EX-10.10
CONSULTING AGREEMENT
This Agreement is made and entered into as of the 27th day of December,
2004 by and between Xxxxxxxx X. Xxxxxxx ("Consultant") and Callisto
Pharmaceuticals, Inc. (the "Company").
WHEREAS, the Consultant is a founder of the Company's Callisto Research
Laboratories, LLC subsidiary ("CLabs"), guided the Company's simultaneous
acquisition of CLabs and Synergy Pharmaceuticals, Inc., its recapitalization and
financing in April 2003, several rounds of financing, exchange listing and
advised management in strategic planning and the development of strategic
relationships; and
WHEREAS, the Consultant has served as the Chairman of the Board of since
April, 2003; and
WHEREAS, the Company's management and Board of Directors wishes to assure
that the Company will continue to have the services of the Consultant available
to it; and
WHEREAS, the Company's Board of Directors has determined, in light of the
importance of the Consultant's continued services to the stability and interests
of the Company and its stockholders to reinforce and encourage the Consultant's
continued attention and dedication to the Company's affairs.
WHEREAS, the Company desires to engage Consultant to provide certain
consulting services, and Consultant is willing to be engaged by the Company to
provide such services, on the terms and conditions set forth below;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
1. PURPOSE: The Company hereby engages Consultant for the term
specified in Paragraph 2 hereof to render consulting advice to the Company
relating to business development, corporate finance and capital markets matters
upon the terms and conditions set forth herein.
2. EFFECTIVE DATE AND TERM:
2.1 EFFECTIVE DATE. This Agreement shall become effective as of
January 1, 2005 (the "Effective Date"), provided that the duties
of Consultant and the obligations of the Company hereunder shall
not commence until Consultant has notified the Company that he has
terminated his present employment. This Agreement shall be deemed
void if Consultant does not assume his responsibilities hereunder
on or prior to February 15, 2005.
2.2 TERM. Unless earlier terminated pursuant to Section 10 hereof, the
term of this Agreement shall commence upon the date that
Consultant assumes his
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responsibilities under this Agreement (the "Start Date") and shall
continue from the Start Date to December 31, 2006 (the "Initial
Term"). This Agreement shall thereafter be automatically renewed
for successive one year periods unless either party shall notify
the other in writing of its intention not to renew this Agreement
(a "Non-renewal Notice"), which notice shall be given at least 90
days prior to the end of the then current term (the "Expiration
Date"). The period from the Commencement Date to the Expiration
Date, including the Renewal Term, if any, is referred to herein as
the "Term."
3. DUTIES OF CONSULTANT: During the term of this Agreement, the
Consultant shall devote such portion of his business time and attention to
affairs of the Company reasonably necessary to provide the Company with such
regular and customary business development, strategic planning, capital markets
and corporate finance consulting advice as is reasonably requested by the
Company's management and Board of Directors, provided that Consultant shall not
be required to undertake duties not reasonably within the scope of this
Agreement. So long as the Consultant serves as a member of the Company's Board
of Directors, Consultant shall serve as Chairman of the Board; PROVIDED, at the
request of all of the members of the Board of Directors (not counting the
Consultant), the Consultant will relinquish his title as Chairman to the
Company's duly appointed chief executive officer, and accept the title of Vice
Chairman,.
3.1. PERMISSIBLE SERVICES. The Consultant's services will
include advising the Company's Board of Directors and senior management
on the following matters:
(i) in-licensing and out-licensing technologies and
compounds;
(ii) capitalization and corporate organization of the
Company;
(iii) structure and pricing of offerings of the Company's
securities in public and private transactions;
(iv) alternative uses of corporate assets;
(v) structure and use of debt;
(vi) application and maintenance of listing of the
Company's stock in securities exchanges and other
appropriate markets;
(vii) strategic planning
(viii) management recruitment and compensation; and
(ix) presentations to institutional and professional
individual investors in the U.S. and Europe.
3.2 PROHIBITED SERVICES. The services to be rendered by the
Consultant to the Corporation shall not (unless the Consultant is
appropriately licensed, registered or there is an exemption available
from such licensing or registration) include, directly or indirectly: any
activities which require the Consultant to register as a broker-dealer
under the Securities Exchange Act of 1934.
4. COMPENSATION: In consideration for the services rendered by
Consultant to the Company pursuant to this Agreement, the Company agrees to pay
Consultant the sum of $205,000 at the rate of $17,083.33 per month commencing on
the Start Date ("Base
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Compensation"). The Consultant's Base Compensation may be increased, but not
decreased by the Compensation Committee of the Company's Board of Directors (or
similar committee serving that function, the "Committee"). Once increased, such
increased amount shall constitute the Consultant's Base Compensation and shall
not be decreased. In addition, Consultant shall be granted an aggregate 375,000
ten year non-qualified stock options pursuant to the Company's Stock Option Plan
(the "Plan") at an exercise price per share equal to the fair market value of
the Company's Common Stock on the date of execution of this Agreement, as
defined in the Plan. Subject to the provision of the Plan and Section 10 of this
Agreement, one half of such options shall vest on each of the first two
anniversaries of the execution of this Agreement. Once vested, the options may
be exercised until their expiration. The Company will include the shares of
equity securities of the Company which may be issued upon the exercise of the
options in any registration statement under the Securities Act of 1933 which
includes securities issuable to any other executive officer of the Company. The
Consultant shall be eligible to earn a cash bonus of up to 15% of Base
Compensation for each twelve-month period during the Term based on meeting
performance objectives and bonus criteria to be mutually identified by
Consultant and the Company's Board of Directors.
5. EXPENSES AND SERVICES:
5.1 Consultant is authorized to incur reasonable expenses in carrying
out his duties and responsibilities under this Agreement,
including, without limitation, expenses for travel, cellular
telephone (including access charges and business calls), and
business entertainment. Additionally, Consultant shall, after
having obtaining the approval of the Company's Chief Executive
Officer, which shall not be unreasonably withheld, be authorized
to incur reasonable expenses for the attendance of conferences in
fields relate to oncology, technology of interest to the Company,
finance of biotechnology ventures, and similar items related to
Consultant's duties and responsibilities as Consultant deems
necessary. Company will reimburse Consultant for all such expenses
upon presentation by Consultant of appropriately itemized accounts
of such expenditures or the Company will pay such expenses
directly.
5.2 During the Term, Consultant shall be provided with computing
hardware and software tools, office facilities and qualified,
access to Company information and financial records and an
experienced administrative assistant (which may be shared with no
more than one senior executive officer) as is deemed appropriate
by the Consultant and approved by the Company's Chief Executive
Officer. Such services and facilities will not be diminished
without the Consultant's prior consent.
6. LIABILITY OF CONSULTANT: The Company acknowledges that all
opinions and advice (written or oral) given by Consultant to the Company in
connection with Consultant's engagement are intended solely for the benefit and
use of the Company in considering the transaction to which they relate, and the
Company agrees that no person or entity other than the Company shall be entitled
to make use of or rely upon the advice of Consultant to be given hereunder, and
no such opinion or advice shall be used for any other purpose or reproduced,
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disseminated, quoted or referred to at any time, in any manner or for any
purpose, nor may the Company make any public references to Consultant, or use
Consultant's name in any annual reports or any other reports or releases of the
Company without Consultant's prior written consent. Consultant's maximum
liability shall not exceed the cash compensation received from the Company.
7. CONSULTANT'S SERVICES TO OTHERS: The Company acknowledges that
Consultant and its affiliates are in the business of investing and providing
financial services and consulting advice to others. Nothing herein contained
shall be construed to limit or restrict Consultant in conducting such business
with respect to others, or in rendering such advice to others.
8. COMPANY INFORMATION:
a. The Company recognizes and confirms that, in advising the
Company and in fulfilling it engagement hereunder, Consultant will use and rely
on data, material and other information furnished to Consultant by the Company.
The Company acknowledges and agrees that in performing its services under this
engagement, Consultant may rely upon the data, material and other information
supplied by the Company without independently verifying the accuracy,
completeness or veracity of same. The Company agrees to notify Consultant in
writing via overnight courier, facsimile or e-mail of any material event and/or
change with in twenty-four hours of its occurrence.
b. Consultant recognizes and acknowledges that by reason of
Consultant's retention by and service to the Company before, during and, if
applicable, after the Term, Consultant will have access to certain confidential
and proprietary information relating to the Company's business, which may
include, but is not limited to, trade secrets, trade "know-how," product
development techniques and plans, formulas, customer lists and addresses,
financing services, funding programs, cost and pricing information, marketing
and sales techniques, strategy and programs, computer programs and software and
financial information relating to the field of in which the Company is actually
engaged in research, development, collaboration or sales at the time of such
disclosure (collectively referred to as "Confidential Information"). Consultant
acknowledges that such Confidential Information is a valuable and unique asset
of the Company and Consultant covenants that it will not, unless expressly
authorized in writing by the Company, at any time during the Consulting Term use
any Confidential Information or divulge or disclose any Confidential Information
to any person, firm or corporation except in connection with the performance of
Consultant's duties for the Company and in a manner consistent with the
Company's policies regarding Confidential Information. Consultant also covenants
that at any time after the termination of this Agreement, directly or
indirectly, it will not use any Confidential Information or divulge or disclose
any Confidential Information to any person, firm or corporation, unless such
information is in the public domain through no fault of Consultant or except
when required to do so by a court of law, by any governmental agency having
supervisory authority over the business of the Company or by any administrative
or legislative body (including a committee thereof) with apparent jurisdiction
to order Consultant to divulge, disclose or make accessible such information.
All written Confidential Information (including, without limitation, in any
computer or other electronic format) which comes into Consultant's possession
during the Consulting Term shall remain the property of the Company.
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Except as required in the performance of Consultant's duties for the Company, or
unless expressly authorized in writing by the Company, Consultant shall not
remove any written Confidential Information from the Company's premises, except
in connection with the performance of Consultant's duties for the Company and in
a manner consistent with the Company's policies regarding Confidential
Information. Upon termination of this Agreement, the Consultant agrees to return
immediately to the Company all written Confidential Information (including,
without limitation, in any computer or other electronic format) in Consultant's
possession. .
9. CONSULTANT AN INDEPENDENT CONTRACTOR: Consultant shall perform its
services hereunder as an independent contractor and not as an employee of the
Company or an affiliate thereof. It is expressly understood and agreed to by the
parties hereto that Consultant shall have no authority to act for, represent or
bind the Company or any affiliate thereof in any manner, except as may be agreed
to expressly by the Company in writing from time to time.
10. TERMINATION:
10.1 TERMINATION WITHOUT CAUSE OR FOR GOOD REASON.
(a) If this Agreement is terminated by the Company other than for
Cause (as defined in Section 10.4 hereof) as a result of
Consultant's death or Permanent Disability (as defined in Section
10.2 hereof), or if Consultant terminates his employment for Good
Reason (as defined in Section 10.1 (b) hereof) prior to the
Expiration Date, Consultant shall receive or commence receiving as
soon as practicable in accordance with the terms of this
Agreement:
(i) a severance payment (the "Severance Payment"), which amount
shall be paid in a cash lump sum within ten (10) days of
the date of termination, in an amount equal to the
aggregate amount of the Consultant's Base Compensation for
the then remaining term of this Agreement;
(ii) immediate vesting of all unvested stock options and the
extension of the exercise period of such options to the
later of the longest period permitted by the Company's
stock option plans or ten years following the Termination
Date;
(iii) payment in respect of compensation earned but not yet paid
(the "Compensation Payment") which amount shall be paid in
a cash lump sum within ten (10) days of the date of
termination; and
(b) For purposes of this Agreement, "Good Reason" shall mean any of
the following (without Consultant's express prior written
consent):
(i) Any material breach by Company of any provision of this
Agreement, including any material reduction by Company of
Consultant's duties or responsibilities (except in
connection with the termination of Consultant's
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employment for Cause, as a result of Permanent Disability,
as a result of Consultant's death or by Consultant other
than for Good Reason);
(ii) A reduction by the Company in Consultant's Base
Compensation or any failure of the Company to reimburse
Consultant for material expenses described in Section 5.1
or provide the services described in Section 5.2 of this
Agreement;
(iii) The failure by the Company to obtain the specific
assumption of this Agreement by any successor or assign of
Company as provided for in Section 11 hereof;
(iv) Moving the principal offices of Company to a location
outside of the Metropolitan New York Area; or
(v) Upon a Change of Control of Company (as such term is
hereinafter defined).
10.2 PERMANENT DISABILITY. If Consultant becomes totally and
permanently disabled (as defined in the Company's disability benefit plan
applicable to senior executive officers as in effect on the date thereof)
("Permanent Disability"), Company or Consultant may terminate this Agreement on
written notice thereof, and Consultant shall receive or commence receiving, as
soon as practicable:
(i) amounts payable pursuant to the terms of the disability
insurance policy or similar arrangement which Company
maintains for the Consultant, if any, during the term
hereof;
(ii) the Compensation Payment which shall be paid to Consultant
as a cash lump sum within 30 days of such termination; and
(iii) immediate vesting of all unvested stock options.
10.3 DEATH. In the event of Consultant's death during the term of his
employment hereunder, Consultant's estate or designated beneficiaries shall
receive or commence receiving, as soon as practicable in accordance with the
terms of this Agreement:
(i) compensation equal to one year's Base Compensation which
shall be paid within 30 days of such termination;
(ii) any death benefits provided under the Consultant benefit
programs, plans and practices in which the Consultant has
an interest, in accordance with their respective terms;
(iii) the Compensation Payment which shall be paid to
Consultant's estate as a cash lump sum within 30 days of
such termination; and
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(iv) such other payments under applicable plans or programs to
which Consultant's estate or designated beneficiaries are
entitled pursuant to the terms of such plans or programs.
10.4 VOLUNTARY TERMINATION BY CONSULTANT: DISCHARGE FOR CAUSE. The
Company shall have the right to terminate this Agreement for Cause (as
hereinafter defined). In the event that Consultant's employment is terminated by
Company for Cause, as hereinafter defined, or by Consultant other than for Good
Reason or other than as a result of the Consultant's Permanent Disability or
death, prior to the Termination Date, Consultant shall be entitled only to
receive, as a cash lump sum within 30 days of such termination the Compensation
Payment. As used herein, the term "Cause" shall be limited to (i) willful
malfeasance or willful misconduct by Consultant in connection with the services
to the Company in a matter of material importance to the conduct of the
Company's affairs which has a material adverse affect on the business of the
Company, (ii) willful continuing refusal by Consultant to perform his duties
hereunder as reasonably directed by the Board of Directors after notice of any
such refusal to perform such duties or such reasonable direction was given to
Consultant by the Board of Directors, or (iii) the conviction of Consultant for
commission of a felony. For purposes of this subsection, no act or failure to
act on the Consultant's part shall be considered "willful" unless done, or
omitted to be done, by the Consultant not in good faith and without reasonable
belief that his action or omission was in the best interest of the Company.
Termination of this Agreement pursuant to this Section 10.4 shall be made by
delivery to Consultant of a copy of a resolution duly adopted by the affirmative
vote of all of the members of the Board of Directors called and held for such
purpose (after 30 days prior written notice to Consultant and reasonable
opportunity for Consultant to be heard before the Board of Directors prior to
such vote), finding that in the good faith business judgment of such Board of
Directors, Consultant was guilty of conduct set forth in any of clauses (i)
through (iii) above and specifying the particulars thereof.
11. ASSIGNMENT:
This Agreement shall be binding upon and inure to the benefit of the
heirs and representatives of Consultant and the assigns and successors of
Company, but neither this Agreement nor any rights or obligations hereunder
shall be assignable or otherwise subject to hypothecation by Consultant (except
by will or by operation of the laws of intestate succession or by Consultant
notifying the Company that cash payment be made to an affiliated investment
partnership in which Consultant is a control person) or by Company, except that
Company may assign this Agreement to any successor (whether by merger, purchase
or otherwise) to all or substantially all of the stock, assets or businesses of
Company, if such successor expressly agrees to assume the obligations of Company
hereunder.
12. CHANGE IN CONTROL:
12.1 DEFINITION. For purposes of this Agreement, a "Change in Control"
shall be deemed to have occurred if (i) there shall be consummated (A) any
consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of the Company's
Common Stock would be converted into cash, securities or other property, other
than a merger of the Company in which the holders of the Company's Common Stock
immediately prior to the merger have substantially the same proportionate
ownership of
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common stock of the surviving corporation immediately after the merger, or (B)
any sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all or substantially all the assets of the Company, or
(ii) the stockholders of the Company shall approve any plan or proposal for the
liquidation or dissolution of the Company, or (iii) any person (as such term is
used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934 (the
"Exchange Act")), other than the Company or any executive benefit plan sponsored
by the Company, or such person on the Effective Date hereof is a 20% or more
beneficial owner, shall become the beneficial owner (within the meaning of Rule
13d-3 under the Exchange Act) of securities of the Company representing 20% or
more of the combined voting power of the Company's then outstanding securities
ordinarily (and apart from rights accruing in special circumstances) having the
right to vote in the election of directors, as a result of a tender or exchange
offer, open market purchases, privately negotiated purchases or otherwise, or
(iv) at any time during a period of two consecutive years, individuals who at
the beginning of such period, constituted the Board of Directors of the Company
shall cease for any reason to constitute at least a majority thereof, unless the
election or the nomination for election by the Company's stockholders of each
new director during such two-year period was approved by a vote of at least
two-thirds of the directors then still in office, who were directors at the
beginning of such two-year period.
12.2 RIGHTS AND OBLIGATIONS. If a Change in Control of the Company
shall have occurred while the Consultant is director of the Company, the
Consultant shall be entitled to the compensation provided in Section 10.1 of
this Agreement upon the subsequent termination of this Agreement by either the
Company, or the Consultant within two years of the date upon which the Change in
Control shall have occurred, unless such termination is a result of (i) the
Consultant's death; (ii) the Consultant's Disability; (iii) the Consultant's
Retirement; or (iv) the Consultant's termination for Cause.
7. INDEMNIFICATION:
Consultant, as such and as a Director of the Company, shall be
indemnified by the Company against all liability incurred by the Consultant in
connection with any proceeding, including, but not necessarily limited to, the
amount of any judgment obtained against Consultant, the amount of any settlement
entered into by the Consultant and any claimant with the approval of the
Company, attorneys' fees, actually and necessarily incurred by him in connection
with the defense of any action, suit, investigation or proceeding or similar
legal activity, regardless of whether criminal, civil, administrative or
investigative in nature ("Claim"), to which he is made a party or is otherwise
subject to, by reason of his being or having been a director, officer, agent or
employee of the Company, to the full extent permitted by applicable law and the
Certificate of Incorporation of the Company.. Such right of indemnification will
not be deemed exclusive of any other rights to which Consultant may be entitled
under Company's Certificate of Incorporation or By-laws, as in effect from time
to time, any agreement or otherwise.
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14. MISCELLANEOUS:
a. This Agreement between the Company and Consultant
constitutes the entire agreement and understanding of the parties hereto, and
supersedes any and all previous agreements and understandings, whether oral or
written, between the parties with respect to the matters set forth herein.
b. Any notice or communication permitted or required hereunder
shall be in writing and shall be deemed sufficiently given if hand-delivered or
sent (i) postage prepaid by registered mail, return receipt requested, or (ii)
by facsimile, to the respective parties as set forth below, or to such other
address as either party may notify the other in writing.
If to the Company, to: Callisto Pharmaceuticals, Inc.
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxx, CEO
If to Consultant, to: Xxxxxxx X. Xxxxxxx
c/x Xxxxxxx Partners Ltd.
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxxxx, Managing Partner
With a required copy to:
Xxxxxx & Xxxxxxxxx LLP
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx Xxxx, XX 00000
Attention: Xxxx Xxxxxx, Partner
c. This Agreement may be executed in any number of
counterparts, each of whom together shall constitute one and the same original
document.
d. This Agreement may not be changed orally, but only by an
agreement in writing signed by the party against whom any waiver, change,
amendment, modification or discharge is sought.
e. The invalidity of all or any part of any provision of this
Agreement shall not render invalid the remainder of this Agreement or the
remainder of such provision. If any provision of this Agreement is so broad as
to be unenforceable, such provision shall be interpreted to be only so broad as
is enforceable.
f. This Agreement shall be governed by and construed in
accordance with the law of the State of New York without giving effect to the
principles of conflicts of law thereof. The parties hereto each hereby submits
herself or itself for the sole purpose of this Agreement and any controversy
arising hereunder to the exclusive jurisdiction of the state courts in the State
of New York.
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g. Any amounts due hereunder to Consultant which remain unpaid
after their due date, shall bear interest from the due date until paid at a rate
of the prime rate (in effect on the date thereof for Citibank).
h. The Company's obligations to make payments under Section 10
and 12 shall survive termination or expiration of this Agreement.
i. Consultant shall not be required to mitigate damages or the
amount of any payment provided for under this Agreement by seeking other
employment or otherwise after the termination of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the date first above written.
CONSULTANT
/s/ XXXXXXXX X. XXXXXXX
------------------------------
Xxxxxxxx X. Xxxxxxx
CALLISTO PHARMACEUTICALS, INC.
By: /s/ XXXX X. XXXXX
--------------------------
Name: Xxxx X. Xxxxx
Title: Chief Executive Officer
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