Exhibit 10.1

 

DigiPath Corp

 

CONSULTING, CONFIDENTIALITY AND PROPRIETARY RIGHTS AGREEMENT

 

This Consulting, Confidentiality and Proprietary Rights Agreement ("Agreement")
is entered into as of the 19th day of April 2014 (the “Effective Date”) by and
between DigiPath Corp., a Kansas corporation (the “Company”), Steven D. Barbee,
an individual (“Consultant”).

 

WHEREAS, the Company desires to engage Consultant to provide certain services as
set forth on Schedule A attached hereto and as specified from time to time by
the Company.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and
conditions contained herein, the parties hereto agree as follows:

 

1. Engagement. The Company hereby engages Consultant to perform those duties set
forth in the Schedule A attached hereto and such other duties as may be
requested from time to time by the Company. Consultant hereby accepts such
engagement upon the terms and subject to conditions set forth in this Agreement.

 

2. Compensation. For the services rendered by Consultant under this Agreement,
the Company shall pay to Consultant the compensation specified in the Schedule
A, subject to the terms and conditions set forth in this Agreement.

 

3. Term and Survivability. The term of this Agreement shall be for a period of
five years from the Effective Date and may be terminated during that time with
30 days’ notice by either party. In addition, this Agreement may be terminated
if Company materially fails to perform or comply with this Agreement or any
material provision hereof. Termination shall be effective five (5) days after
notice of such material failure to perform or comply with this Agreement or any
material provision hereof to the defaulting party if the defaults have not been
cured within such five (5) day period. Upon termination of this Agreement the
following sections of this Agreement shall survive such termination: Sections 3,
5, 6, 7, 8, 10, 12, 13, and Schedule A Sections 4.2, 4.3 and 4.4. The rights in
Schedule A Sections 4.2, 4.3 and 4.4 shall survive indefinitely unless otherwise
agreed to by the Consultants.

 

4. Costs and Expenses of Consultant’s Performance. Except as set forth on the
Schedule A, all costs and expenses of Consultant’s performance hereunder shall
be borne by the Consultant.

 

5. Taxes. As an independent contractor, Consultant acknowledges and agrees that
it is solely responsible for the payment of any taxes and/or assessments imposed
on account of the payment of compensation to, or the performance of services by
Consultant pursuant this Agreement, including, without limitation, any
unemployment insurance tax, federal and state income taxes, federal Social
Security (FICA) payments, and state disability insurance taxes. The Company
shall not make any withholdings or payments of said taxes or assessments with
respect to amounts paid to Consultant hereunder; provided, however, that if
required by law or any governmental agency, the Company shall withhold such
taxes or assessments from amounts due Consultant, and any such withholding shall
be for Consultant's account and shall not be reimbursed by the Company to
Consultant. Consultant expressly agrees to make all payments of such taxes, as
and when the same may become due and payable with respect to the compensation
earned under this Agreement.

 

6. Confidentiality. Consultant agrees that Consultant will not, except when
required by applicable law or order of a court, during the term of this
Agreement or thereafter, disclose directly or indirectly to any person or
entity, or copy, reproduce or use, any Trade Secrets (as defined below) or
Confidential Information (as defined below) or other information treated as
confidential by the Company known, learned or acquired by the Consultant during
the period of the Consultant's engagement by the Company. For purposes of this
Agreement, "Confidential Information" shall mean any and all Trade Secrets,
knowledge, data or know-how of the Company, any of its affiliates or of third
parties in the possession of the Company or any of its affiliates, and any
nonpublic technical, training, financial and/or business information treated as
confidential by the Company or any of its affiliates, whether or not such
information, knowledge, Trade Secret or data was conceived, originated,
discovered or developed by Consultant hereunder. For purposes of this Agreement,
"Trade Secrets" shall include, without limitation, any formula, concept,
pattern, processes, designs, device, software, systems, list of customers,
training manuals, marketing or sales or service plans, business plans, marketing
plans, financial information, or compilation of information which is used in the
Company's business or in the business of any of its affiliates. Any information
of the Company or any of its affiliates which is not readily available to the
public shall be considered to be a Trade Secret unless the Company advises
Consultant in writing otherwise. Consultant acknowledges that all of the
Confidential Information is proprietary to the Company and is a special,
valuable and unique asset of the business of the Company, and that Consultant's
past, present and future engagement by the Company has created, creates and will
continue to create a relationship of confidence and trust between the Consultant
and the Company with respect to the Confidential Information. Furthermore,
Consultant shall immediately notify the Company of any information which comes
to its attention which might indicate that there has been a loss of
confidentiality with respect to the Confidential Information. In such event,
Consultant shall take all reasonable steps within its power to limit the scope
of such loss.

 

7. Return of the Company’s Proprietary Materials. Consultant agrees to deliver
promptly to the Company on termination of this Agreement for whatever reason, or
at any time the Company may so request, all documents, records, artwork,
designs, data, drawings, flowcharts, listings, models, sketches, apparatus,
notebooks, disks, notes, copies and similar repositories of Confidential
Information and any other documents of a confidential nature belonging to the
Company, including all copies, summaries, records, descriptions, modifications,
drawings or adaptations of such materials which Consultant may then possess or
have under its control. Concurrently with the return of such proprietary
materials to the Company, Consultant agrees to deliver to the Company such
further agreements and assurances to ensure the confidentiality of proprietary
materials. Consultant further agrees that upon termination of this Agreement,
Consultant's, employees, consultants, agents or independent contractors shall
not retain any document, data or other material of any description containing
any Confidential Information or proprietary materials of the Company.

 

8. Assignment of Proprietary Rights. Other than the Proprietary Rights listed on
the Schedule B attached hereto, if any, Consultant hereby assigns and transfers
to the Company all right, title and interest that Consultant may have, if any,
in and to all Proprietary Rights (whether or not patentable or copyrightable)
made, conceived, developed, written or first reduced to practice by Consultant,
whether solely or jointly with others, during the period of Consultant's
engagement by the Company which relate in any manner to the actual or
anticipated business or research and development of the Company, or result from
or are suggested by any task assigned to Consultant or by any of the work
Consultant has performed or may perform for the Company.

 

Consultant acknowledges and agrees that the Company shall have all right, title
and interest in, among other items, all research information and all
documentation or manuals related thereto that Consultant develops or prepares
for the Company during the period of Consultant's engagement by the Company and
that such work by Consultant shall be work made for hire and that the Company
shall be the sole author thereof for all purposes under applicable copyright and
other intellectual property laws. Other than the Proprietary Rights listed on
the Schedule B attached hereto, Consultant represents and covenants to the
Company that there are no Proprietary Rights relating to the Company's business
which were made by Consultant prior to Consultant's engagement by the Company.
Consultant agrees promptly to disclose in writing to the Company all Proprietary
Rights in order to permit the Company to claim rights to which it may be
entitled under this Agreement. With respect to all Proprietary Rights which are
assigned to the Company pursuant to this Section 8, Consultant will assist the
Company in any reasonable manner to obtain for the Company's benefit patents and
copyrights thereon in any and all jurisdictions as may be designated by the
Company, and Consultant will execute, when requested, patent and copyright
applications and assignments thereof to the Company, or other persons designated
by the Company, and any other lawful documents deemed necessary by the Company
to carry out the purposes of this Agreement. Consultant will further assist the
Company in every way to enforce any patents, copyrights and other Proprietary
Rights of the Company.

 

9. Trade Secrets of Others. Consultant represents to the Company that its
performance of all the terms of this Agreement does not and will not breach any
agreement to keep in confidence proprietary information or trade secrets
acquired by Consultant in confidence or in trust prior to its engagement by the
Company, and Consultant will not disclose to the Company, or induce the Company
to use, any confidential or proprietary information or material belonging to
others. Consultant agrees not to enter into any agreement, either written or
oral, in conflict with this Agreement.

 

10. Other Obligations. Consultant acknowledges that the Company, from time to
time, may have agreements with other persons which impose obligations or
restrictions on the Company regarding proprietary rights made or developed
during the course of work hereunder or regarding the confidential nature of such
work. Consultant agrees to be bound by all such obligations and restrictions and
to take all action necessary to discharge the obligations of the Company
hereunder.

 

11. Independent Contractor. Consultant shall not be deemed to be an employee or
agent of the Company for any purpose whatsoever. Consultant shall have the sole
and exclusive control over its employees, consultants or independent contractors
who provide services to the Company, and over the labor and employee relations
policies and policies relating to wages, hours, working conditions or other
conditions of its employees, consultants or independent contractors.

 

12. Non-Solicit. Consultant will not, during the term this Agreement and for one
year thereafter, directly or indirectly (whether as an owner, partner,
shareholder, agent, officer, director, employee, independent contractor,
consultant, or otherwise) with or through any individual or entity: (i) employ,
engage or solicit for employment any individual who is, or was at any time
during the twelve-month period immediately prior to the termination of this
Agreement for any reason, an employee of the Company, or otherwise seek to
adversely influence or alter such individual's relationship with the Company; or
(ii) solicit or encourage any individual or entity that is, or was during the
twelve-month period immediately prior to the termination of this Agreement for
any reason, a customer or vendor of the Company to terminate or otherwise alter
his, her or its relationship with the Company or any of its affiliates.

 

13. Equitable Remedies. In the event of a breach or threatened breach of the
terms of this Agreement by Consultant, the parties hereto acknowledge and agree
that it would be difficult to measure the damage to the Company from such
breach, that injury to the Company from such breach would be impossible to
calculate and that monetary damages would therefore be an inadequate remedy for
any breach. Accordingly, the Company, in addition to any and all other rights
which may be available, shall have the right of specific performance, injunctive
relief and other appropriate equitable remedies to restrain any such breach or
threatened breach without showing or proving any actual damage to the Company.

 

14. Governing Law. This Agreement shall be governed, construed and interpreted
in accordance with the internal laws of the State of Kansas. In the event a
judicial proceeding is necessary, the sole forum for resolving disputes arising
under or relating to this Agreement are the Municipal and Superior Courts for
Sedgwick County, Kansas or the Federal District Court in Sedgwick County, Kansas
and all related appellate courts, and the parties hereby consent to the
jurisdiction of such courts, and that venue shall be in Sedgwick County, Kansas.

 

15. Entire Agreement: Modifications and Amendments. The terms of this Agreement
are intended by the parties as a final expression of their agreement with
respect-to such terms as are included in this Agreement and may not be
contradicted by evidence of any prior or contemporaneous agreement. The
Schedules A and B referred to in this Agreement is incorporated into this
Agreement by this reference. This Agreement may not be modified, changed or
supplemented, nor may any obligations hereunder be waived or extensions of time
for performance granted, except by written instrument signed by the parties or
by their agents duly authorized in writing or as otherwise expressly permitted
herein.

 

16. Attorneys Fees. Should any party institute any action or proceeding to
enforce this Agreement or any provision hereof, or for damages by reason of any
alleged breach of this Agreement or of any provision hereof, or for a
declaration of rights hereunder, the prevailing party in any such action or
proceeding shall be entitled to receive from the other party all costs and
expenses, including reasonable attorneys' fees, incurred by the prevailing party
in connection with such action or proceeding. To the extent the Consultant is
the prevailing party, the Company shall pay the Consultant at a rate of $300 per
hour for any time spent related to such action or proceeding. If the Company
institutes any action or proceeding, prior to submitting such action or
proceeding the Company shall place in an attorney’s escrow account of the
Consultants choosing $100,000.

 

17. Assignment. This Agreement and the rights, duties and obligations hereunder
may be assigned or delegated by Consultant.

 

18. Binding Effect: Successors and Assignment. This Agreement and the provisions
hereof shall be binding upon each of the parties, their successors and permitted
assigns.

 

19. Validity. This Agreement is intended to be valid and enforceable in
accordance with its terms to the fullest extent permitted by law. If any
provision of this Agreement is found to be invalid or unenforceable by any court
of competent Jurisdiction, the invalidity or unenforceability of such provision
shall not affect the validity or enforceability of all the remaining provisions
hereof.

 

20. Notices. All notices and other communications hereunder shall be in writing
and, unless otherwise provided herein, shall be deemed duly given if delivered
personally or by telecopy or mailed by registered or certified mail (return
receipt requested) or by Federal Express or other similar courier service to the
parties at the following addresses or (at such other address for the party as
shall be specified by like notice). Additionally, an email shall be sent with a
copy of all written notices.

 

(i) If to the Company:

DigiPath Corp

 

(ii) If to the Consultant:

Steven Barbee

 

Any such notice, demand or other communication shall be deemed to have been
given on the date personally delivered or as of the date mailed, as the case may
be.

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Consulting,
Confidentiality, and Proprietary Rights Agreement as of the Effective Date
written above.

 

CONSULTANT

 

 

By:___/s/ Steven D. Barbee__________________

Name; Steven D. Barbee

 

 

DigiPath Corp

 

 

By:___/s/ Steven D. Barbee____________

Name: Steven D. Barbee

Title: President and Chairman

Accepted and Acknowledged by:

 

DigiPath, Inc.

 

 

By:___/s/ Todd Denkin________________________

Name: Todd Denkin

Title: President

 

 

 

Schedule A

 

TITLE, DUTIES AND OPERATIONAL RESPONSIBILITIES:

 

1. Title and Operational Responsibilities

 

§Consultant will provide services of President

§Company shall have the right to introduce and represent Consultant to those
outside of the Company as President

§Consultant shall report to the Board of Director(s)

§Consultant shall be responsible for worldwide sales

 

2. SCHEDULE AND COMITTMENT OF TIME:

Consultant is expected to devote as much time as needed to assist in selling
DigiPath products, and fulfilling such scope of work as both parties agree in
writing.

 

3. REPORTING SCHEDULE:

Consultant shall report regularly, and not less frequent than once per month, to
the Company his actions on behalf of the Company. The Consultant shall keep a
detailed list of all communications as required by the Company.

 

4. COMPENSATION AND PAYMENT TERMS:

 

4.1 Consultant shall be paid $10,000 per month in consulting fees and bonus
based on achieving specific milestones plus fair and reasonable business expense
reimbursement.

 

4.2 Consultant is hereby granted a five year Common Stock Purchase Warrant as
set forth in Exhibit A (“Warrants”). The Warrant will entitle the Consultant to
purchase 3,000,000 shares of common stock at an exercise price of $0.10. No
equity or debt shall be issued in the Company or its subsidiaries without the
expressed written consent of Consultant, which shall not be unreasonably
withheld. To the extent the issuance could be dilutive the Consultant shall be
made whole. The Warrants shall vest immediately and are considered to be earned
in full. Warrants shall have a cashless provision.

 

4.3 In the event that there is ever a Change in Control, and at such time the
Company’s value exceeds $1,600,000, as measured by the fair market value of the
greater of the Company or its assets, Mr. Barbee shall be paid his Severance as
set forth in Section 4.4 of Schedule A. Change in Control of the Company shall
be deemed to have occurred if: (i) any “Person,” as such term is used in Section
13(d) and 14(d) of the Exchange Act (other than the Company, any trustee or
other fiduciary holding securities under an employee benefit plan of the
Company, or any corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their ownership of stock
of the Company), is or becomes the “beneficial owner’ (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the Company’s then
outstanding securities; (ii) during any 12-month period (not including any
period prior to the execution of this Agreement), individuals who at the
beginning of such period constitute the Board, and any new director (other than
a director designated by a person who has entered into an agreement with the
company to effect a transaction described in subclauses (i), (iii) or (iv) of
this Section 4.3) whose election by the Board or nomination for election by the
Company’s stockholders was approved by a vote of at least 66 2/3 % of the
members of the Board then still in office who either were Directors at the
beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute at least a majority
thereof; (iii) the Company’s stockholders approve a merger or consolidation of
the Company with any other corporation, other than: (A) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation; or (B) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in which no
Person acquires more than 50% of the combined voting power of the Company’s then
outstanding securities; or (iv) the stockholders of the Company approve a plan
of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company’s assets.

 

4.4Termination Fee - In the event of termination without cause or the
Consultant’s termination for Good Reason, the Company shall pay the Consultant a
severance of $300,000.

 

4.4.1For purposes of this Agreement, the Company shall have "Cause" to terminate
the Consultant only upon the Consultant's:

(a)   conviction of a felony or willful gross misconduct that, in either case,
results in material and demonstrable damage to the business of the Company; or

(b)   willful and continued failure to perform his duties hereunder (other than
such failure resulting from the Consultant's incapacity due to physical or
mental illness or after the issuance of a notice of termination by the
Consultant for Good Reason) within ten business days after the Company delivers
to his a written demand for performance that specifically identifies the actions
to be performed.

(c)   For purposes of this Section, no act or failure to act by the Consultant
shall be considered "willful" if such act is done by the Consultant in the good
faith belief that such act is or was to be beneficial to the Company or one or
more of its businesses, or such failure to act is due to the Consultant 's good
faith belief that such action would be materially harmful to the Company or one
of its businesses. Cause shall not exist unless and until the Company has
delivered to the Consultant a copy of a resolution duly adopted by a majority of
the Board at a meeting of the Board called and held for such purpose after
reasonable (but in no event less than thirty days') notice to the Consultant and
an opportunity for the Consultant, together with his counsel, to be heard before
the Board, finding that in the good faith opinion of the Board that "Cause"
exists, and specifying the particulars thereof in detail. This Section 4.4.1(c)
shall not prevent the Consultant from challenging in any court of competent
jurisdiction the Board's determination that Cause exists or that the Consultant
has failed to cure any act (or failure to act) that purportedly formed the basis
for the Board's determination.

4.4.2Good Reason. The Consultant may terminate his service for "Good Reason"
after giving the Company detailed written notice thereof, if the Company shall
have failed to cure the event or circumstance constituting "Good Reason" within
twenty business days after receiving such notice. Good Reason shall mean the
occurrence of any of the following without the written consent of the Consultant
or his approval in his capacity as the Chairman of the Board:

(a)               the assignment to the Consultant of duties inconsistent with
this Agreement or a change in his titles or authority;

(b)              any failure by the Company to comply with Section 4 hereof in
any material way;

(c)            the requirement of the Consultant to relocate greater than 50
miles from his residence on the date of this Agreement; or

(d);     any material breach of this Agreement by the Company.

(e)   The Consultant's right to terminate hereunder for Good Reason shall not be
limited by his incapacity due to physical or mental illness. The Consultant's
continued service shall not constitute consent to, or a waiver of rights with
respect to, any act or failure to act constituting Good Reason hereunder.

4.5

To the extent the Consultant incurs any expenses as a result of this Agreement
or has to comply with any legal, court, or administrative body requests such
costs shall be subtracted from the Consultant’s compensation in the following
month.

 

5 EXPENSES:

Company agrees to reimburse Consultant for other reasonably necessary travel
expenses, and other expenses associated with working in a home office. However,
should such expenses exceed $4,000 in any given calendar month; such expenses
shall be pre-approved in advance by Company in order to qualify to
reimbursement. An email authorization by an officer of Company shall be deemed a
valid approval.

 

 

Schedule B

Propriety Rights
Exhibit A

COMMON STOCK PURCHASE WARRANT