EXHIBIT 10.2
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (this "AGREEMENT") is executed and delivered as of
July 31, 2003 (the "EFFECTIVE DATE"), by and between Endocare, Inc., a Delaware
corporation (the "COMPANY"), and Xxxx X. Xxxxx ("CONSULTANT"). Each of the
Company and Consultant is referred to herein as a "PARTY," and, collectively, as
the "PARTIES."
RECITALS
WHEREAS, concurrently with the execution of this Agreement, the Company
and Consultant are executing and delivering a Separation Agreement (the
"SEPARATION AGREEMENT") pursuant to which the Company and Consultant are
terminating their employment relationship; and
WHEREAS, SECTION 4 of the Separation Agreement provides that the
Parties shall execute and deliver this Agreement;
NOW, THEREFORE, in consideration of the foregoing recitals, and the
representations, warranties, covenants and promises contained herein, the
adequacy and sufficiency of which are hereby acknowledged, the Parties agree as
follows:
AGREEMENT
1. SERVICES. During the Term (as defined below in SECTION 3),
Consultant shall provide consulting services (the "SERVICES") to the Company, as
and when requested by the Company, including, without limitation, requested
consultation regarding strategic transactions in which the Company is involved,
the Company's customers, suppliers, marketing plans, strategies and tactics, the
Company's employees, the Company's historical transactions, the Company's
competitors and other substantive and strategic issues relevant to the Company's
business. Consultant and the Company mutually shall determine the amount of the
Services that Consultant shall provide; PROVIDED, HOWEVER, that Consultant shall
perform the Services for a minimum of eight (8) hours per calendar quarter.
2. COMPENSATION.
(a) CASH COMPENSATION. In consideration of Consultant's
execution and delivery of this Agreement and the performance of the Services,
the Company shall pay to Consultant $375,000 on the Effective Date.
Notwithstanding anything in this Agreement to the contrary, Consultant shall be
liable to repay to the Company all amounts paid to Consultant pursuant to this
SECTION 2(A) upon the occurrence of any of the following events (each, a
"Payment Cancellation Event"): (i) the conviction of Consultant in a court of
law, or entering a plea of guilty or no contest to, any crime directly relating
to Consultant's activities on behalf of the Company during Consultant's
employment with the Company; or (ii) successful prosecution of an enforcement
action by the Securities and Exchange Commission against Consultant.
(b) BENEFITS. In consideration of Consultant's execution and
delivery of this Agreement and the performance of the Services, during the
twenty-four (24) month period immediately following the Effective Date,
Consultant shall be permitted to continue to participate in the Company's fringe
benefit plans to the extent permitted under applicable law and the terms of such
plans. In the event that continued participation in the Company's insurance
benefit plans is not permissible, then Consultant shall receive a monthly
payment from the Company in an amount sufficient to enable him to purchase
insurance coverage that is substantially equivalent to what he would have
received had he been able to continue to participate in the Company's plans.
This coverage also shall extend to the spouse and dependents of Consultant who
were covered by the relevant fringe benefit plan on the Effective Date.
Notwithstanding the foregoing, the Company shall not be obligated to provide to
Consultant any fringe benefits that are otherwise available to Consultant from
another source (e.g., a subsequent employer).
(c) TREATMENT OF STOCK OPTIONS. In consideration of
Consultant's execution and delivery of this Agreement and the performance of the
Services, all stock options that the Company granted to Consultant prior to
January 1, 2002 automatically shall continue to be subject to the option
agreements that govern such options. In consideration of the Company's execution
and delivery of this Agreement, Consultant agrees that the 200,000 stock options
that the Company granted to Consultant on June 26, 2002 shall be terminated,
effective as of the Effective Date.
(d) COSTS AND EXPENSES. The Company shall bear all costs and
expenses incurred in connection with Consultant's performance of the Services;
PROVIDED, HOWEVER, that Consultant shall not incur aggregate expenses in excess
of $10,000 without the Company's prior written consent.
3. TERM AND TERMINATION. The term of this Agreement (the "TERM") shall
commence on the Effective Date and shall continue until the first anniversary of
the Effective Date, unless terminated by either Party in accordance with this
SECTION 3. Either Party may terminate this Agreement immediately upon giving
written notice thereof to the other Party if the other Party materially breaches
any provision of this Agreement and fails to cure such breach within thirty (30)
days after receipt of written notice from the other Party of such breach.
4. SURVIVAL. The provisions of SECTIONS 2(B) (Benefits), SECTION 4
(Survival), SECTION 5 (Confidentiality), SECTION 6 (Non-Disclosure of Third
Party Information), SECTION 8 (Relationship of the Parties), SECTION 9 (Taxes),
SECTION 10 (Choice of Law), SECTION 11 (Successors and Assigns), SECTION 12
(Attorneys' Fees), SECTION 13 (Interpretation), SECTION 14 (Amendments; Waivers;
Remedies), SECTION 15 (Integration), SECTION 16 (Severability) and SECTION 17
(Counterparts) shall survive any termination of this Agreement. Consultant
agrees that all property (including, without limitation, all equipment, tangible
proprietary information, documents, records, notes, contracts and
computer-generated materials) furnished to or created or prepared by Consultant
incident to Consultant's engagement belongs to the Company and shall be promptly
returned to the Company upon termination of this Agreement. Consultant also
shall cooperate with the Company in the defense of any action brought by any
third party against the Company that relates to Consultant's engagement by the
Company or the Services.
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5. CONFIDENTIALITY. Consultant understands that Consultant's work for
the Company will involve access to and creation of confidential, proprietary and
trade secret information and materials of the Company (collectively,
"CONFIDENTIAL INFORMATION"). Confidential Information includes, without
limitation, any confidential information, ideas or materials of a technical or
creative nature, such as designs and specifications, patent applications and
other confidential materials and concepts relating to the Company's products,
services, processes, technology or other intellectual property rights.
Consultant shall not (a) use Confidential Information for any purpose whatsoever
other than the performance of the Services, or (b) disclose Confidential
Information to any third party.
6. NON-DISCLOSURE OF THIRD PARTY INFORMATION. Consultant represents and
warrants and covenants that Consultant shall not disclose to the Company, or
use, or induce the Company to use, any proprietary information or trade secrets
of others at any time, including but not limited to any proprietary information
or trade secrets of any former employer, if any; and Consultant acknowledges and
agrees that any violation of this provision shall be grounds for Consultant's
immediate termination and could subject Consultant to substantial civil
liabilities and criminal penalties. Consultant further specifically and
expressly acknowledges that no officer or other employee or representative of
the Company has requested or instructed Consultant to disclose or use any such
third-party proprietary information or trade secrets.
7. NON-COMPETITION COVENANT.
(a) In consideration of the Company's execution and delivery
of this Agreement, during the Term Consultant shall not engage in any
Competitive Activity (as defined below) in the Restricted Territory (as defined
below).
(b) The term "COMPETITIVE ACTIVITY" shall mean: (i) any
activity specifically utilizing argon-based cryosurgical equipment or technology
that directly competes with the Company's argon-based cryosurgical equipment
products; or (ii) soliciting for employment or recommending for employment any
person employed by the Company during such person's employment with the Company
(or any affiliate of the Company) or for one (1) year thereafter.
(c) The term "RESTRICTED TERRITORY" shall mean every state,
territory, country or jurisdiction in which the Company carries on business as
of the Effective Date.
(d) Notwithstanding the foregoing, the provisions of this
SECTION 7 shall not prevent Consultant from beneficially owning up to one
percent (1%), on a fully-diluted basis, of the total shares of all classes of
stock outstanding of any corporation having securities listed on the New York
Stock Exchange or the American Stock Exchange, or traded on Nasdaq.
(e) It is the understanding of the Parties that the scope of
the covenants contained in this Section 7, both as to time and area covered, are
necessary to protect the rights of the Company. It is the Parties' intention
that these covenants be enforced to the greatest extent (but to no greater
extent) in time, area and degree of participation as is permitted by the law of
that jurisdiction whose law is found to be applicable to any acts in breach of
these covenants. It being the purpose of this Agreement to govern competition by
Consultant in the Restricted Territory, these covenants shall be governed by and
construed according to that law (from among those jurisdictions arguably
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applicable to this Agreement and those in which a breach of this Agreement is
alleged to have occurred or to be threatened) that best gives them effect. Each
prohibition set forth above in this SECTION 7 shall be deemed, and shall be
construed as, separate and independent agreements between Consultant and the
Company. If any such agreement or any part of such agreement is held invalid,
void or unenforceable by any arbitrator or court of competent jurisdiction, such
invalidity, voidness or unenforceability shall in no way render invalid, void or
unenforceable any other part of them or any separate agreement not declared
invalid, void or unenforceable; and this Agreement shall in such case be
construed as if the invalid, void or unenforceable provisions were omitted.
(f) The Parties agree that the covenants of Consultant not to
compete contained in this SECTION 7 may be assigned by the Company to any person
to whom the Company may transfer all or part of its business or any portion
thereof after the date of this Agreement, whether by sale, merger, operation of
law or otherwise. It is the Parties' intention that these covenants shall inure
to the benefit of any person that may succeed to the Company's business or any
portion thereof with the same force and effect as if these covenants were made
directly with such successor.
(g) The Parties agree that, in the event of breach or
threatened breach of Consultant's covenants in this SECTION 7, the damage or
imminent damage to the value and the goodwill of the Company will be irreparable
and extremely difficult to estimate, making any remedy at law or in damages
inadequate. Accordingly, the Parties agree that the Company shall be entitled to
injunctive relief against Consultant in the event of any breach or threatened
breach of any of such covenants by Consultant, in addition to any other relief
(including, without limitation, damages) available to the Company under this
Agreement or under applicable law.
8. RELATIONSHIP OF THE PARTIES. This Agreement shall not be construed
as creating an agency, partnership, joint venture or any other form of
association, for tax purposes or otherwise, between the Parties; and the Parties
shall at all times be and remain independent contractors. Except as expressly
agreed by the Parties in writing, neither Party shall have any right or
authority, express or implied, to assume or create any obligation of any kind,
or to make any representation or warranty, on behalf of the other Party or to
bind the other Party in any respect whatsoever. Neither Party shall have any
obligation or duty to the other Party except as expressly and specifically set
forth herein, and no such obligation or duty shall be implied by or inferred
from this Agreement or the conduct of the Parties hereunder. Except as provided
above in SECTION 2 (Compensation), Consultant shall not be entitled to any of
the benefits that the Company may make available to its employees, such as group
health, life, disability or worker's compensation insurance, profit-sharing or
retirement benefits, and the Company shall not withhold or make payments or
contributions therefor or obtain such protection for Consultant.
9. TAXES. Consultant shall be solely responsible for all tax returns
and payments required to be filed with or made to any federal, state or local
tax authority with respect to Consultant's performance of the Services and
receipt of compensation under this Agreement. Consultant acknowledges and agrees
that it shall be Consultant's obligation to report as income all compensation
received by Consultant pursuant to this Agreement and to pay any withholding
taxes, self-employment taxes, and social security, unemployment or disability
insurance or similar items, including interest and penalties thereon, in
connection with any payments made to Consultant by the Company pursuant to this
Agreement. Consultant agrees to indemnify, hold harmless and, at the Company's
discretion, defend the Company against any and all liability related thereto,
including, without limitation, any taxes, penalties and interest the Company may
be required to pay as a result of Consultant's failure to report such
compensation or make such payments.
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10. CHOICE OF LAW. Except as otherwise provided in SECTION 7
(Non-Competition Covenant), this Agreement, in all respects, shall be
interpreted, enforced and governed by and under the internal laws of the State
of California, without regard to conflicts of law principles.
11. SUCCESSORS AND ASSIGNS. Consultant shall have no right to assign
and shall not assign or purport to assign any rights or obligations under this
Agreement. This Agreement may be assigned or transferred by the Company; and
nothing in this Agreement shall prevent the consolidation, merger or sale of the
Company or a sale of any or all or substantially all of its assets. Subject to
the foregoing restriction on assignment by Consultant, this Agreement shall
inure to the benefit of and be binding upon each of the Parties; the affiliates,
officers, directors, agents, successors and assigns of the Company; and the
heirs, devisees, spouses, legal representatives and successors of Consultant.
12. ATTORNEYS' FEES. In the event that either Party asserts a claim for
breach of this Agreement or seeks to enforce its terms, the prevailing Party in
any such proceeding shall be entitled to recover costs and reasonable attorneys'
fees.
13. INTERPRETATION. This Agreement shall be construed as a whole,
according to its fair meaning, and not in favor of or against either Party.
Sections and section headings contained in this Agreement are for reference
purposes only, and shall not affect in any manner the meaning or interpretation
of this Agreement. Whenever the context requires, references to the singular
shall include the plural and the plural the singular.
14. AMENDMENTS; WAIVERS; REMEDIES. This Agreement may not be amended or
waived except by a writing signed by Consultant and by a duly authorized officer
of the Company. Failure to exercise any right under this Agreement shall not
constitute a waiver of such right. Any waiver of any breach of this Agreement
shall not operate as a waiver of any subsequent breaches. All rights or remedies
specified for a Party herein shall be cumulative and in addition to all other
rights and remedies of the Party hereunder or under applicable law.
15. INTEGRATION. This Agreement, together with any exhibits attached
hereto, is intended to be the final, complete and exclusive statement of the
Parties' agreement regarding the subject matter hereof and may not be
contradicted by evidence of any prior or contemporaneous statements or
agreements. Notwithstanding the foregoing, this Agreement shall not supersede or
otherwise affect any agreements previously or concurrently executed by
Consultant relating to the Company's proprietary information or intellectual
property rights, or relating to Consultant's non-interference or
non-solicitation obligations relative to the Company's business or employees. To
the extent that the practices, policies or procedures of the Company, now or in
the future, apply to Consultant and are inconsistent with the terms of this
Agreement, the provisions of this Agreement shall control. Any subsequent change
in Consultant's duties, position or compensation shall not affect the validity
or scope of this Agreement.
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16. SEVERABILITY. If any provision of this Agreement shall be held by a
court or arbitrator to be invalid, unenforceable or void, such provision shall
be enforced to the fullest extent permitted by law, and the remainder of this
Agreement shall remain in full force and effect. In the event that the time
period or scope of any provision is declared by a court or arbitrator of
competent jurisdiction to exceed the maximum time period or scope that such
court or arbitrator deems enforceable, then such court or arbitrator shall
reduce the time period or scope to the maximum time period or scope permitted by
law, except as otherwise provided in SECTION 7 (Non-Competition Covenant).
17. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original of this Agreement, but
all of which together shall constitute one and the same instrument.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Parties hereby execute this Consulting
Agreement as of the date first above written.
ENDOCARE, INC.
By: /s/ Xxxxxxx X. Xxxxx /s/ Xxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx Xxxx X. Xxxxx
Title: President & Chief Operating Officer
[SIGNATURE PAGE TO CONSULTING AGREEMENT]
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