Exhibit 10.21
CONSULTING AND NON-COMPETITION AGREEMENT
Nanosphere, Inc.
THIS CONSULTING AGREEMENT (this
“Agreement”) is made by and between Nanosphere, Inc., a
Delaware corporation (the “Company”), and Chad A Mirkin
(“Consultant”) as of the 31st day of October,
2002.
PREAMBLE
WHEREAS, the Company has heretofore
engaged the Consultant pursuant to a Consulting and Non-Competition
Agreement dated as of January 18, 2000 (the “Prior
Agreement”), and the Company desires to continue to engage
the Consultant and the Consultant desires to continue to be engaged
by the Company as a consultant pursuant to the terms hereof;
WHEREAS, contemporaneously with the
execution hereof, the Company has entered into a Series C
Preferred Stock Purchase Agreement, effective as of
October 31, 2002, with certain Purchasers named therein (the
“Purchase Agreement”) pursuant to which the Company
will issue and sell Series C Preferred Stock to the
Purchasers;
WHEREAS, the execution and delivery
of this Agreement by the Consultant and the Company is a condition
to the Purchasers’ obligations under the Purchase Agreement,
including making the investment described therein;
WHEREAS, as an inducement to the
Purchasers to perform their obligations under the Purchase
Agreement, including making the investment described therein, and
in consideration for the Company’s engagement of the
Consultant as a consultant to the Company, Consultant desires to
enter into this Agreement; and
WHEREAS, the Company is in the
business of nano particle-based diagnostics and the business
described in that certain October, 2002 Business Plan prepared by
the Company, excluding, however, without limitation, anything
related to dip-pen nanolithography (collectively, the
“Business”), which Business relies on certain
fundamental discoveries made, in part, by the Consultant in the
field of nanoparticle technology (the Company’s
“Science”);
NOW, THEREFORE, in consideration of
the terms and conditions set forth herein and in the
Consultant’s Intellectual Property Rights, Non-Disclosure and
Non-Competition Agreement, dated as of January 18, 2000, with
the Company (the “Intellectual Property Agreement”),
and the Purchase Agreement, and for other good and valuable
consideration, the sufficiency of which is hereby acknowledged, and
in reliance upon the recitals set forth above, which are fully made
a part of this Agreement, the Company and Consultant hereby agree
as follows:
1. Consulting Duties .
Subject to the terms and conditions of this Agreement, the Company
hereby engages the Consultant to render services to the Company and
the Consultant hereby accepts such engagement on the terms and
conditions set forth herein during the Term (as defined in
Paragraph 2 below). The Consultant shall provide such services
to the Company as are reasonably requested by the Company. The
Consultant shall perform his duties to the best of his ability in a
diligent, trustworthy, businesslike and efficient manner. In the
performance of his
services
hereunder, the Consultant shall abide by the general rules and
regulations-of the Company and such laws, rules and regulations of
any governmental agency that may be binding or effective upon the
Consultant’s activities on behalf of the Company. The
Consultant shall have no authority to bind or act on behalf of the
Company, except in his capacity as an officer of the Company, if
appointed as such by the Board of Directors of the Company. The
Consultant shall not hold himself out as an employee of the
Company. At all times during the Term hereof and for a period of
twelve (12) months thereafter, the Company shall have full
access to all of the books and records of the Consultant regarding
the activities of the Consultant on behalf of the Company. Nothing
herein shall be construed so as to limit Consultant’s ability
to consult on behalf of other companies not engaging in a Competing
Business (as defined below) or on behalf of other companies with
respect to businesses that are not Competing Businesses. The
Company hereby agrees and acknowledges that Consultant may act as a
consultant to other companies that engage in Competing Businesses
so long as the scope of such consultation does not deal with or in
any way relate to the Business or the subject matter thereof.
Without limiting the generality of
the foregoing, the parties agree that among Consultant’s
consulting duties and services hereunder shall be:
(i) provision of scientific advice and counseling to the
Company with regard to the Company’s Science;
(ii) representation and promotion of the Company and its
Science at scientific meetings and other public forums;
(iii) participation, either singly, or with other Company
representatives, at meetings and presentations on behalf of the
Company; and (iv) participation in capital-raising activities
on behalf of the Company.
2. Term . The
Consultant’s engagement hereunder shall commence on the date
hereof and shall continue for an initial period of ten
(10) years from the date hereof (the “Initial
Period”), and shall automatically renew for successive one
year periods (each, a “Renewal Period”) thereafter,
unless either party gives the other party written notice of the
non-renewal of such engagement at least sixty (60) days prior
to the end of the Initial Period or the then current Renewal
Period, as the case may be, of the Term, subject to early
termination pursuant to Paragraph 8 hereof (the
“Term”).
3. Compensation . As
compensation for the services rendered by the Consultant hereunder
during the Term, the Company agrees to pay the Consultant fees at
an initial annual rate of $60,000.00. Such fees shall be payable
monthly or with such other frequency as may be agreed upon by the
Company and the Consultant. The initial annual rate shall be
subject to annual review and adjustment by the Company to reflect
changes in market conditions (taking into consideration the demands
imposed on the Consultant by the Company; equity and other forms of
Consultant compensation and benefits; and such other factors as the
Board of Directors of the Company, and any consultants it may
retain, elect to consider after consultation with Consultant);
provided , however , that no such annual adjustment
shall reduce the annual rate of cash compensation hereunder below
$60,000.00. The first such annual review shall begin in
January 2003, and any adjustment resulting therefrom shall
apply retroactively as of January 1, 2003. Each subsequent
review shall commence in January of the applicable year with
retroactive effect as of January 1 of that year. In addition, in
anticipation and expectation that Consultant will continue to
provide the services and fulfill the duties contracted for
hereunder throughout the Initial Period, the Company will,
simultaneously herewith, grant Consultant non-qualified stock
options, under the 2000 Equity Incentive Plan Option Award
Agreement for Chad A.
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Mirkin,
for the purchase of up to 3,000,000 shares of its common stock, par
value $.01 per share, to vest in three (3) equal annual
installments beginning on the first anniversary hereof. If this
Agreement is terminated for any reason prior to the expiration of
the Initial Term, then the Consultant shall continue to provide
such patent prosecution support and similar services as the Company
shall reasonably request or as shall be required under any other
agreement directly or indirectly applicable to Consultant. Such
services shall be rendered under the direction of the Company, and
as compensation therefor, the Consultant shall be paid by the
Company in accordance with the Company’s normal payroll
practices, at such hourly “market” rate as the Company
and Consultant shall agree to in good faith and, absent such
agreement, at the rate of $300.00 per hour.
4. Expenses , The
Company, promptly upon receipt of appropriate documentation and
receipts from the Consultant, shall be responsible for or reimburse
the Consultant with respect to any reasonable bona fide costs or
expenses incurred by the Consultant in performing his duties and
obligations hereunder, provided that any such costs or expenses
greater than $5,000.00 shall have been pre-approved in writing by
the Company. Upon submission of customary invoices and time detail,
the Company shall, as a one-time matter, reimburse
Consultant’s reasonable legal fees incurred on or prior to
the date of this Agreement in connection with the review and
modification of this Agreement, concurrent option awards and
related contractual matters pertaining to the Consultant and
Company; provided , however , that such reimbursement
obligation shall be limited to $10,000.00 in the aggregate.
5. Relationship with
Northwestern University .
The Company hereby acknowledges and
agrees with Consultant regarding the following:
a. Consultant is a full time
professor at Northwestern University (“Northwestern”)
and has certain duties, responsibilities and obligations to
Northwestern with respect thereto (the “Northwestern
Relationship”), including, without limitation, certain
research and publishing responsibilities;
b. Consultant’s relationship
with the Company is subject to Northwestern’s (i) Policy
on Faculty Conflict of Commitment and Conflict of Interest,
(ii) Patent and Invention Policy, (iii) Technology
Transfer Program and (iv) any other policies and guidelines
that may be in effect from time to time to which Northwestern
faculty are subject, including, without limitation, any grants
Consultant may receive with respect to the Northwestern
Relationship (the “Policies”);
c. Pursuant to Consultant’s
relationship with Northwestern and the Policies, Consultant can
only devote a limited amount of time to the affairs of the Company;
and
d. Nothing contained in this
Agreement shall be construed so as to create or result in a
violation or breach of any of Consultant’s duties,
responsibilities and obligations to Northwestern and under the
Policies, and the Company specifically agrees that if any of the
obligations of the Consultant pursuant to this Agreement should
create such a violation or breach, the Consultant shall be relieved
of such obligation.
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The Consultant hereby represents and
warrants that, notwithstanding the Northwestern Relationship and
the Policies, the Consultant believes in good faith that he has the
ability and right to provide the consulting services and fulfill
the duties contracted for hereunder.
6. Status of Parties:
Indemnification .
a. The Consultant is, and at all
times during the Term shall be, an independent contractor vis-a-vis
the Company. The Consultant shall have no rights to the
Company’s usual employee fringe benefits, including but not
limited to workers’ compensation or unemployment insurance
benefits, and in no event is a contract of employment intended
hereby.
b. The Consultant represents,
warrants and covenants that this Agreement is a valid, binding and
enforceable agreement of the Consultant and the Consultant hereby
agrees to indemnify and hold the Company harmless from and against
any material loss, cost or expense incurred by the Company arising
out of or which are a direct or indirect result of (i) the
Consultant’s breach of a representation, warranty or covenant
in this Agreement, or (ii) the Consultant’s gross
negligence or reckless or intentional acts.
c. The Company represents, warrants
and covenants that this Agreement is a valid, binding and
enforceable agreement of the Company and the Company hereby agrees
to indemnify and hold the Consultant harmless from and against any
material loss, cost or expense incurred by the Consultant arising
out of or which are a direct or indirect result of (i) the
Company’s breach of a representation, warranty or covenant in
this Agreement, or (ii) the Company’s gross negligence
or reckless or intentional acts.
7. Tax Returns; Taxes .
The Consultant agrees that he will file all tax returns and reports
required to be filed by him, and pay all taxes required to be paid
by him, on the basis that the Consultant is an independent
contractor, rather than an employee, of the Company.
8. Termination .
a. The Term and the
Consultant’s engagement hereunder shall terminate upon the
first to occur of the following events: (1) the mutual
agreement of the Company and the Consultant to so terminate this
Agreement, (2) the death or permanent disability (as
hereinafter defined) of the Consultant, (3) the
Company’s election to terminate the Term and the
Consultant’s engagement hereunder “for cause” (as
hereinafter defined), or (4) as a result of the non-renewal of this
Agreement by either party after the Initial Period or the then
current Renewal Period, as the case may be, of the engagement in
accordance with Paragraph 2 above. For purposes hereof:
(i) The term “permanent
disability” shall mean a disability of the Consultant that
prevents the Consultant from fully performing his duties hereunder
and continues for ninety (90) days or more in any one hundred
twenty (120) day period.
(ii) The term “for cause”
shall mean any one or more of the following (A) conviction of, plea
of nolo contendre by, or plea or settlement agreement by
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Consultant for theft,
embezzlement, fraud, misappropriation of funds, or the breach
of fiduciary duty, abuse of trust or other act of dishonesty,
or the violation of any other law or ethical rule relating to
the Consultant’s engagement with the Company,
(B) the conviction of the Consultant of a felony or a
crime involving moral turpitude by the Consultant,
(C) the impending bona fide threat upon the Company of
any criminal liability caused by the action or inaction of the
Consultant, or (D) the Consultant’s material breach
of any of the covenants set forth in Paragraphs 1, 9, or
2 of this Agreement or Paragraphs 3, 4 or 9 of the
Intellectual Property Agreement; provided ,
however , in the case of clause (D) above only,
and only to the extent that it pertains to a breach of
Paragraph 1 of this Agreement, such termination shall not
be effective unless and until the Company shall have given
Consultant written notice that Consultant is in material
breach of this Agreement (which notice shall specify the
nature of such breach) and, within thirty (30) days of
such notice, Consultant shall have failed to cure such breach
in all material respects.
b. In the
event this Agreement is terminated pursuant to the terms
hereof, the Company shall be obligated to pay the Consultant
only the compensation accrued through the date of the
termination, plus such other compensation as may be payable
pursuant to the last sentence of Paragraph 3 above.
c. If this
Agreement is terminated at the Company’s election for
cause, in addition to all of the rights and remedies available
to the Company as set forth herein, the Company shall be
entitled to enforce all other rights and remedies available to
it at law or in equity.
d. Notwithstanding anything to the contrary, upon
the termination of the Term of this Agreement for any reason,
the terms and conditions of this Agreement shall remain in
full force and effect and shall be binding on and enforceable
against the parties. The parties hereby acknowledge that their
respective agreements pertaining to the survival of the terms
and conditions of this Agreement constitute material
inducements of the other party to enter into this
Agreement.
e. The
Company acknowledges that it would be inappropriate for the
Company to have actual knowledge of material breaches by
Consultant hereunder, knowingly not act on such information,
and subsequently terminate Consultant “for cause”
on the basis of such old breach. Accordingly, in the event
that the Board of Directors of the Company (and not merely
individual members) (x) obtains actual knowledge of
specific facts, events or circumstances constituting a
material breach of this Agreement (y) comprehends that
such facts, events or circumstances constitute such a breach,
and (z) reasonably appreciates the magnitude and
implications of such breach, the Company’s right to
terminate Consultant for cause hereunder shall expire (but
solely with respect to the matters falling within
clauses (x), (y) and (z) above) ninety (90) days
following the Board of Directors of the Company obtaining all
such knowledge.
9.
Confidential Information . During the period of
Consultant’s engagement by the Company, and after the
termination thereof for any reason, Consultant agrees that,
because of the
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valuable
nature of the Confidential Information (as hereinafter defined), he
shall use his best efforts to maintain and protect the secrecy of
the Confidential Information. Without in any manner limiting the
generality of the foregoing obligation, Consultant agrees that,
except as required in connection with his work for the Company, he
shall not, directly or indirectly, undertake or attempt to
undertake any of the following activities:
a. disclose any Confidential
Information to any other person or entity;
b. use any Confidential Information
for his own purposes or for the purposes of any other person or
entity;
c. make any copies, duplicates or
reproductions of any Confidential Information;
d. authorize or permit any other
person or entity to use, copy, disclose, publish or distribute any
Confidential Information; or
e. undertake or attempt to undertake
any activity the Company is prohibited from undertaking or
attempting to undertake by any of its present or future clients,
customers, suppliers, vendors, consultants, agents or
contractors.
As used in this Agreement, the term
“Confidential Information” means any knowledge,
information or property (excluding information that is publicly
available other than as a result of inappropriate disclosure by the
Consultant) relating to, or used or possessed by, the Company other
than Northwestern Intellectual Property (as defined in the
Intellectual Property Agreement), and includes, without limitation,
the following: Company Intellectual Property (as defined in the
Intellectual Property Agreement), trade secrets, patents, patent
applications, copyrights, software (including, without limitation,
all programs, specifications, applications, routines, subroutines,
techniques and ideas for formulae), discoveries, inventions,
concepts, data, drawings, designs and documents, names of actual
and prospective clients, customers, employees, agents, contractors,
and suppliers, marketing information, business plans, financial
information and other business records, and all copies of any of
the foregoing, including notes, extracts, and memoranda prepared or
suffered or directed to be prepared by Consultant based on any
Confidential Information. Consultant agrees that all information
possessed by him, or disclosed to him, or to which he obtains
access during the course of his consultancy with the Company
(excluding Northwestern Intellectual Property and/or information
that is publicly available other than as a result of inappropriate
disclosure by the Consultant) shall be presumed to be Confidential
Information under the terms of this Agreement, and the burden of
proving otherwise shall rest with Consultant.
10. Third Party
Information . Consultant understands, in addition, that the
Company has received and in the future will receive from third
parties confidential or proprietary information (‘Third Party
Information”) subject to a duty on the Company’s part
to maintain the confidentiality of such information and to use it
only for certain limited purposes. During the term of
Consultant’s engagement by the Company and thereafter,
Consultant agrees to hold Third Party Information in the strictest
confidence and not to disclose to anyone (other than Company
personnel who need to know such information in connection with
their work for the
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Company)
or use, except in connection with Consultant’s work for the
Company, Third Party Information.
11. Return of Confidential
Information . Upon the termination of Consultant’s
engagement by the Company for any reason, Consultant agrees not to
retain or remove from the Company’s premises any records,
files or other documents or copies thereof or any other
Confidential Information whatsoever, and he agrees to surrender
same to the Company, wherever it is located, immediately upon
termination of his consultancy.
12. Restrictive
Covenants .
a. Noncompetition Agreement .
Consultant acknowledges that the Company has provided and may
provide additional special training and resources to Consultant to
enable Consultant to perform his duties as a consultant to the
Company. As a result, Consultant agrees that, during the term of
his engagement by the Company and for two (2) years after the
termination of the Consultant’s engagement by the Company
(whether such termination is with or without cause or results from
Consultant’s resignation or non renewal of a consulting
agreement or arrangement) (the “Restricted Period”),
Consultant shall not, in the continental United States (the
“Geographic Area”), (i) directly or indirectly
engage in, consult with, be employed by or be connected with any
business or activity that directly or indirectly competes with the
Business (a “Competing Business”), (ii) own any
interest in any Competing Business (other than the ownership of
less than five percent (5%) of the outstanding stock of any
publicly traded corporation and/or NanoInk, Inc.), or
(iii) assist others to open or operate any Competing Business;
provided , however , that the foregoing prohibitions
set forth in clauses (i), (ii) and (iii) above shall not be
deemed to have been breached to the extent that (x) the
Consultant’s breach was inadvertent and under circumstances
where the Consultant did not know and cannot reasonably be expected
to have known, that his conduct would violate this
Paragraph 12, or (y) the specific conduct in which the
Consultant desires to engage and all reasonably relevant facts were
fully and formally disclosed to the Board of Directors of the
Company by Consultant in writing and expressly consented to in
writing by formal resolution of the Board of Directors of the
Company.
b. Non-Solicitation of Clients
. Consultant also agrees that, during the term of his engagement by
the Company and during the Restricted Period, Consultant shall not
canvass, solicit or accept any business from any of the
Company’s current or former clients, including, without
limitation, any of the Company’s licensees if such
canvassing, solicitation or acceptance is related to the Business,
unless the specific conduct in which the Consultant desires to
engage and all reasonably relevant facts were fully and formally
disclosed to the Board of Directors of the Company by Consultant in
writing and expressly consented to in writing by formal
resolution
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