CONSULTING AGREEMENT
This
Consulting Agreement (the “Agreement”) dated as of November 17, 2006 is by and
between OrthoLogic Corp., a Delaware corporation (the “Company”), and Xxxxx X.
Xxxxx, Ph.D. (“Consultant”).
RECITALS
A. The
Company and Consultant are parties to a Separation Agreement and Release
dated
the date hereof (the “Separation Agreement”), pursuant to which Consultant
ceased to be an officer and employee of the Company.
B. The
Company desires to engage Consultant, and Consultant desires to accept such
engagement, on the terms and conditions set forth in this
Agreement.
C. The
Company and Consultant are parties to an Invention, Confidential Information
and
Non-Competition Agreement dated February 9, 1999 (“Invention Agreement”), which
shall survive the termination of Consultant’s employment and the entry into this
Agreement and shall remain in full force and effect
AGREEMENT
In
consideration of the conditions and covenants contained herein, the parties
agree as follows:
1. Engagement.
The Company hereby engages Consultant and Consultant hereby accepts such
engagement with the Company, on the terms and conditions set forth in this
Agreement (the “Engagement”).
2. Duties
and Performance.
(a) During
the Engagement, Consultant shall report to the President of the Company and
shall perform such consulting services for the Company as the Company (acting
through its President) may reasonably request in writing. During the Engagement,
Consultant shall devote substantially all of his business time, attention,
and
energies to the Company on an exclusive basis, shall give undivided loyalty
to
the Company and shall use his best efforts to advance the interests of the
Company; provided, that this Section 2(a) shall not prohibit Consultant from
engaging in consulting or other services for another entity for up to five
days
per calendar month after the expiration of the Initial Term if such consulting
or other services are disclosed in writing in advance to the
Company.
(b) Consultant
shall not have, nor shall Consultant represent to any party that Consultant
has,
any power or authority to enter into written or oral agreements on behalf
of the
Company or otherwise bind the Company.
(c) Consultant
shall provide the services hereunder at Consultant’s home or at one or more
other offsite locations to be determined by Consultant, at Consultant’s expense,
if any, subject to Section 4(c), below. Consultant shall not have access
to the
Company’s internal IT network. Information and documents that Consultant
believes are necessary to perform his services hereunder shall be provided
to
Consultant, in the discretion of the Company, upon written request to the
Company’s President. Consultant shall not visit the Company’s premises except
upon, and in accordance with, the invitation of the Company’s President or
Executive Chairman.
(d) Consultant
shall be responsible for providing, at Consultant’s expense, all necessary
equipment and supplies for the performance of his services
hereunder.
3. Term.
The Engagement shall commence on the date hereof and, unless earlier terminated
as provided herein, shall continue until and expire on December 31, 2007
(the
“Term”). The Company and Consultant shall meet on or about September 30, 2007 to
discuss extending the Term beyond December 31, 2007.
4. Fees,
Benefits and Expenses.
(a) Ten
days
after the signing of this Agreement, the Company shall pay to Consultant
a
one-time administrative payment in the amount of $40,000 to cover Consultant’s
start-up expenses.
(b) During
the Term, the Company shall pay to Consultant a consulting fee at the rate
of
$250,000 per year, subject to required withholdings, if any, payable in arrears
in equal monthly installments or, at the discretion of the Company, on the
Company’s regular employee payroll schedule (the “Consulting Fee”).
(c) The
Company shall pay or reimburse Consultant for all reasonable travel and other
expenses incurred or paid by Consultant in connection with the performance
of
services under this Agreement, provided that such expenses are approved in
advance in writing by the Company. Payment shall be made within 30 days
following the presentation of expense statements or vouchers and supporting
information consistent with the Company’s reimbursement policies; provided,
that the
Company shall not in any event reimburse Consultant for (i) first class or
business class travel or (ii) entertainment expense not specifically approved
in
writing in advance by the Company.
(d) The
Company shall promptly reimburse Consultant for the cost of Consultant’s
purchase under COBRA of health and dental insurance, including dependent
care
coverage, during the Term (the “Benefit Reimbursement”). Consultant shall be
responsible for making all necessary elections, making the necessary payments
and providing reasonable documentation to the Company evidencing such payments.
(e) Except
as
expressly provided in this Section 4, the Company shall have no obligation
to
provide any health, welfare, retirement, employee or other benefits to
Consultant.
5. Termination.
Consultant’s Engagement by the Company shall terminate as set forth below. No
termination shall affect any rights or obligations accruing prior thereto
or any
continuing obligations of the parties hereunder.
(a) The
Engagement shall be terminable by the Company during the first 123 days of
the
Term (the “Initial Term”) only for cause. Thereafter, the Engagement will be
terminable by either party with or without cause upon 60 days prior written
notice. If the Company terminates the Engagement during the Initial Term
for
cause, the Company shall pay Consultant the accrued and unpaid Consulting
Fee,
Benefit Reimbursement and expense reimbursements through the date of such
termination and the Company shall have no further obligation to pay any amounts
or provide any benefits hereunder. If the Company terminates the Engagement
during the Initial Term without cause, the Company shall pay Consultant the
accrued and unpaid expense reimbursements through the date of such termination
and the Consulting Fee and Benefit Reimbursement for the remainder of the
Initial Term plus 60 days, after which the Company shall have no further
obligation to pay any amounts or provide any benefits hereunder. If the Company
terminates the Engagement after the Initial Term with or without cause, the
Company shall pay Consultant the accrued and unpaid Consulting Fee, Benefit
Reimbursement and expense reimbursements through the later of the date of
such
termination or 60 days after the expiration of the Initial Term and the Company
shall have no further obligation to pay any amounts or provide any benefits
hereunder.
(b) Either
party may terminate the Engagement for cause upon 15 days prior written notice,
which shall specify the cause for the termination. Cause shall include any
of
the following occurring after the date hereof: (i) material neglect of duties,
(ii) material violations of corporate policies (including confidentiality
and
xxxxxxx xxxxxxx policies) established by the Company, (iii) material breach
of
the Separation Agreement or the Invention Agreement or any other material
agreement between Consultant and the Company and (iv) commission of one or
more
acts of dishonesty that negatively affect the Company or Consultant’s standing
in the scientific community or that challenge Consultant’s research or
scientific integrity. However, if the reason for termination is curable,
and the
party receiving notice cures the specified cause during such 15-day period,
the
Engagement shall not terminate.
(c) Additionally,
the Engagement shall terminate immediately upon the death or disability of
the
Consultant. For this purpose, the Consultant shall be deemed to be disabled
if
he is unable substantially to perform the duties required by the Engagement,
as
determined by a responsible and licensed physician, for a continuous period
of
60 days or for any 60 days within any 120-day period. In the event of such
termination during the Initial Term, the Company shall pay to Consultant,
or
Consultant’s estate, as the case may be, the Consulting Fee for the remainder of
the Initial Term plus 60 days.
(d) Upon
termination of this Agreement for any reason, Consultant shall immediately
return any and all things in his possession or control belonging to the Company,
including without limitation, computers, files and documents (whether in
electronic or hard copy format).
6. Restrictive
Covenants.
(a) Consultant
acknowledges and recognizes that prior to and during the Term he has been
and
will be privy to confidential information of the Company. Accordingly, in
consideration of the promises contained herein and the consideration to be
received by Consultant hereunder, without the prior written consent of the
Company, Consultant shall not, at any time during the Term or within 180
days
thereafter (x) “engage” (as hereinafter defined) in any Competing Business (as
hereinafter defined) in the United States, Canada or Europe, or (y) directly
or
indirectly (i) induce, solicit or encourage employees of the Company or any
direct or indirect subsidiary thereof to terminate their employment with
the
Company or any such direct or indirect subsidiary, whether or not in connection
with commencing employment with a Competing Business or (ii) induce or encourage
any entity or person with which the Company or any direct or indirect subsidiary
thereof has a business relationship to terminate or alter such business
relationship. As used herein, “Competing Business” shall mean any person or
organization that is designing, researching, developing, producing, marketing,
distributing, leasing, licensing or selling a pharmaceutical that is competitive
with any product or product candidate that is actively being designed,
researched, developed, produced, marketed, distributed, leased, licensed
or sold
by the Company during the term of this Agreement (a “Conflicting Product”). For
the avoidance of doubt, Conflicting Products shall include medical devices
that
are combination products involving the use of one or more pharmaceuticals
that
constitute Conflicting Products, but shall not include medical devices that
are
not combination products involving the use of such pharmaceuticals. For purposes
of this Section 6, “engage” shall mean to serve as an officer, director,
consultant or employee of or to beneficially own more than 2% of the outstanding
equity of a Competing Business. It is agreed that a violation of the covenants
in this Section 6 is not curable for purposes of Section 5(b) of this Agreement.
(b) Consultant
understands that the foregoing restrictions may limit his ability to earn
a
livelihood after the termination of this Agreement in a business similar
to the
business of the Company or any subsidiary or affiliate thereof, but he
nevertheless believes that he has received and will receive sufficient
consideration provided hereunder to justify clearly such restrictions which,
in
any event (given his education, skills and ability), Consultant does not
believe
would prevent him from earning a living.
(c) It
is
agreed that the covenant in the foregoing Section 6(a) supersedes the
restrictive covenant in Section 6 of Consultant’s Invention Agreement. All other
provisions in the Invention Agreement shall remain in full force and
effect.
7. Injunctive
Relief.
It is agreed that the restrictions contained in Section 6 “Restrictive
Covenants” of this Agreement are reasonable, but it is recognized that damages
in the event of the breach of any of those restrictions will be difficult
or
impossible to ascertain; and, therefore, Consultant agrees that, in addition
to
and without limiting any other right or remedy the Company may have, the
Company
shall have the right to obtain an injunction against Consultant issued by
a
court of competent jurisdiction enjoining any such breach if and to the extent
that the Company can establish that it has met its burden in demonstrating
that
it satisfies the corresponding legal standards for imposing injunctive relief
under Arizona law. Moreover, nothing in this Agreement shall limit any rights
or
remedies otherwise available to the Company or Consultant, including recovering
damages for any breach of this Agreement.
8. Part
of Consideration.
Consultant also agrees, acknowledges, covenants, represents and warrants
that he
is fully and completely aware that, and further understands that, the
restrictive covenants contained in Section 6 “Restrictive Covenants” of this
Agreement and in the Invention Agreement, which are incorporated herein,
are an
essential part of the consideration for the Company entering into this Agreement
and that the Company is entering into this Agreement in full reliance on
such
acknowledgments, covenants, representations and warranties.
9. Nondelegability
of Consultant’s Rights and Company Assignment Rights.
The obligations, rights and benefits of Consultant hereunder are personal
and
may not be delegated, assigned or transferred in any manner whatsoever, nor
are
such obligations, rights or benefits subject to involuntary alienation,
assignment or transfer. Upon mutual agreement of the parties, the Company
upon
reasonable notice to Consultant may transfer Consultant to an affiliate of
the
Company, which affiliate shall assume the obligations of the Company under
this
Agreement. This Agreement shall be assigned automatically to any entity merging
with or acquiring the Company.
10. Governing
Law.
This Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of Arizona, exclusive of the conflict
of law
provisions thereof, and the parties agree that any litigation pertaining
to this
Agreement shall be in courts located in Maricopa County, Arizona.
11. Attorneys’
Fees.
If any party finds it necessary to employ legal counsel or to bring an action
at
law or other proceeding against the other party to enforce any of the terms
hereof, the party prevailing in any such action or other proceeding shall
be
paid by the other party its reasonable attorneys’ fees as well as court costs
all as determined by the court and not a jury; provided, that nothing in
this
Section 11 shall be implied as a waiver of either party's right to request
a
jury trial.
12. Notices.
All notices and other communications required or permitted to be given under
this Agreement shall be in writing and shall be considered given and delivered
when personally delivered to the party to whom such notice or communication
is
addressed, or one business day after posting with an overnight courier, or
when
confirmation is received if sent by facsimile, or three business days after
mailing via certified mail through the United States Postal Service, postage
prepaid, with return receipt requested, properly addressed to a party at
the
address set forth below, or at such other address as such party shall have
specified by notice given in accordance with this Section:
|
If
to the Company, to:
|
0000
X.
Xxxxxxxxxx Xx.
Xxxxx,
XX
00000
Attn:
President
Fax:
(000) 000-0000
|
If
to Consultant, to:
|
Xxxxx
X. Xxxxx, Ph.D.
|
0000
X.
000xx Xxx
Xxxxxxxxxx,
XX 00000
|
With
fax and email copies to:
|
Xxxx
X. Xxxx, Esq.
|
Holm,
Wright, Hyde & Xxxx PLC
Fax:
(000) 000-0000
Email:
xxxxx@xxxxxxxxxx.xxx
13. Entire
Agreement.
This Agreement and the Invention Agreement constitute the final written
expressions of the agreement between the parties with regard to Consultant’s
engagement and are complete and exclusive statements of those terms. They
supersede all understandings and negotiations concerning the matters specified
herein and therein. Any representations, promises, warranties or statements
made
by either party that differ in any way from the terms of this written Agreement
or the Invention Agreement shall be given no force or effect. The parties
specifically represent, each to the other, that there are no additional or
supplemental agreements between them related in any way to the matters herein
contained unless specifically included or referred to herein. No addition
to or
modification of any provision of this Agreement and the Invention Agreement
shall be binding upon any party unless made in writing and signed by all
parties.
14. Waiver.
The
waiver by either party of the breach of any covenant or provision in this
Agreement shall not operate or be construed as a waiver of any subsequent
breach
by either party.
15. Invalidity
of any Provision.
The provisions of this Agreement are severable, it being the intention of
the
parties hereto that should any provisions hereof be invalid or unenforceable,
such invalidity or unenforceability of any provision shall not affect the
remaining provisions hereof, but the same shall remain in full force and
effect
as if such invalid or unenforceable provisions were omitted.
16. Attachments
Incorporated by Reference.
The Invention Agreement and all attachments or exhibits to this Agreement
are
incorporated herein by this reference as though fully set forth herein. In
the
event of any conflict, contradiction or ambiguity between the terms and
conditions in this Agreement and any of its attachments, the terms of this
Agreement shall prevail.
17. Interpretation
of Agreement.
When a reference is made in this Agreement to an article or section, such
reference shall be to an article or section of this Agreement unless otherwise
indicated. The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words “include,” “includes,” or “including” are used in
this Agreement, they shall be deemed to be followed by the words “without
limitation.” Headings in this Agreement are for informational purposes only and
shall not be used to construe the intent of this Agreement.
18. Binding
Effect; Benefits.
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective heirs, successors, executors, administrators
and assigns. Notwithstanding anything contained in this Agreement to the
contrary, nothing in this Agreement, expressed or implied, is intended to
confer
on any person other than the parties hereto or their respective heirs,
successors, executors, administrators and assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
19. Effect
of Revocation of Separation Agreement.
Notwithstanding anything herein to the contrary, if Consultant revokes the
Separation Agreement as permitted therein, this Agreement shall be null and
void, ab
initio,
and
neither party shall have any liabilities or obligations whatsoever
hereunder.
20. Counterparts.
This
Agreement may be executed simultaneously in any number of counterparts, each
of
which shall be deemed an original but all of which together shall constitute
one
and the same agreement.
IN
WITNESS WHEREOF, Consultant and the Company have executed this Agreement
as of
the date first written above.
| Company |
Consultant
|
|
| ORTHOLOGIC CORP. | ||
|
By:
|
/s/
Xxxx X. Xxxxxxxx
|
/s/
Xxxxx X. Xxxxx, Ph.D.
|
|
Xxxx
X. Xxxxxxxx, III
|
Xxxxx
X. Xxxxx, Ph.D.
|
|
|
Executive
Chairman
|
||
