EMPLOYMENT AGREEMENT
Exhibit
10.1
Employment
Agreement dated as of November
6, 2006, between OXIS INTERNATIONAL INC., a Delaware corporation (with its
successors and assigns, referred to as the “Corporation”) and XXXXXX X. XXXXXXX,
M.D. (hereinafter referred to as “XXXXXXX”).
PRELIMINARY
STATEMENT
The
Corporation desires to employ HAUSMAN as President and Chief Executive Officer
of the Corporation, and XXXXXXX wishes to be employed by the Corporation, upon
the terms and subject to the conditions set forth in this Agreement. The
Corporation and XXXXXXX also wish to enter into the other agreements set forth
in this Agreement, all of which are related to XXXXXXX’x employment under this
Agreement.
AGREEMENT
XXXXXXX
and the Corporation therefore agree as follows:
1.
Term
of Employment.
The
Corporation hereby employs XXXXXXX and XXXXXXX hereby accepts employment with
the Corporation for the period (the “Initial Term”) commencing as of October 15,
2006 (the “Commencement Date”), and ending on the third anniversary of the
Commencement Date hereof or
upon
the earlier termination of the Initial Term pursuant to Section 6. The Initial
Term will be extended automatically for additional one-year periods (each,
an
“Additional Term,” together with the Initial Term, the “Term”), subject to the
rights of the parties generally to terminate this Agreement in accordance with
the provisions of Section 6(a). The termination of the Term for any reason
shall
end XXXXXXX’x employment under this Agreement, but, except as otherwise set
forth herein, shall not terminate XXXXXXX’x or the Corporation’s other
agreements in this Agreement.
2.
Position
and Duties.
Upon the
commencement of the Initial Term, XXXXXXX shall serve as President and Chief
Executive Officer of the Corporation. XXXXXXX shall also serve as the Chairman
of the Board of Directors and shall also hold such additional positions and
titles as the Board of Directors (“Board”) may determine from time to time.
XXXXXXX shall report to the Board. During the Term, XXXXXXX shall devote
substantial time and attention to performing his duties as an employee of the
Corporation. The Corporation acknowledges that the foregoing sentence shall
not
restrict XXXXXXX from devoting time and attention to other business ventures,
including without limitation those activities identified on Schedule A annexed
hereto, which the Corporation acknowledges are not business opportunities of
the
Corporation. Additionally, XXXXXXX may continue serving on the Board of
Directors of TorreyPines Therapeutics, Inc. and as a member of its Board
committees and may serve in similar capacities with other companies or
organizations subject to his obtaining prior approval from Board.
3.
Compensation.
(a)
Base
Salary.
The
Corporation shall pay XXXXXXX a base salary, beginning on the first day of
the
Initial Term and ending on the last day of the Initial Term, of $250,000 per
annum. The base salary initially will be payable quarterly in advance in the
form of the Corporation’s common stock (“Common Stock”), at a price equal to 85%
of the “Market Price” for the Corporation’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, XXXXXXX 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 $67,500 of
XXXXXXX’x base salary, and payable at XXXXXXX’x election either in the shares of
Common Stock or form of warrants described in the foregoing sentence, will
be
paid promptly after the initial determination of the Market Price, 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 Corporation 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”), XXXXXXX may elect, at any time, in lieu
of receiving a quarterly issuance of stock (or warrants in lieu thereof), to
receive his base salary in cash, payable monthly on the Corporation’s regular
pay cycle for professional employees. All shares of Common Stock issuable to
XXXXXXX under Sections 3 and 4 hereof (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 Corporation and XXXXXXX (the “Registration
Rights Agreement”); provided, however, that the failure to execute such a
Registration Rights Agreement shall not limit XXXXXXX’x piggyback registration
rights hereunder. Furthermore, the Corporation will obtain advice of counsel
that the issuance of shares of Common Stock by the Corporation to XXXXXXX under
Sections 3 and 4 hereof do not violate the provisions of Section 203 of the
Delaware General Corporation Law. Following the Initial Term, the Board shall,
in accordance with its customary review of executive management compensation,
review XXXXXXX’x base salary and make adjustments the Board (or its Compensation
Committee) feels are appropriate, but in any event XXXXXXX’x base salary shall
not be lower than $250,000.
(b) Other
and Additional Compensation.
(i) Annual
Bonus.
During
the Term, XXXXXXX 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, XXXXXXX’x bonus shall be
pro rated on an annual bonus rate in the range of 25% to 50% of his base salary,
and his 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) each $1 million in
combined annual sales of the Corporation and its subsidiary BioCheck exceeding
$6,500,000, (ii) successful financings an/or strategic transactions completed,
taking into account the aggregate amount of funds raised for the Corporation
and
(iii) performance of the trading price of the Common Stock.
The
bonuses payable hereunder shall be paid in cash, although at XXXXXXX’x 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 XXXXXXX of the bonus for a particular year (which shall also be
the
exercise price of the warrants, if the Advisor elects to receive warrants).
XXXXXXX shall make his election no more than ten (10) days following
notification by the Corporation of his bonus award, and the failure to make
timely election shall mean that XXXXXXX shall receive the bonus in the form
of
cash.
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(ii) Stock
Options.
As soon
as practicable following execution of this Agreement, XXXXXXX shall be granted
options for the purchase of up to 495,000 shares (the “Initial Option Grant”) of
Common Stock under the Corporation’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 of 247,500 options
in
four equal quarterly installments commencing on the date that is three months
from the Commencement Date and every three months thereafter, (iii) for the
vesting of the remaining 247,500 options 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 hereof. 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 Corporation’s Common Stock, sales, revenue and income performance, as well
as the frequency and success of financings and/or strategic transactions.
(iii) Additional
Compensation.
The
foregoing establishes the minimum compensation during the Term and shall not
preclude the Board from awarding XXXXXXX 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 Corporation shall issue to XXXXXXX 500,000 shares of Common Stock and
ten
year warrants (the “Warrants”) to purchase 1,505,000 shares of Common Stock, 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. All of the shares of Common Stock issued under this Section 3(b)(iv)
will be subject to repurchase by the Corporation at a price of par value per
share, and the amount of shares subject to repurchase will be reduced in six
equal monthly increments commencing on the 30 days after the Commencement Date
and every 30th
day
thereafter until 180 days after the Commencement Date, when none of such shares
shall be subject to repurchase. The Warrants issued under this Section 3(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.
4.
Employee
Benefits.
(a) General.
During
the Term, XXXXXXX shall be entitled to the employee benefits generally made
available to the Corporation’s executive officers, including four-weeks paid
vacation (no more than 2 weeks per month) and all U.S. national holidays,
participation in the Corporation’s 401(k) plan or other plans that may be made
available from time to time to the Corporation’s executive officers.
Additionally, XXXXXXX shall receive family health and dental insurance benefits.
As soon as reasonably practicable following the date hereof, the Corporation
shall arrange for and maintain short-term and long-term disability policies
for
benefit of XXXXXXX in such amounts generally customary for similarly situated
executive employees in the industry.
(b) Other
Benefits. During
the Term, the Corporation shall provide XXXXXXX with an annual office expense
allowance of $50,000, for the costs of maintaining an office in the Xxxxxxxxx,
Washington area. The office expense allowance shall be payable quarterly in
advance in the form of Common Stock, at a price equal to 85% of the Market
Price. The first installment, representing $12,500 of the office expense
allowance, will be paid promptly after the determination of the Market Price,
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 Corporation has completed
a
Qualifying Financing, the office expense allowance will be paid in cash in
advance, commencing for the quarter next following the quarter in which the
Qualifying Financing occurred.
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(c) Indemnification.
The
Corporation will indemnify XXXXXXX for his actions in the capacity as an officer
and director of the Corporation and any of its subsidiaries to the full extent
permitted by law and as provided in the Corporation’s Certificate of
Incorporation and by-laws.
5.
Expenses.
During
the Term, the Corporation shall reimburse XXXXXXX in cash for actual
out-of-pocket travel, entertainment and other business expenses incurred by
him
in the performance of his services for the Corporation upon the receipt of
appropriate documentation of such expenses.
6.
Termination;
Non-Renewal.
(a)
General.
The Term
shall end immediately upon XXXXXXX’x death, or upon termination for Cause,
Disability or Good Reason, each as defined in Section 7. Upon termination of
the
Term due to XXXXXXX’x death, all compensation due XXXXXXX under this Agreement
will cease. In all other cases, (i) the Corporation may terminate this Agreement
either upon sixty (60) days prior written notice, if such termination shall
be
effective in the calendar year 2006, or otherwise upon ninety (90) days written
notice and (ii) XXXXXXX may terminate this Agreement upon sixty (60) days
written notice. The parties agree that the mere act to providing notice to
the
other party of termination shall not in any event be deemed to provide such
other party the right to immediately terminate this Agreement.
The
Corporation may elect not to renew this Agreement by giving no less than 90
days
written notice prior to the expiration of any Term. XXXXXXX may elect not to
renew this Agreement by giving not less than 60 days written notice prior to
the
expiration of any Term. Upon the receipt of any notice of non-renewal as
provided in this Section 6(a), XXXXXXX shall continue to be compensated in
the
manner set forth in this Agreement until the expiration of the applicable Term.
(b)
Notice
of Termination - Generally.
Any
termination by the Corporation of XXXXXXX’x employment hereunder shall be in
writing and delivered to XXXXXXX at the address set forth herein or at such
address kept in the records of the Corporation and shall specify the reasons
for
such termination.
(c) Termination
by the Corporation for Cause. Any
written notice of termination by the Corporation of XXXXXXX for Cause shall,
to
the extent determined by the Board that the Cause is curable, allow XXXXXXX
the
opportunity to cure, but in any event no more than ten (10) days (except in
the
event of a termination pursuant to Section 7(a)(vi), in which case the cure
period shall be 30 days). Such notice of termination shall also state in
reasonable detail the Board’s understanding of the facts leading to the
determination of Cause. Upon the Corporation’s final termination of the Term for
Cause, all compensation due to XXXXXXX under this Agreement will cease, other
than that described in Section 9 below. Moreover, any unexercised portions
of
the Initial Option Grant or other stock option grants to XXXXXXX by the
Corporation shall expire upon such termination.
(d) Termination
by the Corporation upon a Change of Control. In
the
event that the Corporation terminates its relationship with XXXXXXX within
one
(1) year of a “Change of Control”, as defined in Section 7(c), other than for
Cause, XXXXXXX shall receive the following:
(i) an
amount
equal to twelve (12) months of base salary for the then current Term (which
is
in addition to the base salary paid to XXXXXXX after the Corporation’s delivery
of notice of termination pursuant to Section 6 and the actual date of
termination) plus an amount equal to the prior year’s bonus (and if occurring
before the bonus for 2007 has been determined, an amount equal to 50% of the
then current base salary); and
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(ii) the
full
vesting of the Initial Option Grant and any other stock option grants to XXXXXXX
by the Corporation, and extended exercisability thereof until their respective
expiration dates; and
(iii) Other
Compensation (as defined in Section 9); and
(iv) If
the
foregoing payments and benefits provided to XXXXXXX in Sections 6(d)(i) through
(iii) above (the “Change of Control Payments”) are or become subject to the tax
(“Excise Tax”) imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended, the Corporation shall pay to XXXXXXX such amount (the “Gross-up
Payment”) as may be necessary to place XXXXXXX in the same after-tax position as
if no portion of the Change of Control Payments and any amounts paid to him
pursuant to this paragraph 6(d) had been subject to the Excise Tax.
For
the
avoidance of doubt, XXXXXXX shall be entitled to the foregoing benefits once
notice of termination is given by the Corporation pursuant to this Section
6(d),
regardless of his subsequent Death or Disability.
(e)
Termination
by the Corporation other than upon Change of Control, Death, Disability or
Cause. In
the
event that the Corporation terminates its relationship with XXXXXXX, including
a
non-renewal of this Agreement by the Corporation but other than upon a Change
of
Control, Death, Disability or Cause, XXXXXXX shall receive the
following:
(i) if
employment was terminated during the calendar year 2006, an amount equal to
six
(6) months of the then current base salary; if employment was terminated
commencing in the calendar year 2007 or if the Corporation elects not to renew
this Agreement following the Initial Term or any Additional Term, an amount
equal to twelve (12) months of base salary for the then current Term plus an
amount equal to the prior year’s bonus (and if occurring before the bonus for
2007 has been determined, an amount equal to 50% of the then current base
salary) ;
(ii) if
employment was terminated during the calendar year 2006, 50% of the previously
unvested portion of the Initial Option Grant shall vest and such vested options
shall be exercisable until their respective expiration dates; if employment
was
terminated commencing in the calendar year 2007 and thereafter or if the
Corporation elects not to renew this Agreement following the Initial Term or
any
Additional Term, all stock options granted to XXXXXXX (including without
limitation the Initial Option Grant) shall immediately vest and shall remain
exercisable until their respective expiration dates; and
(iii) Other
Compensation.
(f)
Termination
by XXXXXXX upon Good Reason; Other Terminations. In
the
event XXXXXXX terminates his relationship with the Corporation for “Good Reason”
as defined in Section 7, within one (1) year of the occurrence of the event
which established the “Good Reason,” or for “Good Reason” within one (1) year of
a Change of Control, XXXXXXX shall receive the following:
(i) if
the
termination occurred during the calendar year 2006 for Good Reason, an amount
equal to six (6) months of base salary; if the termination occurred during
the
calendar year 2006 due to a Change of Control, an amount equal to twelve (12)
months of base salary; if termination for Good Reason occurred during the
calendar year 2007 or thereafter, an amount equal to twelve (12) months of
the
then current base salary plus an amount equal to the prior year’s bonus (and if
occurring before the bonus for 2007 has been determined, an amount equal to
50%
of the then current base salary);
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(ii) if
termination occurred during the calendar year 2006, 50% of the previously
unvested portion of the Initial Option Grant shall vest and such vested options
shall be exercisable until their respective expiration dates, except that if
termination is by XXXXXXX for Good Reason subsequent to a Change of Control,
then 100% of any option grants to XXXXXXX (including, without limitation, the
Initial Option Grant) shall vest and shall remain exercisable until its
respective expiration dates; if employment was terminated commencing in the
calendar year 2007 and thereafter, all stock options granted to XXXXXXX
(including, without limitation, the Initial Option Grant) shall immediately
vest
and shall remain exercisable until their respective expiration dates; and
(iii) Other
Compensation.
XXXXXXX
shall provide prior written notice to the Corporation of his termination
pursuant to this Section 6(f), and such notice shall describe the particular
“Good Reason(s)” at issue.
If
XXXXXXX otherwise terminates his employment without Good Reason, all options
vested at the time of such termination shall expire on their respective
expiration dates.
7.
Definitions.
(a)
"Cause"
Defined.“Cause”
means (i)
willful
malfeasance or willful misconduct by XXXXXXX in connection with his employment;
(ii)
XXXXXXX’x gross negligence in performing any of his duties under this Agreement;
(iii)
XXXXXXX’x conviction of, or entry of a plea of guilty to, or entry of a plea of
nolo contendere with respect to, any felony; (iv) XXXXXXX’x habitual drunkenness
or use or possession of illegal drugs while performing his duties under this
Agreement or excessive absenteeism not related to illness; (v) XXXXXXX’x
material breach of any written policy applicable to all employees adopted by
the
Corporation; or (vi) material breach by XXXXXXX of any of his agreements in
this
Agreement having a material detrimental impact on the Corporation.
(b)
“Disability”
Defined.“Disability”
shall mean XXXXXXX’x incapacity due to physical or mental illness that results
in his being unable to substantially perform his duties hereunder for six
consecutive months (or for six months out of any nine-month period). During
a
period of Disability, XXXXXXX shall continue to receive his base salary
hereunder, provided that if the Corporation provides XXXXXXX with disability
insurance coverage, payments of XXXXXXX’x base salary shall be reduced by the
amount of any disability insurance payments received by XXXXXXX due to such
coverage. Upon termination, after the end of the period of Disability, all
compensation due XXXXXXX under this Agreement shall cease.
(c)
“Change
of Control” Defined. “Change
of Control” shall mean the occurrence of any one or more of the following
events:
(i) An
acquisition (whether directly from the Corporation or otherwise) of any voting
securities of the Corporation (the “Voting Securities”) by any “Person” (as the
term person is used for purposes of Section 13(d) or 14(d) of the Securities
and
Exchange Act of 1934, as amended (the “1934 Act”)), immediately after which such
Person has “Beneficial Ownership” (within the meaning of Rule 13d-3 promulgated
under the 0000 Xxx) of fifty percent (50 %) or more of the combined voting
power
of the Corporation’s then outstanding Voting Securities.
(ii) The
individuals who, as of the Commencement Date, are members of the Board (the
“Incumbent Board”), cease for any reason to constitute at least fifty-one
percent (51%) of the Board; or
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(iii) Approval
by the Board and, if required, stockholders of the Corporation of, or execution
by the Corporation of any agreement with respect to, or the consummation of
(it
being understood that the mere execution of a term sheet, memorandum of
understanding or other non-binding document shall not constitute a Change of
Control):
(A) A
merger,
consolidation or reorganization involving the Corporation, where either or
both
of the events described in Section 7(c)(i) or 7(c)(ii) would be the
result;
(B) A
liquidation or dissolution of or appointment of a receiver, rehabilitator,
conservator or similar person for, the Corporation; or
(C) An
agreement for the sale or other disposition of all or substantially all of
the
assets of the Corporation to any Person (other than a transfer to a subsidiary
of the Corporation).
Notwithstanding
anything contained in this Agreement to the contrary, if XXXXXXX’x employment is
terminated prior to a Change in Control and XXXXXXX reasonably demonstrates
that
such termination (i) was at the request of a third party who has indicated
an
intention or taken steps reasonably calculated to effect a Change in Control
and
who effectuates a Change in Control (a “Third Party”) or (ii) otherwise occurred
in connection with, or in anticipation of, a Change in Control which actually
occurs, then for all purposes of this Agreement, the date of a Change in Control
with respect to XXXXXXX shall mean the date immediately prior to the date of
such termination of XXXXXXX’x employment.
(d)
“Good
Reason” Defined. “Good
Reason” shall mean the occurrence, whether or not after a Change in Control, of
any of the events or conditions described below:
(i) a
change
in XXXXXXX’x status, title, position or responsibilities (including reporting
responsibilities) which represents a material adverse change from his status,
title, position or responsibilities as in effect immediately prior to such
change; the assignment to XXXXXXX of any duties or responsibilities which are
inconsistent with his status, title, position or responsibilities as in effect
immediately prior to such change; or any removal of XXXXXXX from any of such
offices or positions (except in those cases where a change is either at the
request of XXXXXXX, in connection with a general corporate restructuring of
officer responsibilities, or a result of the promotion of XXXXXXX);
(ii) the
Corporation’s requiring XXXXXXX to spend substantially all of his time
performing his duties hereunder at a location other than his current home office
facility, including requiring him to relocate to Xxxxxx City or the San
Francisco area, except for required travel relating to the Corporation’s
business;
(iii) the
failure by the Corporation to provide XXXXXXX with benefits, in the aggregate,
at least equal (in terms of benefit levels) to those provided for under each
employee benefit plan, program and practice in which XXXXXXX was participating
at any time prior to such failure; or
(iv) any
material breach by the Corporation of any provision of this Agreement which
is
not cured within ten (10) days after the receipt of written notice by the
Corporation of a description of the breach.
8. Payment
Terms.
Payment
of any amounts to which XXXXXXX shall be entitled pursuant to the provisions
of
Sections 6 and 7 shall be made no later than sixty (60) days following receipt
of notice of termination or the event giving rise to such termination. Any
amounts payable pursuant to Sections 6 and 7 which are not made within the
period specified in this Section 8 shall bear interest at a rate equal to the
lesser of (i) the maximum interest rate allowable pursuant to applicable law
or
(ii) five points above the “prime rate” of interest as published from
time-to-time in the Eastern Edition of the Wall Street Journal.
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9. Post-Termination
Benefits.
The
benefits hereunder shall be deemed the “Other Compensation” referenced in
Section 6(d), 6(e) and 6(f) hereof. Except if XXXXXXX resigns without Good
Reason (other than retirement on or after the age of 62), in the event XXXXXXX’x
employment with the Corporation is terminated for any reason prior to the end
of
the Term, XXXXXXX and his dependents, if any, will continue to participate
in
any group health plan sponsored by the Corporation in which XXXXXXX was
participating on the date of such termination, at
a cost
to XXXXXXX and his dependents equal to the amount charged by the Corporation
to
similarly situated employees while employed by the Corporation, for the
remainder of the Initial Term or, if termination occurs within an Additional
Term, for the remainder of such Additional Term. Thereafter, XXXXXXX and his
dependents, if any, shall be entitled to elect to continue such health coverage,
at a cost to XXXXXXX and his dependents equal to the amount paid by the
Corporation for similarly situated employees while employed by the Corporation,
for the longest period of time permitted by the agents of the Corporation who
arrange for such health coverage, with such period to last at least twelve
(12)
months from the date of termination. Upon termination for any reason, in
addition to any payments to which XXXXXXX may be entitled upon termination
of
his Employment pursuant to any provision of this Agreement, XXXXXXX shall be
entitled to any benefits under any pension, supplemental pension, savings,
or
other employee benefit plan (other than life insurance) in which XXXXXXX was
participating on the date of any such termination.
10.
Confidentiality.
(a)
"Corporation
Information" Defined.“Corporation
Information” means all information, knowledge or data of or pertaining to (i)
the Corporation, its employees and all work undertaken on behalf of the
Corporation, and (ii) any other person, firm, corporation or business
organization with which the Corporation may do business during the Term, that
is
not in the public domain (and whether relating to methods, processes,
techniques, discoveries, pricing, marketing or any other matters).
(b) Confidentiality.
XXXXXXX
hereby recognizes that the value of all trade secrets and other proprietary
data
and all other information of the Corporation not in the public domain disclosed
by the Corporation in the course of his employment with the Corporation is
attributable substantially to the fact that such confidential information is
maintained by the Corporation in strict confidentiality and secrecy and would
be
unavailable to others without the expenditure of substantial time, effort or
money. XXXXXXX therefore, except as provided in the next two sentences,
covenants and agrees that all Corporation Information shall be kept secret
and
confidential at all times during and after the end of the Term and shall not
be
used or divulged by him outside the scope of his employment as contemplated
by
this Agreement, except as the Corporation may otherwise expressly authorize
by
action of the Board. In the event that XXXXXXX is requested in a judicial,
administrative or governmental proceeding to disclose any of the Corporation
Information, XXXXXXX will promptly so notify the Corporation so that the
Corporation may seek a protective order or other appropriate remedy and/or
waive
compliance with this Agreement. If disclosure of any of the Corporation
Information is required, XXXXXXX may furnish the material so required to be
furnished, but XXXXXXX will furnish only that portion of the Corporation
Information that legally is required.
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11. Non-Competition,
Non-disparagement and Non-Solicitation Covenants; Intellectual Property.
(a) Non-Competition.
The
Corporation and XXXXXXX acknowledge that: (i) the Corporation has a special
interest in and derives significant benefit from the unique skills and
experience of XXXXXXX; (ii) XXXXXXX will use and have access to proprietary
and
valuable Corporation Information (as defined in Section 10 hereof) during the
course of his employment; and (iii) the agreements and covenants contained
herein are essential to protect the business and goodwill of the Corporation
or
any of its subsidiaries, affiliates or licensees. Accordingly, except as
hereinafter noted, XXXXXXX covenants and agrees that during the Term, and for
a
period of one year following the termination of XXXXXXX’x employment, XXXXXXX
shall not provide any labor, work, services or assistance (whether as an
officer, director, employee, partner, agent, owner, independent contractor,
stockholder or otherwise) to a “Competing Business.” For purposes hereof,
“Competing Business” shall mean any business engaged in (i) the research,
diagnosis, treatment and prevention of diseases of oxidative stress associated
with damage from free radical and reactive oxygen species or (ii) the provision
of high quality enzyme immunoassay research services and products including
immunoassay kits for cardiac and tumor markers, infectious diseases, thyroid
function, steroids, and fertility hormones or
any
other business engaged in by the Company during the Term. Notwithstanding the
foregoing, a “Competing Business” shall not include any of the business
activities identified on Schedule A annexed hereto, activities which the
Corporation hereby acknowledges do not constitute corporate opportunities of
the
Corporation and in which XXXXXXX has previously engaged and may continue to
engage. In consideration of all of the compensation provisions in this
Agreement, XXXXXXX agrees to the provisions of this Section 11 and also agrees
that the non-competition obligations imposed herein, are fair and reasonable
under all the circumstances.
(b) Non-Solicitation
of Employees.
XXXXXXX
covenants and agrees that during the Term, and for a period of one year
following termination of employment hereunder for any reason whatsoever, XXXXXXX
shall not directly or indirectly solicit any other employee of or consultant
to
the Corporation, or any of its subsidiaries or affiliates to terminate such
employee’s employment or consultant’s relationship with the Corporation, or any
of its subsidiaries or affiliates, as the case may be, or to become employed
by
or a consultant to a Competing Business.
(c) Ownership
of Intellectual Property.
Any
material or other work which may be subject to copyright or patent, and which
is
conceived, derived, made or written by XXXXXXX in connection with the
Corporation Information shall be deemed a “work for hire,” (and is herein
referred to as a “Development”). As between XXXXXXX and the Corporation, XXXXXXX
acknowledges that all Developments will be the sole and exclusive property
of
the Corporation and shall also be deemed Corporation Information under this
Agreement. XXXXXXX further acknowledges the Corporation may in turn negotiate
with any third party regarding their respective ownership rights to such
Developments. XXXXXXX shall execute such documents as may be necessary to vest
in the Corporation or any third party, if applicable, all right, title and
interest in and to the Developments. The Corporation (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 XXXXXXX’x reasonable
attorneys’ fees for reviewing such documents and instruments presented for
execution.
(d) XXXXXXX’x
Intellectual Property Rights. Notwithstanding
the foregoing, the assignment by XXXXXXX to the Corporation (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 Corporation 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 Corporation to general
concepts, formats, methods, testing techniques, study designs, computer software
or other procedures utilized or designed by XXXXXXX in performing his 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 Corporation Information, or, which predate this Agreement
or XXXXXXX’x receipt of the Corporation Information, or (iii) any intellectual
property relating to XXXXXXX’x current activities identified on Schedule
A.
9
(e) Remedies.
XXXXXXX
acknowledges that any such breach of the provisions of this Section 11 is likely
to result in immediate and irreparable harm to the Corporation for which money
damages are likely to be inadequate. Accordingly, XXXXXXX consents to injunctive
and other appropriate equitable relief upon the institution of proceedings
therefor by the Corporation in order to protect its rights hereunder. Such
relief may include, without limitation, an injunction to prevent: (i) the breach
or continuation of XXXXXXX’x breach; (ii) XXXXXXX from disclosing any trade
secrets or Corporation Information; (iii) any Competing Business from receiving
from XXXXXXX or using any such trade secrets or Corporation Information; and/or
(iv) any such Competing Business from retaining or seeking to retain any
employees of the Corporation. The provisions of this Section 11(e) shall survive
the termination of this Agreement and XXXXXXX’x Term of employment.
12. Successors
and Assigns; Expenses.
(a) The
Employee.
This
Agreement is a personal contract, and the rights and interests that the
Agreement accords to XXXXXXX may not be sold, transferred, assigned, pledged,
encumbered, or hypothecated by him. All rights and benefits of XXXXXXX shall
be
for the sole personal benefit of XXXXXXX, and no other person shall acquire
any
right, title or interest under this Agreement by reason of any sale, assignment,
transfer, claim or judgment or bankruptcy proceedings against XXXXXXX. Except
as
so provided, this Agreement shall inure to the benefit of and be binding upon
XXXXXXX and his personal representatives, distributees and
legatees.
(b) The
Corporation. This
Agreement shall be binding upon the Corporation and inure to the benefit of
the
Corporation and its successors and assigns.
(c) Expenses.
The
costs
of XXXXXXX’x counsel, Xxxx Xxxxxxxxx, related to the negotiation, preparation
and review of this Agreement, in the amount of $5,000, 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 XXXXXXX hereunder and pursuant to the
Registration Rights Agreement. Furthermore, in the event of any dispute between
XXXXXXX and the Corporation relating to this Agreement which follows a Change
of
Control, the Corporation will pay all reasonable legal expenses incurred by
XXXXXXX in connection with such dispute unless a court of competent jurisdiction
determines that the facts surrounding such dispute originates from events that
occurred prior to the Change of Control.
13. Entire
Agreement.
This
Agreement, together with the Initial Option Grant and the Registration Rights
Agreement, represents the entire agreement between the parties concerning
XXXXXXX’x employment with the Corporation and supersedes all prior negotiations,
discussions, understandings and agreements, whether written or oral, between
XXXXXXX and the Corporation relating to the subject matter of this Agreement,
including any existing consulting agreements.
14. Amendment
or Modification; Waiver.
No
provision of this Agreement may be amended or waived unless such amendment
or
waiver is agreed to in writing signed by XXXXXXX and by a duly authorized
officer of the Corporation. No waiver by any party to this Agreement of any
breach by another party of any condition or provision of this Agreement to
be
performed by such other party shall be deemed a waiver of a similar or
dissimilar condition or provision at the same time, any prior time or any
subsequent time.
10
15. Notices.
Any
notice to be given under this Agreement shall be in writing and delivered
personally or sent by overnight courier or registered or certified mail, postage
prepaid, return receipt requested, addressed to the party concerned at the
address indicated below, or to such other address of which such party
subsequently may give notice in writing:
If
to
XXXXXXX: XXXXXX
X.
XXXXXXX, M.D
00
XX
Xxxxxx Xxxxxx, X.X. Xxx 000,
Xxxxxxxxx,
Xxxxxxxxxx 00000
with
a
copy to: Xxxxxxxxx
& Xxxxxx LLP
00
Xxxx
00xx
Xxxxxx
Xxx
Xxxx,
XX 00000
Attention:
Xxxx Xxxxxxxxx, Esq.
If
to the
Corporation: OXIS
International, Inc.
000
Xxxxxxx Xxxx Xxxxx, Xxxxx X,
Xxxxxx
Xxxx, Xxxxxxxxxx 00000
Attention:
Chairman of the Board
with
a
copy to: __________________________
__________________________
__________________________
Attention:
__________________
Any
notice delivered personally or by overnight courier shall be deemed given on
the
date delivered and any notice sent by registered or certified mail, postage
prepaid, return receipt requested, shall be deemed given on the date
mailed.
16. Severability.
If any
provision of this Agreement or the application of any such provision to any
party or circumstances shall be determined by any court of competent
jurisdiction to be invalid and unenforceable to any extent, the remainder of
this Agreement or the application of such provision to such person or
circumstances other than those to which it is so determined to be invalid and
unenforceable shall not be affected, and each provision of this Agreement shall
be validated and shall be enforced to the fullest extent permitted by law.
If
for any reason any provision of this Agreement containing restrictions is held
to cover an area or to be for a length of time that is unreasonable or in any
other way is construed to be too broad or to any extent invalid, such provision
shall not be determined to be entirely null, void and of no effect; instead,
it
is the intention and desire of both the Corporation and XXXXXXX that, to the
extent that the provision is or would be valid or enforceable under applicable
law, any court of competent jurisdiction shall construe and interpret or reform
this Agreement to provide for a restriction having the maximum enforceable
area,
time period and such other constraints or conditions (although not greater
than
those contained currently contained in this Agreement) as shall be valid and
enforceable under the applicable law.
17. Survivorship.
The
respective rights and obligations of the parties hereunder shall survive any
termination of this Agreement to the extent necessary to the intended
preservation of such rights and obligations.
11
18. Headings.
All
descriptive headings of sections and paragraphs in this Agreement are intended
solely for convenience of reference, and no provision of this Agreement is
to be
construed by reference to the heading of any section or paragraph.
19. Withholding
Taxes.
All
salary, benefits, reimbursements and any other payments to XXXXXXX under this
Agreement shall be subject to all applicable payroll and withholding taxes
and
deductions required by any law, rule or regulation of and federal, state or
local authority.
20.
Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed to be an original but all of which together constitute one and same
instrument.
21. Applicable
Law; Jurisdiction.
The laws
of the State of California shall govern the interpretation, validity and
performance of the terms of this Agreement, without reference to rules relating
to conflicts of law. Any suit, action or proceeding against XXXXXXX with respect
to this Agreement, or any judgment entered by any court in respect thereof,
may
be brought in any court of competent jurisdiction in the State of California,
as
the Corporation may elect in its sole discretion, and XXXXXXX hereby submits
to
the exclusive jurisdiction of such courts for the purpose of any such suit,
action, proceeding or judgment.
[THE
BALANCE OF THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY]
12
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date
first written above.
___s/
Xxxxxx
X. Xxxxxxx, M.D._______
XXXXXX
X. XXXXXXX,
M.D.
OXIS
INTERNATIONAL,
INC.
|
By:
|
____/s/
Xxxxxxx X. Centron_____________
|
Name:
Xxxxxxx X.
Xxxxxxx
Title:
Vice President &
CFO
13
SCHEDULE
A
PERMITTED
OUTSIDE BUSINESS ACTIVITIES OF XXXXXXX
|
1.
|
XXXXXXX’x
previously disclosed current activities in the field of mushrooms
and
associated oxidative stress and bioactive substances, as well as
to the
avian flu virus, previously acknowledged by the Board not to constitute
business opportunities of the Corporation.
|
|
2.
|
Patent
activity, research and development and commercial development of
patent
applications and related intellectual property entitled “Identification of
Selenoergothioneine as a Natural Organic Form of Selenium from Cultivated
Mushrooms” for which XXXXXXX is a
co-inventor.
|
|
3.
|
Patent
activity, research and development and commercial development of
patent
applications and related intellectual property entitled “Identification of
ergothioneine transporter and therapeutic uses thereof” to which XXXXXXX
and related entities have acquired rights.
|
14
