BUSINESS ADVISORY
BOARD
CONSULTING
AGREEMENT
This Business
Advisory Board Consulting Agreement (the “
Agreement ”) is made as of this 22
nd day of June, 2009, between Shrink
Nanotechnologies, Inc., a Delaware corporation (the "
Company "), and Heiner Dreismann (the "
Consultant ") and shall be effective upon execution
by the Company and the Consultant (the " Effective
Date "). The Company and the Consultant are
collectively referred to herein as the
“Parties.”
The Consultant
has a long history of experiences and successes in a business area
which shall broadly be referred to as the diagnostics, life
sciences and biotech fields, and these fields are of particular
interest to the Company. The Company wishes to retain
the Consultant in a consulting capacity and as a member of one or
more panels (a “ Panel ”) of the
Company's Business Advisory Board (the “ BAB
”) and the Consultant desires to perform such consulting
services. Accordingly, the Parties agree as follows:
1.
Services . The Consultant will advise the
Company's management, employees and agents, at reasonable times, in
matters related to the relevant field of interest (“
Field of Interest ”), as requested by the
Company and set forth in Exhibit A attached hereto.Consultant will
provide consulting services, which shall amount to not less than
two days per month, as reasonably requested by the Company and as
the Consultant’s schedule permits. Consultation
may be sought by the Company over the telephone, in person, at the
Company's offices or another reasonable location or through written
correspondence, and will involve reviewing activities and
developments in the Field of Interest. Additionally,
Consultant may be requested to attend, to the extent
Consultant’s schedule permits, one or more in person meetings
with other members of a Panel or the BAB, upon reasonable notice
being given to the Consultant, in keeping with the terms of this
Agreement.
1.1 Strategic
Parties. As a part of this Agreement, Consultant is to
assist the Company in developing new relevant business
relationships with strategic parties in the United States and
around the world. For the purposes Section 3.3 of this
Agreement, any such party shall be referred to as a “
Strategic Party ” and such a Strategic Party
shall retain such a definition under Section 3.3 of this Agreement
until the earlier date of either (i) two years subsequent to the
Term, or (ii) immediately following the date which Consultant is
not serving as a member of the Company’s Board of
Directors.
1.1.1 Consultant
shall provide Company with reasonable notice (“ SP
Notice ”) of a referral to a potential Strategic
Party. For five (5) business days following a SP Notice,
Company shall have the right to disclose to Consultant any prior
business contacts or relationships with a potential Strategic Party
(a “ Notice of Prior Contacts
”). In the event Company fails to provide a Notice
of Prior Contacts, such a potential Strategic Party shall become a
Strategic Party under Section 3.3 of this Agreement.
2.
Term and Termination . The term of this Agreement
will begin on the Effective Date of this Agreement and will end on
the first year anniversary (based on a 360 day year containing four
(4) ninety (90) day quarterly periods) of this Agreement or upon
earlier termination as provided below (the " Term ");
provided that the Term may be renewed, by mutual assent by the
Parties, for successive one-year periods. This Agreement may be
terminated at any time upon sixty (60) days written notice by
either party. The Consultant agrees, following the
termination of this Agreement or upon earlier request by the
Company, to promptly return all drawings, tracings, and all visual
or written materials in the Consultant’s possession that were
supplied by the Company in conjunction with the Consultant’s
consulting services under this Agreement, or generated by the
Consultant in the performance of consulting services under this
Agreement.
3.
Compensation . The right, title and interest in
the Compensation discussed in this Section 3 shall be earned, vest
and be due and payable, during the Term, in equal quarterly
amounts, commencing on July 15, 2009, on the first day of the
quarterly period immediately subsequent to a quarterly period in
which this Agreement was effective. The Consultant shall
be compensated for services rendered as set follows:
3.1 Every
quarter and at the option of the Consultant, either: (i) $20,000
(the “ Quarterly Cash Fee ”), or (ii)
20,000 common shares of Company stock (the “ Quarterly
Stock Fee ”).
3.1.1 Quarterly
Cash Fee. At any time subsequent to the end of a
quarterly period, at the time such a quarterly payment under
Section 3.1 is due, Consultant shall only be entitled to receive a
maximum amount of Quarterly Cash Fees derived by multiplying: (i)
fifteen percent (15%) and (ii) the aggregate of: (A) the (net of
fees) amount, exclusive of a pass through investment, of any new
debt or equity investment into the Company by a non-affiliated
third party (a “ New Investment ”) during
the Term of this Agreement; and (B) all Strategic Party Cash
(referred to in Section 3.3) received by the Company during the
Term of this Agreement. A non-affiliated third party
shall mean a party who is not presently an obligee of the Company
or a Company shareholder. To be clear, for example,
if during the Term, a New Investment was made which provided the
Company with $1,000,000 (net of fees), unless the Company was
provided a written election from consultant stating all fees due
under this Agreement would be paid in Quarterly Stock Fees, exactly
$120,000 (i.e. the total amount of all Quarterly Cash Fees under
this Agreement) of this New Investment would be made available to,
and reserved for, Consultant to pay Quarterly Cash
Fees. Additionally, if the above example New Investment
was only $500,000, and there were no additional New Investments
made during the Term, then a maximum of $75,000 would be available
to be paid to Consultant under this Section 3.1.1 in Quarterly Cash
Fees.
3.1.2 Deferral. To
the extent the Company has not completed a New Investment at the
time Consultant may exercise a right related to the above Sections
3.1 and 3.1.1, Consultant may elect to defer such rights until the
date any subsequent quarterly payment under Section 3.1 is due (a
“ Deferral ”). Once any
compensation under this Section 3.1 is earned, the termination of
this Agreement by either party or by mutual agreement, shall not
affect the Company’s obligations to make such payments
pursuant to Section 3.1. However, by the 90
th day subsequent to the end of the Term,
Consultant shall have exercised all rights due under this Agreement
related to Section 3.1.
3.2 Consultant
understands that any restricted shares, and any securities issued
in respect thereof, shall bear the following legend:
“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE
OR DISTRIBUTION THEREOF. THESE SECURITIES MAY NOT BE OFFERED,
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE STATE
SECURITIES LAWS OR AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE.
3.3 Additional
Success Fees. The below success fees shall be paid
within ninety days subsequent to the end of the Company’s
fiscal year end (December 31) from cash received by the Company
from either: (i) sublicensing agreements the Company enters into
with Strategic Parties or (ii) revenues generated from the sale of
goods or services to a Strategic Party. Cash received by
the Company related to this Section 3.3 shall be referred to as
“ Strategic Party Cash
.” Consultant shall be paid the greater dollar
value in Success Fees as follows:
3.3.1 Net
of all royalties and dividends payments, five percent (5%) of
sublicensing Strategic Party Cash received by the Company from a
Strategic Party; or
3.3.2 Net
of costs of goods or services and a pro-rata allocation of sales,
general and administrative costs, three percent (3%) of the
revenues received by the Company from the sale of goods and
services to or through a Strategic Party.
3.3.3 Under
this Section 3.3, 3.3.1 and 3.3.2, the Company shall receive a
credit of an amount equal to the amount of Quarterly Cash Fees paid
to Consultant at the time a payment under Section 3.3, 3.3.1 and
3.3.2 is due, and in any event, such an amount shall not exceed
$80,000.
3.4. The
maximum amount of payments which may become due to Consultant under
Sections 3.3, 3.3.1, 3.3.2 and 3.3.3 is five million dollars
($5,000,000).
3.5 The
Company shall reimburse the Consultant for all pre-approved and
reasonable expenses incurred in the performance of this
Agreement.
4.
Certain Other Contracts . Company is aware that
Consultant is involved in several professional engagements with
various commercial entities. The Consultant will not
disclose to the Company any information that the Consultant is
obligated to keep secret pursuant to an existing confidentiality
agreement with a third party, and nothing in this Agreement will
impose any obligation on the Consultant to the
contrary. The consulting work performed hereunder will
not be conducted on time that is required to be devoted to any
other third party. The Consultant shall not use the funding,
resources and facilities of the any other third party to perform
consulting work hereunder and shall not perform the consulting work
hereunder in any manner that would give any third party rights to
the product of such work. The Consultant has disclosed
and, during the Term, will disclose to the President of the Company
any conflicts between this Agreement and any other relevant
agreements binding the Consultant.
5.
Direction of Projects and Inventions to the Company .
Subject to the Consultant's obligations under any confidentiality
or other written obligations to third parties (including academic
institutions which Consultant is employed by), during the Term of
this Agreement, the Consultant will use his best efforts to
disclose to the President of the Company, on a confidential basis,
technology and product opportunities which come to the attention of
the Consultant in the Field of Interest, and any invention,
improvement, discovery, process, formula or method or other
intellectual property relating to or useful in, the Field of
Interest (collectively " New Discoveries "), whether
or not patentable or copyrightable, and whethe
