Contract
Exhibit
10.2
ADVISORY
AGREEMENT dated
as
of November 6, 2006, between Oxis International, Inc., a Delaware corporation
(the “Company”), and Ambient Advisors LLC (the “Advisor”).
The
Company desires to retain the Advisor to provide management and advisory
services to the Company, and the Advisor desires to perform such management
and
advisory services for the Company, in each case, upon the terms and conditions
hereinafter set forth.
NOW,
THEREFORE,
in
consideration of the mutual covenants and obligations hereinafter set forth,
the
parties agree as follows:
1.
Retention
of Advisor.
The
Company hereby retains the Advisor, and the Advisor hereby accepts such
retention by the Company, upon the terms and conditions hereinafter set forth.
The Advisor shall perform all such services as an independent contractor to
the
Company and not as an employee, agent or representative of the
Company.
2.
Term.
The
retention of the Advisor hereunder shall be for a period (the “Initial Term”)
that commenced on October 15, 2006 (the “Commencement Date”) and shall end on
October 15, 2009 or such earlier date provided in this Section 2. The Initial
Term will be extended automatically for additional one-year periods (each an
“Additional Term,” together with the Initial Term, the “Term”). This Agreement
shall automatically terminate prior to October 15, 2009 or the expiration of
any
Additional Term upon the first to occur of (i) the death or disability of Xx.
Xxxx X. Post, Managing Director of the Advisor, (ii) the resignation by the
Advisor following the delivery by it to the Company of ten days’ advance written
notice of such resignation or (iii) termination by the Company following the
delivery to the Advisor of 60 days’ advance written notice from the Company’s
Board of Directors of its intention to terminate the Agreement.
3.
Duties.
During
the Term, the Advisor shall advise the Company and provide management services
in the areas of (a) strategic planning, (b) financial planning and budgeting,
(c) investor relations, (d) corporate finance (including advising on new capital
formation and mergers and acquisitions), (e) day to day operational management
and (f) such additional roles and responsibilities as the Advisor and the
Company shall mutually agree. The parties acknowledge that Xx. Xxxx X. Post
shall perform substantially all of the services of the Advisor under this
Agreement, and that although he will not formally be named an officer of the
Company, he will be empowered to sign checks and enter into contracts on the
Company’s behalf in the capacity of “Acting Chief Operating Officer.” The
Advisor shall report directly to, and shall reasonably update, the CEO or his
designee on the status of each project, and shall reasonably coordinate its
efforts with members of management, the Board of Directors and other advisors
and consultants to the Company.
4.
Time
to be Devoted to Services.
During
the Term, the Advisor agrees to spend approximately one-third (1/3) of the
Advisor’s working time to the provisions of services hereunder.
5.
Compensation.
(a) Advisory
Fee.
The
Company shall pay to the Advisor an advisory fee of $83,333 per annum. The
advisory fee initially will be payable quarterly in advance in the form of
either the Company’s common stock (“Common Stock”), at a price equal to 85% of
the “Market Price” for the Company’s common stock, which shall equal the average
of the closing price for the five trading days prior to the date that the
issuance is authorized by the Board of Directors. In lieu of receiving Common
Stock for such payments, the Advisor may elect to receive that number of ten
year Warrants (with cashless exercise provisions) equal to 1.5 times the number
of shares of Common Stock that would otherwise be received, at an exercise
price
equal to the Market Price. The first installment, representing $20,833 of the
annual advisory fee, and payable at the Advisor’s election in the form of
warrants described in the foregoing sentence, will be made as soon as
practicable after the execution of this Agreement, and thereafter, will be
paid
on the dates that are three months, six months and nine months from the date
hereof, and quarterly thereafter for the duration of the Term. Notwithstanding
the foregoing, once the Company has raised at least $2.5 million in one or
more
financings (equity, debt or convertible debt, in addition to the financing
closed on October 27, 2006) or in a strategic transaction (a “Qualifying
Financing”), the Advisor may elect, at any time, in lieu of receiving a
quarterly issuance of stock (or warrants in lieu thereof), to receive the
advisory fee in cash, payable monthly on the Corporation’s regular pay cycle for
professional employees. All shares of Common Stock issuable to the Advisor
under
this Agreement (if not otherwise registered pursuant to an existing stock option
plan covered by a registration statement on Form S-8), or upon the exercise
of
the warrants to be issued in lieu thereof, shall have the benefit of piggyback
registration rights, pursuant to a Registration Rights Agreement to be executed
by the Company and the Advisor (the “Registration Rights Agreement”); provided,
however, that the failure to execute such a Registration Rights Agreement shall
not limit the Advisor’s piggyback registration rights hereunder. Following the
Initial Term, the Board shall in accordance with its customary review of
executive management and consultants’ compensation, review Advisor’s annual
advisory fee and make adjustments the Board (or its Compensation Committee)
feels are appropriate, but in any event Advisor’s base compensation shall not be
lower than $250,000 (on a full-time annual basis).
(b)
Other and Additional Compensation.
(i) Annual
Bonus.
During
the Term, the Advisor shall receive an annual bonus based upon the attainment
of
agreed upon goals and milestones as determined by the Board and its Compensation
Committee. During the remainder of calendar year 2006, the Advisor’s bonus shall
be pro rated on an annual bonus rate in the range of 25% to 50% of the advisory
fee, and the bonus for subsequent years of the Term shall be in a similar target
range. Additional bonus calculations and payments determined by the Board and
the Compensation Committee shall be made based upon (i) increases in the
Company’s sales and reductions in its expenses, improvements in operations, and
completion of a merger with Biochek and integration of its operations with
those
of the Company, (ii) successful financings an/or strategic transactions
completed, taking into account the aggregate amount of funds raised for the
Company and (iii) performance of the trading price of the Company’s Common
Stock.
The
bonuses payable hereunder shall be paid in cash, although at the Advisor’s sole
option, they may be paid in stock (or in the form of ten year warrants with
cashless exercise provisions, with 1.5 times the number of warrants to be issued
in lieu of the number of shares of Common Stock), based upon the average of
the
closing bid and asked prices for the 5 trading days immediately prior to the
awarding to the Advisor of the bonus for a particular year (which shall also
be
the exercise price of the warrants, if the Advisor elects to receive warrants).
The Advisor shall make its election no more than ten (10) days following
notification by the Company of the bonus award, and the failure to make timely
election shall mean that the Advisor shall receive the bonus in the form of
cash.
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(ii) Warrants.
As soon
as practicable following execution of this Agreement, the Company shall issue
to
the Advisor ten year warrants to purchase 550,000 shares of Common Stock (the
“Warrants”), at an exercise price equal to the Market Price. The Warrants shall
have a cashless exercise provision and otherwise shall be in form mutually
satisfactory to the parties. The Warrants will vest as follows: 275,000 Warrants
in four equal quarterly installments commencing on the date that is three months
from the Commencement Date and every three months thereafter, (iii) and the
remaining 275,000 Warrants in eight quarterly installments over the subsequent
two years and (iv) for an exercise price equal to the average of the closing
bid
and asked prices for the Common Stock on the trading day immediately prior
to
the date of the execution of this Agreement.
(iii) Additional
Compensation.
The
foregoing establishes the minimum compensation during the Term and shall not
preclude the Board from awarding the Advisor a higher salary or any additional
bonuses or stock options in the event of a successful financing or strategic
transaction or otherwise, and in any event, in the discretion of the Board.
(iv) Sign-on
Bonus.
As a
sign-on bonus and as soon as practicable following execution of this Agreement,
the Advisor shall be granted non-qualified options for the purchase of up to
333,333 shares (the “Initial Option Grant”) of Common Stock under the Company’s
existing stock option plan (the “Plan”). The terms of the grant, including the
vesting schedule and exercise price of the Initial Option Grant, shall be as
set
forth in a separate option agreement executed by and between the parties and
will provide, among other things, (i) for cashless exercise provisions and
(ii)
for the vesting in six equal installments, commencing on the date that is 30
days after the Commencement Date, through the 180th
day
after the Commencement Date. The options issued under this Section 5(b)(iv)
will
vest monthly in six equal installments, commencing on the date that is 30 days
after the Commencement Date, through the 180th
day
after the Commencement Date. Subsequent stock option grants, including an annual
grant in 2007, will be determined annually by the Board and the Compensation
Committee, taking into account the previous year’s performance of the Company’s
Common Stock, sales, revenue and income performance, as well as the frequency
and success of financings and/or strategic transactions.
6.
Business
Expenses: Benefits.
The
Company shall reimburse the Advisor in cash, in accordance with its practice
from time to time, for all reasonable and necessary travel, entertainment and
other expenses and other disbursements incurred by the Advisor for or on behalf
of the Company in the performance of the Advisor’s duties hereunder. The Advisor
shall provide such appropriate documentation of expenses and disbursements
as
may from time to time be required by the Company. Any travel expenses in excess
of $1,000 for any one trip must be pre-approved by the CEO.
The
Company shall have no obligation to provide any benefits to Advisor or to Xxxx
X. Post, including without limitation, any health, life or disability
benefits.
7.
Indemnification;
Insurance.
The
Company will indemnify the Advisor for its actions in the capacity as a Advisor
hereunder (other than resulting from the Advisor’s gross negligence or willful
misconduct) and Xxxx X. Post for his actions as a director of the Company and
any of its subsidiaries to the full extent permitted by law and as provided
in
the Company’s Certificate of Incorporation and by-laws. The Company also will
include the Advisor and Xxxx X. Post on its existing Directors and Officers
liability insurance policy, which the Company represents is for a customary
amount for similar public companies in the life sciences
industry.
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8.
Termination
Payments.
If
the
Company terminates this Agreement pursuant to Section 2(iii) without Cause
after
the six month anniversary of the date of this Advisory Agreement, Advisor shall
receive an amount equal to twelve (12) months of the advisory fee for the then
current Term in a lump sum payment and all outstanding stock options shall
become fully vested and the warrants vested as of the date of termination and
the stock options shall remain exercisable through their respective expiration
dates. If the Company terminates this Agreement pursuant to Section 2(iii)
without Cause prior the six month anniversary of the date of this Advisory
Agreement, Advisor shall be paid any expenses due to him and all vested stock
options and warrants shall remain exercisable through their respective
expiration dates. “Cause” shall mean means (i) willful malfeasance or willful
misconduct by the Advisor in connection with the performance of its duties
hereunder; (ii) the Advisor’s gross negligence in performing any of its duties
under this Agreement; (iii) the Advisor’s or Xxxx X. Post’s conviction of, or
entry of a plea of guilty to, or entry of a plea of nolo contendere with respect
to, any felony; (iv) the habitual drunkenness or use or possession of illegal
drugs by Xxxx X. Post while performing the Advisor’s duties under this Agreement
or excessive absenteeism not related to illness; (v) the Advisor’s material
breach of any written policy applicable to all employees and Advisors adopted
by
the Corporation; or (vi) material breach by the Advisor of any of its agreements
in this Agreement having a material detrimental impact on the Company after
written notice and a reasonable opportunity to cure of not less than 30
days.
If
the
Company terminates this Agreement pursuant to Section 2(iii) for Cause, the
Company will only be required to give ten (10) days’ prior notice (other than
pursuant to Section 8(a)(vi), for which the notice requirement is 30 days),
stating in reasonable detail the Board’s understanding of the facts leading to
the determination of Cause, and in such event the Advisor shall not be entitled
to any further payments of its advisory fee hereunder, and any unexercised
stock
options shall expire.
If
the
Advisor resigns pursuant to Section 2(ii), for whatever reason, or if Xxxx
X.
Post dies or becomes disabled, the Advisor (or its successors or assigns) shall
not be entitled to any further payments of the advisory fee hereunder, all
unvested stock options and warrants shall expire, and all vested stock options
and warrants shall remain exercisable until their respective expiration dates.
“Disability” shall mean the incapacity of Xxxx Post due to physical or mental
illness that results in the Advisor’s being unable to substantially perform its
duties hereunder for six consecutive months (or for six months out of any
nine-month period). During a period of Disability, the Advisor shall continue
to
receive the advisory fee hereunder.
9.
Corporate
Opportunities; Intellectual Property.
(a) The
Advisor acknowledges that by virtue of its efforts as a Advisor hereunder to
the
Company and of Xxxx X. Post’s serving as a director, the Advisor may become
aware of confidential information identified as such in writing by the Company
relating to the Company’s business opportunities and potential acquisitions of
companies and or technologies/compounds (“Confidential Information”), and that
the Advisor will not, during the Term and for a period of 6 months thereafter
(the “Restricted Period”), directly or indirectly use any such Confidential
Information for its own benefit or for the benefit of any third person other
than the Company or its affiliates or enter into or negotiate a transaction
with
any person that was the subject of the Company’s business opportunity or
potential acquisition without the prior written approval of the Company or
following an express decision by the CEO or the Board not to pursue the specific
business opportunity or potential acquisition. The foregoing limitation shall
not apply to the Advisor after the end of the Restricted Period. The
restrictions set forth in this Section 9 are in addition to any of the fiduciary
obligations of Xxxx X. Post to the Company by virtue of his being a director
of
the Company.
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(b)
Notwithstanding the foregoing, the Company acknowledges that the Advisor may
pursue its own independent business interests and activities during the
Restricted Period, including those relating to life sciences and medical
technologies, which the Company acknowledges are not business opportunities
of
the Company and, therefore, which may be pursued by the Advisor on its own
or in
association with others independently of the Company during the Restricted
Period. The Advisor is under no obligation hereunder to identify specific
potential business opportunities or acquisitions for the Company. However,
once
the Advisor informs the Company of a potential opportunity during the Term,
it
may not independently pursue that opportunity during the Restricted Period
without the prior written approval of the Company or following an express
decision by the CEO or the Board not to pursue the specific business opportunity
or potential acquisition.
(c)
Any
material or other work which may be subject to copyright or patent, and which
is
conceived, derived, made or written by the Advisor in connection with the
Confidential Information shall be deemed a “work for hire,” (and is herein
referred to as a “Development”). As between the Advisor and the Company, Advisor
acknowledges that all Developments will be the sole and exclusive property
of
the Company and shall also be deemed Confidential Information under this
Agreement. The Advisor further acknowledges the Company may in turn negotiate
with any third party regarding their respective ownership rights to such
Developments. The Advisor shall execute such documents as may be necessary
to
vest in the Company or any third party, if applicable, all right, title and
interest in and to the Developments. The Company (or a third party, if
applicable) will pay all costs and expenses associated with any applications
and
the transfer of title to Developments, including paying the Advisor’s reasonable
attorneys’ fees for reviewing such documents and instruments presented for
execution.
(d)
Notwithstanding the foregoing, the assignment by the Advisor to the Company
(or
a third party, if applicable) of Developments, as well as the right to apply
for
and obtain patents and/or registered copyrights on the same, shall be expressly
limited to those specifically involving the Confidential Information relating
to
such projects as mutually agreed upon by the parties hereto, and shall
specifically not include (i) any right, license or interest of the Company
to
general concepts, formats, methods, testing techniques, study designs, computer
software or other procedures utilized or designed by the Advisor in performing
its duties hereunder, or any general inventions, discoveries, improvements,
or
copyrightable materials relating thereto, nor (ii) any patentable or
copyrightable materials which can be shown by competent proof not to concern
the
subject matter of the Confidential Information, or, which predate this Agreement
or the Advisor’s receipt of the Confidential Information, or (iii) any
intellectual property relating to the Advisor’s current activities.
(e)
The
Advisor agrees that this Section 9 may be enforced by the Company by injunction,
or other equitable relief, without prejudice to any other rights and remedies
that the Company may have under this Agreement and without the posting of any
bond.
10. Legal
Expenses.
The
costs of the Advisor’s counsel, Xxxx Xxxxxxxxx related to the negotiation,
preparation and review of this Agreement, in the amount of $2,500, shall be
paid
by the Corporation, in the form of shares of Common Stock, based on a price
equal to 85% of the Market Price, and shall be issued to Xxxx Xxxxxxxxx. Any
shares issued pursuant to the foregoing sentence shall have the same
registration rights as those being provided to Advisor hereunder and pursuant
to
the Registration Rights Agreement.
11.
Notices.
All
notices, claims, certificates, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given and
delivered if personally delivered or if sent by nationally-recognized overnight
courier, by telecopy, or by registered or certified mail, return receipt
requested and postage prepaid, addressed as follows:
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If
to the
Company, to:
OXIS
International, Inc.
000
Xxxxxxx Xxxx Xxxxx, Xxxxx X
Xxxxxx
Xxxx, Xxxxxxxxxx 00000
Attention:
Chairman of the Board
if
to the
Advisor, to:
Ambient
Advisors LLC
Xxx
00000
Xxx
Xxxxxxx, XX 00000
Attention:
Xxxx X. Post
or
to
such other address as the party to whom notice is to be given may have furnished
to the other party or parties in writing in accordance herewith. Any such notice
or communication shall be deemed to have been received in the case of personal
delivery, on the date of such delivery, in the case of nationally-recognized
overnight courier, on the next business day after the date when sent, in the
case of telecopy transmission, when received, and in the case of mailing, on
the
third business day following that on which the piece of mail containing such
communication is posted.
12.
Binding
Agreement; Benefit.
Subject
to Section 16, the provisions of this Agreement will be binding upon, and will
inure to the benefit of, the respective heirs, legal representatives, successors
and assigns of the parties.
13.
Governing
Law.
This
Agreement will be governed by, and construed and enforced in accordance with,
the laws of the State of California (without giving effect to principles of
conflicts of laws).
14.
Waiver
of Breach.
The
waiver by either party of a breach of any provision of this Agreement must
be in
writing and shall not operate or be construed as a waiver of any other
breach.
15.
Entire
Agreement; Amendments.
This
Agreement contains the entire agreement between the parties with respect to
the
subject matter hereof and supersedes all prior agreements or understandings
between the parties with respect thereto. This Agreement may be amended only
by
and agreement in writing signed by the parties.
16.
Headings.
The
section headings contained in this Agreement are for reference purposes only
and
shall not affect in any way the meaning or interpretation of this
Agreement.
17.
Assignment.
This
Agreement is personal in its nature and the parties shall not, without the
consent of the other, assign or transfer this Agreement or any rights or
obligations hereunder; provided,
however,
that
the Company may assign this Agreement to any of its subsidiaries.
18.
Counterparts.
This
Agreement may be executed in counterparts, and each such counterpart shall
be
deemed to be an original instrument, but both such counterparts together shall
constitute but one agreement.
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IN
WITNESS WHEREOF,
the
parties hereto have executed and delivered this Advisory Agreement as of the
date first written above.
OXIS
INTERNATIONAL,
INC.
By:
/s/
Xxxxxx X.
Xxxxxxx, M.D.
Name:
Title:
AMBIENT
ADVISORS
LLC
By:/s/
Xxxx X.
Post
Xxxx
X.
Post
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