Exhibit 10.1
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT ("AGREEMENT") IS ENTERED BETWEEN NATIONAL
SCIENTIFIC CORPORATION AND XXX X. XXXX, EFFECTIVE THIS 1ST DAY OF FEBRUARY,
2002. "NSC," OR "COMPANY" AS USED IN THIS AGREEMENT MEANS NATIONAL SCIENTIFIC
CORPORATION. "CONTRACTOR" OR "XXXX" AS USED IN THIS AGREEMENT MEANS XXX X. XXXX.
For good and valuable consideration, as set forth herein, the parties agree
as follows:
1. RECOGNITION OF PAST PERFORMANCE; DISPLACEMENT OF EXISTING CONTRACTS: NSC
wishes to recognize Xxxx'x performance without salary for the first several
years of the Company's existence. This Agreement supersedes and entirely
revokes, abrogates, and displaces any and all existing agreements between the
parties hereto regarding compensation for services rendered to the Company,
other than the waiver on August 16, 2001, the Settlement Agreement of December
2002, and the Option Agreement of December 2001, and the Board of Director's
Operating Plan of February 13, 2002, all of which remain in force. If any of
these specific prior Agreements are in conflict with this Consulting Agreement,
the terms of those specific prior Agreements shall prevail.
2. POSITION AND DUTIES OF CONTRACTOR: As of the effective date of this
Agreement, Xxxx is retained by NSC in the position of Founder and Managing
Director. Xxxx will perform such duties as are assigned by the Board of
Directors consistent with that position, which may vary from time to time, or
any other position he may subsequently assume with NSC, and will devote his full
knowledge, skills, attention, and efforts to the business of the Company. These
duties are detailed in Attachment A, "Specific Duties and Compensation," and are
subject to change as the Board may dictate option at a later time.
3. TERM OF AGREEMENT: The term of this Agreement will be two (2) years,
from the effective date of this Agreement, unless sooner terminated in
accordance with the provisions set forth herein.
4. COMPENSATION & SPECIFIC DUTIES: For his services under this Agreement,
Xxxx will receive the Compensation listed in Attachment A, "Specific Duties and
Compensation"
5. EXPENSES: NSC will reimburse Xxxx for all reasonable business expenses
incurred and documented in compliance with Company policy and procedure.
6. EXTERNAL COVENANTS AND RESTRICTIONS: Xxxx certifies that he is under no
restrictive covenant or similar obligation by reason of a prior employment or
other relationship. Xxxx agrees not to undertake, during his service with NSC,
any external obligation that could restrict his ability to perform his duties
under this Agreement.
7. OWNERSHIP OF WORK PRODUCT: Xxxx acknowledges and agrees that the nature
of his services to NSC and its clients/customers may have involved and continue
to involve development and/or improvement of technology, systems, formulas,
processes, procedures, computer-software programs, other programs, and related
documentation.
x. Xxxx agrees that all new or improved technology, systems, formulas,
processes, procedures, computer-software programs, other programs, and
related documentation that Xxxx has or has had any part in developing
or improving are, will be and remain the sole and exclusive property
of NSC, and that Xxxx has acquired and will acquire no right, title,
or interest therein. Xxxx further agrees to execute any and all
documents necessary for NSC to secure and protect its interest in any
such technology, systems, formulas, processes, procedures,
computer-software programs, other programs, and related documentation,
including but not limited to documents related to non-disclosure,
patents, licenses, or copyrights, whether of any state, federal, or
foreign government.
x. Xxxx further acknowledges and expressly agrees that all files,
records, lists, books, literature, correspondence, documents,
services, products and data of any type whatsoever, and in whatever
form, including electronically or digitally stored data, related to or
used in the conduct of the business of NSC, its customers/clients, or
2
prospective customers/clients are and will remain the property of NSC.
Xxxx agrees that, upon termination of this agreement for any reason
whatsoever, he will surrender and deliver to NSC all such information
and materials, and, to the extent any such material is electronically
or digitally stored on a computer or another medium, any remaining
copies of information surrendered or delivered to NSC will be
permanently deleted from any computer or other means of storage in
NSC's possession.
8. CONFIDENTIAL INFORMATION: Xxxx acknowledges that, in the course of his
service with NSC, he has acquired, used and added to, and will be acquiring,
using, and adding to Confidential Information of a special and unique nature and
value. Xxxx acknowledges and understands that NSC is in a highly competitive
business and that its success depends in significant part on maintaining a
competitive advantage. Xxxx acknowledges and understands that NSC maintains and
uses Confidential Information to gain and maintain such a competitive advantage.
a. For the purposes of this Agreement, "Confidential Information" is that
which is not routinely disclosed by the management or Board of
Directors of NSC in response to inquiries and is not readily
obtainable elsewhere. "Confidential information" includes but is not
limited to information related to the business, operations, assets,
systems, plans, products, contracts, procedures, processes,
documentation, computer programs, or software products of NSC and/or
its customers or clients and any information about the development or
improvement of any technology by NSC and/or its customers or clients.
Information obtained by Xxxx in the course of his previous work with
NSC or service under this Agreement is Confidential Information unless
it is in the public domain. Information which is in the public domain
through sources other than Contractor is not Confidential Information.
x. Xxxx agrees he will not, during or after his service under this
agreement, disclose any Confidential Information to any person(s)
without the express written permission of NSC except as such
disclosures may be reasonably necessary in carrying out his duties for
NSC.
x. Xxxx acknowledges and agrees that any disclosure of Confidential
Information by him will constitute a material breach of this Agreement
3
and be cause for immediate termination of this Agreement and may give
rise to other legal liabilities for Contractor and remedies for NSC.
9. AGREEMENT NOT TO COMPETE: Xxxx acknowledges that, in addition to
Confidential Information to which he has had access and will have access during
the course of his service under this agreement, he will be given the opportunity
to develop and maintain relationships on behalf of NSC with employees of NSC and
with existing and future customers and prospective customers and clients of NSC.
Xxxx agrees that during the term of this Agreement and any extension thereof and
for a period of one (1) year after termination of this Agreement, he will not,
directly or indirectly, as owner, partner, principal, shareholder, director,
investor, lender, officer, agent, or in any other capacity:
a. solicit, divert, or accept business from any person or entity that was
a current or prospective customer or client of NSC at any time during
the one-year period before termination of this Agreement, or
b. employ or solicit for employment any person who was an employee of NSC
at any time during the one-year period before termination of this
Agreement.
c. For purposes of this Agreement, a "prospective" customer or client is
one that, at any time during the one-year period before termination of
this Agreement, received a proposal from NSC or whose business was
demonstrably solicited by NSC.
10. TERMINATION OF AGREEMENT: This Agreement will terminate as provided in
Section 3 unless sooner terminated by any of the following events.
a. This Agreement will terminate at any time upon mutual written
agreement of NSC and Xxxx, in accordance with the terms of that mutual
agreement.
b. This Agreement will terminate upon a filing for the liquidation,
dissolution or bankruptcy of NSC.
c. This Agreement will terminate on the date of Xxxx' death.
x. Xxxx may terminate this Agreement without cause upon thirty (30) days
written notice to NSC. In the event of such termination, Xxxx will be
entitled only to compensation earned on or before the final date of
4
this service, and will forfeit any benefit conferred upon him by and
through the Nonqualified Stock Option Agreement of December 2001,
other than from the execution of any then-vested options in his
possession executed within the time windows specified in the
Nonqualified Stock Option Agreement of December 2001.
e. NSC may terminate this Agreement at any time without cause upon
written notice to Xxxx, but will pay a penalty of approximately six
months of compensation to do so. In the event of such termination, NSC
will pay Xxxx $60,000 as liquidated damages for this termination,
payable within 90 days of such termination. Such termination will not
as prevent Xxxx from continuing to serve at the NSC Board, and to be
compensated in the manor then customary for outside Board members. No
additional payment, including payment of accrued and unpaid vacation
or any other benefit, will be due from the Company to Xxxx.
f. Notwithstanding any other provision hereof, NSC may terminate this
Agreement and for cause at any time upon written notice to Xxxx,
specifying the cause for termination. "Cause for termination" is
defined as any of the following: neglect of duties; insubordination;
failure to comply with lawful instructions; fraud; theft; habitual
drunkenness or substance abuse; unethical business conduct; conviction
of a felony; any act or failure to act that would constitute a felony
if prosecuted pursuant to applicable criminal statutes; any material
breach of this Agreement; any willful or repeated material violation
of company policy; or failure to comply with applicable federal or
state statute or regulations regarding trading Company stock. In the
event of termination for cause, Xxxx will be entitled only to
compensation earned on or before the final date of Agreement
termination, including liquidated damages of $6000, payable within 90
days of such termination.
11. SCOPE AND MODIFICATION OF AGREEMENT: Neither party has relied on any
statement or representation by the other party or any representative of the
other party that is not expressly stated in this Agreement. Changes or
amendments to this Agreement are of no effect unless in writing signed by both
parties.
5
12. PROHIBITION OF ASSIGNMENT: This Agreement is personal to Xxxx. Neither
party can assign the performance of obligations hereunder to any third party.
Notwithstanding that, the parties' rights under this Agreement inure to the
benefit of their respective successors, heirs, and assigns.
13. SEVERABILITY: The provisions herein entitled Position and Duties of
Contractor, Compensation, Expenses, Termination, and Prohibition of Assignment
are not severable. All other provisions herein are severable. The ruling of any
court or arbitrator of competent jurisdiction that any severable provision is
void, voidable, or otherwise unenforceable shall have no effect on the validity
and enforceability of any other provision.
14. CHOICE OF LAW: This Agreement is to be construed and interpreted in
accordance with the laws of Arizona, except as those laws may be preempted by
federal law, and without regard to choice of laws rules. No action involving
this Agreement may be brought except as provided in Sections 18 below, and no
court action challenging the enforceability of Section 18 may be brought except
in a state or federal court located in Phoenix, Maricopa County, Arizona.
15. WAIVER: Waiver by either party of any breach under this Agreement shall
not operate as a waiver of any subsequent breach of the same or any other
provision of this Agreement.
16. NOTICES: Any notice required under this Agreement shall be sufficient
if given in writing and sent by registered mail to the below address of the
party to be noticed.
National Scientific Corporation Xxx X. Xxxx
00000 X Xxxxxx Xxxx 0000 Xxxxx Xxxxx Xxxxxx
Xxxxx 000 Xxxx, Xxxxxxx 00000
Xxxxxxxxxx, Xxxxxxx 00000
17. ARBITRATION OF CLAIMS AND DISPUTES: Except as otherwise expressly
provided in this Agreement, any civil claim which arises out of or relates in
any way to this Agreement, to the parties' previous contract(s), or to the
relationship between the parties shall be settled by exclusive, binding, and
6
final arbitration in Phoenix, Arizona, in accordance with Rules, and under the
auspices, of the American Arbitration Association. This includes but is not
limited to claims arising under the common law of contract or tort,
discrimination claims, and all claims arising under any federal, state, county,
or municipal constitution, charter, statute, rule, or regulation. THE PARTIES
EXPRESSLY AGREE TO FOREGO ANY RIGHT TO TRIAL BY A JUDGE AND/OR JURY IN FAVOR OF
FINAL, BINDING, AND EXCLUSIVE ARBITRATION.
18. RIGHT TO INJUNCTIVE RELIEF: Notwithstanding the parties' agreement to
arbitrate any and all civil claims that may arise from this Agreement, their
prior contract(s), or the relationship between them, Xxxx acknowledges and
agrees that any breach or threatened breach of Sections 8, 9 or 10 will cause
NSC irreparable harm and entitle NSC to such injunctive relief as may be
necessary to prevent such a breach by Xxxx and/or any person acting for or with
him. This right to injunctive relief is in addition to and without limitation of
any other rights, remedies, or damages available to NSC under this Agreement or
at law or in equity. Xxxx shall reimburse NSC its costs and reasonable
attorney's fees incurred in obtaining such injunctive relief.
19. DAMAGES FOR BREACH: NSC's liability to Xxxx for wrongful termination of
this Agreement or any other breach thereof shall not exceed the amount of actual
damages proven and, in any case, shall not exceed the amount of compensation and
expenses Xxxx did not receive and would have received had he completed the
then-current Period of this Agreement.
20. INDEPENDENT CONTRACTORS. The parties are independent contractors. Each
will bear its own costs and expenses incurred in connection with this Agreement.
Neither party has the authority to bind the other to any third party agreement,
except as may be mutually agreed upon in a separate writing. In no event shall
either party be liable for any debts of the other party to its customers or
other creditors unless provided for in this Agreement or in a separate writing.
21. LEGAL COUNSEL: The parties agree that they have read and understand the
terms of this Agreement and that they have had ample opportunity to seek the
counsel of their own attorneys before executing this Agreement.
7
22. SURVIVAL: The parties expressly agree that Sections 7, 8, 9, 10, 18 and
19 (and all subparts thereof), and the rights and liabilities set forth therein,
shall survive the termination of this Agreement.
23. EXECUTION IN COUNTERPARTS: This Agreement may be executed in
counterparts with the same effect as if the parties had signed the same
document. The counterparts shall be construed together and shall constitute one
Agreement.
Executed this date, _________ 2002_____, in Scottsdale, Arizona,
National Scientific Corporation Xxx X. Xxxx
By: ________________________________ By: _______________________________
Its: ________________________________
8
ATTACHMENT A
SPECIFIC DUTIES AND COMPENSATION AS FOUNDER AND MANAGING DIRECTOR
SPECIFIC DUTIES:
1. Leadership and direction on development of off-shore manufacturing
channels.
2. Leadership and direction on development of novel and profitable
technology relationships with Universities and other prospective NSC
IP partners, including assistance with the oversight of Dr. El-Sharawy
at ASU.
3. Support and direction of Mergers and Acquisitions activities of the
Company.
4. Leadership and direction on overall Company business strategy.
5. Other projects are assigned by the Board on an on-going basis, to be
determined in detail at a later date.
6. (Duties and Compensation as a Board member and Chairman are covered
under a separate agreement.)
COMPENSATION:
1. Consulting Services of $100 per hour of approved project work.
Consultant is projected to work 900 hours per year, or an approximate
average of 18 hours per week. Consultant will be paid on a bi-weekly
basis using this assumption, unless the Consultant reports a variance
in the project hours worked to the Company. Consultant shall report
such variances with in a reasonably period of time from which they
occur, but otherwise shall not have any specific time reporting
requirements under this Agreement. This plan is projected to produce
$90,000 per year in consulting fees, which combined with Board Fees
(covered in a separate agreement) is expected to result in $120,000
per year in cash compensation to the Xxxx.
2. From February 1, 2002, until otherwise announced by the Company, 20%
of the payable fees to the Consultant will be held back by the Company
in an effort to preserve cash resources, and will be paid to the
Consultant when the Company has sufficient cash and other resources
available, in the option of the Chief Financial Officer or the Board
of Directors, to responsibly do so. These funds remain payable to the
Consultant.
9
