ADVISORY AGREEMENT
EXHIBIT 10.40
THIS ADVISORY AGREEMENT (“Agreement” or “AA”) is made and entered into on this the 24th day of
May, 2007, by and between Halter Financial Group, L.P., a Texas limited partnership (“HFG”), and
Athersys, Inc., a Delaware corporation (the “Company”).
W I T N E S S E T H:
WHEREAS, the Company desires to engage HFG to provide certain financial advisory and
consulting services as specifically enumerated below commencing as of the date hereof related to
the Going Public Transaction and the Post-Transaction Period (each as hereinafter defined), and HFG
is willing to be so engaged.
NOW, THEREFORE, for and in consideration of the covenants set forth herein and the mutual
benefits to be gained by the parties hereto, and other good and valuable consideration, the receipt
and adequacy of which are now and forever acknowledged and confessed, the parties hereto hereby
agree and intend to be legally bound as follows:
1. Retention. As of the date hereof, the Company hereby retains and HFG hereby agrees
to be retained as the Company’s financial advisor during the term of this Agreement. The Company
acknowledges that HFG shall have the right to engage, at HFG’s sole cost and expense, third parties
to assist it in its efforts to satisfy its obligations hereunder. In its capacity as a financial
advisor to the Company, HFG will:
A. Going Public Transaction.
Assist the Company in evaluating the manner of effecting a going public transaction
with a public shell corporation (“Pubco”) domiciled in the United States of America and
quoted on the “OTC BB” (a “Going Public Transaction”). It is anticipated that (a) upon
consummation of the Going Public Transaction and (b) the closing of the Company’s current
private placement of securities (the “Company Offering”), which will generate estimated
gross offering proceeds of not less than $40,000,000, the Company’s current stockholders and
investors in the Company Offering will hold at least 95% of all the
issued and outstanding shares of Pubco’s common capital stock.
B. Post Transaction Period
Upon consummation of the Going Public Transaction, HFG agrees to:
(i) assist Pubco in obtaining a new CUSIP number and a new stock symbol upon the
changing of its name;
(ii) if necessary, coordinate with the Company’s legal counsel the preparation and
assembly of application materials for the listing of Pubco’s common stock on a national
stock exchange; and
ADVISORY AGREEMENT — Page 1
(iii) provide Pubco with such additional advisory services as may be reasonably
requested, to the extent HFG has the expertise or legal right to render such services.
2. Authorization. Subject to the terms and conditions of this Agreement, the Company
hereby appoints HFG to act on a best efforts basis as its consultant during the Authorization
Period (as hereinafter defined). HFG hereby accepts such appoint, with it being expressly
acknowledged that HFG is acting in the capacity of independent contractor and not as agent of
either the Company, affiliates of the Company or Pubco.
3. Authorization Period. HFG’s engagement hereunder shall become effective on the
date hereof (the “Effective Date”) and will automatically terminate (the “Termination Date”) on the
first to occur of the following: (a) the termination of the Merger Agreement (as defined below) in
accordance with its terms prior to the effective time of the merger, (b) 90 days from the Effective
Date in the event the Going Public Transaction has not been completed, (c) the mutual decision of
the parties not to move forward with the Going Public Transaction or (d) 12 months from the
Effective Date.
4. Fees and Expenses. In consideration for the services to be provided for hereunder
the Company shall pay to HFG the amount of $350,000 (the “Fee”) to be paid on the closing date of
the Going Public Transaction. The Company shall be under no obligation to pay any part of the Fee
to HFG in the event this Agreement is terminated as a result of the failure of the Company and
Pubco to effect the Going Public Transaction as contemplated by the agreement and plan of merger
entered into between Pubco, a subsidiary of Pubco and the Company concurrently with the execution
of this Agreement (the “Merger Agreement”).
5. Indemnification. The parties hereto shall indemnify each other to the extent
provided for in this paragraph. Except as a result of an act of gross negligence or willful
misconduct on the part of a party hereto, no party shall be liable to another party, or its
officers, directors, employees, shareholders or affiliates, for any damages sustained as a result
of an act or omission taken or made under this Agreement. In those cases where gross negligence or
willful misconduct of a party is alleged and proven, the non-damaged party agrees to defend,
indemnify and hold the damaged party harmless from and against any and all reasonable costs,
expenses and liabilities suffered or sustained as a result of the act of gross negligence or
willful misconduct.
6. Governing Law. This Agreement shall be governed by the laws of the State of Texas.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first
above written.
| HFG: Halter Financial Group, L.P. |
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| By: | /s/ Xxxxxxx X. Xxxxxx | |||
| Xxxxxxx X. Xxxxxx, Chairman, Halter | ||||
| Financial Group GP, LLC, its General Partner | ||||
| The Company: Athersys, Inc. |
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| By: | /s/ Gil Van Bokkelen | |||
| Name: | Gil Van Bokkelen | |||
| Its: CEO | ||||
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