Contract
Exhibit
10.3
CONSULTING
AGREEMENT dated
as
of November 6, 2006, between Oxis International, Inc., a Delaware corporation
(the “Company”), and Xxxx X. Xxxxxx, M.D. (the “Consultant”).
The
Company desires to retain the Consultant to perform consulting services in
the
field of antioxidant and inflammation research for the Company, and the
Consultant desires to perform such consulting 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 Consultant.
The
Company hereby retains the Consultant as a consultant, and the Consultant hereby
accepts such retention by the Company, upon the terms and conditions hereinafter
set forth. The Consultant 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 Consultant hereunder shall be for a period commencing as of
October 15, 2006 (the “Commencement Date”) and ending on October 15, 2009 or
such earlier date provided in this Section 2. This Agreement shall automatically
terminate prior to such date upon the first to occur of (i) the death or
disability of the Consultant, (ii) the resignation by the Consultant following
the delivery by him to the Company of ten days’ advance written notice of such
resignation or (iii) termination by the Company following the delivery to the
Consultant of 60 days’ advance written notice from the Company’s Board of
Directors of its intention to terminate the Agreement. The period commencing
on
the Commencement Date and ending on the date of termination of the Consultant’s
retention hereunder shall be called the “Term”.
3.
Duties.
During
the Term, the Consultant shall advise the Company concerning matters of
antioxidant and inflammation research and potential acquisitions (including
products/compounds/intellectual property as well as companies), and product
research and development. The Consultant shall also advise the Company regarding
the development and establishment of reference labs for oxidative stress and
inflammatory reactions. For each such matter, the Consultant will initiate
his
advisory services only after being requested to do so by the Chief Executive
Officer of the Company (the “CEO”). At the outset of each project, the CEO will
define its scope and timing. The Consultant shall report directly to, and shall
reasonably update, the CEO or his designee on the status of each project, and
shall reasonably coordinate his efforts with members of management and other
consultants to the Company.
4.
Time
to be Devoted to Services.
During
the Term, the Consultant shall not be required to devote any specified amount
of
time to the provisions of services hereunder and shall only be required to
devote such reasonable amount of time to the business of the Company as the
Consultant shall reasonably determine to be necessary to fulfill his duties
hereunder.
5.
Compensation.
The
Company shall pay to the Consultant a consulting fee of $36,000 per annum.
The
consulting fee initially will be payable quarterly in advance in the form of
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 prices 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 Consultant 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 $9,000 of the annual
consulting fee, and payable at the Consultant’s election either in the shares of
Common Stock of form of warrants described in the foregoing sentence, 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 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 consultant may elect, at any time, in lieu of
receiving a quarterly issuance of stock (or warrants in lieu thereof), to
receive his consulting fee in cash, payable quarterly. All shares of Common
Stock issuable to the Consultant 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
Consultant (the “Registration Rights Agreement”); provided, however, that the
failure to execute such a Registration Rights Agreement shall not limit the
Consultant’s piggyback registration rights hereunder.
6.
Bonus
Awards.
During
the Term, the Consultant shall be eligible to annual and special bonuses based
upon the attainment of agreed upon goals and milestones as determined by the
CEO, relating to special contributions made by the Consultant to the Company’s
business, product development and intellectual property. Each bonus payable
hereunder shall be paid in cash, although at the Consultant’s sole option, such
bonus 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 Consultant of the particular bonus (which shall also be the exercise price
of the warrants, if the Consultant elects to receive warrants). The Consultant
shall make his election no more than ten (10) days following notification by
the
Company of a bonus award, and the failure to make timely election shall mean
that the Consultant shall receive the bonus in the form of cash.
7.
Stock
Options.
As
soon
as practicable following execution of this Agreement, the Consultant shall
be
granted ten-year options for the purchase of up to 200,000 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
of
100,000 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 100,000 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
will be determined annually by the Company’s Board of Directors (the “Board”)
and its Compensation Committee. During the Term, the Consultant will be deemed
to be an employee of the Company for the purpose of his existing stock options,
including those granted pursuant to Sections 7 and 8 hereof.
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8.
Sign
On Bonus.
As
a
sign-on bonus and as soon as practicable following execution of this Agreement,
the Company shall issue to the Consultant an additional ten-year option under
the Plan for the purchase of up to 200,000 shares (the “Sign On Option Grant”).
The terms of the grant, including the vesting schedule and exercise price of
the
Sign On 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 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 Commencement Date. The options issued under this
Section 8 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.
9.
Business
Expenses: Benefits.
The
Company shall reimburse the Consultant 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 Consultant for or on
behalf of the Company in the performance of the Consultant’s duties hereunder.
The Consultant shall provide such appropriate documentation of expenses and
disbursements as may from time to time be required by the Company.
The
Company shall have no obligation to provide any benefits to Consultant,
including without limitation, any health, life or disability
benefits.
10.
Indemnification;
Insurance.
The
Company will indemnify the Consultant for his actions in the capacity as a
consultant hereunder (other than resulting from his gross negligence or willful
misconduct) and 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 Consultant 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.
11.
Additional
Payments and Stock Issuances.
The
Company agrees whenever it makes any payment of cash to the Consultant hereunder
(other than for the reimbursement of expenses), it will simultaneously pay
to
University Physicians Inc., 00000 Xxxx Xxxxxx Xxxxxx, Xxxxxx, XX 00000 (“UPI”) a
cash payment equal to 13.5% of the cash paid to the Consultant, and that
whenever the Company grants a stock option to the Consultant, it will
simultaneously grant to UPI an award for 10% of the number of options awarded
to
the Consultant, at the same exercise price and subject to the same rights,
terms
and conditions as the option grant awarded to Consultant (including, without
limitation, exercise price, vesting provisions, cashless exercise rights and
piggyback registration rights). UPI shall be a third party beneficiary of this
Section 11.
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12.
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 Consulting Agreement, Consultant
shall receive an amount equal to twelve (12) months of the consulting 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
Consulting Agreement, Consultant 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 Consultant in connection with the performance of
his
duties hereunder; (ii) the Consultant’s gross negligence in performing any of
his duties under this Agreement; (iii) the Consultant’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 Consultant’s habitual drunkenness or use or possession of
illegal drugs while performing his duties under this Agreement or excessive
absenteeism not related to illness; (v) the Consultant’s material breach of any
written policy applicable to all employees and consultants adopted by the
Corporation; or (vi) material breach by the Consultant of any of his agreements
in this Agreement having a material detrimental impact on the Corporation 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 (other
than pursuant to Section 8(a)(vi), for which the notice requirement is 30 days),
the Company will only be required to give ten (10) days’ prior notice, and in
such event the Consultant shall not be entitled to any further payments of
his
consulting fee hereunder, and any unexercised stock options shall
expire.
If
the
Consultant resigns pursuant to Section 2(ii), for whatever reason, or dies
or
becomes disabled, the Consultant (or his estate) shall not be entitled to any
further payments of his consulting 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
Consultant’s 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, the Consultant shall continue to receive his consulting fee
hereunder.
13.
Corporate
Opportunities; Intellectual Property.
(a) The
Consultant acknowledges that by virtue of his efforts as a consultant hereunder
to the Company and as a director, he 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 he 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 his
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
Consultant after the end of the Restricted Period. The restrictions set forth
in
this Section 12 are in addition to any of Consultant’s fiduciary obligations 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 Consultant
may
pursue his own independent business interests and activities during the
Restricted Period, including those relating to life sciences and medical
technologies. Such business interests and activities include, without
limitation, those identified on Schedule A annexed hereto, which the Company
acknowledges are not business opportunities of the Company and, therefore,
which
may be pursued by the Consultant on his own or in association with others
independently of the Company during the Restricted Period. The Consultant is
under no obligation hereunder to identify specific potential business
opportunities or acquisitions for the Company. However, once the Consultant
informs the Company of a potential opportunity during the Term (other than
those
set forth on Schedule A), he 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 Consultant in connection with the
Confidential Information shall be deemed a “work for hire,” (and is herein
referred to as a “Development”). As between the Consultant and the Company,
Consultant 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 Consultant further acknowledges the Company may in turn
negotiate with any third party regarding their respective ownership rights
to
such Developments. The Consultant 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 Consultant’s
reasonable attorneys’ fees for reviewing such documents and instruments
presented for execution.
(d)
Notwithstanding the foregoing, the assignment by the Consultant 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 Consultant
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 Confidential Information, or, which predate
this Agreement or the Consultant’s receipt of the Confidential Information, or
(iii) any intellectual property relating to the Consultant’s current activities
identified on Schedule A.
(e)
The
Consultant agrees that this Section 12 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.
14. Legal
Expenses.
The
costs of the Consultant’s counsel, Xxxx Xxxxxxxxx, related to the negotiation,
preparation and review of this Agreement, up to $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 Consultant hereunder and pursuant to the Registration
Rights Agreement.
15.
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
Consultant, to:
Xxxx
X.
Xxxxxx, M.D.
x/x
Xxxx-Xxxxxx Xxxxxxxxx
Xxx
x000
0000
X.
Xxxxx Xxxxxx, Xxxxxx, XX 00000
with
a
copy to:
Xxxx
X.
Xxxxxx, M.D.
00
Xxxxxx
Xxxxx Xxxx Xxxxx
Xxxxxxxxx,
XX 00000
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.
16.
Binding
Agreement; Benefit.
Subject
to Section 20, 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.
17.
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).
18.
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.
19.
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.
20.
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.
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21.
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.
22.
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.
[remainder
of page left intentionally blank]
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IN
WITNESS WHEREOF,
the
parties hereto have executed and delivered this Consulting Agreement as of
the
date first written above.
OXIS
INTERNATIONAL,
INC.
By:
/s/
Xxxxxx X.
Xxxxxxx, M.D.
Name:
Xxxxxx X. Xxxxxxx, M.D.
Title:
President
& Chief Executive Officer
/s/
Xxxx X. Xxxxxx, M.D.
Xxxx
X. Xxxxxx, M.D.
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SCHEDULE
A
EXISTING
BUSINESS INTERESTS AND ACTIVITIES OF THE CONSULTANT
1.
Use of
Near-Infrared Spectrometry technique to non-invasively measure factors that
predict and reflect changes in Diabetes, ARDS and other disorders.
2.
Development of intellectual property of ways to treat age-related macular
degeneration.
3.
Development of CD40 T Cell diagnostics and therapeutics
4.
Development of biomarker microarrays to predict the acute respiratory distress
syndrome (ARDS) and of proprietary elastase inhibitors to prevent
ARDS.
5.
Development of novel glucose molecules for nutritional and therapeutic
purposes.
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