Consulting Agreement - CytoTherapeutics Inc. and Seth A. Rudnick
CYTOTHERAPEUTICS, INC.
701 George Washington Highway
Lincoln, RI 02865
(401) 288-1000
Dated as of September 30, 1997
Seth A. Rudnick, M.D.
CytoTherapeutics, Inc.
701 George Washington Highway
Lincoln, RI 02865
Re: Board Chairman and Consulting Positions
Dear Seth:
This letter will reflect our understanding in regard to your agreement to
serve as Chairman of the Board of Directors of CytoTherapeutics, Inc. (the
"Company") and as a Consultant to the Company.
1. Change in Position and Duties. Effective as of September 30, 1997,
you will cease to serve as President and Chief Executive Officer of
the Company. You will continue to serve as Chairman of the Board of
Directors of the Company until the next Annual Meeting of the
Stockholders of the Company and the provisions of this Agreement
regarding your service as Chairman of the Board shall also apply
during any further period in which you may be elected to such
position. As Chairman of the Board, you will chair all meetings of
the Board of Directors of the Company and will have those other duties
and responsibilities, if any, specified for the Chairman of the Board
of Directors of the Company in the By-laws of the Company, as the same
may exist from time to time.
1.1. Transition Period. During the period commencing October 1, 1997
through December 31, 1997 (the "Transition Period"), you will
make yourself available as requested by the Company's Chief
Executive Officer to fulfill such other duties and
responsibilities as the Chief Executive Officer may reasonably
expect, consistent with your status as
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the current Chairman of the Board of Directors of the Company and
former President and Chief Executive Officer of the Company and
with any applicable provisions of this Agreement. In this regard
it is expected that you will devote approximately one day per
week to in-office consultation with the Chief Executive Officer
and other members of the Company's senior management; that you
will travel on Company business as the Chief Executive Officer
may reasonably request for an additional one or two days per
week; and that you will make yourself generally available as
required at other times during normal business hours to consult
by telephone regarding the business of the Company.
1.2. Consulting Period. From January 1, 1998 through December 31,
1999 (the "Consulting Period"), you will serve as a Consultant to
the Company and shall provide such consulting services to the
Company as the Company's Chief Executive Officer may reasonably
request from time to time up to a maximum commitment of 5 days
per month and 50 days per year of such consulting services.
2. Salary and Bonus.
2.1. Transition Period. During the Transition Period, your salary
shall be paid at an annual rate of $200,000 per year.
2.2. 1997 Bonuses. The Board of Directors will review your
performance in all positions you have held with the Company
during 1997 and you shall be eligible to receive a bonus at least
equal to the bonus you would have been eligible to receive under
your employment contract as President and CEO for the time during
1997 in which you served in such capacity (up to (9 months/12
months) x 20% x $300,000 = $45,000).
2.3. Consulting Period Payments. For your services as a Consultant
and, to the extent applicable, Chairman and a member of the Board
of Directors of the Company, during the Consulting Period you
shall be paid a consulting fee of $12,500 per month, plus
reimbursement for any out-of-pocket expenses reasonably incurred
by you in the course of performing such services, subject to
appropriate documentation of such expenses on a basis consistent
with Company policy. During the Consulting Period you shall not
receive any other compensation for any service you may render as
a member of the Board of Directors of the Company or as Chairman
thereof; should you serve in any such position after the end of
the Consulting Period, you shall be compensated therefore
according to the Company's then-existing policies for the
compensation of a non-employee holding any such position.
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2.4. Vacation Pay. No later than January 15, 1998, you shall be paid
$25,000 as a lump sum payment in lieu of all unused vacation time
accrued by you during your service as Chief Executive Officer of
the Company.
3. Stock Options. During the Transition Period and the Consulting
Period, stock options granted to you and not yet expired, exercised,
canceled or otherwise become unexerciseable shall continue to vest.
In addition, subject to approval by the Company's Board of Directors,
the exercise period for all options previously granted to you shall be
extended until the end of the Consulting Period (i.e., all options may
be exercised at any time prior to December 31, 1999 and must be
exercised no later than that date).
4. Benefits.
4.1. Health and Dental. During the Transition Period and the
Consulting Period, to the extent permitted by the terms of the
Company's group health and dental plan and by its health and
dental plan insurer or providers, as applicable, the Company will
continue your participation and that of your eligible dependents
in its group health and dental plan to the same extent as you and
they currently participate and will pay the premium cost of such
participation, to the same extent currently paid, through the
earlier of (i) the end of the Consulting Period or (ii) the date
you commence other employment which makes you eligible, at no
greater cost to you than the current cost to you, if any, under
the Company's health and dental plans, to obtain comparable
coverage under the health and dental plans of your new employer.
If the Company is unable to provide continuation as contemplated
in the previous sentence, you may exercise your right to continue
your coverage and that of your eligible dependents in the
Company's group health and dental plan under the federal law
known as COBRA, provided you are eligible to do so, and, if you
are eligible, then, until the end of the Consulting Period or the
date you cease to be eligible for continuation under COBRA, the
Company will pay the premium cost of your coverage and that of
your eligible dependents.
4.2. Life Insurance. During the Transition Period and the Consulting
Period, to the extent permitted by the terms of the Company's
group life insurance plan, the Company will continue your
coverage under its group life insurance plan in the same face
amount in which your life is currently insured under such plan
through the end of the earlier of (i) the Consulting Period or
(ii) the date you commence other employment
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under circumstances which entitle you to group life insurance
coverage comparable to that provided by Company at no greater
cost to you than such coverage as currently provided to you by
the Company. If life insurance coverage is not available under
the Company's plan, the Company shall pay $2,500 per year toward
the cost of any life insurance coverage which you may arrange.
4.3. Plan Limitations. It is understood and agreed that the benefits
of the group health and group life insurance plans of the Company
are subject to such conditions and limitations as are set forth
in the applicable plan, policy or contract terms, as such may
exist from time to time, and that any disputes concerning
eligibility for payment of benefits under such plan shall be
settled in accordance with the terms thereof, and that the
Company shall have no liability to you, your dependents or any
other person claiming through you, for payment of benefits under
any such plan.
4.4. Retirement Annuity. Commencing at the time you reach age 60 and
continuing until your death, the Company shall pay to you a
monthly retirement payment at the rate of $30,000 per year. You
acknowledge that this payment obligation is an unsecured payment
obligation of the Company that has not been (and is not expected
to be) funded by the Company through the purchase of an annuity
contract or otherwise.
4.5. Office Space. During the time you serve as Chairman of the Board
of the Company, the Company shall make available to you office
space, either at the Company, or at the Company's option, at a
separate location located no more than one-half hour from the
Company, for you to use. If the Company elects to provide you
with a separate office location, the cost to the Company
(including rent, secretarial services, leased equipment, etc.)
shall not exceed $2,000 per month.
5. During the Transition and Consulting Periods and for one year
thereafter, you will not, either directly or indirectly, become
employed by, serve as a director of or consultant to or otherwise
participate in any competitor of the Company. A competitor shall be
defined as any entity utilizing or proposing to utilize the
transplantation of cells as a therapeutic agent for the treatment of
human disease. You further agree that during the Transition and
Consulting Periods and for a period of one year thereafter, you will
not directly or indirectly solicit the services of any employee of the
Company for another entity, or otherwise induce or attempt to induce
any such employee to leave the employ of the Company.
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6. You shall not disclose to any other person, corporation or other
entity (except as required by applicable law or for the proper
performance of your duties and responsibilities hereunder), or use
for your own benefit or gain, any Confidential Information of the
Company. Confidential Information of the Company shall mean all
information of or regarding the Company other than information that
is generally known to the public through no fault of yours,
including, without limitation, information regarding the research
and development activities of the Company, the products and
services of the Company, the cost, sources of supply and strategic
plans of the Company, the identity and special needs of the
customers of the Company and those persons and organizations with
whom the Company has business relationships and the nature of those
relationships, as well as any comparable information that the
Company may possess regarding customers or others who do business
with the Company.
If the terms of this Letter Agreement accurately reflect your
understanding of the matters set forth herein, please sign this Agreement and
return it to the Company. The enclosed copy of this Letter Agreement, which
you should also sign and date, is for your records.
Sincerely,
CYTOTHERAPEUTICS, INC.
By:___________________________
Name:
Title:
Accepted and Agreed:
/s/ Seth Rudnick
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Seth A. Rudnick, M.D.
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