EXHIBIT 10.1

 

CONSULTING AGREEMENT

 

This Consulting Agreement (the “Agreement”) is made effective as of October 1,
2020 (the “Effective Date”), by and between BioStage, Inc. a Delaware
corporation, with its principal place of business being 84 October Hill Rd,
Holliston, MA 01746 USA (the “Company”) and Danforth Advisors, LLC, a
Massachusetts limited liability corporation, with its principal place of
business being 91 Middle Road, Southborough, MA 01772 (“Danforth”). The Company
and Danforth are herein sometimes referred to individually as a “Party” and
collectively as the “Parties.”

 

WHEREAS, the Company is a clinical-stage biotechnology company developing
bioengineered organ implants based on the Company's novel Cellspan™ technology;
and

 

WHEREAS, Danforth has expertise in financial and corporate operations and
strategy; and

 

WHEREAS, Danforth desires to serve as an independent consultant for the purpose
of providing the Company with certain strategic and financial advice and support
services, as more fully described in Exhibit A attached hereto, (the
"Services"); and

WHEREAS, the Company wishes to engage Danforth on the terms and conditions set
forth herein.

 

NOW THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt of which are hereby acknowledged, the Parties agree
and covenant as follows.

 

1.Services of Consultant. Danforth will assist the Company with matters relating
to the Services. The Services are more fully described in Exhibit A attached
hereto. Danforth and the Company will review the Services on a monthly basis to
prioritize and implement the tasks listed on Exhibit A.

 

2.Compensation for Services. In full consideration of Danforth’s full, prompt
and faithful performance of the Services, the Company shall compensate Danforth
a consulting fee more fully described in Exhibit A (the “Consulting Fee”).
Danforth shall, from time to time, but not more frequently than twice per
calendar month, invoice the Company for Services rendered, and such invoice will
be paid upon 15 days of receipt. Each month the Parties shall evaluate jointly
the current fee structure and scope of Services. Danforth reserves the right to
an annual increase in consultant rates of up to 4%, effective January 1 of each
year. Upon termination of this Agreement pursuant to Section 3, no compensation
or benefits of any kind as described in this Section 2 shall be payable or
issuable to Danforth after the effective date of such termination. In addition,
the Company will reimburse Danforth for reasonable out-of-pocket business
expenses, including but not limited to travel and parking, incurred by Danforth
in performing the Services hereunder, upon submission by Danforth of supporting
documentation reasonably acceptable to the Company. Any such accrued expenses in
any given three (3) month period that exceed $1,000 shall be submitted to the
Company for its prior written approval.

 

1

 

 

All Danforth invoices and billing matters should be addressed to:

 

Company Accounts Payable Contact:  Shunfu Hu Ph.D.   shu@biostage.com   (774)
233-7341
84 October Hill Rd., Suite 11, Holliston, MA 01746

 

All Company payments and billing inquiries should be addressed to:

 

Danforth Accounting:  Betsy Sherr   bsherr@danforthadvisors.com   (508)
277-0031    Danforth Advisors    PO Box 335    Southborough, MA 01772 

 

3.Term and Termination. The term of this Agreement will commence on the
Effective Date and will continue until such time as either party has given
notice of termination pursuant to this paragraph 3 (the “Term”). This Agreement
may be terminated by either Party hereto: (a) with Cause (as defined below),
upon 30 days prior written notice to the other Party; or (b) without cause upon
60 days prior written notice to the other Party. For purposes of this Section 3,
“Cause” shall include: (i) a breach of the terms of this Agreement which is not
cured within 30 days of written notice of such default or (ii) the commission of
any act of fraud, embezzlement or deliberate disregard of a rule or policy of
the Company.

 

4.Time Commitment. Danforth will devote such time to perform the Services under
this Agreement as may reasonably be required.

 

5.Place of Performance. Danforth will perform the Services at such locations
upon which the Company and Danforth may mutually agree. Danforth will not,
without the prior written consent of the Company, perform any of the Services at
any facility or in any manner that might give anyone other than the Company any
rights to or allow for disclosure of any Confidential Information (as defined
below).

 

6.Compliance with Policies and Guidelines. Danforth will perform the Services in
accordance with all rules or policies adopted by the Company that the Company
discloses in writing to Danforth.

 

2

 

 

7.Confidential Information. Danforth acknowledges and agrees that during the
course of performing the Services, the Company may furnish, disclose or make
available to Danforth information, including, but not limited to, material,
compilations, data, formulae, models, patent disclosures, procedures, processes,
business plans, projections, protocols, results of experimentation and testing,
specifications, strategies and techniques, and all tangible and intangible
embodiments thereof of any kind whatsoever (including, but not limited to, any
apparatus, biological or chemical materials, animals, cells, compositions,
documents, drawings, machinery, patent applications, records and reports), which
is owned or controlled by the Company and is marked or designated as
confidential at the time of disclosure or is of a type that is customarily
considered to be confidential information (collectively the “Confidential
Information"). Danforth acknowledges that the Confidential Information or any
part thereof is the exclusive property of the Company and shall not be disclosed
to any third party without first obtaining the written consent of the Company.
Danforth further agrees to take all practical steps to ensure that the
Confidential Information, and any part thereof, shall not be disclosed or issued
to its affiliates, agents or employees, except on like terms of confidentiality.
The above provisions of confidentiality shall apply for a period of five years.
The Company agrees to permit the use of its name and logo in a roster of
Danforth clients, which may appear on the Danforth website and in its marketing
materials.   

8.Intellectual Property. Danforth agrees that all ideas, inventions,
discoveries, creations, manuscripts, properties, innovations, improvements,
know-how, designs, developments, apparatus, techniques, methods, and formulae
that Danforth conceives, makes, develops or improves as a result of performing
the Services, whether or not reduced to practice and whether or not patentable,
alone or in conjunction with any other party and whether or not at the request
or upon the suggestion of the Company (all of the foregoing being hereinafter
collectively referred to as the “Inventions”), shall be the sole and exclusive
property of the Company. Danforth hereby agrees in consideration of the
Company’s agreement to engage Danforth and pay compensation for the Services
rendered to the Company and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged that Danforth shall
not, without the prior written consent of the Company, directly or indirectly,
consult for, or become an employee of, any company which conducts business in
the Field of Interest anywhere in the world. As used herein, the term “Field of
Interest” shall mean the research, development, manufacture and/or sale of the
products resulting from the Company’s technology. The limitations on competition
contained in this Section 8 shall continue during the time that Danforth
performs any Services for the Company, and for a period of three months
following the termination of any such Services that Danforth performs for the
Company. If any part of this section should be determined by a court of
competent jurisdiction to be unreasonable in duration, geographic area, or
scope, then this Section 8 is intended to and shall extend only for such period
of time, in such area and with respect to such activity as is determined to be
reasonable. Except as expressly provided herein, nothing in this Agreement shall
preclude Danforth from consulting for or being employed by any other person or
entity.

 

9.Non Solicitation. All personnel representing Danforth are employees or
contracted agents of Danforth. Accordingly, they are not retainable as employees
or contractors by the Company and the Company hereby agrees not to solicit, hire
or retain their services for so long as they are employees or contracted agents
of Danforth and for two years thereafter. Should the Company violate this
restriction, it agrees to pay Danforth liquidated damages equal to thirty 30% of
the employee’s starting annual base salary and target annual bonus for each
Danforth contracted agent hired by the Company in violation of this Agreement,
plus Danforth’s reasonable attorneys’ fees and costs incurred in enforcing this
agreement should the Company fail or refuse to pay the liquidated damages amount
in full within 30 days following its violation.

 

3

 

 

10.Placement Services. In the event that Danforth refers a potential employee to
the Company and that individual is hired, Danforth shall receive a fee equal to
20% of the employee’s starting annual base salary and target annual bonus. This
fee is due and owing whether an individual is hired, directly or indirectly on a
permanent basis or on a contract or consulting basis by the Company, as a result
of Danforth’s efforts within one year of the date applicant(s) are submitted to
the Company. Such payment is due within 30 days of the employee’s start date.

 

11.No Implied Warranty. Except for any express warranties stated herein, the
Services are provided on an "as is" basis, and the Company disclaims any and all
other warranties, conditions, or representations (express, implied, oral or
written), relating to the Services or any part thereof. Further, in performing
the Services Danforth is not engaged to disclose illegal acts, including fraud
or defalcations, which may have taken place. The foregoing notwithstanding,
Danforth will promptly notify the Company if Danforth becomes aware of any such
illegal acts during the performance of the Services. Because the Services do not
constitute an examination in accordance with standards established by the
American Institute of Certified Public Accountants (the “AICPA”), Danforth is
precluded from expressing an opinion as to whether financial statements provided
by the Company are in conformity with generally accepted accounting principles
or any other standards or guidelines promulgated by the AICPA, or whether the
underlying financial and other data provide a reasonable basis for the
statements.

 

12.Indemnification. Each Party hereto agrees to indemnify and hold the other
Party hereto, its directors, officers, agents and employees harmless against any
claim based upon circumstances alleged to be inconsistent with such
representations and/or warranties contained in this Agreement. Further, the
Company shall indemnify and hold harmless Danforth and any of its subcontractors
against any claims, losses, damages or liabilities (or actions in respect
thereof) that arise out of or are based on the Services performed hereunder,
except for any such claims, losses, damages or liabilities arising out of the
gross negligence or willful misconduct of Danforth or any of its subcontractors.
The Company will endeavor to add Consultant and any applicable subcontractor to
its insurance policies as additional insureds. Furthermore, during the Term of
this Agreement, Company shall maintain a Crime and Cyber Insurance Policy that
includes coverage for "Social Engineering" claims and extends coverage to
Danforth.

 

13.Independent Contractor. Danforth is not, nor shall Danforth be deemed to be
at any time during the term of this Agreement, an employee of the Company, and
therefore Danforth shall not be entitled to any benefits provided by the Company
to its employees, if applicable. Danforth’s status and relationship with the
Company shall be that of an independent contractor and consultant. Danforth
shall not state or imply, directly or indirectly, that Danforth is empowered to
bind the Company without the Company's prior written consent. Nothing herein
shall create, expressly or by implication, a partnership, joint venture or other
association between the parties. Danforth will be solely responsible for payment
of all charges and taxes arising from his or her relationship to the Company as
a consultant.

 

4

 

 

14.Records. Upon termination of Danforth’s relationship with the Company,
Danforth shall deliver to the Company any property or Confidential Information
of the Company relating to the Services which may be in its possession including
products, project plans, materials, memoranda, notes, records, reports,
laboratory notebooks, or other documents or photocopies and any such information
stored using electronic medium.

 

15.Notices. Any notice under this Agreement shall be in writing (except in the
case of verbal communications, emails and teleconferences updating either Party
as to the status of work hereunder) and shall be deemed delivered upon personal
delivery, one day after being sent via a reputable nationwide overnight courier
service or two days after deposit in the mail or on the next business day
following transmittal via facsimile. Notices under this Agreement shall be sent
to the following representatives of the Parties:

 

If to the Company:         Name:  Shunfu Hu Ph.D. Title:  VP of Business
Development & Operations Address:  84 October Hill Rd., Suite 11, Holliston, MA
01746 USA Phone:  (774) 233-7341 E-mail:  shu@biostage.com      If to Danforth: 
       Name:  Gregg Beloff Title:  Managing Director Address:  91 Middle Road  
Southborough, MA 01772 Phone:  (617) 686-7679 E-mail: 
gbeloff@danforthadvisors.com

 

16.Assignment and Successors. This Agreement may not be assigned by a Party
without the consent of the other which consent shall not be unreasonably
withheld, except that each Party may assign this Agreement and the rights,
obligations and interests of such Party, in whole or in part, to any of its
Affiliates, to any purchaser of all or substantially all of its assets or to any
successor corporation resulting from any merger or consolidation of such Party
with or into such corporation.

 

17.Force Majeure. Neither Party shall be liable for failure of or delay in
performing obligations set forth in this Agreement, and neither shall be deemed
in breach of its obligations, if such failure or delay is due to natural
disasters or any causes beyond the reasonable control of either Party. In the
event of such force majeure, the Party affected thereby shall use reasonable
efforts to cure or overcome the same and resume performance of its obligations
hereunder.

 

5

 

 

18.Headings. The Section headings are intended for convenience of reference only
and are not intended to be a part of or to affect the meaning or interpretation
of this Agreement.

 

19.Integration; Severability. This Agreement is the sole agreement with respect
to the subject matter hereof and shall supersede all other agreements and
understandings between the Parties with respect to the same. If any provision of
this Agreement is or becomes invalid or is ruled invalid by any court of
competent jurisdiction or is deemed unenforceable, it is the intention of the
Parties that the remainder of the Agreement shall not be affected.

 

20.Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts, excluding choice
of law principles. The Parties agree that any action or proceeding arising out
of or related in any way to this Agreement shall be brought solely in a Federal
or State court of competent jurisdiction sitting in the Commonwealth of
Massachusetts.

 

21.Counterparts. This Agreement may be executed in counterparts, each of which
will be deemed an original, but all of which together will constitute one
agreement.

 

If you are in agreement with the foregoing, please sign where indicated below,
whereupon this Agreement shall become effective as of the Effective Date.

 

DANFORTH ADVISORS, LLC  BIOSTAGE, INC.           By: /s/ Chris Connors  By: /s/
Shunfu Hu Ph.D.          Print Name: Chris Connors  Print Name: Shunfu Hu Ph.D. 
         Title: President   Title: VP of Business Development       Date:
October 1, 2020  Date: October 6, 2020

 

6

 

 

EXHIBIT A

 

Description of Services and Schedule of Fees

 

Danforth will perform mutually agreed to finance and accounting functions which
are necessary to support the management and operations of the Company, certain
of which are set forth below.

 

The initial staffing for this engagement shall be as follows:

 

Sr. Manager /James Mastridge/ $225 per hour:

 

•Assistance with drafting, filing, signing and execution as principal accounting
and principal financial officer of filings with the SEC including without
limitation forms 8-k 10-Q and 10-K for the service.

 

•Maintain an appropriate accounting system and general ledger, likely on
QuickBooks

 

•Regular bookkeeping and accounting activities--- monthly close, monthly
reporting, and general financial administration

 

•Establish and perform procedures for setting up new vendors (contracts, W-9s)
and paying monthly invoices; manage payables and cash disbursements

 

•Reconcile cash accounts, track cash usage and prepare cash flow projections

 

•Establish reporting template and perform monthly reporting (internal and
external)

 

•Establish/maintain internal controls

 

•Work with the Company management team to prepare operating plans and budgets

 

•Input of budget in QuickBooks for variance analysis

 

•Manage insurance and banking

 

•Establish and manage payroll and employee benefits

 

•Monthly payroll/benefits administration (if applicable)

 

•Update and manage the Company’s capitalization table

 

•Financing, audit, budget, payroll/workers comp set up or other special
project(s), as required and requested

 

•Provide support for fundraising initiatives

 

•Assist with tax returns, as appropriate

 

7