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Consulting Services Agreement - VaxGen-Celltrion Inc. and VaxGen Inc.

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                             VAXGEN-CELLTRION, INC.

                          CONSULTING SERVICES AGREEMENT

      This Consulting Services Agreement (the "Agreement") is made and entered
into on the 7th day of June, 2002 (the "Effective Date") by and between
VaxGen-Celltrion, Inc., a California corporation, having an address at c/o
VaxGen, Inc., 1000 Marina Boulevard, Brisbane, CA 94005-1841 ("VCI"), and
VaxGen, Inc., a Delaware corporation, with a principal place of business at 1000
Marina Boulevard, Brisbane, CA 94005-1841 ("VaxGen"). (VCI and VaxGen are
sometimes referred to individually herein as a "Party" or collectively as the
"Parties.")

WHEREAS:

Vaxgen and VCI entered into a series of agreements on June 7, 2002, including a
license agreement, an executed copy of which is attached hereto as Schedule 1
("License Agreement"), all of which together set forth the terms for the
construction and operation of pilot manufacturing facilities for the production
of pharmaceutical products in South San Francisco, California;

VCI now desires to retain VaxGen as an independent contractor to perform the
Services (as defined and more fully described herein); and

VaxGen is willing to perform the Services on the terms and conditions set forth
herein.

NOW THEREFORE, in consideration of the mutual promises contained herein, the
Parties agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

1.1 "Intellectual Property" shall mean all patents, inventions, developments,
discoveries, improvements, know-how, trade secrets, copyrightable material,
records, data, results, notes, computer files, records, trademarks, service
marks, trade names, names, marks, logos, brand names, designs, trademark and
service mark registrations,



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and any other intellectual property made, conceived, reduced to practice,
invented, or discovered by either Party or their employees, independent
contractors, consultants, agents, and representatives, prior to the Effective
Date or during the term of this Agreement.

1.2 "Licensed Knowhow" shall have the meaning ascribed to this term in the
License Agreement, which is attached hereto as Schedule 1 and incorporated
herein by reference.

1.3 "Licensed Patent Rights" shall have the meaning ascribed to this term in the
License Agreement attached as Schedule 1, which is incorporated herein by
reference.

1.4 "VaxGen Intellectual Property" shall mean all Intellectual Property (i)
owned or licensed by VaxGen prior to the Effective Date and (ii) made,
conceived, reduced to practice, invented, or discovered independently by VaxGen,
or its employees, independent contractors, consultants, agents, or
representatives, or licensed by VaxGen, during the term of this Agreement but
not in the course of providing Services hereunder. For the purpose of this
Agreement, the Licensed Knowhow, Licensed Patent Rights, and all improvements to
VaxGen Intellectual Property, conceived or developed independently by VaxGen,
its employees, independent contractors, consultants, agents, and
representatives, shall constitute VaxGen Intellectual Property.

1.5 "VCI Intellectual Property" shall mean all Intellectual Property (i) made,
conceived, reduced to practice, invented, or discovered independently by VCI,
and its employees, independent contractors, consultants, agents, and
representatives, expressly excluding VaxGen, prior to the Effective Date or
during the term of this Agreement and (ii) all Intellectual Property made,
conceived, reduced to practice, invented, or discovered by VaxGen, and its
employees, independent contractors, consultants, agents, and representatives
solely in the course of providing Services hereunder. For the purpose of this
Agreement, VCI Intellectual Property shall further include all improvements to
VCI Intellectual Property, which are developed or conceived during the term of
this Agreement independently by one or more employees, independent contractors,
consultants, agents, and other representatives of VCI and, solely in the course
of providing Services hereunder, by one or more employees, independent
contractors, consultants, agents, and other representatives of VaxGen..

1.6 "Work Product" shall mean all electronic and written records, files, and
samples of work produced during the term of this Agreement by VCI and, solely in
the course of providing Services hereunder, VaxGen, including, but not limited
to, reports, notes, data, sketches, drawings, media, and other representations
of such work.

                                   ARTICLE II

                            SERVICES AND COMPENSATION

2.1 Performance of Services. During the term of this Agreement, VaxGen shall
perform the following Services for VCI in a commercially reasonable manner and
in


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accordance with the terms and conditions of this Agreement, and with any time
schedule, requirements, or other goals, which are agreed between VaxGen and VCI
pursuant to this Section 2.1:

      (a) the services set forth in the License Agreement and Sub-license
Agreement entered into between VaxGen and VCI,

      (b) the services requested by VCI in connection with the performance of
the License Agreement and Sub-license Agreement entered into between VaxGen and
VCI, and

      (c) other services reasonably requested by VCI.

2.2 Compensation. VCI shall pay to VaxGen compensation as set forth in this
Section 2.2 for the performance of the Services described in Sections 2.1(b) and
(c) above.

      (a) Payment of each VaxGen employee at a rate equal to the hourly rate of
such employee's annual salary, plus an additional overhead rate of [*], as set
forth in Schedule 2, and

      (b) Payment of independent contractor, consultant, agent, or other
representative of VaxGen hired by VaxGen on behalf of VCI in support of the
Services at a rate equal to the hourly rate of his or her contract rate.

The amount of compensation shall not be increased except upon the signed written
agreement of the Parties. The Parties agree that the compensation described in
this Section 2.2 is based solely on the performance of the Services described in
Section 2.1(b) and (c) above.

2.3 Reimbursement of Expenses. VCI shall reimburse VaxGen for all reasonable
out-of-pocket expenses, which are necessarily incurred on its behalf in the
performance of the Services by VaxGen, any employee, independent contractor,
consultant, agent, and/or other representative of VaxGen, including but not
limited to telephone, facsimile, shipping, postage, lodging, travel expenses,
provided that prior written approval shall be obtained before such travel
expenses are incurred. For any out-of-pocket expenses, with respect to which
VaxGen seeks reimbursement from VCI, VaxGen shall submit an itemized written
statement detailing such expenses, which shall be provided in a format
reasonably acceptable to VCI.

2.4 Payments and Capital Contributions by VaxGen. All compensation and
reimbursement payable to VaxGen pursuant to Sections 2.2 and 2.3 shall not be
deemed capital contributions by VaxGen as set forth in Article 5 of the VCI
Joint Venture Agreement. All payments pursuant to Sections 2.2 and 2.3 shall be
due and payable within sixty (60) days of the invoice date, and shall be
remitted to VaxGen at the following address: Attn: Carter A. Lee, VaxGen, Inc.,
1000 Marina Boulevard, Brisbane, CA 94005-1841, U.S.A. All sums, including
reimbursements, due payable under this

[*] Denotes confidential treatment requested. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission


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<PAGE>

Agreement shall exclude any value added goods and services, sales, or other tax,
duty, or levy, and shall be payable in U.S. Dollars.

2.5 Late Payments. On all amounts outstanding and payable, interest shall accrue
from the date such amounts are due and payable at the rate of one-half percent
(1/2%) per month on any amount required by this Agreement, commencing on the
date on which payment is due.

                                   ARTICLE III

                       OWNERSHIP OF INTELLECTUAL PROPERTY

3.1 Ownership of Intellectual Property and Work Product. All right, title, and
interest in VaxGen Intellectual Property shall be solely owned by VaxGen. All
right, title, and interest in VCI Intellectual Property and Work Product shall
be solely owned by VCI.

3.2 Assignment of Rights to Intellectual Property and Work Product. VaxGen
hereby certifies that each employee, independent contractor, consultant, agent,
and representative of VaxGen, having access to VaxGen Intellectual Property
and/or VCI Intellectual Property and Work Product, has signed an agreement with
VaxGen, which assigns and transfers to VaxGen all right, title, and interest in
any VCI Intellectual Property and Work Product conceived or developed during the
term of this Agreement. VCI hereby certifies that each employee, independent
contractor, consultant, agent, and representative of VCI, having access to the
VaxGen Intellectual Property and/or the VCI Intellectual Property and Work
Product, has signed an agreement with VCI, which assigns and transfers to VCI
all right, title, and interest in any VCI Intellectual Property and Work Product
conceived or developed during the term of this Agreement.

3.3 Improvements. VCI agrees that, if VaxGen, or any employee, independent
contractor, consultant, agent, and/or other representative of VaxGen, in the
course of performing the Services, and/or VCI, or any employee, independent
contractor, consultant, agent, and/or other representative of VCI, at any time,
incorporates any improvement, invention, development, concept, discovery, or
other proprietary information into VaxGen Intellectual Property, VaxGen shall
have a perpetual, irrevocable, worldwide, fully paid, royalty free,
non-exclusive right to practice, make, have made, sell, offer for sale, import,
modify, reproduce, display, and use, as applicable, such invention, improvement,
development, concept, discovery, or other proprietary information.


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<PAGE>

                                   ARTICLE IV

                                  INFRINGEMENT

      Sections 5.3 and 5.4 of the License Agreement attached hereto as Schedule
1 are incorporated herein by reference.

                                    ARTICLE V

                       MAINTENANCE OF RECORDS AND REPORTS

      During the Term of this Agreement and for a period of two (2) years
following the expiration or termination of this Agreement, the Parties agree to
maintain complete and accurate accounting records, in a form substantially in
accordance with standard accounting practices, substantiating the compensation,
reimbursements, overhead rate, and late interest, if any, invoiced by VaxGen for
Services rendered during the term of this Agreement, and listing the invoices
received by VCI and payments made pursuant to such invoices. These records shall
be kept at the Parties' principal place of business, and shall be made available
for inspection and copying during regular business hours by an independent
accountant retained by the Party seeking inspection at such Party's sole
expense.

                                   ARTICLE VI

                              TERM AND TERMINATION

6.1 Term of Agreement. The term of this Agreement will commence on the Effective
Date and will continue for a period of five (5) years until the fifth
anniversary of the Effective Date, unless earlier terminated as set forth
herein.

6.2 Termination at Will. Either Party may terminate this Agreement at will upon
the provision of ninety (90) days prior written notice to the other Party.

6.3 Termination for Cause. Failure by either Party to comply with any of its
material obligations set forth in this Agreement shall entitle the
non-defaulting Party to give the defaulting Party a notice specifying the nature
of the default and requiring the defaulting Party to make good its default. If
such default is not cured within thirty (30) days after such notice, the
non-defaulting Party shall be entitled, without prejudice to any of its other
rights under this Agreement or available under law or in equity, to terminate
this agreement effective upon a notice of termination to the defaulting Party.
Such termination shall not relieve the breaching Party from any obligations,
which are expressly indicated to survive the termination or expiration of this
Agreement.

6.4 Termination for Insolvency or Bankruptcy. Section 9.3 of the License
Agreement, attached hereto as Schedule 1, shall be incorporated herein by
reference.

6.5 Expiration or Termination. Upon expiration or termination of this Agreement,
the performance of any and all Services shall cease. Compensation for all
Services rendered up to the date of expiration or termination shall be due and
payable, and if overpayment has occurred, then such overpayment amounts shall be
deducted and the overpayment shall be refunded within sixty (60) days of such
termination. In addition, the reimbursement of all expenses incurred pursuant to
Section 2.3, and all outstanding


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financial obligations incurred on behalf of VCI, on or before the date of
expiration or termination, shall be due and payable on or before the fifteenth
(15th) day following any such expiration or termination.

6.6 Survival of Terms. The following terms will survive expiration or
termination of this Agreement: Sections 2.2, 2.3, 2.4, 2.5, and 6.5, and
Articles III, IV, V, VII, VIII, and IX.

                                   ARTICLE VII

                                 CONFIDENTIALITY

      Section 6.1 of License Agreement, which is attached hereto as Schedule 1,
is incorporated herein by reference.

                                  ARTICLE VIII

                                    LANGUAGE

      This Agreement is written in the English language, which language shall
prevail over any translation thereof.

                                   ARTICLE IX

                                  MISCELLANEOUS

9.1 Force Majeure. Section 10.11 of the License Agreement, which is attached
hereto as Schedule 1, is incorporated herein by reference.

9.2 Binding Effect and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties hereto and their respective permitted
successors and assigns, subject to the remainder of this Section 9.2. This
Agreement shall not be assignable by either Party in whole or in part without
the other Party's prior consent in its sole discretion, except that either Party
may assign this Agreement in whole or in part without the other Party's consent
in connection with any consolidation, merger redemption, put or sale of stock,
conveyance of substantially all of the assigning Party's assets, or
change-of-control transaction that involves the assigning Party.

9.3 Governing Law; Disputes. Sections 10.2 and 10.5 of the License Agreement,
which is attached hereto as Schedule 1, shall be incorporated herein by
reference.

9.4 Notices. Any notice, request, delivery, demand, report, accounting, approval
or consent required or permitted to be given under this Agreement shall be in
writing and shall be deemed sufficiently given on the same day as delivery if
delivered in person or transmitted by telecopier (with confirmed answer-back) in
any case by 5:00 p.m. local time, on the next business day if sent by overnight
courier service, and in three business


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<PAGE>

days if sent by registered or certified mail, in any case addressed to the Party
to whom it is directed at its address shown below or such other address as such
Party shall have last given by notice to the other Party in accordance with this
Section:

If to VaxGen, addressed to:      VaxGen, Inc.
                                 1000 Marina Boulevard
                                 Brisbane, CA   U.S.A.  94005-1841
                                 Attn: Dr. Lance K. Gordon
                                 Facsimile: (650) 624-1003

If to VCI, addressed to:         VaxGen-Celltrion, Inc.
                                 c/o VaxGen, Inc.
                                 1000 Marina Boulevard
                                 Brisbane, CA   U.S.A.  94005-1841
                                 Attn: James P. Panek
                                 Facsimile: (650) 624-1001

9.5 Entire Understanding. This Agreement, along with the License Agreement,
effective as of June 7, 2002, which is attached hereto as Schedule 1, and the
other Schedules, contains the entire understanding of the Parties with respect
to the subject matter contained herein, and supercedes all prior understandings
between the Parties, whether written or oral, regarding the same matter. There
are no restrictions, promises, covenants or understandings other than those
expressly set forth herein, and no rights or duties on the part of either Party
are to be implied or inferred beyond those expressly herein provided for. The
Parties hereto may, from time to time during the term of this Agreement, modify,
vary, or alter any of the provisions of this Agreement but only by written
agreement duly executed by the Parties.

9.6 Severance. Section 10.7 of the License Agreement, which is attached hereto
as Schedule 1, shall be incorporated herein by reference.

9.7 Publicity. VCI and VaxGen shall consult and obtain mutual consent before
making any public announcement concerning this Agreement, the subject matter
hereof or use of the other Party's name, except for information that is already
in the public domain or where the nature of such information has been previously
approved for disclosure (in which case this Section 10.7 will no longer apply to
that previously approved information).

9.8 Independent Contractors. Section 10.13 of the License Agreement, which is
attached hereto as Schedule 1, shall be incorporated herein by reference.

9.9 Waiver. Section 10.6 of the License Agreement, which is attached hereto as
Schedule 1, shall be incorporated herein by reference.

9.10 Third Party Beneficiaries. This Agreement does not create, and shall not be
construed to create, any rights enforceable by any person not a Party to this
Agreement.


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<PAGE>

9.11 Headings. Section 10.12 of the License Agreement, which is attached hereto
as Schedule 1, is incorporated herein by reference.

9.12 Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original for all purposes, but all of which together shall
constitute one and the same instrument.

                            [Signature Page Follows]


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<PAGE>

      IN WITNESS WHEREOF, the undersigned are duly authorized to execute this
Agreement on behalf of VaxGen and VCI, as applicable.

VAXGEN, INC.                           VAXGEN-CELLTRION, INC.

("VaxGen")                             ("VCI")

By:                                    By:

Print Name:                            Print Name:

Title:                                 Title:


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                                   SCHEDULE 1

                                LICENSE AGREEMENT


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<PAGE>

                                   SCHEDULE 2

                                  OVERHEAD RATE

Facility Costs (Office Space Only)                              [*]
           Indirect Labor
                     Facilities
                     Office Services
                     Purchasing
           Office Rent
           Utilities
           Security
           General Insurance
           Facility Repairs and Maintenance
           Depreciation on Office Equipment

Benefits                                                        [*]
           Medical Insurance
           Dental Insurance
           Vision Insurance
           Life Insurance
           Long Term Disability
           Short Term Disability
           Employer Taxes
           Vacation

Operating Expenses                                              [*]
           Telecommunication
           Office Supplies
           Postage and Couriers
           Software License
           Equipment Rental (Copiers, Cubicles)
           Office Equipment Repair and Maintenance
           Print and Reproductions

Other Indirect Labor
           Finance and Administration                           [*]
           Corporate Communications                             [*]
           Human Resources                                      [*]
           Information Technology                               [*]

Total Overhead Allocation                                       [*]

[*] Denotes confidential treatment requested. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission


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