Thomas J.
Graham, M.D.
705 West Timonium Road
Lutherville, Maryland 21903
Re: Consulting
Agreement ( “ Consulting Agreement
”)
MiMed x ,
Inc., Inc. (the “ Company ”) hereby
confirms its mutual agreement with Thomas J. Graham, M.D.
(“you” or “Consultant”) for you to serve as
a consultant to the Company (including your service on the
Company’s Physician’s Advisory Board (“
PAB ”), upon the terms and conditions set forth in
this Consulting Agreement for services within the Field (as defined
on Exhibit A attached hereto) and with respect to the
Company’s other research, development, and business
activities. It is agreed that the consulting agreement dated
March 8, 2007 between you and the Company (the “Original
Agreement”) regarding your service on the PAB is hereby
terminated upon execution hereof by both parties, provided that you
shall retain the consulting fees and options already received under
the Original Agreement.
The Field of this Consulting Agreement may be
broadened by mutual consent. The Company understands that you are
currently an employee of the Curtis National Hand Institute (the
“ Curtis Institute ”) and that services
to such employer may take precedence over your consulting services
to the Company as set out in Section 3 below. The Definitions
attached hereto as Exhibit A are expressly made a part of this
Consulting Agreement by this reference thereto.
1. Your consulting service shall include
full participation on the Company’s PAB, and otherwise upon
reasonable request by the Company, advising and informing the
Company of activities and developments within the Field, and
providing the Company with the benefit of your knowledge,
experience, skill, and judgment in the Field and with respect to
the Company’s other research, development, and business
activities.
2. Upon request by the Company from time to
time, and at times mutually agreed upon by you and the Company, you
agree to participate in meetings with other members of the PAB,
Company officers and other representatives, and other parties, at
the request of the Company, in person and/or by telephonic
conference calls, for the following compensation as full
consideration for all your consulting services and other
obligations under this Consulting Agreement (it is hereby
acknowledged by both you and the Company that the following is in
addition to the 50,000 shares of common stock previously issued to
you as a “founder” of the Company, and 50,000 options
previously awarded to you under the Original Agreement):
a) Annual consulting payments in the
amount of $125,000.00, to be paid in quarterly installments. You
will be responsible for all taxes in respect of these consulting
payments.
b) Stock Options for 200,000 shares of
the Company’s Common Stock to be awarded effective as of the
date of this Consulting Agreement and vested one-third at each
anniversary of this agreement, so long as this Consulting Agreement
has not been earlier terminated by either party. The exercise price
for the options shall be the fair market value of the common stock
of the Company as determined in good faith by the Board of
Directors. The options shall be governed by the Stock Incentive
Plan and the individual option Award Agreement to be entered into
between you and the Company.
c) Royalties . The Company shall pay you
continuing royalty fees in the aggregate as follows (the
“Royalties”):
(i) Seven percent (7%) of the
Company’s Net Revenues derived from the sale of Products
embodying or utilizing any Valid Claim under a Company Patent in
the country from which the Net Revenues originated; or
(ii) Three and one-half percent (3.5%) of
the Company’s Net Revenues derived from the sale of Products
embodying or utilizing any Valid Claim under a Company Patent in
the country from which the Net Revenues originated in the event
(A) such Products embody or utilize any material intellectual
property rights of the Company (other than the Contributed IP) or
of any Third Party; or
(iii) Four percent (4%) of the
Company’s Net Revenues derived from the sale of Products
embodying or utilizing any unpatented or unpatentable Contributed
in the country from which the Net Revenues originated;
or
(iv) Two percent (2.0%) of the
Company’s Net Revenues derived from the sale of Products
embodying or utilizing any unpatented or unpatentable Contributed
IP (other than any Valid Claim under a Company Patent) in the
country from which the Net Revenues originated in the event
(A) such Products embody or utilize any material intellectual
property rights of the Company (other than the Contributed IP) or
of any Third Party; or
(v) One and one-half percent (1.5%) of
Company’s (and not any of Company’s affiliates,
sublicensees, successors, or assigns’) Net Revenues from
Company’s sale of Products under any circumstances other than
those described in above clauses (i) through (iv).
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(vi) Any royalties or similar fees payable
to any Third Party with respect to any Products shall be offset and
deducted from any Royalties due to Consultant hereunder. Also, the
Company shall pay only one Royalty, and the Consultant shall not
receive double or multiple Royalties, from the sale of the same
Product, regardless how much or many Valid Claims or other
Contributed IP may cover or be incorporated in such Product.
Furthermore, by way of example and to avoid any confusion, the
following is an example of how the parties hereto anticipate that
the Royalties will be calculated:
If the
Company’s Net Revenues were (A) $1,000,000 from the sale of a
Product embodying or utilizing a Valid Claim in the United States
of America (i.e., Section 2(c)(i) above) and (B) $1,000,000
from the sale of a second Product embodying or utilizing no
Contributed IP in Canada) (i.e., Section 2(c)(v)), and (C)
$1,000,000 from a third Product embodying Contributed IP under a
Valid Patent as well as Intellectual Property of a Third Party
(i.e., Section 2(c)(ii) above, then Consultant would receive
Royalties of $70,000 ($1,000,000 x 7%), plus $15,000 ($1,000,000 x
1.5%), plus $35,000 ($1,000,000 x 3.5%) for an aggregate total of
$120,000).
(vii) Term of Royalties. The Royalties
shall be payable as follows:
(A) With respect to Royalties earned from
the sale of Products embodying or utilizing any Valid Claim under a
Company Patent in the country from which the Net Revenues
originated, the expiration of the Life of the Valid Claim in such;
and
(B) With respect to Royalties earned from
the sale of Products embodying or utilizing any Contributed IP
(other than any Valid Claim) in the country from which the Net
Revenues originated, the expiration of the Life of the Product in
such country.
(viii) Payment of Royalties. The Royalties
shall be payable within forty-five (45) days after the end of
each calendar quarter during the term of this Agreement with
respect to the Net Revenues collected by the Company during such
calendar quarter. The Royalties shall be payable in U.S. dollars by
check. Conversion from any other currency shall be calculated at
the exchange rate published by CitiBank on the last day of the
calendar quarter in respect of which the Royalty is due.
(ix) Combinations or bundling of Products.
If any Products are combined or “bundled” with any
other product, device, equipment, or apparatus sold by the Company
as a combined product, device, equipment, system or apparatus, then
the Net Revenues for the purpose of calculating Royalties hereunder
shall be that proportion of the Net Revenues of that combined
product, device, equipment, or apparatus which is fairly
attributable to such Products based on the extent of functionality
and performance contributed by such Products to that combined
product, device, equipment, or apparatus.
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(x) Records; Audit. Each Royalty payment
shall be accompanied by a report setting forth the total payments
and the total Net Revenues received by the Company for the sale of
Products during the relevant time period. The Company shall keep
all usual and proper records and books of account relating to the
sale and marketing of the Products. From time to time during the
term of this Consulting Agreement, Consultant may cause an audit to
be made, at his sole expense, of the applicable books and records
of the Company in order to verify the accuracy of the Royalty
payment reports. Any such audit shall be conducted solely by an
independent certified accountant and shall be conducted during
regular business hours and in such a manner as to not unreasonably
interfere with the Company’s business operations. The Company
shall be provided with reasonable notice prior to any such audit.
If the audit reveals that Royalties due in respect of any time
period under audit have been underpaid by more than ten percent
(10%), in addition to promptly paying to the Consultant the amount
of such underpayment, the Company shall reimburse the Consultant
for the cost of the audit.
3. The Company acknowledges that you are an
employee of the Curtis Institute and are subject to Curtis
Institute’s policies, including policies concerning
consulting, conflicts of interest, and intellectual property, and
that your obligations under Curtis Institute’s policies take
priority over any obligations you may have to the Company by reason
of this Consulting Agreement.
4. The initial period of this Consulting
Agreement shall be three (3) years from the date of full
execution of this Consulting Agreement provided that this
Consulting Agreement may by terminated by either party upon thirty
(30) days written notice to the other party in the event of a
breach hereof by the other party, unless the allegedly breaching
party cures the default during the notice period. The nonbreaching
party may cure or correct such breach during such notice period, in
which event this Consulting Agreement shall continue. If this
Consulting Agreement is terminated in accordance with the forgoing,
compensation for services and travel expense incurred in accordance
with this Consulting Agreement prior to such termination will be
paid by the Company. For the avoidance of doubt, if this Consulting
Agreement is terminated by the Company because of
Consultant’s breach, the obligations of Consultant under
Section 7 below shall survive. If not earlier terminated by
notice given by either party not less than ninety (90) days
prior to the expiration of the initial three year term hereof (or
any renewal term), then this Consulting Agreement will be renewed
automatically for additional one (1) year periods after from
the end of the initial three year period, and for additional one
year renewal periods thereafter.
5. In addition to the compensation for your
consulting services provided in paragraph 2, the Company will
reimburse you for necessary and reasonable out-of-pocket travel and
living expenses incurred by you at the Company’s request,
within thirty (30) days of submission of a statement to the
Company documenting the expenses incurred, provided that the
Company’s prior approval shall be required with respect to
such individual expenses in excess of one thousand U.S. dollars
($1,000.00).
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6. You represent and warrant to the Company
that, except for that certain PAB Consulting Agreement between you
and MiMed x
, Inc., Inc. dated March 8,
2007, you do not have any agreement to provide consulting services
to any other party, firm, or company in the Field or whose business
would be directly or indirectly competitive with the business of
the Company and will not enter into any such agreement during the
term of this Consulting Agreement without the Company’s prior
written consent.
a) You hereby transfer and assign to the Company
all rights, interests and ownership in and to Contributed IP
currently in existence, and you agree to transfer and assign all
rights, interests and ownership in and to the Company all
Contributed IP hereafter created. You agree that all Contributed IP
shall be the sole and exclusive property of the Company or its
nominees. You will notify the Company of the creation of any new
Intellectual Property in the Field that is Contributed IP under
this Consulting Agreement promptly and in writing, and you will and
hereby do assign to the Company all rights in and to such
Contributed IP upon the creation thereof. The Company and its
nominees shall have the right to use and/or to apply for statutory
or common law protections for such Contributed IP in any and all
countries. You further agree (i) to assist the Company in
every proper way to obtain and from time to time to enforce its
rights in such Company IP, at the Company’s expense, and
(ii) to execute and deliver to the Company or its nominee upon
request all such documents as the Company or its nominee may
reasonably determine are necessary or appropriate. Such
contribution, transfer, and assignment constitutes all of the
right, title, and interest in, to, and under the Contributed IP
held by Consultant at any time during the Contribution
Period.
b) In the event that any right, title, or
interest in, to, or under any Contributed IP does and will not vest
automatically in and with the Company, you hereby
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