Exhibit 10.18

 

CONSULTING AGREEMENT

 

THIS CONSULTING AGREEMENT (this “Agreement”) is entered into as of June 9, 2005
(“the Effective Date”), by and between APHTON CORPORATION, a Delaware
corporation (the “Company”), and DOV MICHAELI, a resident of the State of
California (“Consultant”).

 

In consideration of the mutual representations, warranties, covenants and
agreements contained in this Agreement, the parties hereto agree as follows:

 

1. Engagement.

 

(a) Retention. The Company agrees to engage Consultant, and Consultant agrees to
accept such engagement, to perform services for the Company as a consultant,
subject to the terms and conditions of this Agreement.

 

(b) Engagement Period. The term during which Consultant shall serve as a
consultant to the Company shall commence on the Effective Date and continue
until June 8, 2006, unless earlier terminated pursuant to this Agreement, (the
“Initial Term”). At least thirty (30) days prior to the expiration of the
Initial Term, the Company may advise Consultant of the Company’s desire to
extend the term of this Agreement and the basis under which it is willing to so
extend. Upon the mutual agreement of the Company and Consultant, the term of
this Agreement may be extended for an additional period of time (the Initial
Term and any such extension period shall hereinafter be referred to as the
“Engagement Period”).

 

(c) Duties and Responsibilities. During the Engagement Period, Consultant shall
be available to assist the Company and provide services relating to the business
of the Company, from time to time, including without limitation, securing a
long-term commitment, as evidenced in writing signed by all applicable parties,
from Dexa Medica and/or an Asian Partner (as defined below) to financially
support the development, manufacturing and commercialization of one or more
potential products of the Company. During the Engagement Period, it is expected
that Consultant will devote approximately eighty (80) hours per month to his
duties hereunder.

 

(d) Consulting Fee. In consideration of Consultant’s services hereunder, during
the Engagement Period, Consultant shall be paid a consulting fee of One Hundred
Twenty-Five Thousand Dollars ($125,000) (the “Consulting Fee”) per year, payable
in accordance with the Company’s payment procedures for consultants, as to which
the Company shall make no deductions or withholdings and as to which Consultant
shall be responsible for the payment of all federal, state and local taxes. Upon
extending this Agreement, if applicable, the parties shall mutually agree on the
applicable Consulting Fee and timing of payment of such Consulting Fee that
shall apply hereunder during such additional extension period. In addition, the
Consultant shall be eligible for payment of a finder’s fee of 1% of any Up Front
Payment on any long-term financial commitment acceptable to the Company by Dexa
Medica and/or an Asian Partner that he secures for the Company during the
Engagement Period; provided that the name of such Asian Partner is set forth on
Schedule I hereto, as amended from time to time by mutual agreement between the
Company and Consultant. It shall be the obligation of Consultant to notify the
Company in writing of any new potential Asian Partner and request that the
Company sign and deliver to Consultant an amended Schedule I that includes the
name of such new potential Asian Partner, if agreed to by the Company. For
purposes hereof, “Up Front Payment” shall mean and refer to any cash payment
made by Dexa Medica or an Asian Partner to the Company within 30 (thirty) days
after the Consultant’s obtaining

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a signed and enforceable agreement, which evidences Dexa Medica’s or the
applicable Asian Partner’s, as the case may be, long-term commitment to
financially support the development, manufacturing and commercialization of one
or more potential products of the Company. For purposes of this Agreement.
“Asian Partner” means any entity or organization that maintains it corporate
headquarters in a country located in Asia and has made an Up Front Payment.

 

(e) Independent Contractor. Consultant is an independent contractor of the
Company and is not entitled to any benefits, privileges or reimbursements (other
than as described in (f) below) given or extended by the Company to its
employees. Consultant acknowledges that he is not an employee of the Company for
any purpose and shall be responsible for any payments, of all federal, state and
local taxes incident to the performance of services.

 

(f) Expenses. In addition to the Consulting Fee, during the Engagement Period,
Consultant shall be reimbursed, in accordance with the Company’s then expense
reimbursement policy, for documented out-of-pocket expenses properly and
reasonably incurred by him on behalf of or in connection with the business of
the Company that are authorized by the Company in advance in writing.

 

(g) Termination. Subject to the provisions of Section 3 below, at any time
during the Engagement Period, either the Company or Consultant shall have the
right to terminate the Engagement Period upon delivery of written notice thirty
(30) days prior to the effective date of such termination to the non-terminating
party. Except for the continuing obligations of the Consultant pursuant to
Section 2 below, neither the Company nor Consultant shall have further
obligations hereunder from and after the date of such termination.

 

2. Confidential Information, Non-Competition and Non-Solicitation of the
Company.

 

(a) Agreement Not to Disclose Confidential Information. (i) Consultant
acknowledges he has read and understands the Company’s Consultant
Confidentiality Agreement (“Confidentiality Agreement”), which is attached
hereto as Exhibit “A” and is incorporated by reference as part of this
Agreement. Consultant will hold all Confidential Information (as that term is
defined by the Confidentiality Agreement) in trust and confidence. In this
regard, during and subsequent to the Engagement Period, Consultant will be bound
by, and comply with, the Confidentiality Agreement. Consultant shall use
Confidential Information only for the purposes contemplated in connection with
Consultant’s engagement by the Company and for the sole benefit of the Company;
shall not use Confidential Information for any other purpose; and shall not
disclose or cause to be disclosed Confidential Information to any employee,
consultant, or third party, except as required in the course and scope of
Consultant’s engagement by the Company and only if the employee, consultant, or
third party has executed a confidentiality agreement with the Company.
Consultant further acknowledges that the Confidentiality Agreement may be
amended from time to time, and as such this paragraph survives and applies to
all such amendments.

 

(ii) Failure of any Confidential Information to be marked or otherwise labeled
as confidential or proprietary information shall not affect its status as
Confidential Information.

 

(iii) All Confidential Information and other materials relating in any way to
any Confidential Information shall be and remain the Company’s sole property
during and after the Engagement Period.

 

(iv) Consultant will not copy or duplicate, or permit to be copied or
duplicated, any Confidential Information or other materials relating in any way
to Confidential Information, other than as necessary to fulfill his obligations
to the Company, without the express prior written consent of the Company.

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(v) Consultant shall take all reasonable steps needed or requested by the
Company to ensure that all Confidential Information is kept confidential.

 

(vi) Upon demand by the Company, Consultant will immediately return all
Confidential Information, including any notes and other materials related
thereto, to the Company and will represent to the Company in writing at such
time that he has complied with the provisions of this subparagraph.

 

(b) Agreement to Comply with Company Policy Regarding Inventions and Ideas.
Consultant acknowledges he has read and understands the Confidentiality
Agreement with respect to Inventions and Ideas (as defined in the
Confidentiality Agreement). Consultant acknowledges and agrees that during and
subsequent to the Engagement Period, Consultant will be bound by, and comply
with, the Confidentiality Agreement, as it relates to Inventions and Ideas.
Consultant further acknowledges that the Confidentiality Agreement may be
amended from time to time, and Consultant agrees that this paragraph survives
and applies to all such amendments.

 

(c) Agreement Not to Compete. During the Engagement Period (the “Non-Compete
Period”), Consultant will not directly or indirectly (on his own behalf or on
behalf of any other person or entity) engage in any business (or own an interest
in an individual proprietorship, partnership, corporation, joint venture, trust
or other form of business entity, whether as an individual proprietor, partner,
shareholder, joint venture, officer, director, consultant, broker, employee,
sales person, trustee, independent contractor, or in any manner whatsoever
(except for a passive ownership interest not exceeding five percent (5%) of a
publicly traded entity)), that is of the type and character or that is
competitive with any business conducted by the Company at any time during the
Engagement Period. The parties hereby agree that the Company is currently
engaged in the business of developing products using immunotherapy technology
for neutralizing hormones that participate in gastrointestinal system and
reproductive system cancer and non-cancer diseases and is also engaged in the
business of research and development in the area of biotechnology, including but
not limited to, hybridoma, monoclonal antibodies, and recombinant DNA (the
“Business”).

 

(d) Agreement Not to Recruit the Company’s Employees or Consultants. Consultant
agrees that both during the Engagement Period and for a period of two (2) years
following expiration or termination, as the case may be, of the Engagement
Period for any reason (the “Non-Solicit Period”), Consultant will not directly
or indirectly (on his own behalf or on behalf of any other person or entity)
recruit, solicit or otherwise induce any employee or consultant of the Company,
or any individual or entity that had been employed or engaged as a consultant by
the Company within one (1) year prior to the Termination Date (as defined in
Section 3 below) to enter into an employment or a consulting relationship with
any other business entity that competes with the Business.

 

(e) Agreement Not to Solicit the Company’s Clients/Customers. During the
Engagement Period, Consultant will not directly or indirectly (on his own behalf
or on behalf of any other person or entity), solicit any business similar to or
in competition with the Business from any clients, customers or strategic
partners of the Company, or divert or attempt to divert from the Company any
business relationship which existed between the Company and any of its clients,
customers or strategic partners.

 

(f) Reasonableness of this Section 2. Consultant agrees that the provisions of
this Section 2 are reasonable and necessary for the protection of the
Confidential Information; the Company’s clients’, customers’ and strategic
partners’ confidential information; its business relationships with its clients,
customers and strategic partners; and its undisrupted workplace.

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(g) Notice to New Employer. Consultant agrees that prior to the commencement of
any new employment or consultation with a person or entity in any business
similar to or in competition with the Business, he will advise the person or
entity of the terms of Section 2 of this Agreement. Consultant also agrees that
the Company may advise any new or prospective employer or partner of the
existence and terms of this Agreement and may furnish said employer or partner
with a copy of the relevant provisions of this Agreement.

 

(h) Absence of Geographic Description; Savings Clause. Consultant acknowledges
that there are no geographic restrictions contained in this Section 2 because
the Business is international, Consultant will be engaged in assisting the
Company to develop business internationally and neither the business of the
Company, nor Consultant’s activities, has been or will be limited to any one
geographic area. Notwithstanding, if a court of competent jurisdiction finds any
or all of the foregoing paragraphs invalid for lack of a specific geographical
restriction, Consultant agrees that the applicable geographical restriction is
the United States or such lesser or greater geographic area in which Consultant
worked or solicited Clients/Customers at any time during the Engagement Period.

 

(i) No Conflict With Obligations. Consultant promises and represents that his
engagement by the Company is not in conflict with any obligations he owes to any
other person or entity. Consultant will notify the Company in writing before
performing or causing to be performed any work for or on behalf of the Company
which appears to be in conflict with: (a) rights of any nature owned or claimed
by Consultant in any Invention or Idea or Confidential Information, as defined
in the appropriate Company Policies, conceived by him prior to beginning work
with the Company; (b) rights arising out of obligations incurred by Consultant
prior to beginning work for the Company; or (c) Consultant’s obligations to the
Company under this Agreement. In the event of Consultant’s failure to give
notice of such conflict, the Company may conclude that no such conflict exists,
and Consultant agrees, in such event, to make no claim against the Company with
respect to the use of any such Invention or Idea or Confidential Information by
the Company.

 

(j) Remedies for Breaches of Section 2. In the event of a breach or potential
breach of this Section 2, Consultant acknowledges that the Company and its
affiliates will be caused irreparable injury and the money damages may not be an
adequate remedy and agrees that the Company and its affiliates shall be entitled
to injunctive or other equitable relief (in addition to its other remedies at
law) to have the provisions of this Section 2 enforced. It is hereby
acknowledged that the provisions of this Section 2 are for the benefit of the
Company and all of the affiliates of the Company and each such entity may
enforce the provisions of this Section 2 and only the applicable entity can
waive the rights hereunder with respect to its confidential information and
Consultants.

 

3. Termination. (a) Notwithstanding any other provision of this Agreement, prior
to the expiration of the Engagement Period, the Company may terminate
Consultant’s engagement: (1) immediately upon the death of Consultant; (2) any
time after providing Consultant thirty (30) days written notice due to
Consultant’s Disability; (3) at any time after providing Consultant thirty (30)
days written notice without Cause, or (4) with immediate effect for Cause. In
the event of a termination for Cause, the Engagement Period under this Agreement
shall terminate without further obligations to Consultant or Consultant’s legal
representatives, other than for payment within thirty (30) days of the
Termination Date (as defined below) of any Consulting Fee accrued, but unpaid.
In the event of a termination for any reason other than Cause, then, the Company
shall pay to Consultant, or Consultant’s estate in the event of Consultant’s
death, within thirty (30) days of the Termination Date any Consulting Fee
accrued, but unpaid and, at the sole discretion of the Company, contingent upon
execution of a release of claims in

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form acceptable to the Company, in a cash lump sum within thirty (30) days after
the effective date of the release an amount equal to all unpaid Consulting Fees
through the end of the Initial Term or any extended term of this Agreement. For
purposes of this Agreement, the “Termination Date” shall mean (A) in the case of
Consultant’s termination due to death, the date of his death, (B) in the case of
Consultant’s termination due to Disability, for Cause or without Cause, the date
specified in the written notice, or if no date in specified in such notice, the
date that is thirty (30) days after the date of the notice.

 

(b) For purposes of this Agreement, the term “Disability” shall mean by reason
of the same or related physical or mental illness or incapacity, Consultant is
unable to carry out his material duties pursuant to the Agreement for more than
six (6) months in any twelve (12) month period; provided, however, that a
minimum of ninety (90) consecutive days must comprise a portion of the six (6)
month period. At any time after the occurrence of a Disability, the Company may
terminate Consultant after providing Consultant thirty (30) days written notice.

 

(c) For purposes of this Agreement, the term “Cause” shall be limited to the
following:

 

(i) Consultant’s willful refusal or willful failure to perform his consulting
duties;

 

(ii) Consultant’s willful misconduct or gross negligence with regard to the
Company or its affiliates or their business, assets or employees (including,
without limitation, Consultant’s fraud, embezzlement or other act of dishonesty
with regard to the Company or its affiliates);

 

(iii) Consultant’s willful misconduct or omission which has a material adverse
economic impact on the Company or its affiliates;

 

(iv) Consultant’s conviction of, or pleading nolo contendere to, any felony or
crime involving fraud, dishonesty or moral turpitude;

 

(v) Consultant’s willful refusal or willful failure to follow the lawful written
direction of the Chief Executive Officer of the Company;

 

(vi) Consultant’s breach of any contractual duty owed to the Company or its
affiliates, including but not limited to those specified in Section 2 hereof; or

 

(vii) any other breach by Consultant of this Agreement that remains uncured for
ten (10) days after written notice thereof is given to Consultant.

 

4. Amendment; Waiver. This Agreement may not be modified, amended, supplemented,
canceled or discharged, except by written instrument executed by all parties. No
failure to exercise, and no delay in exercising, any right, power or privilege
under this Agreement shall operate as a waiver, nor shall any single or partial
exercise of any right, power or privilege hereunder preclude the exercise of any
other right, power or privilege. No waiver of any breach of any provision shall
be deemed to be a waiver of any preceding or succeeding breach of the same or
any other provision, nor shall any waiver be implied from any course of dealing
between the parties. No extension of time for performance of any obligations or
other acts hereunder or under any other agreement shall be deemed to be an
extension of the time for performance of any other obligations or any other
acts. The rights and remedies of the parties under this Agreement are in
addition to all other rights and remedies, at law or equity, that they may have
against each other.

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5. Assignment; Third Party Beneficiary. This Agreement and Consultant’s rights
and obligations hereunder, may not be assigned or delegated by Consultant. The
Company may assign its rights, and delegate its obligations, hereunder to any
affiliate of the Company or any successor or assign. The rights and obligations
of the Company under this Agreement shall inure to the benefit and be binding
upon its respective successors and assigns.

 

6. Legal and Other Fees and Expenses. Any reasonable costs or expenses arising
out of the interpretation or application of this Agreement or any term or
condition of this Agreement, other than with respect to Section 2 hereof shall
be the responsibility of the Company; provided, however that Consultant shall
repay any amounts paid or advanced to Consultant in connection with a dispute or
any litigation if Consultant is not the prevailing party with respect to at
least one material claim or issue in such dispute or litigation. Any reasonable
costs or expenses of Consultant arising out of a dispute or litigation regarding
the interpretation of application of Section 2 hereof shall be the
responsibility of Consultant; provided, however that Company shall reimburse
Consultant any amounts paid by Consultant in connection with such dispute or
litigation if the Company is not the prevailing party of such dispute or
litigation. The provisions of this subsection shall survive the expiration or
termination of the Agreement and Consultant’s engagement hereunder.

 

7. Severability; Survival. In the event that any provision of this Agreement is
found to be void and unenforceable by a court of competent jurisdiction, then
such unenforceable provision shall be deemed modified so as to be enforceable
(or if not subject to modification then eliminated herefrom) for the purpose of
those procedures to the extent necessary to permit the remaining provisions to
be enforced. The provisions of Section 2 and Section 6 will survive the
termination for any reason of Consultant’s relationship with the Company.

 

8. Counterparts. This Agreement may be signed in any number of counterparts,
each of which shall be an original but all of which together shall constitute
one and the same instrument.

 

9. Arbitration. (i) All disputes arising out of or relating to this Agreement,
other than those arising out of the Company’s enforcement of Section 2 hereof,
that cannot be settled by the parties shall be settled by arbitration in San
Francisco, California pursuant to the rules and regulations then obtaining of
the American Arbitration Association. The decision of the arbitrators shall be
final and binding upon the parties, and judgment upon such decision may be
entered in any court of competent jurisdiction.

 

(ii) Discovery shall be allowed pursuant to the intendment of the United States
Federal Rules of Civil Procedure and as the arbitrators determine appropriate
under the circumstances.

 

(iii) The arbitration tribunal shall be formed of three arbitrators, one to be
appointed by each party and the third to be appointed by the first two
arbitrators. Such arbitrators shall be required to apply the contractual
provisions hereof in deciding any matter submitted to them.

 

(iv) The costs and expenses of such arbitration shall be borne by the Company.
The Company shall pay or reimburse Consultant for all reasonable attorneys’ fees
and costs incurred by Consultant in prosecuting or defending any claim under
this Agreement and any such arbitration proceeding, unless the arbitrator(s)
shall determine in their award that Consultant has not prevailed with respect to
at least one material claim or issue in such dispute in which case Consultant
shall repay any amounts paid or advanced to Consultant in connection with such
dispute.

 

10. Governing Law. This Agreement shall be construed in accordance with and
governed for all purposes by the laws of the State of California without
reference to principles of conflict of laws.

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11. Notices. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly received (i) on the same business day when faxed or
delivered, personally or by confirmed facsimile transmission prior to 5:00 p.m.
Philadelphia time, (ii) three (3) business days after being mailed in the United
States registered or certified mail, return receipt requested, postage prepaid,
or (iii) one (1) business day after being sent by a reputable overnight courier,
addressed to the respective addresses set forth below, provided that all notices
to the Company shall be directed to the attention of the person below or to such
other address as any party may have furnished to the other in writing in
accordance herewith. Notice of change of address shall be effective only upon
receipt. Notices and all other communications shall be addressed to each party
at its address or facsimile number set forth below:

 

if to Consultant:    [            ]      [            ]      Facsimile: with a
copy to:      if to the Company:    Aphton Corporation      8 Penn Center, Suite
2300      1628 JFK Boulevard      Philadelphia, PA 19103      Attention: Patrick
T. Mooney, Chief Executive Officer     

        John M. McCafferty, Corporate Counsel

     Facsimile: (215) 218-4355 with a copy to:    Akerman Senterfitt      One
Southeast Third Avenue, 28th Floor      Miami, FL 33131      Attention: Kara L.
MacCullough      Facsimile: (305) 374-5095                      and      Latham
& Watkins      505 Montgomery Street, Suite 2000      San Francisco, CA 94111  
   Attention: Linda Inscoe      Fax: (415) 395-8095

 

12. Entire Agreement. This Agreement contains the entire understanding of the
parties in respect of its subject matter and supersedes all prior agreements and
understandings (oral or written) between or among the parties with respect to
such subject matter.

 

13. Headings. The headings of this sections contained in this Agreement are for
convenience only and shall not be deemed to control or affect the meaning or
construction of any provision of this Agreement.

 

14. Consultant’s Representation. Consultant represents and warrants to the
Company that there is no legal impediment to him entering into or performing his
obligations under this Agreement and neither entering into this Agreement nor
performing his contemplated service hereunder will violate any agreement to
which he is party or any other legal restriction. Consultant further represents
and warrants that in performing his duties hereunder he will not use or disclose
any confidential information of any prior employer or any other person or
entity.

 

[Signatures on the following page]

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IN WITNESS HEREOF, the parties have executed this Agreement as of the date first
above written.

 

Company: APHTON CORPORATION,

a Delaware corporation

By:

 

/s/ Patrick T. Mooney

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Name:

  Patrick T. Mooney, M.D.

Title:

  Chief Executive Officer and President Consultant:

/s/ Dov Michaeli

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Dov Michaeli