EXHIBIT 10.6
Xxxxxxx Letter Agreement
Exhibit 10.6
PHASE III MEDICAL, INC.
000 Xxxxx Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxxx, Xxx Xxxx 00000
631 574.4955
August 12, 2004
Xxxxx X. Xxxxxxx, M.D., Ph.D.
Department of Cancer Immunology & AIDS
Xxxx-Xxxxxx Cancer Institute - Harvard Medical School
00 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Dear Xx. Xxxxxxx:
We are pleased to extend to you an invitation to become the Senior
Scientific Advisor ("SSA") of Phase III Medical, Inc. (the "Company").
As you know, the Company is a public company that, among other things,
provides capital and guidance to companies, within the medical sector, in
exchange for revenues, royalties and other contractual rights known as "royalty
interests," that entitle it to receive a portion of revenue from the sale of
pharmaceuticals, medical devices and biotechnology products. As SSA, you will be
responsible for assisting the Company in reviewing and evaluating business,
scientific and medical opportunities, and for other discussions and meetings
that may arise during the normal course of the Company conducting its business.
You will report your reviews and evaluations to the Chief Executive Officer and
President who will have direct responsibilities for Business Development
decisions. In keeping with Harvard Medical School's new policies on Conflicts of
Interest and Commitment for full-time Faculty Members (accepted May 26, 2004),
your position will not include any fiduciary or other responsibilities that are
required to operate a material segment of the operations of the business.
This Letter Agreement shall be effective as of August 12, 2004 (the
"Commencement Date") and shall continue for a period of three (3) years from the
Commencement Date (the "Term"). For all services rendered by you in any capacity
required hereunder during the Term, you shall be entitled to an annual salary of
$84,000 for the first year of the Term, $92,400 for the second year of the Term,
and $101,640 for the third year of the Term payable within normal payroll
practices of the Company, provided that all conditions to payment specified
herein have been met. In addition to the annual cash compensation stated in the
preceding sentence, you shall also be entitled to five (5%) percent of all
collected revenues ("additional cash compensation") derived from the Company's
royalty or other revenue sharing agreements, provided that the amount of annual
salary and additional cash compensation (in the form of such revenue sharing)
shall not exceed $200,000 per year during the Term. Such additional cash
compensation shall be payable quarterly within 45 days of the end of each
quarter, provided that all conditions to payment specified herein have been met.
Although the annual cash compensation and additional cash compensation
stated above shall begin to accrue as of the Commencement Date, you will not be
entitled to receive any such amounts until the Company raises $1,500,000 in
additional equity financing after the Commencement Date. In light of such
repayment restrictions, and in further consideration for your services
hereunder, upon execution of this Letter Agreement, you will be granted an
option, fully vested, to purchase 675,000 shares of the Company's common stock
at an exercise price of ten cents per share. The shares will be subject to a one
year lockup as of the date of grant. The exercise period will be ten years, and
the grant will otherwise be in accordance with the Company's 2003 Equity
Participation Plan and Non-Qualified Stock Option Grant Agreement. In addition,
in the event that the closing price of the Company's common stock equals or
exceeds fifty cents per share for any five consecutive trading days during the
Term, the Company shall grant you, on the day immediately following the end of
the five day period, pursuant to the 2003 Equity Participation Plan and a Stock
Option Agreement, an option for the purchase of an additional 1,000,000 shares
of common stock substantially upon the terms of the initial option and in the
form of the initial option agreement, except that the exercise price shall be
fifty cents per share. You will not be entitled to any further option grants as
a director of the Company under any existing or future plans, but you will be
entitled to participate in any future option plans established by the board for
the officers of the Company so long as you remain as SSA.
The Company shall pay or reimburse you for all reasonable travel or other
expenses incurred by you in connection with the performance of your duties and
obligations under this Letter Agreement, subject to your presentation of
appropriate vouchers in accordance with such procedures as the Company may from
time to time establish (including any procedures established to preserve any
deductions for Federal income taxation purposes to which the Company may be
entitled).
This Letter Agreement shall automatically terminate upon your death or
permanent disability. In addition, the Company may also terminate this Agreement
with or without cause immediately upon written notice to you. A termination for
cause would occur in the event that you, after written notice and an opportunity
to cure, consistently and willfully refuse to perform the services required by
you under this Letter Agreement. You may terminate this Letter Agreement upon
thirty days' prior written notice to the Company. In the event this Letter
Agreement terminates due to your death, permanent disability or upon notice from
the Company with or without cause, earned but unpaid cash and additional cash
compensation and unreimbursed expenses due as of the date of termination of this
Letter Agreement shall be payable in full. However, no other payments shall be
made, nor benefits provided, by the Company under this Letter Agreement except
as otherwise required by law. In the event that the Company decides to terminate
your employment without cause prior to the end of the three year term, you will
be entitled to receive a severance payment equal to one
year's salary, paid at the same level of salary as you are then currently
receiving and as a single payment to be paid promptly after the last day of
employment as SSA, in exchange for your execution of a release of all other
claims against the Company.
You acknowledge that, as SSA, you will have access to the Company's
confidential information and that all confidential information shall be and
remain the sole property of the Company and that you will not at any time, now
or in the future, disclose, disseminate or otherwise make public any of the
confidential information without the express written permission of the Company.
You hereby represent and warrant that (i) you have the legal capacity to
execute and perform this Letter Agreement, (ii) this Letter Agreement is a valid
and binding agreement enforceable against you according to its terms, (iii) the
execution and performance of this Letter Agreement does not violate the terms of
any existing agreement or understanding to which you are a party or by which you
may be bound and (iv) you have, and will, maintain during the Term, all
requisite licenses, permits and approvals necessary to perform the duties of SSA
set forth herein. You also hereby agree that you shall not participate in any
medical, health, and insurance plans which may from time to time be in effect
for employees of, or consultants to, or other agents of, the Company. You hereby
acknowledge to the Company that you desire to, and are capable of, securing such
benefits independent of your relationship with the Company.
This Agreement shall be governed by, and construed in accordance with, the
internal laws of the State of New York, without reference to the choice of law
principles thereof. Any claim, controversy or dispute between the parties
hereto, arising out of, relating to, or in connection with this Letter Agreement
or any aspect of your services to the Company hereunder, including but not
limited to the termination of this Letter Agreement and any and all claims in
tort or contract, shall be submitted to arbitration in Melville, New York,
pursuant to the American Arbitration Association ("AAA") National Arbitration
Rules for the Resolution of Employment Disputes. This provision shall apply to
claims against the Company and/or its affiliates and their respective current or
former employees, agents, managers, officers and/or directors. Any issue about
whether a claim is covered by this Letter Agreement shall be determined by the
arbitrator. There shall be one arbitrator, who (a) shall be chosen from a panel
provided by the AAA and who shall apply the substantive law of the State of New
York, (b) may award injunctive relief or any other remedy available from a
judge, including attorney fees and costs to the prevailing party, and (c) shall
not have the power to award punitive damages. Judicial review of the
arbitrator's award shall be strictly limited to the issue of whether said award
was obtained through fraud, corruption or misconduct.
This Letter Agreement shall be binding upon, and shall inure to the
benefit of, the Company and you and its and your respective permitted
successors, assigns, heirs, beneficiaries and representatives. This Letter
Agreement is personal to you and may not be assigned by you without the prior
written consent of the Company. Any attempted assignment in violation of this
paragraph shall be null and void. This Letter Agreement shall constitute the
entire agreement among the parties with respect to the matters covered hereby
and shall supersede all previous written, oral or implied understandings among
them with respect to such matters.
The Company acknowledges the Xxxx-Xxxxxx Cancer Institute's standard
consulting agreement provisions. These provisions, which were attached as
Exhibit A to a Board of Director's Engagement Letter dated May 19, 2003 by the
Company, as agreed to and accepted by you, have been reviewed and approved by
the Company.
The company recognizes the constraints on your time and agrees that your
efforts on behalf of the Company, as a Director and SSA, will not require more
than four (4) hours per week, scheduled to accommodate your existing
commitments.
We are excited about your involvement with the Company and look forward to
a long and mutually rewarding scientific and business relationship.
For our records, I would appreciate your countersigning the attached copy
of this Letter Agreement and returning the same to me at your earliest
convenience.
Sincerely,
Xxxx Xxxxxxx, President & CEO
Date Signed: November 18, 2004
Accepted and agreed to:
-----------------------------
Xxxxx X. Xxxxxxx, M.D., Ph.D.
Date Signed: November 18, 2004
