EXHIBIT 10.1
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of January 19, 2006 by and
between Phase III Medical, Inc. (the "Company") and Xxxxx Xxx (the "Executive").
W I T N E S S E T H:
WHEREAS, simultaneously with execution of this Agreement, the
Company is acquiring, through its wholly-owned subsidiary, Phase III Medical
Holding Company ("Holding"), substantially all of the business assets of
NeoStem, Inc. (the "Former Employer") pursuant to the terms of an Asset Purchase
Agreement dated as of December 6, 2005 (the "Asset Purchase Agreement") and
entered into by and among the Company, Holding and the Former Employer;
WHEREAS, the Executive has performed valuable services for the
Former Employer; and
WHEREAS, the Executive is willing to serve after the
acquisition as an employee of the Company and the Company desires to retain the
Executive effective upon consummation of the acquisition on the terms and
conditions herein set forth;
NOW THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto hereby agree as follows:
SECTION 1. EMPLOYMENT. The Company agrees to employ the
Executive, and the Executive agrees to be employed by the Company, upon the
terms and conditions hereinafter provided, for a period commencing on the date
first above written (the "Commencement Date") and, subject to earlier
termination pursuant to Section 5 hereof, continuing until the third (3rd)
anniversary of the Commencement Date (the "Term"). The Executive hereby
represents and warrants that he has the legal capacity to execute and perform
this Agreement, and that its execution and performance by him will not violate
the terms of any existing agreement or understanding to which the Executive is a
party. The Executive also represents that he understands that the Company has no
obligations to the Executive with respect to any agreements which exist or may
have existed between the Executive and the Former Employer.
SECTION 2. POSITION AND DUTIES. During the Term, the Executive
agrees to serve as an officer of the Company, and as an officer of any
subsidiary or division of the Company and will have such powers and duties as
may be reasonably conferred upon him by the Board of Directors of the Company
(the "Board"). During the Term, and except for reasonable vacation periods, the
Executive shall devote substantially all of his business time, attention, skill
and efforts exclusively to the business and affairs of the Company and its
subsidiaries and affiliates. Executive shall be based in or around Los Angeles,
California; however, it is understood that reasonable travel, estimated at two
times monthly shall be required to the Company's headquarters in New York.
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SECTION 3. COMPENSATION. For all services rendered by the
Executive in any capacity required hereunder during the Term, including, without
limitation, services as an officer, director, or member of any committee of the
Company or any subsidiary, affiliate or division thereof, the Executive shall be
compensated as follows:
(a) The Company shall pay the Executive a fixed annual salary
equal to $165,000 (the "Base Salary") in bi-weekly installments or otherwise in
accordance with the Company's payroll practices, including the withholding of
appropriate payroll taxes.
(b) The Executive shall be entitled to participate in all
compensation and employee benefit plans or programs, and to receive all benefits
and perquisites, which are approved by the Board of Directors of the Company and
are generally made available by the Company to all salaried employees of the
Company and to the extent permissible under the general terms and provisions of
such plans or programs and in accordance with the provisions thereof.
Notwithstanding any of the foregoing, nothing in this Agreement shall require
the Company to establish, maintain or continue any particular plan or program
nor preclude the amendment, rescission or termination of any such plan or
program that may be established from time to time. Notwithstanding the
foregoing, you will not participate in any medial, health and insurance plans of
the Company; however, the Company shall reimburse you for reasonable costs of
health insurance for you which you obtain upon receipt of appropriate monthly
medical insurance invoices.
(c) On the Commencement Date, Executive shall be granted an
option under and subject to the Company's 2003 Equity Participation Plan ("EPP")
to purchase 150,000 shares of the Company's common stock, $.001 par value
("Common Stock") at an exercise price equal to the closing price of the Common
Stock on the Commencement Date, which shall vest and become exercisable as to
50,000 shares of Common Stock on each of the first, second and third
anniversaries of the Commencement Date.
SECTION 4. BUSINESS EXPENSES. The Company shall pay or
reimburse the Executive for all reasonable travel or other reasonable expenses
incurred by the Executive in connection with the performance of his duties and
obligations under this Agreement, including a monthly car allowance of $750
(paid through the Company's payroll), subject to the Executive's presentation of
appropriate vouchers in accordance with such expense account policies and
approval procedures as the Company may from time to time establish for officers
(including but not limited to prior approval of extraordinary expenses) and to
preserve any deductions for Federal income taxation purposes to which the
Company may be entitled.
SECTION 5. TERMINATION OF EMPLOYMENT.
(a) The Company may terminate Executive's employment prior to
the end of the Term immediately upon written notice to Executive. Executive may
terminate Executive's employment upon thirty days' prior written notice to the
Company. In the event that the Executive's employment terminates prior to
expiration of the Term due to any reason, earned but unpaid Base Salary as of
the date of termination of employment shall be payable in full. In the event the
Company terminates Executive's employment prior to the expiration of the Term
based on any reason except a Termination for Cause, Executive will be entitled
to receive severance payments equal to one year's salary, paid at the same level
and timing of salary as Executive is then receiving; provided, however, that no
severance payments shall be made hereunder unless and until Executive executes
and delivers to the Company a release of all claims against the Company.
However, no other payments shall be made, or benefits provided, by the Company
under this Agreement except as otherwise required by law.
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(b) For purposes of this Agreement, the term "Termination for
Cause" means, to the maximum extent permitted by applicable law, a termination
of the Executive's employment by the Company for any event or circumstance
which, pursuant to applicable law, constitutes cause for dismissal, including
termination because the Executive has (a) materially breached or failed to
perform his duties under applicable law (including but not limited to laws
governing employment practices and securities laws), this Agreement or any
employment policies or practices of the Company and such breach or failure to
perform constitutes self-dealing, willful misconduct or recklessness, (b)
committed an act of dishonesty in the performance of his duties hereunder, (c)
intentionally engaged in conduct detrimental to the business of the Company, (d)
been convicted of a felony or a misdemeanor involving moral turpitude, (e)
materially breached or failed to perform his obligations and duties hereunder or
under any policies or procedures of the Company, and, if such breach or failure
is curable, which breach or failure the Executive shall fail to remedy within 15
days after written demand from the Company (which demand shall specify the
breach or failure and any necessary or desired corrective action) or (f)
violated in any material respect the representations made in Section 1 above or
the provisions of Section 6 below.
(c) The Company shall have the right to suspend the Executive
with pay during any period in which it is investigating a possible basis for a
Termination for Cause. Upon suspension, the Company shall provide the Executive
with reasonable notice of the basis for suspension to the extent practical.
SECTION 6. CONFIDENTIALITY; COVENANT AGAINST COMPETITION. (a)
The Executive recognizes and acknowledges that all information pertaining to the
affairs, business, clients, customers or acquisition targets of the Company or
any of its subsidiaries or affiliates or predecessors (any or all of such
entities being hereinafter referred to as the "Business"), as such information
may exist from time to time, other than information that the Company has
previously made publicly available or which has otherwise entered the public
domain through no fault of the Executive, is confidential information and is a
unique and valuable asset of the Business, access to and knowledge of which will
be essential to the performance of the Executive's duties under this Agreement.
In consideration of the payments made to him hereunder, the Executive shall not,
except to the extent reasonably necessary in the performance of his duties under
this Agreement, or as required by law, during the term of his employment
hereunder and thereafter, divulge to any person, firm, association, corporation,
or governmental agency, any information concerning the affairs, businesses,
clients, customers or acquisition targets of the Company or the Business (except
such information as is required by law to be divulged to a government agency or
pursuant to subpoena or similar lawful process), or make use of any such
information for his own purposes or for the benefit of any person, firm,
association or corporation (except the Business) and shall use his reasonable
best efforts to prevent the disclosure of any such information by others. All
records, memoranda, letters, books, papers, reports, customer lists, accountings
or other data, and other records and documents relating to the Business, whether
made by the Executive or otherwise coming into his possession, are confidential
information and are, shall be, and shall remain the property of the Business. No
copies thereof shall be made which are not retained by the Business, and the
Executive agrees, on termination of his employment that he will not retain or
make copies of any such documents relating to the Business and, on demand of the
Company, to deliver the same to the Company.
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(b) All proprietary information and all of the Executive's
interest in trade secrets, trademarks, computer programs, customer information,
customer lists, employee lists, products, procedures, copyrights, patents and
developments developed by the Executive as a result of, or in connection with,
his employment hereunder, shall belong to the Company; and without further
compensation, but at the Company's expense, upon the request of the Company, the
Executive shall execute any and all assignments or other documents and take any
and all such other action as the Company may reasonably request in order to vest
in the Company all of the Executive's right, title and interest in and to all of
the foregoing items, free and clear of all liens, charges and encumbrances of
the Executive of any kind.
(c) In consideration of the payments made to him hereunder,
during the period commencing on the effective date of the termination of his
employment (whether pursuant to this Agreement or under any extension hereof),
and ending on the second (2nd) anniversary of such effective date of termination
of his employment (the "Restrictive Period"), the Executive shall not, without
express prior written approval of the Board of Directors of the Company, as
evidenced by a resolution of the Company's Board, directly or indirectly, for
himself or on behalf of or in conjunction with, any other person, persons,
company, partnership, corporation or business of whatever nature, own or hold
any proprietary interest in, or be employed by or receive remuneration from, or
engage as an officer, director or in a managerial capacity, whether as an
employee, independent contractor, consultant or advisor, or as a sales
representative of, any corporation, partnership, sole proprietorship or other
entity (a "Competitor") engaged in competition with the "Business Activities" of
the Company or any of its subsidiaries or affiliates at the time of such
termination of employment, in the "Territory", other than severance-type or
retirement-type benefits from entities constituting prior employers of the
Executive. The Executive agrees that during such Restrictive Period he will not
solicit for himself or for the account of any Competitor, any customer or client
of the Company or its subsidiaries or affiliates, or, in the event of the
Executive's termination of his employment, any entity or individual that was
such a customer or client during the eighteen (18)-month period immediately
preceding the Executive's termination of employment. "Business Activities" shall
mean the collection and storage of adult stem cells and any ancillary or related
services engaged in by the Company or its subsidiaries during the Term.
The Executive agrees that the restrictive covenants contained
herein are in addition and not in lieu of any similar covenants contained in the
Asset Purchase Agreement.
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In addition, during such Restrictive Period the Executive
agrees not to act on behalf of himself or any Competitor to interfere with the
relationship between the Company or its subsidiaries or affiliates and their
employees, independent contractors, customers, suppliers or acquisition targets.
The Executive also agrees, during such Restrictive Period not to hire an
employee of the Company or its subsidiaries or induce any such employee to leave
the employment of the Company or its subsidiaries, provided that the Executive
shall be permitted to call upon and hire any member of his immediate family.
For purposes of this Agreement, "Territory" shall mean the
entire United States.
For purposes of the preceding paragraphs, (i) the term
"proprietary interest" means legal or equitable ownership, whether through
stockholding or otherwise, of an equity interest in a business, firm or entity
other than ownership of less than two (2%) percent of any class of equity
interest in a publicly held business, firm or entity and (ii) an entity shall be
considered to be "engaged in competition" if such entity is, or is a holding
company for, a company engaged in any aspect of the Business or providing any
other services competitive with the business then being conducted by the Company
and/or its subsidiaries at the date of termination of employment, in the
Territory.
(d) The Executive acknowledges the reasonableness of the
restrictions contained in this Section 6. The Executive acknowledges that the
Company and its subsidiaries and their successors and assigns would be
irreparably injured in a manner not adequately compensated by money damages by a
breach or violation (or threatened breach or violation) of the provisions of
this Section 6 by the Executive. Therefore, in the event of any such breach or
violation (or threatened breach or violation), in addition to all other rights
and remedies which the Company may have, whether at law or in equity, the
Company and its successors and assigns shall be entitled to obtain injunctive or
other equitable relief against the Executive without the need to post bond or
other security in connection therewith and the Executive hereby consents to the
entry of an order for such injunctive or other equitable relief.
(e) The Executive's agreement as set forth in this Section 6
shall survive the expiration of the Term and the termination of the Executive's
employment with the Company.
(f) If any court determines that the provisions of this
Section 6, or any part hereof, is unenforceable because of the duration or
geographic scope of such provisions, such court shall have the power to reduce
the duration or scope of such provisions, as the case may be, so that, as so
reduced, such provisions are then enforceable to the maximum extent permitted by
applicable law.
SECTION 7. WITHHOLDING TAXES. The Company may directly or
indirectly withhold from any payments made under this Agreement all Federal,
state, city or other taxes and all other deductions as shall be required
pursuant to any law or governmental regulation or ruling or pursuant to any
contributory benefit plan maintained by the Company in which the Executive may
participate.
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SECTION 8. NOTICES. All notices, requests, demands and other
communications required or permitted hereunder shall be given in writing and
shall be deemed to have been duly given if delivered or mailed, postage prepaid,
by certified or registered mail or by use of an independent third party
commercial delivery service for same day or next day delivery and providing a
signed receipt as follows:
(a) To the Company:
Phase III Medical, Inc. 000
Xxxxx Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxxx, Xxx Xxxx 00000
Attention: General Counsel
(b) To the Executive: Mr.
Xxxxx Xxx
00000 Xxxxxxxx
Xx. Xxxxxxxxx, XX 00000
or to such other address as either party shall have previously specified in
writing to the other. Notice by mail shall be deemed effective on the second
business day after its deposit with the United States Postal Service, notice by
same day courier service shall be deemed effective on the day of deposit with
the delivery service and notice by next day delivery service shall be deemed
effective on the day following the deposit with the delivery service.
SECTION 9. NO ATTACHMENT. Except as required by law, no right
to receive payments under this Agreement shall be subject to anticipation,
commutation, alienation, sale, assignment, encumbrance, charge, pledge, or
hypothecation or to execution, attachment, levy, or similar process or
assignment by operation of law, and any attempt, voluntary or involuntary, to
effect any such action shall be null, void and of no effect; PROVIDED, HOWEVER,
that nothing in this Section 9 shall preclude the assumption of such rights by
executors, administrators or other legal representatives of the Executive or his
estate and their conveying any rights hereunder to the person or persons
entitled thereto.
SECTION 10. SOURCE OF PAYMENT. All payments provided for under
this Agreement shall be paid in cash from the general funds of the Company. The
Company shall not be required to establish a special or separate fund or other
segregation of assets to assure such payments, and, if the Company shall make
any investments to aid it in meeting its obligations hereunder, the Executive
shall have no right, title or interest whatever in or to any such investments
except as may otherwise be expressly provided in a separate written instrument
relating to such investments. Nothing contained in this Agreement, and no action
taken pursuant to its provisions, shall create or be construed to create a trust
of any kind, or a fiduciary relationship, between the Company and the Executive
or any other person. To the extent that any person acquires a right to receive
payments from the Company hereunder, such right, without prejudice to rights
which employees may have, shall be no greater than the right of an unsecured
creditor of the Company.
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SECTION 11. BINDING AGREEMENT; NO ASSIGNMENT. This Agreement
shall be binding upon, and shall inure to the benefit of, the Executive and the
Company and their respective permitted successors, assigns, heirs, beneficiaries
and representatives. This Agreement is personal to the Executive and may not be
assigned by him. This Agreement may not be assigned by the Company except (a) in
connection with a sale of all or substantially all of its assets or a merger or
consolidation of the Company, or (b) to an entity that is a subsidiary or
affiliate of the Company. Any attempted assignment in violation of this Section
11 shall be null and void. SECTION 12. GOVERNING LAW; CONSENT TO JURISDICTION.
The validity, interpretation, performance, and enforcement of this Agreement
shall be governed by the laws of the State of New York. In addition, the
Executive and the Company irrevocably submit to the jurisdiction of the courts
of the State of New York and the United States District Court sitting in New
York County for the purpose of any suit, action, proceeding or judgment relating
to or arising out of this Agreement and the transactions contemplated hereby.
Service of process in connection with any such suit, action or proceeding may be
served on the Executive or the Company anywhere in the world by the same methods
as are specified for the giving of notices under this Agreement. The Executive
and the Company irrevocably consent to the jurisdiction of any such court in any
such suit, action or proceeding and to the laying of venue in such court.
SECTION 13. ENTIRE AGREEMENT. This 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.
SECTION 14. AMENDMENTS. This Agreement may only be amended or
otherwise modified by a writing executed by all of the parties hereto.
SECTION 15. COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which when executed shall be deemed to be an
original and all of which together shall be deemed to be one and the same
instrument.
IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed by its duly authorized officer and the Executive has signed this
Agreement, all as of the first date above written. PHASE III MEDICAL, INC.
By: /S/ XXXX XXXXXXX
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Name: Xxxx Xxxxxxx
Title: President and CEO
/S/ XXXXX XXX
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Xxxxx Xxx, Executive
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