CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (this "Agreement") dated as of November 23 ,
1994, is made by and between Osiris Therapeutics, Inc., a Delaware
corporation (the "Company"), and Xxx Xxxx, Ph.D. (the ".consultant").
RECITALS
A. The Company desires to retain the services of consultant
B. Consultant is willing to be retained by the Company on the terms and
conditions set forth in this Agreement.
AGREEMENTS
NOW, THEREFORE, the Company and the Consultant agree as follows:
l. Services to be Provided (a) The Company hereby retains the services of
Consultant for the term set forth in Section 2 below (the "Consulting
Period"), with the duties and responsibilities set forth below, and upon the
other terms and conditions hereinafter stated. During the Consulting Period,
Consultant shall be an advisor to the Company and shall serve as the Business
Advisor--Stem Cell Strategy, Industry Collaborations and Financial
Development for the Company, and as a non-employee Chairman of the Board of
Directors of the Company (the "Board"). Consultant's duties and
responsibilities shall include:
Advisory Activities:
(i) Provide guidance and counsel on the Company's strategic direction,
priorities and response to industry developments.
(ii) Identify and introduce the Company's management to new strategic
opportunities, including in the areas of corporate partnerships,
acquisitions, technology licensing and international marketing/distribution
arrangements.
(iii) Assist the Company in identifying and developing financing
alternatives.
(iv) Assist the Chief Executive Officer of the Company (the "CEO") in
presentations to key investors and financial institutions.
Board Activities:
(i) When present, chair meetings of the Board of Directors.
(ii) Assist the Chief Executive Officer in setting Board policy and the
agenda of regularly scheduled Board meetings.
(iii) Attend from four to six full Board meetings per year.
(b) The Company and Consultant agree that Consultant's relationship with
the Company shall be that of independent contractor, and Consultant shall not
be an employee of the Company. Further, Consultant shall only be authorized
to act for or on behalf of the Company to the extent specifically authorized
by the Board or the CEO.
(c) During the Consulting Period, Consultant shall devote twelve days per
year to activities on behalf of the Company as follows: four to six days for
attendance at four regularly scheduled Board meetings and two optional Board
meetings and six to eight days, as appropriate, for assisting the Company in
a business advisory capacity. Consultant may devote additional days to
activities on behalf of the Company at the mutual agreement of Consultant and
the Company.
2. Term. The term of Consultant's consulting services to the Company shall
commence on December 1, 1994 (the "Commencement Date") and shall end on the
third anniversary of the Commencement Date unless sooner terminated pursuant
to the terms of this Agreement.
3. Compensation.
(a) Issuance and Sale of Shares In consideration of the services to be
provided by Consultant, the Company hereby issues and sells to Consultant
80,000 shares of the Company's Common Stock, par value $.001 per share (the
"Common Stock"), for a price per share of $.34. Of such 80,000 shares of
Common Stock (the "Shares"), 10,000 Shares are issued and sold to Consultant
without restriction other than as provided in clause (ii) of paragraph (b)
below, and 70,000 Shares (the "Restricted Shares") are subject to the
restrictions and risk of forfeiture set forth in paragraphs (b) and (c) of
this Section 3.
(b) Restrictions on Transfer of Shares. The Shares may not be
transferred, sold, pledged, exchanged, assigned or otherwise encumbered or
disposed of by Consultant, except to the Company, unless and until (i) in the
case of the Restricted Shares, such Shares have become nonforfeitable in
accordance with paragraph (c) of this Section 3 and (ii) such transfer or
other disposition is registered under the Securities Act of 1933 and any
applicable state
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securities laws and will not cause the Company to be subject to the periodic
reporting requirements of the Securities Exchange Act of 1934, and the
Company receives evidence satisfactory to it, in its sole discretion, that
such transfer or other disposition is registered or is not required to be
registered under the Securities Act of 1933 and such state securities laws
and will not subject the Company to such reporting requirements. Any
purported transfer, encumbrance or other disposition of the Shares that is in
violation of this Section 3 shall be null and void, and the other party to
any such purported transfer, encumbrance or other disposition shall not
obtain any rights to or interest in such Shares. The certificate(s)
evidencing the Shares shall bear a legend in a form satisfactory to the
Company reflecting the restrictions described above.
(c) Vesting of Restricted Shares. 10,000 of the Restricted Shares shall
become nonforfeitable upon each of the first, second and third anniversary of
the Commencement Date if Consultant's services to the Company have not been
terminated prior to such anniversary pursuant to Section 5 of this Agreement.
The remaining 40,000 Restricted Shares shall become nonforfeitable in
accordance with Exhibit A attached hereto and made a part hereof.
(d) Forfeiture of Restricted Shares Any of the Restricted Shares that
have not become nonforfeitable in accordance with paragraph (c) hereof on the
date on which Consultant's consulting services to the Company are terminated
pursuant to Section 5 of this Agreement shall be forfeited by Consultant. In
the event of a forfeiture, the certificate(s) representing all of the
Restricted Shares that have not become nonforfeitable in accordance with
paragraph (c) hereof shall be canceled and Consultant shall have no further
interest in or rights with respect to such Restricted Shares, and the Company
shall repurchase such Restricted Shares for a price per share equal to that
originally paid by Consultant.
(e) Dividend, Voting and Other Rights. Consultant shall have all of the
rights of a stockholder with respect to the Restricted Shares, including the
right to vote the Restricted Shares and receive any dividends that may be
paid thereon; provided, however, that any additional shares of Common Stock
or other securities that Consultant may become entitled to receive pursuant
to a stock split or dividend with respect to the Common Stock or a merger or
reorganization in which the Company is the surviving corporation or any other
change in the capital structure of the Company shall be subject to the same
restrictions and risk of forfeiture as the Restricted Shares with respect to
which such additional shares of Common Stock or other securities were
received by Consultant.
(f) Retention of Stock Certificate(s) by the Company The certificate(s)
representing the Restricted Shares covered by this Agreement shall be held in
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custody by the Company, together with a stock power with respect thereto
endorsed in blank by Consultant, until those Restricted Shares have become
nonforfeitable in accordance with paragraph (c) to this Section 3.
(g) Withholding Taxes. If the Company shall be required to withhold any
federal, state, local or foreign tax in connection with any issuance of the
Shares or other securities pursuant to this Section 3, Consultant shall pay
the tax or make provisions that are satisfactory to the Company for the
payment thereof.
(h) Other. No provision of this Section 3 shall limit in any way
whatsoever any right that the Company may otherwise have to terminate the
consulting services of Consultant at any time.
(i) Loan. In order to facilitate Consultant's purchase of the Shares,
the Company shall, at the election of Consultant, make a loan to Consultant
in the amount of $27,200 (the "Loan"), which shall bear interest at a rate
equal to the lowest rate necessary to avoid the imputation of interest under
the Internal Revenue Code of 1986, as amended, and shall become due and
payable in full on the earliest to occur of(a) termination of Consultant's
consulting services to the Company for any reason, (b) the first sale of all
or a portion of the Shares by Consultant and (c) the fifth anniversary of the
date of this Agreement.
4. Expense Reimbursement. During the Consulting Period, Consultant shall be
entitled to reimbursement for all reasonable and documented expenses incurred
by Consultant in connection with approved business of the Company (such as
business class transportation, hotels, and meals), in accordance with the
Company policy with respect to such reimbursement.
5. Termination of Consulting Period.
(a) Consultant may terminate his consulting services to the Company at
any time upon giving the Company written notice 30 days in advance of the
proposed date of termination.
(b) Consultant's consulting services to the Company shall terminate
automatically upon the death of Consultant.
(c) The Company may terminate Consultant's consulting services to the
Company with or without cause, at any time and for any reason, by giving
Consultant written notice from the CEO or the Board at least 90 days in
advance of the date on which the termination is to become effective.
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6. Confidentiality.
Consultant acknowledges that by reason of his duties as an advisor to the
Company he has or will have access to and become informed of confidential and
secret information which is a competitive asset of the Company (collectively
"Confidential Information") including, without limitation, (a) information
concerning concepts for products and services and products and services data,
(b) research, development and corporate planning data, (c) the Company's
financial results and business condition, and (d) any other information which
constitutes a "trade secret" under the Uniform Trade Secrets Act. Consultant
agrees to keep in strict confidence and not, either directly or indirectly,
to make known, divulge, reveal, furnish, make available or use any
Confidential Information, except for use in Consultant's regular authorized
duties on behalf of the Company.
Consultant acknowledges that all documents and other property including
or reflecting Confidential Information furnished to Consultant by the Company
or otherwise acquired or developed by the Company shall at all times be the
property of the Company. Consultant agrees that upon termination of
Consultant's consulting services to the Company, for any reason, Consultant
shall return to the Company any such documents or other property (including
copies, summaries or analyses of the foregoing) containing Confidential
Information which are in his or her possession, custody or control.
Consultant further agrees that Consultant's obligations of confidentiality
hereunder shall survive any termination of Consultant's consulting services
to the Company. For the purposes of this Section 6, Confidential Information
shall not include information which has become, through no fault of
Consultant, generally known to the public, and Consultant, if required by law
to make disclosure of Confidential Information to a court of competent
jurisdiction, may make such disclosure after providing the Company with
reasonable notice and an opportunity to contest such requirement. The
obligations of Consultant under this Section 6 are in addition to, and not in
limitation of or preemption of, all other obligations of confidentiality
which he may have to the Company under general legal and equitable principles.
7. Noncompetition.
Consultant acknowledges that his access to and knowledge of the
Confidential Information would be valuable to a competitor of the Company.
Consultant further acknowledges that it would be inherent in the performance
of his duties as a director, officer, employee, agent, consultant,
shareholder or partner of any corporation, partnership or other entity which
competes with the Company, or which intends to or may compete with the
Company, to disclose or use such knowledge to or for the benefit of such
corporation, partnership or other entity.
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To protect these vital interests of the Company, Consultant agrees that
from the date of this Agreement through the second anniversary of the date on
which his consulting services to the Company terminate for any reason (the
"Noncompetition Period"), he shall not, directly or indirectly, whether as a
director, officer, employee, agent or consultant or otherwise: (a) invest in
or become employed by or affiliated with, in any capacity, any corporation,
partnership or other entity which is engaged in a business which is
competitive with the business of the Company on the date of such termination
(except that Consultant may purchase up to two percent of the outstanding
capital stock of a company that has common stock quoted on a national stock
exchange or the over-the-counter market); (b) solicit sales of, or sell or
deliver, any product or service of the kind and character sold or distributed
by the Company; (c) solicit, attempt to solicit or seek to divert from the
Company the business or patronage of any person, corporation, partnership or
other entity with whom the Company has had business relations; or (d) engage,
suggest or assist in or influence the engagement of hiring by any competitor
of the Company of any employee of the Company, or otherwise cause or
encourage any person, corporation, partnership or other entity having a
business or employment relationship with the Company to sever such
relationship with or commit any act harmful to the Company.
Consultant's obligations and covenants ;under this Section 7 shall be
limited to North America, Europe, Japan, China, Taiwan, Singapore and
Australia. For the purposes of this Section 7, the business of the Company
shall mean (a) the research, development and commercialization of products
using mesenchymal stem cells, hematopoietic stem cells, or the progeny cells
of either, for the repair and regeneration of tissue, bone marrow
transplantation and cancer therapy; (b) the research, development and
commercialization of cellular transplants and cell-matrix products that
utilize mesenchymal stem cells and their progeny; (c) the research,
development and commercialization of products using mesenchymal stem cells
and their growth factors, their receptors and their cross-signaling molecules
to control, mediate, enhance or otherwise influence hematopoietic stem cells
and their progeny; and (d) the research, development and commercialization of
biomatrix and gene therapy products specifically using mesenchymal stem
cells, hematopoietic stem cells and/or their progeny.
8. Inventions.
Consultant hereby assigns and agrees to assign to the Company, its
successors, assigns or nominees, all of his rights to any discoveries,
inventions and improvements, whether patentable or not, made, conceived or
suggested, either solely or jointly with others, by Consultant while
providing consulting services to the Company, whether in the course of his
providing consulting services with the use of the Company's time, material or
facilities or that is in any way within or related to the existing or
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contemplated scope of the Company's business. Any discovery, invention or
improvement relating to any subject matter with which the Company was
concerned during the Consulting Period and made, conceived or suggested by
Consultant, either solely or jointly with others, within one year following
termination of Consultant's consulting services to the Company shall be
irrebuttably presumed to have been so made, conceived or suggested in the
course of such consulting services with the use of the Company's time,
materials or facilities.
Upon request by the Company with respect to any such discoveries,
inventions or improvements, Consultant will execute and deliver to the
Company, at any time during or after the Consulting Period, all appropriate
documents for use in applying for, obtaining and maintaining such domestic
and foreign patents as the Company may desire, and all proper assignments
therefor, when so requested by and at the expense of the Company, but without
further or additional consideration.
9. Options to Purchase Stock.
(a) For each day of consulting services provided by Consultant pursuant
to Section 1(c) in excess of the twelve days of consulting services to be
provided each year, Consultant shall receive an option to purchase 1,000
shares of common stock (as adjusted to reflect any stock split, combination
or other reclassification) with an exercise per share equal to the then fair
market value of such common stock (as determined by the Board) and upon such
other terms and conditions as are contained in the Company's standard stock
option agreement.
(b) As additional consideration for the services to be provided by
Consultant pursuant to this Agreement, Consultant shall have the option to
purchase up to 100,000 shares of the series of preferred stock issued in
connection with the Company's next round of equity financing with
institutional investors, at a price per share of $3.40. Such purchase shall
be on substantially the same terms and conditions as those provided generally
to such investors. Such option shall expire and be of no further force and
effect on December 1, 1995.
10. Miscellaneous
(a) All notices required to be given under this Agreement shall be in
writing and delivered personally or sent by registered mail or certified
mail, postage prepaid, return receipt requested, addressed as follows:
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If to the Company:
Osiris Therapeutics, Inc.
The Wearn Building, Fourth Floor
00000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Chief Executive Officer
with a copy to:
Xxxxx, Day, Xxxxxx & Xxxxx
North Point
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxx X. XxXxxxxxxx
If to Consultant:
Dr. Xxx Xxxx
Xxxxxxxxxxxxxxx 00
0000 Xxxxxx
Xxxxxxxxxxx
Notice shall be deemed delivered at the time received in the case of personal
delivery, or five business days after it is mailed in the case of mailing.
The foregoing instructions may be changed at any time by a party by providing
written notice of such change.
(b) This Agreement shall be subject to and governed by the internal laws
of the State of Maryland (without regard to conflicts of law principles).
(c) The headings or titles to sections in this Agreement are intended
solely for convenience and no provision of this Agreement is to be construed
by reference to the heading or title of any section.
(d) No provision of this Agreement may be amended, modified or waived
unless such amendment, modification or waiver is authorized by the Board and
is agreed to in a writing signed by Consultant and by the CEO of the Company.
Except as otherwise specifically provided in this Agreement, no waiver by
any party hereto of any breach by any other party hereto of any condition or
provision of this Agreement to be performed by such other party shall be
deemed a waiver of a subsequent breach of such condition or provision or a
waiver of a similar or dissimilar provision or condition at the same or at
any prior or subsequent time; nor shall the receipt or acceptance of
compensation or other benefits following any termination of Consultant's
employment be deemed a waiver of any condition or provision hereof.
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(e) Consultant shall not assign, pledge or encumber any interest in this
Agreement or any part thereof without the express written consent of the
Company this Agreement being personal to Consultant. This Agreement shall,
however, inure to the benefit of Consultant's estate, dependents,
beneficiaries and legal representatives. This Agreement shall not be
assignable by the Company without the written consent of Consultant, but if
the Company shall merge or consolidate with or into, or transfer all or
substantially all of its assets to, another corporation or other form of
business organization, then this Agreement shall inure to the benefit of and
be binding upon the successor of the Company resulting from such merger,
consolidation or transfer. No such merger, consolidation or transfer,
however, shall relieve the Company from liability and responsibility for the
performance of its duties and obligations hereunder.
(f) Each provision of this Agreement constitutes a separate and distinct
undertaking, covenant and/or provision hereof. In the event that any
provision of this Agreement shall finally be determined to be unlawful, such
provision shall be deemed severed from this Agreement, but every other
provision of this Agreement shall remain in full force and effect, and in
substitution for any such provision held unlawful, there shall be substituted
a provision of similar import reflecting the original intent of the parties
hereto to the extent permissible under law.
(g) This Agreement and the agreements referred to herein comprise the
entire understanding between the Company and Consultant as to the subject
matter hereof and supersedes all prior agreements relating thereto.
(h) In the event of a breach by Consultant of any of the provisions of
Sections 6, 7, or 8 of this Agreement, the Company shall have the right to
institute and prosecute proceedings, in equity, in any court of competent
jurisdiction, to obtain an injunction during or after the term of this
Agreement to enforce the provisions of such Sections and to pursue any other
remedy to which the Company may be entitled. Consultant acknowledges that the
Company's remedy at law for any of Consultant's obligations under such
Sections will be inadequate, and Consultant agrees and consents that
temporary and permanent injunctive relief may be granted in any proceeding
which may be brought to enforce any provision thereof, without the necessity
of proof of actual damage.
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IN WITNESS WHEREOF, Consultant and the Company, by a duly authorized
officer of the Company pursuant to the authority of its Board of Directors,
have executed this Consulting Agreement as of the day and year first written
above.
OSIRIS THERAPEUTICS, INC.
By: /s/ Xxxxx X. Xxxxx
---------------------------------
Xxxxx X. Xxxxx, President and CEO
/s/ Xxx Xxxx
---------------------------------
XXX XXXX
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Exhibit A
OSIRIS THERAPEUTICS, INC.
Incentive Equity Compensation
for
Xxx Xxxx, Ph.D.
1. Total Shares: 40,000 shares of Osiris Common Stock at a purchase price
of $0.34 per share.
2. Incentive Features: Milestone vesting schedule based on achievement of
corporate partnership and/or financing milestones3 based on the introduction
or arrangement by Dr. Link.
3. Vesting Schedule:
10,000 Upon issuance of $2.5 million of Osiris Preferred
Stock to qualified individuals and/or financial
institutions introduced by Dr. Link (i.e., 10,000
shares for each $2.5 million1 up to 40,000 shares).
- or -
40,000 Upon completion of a corporate partner-ship
agreement in the pharmaceutical, stem cell and/or
other cell/drug therapy field involving equity
investment, license fees1 milestone payments and
multi-year R&D contracts on the part of the
corporate partner, in exchange for product and/or
geographic rights and, in an aggregate amount which
exceeds $50 million over a period of five years
- or -
20,000 Upon completion of a license or purchase agreement
for proprietary technology acquired by Osiris which
is the subject of a patent application and which was
introduced by Dr. Link
- or -
40,000 Upon completion of a minority equity investment in
Osiris by a health care company in an amount
exceeding $20 million at a price per share in excess
of $8 per share.
Incentive Equity Compensation
Exhibit A contd.
Page Two
40,000 Upon approval by Osiris shareholders of a definitive
or more agreement to purchase a majority equity interest in
Osiris at a price of at least $20 per share3 based on
the Company's capitalization as of December1,1994.
Preferred Stock investments over $10 million or
substantial corporate investments by investors and/or
companies introduced by Dr. Link will be negotiated
separately.
Promissory Note
$27,200.00 January 2, 1995
Cleveland, Ohio
FOR VALUE RECEIVED, the undersigned, Xxx Xxxx, whose address is
Xxxxxxxxxxxxxxx 00, 0000 Xxxxxx, Xxxxxxxxxxx (the "Maker"), promises to pay,
in lawful money of the United State of America, to the order of Osiris
Therapeutics, Inc., a Delaware corporation with an address of 00000 Xxxxxx
Xxxxxx, Xxxxx Xxxxxxxx, Xxxxxx Xxxxx, Xxxxxxxxx, Xxxx 00000 (the "Payee"),
the sum of Twenty Seven Thousand Two Hundred Dollars ($27,200.00) (the
"Principal Sum") as hereinafter set forth.
In accordance with that certain Consulting Agreement dated as of November
23, 1994 ("Consulting Agreement") by and between Maker and Payee, this
Promissory Note is given to Payee and represents payment of the purchase
price for the Shares (as defined in the Consulting Agreement)
Payment of the Principal Sum. Payment of the Principal Sum, together
with interest at seven and one-half percent (71/2%) per annum, shall be due
and payable on the earlier of (i) the date on which a demand for payment of
the Principal Sum is made upon Maker by Payee, (ii) the date on which the
Maker sells all or any portion of the Shares, and (iii) December 31, 2003.
Prepayment. The unpaid and outstanding balance of the Principal Sum may
be prepaid, in whole or in part, without any premium or penalty.
Default. It shall be an event of default hereunder ("Event of Default")
if (a) Maker fails to make any payment due hereunder when due or within ten
(10) days thereafter; (b) by the order or decree of a court of competent
jurisdiction an adjudication is made that the Maker is bankrupt or insolvent,
or a substantial part of the property of the Maker shall have been
sequestered, and such decree shall have continued unreversed or unstayed for
a period of thirty (30) days after the entry thereof; or (c) the Maker shall
make a general assignment for the benefit of the creditors.
/s/ Xxx Xxxx
------------
Xxx Xxxx
"Maker"
This Note has not been registered under the Securities Act of 1933 or
applicable state securities laws, if any, and neither the Note nor any
interest therein may be sold, transferred, pledged or otherwise disposed of
in the absence of (i) the opinion of counsel or other evidence satisfactory
to the issuer hereof that such disposition may lawfully be made without such
registration or (ii) such registration.
