EXHIBIT 10.4
CONSULTING AGREEMENT
Agreement ("Agreement") made as of the 30th day of September, 1996, by
and between PerArdua Corporation, a Missouri corporation ("PerArdua"), and Xx.
Xxxxxxx X. XxXxxxx, Ph.D., an individual residing in Pacific Palisades,
California ("XxXxxxx").
PerArdua and XxXxxxx hereby agree as follows:
1. Consulting Services. Subject to the terms and conditions of this
Agreement, PerArdua hereby engages XxXxxxx to provide consulting services to it
for the period beginning on the date of this Agreement and expiring September
30, 1999, subject to earlier termination as hereinafter provided, and XxXxxxx
agrees to provide such services.
2. Scope of Services. (a) It is understood that XxXxxxx shall be
obligated to provide consulting services only upon matters which relate to his
field of professional expertise and experience, namely the field of chemistry
generally and specifically to any matters relating to the development of a drug
termed Thiovir(TM), as the parties may mutually agree. Consulting services may
include, but shall not be limited to, providing advice and consultation to
officers or employees of PerArdua or to others designated by and having a
relationship with PerArdua, evaluating scientific information, narratives and/or
data and reporting upon the same to PerArdua, attending and participating in
meetings pertinent to PerArdua's business, and otherwise cooperating with
PerArdua in a consulting capacity, all as may be requested from time to time by
PerArdua and subject to the limitations set forth in (b) next below. XxXxxxx
shall perform his services in Me Los Angeles, California metropolitan area and
at such other locations as XxXxxxx and PerArdua reasonably may agree; provided
that if PerArdua requests XxXxxxx to perform services outside of the Los Angeles
metropolitan area, XxXxxxx shall use reasonable efforts to comply with such
request.
(b) It is acknowledged by PerArdua that XxXxxxx'x principal occupation
is as a Professor of Chemistry at the University of Southern California ("USC")
and that, in addition to his commitments to USC, he will have from time to time
other professional commitments. XxXxxxx'x obligations to PerArdua hereunder are
subject to his commitments to USC, it being understood that XxXxxxx will
nevertheless make a good faith effort to make himself available to provide
services hereunder from time to time as may be reasonably requested by PerArdua.
It is further understood that in no event will XxXxxxx be expected to provide
more than one day a week to PerArdua. Both parties shall act in good faith in
arriving at mutually convenient times for the rendering of services hereunder.
(c) PerArdua acknowledges that XxXxxxx'x services under this Agreement
are in the nature of research and development services. XxXxxxx shall use his
best judgment and efforts to timely and professionally perform his services
under this Agreement. PerArdua acknowledges and agrees that XxXxxxx can not
guaranty that any of his research efforts and decisions will produce
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results directly beneficial to the development of Thiovir(TM) and that XxXxxxx
shall not be deemed to be in breach of this Agreement solely because it is
subsequently determined that the research is not successful or that an
alternative course of research would have been more beneficial.
3. Compensation. (a) PerArdua shall pay to XxXxxxx a retainer of $5,000
for the period October 1, 1996, through March 31, 1997, $5,000 for the period
April 1, 1997, through September 30, 1997, $12,500 for the period October 1,
1997, through September 30, 1998, and $ 15,000 for the period October 1, 1998,
through September 30, 1999. Such retainer payments shall be due and payable on
the first day of each applicable period except the first $5,000 payment shall be
made on January 2, 1997. All amounts paid and payable by PerArdua under this
Section 3 (a) shall be deemed non-refundable regardless of circumstances which
may occur after the payment date except that PerArdua shall not be precluded by
these provisions from seeking or obtaining damages for breach of this agreement.
(b) In addition to the retainer specified in (a) above, PerArdua shall
pay to XxXxxxx $ 1,~000 for each day (in excess of four hours) and $600 for each
half day (up to four hours) of consulting services hereunder. Travel time,
unless after 6:00 p.m. or before 8:00 a.m., shall be added to time spent on
consulting services for purposes of computing compensation hereunder. Such
compensation shall be paid to XxXxxxx reasonably promptly after PerArdua is
invoiced therefor. Notwithstanding the foregoing, no per diem fees shall be
payable for the following consulting services rendered by XxXxxxx hereunder: (i)
incidental telephone discussions or other de minimis expenditures of time, (ii)
advice and consultation to PerArdua and/or its attorneys, accountants and
underwriters, and attorney for underwriters, rendered on or before June 30,
1997, and regarding scientific and development matters pertinent to the drug
Thiovir in connection with the preparation of a registration statement, and any
amendments thereto, for an initial public offering of PerArdua's securities, and
discussed or to be discussed in such registration statement and amendments, and
(iii) advice and consultation rendered on or before December 31, 1996, regarding
the preparation of protocols for the testing of, and studies with respect to,
Thiovir pursuant to FDA rules, regulations and guidelines.
(c) PerArdua shall reimburse XxXxxxx for his reasonable out-of-pocket
expenditures incurred in the performance of his services hereunder upon
presentation of appropriate supporting documentation.
(d) PerArdua shall reimburse XxXxxxx for legal fees and disbursements
incurred by him in connection with the negotiation and preparation of this
Agreement up to a maximum of $1,000.
4. Restrictive Covenants. (a) During the Term and for a period of one
year thereafter, XxXxxxx, whether for himself or as an employee or agent of, or
consultant to, another person or entity, shall not be engaged in any activity,
including, without limitation, research, product design, product development,
manufacturing or selling, which involves the development or commercialization of
a specific drug for the treatment of active cytomegalovirus in the human
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body; provided, however, that the foregoing restrictions shall not apply to (i)
any acts undertaken pursuant to research grants made to USC by PerArdua, whether
now or hereinafter in effect, or (ii) any acts undertaken on behalf of PerArdua
pursuant to this Agreement or otherwise, or (iii) any "Permitted Research"
regardless of the source of the funding for such research or the topic of the
research. For purposes of this Section. "Permitted Research" means (I) any
exploratory or general research that is not oriented towards the development of
any specific drug or treatment for active cytomegalovirus in the human body or
for other virus which has been identified by PerArdua as a potential target for
control by Thiovir or any variation thereof or synthetic substitute therefor,
and (II) any research with respect to which there is no reasonable possibility
that the research may result in findings that would relate to a specific drug or
treatment of the type described in (I) above.
In the event that XxXxxxx submits a proposal for funding or receives
funding to perform any Permitted Research of the type described in (iii) above,
but which XxXxxxx nevertheless anticipates may produce results which may relate
to a specific drug for the treatment of cytomegalovirus, he shall give PerArdua
written notice of such proposal or funding commitment and the following
provisions designated (w) through (z) shall apply:
(w) If the proposal is submitted to a government agency, such as
NIH, XxXxxxx shall deliver to PerArdua, within thirty (30)
days after the submission of such proposal, a copy of the
title, abstract and total budget request and an explanation
of why the proposed research is exploratory or general
research that is permitted under paragraph 4 (a) (iii) above.
If, within thirty (30) days after its receipt of such
materials and statement from XxXxxxx, XxxXxxxx advises
XxXxxxx in writing that it desires to have XxXxxxx perform
such research for PerArdua and that PerArdua will fund such
research, XxXxxxx shall negotiate in good faith with PerArdua
regarding the withdrawal of such proposal and PerArdua's
sponsorship of the research.
(x) If XxXxxxx intends to submit to a government agency a
proposal for a joint small business-academic or small
business research proposal under the SBIR, STTR or similar
program; XxXxxxx shall deliver to PerArdua, within thirty
(30) days after the submission of such proposal, a copy of
the title, abstract and total budget request and an
explanation of why the proposed research is exploratory or
general research that is permitted under paragraph 4 (a)
(iii) above. If, within thirty (30) days after its receipt of
such materials and statement from XxXxxxx, XxxXxxxx advises
XxXxxxx in writing that it desires to have XxXxxxx perform
such research with PerArdua, XxXxxxx shall agree to
collaborate with PerArdua as XxXxxxx'x small business partner
on such proposal.
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(y) If XxXxxxx receives from a for-profit entity a commitment for
funding or research, or a request that he perform funded
research, of a type that may be described in clause 4 (a)
(iii) above and other than as a result of a proposal
described in either of paragraphs (w) and (x) above, XxXxxxx
shall give PerArdua written notice of the commitment or
request promptly after his receipt of the commitment or
request. Thereafter, PerArdua shall have thirty (30) days
within which to advise XxXxxxx in writing that it desires to
have XxXxxxx perform such research for PerArdua and that
PerArdua will fund such research.
(z) If PerArdua does not provide to XxXxxxx within the applicable
period described above such notice and reasonable assurance
that the funding will be provided timely, XxXxxxx thereafter
may perform such research without violating any of the
provisions of this Section 4, provided that noting in this
Section shall be deemed to relieve XxXxxxx of his obligations
to perform services for PerArdua under Sections 1 and 2
hereof. XxXxxxx shall not be deemed to have breached any
obligation under this Agreement solely by reason of his delay
or failure to provide any notice contemplated in any of
paragraphs (w), (x) or (y) above.
(b) XxXxxxx shall not, during the Term and for a period of five (5)
years thereafter, disclose to any other party any trade secrets or confidential
information of PerArdua, except (i) as may be required by law or governmental
order, (ii) such information which has already been made public through no
wrongful act of XxXxxxx, or which is approved for release by PerArdua or (iii)
such information as is the subject matter of a patent application which has been
abandoned. For purposes of this Agreement, all documents marked "CONFIDENTIAL"
or by some similar legend, shall be deemed to be confidential information or
trade secrets of PerArdua.
(c) Subject to the provisions of Section 4 (d) below, XxXxxxx agrees
that any inventions, improvements or modifications made by him during the Term
hereof and relating in any way to (i) the chemical compound thiophosphonoformic
acid or any variation thereof or synthetic substitute therefor, or (ii) a
specific drug which may be used for the treatment of active cytomegalovirus,
shall be promptly disclosed and shall belong to PerArdua. XxXxxxx shall execute
and deliver to PerArdua such instruments of transfer as PerArdua may reasonably
request in order to effect the intent of this provision.
(d) PerArdua acknowledges and agrees that XxXxxxx is a Professor
employed at USC, that he is subject to various agreements with USC and policies
of USC under which he is obligated to assign to USC his rights in inventions,
improvements, modifications, trade secrets and other confidential information
that he may develop or make, either alone or in connection with others, while
employed at USC, including those arising from his performance of services under
this Agreement, that PerArdua's rights under Section 4 (c) above are subject and
subordinate to
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XxXxxxx'x obligations to USC, and that XxXxxxx shall not be deemed to have
violated any provision of Section 4 (c) above by reason of his transfer or
assignment to USC, pursuant to the terms of any agreement between XxXxxxx and
USC, of any invention, improvement or modification described in this Section.
XxXxxxx represents that attached hereto is a true and complete list of each
agreement between XxXxxxx and USC and that he has delivered to PerArdua a true
and complete copy thereof. PerArdua acknowledges that it has had a chance to
review each such agreement.
5. Early Termination. (a) In the event PerArdua does not complete an
underwritten public offering of its securities in an amount of at least
$4,000,000 on or before June 30, 1997, then PerArdua shall have the right to
terminate this Agreement as of September 30, 1997, by giving to XxXxxxx written
notice of such termination at any time on or before August 31, 1997.
(b) If XxXxxxx dies or becomes disabled during the Term, this Agreement
shall terminate automatically on the date of XxXxxxx'x death or ten (10) days
after PerArdua delivers to XxXxxxx written notice of its intention to terminate
this Agreement pursuant to this Section because of XxXxxxx'x disability. For
purposes of this Section, XxXxxxx shall be deemed to be disabled if he is
unable, by reason of his physical or mental disability, to discharge his duties
hereunder for a period of three (3) consecutive calendar months.
(c) PerArdua may terminate this Agreement for "good cause" relating to
XxXxxxx'x actions or omissions. For purposes of this paragraph, the term "good
cause" shall include only the following: (i) XxXxxxx'x continuing and repeated
failure or refusal to perform his material duties as required by this Agreement
after PerArdua shall have given XxXxxxx written notice specifically stating the
nature of such failure or refusal and affording XxXxxxx at least thirty (30)
days to correct the specified act or omission; or (ii) the existence of a
material breach by XxXxxxx of any of the material provisions of this Agreement
after PerArdua shall have given XxXxxxx written notice specifically stating the
nature of such breach and affording XxXxxxx at least thirty (30,~ days to
correct such breach. PerArdua may terminate this Agreement at the end of any
such 30-day period by delivering to XxXxxxx a second notice of termination and
this Agreement shall terminate simultaneously with the delivery of such second
notice.
(d) XxXxxxx may terminate this Agreement for "good cause" relating to
PerArdua's actions or omissions. For purposes of this paragraph, the term "good
cause" shall include but not be Limited to, the existence of a material breach
by PerArdua of any of the material provisions of this Agreement after XxXxxxx
shall have given PerArdua written notice stating with specificity the nature of
such breach and affording PerArdua at least thirty (30) days to correct such
breach. XxXxxxx may terminate this Agreement at the end of any such 30-day
period by delivering to PerArdua a second notice of termination and this
Agreement shall terminate simultaneously with the delivery of such second
notice.
(e) Upon termination of this Agreement, XxXxxxx shall be entitled to be
paid any unpaid
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compensation for the period prior to the date of termination and to be
reimbursed for expenses incurred before the date of termination. PerArdua shall
pay such compensation and expense reimbursement to XxXxxxx within ten (10) days
after the later of the date of termination of the Agreement and the date on
which XxXxxxx delivers to PerArdua a statement requesting payment of such
compensation and/or expense reimbursement.
(f) Except as specifically provided in this Section 5, in the event of
termination, all obligations of the parties hereto shall be null and void after
the termination date, including without limitation the retainer payments payable
after the termination date, but excluding those provisions of Section 4 above
which continue after the Term. PerArdua acknowledges and agrees that if PerArdua
terminates this Agreement because it has not completed an underwritten public
offering on or before June 30, 1997, XxXxxxx'x obligations under Section 4 (a)
hereof shall terminate simultaneously with the termination of this Agreement.
(g) "Term" as used in this Agreement shall mean the period of time
specified in Section 1 of this Agreement as the same may be earlier terminated
in accordance with the provisions of this Section 5.
6. Relationship of Parties. Both parties acknowledge that their
relationship created hereby is strictly one of independent contractors, and no
employment or agency relationship is created or intended.
7. Miscellaneous. (a) This Agreement shall be governed by the laws of
California.
(b) This Agreement shall be binding upon, and shall inure to the
benefit of, the parties hereto and their respective successors, assigns, heirs
and representatives.
8. Insurance. At such time as PerArdua obtains any product liability
insurance and/or errors and omissions insurance applicable to its officers,
directors and employees, PerArdua shall use its reasonable efforts to cause such
insurance to apply to and include XxXxxxx with respect to his performance of
services under this Agreement.
9. Arbitration. Except as provided below, any claim or controversy
arising out of or relating to this Agreement shall be settled by binding
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association (the "AAA"), and judgment on the award rendered by the
arbitrators may be entered in any court having jurisdiction. The arbitration
shall be held in Los Angeles, California. The parties shall jointly select one
arbitrator; provided that if the parties do not agree on a single arbitrator
within frozen (15) days after delivery of notice of the commencement of the
arbitration, then a single arbitrator shall be chosen in accordance with the
procedures of the AAA. The AAA shall be instructed to appoint an arbitrator
within fifteen (15) days of receiving notice from either party that the parties
could not agree on an arbitrator, and the arbitrator shall be instructed to use
its best effort to conclude the
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arbitration within thirty (30) days of appointment. Each party shall pay
one-half of the fees of the arbitrator and the other costs of the arbitration,
administrative fees and all other fees and costs. Notwithstanding the foregoing,
neither party shall be obligated to resort to arbitration for any injunction
sought for a breach of Section 4 thereof. Each party shall use its best efforts
to proceed with and conclude as expeditiously as possible any arbitration
proceedings pursuant hereto.
10. Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be deemed to have been delivered, when
served, if personally served, or five (5) days after mailing, if mailed by
certified or registered mail, return receipt requested, or when transmitted, if
sent by facsimile, telex or other form of electronic transmission, or when
delivered, if delivered by recognized overnight delivery service such as Federal
Express or DHL, in all cases charges prepaid and addressed to the appropriate
party at the address set forth on the signature page of this Agreement or to
such other person or address as the party may from time to time furnish for
purposes of such notice.
Executed as of the date first above written.
PerArdua: PerArdua Corporation
by: /s/ Xxxxxx X. Xxxxx, Xx.
------------------------------
Xxxxxx X. Xxxxx, Xx., Treasurer
Address: 00 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
fax: 000-000-0000
XxXxxxx: /s/Xxxxxxx X. XxXxxxx
------------------------------
Xxxxxxx X. XxXxxxx, individually
Address: 00000 Xxxxxxx Xxxxx
Xxxxxxx Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
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AGREEMENTS AND POLICIES
Set forth below is a list of the written agreements between XxXxxxx and USC
and the written policies of USC that XxXxxxx has delivered to PerArdua under
Section 4(d) of the Consulting Agreement.
1. The relevant portions of XxXxxxx'x Faculty Contract with USC
2. The relevant portions of the USC Faculty Handbook, including Appendices 5,
6, 7 and 8
3. The relevant portions of the USC statement for faculty on Conflict of
Interest in Research: Policy and Procedures.
4. July 13, 1995 Important Notice from National Science Foundation to
Presidents of Universities and Colleges and Heads of Other National Science
Foundation Grantee Organizations regarding technical changes to
investigator financial disclosure policy
