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Exhibit 10(ee)
May 5, 2006
Xx. Xxxx Xxxxxxx
President & CEO
Phase III Medical, Inc.
000 Xxxxx Xxxxxxx Xxxx
Xxxxxxxx, XX 00000
RE: ADVISORY AGREEMENT
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Dear Xxxx:
This letter confirms the terms upon which Phase III Medical, Inc., together with
all subsidiaries, affiliates, successors and other controlled units, either
existing or formed subsequent to the execution of this engagement (the
"Company"), engages Xxxxxx Capital Group LLC ("Xxxxxx"), to act as its financial
consultant in connection with arranging any equity or debt financings, mergers
or acquisitions, or with respect to any other financial matter of the Company.
1. Scope of Engagement.
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The Company hereby engages Xxxxxx (the "Engagement") on a
non-exclusive, "best efforts" basis to act as financial consultant to the
Company and to provide recommendations to the Company in connection with
any equity or debt financing, merger, acquisition as well as with other
financial matters.
2. Scope of Work; Parameters.
--------------------------
In connection with the Engagement:
x Xxxxxx will familiarize itself to the extent it deems appropriate with
the business, operations, financial condition and prospects of the
Company;
x Xxxxxx will assist the Company and its counsel in a merger or
acquisition and any concurrent financing;
x Xxxxxx will assist in navigating the public markets including, but not
limited to, identifying outside board members, investor relations
firms, public relations firms, auditors, lawyers, market makers,
research analysts and broker-dealers / underwriters for a private
placement or follow-on offering (a "Follow-On Offering") and assist
the Company in negotiating an agreement with such
broker-dealer/underwriter;
x Xxxxxx is not broker-dealer and will assist only as advisor to the
Company.
3. Company Responsibilities, Representations and Warranties.
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In connection with the Engagement:
The Company agrees to cooperate with Xxxxxx and will furnish to Xxxxxx all
information and data concerning the Company (the "Information") which Xxxxxx
reasonably deems appropriate for purposes of rendering its services hereunder
(including monthly financial statements and budgets), and will provide Xxxxxx
access to its officers, directors, employees and advisors as shall be reasonably
requested by Xxxxxx. Xxxxxx acknowledges that by the very nature of its
relationship with the Company it may, from time to time, have knowledge of or
access to material non-public information. Xxxxxx agrees that it will utilize
its commercially reasonable best efforts to safeguard and prevent the disclosure
of such material non-public information to third parties unless such third
parties agree to maintain the confidentiality of such information. All such
information should be marked as confidential.
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x Xxxxxx Capital Group LLC o 000 Xxxxx Xxxxxx, 00xx Xxxxx x Xxx Xxxx, XX 00000 o
o Phone: (000) 000-0000 o Fax: (000) 000-0000 o xxx.xxxxxxx.xxx o
o The Company represents and warrants to Xxxxxx that all Information
included or incorporated by reference in any documents or otherwise
made available to Xxxxxx by the Company to be communicated to parties
in connection with any transaction: (a) will be complete and correct
in all material respects to the best of their ability; and (b) any
projected financial information or other forward-looking information
which the Company provides to Xxxxxx will be made by the Company in
good faith, based on management's best estimates at the time and based
on facts and assumptions which the Company believed were reasonable at
the time.
o The Company agrees to notify Xxxxxx as promptly as is reasonably
practicable if the Company believes that any Information that was
previously provided to Xxxxxx has become materially misleading or
materially inaccurate.
o The Company acknowledges and agrees that, in rendering its services
hereunder, Xxxxxx will be using and relying on the Information (and
information available from public sources and other sources deemed
reliable by Xxxxxx) without independent investigation or verification
thereof or independent appraisal or evaluation of the Company or its
business or assets, or any other party to the Financing. Xxxxxx has no
responsibility for the accuracy or completeness of any information,
regarding the Company furnished to Xxxxxx by the Company.
o The Company agrees it is solely responsible for the decision to pursue
or execute any transaction. The Company acknowledges that Xxxxxx is
not responsible for the due diligence, legal, regulatory, compliance
and success or failure of any transaction.
o Any advice rendered by Xxxxxx during the Engagement or in meetings
with the Company or its Board of Directors, as well as any written
materials provided by Xxxxxx, are intended solely for the benefit and
confidential use of the Company and will not be reproduced,
summarized, described or referred to or given to any other person for
any purpose without Xxxxxx'x prior written consent, except as required
by law, legal process or the rules of any regulatory agency.
4. Fees.
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4.1 Retainer. The Company shall pay to Xxxxxx a monthly retainer fee of
$7,500, for a period of twelve (12) months due on the first of every month
upon signing of this agreement. The Company may pay at its option fifty
percent (50%) of the monthly retainer fee in common stock of the Company at
the then fair market value of the stock which shall be based upon the
closing price of the common stock for the five (5) trading days ending on
the date on which such payment is due; provided that the Company shall
include any such shares of common stock for resale in the registration
statement required to be filed with the Securities and Exchange Commission
pursuant to the terms of the Transaction described in Section 4.2 below.
4.2 Public or Private Offering. In consideration for being lead investor in
the transaction (the "Transaction") outlined in the Term Sheet, dated March
14, 2006 and signed by the Company and Xxxxxx, the Company shall pay Xxxxxx
a fee equal to $200,000 and 2.4 million shares of the Company's restricted
common stock (the "Fee") upon the closing of the Transaction. Other advice
or services not covered by this Section 4.2 or the scope of services set
forth in Section 2 shall be negotiated on a case by case basis and be
commercially reasonable. The parties acknowledge that the Company may raise
through Westpark Capital, Inc. up to $750,000 on the same terms as the
Transaction with fees paid to Westpark as agreed.
4.3 Mergers and Acquisitions. For acting as financial consultant by
identifying and assisting with the completion of any potential merger or
acquisition where the Company is a buyer Xxxxxx shall be paid a
commercially reasonable fee to be negotiated by the Company and Xxxxxx, if
the transaction closes within two (2) years of initial introduction by
Xxxxxx. For acting as financial consultant by identifying and assisting
with the completion of any potential merger or acquisition where the
Company is a seller, Xxxxxx shall be paid a commercially reasonable fee to
be negotiated by the Company and Xxxxxx, if the transaction closes within
two (2) years of initial introduction by Xxxxxx. For purposes of this
Section 4.3, any such introduction by Xxxxxx shall be made during the term
of this Agreement and Xxxxxx shall notify the Company in writing or by
email of the introduced party to the Company. If the Company does not
dispute, refuse or contest within fifteen (15) days the introduced party
then Xxxxxx will be entitled to rely upon such absence as indication of
acceptance.
5. Expenses.
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The Company will reimburse Xxxxxx for all out-of-pocket expenses
reasonably incurred by it in connection with its Engagement hereunder,
including reasonable fees and expenses of its counsel and any other
independent experts reasonably retained by Xxxxxx (and any retainers
related thereto); provided, however, that without the prior written consent
of the Company, all expenses shall not exceed $12,000 in the aggregate over
the twelve months and no counsel or outside consultant fees shall be
reimbursed unless prior written approval from the Company is obtained. The
Company, however, will additionally reimburse Xxxxxx for all out-of-pocket
expenses reasonably incurred by it in connection with the Transaction.
Subject to the provisions of Section 8, all such fees and expenses referred
to above shall be paid to Xxxxxx whether or not any transaction, as
described under Section 1 "Scope of Engagement", is consummated. Such
out-of-pocket expense reimbursement will be payable promptly upon
submission by Xxxxxx of statements to the Company.
6. Scope of Responsibility.
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Neither Xxxxxx nor any of its affiliates (nor any of their respective
control persons, directors, officers, employees or agents) shall be liable
to the Company or to any other person claiming through the Company for any
claim, loss, damage, liability, cost or expense suffered by the Company or
any such person arising out of or related to Xxxxxx'x Engagement hereunder
except for a claim, loss or expense that arises solely out of or is based
solely upon any action or failure to act by Xxxxxx, other than an action or
failure to act undertaken at the request or with the consent of the
Company, that is found to constitute bad faith, willful misconduct or gross
negligence on the part of Xxxxxx. The Company understands that Xxxxxx is
not a broker-dealer and will not be performing any services that may only
be performed by a registered broker-dealer.
7. Indemnification.
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Since Xxxxxx will be acting on behalf of the Company in connection
with its Engagement, the Company agrees to indemnify Xxxxxx as set forth in
Exhibit A to this Agreement.
8. Termination.
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The term of this Agreement is one (1) year from the date hereof;
provided, however, that Xxxxxx'x Engagement hereunder may be earlier
terminated, with or without cause, by either the Company or Xxxxxx upon 30
days prior written notice to the other party; provided, further, that such
termination will not affect obligations or rights of the parties incurred
prior to such date of earlier termination, including Xxxxxx'x right to (i)
expense reimbursement under Section 5, (ii) receipt of payment of any fees
or compensation pursuant to Section 4, (iii) the indemnification
contemplated by Section 7 above, and (iv) any other remaining compensation
due under this Agreement.
9. Other Relationships.
9.1 The parties acknowledge that Dr. Xxxxx Xxxxx is the Chairman of the
Advisory Board of the Company and serves from time to time as an advisor to
Xxxxxx and is entitled to a fee from the Company in connection with the
consummation of the Transaction.
10. Governing Law; Jurisdiction; Waiver of Jury Trial.
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10.1 This Agreement will be deemed made in New York and will be
governed by the laws of the State of New York without regard to the
conflict of law principles contained therein. The Company and Xxxxxx
irrevocably submit to the jurisdiction of the United States District Court
for the Southern District of New York or any court of the State of New
York, in each case located in New York County, New York, for the purpose of
any suit, action or other proceeding arising out of this Agreement, or any
of the agreements or transactions contemplated hereby, which is brought by
or against the Company or Xxxxxx. Each of the Company (and, to the extent
permitted by law, on behalf of the Company's equity holders and creditors)
and Xxxxxx hereby knowingly, voluntarily and irrevocably waive any right it
may have to a trial by jury in respect of any claim based upon, arising out
of or in connection with this Agreement and the transactions contemplated
hereby.
10.2 Any dispute arising hereunder, if not settled by mutual
agreement, shall, at Xxxxxx'x option, and, upon written notice by Xxxxxx to
the Company, be settled by final and binding arbitration in New York, New
York. The arbitration shall be conducted in accordance with the Commercial
Dispute Resolution Procedures and Rules of the American Arbitration
Association ("AAA Rules") by a single disinterested arbitrator appointed in
accordance with such AAA Rules.
10.3 The arbitrator shall have authority to award relief under legal
or equitable principles, including interim or preliminary relief, and to
allocate responsibility for the costs of the arbitration and to award
recovery of attorneys' fees and expenses in such manner as is determined by
the arbitrators.
10.4 Judgment upon the award rendered by the arbitrators may be
entered in any court having personal and subject matter jurisdiction. Each
party hereby submits to the in personal and subject matter jurisdiction of
the federal and state courts in the County of New York for the purpose of
confirming any such award and entering judgment thereon.
All proceedings under Section 10 and all evidence given or discovered
pursuant hereto, shall be maintained in confidence by both parties, except
as required by law.
11. No Rights in Equityholders, Creditors.
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This Agreement does not create, and will not be construed as creating,
rights enforceable by any person or entity not a party hereto, except those
entitled thereto by virtue of Section 7 herein. The Company acknowledges
and agrees that (a) Xxxxxx will act as an independent contractor and is
being retained solely to assist the Company in its efforts to help with
possible financial transactions, and that, Xxxxxx is not being retained to
advise the Company on, or to express any opinion as to, the wisdom,
desirability or prudence of consummating any financial transaction; and (b)
Xxxxxx is not and will not be construed as a fiduciary of the Company or
any affiliate thereof and will have no duties or liabilities to the equity
holders or creditors of the Company, and affiliates of the Company or any
other person by virtue of this Agreement and the retention of Xxxxxx
xxxxxxxxx, all of which duties and liabilities are hereby expressly waived.
Neither equity holders nor creditors of the Company are intended
beneficiaries hereunder. The Company confirms that it will rely on its own
counsel, accountants and other similar expert advisors for legal,
accounting, tax and other similar advice.
12. Xxxxxx; Other Activities; Public Announcements.
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(a) The Company acknowledges that Xxxxxx and its affiliates are in the
business of providing financial services and consulting advice to others.
Nothing herein contained shall be construed to limit or restrict Xxxxxx in
conducting such business with respect to others, or in rendering such
advice to others, except as such advice may relate to matters relating to
the Company's business and properties.
(b) Except as required by law or any regulatory agency, neither Xxxxxx
nor the Company shall make or issue any public announcements or other
communications regarding this Agreement or the Financing without the prior
approval of the other, which consent shall not be unreasonably withheld,
delayed or conditioned.
13. Miscellaneous.
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13.1 This Agreement may not be modified or amended except in writing
executed in counterparts, each of which will be deemed an original and all
of which will constitute one and the same instrument.
13.2 This Agreement supersedes all prior agreements between the
parties concerning the subject matter hereof.
13.3 Neither party may assign this Agreement without the prior written
consent of the other party.
13.4 This Agreement can be modified or amended only by a written
instrument signed by both parties.
13.5 If any provision of this Agreement shall for any reason be held
invalid or unenforceable by any court, governmental agency or arbitrator of
competent jurisdiction, such invalidity or unenforceability shall not
affect any other provision hereof, but this Agreement shall be construed as
if such invalid or unenforceable provision had never been contained herein.
13.6 The provisions contained in Sections 3, 4, 5, 6, 7, 10, 11 and 13
shall survive expiration or termination of this Agreement.
13.7 All notices, requests, demands and other communications hereunder
shall be given in writing and shall be (a) personally delivered; (b) sent
by telecopier; (c) sent by an internationally-recognized overnight courier,
or (d) sent to the parties at their respective addresses indicated herein
by registered or certified mail, return receipt requested and postage
prepaid. The respective addresses to be used for all such notices, demands
or requests are as follows:
If to the Company,
Phase III Medical, Inc.
000 Xxxxx Xxxxxxx Xxxx
Xxxxxxxx, XX 00000
Telecopier: (631) 574 - 4956
Attention: Xx. Xxxx Xxxxxxx
Or to such other person or address as the Company shall designate in
writing to the other party.
If to Xxxxxx,
Xxxxxx Capital Group LLC
000 Xxxxx Xxxxxx (00xx Xxxxx)
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxxxxx Xxxx
with a copy to:
The same address listed above for Xxxxxx, Attn: General Counsel.
Such communication shall be deemed delivered upon actual receipt
(provided, that if notice is sent by telecopier it shall be deemed
delivered the next day business after transmission and the sender shall
bear the burden of proof of delivery) or refusal of receipt. Either party
to this Agreement may change its address at any time by giving notice
thereof in accordance with this Section 13.
If the foregoing correctly sets forth our Agreement, please so indicate by
signing below and returning an executed copy to Xxxxxx Capital Group LLC. This
Agreement may be executed by the exchange by facsimile/telecopy or
e-mail/electronic signature between the Parties of signed counterparts of this
Agreement. We look forward to working with you and the rest of the management
team in a long-term relationship that assists the Company in achieving its
business goals.
Sincerely, ACCEPTED AND APPROVED:
Xxxxxx Capital Group LLC Phase III Medical, Inc.
/s/Xxxxxxx Xxxx /s/Xxxx Xxxxxxx
Xxxxxxx Xxxx Xxxx Xxxxxxx
President President&CEO
EXHIBIT A - INDEMNIFICATION PROVISIONS
In connection with our engagement of Xxxxxx as our consultant and advisor,
the Company hereby agrees to indemnify and hold Xxxxxx and its affiliates, and
the directors, officers, partners, shareholders, members, employees and agents
of Xxxxxx and each other person, if any, controlling Xxxxxx or any of its
affiliates (collectively the "Indemnified Persons"), harmless from and against
any and all claims, actions, suits, proceedings (including those of
shareholders), damages, liabilities and expenses incurred by any of them
(including, but not limited to, fees and expenses of counsel) which are (A)
related to or arise out of (i) any actions taken or omitted to be taken
(including any untrue statements made or any statements omitted to be made) by
the Company, or (ii) any actions taken or omitted to be taken by any Indemnified
Person in connection with the Company's engagement of Xxxxxx pursuant to this
Agreement between the Xxxxxx and the Company, or (B) otherwise related to or
arising out of Xxxxxx'x activities on our behalf pursuant to Xxxxxx'x engagement
under this Agreement, and the Company shall reimburse any Indemnified Person for
all expenses (including, but not limited to, fees and expenses of counsel) as
incurred by such Indemnified Person in connection with investigating, preparing
or defending any such claim, action, suit or proceeding (collectively a
"Claim"), whether or not in connection with pending or threatened litigation in
which any Indemnified Person is a party. The Company will not, however, be
responsible for any Claim which is finally judicially determined to have
resulted exclusively from the gross negligence or willful misconduct of any
person seeking indemnification hereunder. The Company further agrees that no
Indemnified Person shall have any liability to the Company for or in connection
with Xxxxxx'x engagement under the Agreement except for any Claim incurred by
the Company solely as a direct result of any Indemnified Person's gross
negligence or willful misconduct.
The Company further agrees that it will not, without the prior written
consent of Xxxxxx xxxxxx, compromise or consent to the entry of any judgment in
any pending or threatened Claim in respect of which indemnification may be
sought hereunder (whether or not any Indemnified Person is an actual or
potential party to such Claim), unless such settlement, compromise or consent
includes a legally binding, unconditional, and irrevocable release of each
Indemnified Person hereunder from any and all liability arising out of such
Claim.
Promptly upon receipt by an Indemnified Person of notice of any complaint
or the assertion or institution of any Claim with respect to which
indemnification is being sought hereunder, such Indemnified Person shall notify
the Company in writing of such complaint or of such assertion or institution,
but failure to so notify the Company shall not relieve the Company from any
obligation it may have hereunder, unless, and only to the extent that, such
failure results in the forfeiture by it of substantial rights and defenses, and
such failure to so notify the Company will not in any event relieve it from any
other obligation or liability it may have to any Indemnified Person otherwise
than under this Agreement. If the Company so elects or is requested by such
Indemnified Person, it will assume the defense of such Claim, including the
employment of counsel reasonably satisfactory to such Indemnified Person and the
payment of the fees and expenses of such counsel. In the event, however, that
such Indemnified Person reasonably determines in its sole judgment that having
common counsel would present such counsel with a conflict of interest or such
Indemnified Person reasonably concludes that there may be legal defenses
available to it or other Indemnified Persons different from or in addition to
those available to the Company, then such Indemnified Person may employ its own
separate counsel to represent or defend it in any such Claim and the Company
shall pay the reasonable fees and expenses of such counsel. Notwithstanding
anything herein to the contrary, if the Company fails timely or diligently to
defend, contest, or otherwise protect against any Claim, the relevant
Indemnified Party shall have the right, but not the obligation, to defend,
contest, compromise, settle, assert crossclaims or counterclaims, or otherwise
protect against the same, and shall be fully indemnified by the Company
therefor, including, but not limited to, for the fees and expenses of its
counsel and all amounts paid as a result of such Claim or the compromise or
settlement thereof. In any Claim in which the Company assumes the defense, the
Indemnified Person shall have the right to participate in such defense and to
retain its own counsel therefor at its own expense.
The Company agrees that if any indemnity sought by an Indemnified Person
hereunder is held by a court to be unavailable for any reason, then (whether or
not Xxxxxx is the Indemnified Person) the Company and Xxxxxx shall contribute to
the Claim for which such indemnity is held unavailable in such proportion as is
appropriate to reflect the relative benefits to the Company, on the one hand,
and Xxxxxx, on the other, in connection with Xxxxxx'x engagement by the Company
under the Agreement, subject to the limitation that in no event shall the amount
of Xxxxxx'x contribution to such Claim exceed the amount of fees actually
received by Xxxxxx from the Company pursuant to Xxxxxx'x engagement under the
Agreement. The Company hereby agrees that the relative benefits to it, on the
one hand, and Xxxxxx, on the other hand, with respect to Xxxxxx'x engagement
under the Agreement shall be deemed to be in the same proportion as (a) the
total value paid or proposed to be paid or received by the Company or its
stockholders as the case may be, pursuant to the transaction (whether or not
consummated) for which Xxxxxx is engaged to render services bears to (b) the fee
paid or proposed to be paid to Xxxxxx in connection with such engagement.
The Company's indemnity, reimbursement and contribution obligations under
this Agreement shall be in addition to, and shall in no way limit or otherwise
adversely affect any rights that an Indemnified Party may have at law or at
equity.
Should Xxxxxx, or any of its directors, officers, partners, shareholders,
members, agents or employees, be required or be requested by the Company to
provide documentary evidence or testimony in connection with any proceeding
arising from or relating to Xxxxxx'x engagement under the Agreement, the Company
agrees to pay all reasonable expenses (including, but not limited to, fees and
expenses of counsel) in complying therewith and customary fees for sworn
testimony or preparation thereof, payable in advance.
