CONSULTING AGREEMENT
EXHIBIT
10.2
THIS
CONSULTING AGREEMENT
("Agreement") is dated August 12, 2008, effective as of July 25, 2008, by and
between BioBalance LLC, a Delaware limited liability company ("Company"), and
The Xxxxxxx Group, LLC, a New York limited liability company
("Consultant").
1. Consultancy;
Term.
Company
hereby retains Consultant, and Consultant hereby accepts such retention,
commencing as of the date of this Agreement and continuing until July 31, 2009
(the “Term”).
2. Services.
Consultant shall serve as a consultant to Company and its affiliates in the
areas of product development and funding, interacting with the Company’s
scientific advisers regarding product studies, assistance with recruiting and
personnel and other relevant areas of Consultant’s expertise (the "Field").
During the Term of this Agreement, Consultant shall be available to perform
services in the Field, during business hours and at other reasonable times,
as
may be requested by Company and agreed to by Consultant; provided that,
Consultant shall be available to perform services for not less than ten (10)
days per calendar month during the Term of this Agreement. The
Consultant shall provide the Company with progress reports with respect to
his
work hereunder in reasonable detail as requested by the Company. Consultant
represents and warrants to Company that, at all times during the Term of this
Agreement, 100% of the membership interest of Consultant shall be owned of
record and beneficially by Xxxx Xxxxxxxx.
3.
Compensation.
3.1 Consulting
Fee; Expenses.
During
the Term of this Agreement, Company will pay Consultant a consulting fee (the
“Base Fee”) at the annual rate of One Hundred Eighty Thousand Dollars
($180,000), payable in equal monthly installments commencing on August 1, 2008.
In addition, Company will reimburse Consultant for reasonable expenses approved
in writing in advance by Company.
3.2 Incentive
Fee.
In
addition to the Base Fee, Consultant shall be eligible to receive an incentive
fee (“Incentive Fee”) equal to the lesser
of (A)
(i) the amount by which the Fair Market Value of the Company determined as
of
the Determination Date (as defined below) exceeds the Fair Market Value of
the
Company as of the date hereof, multiplied by (ii) 33-1/3%, and (B) One Hundred
Eighty Thousand Dollars ($180,000).
The
“Determination Date” shall mean (i) the date of consummation of an Equity Event
(as defined in Section 3.4 below) or (ii) if there has been no Equity Event
during the Term, the last day of the Term.
The
Incentive Fee, if due and payable, shall be paid to Consultant no later than
ten
(10) days after the Determination Date.
3.3 Original
Fair Market Value.
Solely
for purposes of this Section 3, the parties have agreed that the Fair Market
Value of the Company as of the date hereof is Six Hundred Twenty Eight Thousand
and Fifty Six Dollars ($628,056), as reported in the Form 10-K of New York
Health Care, Inc. for the year ended December 31, 2007, representing the
remaining net carrying value of the intellectual property of The BioBalance
Corporation after recording impairment losses.
3.4 Valuation.
Solely
for purposes of this Section 3, the Fair Market Value of the Company as of
the
Determination Date shall be the valuation of the Company determined on the
basis
of either (i) an equity investment in the Company during the Term by an
unaffiliated third party in a bona fide financing round that values the Company
at more than $628,056, or (ii) a sale of all or substantially all of the
membership interests or assets of the Company to an unaffiliated third party
for
total consideration in excess of $628,056 (each of the foregoing events referred
to as an “Equity Event”). If no such equity investment or sale was made during
the Term, the Fair Market Value of the Company shall be the price that could
be
obtained from an unaffiliated willing buyer on an arms’-length basis as of the
last day of the Term, as determined in by an independent appraiser mutually
acceptable to, and unaffiliated with, the Company or the Consultant, whose
appraisal costs shall be paid by shared equally by Consultant and the Company
(such determination referred to as the “Appraisal”).
4. Other
Engagements.
During
the Term of this Agreement, unless otherwise consented to by the Company, which
consent shall not be unreasonably withheld, Consultant, which, for purposes
of
this Section 4, shall include Xxxx Xxxxxxxx and his affiliates, shall not engage
or participate in, or assist, advise or be connected with (whether as an owner,
partner, shareholder, consultant, director, officer or employee), any activity
or business which competes with the Company, including without limitation,
any
business engaged in the development, manufacture, and/or sale of probiotic
products or other products performing functions similar to ProBactrix®. Except
as provided above, Consultant may be engaged, during the Term hereof, by one
or
more third parties so long as Consultant promptly notifies Company of the name
of such third party and the nature of the services to be performed for such
third party. Consultant represents that Consultant is not and shall not become
a
party to any agreement that conflicts with Consultant's duties hereunder.
Consultant shall use his best efforts to segregate work done under this
Agreement from work performed for any third party, so as to minimize any
questions of disclosure or ownership of rights concerning any Work Product
or
Confidential Information. Consultant shall not knowingly disclose to Company
any
inventions, trade secrets, or other information of third parties that Consultant
does not have the right to disclose and that Company is not free to use without
liability.
5. Nonsolicitation.
During
the Term of this Agreement and for a period of two (2) years thereafter,
Consultant agrees (i) not to solicit or otherwise recruit (for himself or for
any person or entity) any employee of Company or its affiliates, (ii) not to
interfere with any business relationship of Company or its affiliates (including
without limitation relationships with consultants), and (iii) to refrain from
making any disparaging remarks concerning Company or its affiliates or their
respective businesses.
6. Ownership
of Work Product.
"Work
Product”" shall mean any ideas, inventions, original works of authorship,
developments, improvements, or processes, solely or jointly conceived, developed
or reduced to practice by Consultant, which arise out of, relate to or result
from the services rendered under this Agreement. Consultant hereby assigns
to
Company all of Consultant's right, title and interest in and to any Work Product
(including without limitation all intellectual property rights associated
therewith) and acknowledges and agrees that such Work Product is the sole and
exclusive property of Company. Consultant further acknowledges that all original
works of authorship defined as “Work Product” which are protectable by copyright
are “works made for hire” within the meaning of Title 17 of the United States
Code. Consultant shall make prompt full written disclosure to Company of any
Work Product. Consultant shall, at Company's request and expense, execute
documents and perform such acts as Company may deem necessary, to confirm in
Company, all right, title and interest throughout the world, in and to any
Work
Product, and all patents, copyrights and other applicable statutory protections
thereon, and to enable and assist Company in procuring, maintaining, enforcing
and defending patents, copyrights and other statutory protections throughout
the
world on any such Work Product. Consultant agrees to maintain adequate and
current written records (in such format as may be specified by Company) of
any
conception, development or reduction to practice of any Work Product and all
such written records will be available to and remain the sole property of
Company at all times.
In
furtherance and not in limitation of the foregoing, upon disclosure of each
Work
Product to the Company pursuant to this Agreement, Consultant will, at the
request and cost of the Company sign, execute, make and do all such deeds,
documents, acts and things as the Company and its duly authorized agents may
deem necessary or desirable: (a) to apply for, obtain and vest in the name
of
the Company alone letters patent, copyrights, trademark registrations or other
analogous protection in any country throughout the world and when so obtained
or
vested to renew, extend and restore the same; and (b) to defend any opposition
proceedings in respect of such applications and any opposition proceedings
or
petitions or applications for revocation or cancellation of such letters patent,
copyright, trademark registration or other analogous protection.
In
the
event that the Company is unable, after reasonable effort, to secure
Consultant’s signature on any application, assignment, or other document or
instrument relating to letters patent, copyright, trademark or other analogous
protection relating to a Work Product, whether because of Consultant’s physical
or mental incapacity or for any other reason whatsoever, Consultant hereby
irrevocably designates and appoints the Company and its duly authorized officers
and agents as Consultant’s agent and attorney-in-fact, to act for and in
Consultant’s behalf and stead to execute and file any such applications and to
do all other lawfully permitted acts to further the prosecution and issuance
of
letters patent, copyright, trademark or other analogous protection thereon
with
the same legal force and effect as if executed by Consultant.
7. Confidentiality.
Consultant agrees that during the Term of this Agreement and thereafter,
Consultant shall not disclose without the prior written consent of Company,
any
Company Confidential Information. "Confidential Information" means all
confidential information and/or trade secrets relating to the business of
Company or its affiliates, including without limitation, information concerning
the management, business, operations, technology, products or business plans
of
Company or its affiliates. Confidential Information shall not include
information that Consultant can demonstrate (i) has become part of the public
domain except by fault of Consultant, (ii) Consultant already possessed prior
to
its disclosure to Consultant by Company, or (iii) Consultant learned from a
third party source having no duty of confidentiality to Company.
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8.
Termination.
8.1 Notwithstanding
anything to the contrary in this Agreement, the Company may, at its option,
at
any time, terminate this Agreement for Cause. For purposes of this Agreement,
“Cause” shall mean (a) Consultant’s conviction of, guilty or no contest plea to,
or confession of guilt of, any felony or any other crime involving theft, fraud
or moral turpitude; (b) an act or omission by Consultant in connection with
the
services or this Agreement that constitutes fraud, criminal misconduct, breach
of fiduciary duty, dishonesty, gross negligence, malfeasance, willful misconduct
or other conduct that is materially harmful or detrimental to the Company or
any
of its members, managers or employees; (c) a material breach by Consultant
of
this Agreement which breach Consultant shall fail to remedy within fifteen
(15)
days after written demand from the Company, other than a breach by Consultant
of
any term of any of Sections 4 through 7, which shall have no cure period; or
(d)
a continuing failure by Consultant to perform such services as are assigned
to
Consultant by the Company in accordance with this Agreement, which failure
Consultant shall fail to remedy within fifteen (15) days after written demand
from the Company; . In addition, in the event of Consultant’s death, this
Agreement shall terminate and be of no further force or effect as of the date
of
death.
8.2 All
disputes relating solely to the Company’s termination of Consultant for “Cause”
under Section 8.1(c) or 8.1(d) of this Agreement shall be resolved exclusively
through arbitration conducted in accordance with the Commercial Arbitration
Rules of the American Arbitration Association as then in effect. The arbitration
hearing shall be held in New York City, New York and shall be before a single
arbitrator selected by the parties in accordance with the Commercial Arbitration
Rule of the American Arbitration Association pursuant to its rules on selection
of arbitrators. Any award or decision rendered in such arbitration shall be
final and binding on the parties, and judgment may be entered thereon in any
court of competent jurisdiction. The prevailing party in the arbitration shall
be entitled to reimbursement of its reasonable attorneys’ fees, and the parties
shall use all reasonable efforts to keep arbitration costs to a minimum.
8.3
In
the
event that this Agreement is terminated by the Company for Cause or Consultant
voluntarily terminates his consultancy hereunder, (i) the Company shall pay
to
Consultant, in accordance with the Company’s regular practices, an amount equal
to any unpaid but earned Base Fee through the date of termination and, if such
termination occurs following the consummation of an Equity Event, an amount
equal to any unpaid but earned Incentive Fee, (ii) the Company shall reimburse
Consultant for any unpaid business expenses pursuant to Section 3.1 (each of
(i)
and (ii) above are subject to Consultant’s compliance with the restrictive
covenants contained herein, such that the breach by Consultant of any provision
of the restrictive covenants contained herein shall result in a forfeiture
of
all of the above), and thereafter the Company shall have no further obligations
to Consultant hereunder.
9 No
Conflict. The
Consultant represents and warrants to the Company that Consultant is free to
be
engaged by the Company upon the terms contained in this Agreement and that
there
are no consulting agreements, employment contracts, restrictive covenants or
other agreements or fiduciary obligations preventing or interfering with in
any
manner whatsoever the full performance of the Consultant’s duties hereunder.
10. Miscellaneous.
10.1. Not
an Employee.
Consultant
is an independent contractor and is not an employee or agent of Company.
Consultant shall be solely responsible for all obligations and reports covering
Social Security, Unemployment Insurance, Workers’ Compensation, Income Tax and
other taxes and assessment, reports and deductions that may be applicable or
required by any federal, state or local law with respect to the services
provided hereunder by Consultant.
10.2 Assignment.
This
Agreement shall inure to the benefit of and shall be binding upon the successors
and the assigns of the parties hereto; provided that, Consultant may not assign
any rights or obligations hereunder without Company’s prior written consent
(which may be withheld in Company’s sole discretion).
10.3 Severability.
If any
provision of this Agreement is deemed invalid, all other provisions shall remain
in full force and effect.
10.4 Waiver
of Breach.
The
waiver by any party of a breach of any provision of this Agreement by the other
party or the failure of any party to exercise any right granted to it hereunder
shall not operate or be construed as the waiver of any subsequent breach by
such
other party nor the waiver of the right to exercise any such right.
10.5 Entire
Agreement.
This
Agreement contains the entire agreement of the parties concerning its subject
matter. This Agreement supersedes all prior discussions, negotiations, promises,
and agreements. This Agreement can be amended or modified only in a subsequent
written document signed by the parties.
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10.6 Notices.
Any
notice required or permitted to be given hereunder shall be in writing and
may
be personally served or sent by United States mail, and shall be deemed to
have
given when personally served or deposited in the United States mail with first
class postage prepaid and properly addressed to the last known address of the
Consultant or Company.
10.7 Applicable
Law; Jurisdiction.
This
Agreement is entered into and executed in the State of New York and shall be
governed by the laws of such State, without reference to the principles of
conflicts of law thereof. The parties hereby irrevocably submit to the exclusive
jurisdiction of any state or federal court sitting in New York County in any
action or proceeding (judicial, administrative or otherwise) arising out of
or
relating to this Agreement, and the parties hereby irrevocably agree that all
claims in respect of such action or proceeding may be heard and determined
in
such New York County state or federal court. The parties hereby irrevocably
waive, to the fullest extent they may effectively do so, the defense of an
inconvenient forum to the maintenance of such action or proceeding. The parties
hereby agree to and accept personal jurisdiction and to the service of process
by mail at such party’s principle place of business or residence, as applicable,
in connection with any such action or proceeding.
10.8 Counterparts.
This
Agreement may be executed in counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same
instrument.
10.9 Headings.
The
paragraph and subparagraph headings in this Agreement are for convenience only
and shall not affect the construction of this Agreement.
10.10 Further
Assurances.
Each of
the parties shall, from time to time, and without charge to the other parties,
take such additional actions and execute, deliver and file such additional
instruments as may be reasonably required to give effect to the transactions
contemplated by this Agreement.
10.11 Attorneys'
Fees.
In the
event that either party commences arbitration or legal action in connection
with
this Agreement, the prevailing party shall be entitled to its attorneys' fees,
costs and expenses incurred in such action.
IN
WITNESS WHEREOF,
the
parties hereto have executed this Agreement as of the date first above
written.
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CONSULTANT:
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COMPANY:
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THE
XXXXXXX GROUP, LLC
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BIOBALANCE
LLC
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By:/s/Xxxx
Xxxxxxxx
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/s/Xxxxx
Xxxxxxx
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Name:
Xxxx Xxxxxxxx
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Name:
Xxxxx Xxxxxxx
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Title:
President
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Title:
Chief Executive Officer
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