Exhibit
10.6
CONSULTING AGREEMENT
THIS CONSULTING
AGREEMENT (the “Agreement”) is made and
entered into by and between VIRAL GENETICS, INC., a Delaware
corporation (the “Company”), and M. Karen Newell,
PhD, an individual residing in the city of Colorado Springs,
CO (“Consultant”) effective the 1 st day
of July, 2007.
(the
Company and Consultant are jointly referred to herein as the
“Parties”)
WHEREAS
the Company is an early-stage business engaged in the
development of certain technologies, investigational drugs,
pharmaceutical products, diagnostics, and medical knowledge,
as well as in-licensed patents and know-how obtained under an
Exclusive License Agreement with the University of Colorado
(the “University”) dated November __, 2007 (the
“License”) (collectively referred to herein as
the “Technology”); and
WHEREAS Consultant has experience, knowledge, contacts,
and skills which are beneficial to the development of the Company,
the Technology, and its areas of focus; and
WHEREAS
the Company wishes to engage Consultant and to define the
nature of the relationship, to protect certain confidential
information owned or possessed by the Company, and to
establish certain other representations, warranties and
covenants.
NOW
THEREFORE , for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the
Parties agree as follows.
1) Non-Exclusive Engagement of Consultant; Term
. The Company hereby engages Consultant as its
non-exclusive provider of the consulting services described in this
Agreement, for a term (the “Term”), which will commence
on the date of this Agreement and end December 31,
2010.
2) Consultant Services. On the terms and
conditions set forth in this Agreement, Consultant will provide the
following services to the Company as directed by the Company (the
“Services”):
|
a)
|
Consultant
will advise and assist the Company with the worldwide development,
evaluation, analysis, testing, research, and study of the
Technology;
|
|
b)
|
Consultant
will design, manage and analyze studies of the Technology,
including sourcing and recommending independent facilities as
necessary, which such studies are separate from the sponsored
research to be carried out by Consultant pursuant to the License
and the Sponsored Research Agreement dated November __, 2007
between the Company and the University;
|
|
c)
|
Consultant
will assist Company in the drafting and review of any documents
necessary to obtain or maintain patent protection on the Technology
or Consultant Creations (as hereinafter defined in Exhibit
C).
|
|
d)
|
Consultant
shall advise and assist the Company with respect to the authorship,
presentation and publication of reports, results, analyses, studies
and other scientific and medical activities of the Company, in
recognized peer-reviewed literature or industry conferences, as
mutually agreed to, and review, edit and provide comment on any
manuscripts or abstracts relating to the Technology, whether
authored by Consultant or not, provided they relate to her areas of
expertise;
|
|
e)
|
Consultant
shall from time to time and as requested present on behalf of the
Company in the areas of its Technology, its development and
scientific strategy, and other areas where Consultant has
expertise, including, without limitation, to the Company’s
Scientific Advisory Board;
|
|
f)
|
Consultant
will assist and advise the Company in the preparation, review,
discussions, follow-up, and other areas in Company dealings with
the FDA, EMEA, and other regulatory agencies in connection
with seeking permission for clinical trials, regulatory approvals,
drug and device registration, and other development
activities;
|
|
g)
|
Consultant
will advise and assist the Company on other medical issues with
respect to the Company’s products and drug candidates;
and
|
|
h)
|
Consultant
will assist and advise the Company in other areas in which
Consultant has expertise as reasonably requested from time to time
by the Company.
|
Services
shall not (i) involve any use of the facilities, space,
materials or other resources of the University (provided that
use alone by the Consultant of the Consultant’s office
space, phone, email, computer, word processor and similar
assets shall not be considered a prohibited use of such
University resources), or (ii) use direct or indirect
financial support from University, including funding from any
outside source awarded to or administered by University.
Notwithstanding anything to the contrary in this Agreement,
nothing in this Agreement shall be construed to restrict or
limit the duties Consultant is performing or may perform in
the course of, or incidental to, Consultant’s
appointment at University.
3) Method of Providing Services . Consultant shall be available
for a teleconference meeting with the management of the Company at
least twice per month during the Term. Consultant will perform
Services, and may communicate with the Company’s management
and other parties, through personal meetings, correspondence,
telephone or video conferences, and such other methods, and at such
times, as mutually determined, subject to the reasonable
convenience of the parties. Unless requested otherwise
by the Company, Consultant shall communicate with the
Company’s management through the Company’s President.
Acting in good faith and consistent with ordinary business
practices with respect to advisory relationships, Consultant shall
devote a reasonable amount of time per month to the provision of
the Services described herein provided that this does not
materially conflict with Consultant’s appointment at the
University.
4) Performance . Consultant agrees to at all times faithfully,
industriously, and to the reasonable best of her abilities,
experience, and talents, perform all of the Services that may be
required of and from them pursuant to the express and explicit
terms hereof.
5) Independence of Parties. Nothing contained in
this Agreement shall constitute either party as an employee,
partner, co-venturer or agent of the other, it being intended that
each shall act as an independent contractor with respect to the
other. Consultant is not authorized to speak on behalf of the
Company or bind it in any manner.
6) Compensation.
|
a)
|
Fees.
For
and in consideration of the agreement of Consultant to enter into
and perform under this Agreement, the Company shall pay to
Consultant $3,000 per month. The Company may, but only with
specific written approval of Consultant, pay such fees in shares of
common stock at the rate of $0.06 per share. Such shares shall be
Restricted Stock Awards that vest on the one-year anniversary of
their issuance. In the event of termination of this Agreement prior
to the shares vesting, they shall be returned cancelled and void
for no additional consideration.
|
|
b)
|
Options . For and in consideration of the agreement
of Consultant to enter into this Agreement and as a long-term
incentive for the Consultant to use their best efforts in pursuit
of the Company’s business, the Company shall grant to
Consultant the option attached hereto as Exhibit B (the
“Option”). Upon each one-year anniversary of this
Agreement, the Company shall grant to Consultant an option of
similar tenor except that the exercise price shall be the closing
price of the Company’s common stock as reported on that
day.
|
|
c)
|
Royalty . Consultant shall receive Three Fourths One
Percent (0.75%) of Net Sales from sales in developed countries, and
One Half Percent (0.125%) from sales in undeveloped
countries. “Developed countries” are herein
defined as United States of America, Canada, Western and Eastern
Europe, Japan, Australia, New Zealand, Israel, Russia, and other
countries of the former Soviet Union, Hong Kong, Singapore, South
Korea, and Taiwan. “Undeveloped countries”
are herein defined as countries other than developed countries.
“Net Sales” and associated terms are as defined in
Exhibit D. If any such Net Sales are due to receipts for
sales of Licensed Products or practice of Licensed Processes where
there is more than one inventor, then the amount that Consultant
shall receive herunder shall be proportionately
reduced.
|
|
d)
|
Benefits, Other Consideration . No
benefits, vacation pay, or other consideration or remuneration of
any kind shall be owed to Consultant by the Company, unless
specifically referenced herein. Expenses incurred in
Consultant’s provision of the Services shall be reimbursed by
the Company provided that they are pre-approved in writing by the
Company.
|
|
e)
|
Reimbursement of Expenses . The Company shall
reimburse all expenses incurred by Consultant in the performance of
the Services, provided that any such expenses in excess of $500
shall require the prior, written authorization of the
Company.
|
7)
C ompany Representations and Warranties
. The Company hereby represents and warrants,
knowing that Consultant is relying thereon, that:
|
a)
|
The
Company is duly organized, validly existing and in good standing
under the laws of the state of Delaware. The Company is
qualified to do business as a foreign corporation in each state in
which its business requires it to be so qualified.
|
|
b)
|
Upon
receipt of the full exercise price, where applicable, all Shares
issued to Consultant under the Option will be duly and validly
issued, fully paid and non-assessable, and will be delivered free
and clear of any liens, claims or encumbrances, except for
restrictions imposed by reference to the registration requirements
of the Securities Act of 1933.
|
8) Consultant Representations. Consultant hereby
represents, knowing that the Company is relying thereon,
that:
|
a)
|
Consultant
is an Accredited Investor, as that term is defined in Regulation D
in the Securities Act, 1933, and Consultant has completed the
attached Exhibit A, or, in lieu of this, Consultant agrees that the
Option shall only be issued immediately if and when an appropriate
exemption from registration exists or an effective registration
statement is available;
|
|
b)
|
Consultant
has not in the past, nor will she in the future engage in any
activity contrary to the securities laws of any jurisdiction
including, without limitation, those of the United States of
America; and
|
|
c)
|
Consultant
has read and accepted the Viral Genetics Intellectual Property
Agreement, attached hereto as Exhibit C, which is part of this
Agreement and the provisions of which shall survive the expiration
or earlier termination of this Agreement in strict accordance with
the time periods as described therein.
|
9)
Stock Certificates . All Shares
delivered to Consultant pursuant to exercise of the Option
shall bear a restrictive legend in the form normally used by
the Company for the issuance of restricted shares, and shall
be deemed restricted securities under SEC Rule
144.
10) Changes to Common Stock . In the event that the Company
shall undertake a recapitalization, reverse stock split, forward
stock split, reclassification, or other change to its common stock
(a “Change in Common Stock Properties”), the quantity
of Shares which may be acquired through exercise of any delivered
but unexercised Options or undelivered Options, and the exercise
price payable thereto shall be increased
or decreased proportionately, in accordance with the terms of said
Change in Common Stock Properties.
11) Extension and Renewal . The Term
may be extended or renewed, and this Agreement may be amended, only
by the written agreement of the parties.
12) Indemnification .
|
a)
|
The
Company hereby indemnifies and defends the Consultant and each of
her executors, heirs, assigns, and representatives, as applicable,
(each, an "Indemnitee") against, and holds each Indemnitee harmless
from, any loss, liability, obligation, deficiency, damage or
expense including, without limitation, interest, penalties,
reasonable attorneys' fees and disbursements (collectively,
"Damages"), that any Indemnitee may suffer or incur based upon,
arising out of, relating to or in connection with (whether or not
in connection with any third party claim):
|
|
|
i)
|
any
breach of any representation or warranty made by the Company
contained in this Agreement;
|
|
|
ii)
|
the
failure of the Company to perform or to comply with any covenant or
condition required to be performed or complied with in accordance
with this Agreement; and
|
|
|
iii)
|
the
good faith performance of the Services.
|
|
b)
|
Indemnification
Procedures for Third Party Claims.
|
|
|
i)
|
Promptly
after notice to an Indemnitee of any claim or the commencement of
any action or proceeding, including any actions or proceedings by a
third party (hereafter referred to as "Proceeding" or
"Proceedings"), involving any Damage referred to in this Section,
such Indemnitee shall, if a claim for indemnification in respect
thereof is to be made against an Indemnitee pursuant to this
Section, give written notice to the Company, setting forth in
reasonable detail the nature thereof and the basis upon which such
party seeks indemnification hereunder; provided, however, that the
failure of any Indemnitee to give such notice shall not relieve the
Company of its obligations hereunder, except to the extent that the
Company is actually prejudiced by the failure to give such
notice.
|
|
|
ii)
|
In
the case of any Proceeding by a third party against an Indemnitee,
the Company shall, upon notice as provided above, assume the
defense thereof, with counsel reasonably satisfactory to the
Indemnitee, and, after notice from the Company to the Indemnitee of
its assumption of the defense thereof, the Company shall not be
liable to such Indemnitee for any legal or other expenses
subsequently incurred by the Indemnitee in connection with the
defense thereof (but the Indemnitee shall have the right, but not
the obligation, to participate at its own cost and expense in such
defense by counsel of its own choice) or for any amounts paid or
foregone by the Indemnitee as a result of any settlement or
compromise thereof that is effected by the Indemnitee (without the
written consent of the Company).
|
|
|
iii)
|
Anything
in this Section 12 notwithstanding, if both the Company and the
Indemnitee are named as parties or subject to such Proceeding and
either party determines with advice of counsel that there may be
one or more legal defenses available to it that are different from
or additional to those available to the other party or that a
material conflict of interest between such parties may exist in
respect of such Proceeding, then the Company may decline to assume
the defense on behalf of the Indemnitee or the Indemnitee may
retain the defense on its own behalf, and, in either such case,
after notice to such effect is duly given hereunder to the other
party, the Company shall be relieved of its obligation to assume
the defense on behalf of the Indemnitee, but shall be required to
pay any legal or other expenses including, without limitation,
reasonable attorneys' fees and disbursements, incurred by the
Indemnitee in such defense.
|
|
|
iv)
|
If
the Company assumes the defense of any such Proceeding, the
Indemntiee shall cooperate fully with the Company and shall appear
and give testimony, produce documents and other tangible evidence,
and otherwise assist the Company in conducting such
defense. The Company shall not, without the consent of
the Indemnitee, consent to entry of any judgment or enter into any
settlement or compromise which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such
Indemnitee of a release from all liability in respect of such claim
or Proceeding. Provided that proper notice is duly given, if the
Company shall fail promptly and diligently to assume the defense
thereof, then the Indemnitee may respond to, contest and defend
against such Proceeding and may make in good faith any compromise
or settlement with respect thereto, and recover from the Company
the entire cost and expense thereof including, without limitation,
reasonable attorneys' fees and disbursements and all amounts paid
or foregone as a result of such Proceeding, or the settlement or
compromise thereof. The indemnification required
hereunder shall be made by periodic payments of the amount thereof
during the course of the investigation or defense, as and when
bills or invoices are received or loss, liability, obligation,
damage or expense is actually suffered or incurred.
|
|
c)
|
Each
of the Company and Consultant acknowledges and agrees that (i)
Consultant is entering into this Agreement in her individual
capacity and not as an employee or agent of the University, and
(ii) the University is not a party to this Agreement and has no
liability or obligation whatsoever hereunder. The
provisions of this paragraph shall survive the expiration or
earlier termination of this Agreement.
|
|
d)
|
The
provisions of this section 12 shall survive the expiration or
earlier termination of this Agreement.
|
13) Termination .
|
a)
|
Either
party may terminate this Agreement upon not less than 15 days
notice in the event of a material breach of this Agreement or
material non-performance by the other party, which breach is not
cured within 10 days after the giving of written notice to the
breaching party specifying the circumstances of such
breach.
|
|
b)
|
The
Company may terminate this Agreement without further notice to
Consultant in the event that Consultant:
|
|
|
i)
|
is
convicted a felony or a violation of any securities
laws;
|
|
|
iii)
|
has
been grossly negligent in the performance of Services at least
three times in any consecutive 30-day period, and Consultant has
been notified in writing within 5 days of each such occurrence;
or
|
|
|
iv)
|
has
engaged in material and willful or gross misconduct in the
performance of Services hereunder.
|
|
c)
|
Either
party may terminate this Agreement without cause upon 90 days prior
written notice to the other party.
|
14) Consequences of Termination . Any
termination or expiration of this Agreement, whether or not for
cause, shall not affect the obligation of the Company to pay
compensation to Consultant that was earned or accrued prior to the
date of termination or expiration, nor shall it be relieved from
paying past, accrued, and future royalties pursuant to Section 6
c). Other than as specifically provided for herein, no further fees
or payments of any kind shall be owed to Consultant upon or
following Termination.
15) Cooperation . The parties shall deal with each
other in good faith, good faith meaning honesty in fact and the
observance of all commercial standards of fair dealing and usages
of trade, which are regularly observed within the
industry.
16) No Strict Construction . The language used in
this Agreement shall be deemed to be the language chosen by the
parties hereto to express their mutual intent, and no rule of
strict construction shall be applied against any
party.
17) Arbitration . In the event of dispute or
controversy between the parties as to the performance hereof, this
Agreement shall be and remain in full force and effect and all
terms hereof shall continue to be complied with by both parties, it
shall be submitted to two arbitrators, one to be appointed by each,
and if those arbitrators do not agree, they shall select a third
disinterested and competent person to act with them, and the
decision of the three, or a majority of them, shall be final and
conclusive. If either party does not appoint an
arbitrator as aforesaid within 90 days after receipt of notice to
the other that it desires arbitration, which notice shall state the
name and address of the arbitrator appointed by such other, and
does not within such period furnish to such other party the name
and address of the second arbitrator, then the arbitrator first
named shall appoint a disinterested and competent arbitrator for
the party thus defaulting, and the two arbitrators so appointed
shall select a third to act with them as aforesaid and with like
effect. Cost of arbitration shall be borne by the
Company. Judgment upon the reward rendered may be
entered in any court having jurisdiction thereof.
18) Governing Law and Disputes . This
Agreement shall be governed by the laws of the State of California,
without regard to choice of law provisions.
19) Waiver . Any party hereto may waive
compliance by the other with any of the terms, provisions and
conditions set forth herein; provided, however, that any such
waiver shall be in writing specifically setting forth those
provisions waived thereby. No such waiver shall be
deemed to constitute or imply waiver of any other term, provision
or condition of this Agreement.
20) Severability . If and to the extent that any
court of competent jurisdiction holds any provision or any part
thereof of this Agreement to be invalid or unenforceable, such
holding shall in no way affect the validity of the remainder of
this Agreement.
21)
Counterpart and Headings . This Agreement
may be executed in two or more counterparts, each of which
shall be deemed an original and all of which together shall
constitute one and the same instrument. All
headings in this Agreement are inserted for convenience of
reference and shall not affect its meaning or
interpretation.
22) Entire Agreement . This Agreement is and shall
be considered to be the only agreement or understanding between the
parties hereto with respect to the engagement of Consultant by the
Company. All negotiations, commitments, and
understandings acceptable to both parties have been incorporated
herein. No letter, telegram, or communication passing
between the parties hereto shall be deemed a part of this
Agreement; nor shall it have the effect of modifying or adding to
this Agreement unless it is distinctly stated in such letter,
telegram, or communication that it is to constitute a part of this
Agreement and is to be attached as a rider to this Agreement and is
signed by the parties to this Agreement.
23) Modification of Contract . This Agreement cannot
be modified by tender, acceptance or endorsement of any instrument
of payment, including check. Any words contained in an instrument
of payment modifying this contract, including a waiver or release
of any claims, or a statement referring to paying in full
is void.&nbs
|
