EXHIBIT 10.4
CONSULTANCY AGREEMENT, dated as of June 4, 2002
(the "Agreement"), between LARGE SCALE BIOLOGY
CORPORATION, a Delaware corporation ("LSBC"), and
XXXXXX X. XXXXXXXX, PH.D. (the "Consultant").
-------------------------------------------------
In consideration of the Consultant's agreement to supply services under
this Agreement and the mutual agreements set forth below, the sufficiency of
which is hereby acknowledged, LSBC and the Consultant agree as follows:
1. Term and Termination. This Agreement shall continue in full force and
effect for a period commencing on the date of this Agreement and terminating on
December 31, 2002 (the "Term"); provided, however, that this Agreement may be
earlier terminated, (i) at the sole discretion of LSBC, at any time upon 15
days' written notice to the Consultant or (ii) at the sole discretion of the
Consultant, at any time upon 15 days' written notice to LSBC.
2. Consulting Services. During the Term, the Consultant will provide LSBC
with such services as it shall reasonably request within the scope of the
Consulting Services (as defined below). In the performance of these duties, the
Consultant shall provide LSBC with the benefits of his experience and best
judgment and will render such services in good faith. The Consultant, when
requested by LSBC to provide services, shall make available such time in
rendering the Consulting Services as shall be mutually agreed upon and
acceptable to the Consultant and LSBC. The Consultant's duties (the "Consulting
Services"), may include, but will not necessarily be limited to, (i) further
development of virus detection technology through continued access to and use of
virus microbanding apparatus and associated instrumentation (either in LSBC's
Germantown facility or, for example in case handling of pathogenic viruses is
required, in an appropriate facility as agreed upon by the Consultant and LSBC),
and (ii) assistance in the development and preparation of proposals to fund such
work.
3. Expenses. LSBC shall reimburse the Consultant for reasonable and
customary out-of-pocket expenses, including travel expenses, actually incurred
in connection with the Consulting Services and authorized in advance by LSBC.
4. Compensation. In connection with his previous employment with LSBC, the
Consultant received (i) an option to purchase 75,000 shares (as adjusted for the
1.5-to-one stock split effective August 9, 2000) of common stock of LSBC (the
"Common Stock") at an exercise price of $7.50 per share (as adjusted for such
stock split) (the "1999 Options"), granted to the Consultant on December 31,
1999 pursuant to LSBC's 2000 Stock Incentive Plan (the "Plan"), as successor to
the Predecessor Plans (as defined in the Plan), and the Notice of Grant of Stock
Option, dated December 31, 1999, between LSBC and the Consultant (the "1999
Option Notice"), of which options to purchase 69,375 shares had vested as of the
date of this Agreement and (ii) options to purchase 18,000 shares of Common
Stock at an exercise price of $6.19 per share (the "2001 Options" and, together
with the 1999 Options, the "Options") granted to the Consultant on March 9, 2001
pursuant to the Plan and the Notice of Grant of Stock Option, dated March 9,
2001, between LSBC and the Consultant (the "2001 Option Notice" and together
with the 1999 Option Notice, the "Option Notices"), of which options to purchase
4,500 shares had vested as of the date of this Agreement. Options to purchase
any additional shares of Common Stock or other securities of LSBC granted to the
Consultant pursuant to the Plan, the
Option Notices or otherwise are hereby terminated. As compensation for the
Consulting Services, (x) notwithstanding that the Consultant is no longer
employed by LSCB, the Options shall continue to vest, in accordance with the
terms of the Plan and the applicable Option Notice, until the end of the Term or
until this Agreement is terminated pursuant to Section 1, whichever is earlier,
and (y) the exercise period with respect to the Options shall be extended and
the Options shall remain exercisable until June 3, 2007, provided that in no
event shall an Option remain exercisable past the Expiration Date (as defined in
the applicable Option Notice). Except as otherwise provided herein, the Options
shall be exercised in accordance with the terms of the Plan and the applicable
Option Notice.
5. Noncompetition. (a) The Consultant acknowledges and recognizes his
possession of secret, confidential or proprietary information pertaining to the
business of LSBC, its affiliates or subsidiaries (including without limitation,
trade secrets, technology, know how, designs, specifications, software, source
code, protocols, algorithms, business strategies or plans, or other intellectual
property) and acknowledges the highly competitive nature of the business of LSBC
and its affiliates and subsidiaries and accordingly agrees that, for and in
consideration of the payments and promises made by LSBC herein and other good
and valuable consideration, he shall not, during the Term, directly or
indirectly, as an owner, partner, member, shareholder (except to the extent
specified herein), director, consultant, agent, employee or co-venturer of any
Person (as defined herein), compete commercially in the Business (as defined
herein). For purposes of this Agreement, "Business" shall mean the businesses of
LSBC or its affiliates or subsidiaries, including the businesses of (i) making
or having made, designing, developing, manufacturing, selling or having sold,
buying, acquiring, licensing, leasing, furnishing, or maintaining or using
products, including diagnostics, diagnostic markers, novel targets for drug
discovery, drug combinations, improved drugs, related software, hardware,
instruments or machines, and processes related to researching, finding,
isolating, analyzing, identifying, and characterizing proteins; (ii)
researching, finding, isolating, analyzing, identifying, and characterizing
proteins, characterizing disease processes at the protein level by the
systematic study of the protein complement of an organism, and/or compiling
protein databases, in each case for commercial purposes; (iii) leasing or
selling instruments, systems protein databases and related research services
anywhere in the world (nothing in this definition is intended to narrow the
recognition that the products and processes and databases developed by LSBC, or
its affiliates or subsidiaries, may have applicability beyond their uses in
association with proteins and would be used, sold or leased within the scope of
the Business for all such uses), and (ii) the term "Person" shall mean an
individual, a corporation, an association, a partnership, an estate, a trust and
any other entity or organization. Notwithstanding the foregoing, the Consultant
may own a passive investment representing an interest of less than 5% of any
outstanding class of shares of any Person directly or indirectly competing in
the Business (x) if such securities are listed on a national or regional
securities exchange or publicly traded in the "over-the-counter" market or (y)
with the consent of LSBC, which consent shall not be unreasonably withheld.
(b) LSBC and the Consultant intend that this Section 5 be enforced to the
fullest extent permissible under applicable law and by injunctive or other
appropriate equitable relief. If any portion of this Section 5 is found to be
unenforceable, LSBC and the Consultant intend that the remaining provisions
shall be fully enforced upon their terms. The Consultant agrees that this
Section 5 is fair and reasonable, and that this Section 5 will not unfairly or
unreasonably restrict the Consultant's ability to earn a living or pursue his
chosen career or profession.
6. Confidentiality. (a) The Consultant further covenants and agrees that he
will not divulge (except as may otherwise be permitted pursuant to this
Agreement) any secret, confidential or proprietary information pertaining to the
business of LSBC or any of its affiliates or subsidiaries (including without
limitation, trade secrets, technology, know how, designs, specifications,
software, source code, protocols, algorithms, business strategies or plans, or
other intellectual property), unless first approved in writing by LSBC. For
purposes of this Agreement, the term secret, proprietary or confidential
information does not include any information that is or becomes generally
available to and known by the public (other than as a result of an unpermitted
disclosure directly or indirectly by you or any third party).
(b) The Consultant agrees that he will not, during the term of this
Agreement, improperly use or disclose to LSBC any proprietary information or
trade secrets of any former or current employer or other person or entity with
which he has an agreement or duty to keep in confidence information acquired by
him in confidence, and that he will not bring onto the premises of LSBC or any
of its affiliates or subsidiaries any unpublished document or proprietary
information belonging to such employer, person or entity unless consented to in
writing by such employer, person or entity.
(c) The Consultant recognizes that LSBC, and its affiliates and
subsidiaries, have received from third parties confidential or proprietary
information of such third parties subject to a duty on the part of LSBC and its
affiliates and subsidiaries to maintain the confidentiality of such information
and to use it only for certain limited purposes. The Consultant agrees that,
insofar as he is aware of the confidential status of such information, he owes
LSBC and such affiliates and subsidiaries an ongoing duty to hold all such
confidential or proprietary information in confidence and not to disclose it to
any person, firm or corporation or to use it except as necessary in connection
with this Agreement or as required by law.
(d) The Consultant agrees that upon or promptly after the termination of
this Agreement for any reason, he will provide to LSBC a reasonably detailed
inventory of all records, files, notes, memoranda, reports, work product and
similar items, and any manuals, drawings, sketches, plans, tape recordings,
computer programs, disks, cassettes and other physical representations of any
information, relating to LSBC or any of its affiliates or subsidiaries, or to
the business of LSBC or any of its affiliates or subsidiaries, whether or not
constituting confidential information (the "Data Inventory") and hereby
represents and warrants that the Data Inventory shall upon delivery represent a
complete and accurate inventory of the aforesaid materials in the Consultant's
possession. Within five business days following the Consultant's receipt from
the Chairman of LSBC of a return copy of such Data Inventory specifying those
elements that are to be returned to LSBC, the Consultant shall return to LSBC
all of the items so marked for return on such Data Inventory, together with any
other property then in his possession belonging to LSBC or any of its affiliates
or subsidiaries. The Consultant further agrees that he will not retain or use
for his account at any time any trade names, trademark or other proprietary
business designation used or owned in connection with the business of LSBC or
its affiliates or subsidiaries.
(e) The Consultant acknowledges and agrees that LSBC's remedies at law
for a breach or threatened breach of any of the provisions of this Section 6 or
of Section 5 or 7 would be inadequate and, in recognition of this fact, the
Consultant agrees that, in the event of such a breach or threatened breach, in
addition to any remedies at law, LSBC, without posting any bond, shall be
entitled to obtain equitable relief in the form of specific performance,
temporary restraining order, temporary or permanent injunction or any other
equitable remedy which may then be available.
7. Non-Conflicting Agreements. The Consultant has no, and will not
enter into any, agreements or obligations which would prevent or interfere with
the performance of his obligations hereunder.
8. Indemnity. The Consultant shall be indemnified by LSBC against all
judgments, payments in settlement (whether or not approved by a court), fines,
penalties and other reasonable costs and expenses (including reasonable fees and
disbursements of counsel) imposed upon or incurred by the Consultant in
connection with or resulting from any action, suit, proceeding, investigation or
claim, whether civil, criminal, administrative, legislative or other (including
any criminal action, suit or proceeding in which the Consultant enters a plea of
guilty or nolo contendere or its equivalent), or any appeal relating thereto
which is brought or threatened by any other person, governmental authority or
instrumentality (herein called a "third-party action") and in which the
Consultant is made a party or is otherwise involved by reason of his being or
having been a consultant of LSBC pursuant to this Agreement or by reason of any
action or omission, or alleged action or omission by the Consultant in his
capacity as such Consultant, if either (a) the Consultant is the prevailing
party, on the merits or otherwise, in defending such third-party action or (b)
in the judgment of a court of competent jurisdiction or, in the absence of such
determination, in the reasonable judgment of LSBC, the Consultant acted in good
faith and in material compliance with this Agreement and in what he reasonably
believed to be the best interest of LSBC and, in addition, in any criminal
action, had no reasonable cause to believe that his conduct was unlawful. In
case the Consultant is successful, on the merits or otherwise, in defending part
of such action, or, in the judgment of such a court or LSBC, has met the
applicable standard of conduct specified in the preceding sentence with respect
to part of such action, he shall be indemnified by LSBC against the judgments,
settlement payments, fines, penalties, and other costs and expenses attributable
to such part of such action. The foregoing rights of indemnification shall be in
addition to any rights which the Consultant may otherwise be entitled. In any
case in which, in the judgment of LSBC, the Consultant will be entitled to
indemnification under the foregoing provisions of this Section 9, such amounts
as they deem necessary to cover, the reasonable costs and expenses incurred by
the Consultant in connection with the action, suit, proceeding, investigation or
claim prior to final disposition thereof may be advanced to the Consultant upon
receipt of an undertaking by or on behalf of the Consultant to repay such
amounts if it is ultimately determined that he is not so entitled to
indemnification.
9. Relationship of the Parties. The Consultant's position will be
that of an independent contractor and not an employee or agent of LSBC.
Consequently, except as otherwise provided in the letter agreement, dated the
date hereof (the "Separation Agreement"), between the parties hereto, the
Consultant will not be entitled to participate during the Term in any of the
employee benefit plans, programs or arrangements of LSBC or any of its
affiliates or
subsidiaries. The Consultant shall be responsible for and pay all taxes related
to the receipt of any payments hereunder.
10. Assignment; Effect of Termination. This Agreement is personal to
the Consultant and shall not be assignable by the Consultant. This Agreement may
be assigned by LSBC to any successor thereto or to any of its affiliates or
subsidiaries. Termination of this Agreement shall not affect the Consultant's
obligations set forth in Sections 5 and 6 or LSBC's obligations set forth in
Sections 3 and 4.
11. Entire Agreement; Amendment and Modification. This Agreement and
the Option Notices, except as they may be amended or modified in a writing
between the parties, constitute the entire agreement between the parties with
respect to the Consultant's service as a consultant of LSBC and terminate and
supersede all other or prior written or oral agreements or understandings
between the parties with respect thereto; provided that the Separation
Agreement, the Inventions Agreement (as defined in the Separation Agreement) and
the License Agreement (as defined in, and amended by, the Separation Agreement)
shall continue in full force and effect and are not affected hereby. No
amendment, modification, waiver, termination or discharge of any provision of
this Agreement, nor any consent to any departure therefrom, shall in any event
be effective unless the same shall be in writing specifically identifying this
Agreement and signed by LSBC and the Consultant.
12. Severability. If any provision of this Agreement shall be held
invalid, illegal or unenforceable in any jurisdiction, for any reason,
including, without limitation, the duration of such provision, its geographical
scope or the extent of the activities prohibited or required by it, then, to the
full extent permitted by law (a) all other provisions hereof shall remain in
full force and effect in such jurisdiction and shall be liberally construed in
order to carry out the intent of the parties hereto as nearly as may be
possible, (b) such invalidity, illegality or unenforceability shall not affect
the validity, legality or enforceability of any other provision hereof, and (c)
any court or arbitrator having jurisdiction thereover shall have the power to
reform such provision to the extent necessary for such provision to be
enforceable under applicable law.
13. Headings. The Section headings contained in this Agreement are for
reference only and shall not affect in any way the meaning or interpretation of
this Agreement.
14. Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of California without
regard to principles of conflicts of laws.
15. Counterparts. This Agreement may be signed in counterparts, each
of which shall be an original but which together shall constitute one and the
same agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
first date written above.
LARGE SCALE BIOLOGY CORPORATION
/s/ Xxxx X. Xxxxxx
By: ---------------------
Xxxx X. Xxxxxx, Xx.
President
/s/ Xxxxxx X. Xxxxxxxx, Ph.D.
-----------------------------------
Xxxxxx X. Xxxxxxxx, Ph.D.
Address:
