CONSULTING AGREEMENT
Exhibit
10.6
THIS
CONSULTING
AGREEMENT (the “Agreement”) is made and entered into by and between
VIRAL GENETICS, INC., a Delaware corporation (the “Company”), and M. Xxxxx
Xxxxxx, PhD, an individual residing in the city of Colorado Springs, CO
(“Consultant”) effective the 1st day of
July,
2007.
(the
Company and Consultant are jointly referred to herein as the
“Parties”)
WHEREAS
the Company is
an early-stage business engaged in the development of certain technologies,
investigational drugs, pharmaceutical products, diagnostics, and medical
knowledge, as well as in-licensed patents and know-how obtained under an
Exclusive License Agreement with the University of Colorado (the “University”)
dated November __, 2007 (the “License”) (collectively referred to herein as the
“Technology”); and
WHEREAS
Consultant has experience, knowledge, contacts, and skills which are beneficial
to the development of the Company, the Technology, and its areas of focus;
and
WHEREAS
the Company
wishes to engage Consultant and to define the nature of the relationship, to
protect certain confidential information owned or possessed by the Company,
and
to establish certain other representations, warranties and
covenants.
NOW
THEREFORE, for
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties agree as follows.
1)
Non-Exclusive Engagement of Consultant; Term. The Company hereby
engages Consultant as its non-exclusive provider of the consulting services
described in this Agreement, for a term (the “Term”), which will commence on the
date of this Agreement and end December 31, 2010.
2)
Consultant Services. On the terms and conditions set forth
in this Agreement, Consultant will provide the following services to the Company
as directed by the Company (the “Services”):
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a)
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Consultant
will advise and assist the Company with the worldwide development,
evaluation, analysis, testing, research, and study of the
Technology;
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b)
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Consultant
will design, manage and analyze studies of the Technology, including
sourcing and recommending independent facilities as necessary, which
such
studies are separate from the sponsored research to be carried out
by
Consultant pursuant to the License and the Sponsored Research Agreement
dated November __, 2007 between the Company and the
University;
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c)
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Consultant
will assist Company in the drafting and review of any documents necessary
to obtain or maintain patent protection on the Technology or Consultant
Creations (as hereinafter defined in Exhibit
C).
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d)
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Consultant
shall advise and assist the Company with respect to the authorship,
presentation and publication of reports, results, analyses, studies
and
other scientific and medical activities of the Company, in recognized
peer-reviewed literature or industry conferences, as mutually agreed
to,
and review, edit and provide comment on any manuscripts or abstracts
relating to the Technology, whether authored by Consultant or not,
provided they relate to her areas of
expertise;
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e)
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Consultant
shall from time to time and as requested present on behalf of the
Company
in the areas of its Technology, its development and scientific strategy,
and other areas where Consultant has expertise, including, without
limitation, to the Company’s Scientific Advisory
Board;
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f)
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Consultant
will assist and advise the Company in the preparation, review,
discussions, follow-up, and other areas in Company dealings with
the FDA,
EMEA, and other regulatory agencies in connection
with seeking permission for clinical trials, regulatory approvals,
drug
and device registration, and other development
activities;
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g)
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Consultant
will advise and assist the Company on other medical issues with respect
to
the Company’s products and drug candidates;
and
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h)
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Consultant
will assist and advise the Company in other areas in which Consultant
has
expertise as reasonably requested from time to time by the
Company.
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Services
shall not (i) involve any use of the facilities, space, materials or other
resources of the University (provided that use alone by the Consultant of the
Consultant’s office space, phone, email, computer, word processor and similar
assets shall not be considered a prohibited use of such University resources),
or (ii) use direct or indirect financial support from University, including
funding from any outside source awarded to or administered by University.
Notwithstanding anything to the contrary in this Agreement, nothing in this
Agreement shall be construed to restrict or limit the duties Consultant is
performing or may perform in the course of, or incidental to, Consultant’s
appointment at University.
3)
Method of Providing Services. Consultant shall be available for a
teleconference meeting with the management of the Company at least twice per
month during the Term. Consultant will perform Services, and may communicate
with the Company’s management and other parties, through personal meetings,
correspondence, telephone or video conferences, and such other methods, and
at
such times, as mutually determined, subject to the reasonable convenience of
the
parties. Unless requested otherwise by the Company, Consultant shall
communicate with the Company’s management through the Company’s President.
Acting in good faith and consistent with ordinary business practices with
respect to advisory relationships, Consultant shall devote a reasonable amount
of time per month to the provision of the Services described herein provided
that this does not materially conflict with Consultant’s appointment at the
University.
4)
Performance. Consultant agrees to at all times faithfully, industriously,
and to the reasonable best of her abilities, experience, and talents, perform
all of the Services that may be required of and from them pursuant to the
express and explicit terms hereof.
5)
Independence of Parties. Nothing contained in this Agreement
shall constitute either party as an employee, partner, co-venturer or agent
of
the other, it being intended that each shall act as an independent contractor
with respect to the other. Consultant is not authorized to speak on behalf
of
the Company or bind it in any manner.
6)
Compensation.
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a)
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Fees.
For
and in consideration of the agreement of Consultant to enter into
and
perform under this Agreement, the Company shall pay to Consultant
$3,000
per month. The Company may, but only with specific written approval
of
Consultant, pay such fees in shares of common stock at the rate of
$0.06
per share. Such shares shall be Restricted Stock Awards that vest
on the
one-year anniversary of their issuance. In the event of termination
of
this Agreement prior to the shares vesting, they shall be returned
cancelled and void for no additional
consideration.
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b)
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Options. For
and in consideration of the agreement of Consultant to enter into
this
Agreement and as a long-term incentive for the Consultant to use
their
best efforts in pursuit of the Company’s business, the Company shall grant
to Consultant the option attached hereto as Exhibit B (the “Option”). Upon
each one-year anniversary of this Agreement, the Company shall grant
to
Consultant an option of similar tenor except that the exercise price
shall
be the closing price of the Company’s common stock as reported on that
day.
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c)
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Royalty. Consultant
shall receive Three Fourths One Percent (0.75%) of Net Sales from
sales in
developed countries, and One Half Percent (0.125%) from sales in
undeveloped countries. “Developed countries” are herein defined
as United States of America, Canada, Western and Eastern Europe,
Japan,
Australia, New Zealand, Israel, Russia, and other countries of the
former
Soviet Union, Hong Kong, Singapore, South Korea, and
Taiwan. “Undeveloped countries” are herein defined as countries
other than developed countries. “Net Sales” and associated terms are as
defined in Exhibit D. If any such Net Sales are due to receipts
for sales of Licensed Products or practice of Licensed Processes
where
there is more than one inventor, then the amount that Consultant
shall
receive herunder shall be proportionately
reduced.
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d)
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Benefits,
Other Consideration. No
benefits, vacation pay, or other consideration or remuneration of
any kind
shall be owed to Consultant by the Company, unless specifically referenced
herein. Expenses incurred in Consultant’s provision of the Services shall
be reimbursed by the Company provided that they are pre-approved
in
writing by the Company.
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e)
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Reimbursement
of Expenses. The Company shall reimburse all expenses
incurred by Consultant in the performance of the Services, provided
that
any such expenses in excess of $500 shall require the prior, written
authorization of the Company.
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7)
Company Representations and Warranties. The Company
hereby represents and warrants, knowing that Consultant is relying thereon,
that:
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a)
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The
Company is duly organized, validly existing and in good standing
under the
laws of the state of Delaware. The Company is qualified to do
business as a foreign corporation in each state in which its business
requires it to be so qualified.
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b)
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Upon
receipt of the full exercise price, where applicable, all Shares
issued to
Consultant under the Option will be duly and validly issued, fully
paid
and non-assessable, and will be delivered free and clear of any liens,
claims or encumbrances, except for restrictions imposed by reference
to
the registration requirements of the Securities Act of
1933.
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8)
Consultant Representations. Consultant hereby represents, knowing
that the Company is relying thereon, that:
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a)
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Consultant
is an Accredited Investor, as that term is defined in Regulation
D in the
Securities Xxx, 0000, and Consultant has completed the attached Exhibit
A,
or, in lieu of this, Consultant agrees that the Option shall only
be
issued immediately if and when an appropriate exemption from registration
exists or an effective registration statement is
available;
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b)
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Consultant
has not in the past, nor will she in the future engage in any activity
contrary to the securities laws of any jurisdiction including, without
limitation, those of the United States of America;
and
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c)
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Consultant
has read and accepted the Viral Genetics Intellectual Property Agreement,
attached hereto as Exhibit C, which is part of this Agreement and
the
provisions of which shall survive the expiration or earlier termination
of
this Agreement in strict accordance with the time periods as described
therein.
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9)
Stock Certificates. All Shares delivered to
Consultant pursuant to exercise of the Option shall bear a restrictive legend
in
the form normally used by the Company for the issuance of restricted shares,
and
shall be deemed restricted securities under SEC Rule 144.
10)
Changes to Common Stock. In the event that the Company shall undertake a
recapitalization, reverse stock split, forward stock split, reclassification,
or
other change to its common stock (a “Change in Common Stock Properties”), the
quantity of Shares which may be acquired through exercise of any delivered
but
unexercised Options or undelivered Options, and the exercise price payable
thereto shall be increased
or decreased proportionately, in accordance with the terms of said Change in
Common Stock Properties.
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11)
Extension and Renewal. The Term may be extended or
renewed, and this Agreement may be amended, only by the written agreement of
the
parties.
12)
Indemnification.
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a)
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The
Company hereby indemnifies and defends the Consultant and each of
her
executors, heirs, assigns, and representatives, as applicable, (each,
an
"Indemnitee") against, and holds each Indemnitee harmless from, any
loss,
liability, obligation, deficiency, damage or expense including, without
limitation, interest, penalties, reasonable attorneys' fees and
disbursements (collectively, "Damages"), that any Indemnitee may
suffer or
incur based upon, arising out of, relating to or in connection with
(whether or not in connection with any third party
claim):
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i)
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any
breach of any representation or warranty made by the Company contained
in
this Agreement;
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ii)
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the
failure of the Company to perform or to comply with any covenant
or
condition required to be performed or complied with in accordance
with
this Agreement; and
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iii)
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the
good faith performance of the
Services.
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b)
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Indemnification
Procedures for Third Party Claims.
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i)
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Promptly
after notice to an Indemnitee of any claim or the commencement of
any
action or proceeding, including any actions or proceedings by a third
party (hereafter referred to as "Proceeding" or "Proceedings"), involving
any Damage referred to in this Section, such Indemnitee shall, if
a claim
for indemnification in respect thereof is to be made against an Indemnitee
pursuant to this Section, give written notice to the Company, setting
forth in reasonable detail the nature thereof and the basis upon
which
such party seeks indemnification hereunder; provided, however, that
the
failure of any Indemnitee to give such notice shall not relieve the
Company of its obligations hereunder, except to the extent that the
Company is actually prejudiced by the failure to give such
notice.
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ii)
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In
the case of any Proceeding by a third party against an Indemnitee,
the
Company shall, upon notice as provided above, assume the defense
thereof,
with counsel reasonably satisfactory to the Indemnitee, and, after
notice
from the Company to the Indemnitee of its assumption of the defense
thereof, the Company shall not be liable to such Indemnitee for any
legal
or other expenses subsequently incurred by the Indemnitee in connection
with the defense thereof (but the Indemnitee shall have the right,
but not
the obligation, to participate at its own cost and expense in such
defense
by counsel of its own choice) or for any amounts paid or foregone
by the
Indemnitee as a result of any settlement or compromise thereof that
is
effected by the Indemnitee (without the written consent of the
Company).
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iii)
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Anything
in this Section 12 notwithstanding, if both the Company and the Indemnitee
are named as parties or subject to such Proceeding and either party
determines with advice of counsel that there may be one or more legal
defenses available to it that are different from or additional to
those
available to the other party or that a material conflict of interest
between such parties may exist in respect of such Proceeding, then
the
Company may decline to assume the defense on behalf of the Indemnitee
or
the Indemnitee may retain the defense on its own behalf, and, in
either
such case, after notice to such effect is duly given hereunder to
the
other party, the Company shall be relieved of its obligation to assume
the
defense on behalf of the Indemnitee, but shall be required to pay
any
legal or other expenses including, without limitation, reasonable
attorneys' fees and disbursements, incurred by the Indemnitee in
such
defense.
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iv)
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If
the Company assumes the defense of any such Proceeding, the Indemntiee
shall cooperate fully with the Company and shall appear and give
testimony, produce documents and other tangible evidence, and otherwise
assist the Company in conducting such defense. The Company
shall not, without the consent of the Indemnitee, consent to entry
of any
judgment or enter into any settlement or compromise which does not
include
as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnitee of a release from all liability in respect of
such
claim or Proceeding. Provided that proper notice is duly given, if
the
Company shall fail promptly and diligently to assume the defense
thereof,
then the Indemnitee may respond to, contest and defend against such
Proceeding and may make in good faith any compromise or settlement
with
respect thereto, and recover from the Company the entire cost and
expense
thereof including, without limitation, reasonable attorneys' fees
and
disbursements and all amounts paid or foregone as a result of such
Proceeding, or the settlement or compromise thereof. The
indemnification required hereunder shall be made by periodic payments
of
the amount thereof during the course of the investigation or defense,
as
and when bills or invoices are received or loss, liability, obligation,
damage or expense is actually suffered or
incurred.
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c)
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Each
of the Company and Consultant acknowledges and agrees that (i) Consultant
is entering into this Agreement in her individual capacity and not
as an
employee or agent of the University, and (ii) the University is not
a
party to this Agreement and has no liability or obligation whatsoever
hereunder. The provisions of this paragraph shall survive the
expiration or earlier termination of this
Agreement.
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d)
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The
provisions of this section 12 shall survive the expiration or earlier
termination of this Agreement.
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13)
Termination.
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a)
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Either
party may terminate this Agreement upon not less than 15 days notice
in
the event of a material breach of this Agreement or material
non-performance by the other party, which breach is not cured within
10
days after the giving of written notice to the breaching party specifying
the circumstances of such breach.
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b)
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The
Company may terminate this Agreement without further notice to Consultant
in the event that Consultant:
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i)
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is
convicted a felony or a violation of any securities
laws;
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ii)
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declares
bankruptcy;
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iii)
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has
been grossly negligent in the performance of Services at least three
times
in any consecutive 30-day period, and Consultant has been notified
in
writing within 5 days of each such occurrence;
or
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iv)
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has
engaged in material and willful or gross misconduct in the performance
of
Services hereunder.
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c)
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Either
party may terminate this Agreement without cause upon 90 days prior
written notice to the other party.
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14)
Consequences of Termination. Any termination or expiration
of this Agreement, whether or not for cause, shall not affect the obligation
of
the Company to pay compensation to Consultant that was earned or accrued prior
to the date of termination or expiration, nor shall it be relieved from paying
past, accrued, and future royalties pursuant to Section 6 c). Other than as
specifically provided for herein, no further fees or payments of any kind shall
be owed to Consultant upon or following Termination.
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15)
Cooperation. The parties shall deal with each other in good
faith, good faith meaning honesty in fact and the observance of all commercial
standards of fair dealing and usages of trade, which are regularly observed
within the industry.
16)
No
Strict Construction. The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any
party.
17)
Arbitration. In the event of dispute or controversy between the
parties as to the performance hereof, this Agreement shall be and remain in
full
force and effect and all terms hereof shall continue to be complied with by
both
parties, it shall be submitted to two arbitrators, one to be appointed by each,
and if those arbitrators do not agree, they shall select a third disinterested
and competent person to act with them, and the decision of the three, or a
majority of them, shall be final and conclusive. If either party does
not appoint an arbitrator as aforesaid within 90 days after receipt of notice
to
the other that it desires arbitration, which notice shall state the name and
address of the arbitrator appointed by such other, and does not within such
period furnish to such other party the name and address of the second
arbitrator, then the arbitrator first named shall appoint a disinterested and
competent arbitrator for the party thus defaulting, and the two arbitrators
so
appointed shall select a third to act with them as aforesaid and with like
effect. Cost of arbitration shall be borne by the
Company. Judgment upon the reward rendered may be entered in any
court having jurisdiction thereof.
18)
Governing Law and Disputes. This Agreement shall be
governed by the laws of the State of California, without regard to choice of
law
provisions.
19)
Waiver. Any party hereto may waive compliance by the
other with any of the terms, provisions and conditions set forth herein;
provided, however, that any such waiver shall be in writing specifically setting
forth those provisions waived thereby. No such waiver shall be deemed
to constitute or imply waiver of any other term, provision or condition of
this
Agreement.
20)
Severability. If and to the extent that any court of competent
jurisdiction holds any provision or any part thereof of this Agreement to be
invalid or unenforceable, such holding shall in no way affect the validity
of
the remainder of this Agreement.
21)
Counterpart and Headings. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original and all
of
which together shall constitute one and the same instrument. All
headings in this Agreement are inserted for convenience of reference and shall
not affect its meaning or interpretation.
22)
Entire Agreement. This Agreement is and shall be considered to be
the only agreement or understanding between the parties hereto with respect
to
the engagement of Consultant by the Company. All negotiations,
commitments, and understandings acceptable to both parties have been
incorporated herein. No letter, telegram, or communication passing
between the parties hereto shall be deemed a part of this Agreement; nor shall
it have the effect of modifying or adding to this Agreement unless it is
distinctly stated in such letter, telegram, or communication that it is to
constitute a part of this Agreement and is to be attached as a rider to this
Agreement and is signed by the parties to this Agreement.
23)
Modification of Contract. This Agreement cannot be modified by
tender, acceptance or endorsement of any instrument of payment, including check.
Any words contained in an instrument of payment modifying this contract,
including a waiver or release of any claims, or a statement referring to paying
in full
is
void. This Agreement can only be modified in a separate writing,
other than an instrument of payment, signed by the
parties.
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25)
Assignment. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto, and their
respective heirs, legal representatives, successors and assigns. This
Agreement may not be assigned without the consent of the parties;
provided,however, that nothing contained herein shall prevent
Consultant from assigning or transferring any of the Shares or Options, or
the
royalties referred to in Section 6 (c) of this Agreement, to any person or
entity in accordance with applicable securities laws and
regulations.
26)
Notices. All notices under this Agreement shall be in
writing and shall be sent by certified or registered first class mail, return
receipt requested, or shall be personally delivered, or sent by an overnight
delivery service such as Federal Express, or shall be transmitted by telefax
(provided such telefax message is confirmed by telephonic acknowledgment of
receipt or by sending via other authorized means a confirmation copy of such
notice) addressed to the parties at their respective last known business
addresses.
Agreed
to
effective the 1st day of
July,
2007
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VIRAL
GENETICS, INC.
By:
________________________
President
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M.
XXXXX XXXXXX
__________________________
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7
EXHIBIT
A
ACCREDITED
INVESTOR QUESTIONNAIRE
PERSONAL
FINANCIAL INFORMATION. The following information pertaining to the
undersigned as a natural person and U.S. Persons within the meaning of
Regulation S is being provided here in lieu of furnishing a personal
financial statement.
(a) My
individual net worth, or joint net worth with my spouse, exceeds
$1,000,000.
Yes [ ] No [ ]
________
INITIAL
(b) My
individual income in 2005 and 2006 exceeded $200,000 in each such year, and
I
reasonably expect my individual income will be in excess of $200,000 in
2007.
Yes [ ] No [ ]
________
INITIAL
(c) The
joint income of my spouse and I in 2005 and 2006 exceeded $300,000 in each
such
year, and I reasonably expect our joint income will be in excess of $300,000
in
2007.
Yes [ ] No [ ]
________
INITIAL
(d) Considering
the foregoing and all other relevant factors in my financial and personal
circumstances, I am able to bear the economic risk of an investment in the
Company.
Yes [ ] No [ ]
________
INITIAL
The
foregoing is a true representation of my financial status:
_______________________________
M.
Xxxxx
Xxxxxx
8
EXHIBIT
B
VIRAL
GENETICS, INC.
Option
for the Purchase of 200,000
Shares
of Common Stock
Par
Value $0.001
STOCK
OPTION AGREEMENT
THE
HOLDER OF THIS OPTION, BY ACCEPTANCE HEREOF, BOTH WITH RESPECT TO THE OPTION
AND
COMMON STOCK ISSUABLE UPON EXERCISE OF THE OPTION, AGREES AND ACKNOWLEDGES
THAT
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER THE
SECURITIES LAWS OF ANY STATE. THESE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE TRANSFERRED OR SOLD IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT OR OTHER COMPLIANCE UNDER THE SECURITIES ACT OR THE
LAWS
OF THE APPLICABLE STATE OR A “NO ACTION” OR INTERPRETIVE LETTER FROM THE
SECURITIES AND EXCHANGE COMMISSION OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE ISSUER, AND ITS COUNSEL, TO THE EFFECT THAT THE SALE OR
TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT AND SUCH STATE
STATUTES.
This
is to certify that, for value
received, M. Xxxxx Xxxxxx (the “Optionee”) is entitled to purchase from
VIRAL GENETICS, INC. (the “Company” or “Corporation”), on the
terms and conditions hereinafter set forth, all or any part of 200,000 shares
(“Option Shares”) of the Company’s common stock, par value $0.001 (the “Common
Stock”), at the purchase price of $0.04 per share (“Option
Price”). Upon exercise of this option in whole or in part, a
certificate for the Option Shares so purchased shall be issued and delivered
to
the Optionee. If less than the total option is exercised, a new
option of similar tenor shall be issued for the unexercised portion of the
options represented by this Agreement.
This
option is granted subject to the
following further terms and conditions:
1. This
option shall vest immediately. The right to exercise this option with respect
to
any of the Option Shares shall terminate on the date that is the earlier of
a)
two years following termination for any reason of Optionee’s engagement under
the Consulting Agreement between the Company and Optionee dated July 1, 2007
(the “Consulting Agreement”) and b) December 31, 2012. In order to
exercise this option with respect to all or any part of the Option Shares for
which this option is at the time exercisable, Optionee (or in the case of
exercise after Optionee’s death, Optionee’s executor, administrator, heir or
legatee, as the case may be) must take the following actions:
(a) Deliver
to the Corporate Secretary of the Corporation an executed notice of exercise
in
substantially the form of that attached to this Agreement (the “Exercise
Notice”) in which there is specified the number of Option Shares which are to be
purchased under the exercised option.
(b) Pay
the aggregate Option Price for the purchased shares either (i) through full
payment in cash or by check made payable to the Corporation’s order, or (ii) by
having the Company retain from the Option Shares otherwise issuable upon
exercise of the Option, a number of shares having a fair market value equal
as
of the Exercise Notice to the Option Price of the Option
Shares.
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(c) Furnish
to the Corporation appropriate documentation that the person or persons
exercising the option (if other than Optionee) have the right to exercise this
option.
(d) For
purposes of this Agreement, the Exercise Date shall be the date on which the
executed Exercise Notice shall have been delivered to the
Company. Except to the extent the sale and remittance procedure
specified above is utilized in connection with the option exercise, payment
of
the Option Price for the purchased shares must accompany such Exercise
Notice.
(e) Upon
such exercise, the Company shall issue and cause to be delivered with all
reasonable dispatch (and in any event within three business days of such
exercise) to or upon the written order of the Optionee at its address, and
in
the name of the Optionee, a certificate or certificates for the number of full
Option Shares issuable upon the exercise together with such other property
(including cash) and securities as may then be deliverable upon such
exercise. Such certificate or certificates shall be deemed to have
been issued and the Optionee shall be deemed to have become a holder of record
of such Option Shares as of the Exercise Date.
2. The
Optionee acknowledges that the shares subject to this option have not and will
not be registered as of the date of exercise of this option under the Securities
Act or the securities laws of any state. The Optionee acknowledges that this
option and the shares issuable on exercise of the option, when and if issued,
are and will be “restricted securities” as defined in Rule 144 promulgated by
the Securities and Exchange Commission and must be held indefinitely unless
subsequently registered under the Securities Act and any other applicable state
registration requirements. The Company is under no obligation to
register the securities under the Securities Act or under applicable state
statutes. In the absence of such a registration or an available
exemption from registration, sale of the Option Shares may be practicably
impossible. The Optionee shall confirm to the Company the
representations set forth above in connection with the exercise of all or any
portion of this option.
3. The
Company, during the term of this Agreement, will obtain from the appropriate
regulatory agencies any requisite authorization in order to issue and sell
such
number of shares of its Common Stock as shall be sufficient to satisfy the
requirements of the Agreement.
4. The
number of Option Shares purchasable upon the exercise of this option and the
Option Price per share shall be subject to adjustment from time to time subject
to the following terms. If the outstanding shares of Common Stock of
the Company are increased, decreased, changed into or exchanged for a different
number or kind of shares of the Company through reorganization,
recapitalization, reclassification, stock dividend, stock split or reverse
stock
split, the Company or its successors and assigns shall make an appropriate
and
proportionate adjustment in the number or kind of shares, and the per-share
Option Price thereof, which may be issued to the Optionee under this Agreement
upon exercise of the options granted under this Agreement. The
purchase rights represented by this option shall not be exercisable with respect
to a fraction of a share of Common Stock. Any fractional shares of
Common Stock arising from the dilution or other adjustment in the number of
shares subject to this option shall rounded-up to the nearest whole
share.
5. The
Company covenants and agrees that all Option Shares which may be delivered
upon
the exercise of this option will, upon delivery, be free from all taxes, liens,
and charges with respect to the purchase thereof; provided, that the Company
shall have no obligation with respect to any income tax liability of the
Optionee and the Company may, in its discretion, withhold such amount or require
the Optionee to make such provision of funds or other consideration as the
Company deems reasonably necessary
to satisfy any income tax withholding obligation under federal or state
law.
10
6. The
Company agrees at all times to reserve or hold available a sufficient number
of
shares of Common Stock to cover the number of Option Shares issuable upon the
exercise of this and all other options of like tenor then
outstanding.
7. This
option shall not entitle the holder hereof to any voting rights or other rights
as a shareholder of the Company, or to any other rights whatsoever, except
the
rights herein expressed, and no dividends shall be payable or accrue in respect
of this option or the interest represented hereby or the Option Shares
purchasable hereunder until or unless, and except to the extent that, this
option shall be exercised.
8. The
Company may deem and treat the registered owner of this option as the absolute
owner hereof for all purposes and shall not be affected by any notice to the
contrary.
9. In
the event that any provision of this Agreement is found to be invalid or
otherwise unenforceable under any applicable law, such invalidity or
unenforceability shall not be construed as rendering any other provisions
contained herein invalid or unenforceable, and all such other provisions shall
be given full force and effect to the same extent as though the invalid or
unenforceable provision were not contained herein.
10. This
Agreement shall be governed by and construed in accordance with the internal
laws of the state of California, without regard to the principles of conflicts
of law thereof.
11. Except
as otherwise provided herein, this Agreement shall be binding on and inure
to
the benefit of the Company and the person to whom an option is granted
hereunder, and such person’s heirs, executors, administrators, legatees,
personal representatives, assignees, and transferees.
IN
WITNESS WHEREOF, the Company has
caused this option to be executed on the __ day of November, 2007, by the
signature of its duly authorized officer.
| VIRAL GENETICS, INC. | |||
|
|
By:
|
||
| Duly Authorized Officer | |||
The
undersigned Optionee hereby
acknowledges receipt of a copy of the foregoing option and acknowledges and
agrees to the terms and conditions set forth in the option.
|
|
|
||
| M. Xxxxx Xxxxxx |
11
Exercise
Notice
(to
be signed only upon exercise of Option)
TO: Viral
Genetics, Inc.
The
Optionee, holder of the attached
option, hereby irrevocable elects to exercise the purchase rights represented
by
the option for, and to purchase thereunder, ________________________________
shares of common stock of Viral Genetics, Inc., and herewith makes payment
therefor, and requests that the certificate(s) for such shares be delivered
to
the Optionee at:
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
If
acquired without registration under
the Securities Act of 1933, as amended (“Securities Act”), the Optionee
represents that the Common Stock is being acquired without a view to, or for,
resale in connection with any distribution thereof without registration or
other
compliance under the Securities Act and applicable state statutes, and that
the
Optionee has no direct or indirect participation in any such undertaking or
in
the underwriting of such an undertaking. The Optionee understands
that the Common Stock has not been registered, but is being acquired by reason
of a specific exemption under the Securities Act as well as under certain state
statutes for transactions by an issuer not involving any public offering and
that any disposition of the Common Stock may, under certain circumstances,
be
inconsistent with these exemptions. The Optionee acknowledges that the Common
Stock must be held and may not be sold, transferred, or otherwise disposed
of
for value unless subsequently registered under the Securities Act or an
exemption from such registration is available. The Company is under
no obligation to register the Common Stock under the Securities Act, except
as
provided in the Agreement for the option. The certificates
representing the Common Stock will bear a legend restricting transfer, except
in
compliance with applicable federal and state securities statutes.
The
Optionee agrees and acknowledges
that this purported exercise of the option is conditioned on, and subject to,
any compliance with requirements of applicable federal and state securities
laws
deemed necessary by the Company.
DATED
this ________ day of
________________________________, __________.
_______________________________________
Signature
12
EXHIBIT
C
Viral
Genetics Intellectual Property Agreement
(the
“Viral Genetics IP Agreement”)
In
consideration of Consultant entering into that certain Consulting Agreement
dated as of the date hereof (the “Consulting Agreement”) with Viral Genetics,
Inc. (“Viral”), Consultant agrees as follows. Capitalized terms used herein that
are not defined in this Viral Genetics IP Agreement shall be defined as in
the
Consulting Agreement.
1.
Non-Solicitation. Consultant acknowledges that, in the
course of performing Services (as used throughout this Viral Genetics IP
Agreement as defined in the Consulting Agreement) for or on behalf of Viral,
having access to Viral’s technology, reports, processes, materials, knowledge
and know-how, data, facilities, books and records, Consultant may from time
to
time receive Confidential Information (as defined in Paragraph 2, below) of
or
with respect to Viral and hereby stipulates and agrees that such Confidential
Information is a part of and essential to the operations and goodwill of
Viral. In connection and in furtherance of the foregoing, Consultant
may not (whether directly or indirectly; as the principal or on such person’s
own account; or solely or jointly with others as an Consultant, agent,
independent contractor, consultant, general or limited partner, member,
stockholder or holder of equity securities of any other person, other than
through ownership of less than one percent of a class of publicly-traded
securities of a company) engage in any of the conduct or activity described
below in this Paragraph 1.
(a) Consultant
may not, so long as Consultant is a Consultant of Viral
pursuant to the Consulting Agreement and until the third anniversary of the
effective date of termination of the Consulting Agreement for any reason,
solicit, induce or influence any person that at such time is (or, during the
six
(6) month period ending on the effective date of termination of the Consulting
Agreement, was) a vendor, licensor, licensee, distributor, customer, client,
Consultant, or independent contractor of Viral, excluding the University, to
terminate any contract or agreement with Viral or leave the service of
Viral. Consultant acknowledges that the restrictions in this
subparagraph (a) of this Paragraph 1 will not impair Consultant’s ability to
carry on Consultant’s profession or earn a living.
(b) Consultant
may not, so long as Consultant is a Consultant of Viral and until the third
anniversary of the effective date of termination of the Consulting Agreement
for
any reason, without the express prior written consent of Viral, participate
either directly or indirectly in any discussion or negotiation with any person
that at such time is (or, during the six month period ending on the effective
date of termination of the Consulting Agreement, was) a vendor, licensor,
licensee, distributor, customer, client, Consultant, or independent contractor
of Viral the purpose of which discussion or negotiation would be materially
adverse to the interests of Viral and the relationship existing between Viral
and such person. Consultant acknowledges that the restrictions in
this subparagraph (b) of Paragraph 1 will not impair Consultant’s ability to
carry on Consultant’s profession or earn a living.
2.
Non-Disclosure of Information. Consultant understands that
the covenants and agreements in this Paragraph 2 may limit Consultant’s ability
to earn a livelihood in a business similar to the business of Viral of
researching, developing and distributing biomedical products and technology,
but
nevertheless believes that Consultant has received and will receive sufficient
consideration and other benefits from Viral so as to clearly justify such
restrictions which, in any event (given Consultant’s education, skills and
ability), Consultant does not believe would prevent Consultant from earning
a
living:
(a) Consultant
acknowledges that, in the course of performing Services for or on behalf of
Viral, having access to Viral’s technology, reports, processes, knowledge and
know-how, data, facilities, books and records, or otherwise being associated
with Viral, Consultant will have access to, and become acquainted with,
Confidential Information of or with respect to Viral and hereby stipulates
and
agrees that such Confidential Information is a part of and essential to the
operations and goodwill of Viral. Consultant (i) hereby stipulates
and acknowledges that the Confidential Information constitutes important,
material, proprietary and confidential trade secrets of Viral that affect the
successful conduct of the business and goodwill of, Viral; (ii) stipulates
and
acknowledges that any and all of the Confidential Information is the sole and
exclusive property of Viral, regardless of
whether Consultant was engaged in the development of any of such Confidential
Information while performing Services for or on behalf of Viral; (iii) agrees
to
keep all such Confidential Information in strictest confidence, and not to,
directly or indirectly, use or divulge, disclose or communicate to any person
(other than a duly-authorized representative of Viral) any such Confidential
Information other than in the ordinary course of business of Viral for the
benefit of Viral; and (iv) agrees not to copy or otherwise duplicate any such
Confidential Information or knowingly allow anyone else to copy or otherwise
duplicate such Confidential Information, other than in the ordinary course
of
business of Viral for the benefit of Viral. Upon the termination of
the Consulting Agreement, and at any time at the request of Viral, shall
promptly return to Viral all copies of such Confidential Information delivered
to or obtained by Consultant or, at the election of Viral, certify that all
copies of such Confidential Information in the possession of Consultant or
any
person who received such Confidential Information from Consultant have been
destroyed or erased, except that Consultant may keep one (1) copy thereof for
the purpose of complying with the terms of this
Agreement.
13
(b) “Confidential
Information” means, with respect to Viral, any technical,
financial, or business information (including, without limitation, manuals,
forms, memoranda, reports, journals, data, test results, correspondence,
business plans, customer lists, pricing lists, contracts, plans or
specifications, or the like) that may disclose (or may reasonably be expected
to
disclose) the customs and practices, marketing methods and data, services and
products, methods of doing business, manner of operation, know-how, formulas,
technical data or information, clinical study protocols, patient or biologic
information, manufacturing information or know-how, methods, processes,
compounds, and other confidential information, regardless of whether in written,
oral, graphic, encoded, encrypted, tangible, or intangible forms, all of which
the Consultant hereby acknowledges constitute “trade secrets” within the meaning
of the Uniform Trade Secrets Act, codified at sections 3426 et seq. of
the California Civil Code.
(c) Consultant
shall have no obligation to preserve the confidential or proprietary nature
of
any information that (i) was already known to Consultant
free of any obligation to keep such information confidential at the time of
disclosure of such information; (ii) is or becomes publicly known through no
wrongful act of Consultant; (iii) is rightfully received from a third person
having no direct or indirect secrecy or confidentiality obligation to Viral;
(iv) is disclosed to a third person by Viral without restrictions on
confidentiality similar to those contained in this Paragraph 2; (v) is approved
for disclosure by written authorization of Viral; (vi) is developed by
Consultant or on Consultant’s behalf independently of the information disclosed
to Consultant by Viral as shown by written record; or (vii) Consultant is
obligated to produce pursuant to an order of a court of competent jurisdiction
or a valid administrative or Congressional subpoena, provided that Consultant
promptly notifies Viral and cooperates reasonably with Viral’s efforts to
contest or limit the scope of such order.
(d) Except
for the assignment provisions as provided in Section 3 of this Viral Genetics
IP
Agreement, the provisions of this Paragraph 2 shall apply to
Consultant throughout the term of the Consulting Agreement and continue in
perpetuity.
3.
Assignment of Inventions. Consultant shall promptly disclose
any Consultant Creations (as defined below) to Viral and any such Consultant
Creations shall be Viral’s sole property. All original works of
authorship that are made by Consultant (in whole or in part, either alone or
jointly with others) during and in the performance of the Services and that
are
protectable by copyright are “works made for hire” as defined in the United
States Copyright Act (17 U.S.C.A. section 101). “Consultant
Creation(s)” means any idea, concept, discovery, development, device, design,
apparatus, use, machine, practice, process, method, product, composition of
matter, improvement, formula, algorithm, literary or graphical or audiovisual
work or sound recording, mask work, or computer program of any kind (whether
or
not subject to patent, copyright, trademark, trade secret, mask work right,
or
similar protection) that relate(s) in any way to any of Viral’s biological or
pharmaceutical products under investigation or development from time to time,
or
any manufacturing or production know-how, scientific know-how, processes, or
procedures pertaining thereto that are made by Consultant, in whole or in part,
either solely or jointly with others, during and in the performance of the
Services, provided, however, that Consultant does not have a pre-existing
obligation to assign any such Consultant Creation to the University. Consultant
shall promptly notify Viral in advance or at the earliest reasonable time if
any
work being performed or proposed by Viral to be performed by Consultant under
this Agreement may give rise to Consultant Creations that may be assignable
to
University under any agreements.
14
(a) Consultant
hereby assigns to Viral, and agrees to assign to Viral in the future where
appropriate, any and all such Consultant Creations, and agrees to cooperate
with
Viral in the execution of appropriate instruments assigning and evidencing
such
assignment and ownership rights of Viral, to the maximum extent permitted by
section 2870 of the California Labor Code. In order that Viral may
perfect and protect its rights to Consultant Creations as provided hereunder,
Consultant agrees that Consultant’s obligations regarding assignment of such
Consultant Creations to Viral shall survive termination of Consultant’s
engagement with Viral for a term of three years following the date of
termination of the Consulting Agreement for any reason.
4.
Enforcement. Consultant acknowledges that the covenants and
the restrictions contained in this Agreement are necessary and required for
the
adequate protection of Viral and are necessary to preserve the goodwill of
Viral
and the value of its existing Confidential Information, inventions, contracts
and relationships; such covenants relate to matters that are of a special,
unique and extraordinary character that give each of such covenants or
restrictions a special, unique and extraordinary value; and, a breach of any
such covenant or restriction will result in loss of goodwill, invasion of
property rights of Viral, unfair competition by the breaching party, and other
irreparable harm and damages to Viral, which cannot be adequately compensated
by
a monetary award. It
is
accordingly agreed that Viral or any of its subsidiaries shall be entitled
to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement.
Nothing in this Agreement shall be construed as prohibiting Viral from pursuing
any other legal or equitable remedies available to Viral for such breach or
threatened breach of any of the provisions of this Agreement (including, without
limitation, recovery of all damages from Consultant and an equitable accounting
of all earnings, profits and other benefits arising from such
violation).
5.
Conflict. In the event of any conflict between any provision
in this Agreement and any provision in the Consulting Agreement, the
provision(s) in the Consulting Agreement shall govern.
|
AGREED:
CONSULTANT
__________________________________
M.
Xxxxx Xxxxxx
VIRAL
GENETICS, INC.
__________________________________
Xxxx
Xxxxxxxxx,
President
|
DATED:_________________________
DATED:_________________________
|
15
EXHIBIT
D
Definitions
for Net Sales
“Net
Sales” shall mean the total gross receipts for sales of Licensed Products or
practice of Licensed Processes by or on behalf of Viral Genetics or its
Affiliates, and from leasing, renting, or otherwise making Licensed Products
available to others without sale or other dispositions, whether invoiced or
not,
less returns and allowances, packing costs, insurance costs, freight out, taxes
or excise duties imposed on the transaction (if separately invoiced and paid),
and wholesaler and cash discounts in amounts customary in the trade to the
extent actually granted. No deductions shall be made for commissions,
or for the costs of collections. Net Sales shall also include the
fair market value of any non-cash consideration received by Licensee or its
Affiliates for the sale, lease, or transfer of Licensed Products or Licensed
Processes.
“Patent
Rights” shall mean all of the following intellectual property:
a)
the
United States and foreign patents and/or patent
applications, provisional patent applications, and invention
disclosures referred to in section 3 of Exhibit C;
b)
United
States and foreign patents issued from the applications referred to in section
3
of Exhibit C and from divisionals and continuations of these
applications;
c)
claims
of U.S. and foreign continuation-in-part applications, and of the resulting
patents, that are directed to subject matter specifically described in the
U.S.
and foreign applications referred to in section 3 of Exhibit C;
d)
claims
of all foreign patent applications, and of the resulting patents, that are
directed to subject matter specifically described in the United States patents
and/or patent applications described in this Exhibit; and any reissues of United
States patents described in this Exhibit
“Licensed
Process(es)” shall mean any process, art, or method that is covered in whole or
in part by an issued, unexpired claim or a pending claim contained in the Patent
Rights.
“Licensed
Product(s)” shall mean any:
a)
product or part thereof that is covered in whole or in part by an issued,
unexpired claim or a pending claim contained in the Patent Rights in the country
in which any such product or part thereof is made, used or sold;
and
b)
product, apparatus, or part thereof that is manufactured by using a process
covered in whole or in part by an issued, unexpired claim or a pending claim
contained in the Patent Rights in the country in which any Licensed Processes
is
used.
“Affiliate(s)”
shall mean every corporation, or entity, which, directly or indirectly, or
through one or more intermediaries, controls, is controlled by, or is under
common control with Viral. For the purposes of this definition, the
term “control” means (a) beneficial ownership of at least fifty percent (50%) of
the voting securities of a business organization with voting securities, or
(b)
a fifty percent (50%) or greater interest in the net assets or profits of a
partnership or business organization without voting securities.
16
