Exhibit 10.2


 


	
  

  	
  CONSULTING
  AGREEMENT

  



 


This
Consulting Agreement (the “Agreement”) is made effective as of May 16,
2005 (the “Effective Date”) and is between Washington Cardiovascular
Associates, LLC, a Maryland limited liability company (“WCA”), H. Bryan Brewer, Jr.,
M.D. (“Consultant”), and Lipid Sciences, Inc., a Delaware corporation (the
“Corporation”).


 


Whereas,
the Corporation desires to engage Consultant as a consultant to the Corporation
to serve as its Chief Scientific Director;


 


Whereas,
Consultant is the sole employee and 100% beneficial owner of WCA;


 


Whereas,
WCA desires to provide the services of Consultant to the Corporation as the
Corporation’s Chief Scientific Director;


 


Whereas,
WCA and the Corporation entered into a letter agreement dated May 16, 2005
confirming the provision of Consultant’s services to the Corporation as both
Chief Scientific Director and as a director on the Corporation’s Board of
Directors (the “Letter Agreement”);


 


Now,
therefore, in consideration of the mutual promises hereinafter set forth, WCA
and the Corporation agree as follows:


 


1.                                       SERVICES


 


WCA agrees to provide the
services of Consultant as the Corporation’s Chief Scientific Director.  These services will be performed at the
offices of Consultant.  Consultant shall
provide advisory services to the Corporation in the field of HDL therapy and
Viral Immunotherapy (the “Services”). 
The scope and duration of this Agreement may be changed or extended by
mutual agreement of the Corporation and WCA.


 


WCA agrees that Consultant’s
service as the Corporation’s Chief Scientific Director shall be a primary
professional activity of Consultant; provided, however, that WCA shall be
permitted to make Consultant’s services available to other companies in
accordance with Sections 6 and 8 below.


 


Consultant shall perform his
duties as the Corporation’s Chief Scientific Director under the direction of
the Corporation’s Chief Executive Officer and the Board of Directors.


 


2.                                       TERM


 


The term of this Agreement shall commence on the
Effective Date and expire on May 16, 2008 (the “Expiration Date”), but
shall automatically renew for a period commencing on the Expiration Date and
ending on the third anniversary of the Expiration Date unless either party
shall provide written notice to the other within the 30-day period prior to the
Expiration Date to the effect that this Agreement shall not be so renewed, in
which case this Agreement shall expire on the Expiration Date.  In the event that this Agreement shall
automatically be renewed as provided for in the immediately preceding sentence,
the term “Expiration Date” shall mean and be deemed to be the third anniversary
of the Expiration Date.  For purposes of
this Agreement, WCA and Consultant shall be deemed, collectively, to be one
party, such that notice by the Corporation to WCA or Consultant, as the case
may be, shall serve as notice to both WCA and Consultant.


 





















 


3.                                       TERMINATION


 


WCA represents that it has advised the Corporation’s
Board of Directors of all outside activities of the Consultant relating to the
treatment of medical indications such as cardiovascular disease and viral
infections in which lipids play a key role and such other fields in which the
Corporation operates (collectively, the “Corporation’s Fields of Business”) as
of the date of execution of this Agreement. 
WCA agrees to promptly notify the Corporation’s Board of Directors of
any additional outside activities relating to the Corporation’s Fields of
Business undertaken by Consultant after the date of execution of this Agreement.  The Corporation’s Board of Directors, by a
majority vote, may determine whether any of such activities would conflict with
or be contrary to the interests of the Corporation.  In the event the Board of Directors
determines that any such activities conflict with or are contrary to the
interests of the Corporation, the Corporation shall notify Consultant, who
shall elect whether or not to terminate such activities within 30 days of
receipt of such notice.  In the event
Consultant elects not to terminate such activities, the Corporation may
terminate this Agreement without any further obligation.


 


In addition, the Corporation may terminate this
Agreement for Cause (as defined herein). 
For purposes of this Agreement, “Cause” shall mean:  (i) WCA’s or Consultant’s act of
dishonesty or fraud in connection with the performance of their respective
responsibilities to the Corporation with the intention that such act result in
WCA’s or Consultant’s substantial personal enrichment; (ii) WCA’s or
Consultant’s conviction of, or plea of nolo contendere to, a felony; (iii) WCA’s
or Consultant’s willful failure to perform their respective duties or
responsibilities; (iv) any material breach of this Agreement by WCA or
Consultant; (v) any breach of Sections 6 or 8 hereof by WCA or Consultant;
or (vi) WCA’s or Consultant’s violation or breach of any fiduciary or
contractual duty to the Corporation which results in material damage to the
Corporation or its business; provided that if any of the foregoing events is
capable of being cured, the Corporation will provide notice to WCA and
Consultant describing the nature of such event and WCA and Consultant will
thereafter have 30 days to cure such event.


 


In the event this Agreement is terminated by the
Corporation pursuant to this Section 3, Consultant’s outstanding stock
options in the Corporation (as provided in Section 4 hereto) shall cease
vesting on the date of termination and thereafter remain exercisable and expire
in accordance with the terms of the applicable award agreements.


 


WCA and Consultant may terminate this Agreement in
the event that: (i) the Corporation pursuant or within the meaning of any
Bankruptcy Law (as hereinafter defined): (A) commences a voluntary case; (B) consents
to the entry of an order for relief against it in an involuntary case; (C) consents
to the appointment of a custodian of it or for any substantial part of its
property; (D) makes a general assignment for the benefit of its creditors;
(E) consents to or acquiesces in the institution of a bankruptcy or
insolvency proceeding against it; or (F) takes any corporate action to
authorize or effect the foregoing; (ii) a court of competent jurisdiction
enters an order or decree under any Bankruptcy Law that: (A) is for relief
against the Corporation in an involuntary case; (B) appoints a custodian
of the Corporation or for any substantial part of its property; or (C) orders
the winding up or liquidation of the Corporation, and in each such case the
order or decree remains unstayed and in effect for 60 days; or (iii) the
Corporation defaults in any payment to WCA or Consultant required to made
hereunder, and such default continues for a period of 30 days, or if WCA or
Consultant shall have notified the Corporation prior to the end of such 30-day
period that such payment may be made at a later time, such default continues
until such later time.  For purposes of
this Agreement, the term “Bankruptcy Law” means Title 11, United States Code,
or any similar Federal or state law relating to bankruptcy, insolvency
receivership, winding-up, liquidation, reorganization or relief of debtors or
any amendment to, succession to or change in any such law.


 


4.                                       COMPENSATION/REIMBURSEMENT


 


The Corporation shall pay WCA at a rate of Three
Hundred Ninety-Five Thousand Dollars ($395,000) annually, payable in monthly
installments.  The parties acknowledge
that the 


 





















 


Corporation has granted directly to Consultant
options to purchase 100,000 shares of the Corporation’s common stock, which
vest in equal annual installments over three years, and which are subject to
the Corporation’s standard terms and conditions for options granted under the
Corporation’s 2001 Performance Equity Plan.


 


The Corporation shall reimburse WCA for expenses
incurred by Consultant for services as Chief Scientific Director in a manner
consistent with reimbursement of expenses made by the Corporation to its
executive officers and directors.


 


So long as WCA is
receiving payments pursuant to this Agreement: (i) Consultant shall not
receive the annual stipend paid to non-employee directors of the Corporation
nor a separate per diem fee to serve as liaison to the Corporation’s Scientific
and Viral Advisory Boards; and (ii) Consultant shall be entitled to
receive the Corporation’s standard meeting fees in connection with attendance
at meetings of the Corporation’s Board of Directors.  As stated in the Letter Agreement, which is
hereby incorporated by reference, Consultant will not receive any monetary
compensation directly from the Corporation.


 


Consultant acknowledges
and agrees, and it is the intent of the parties hereto, that Consultant receive
no Corporation-sponsored benefits from the Corporation either as a consultant
or employee.  Such benefits include, but
are not limited to, paid vacation, medical insurance, and 401(k)
participation.  If Consultant is
reclassified by a state or federal agency or court as an employee, Consultant
will become a reclassified employee and will receive no benefits except those
mandated by state or federal law, even if by the terms of the Corporation’s
benefit plans in effect at the time of such reclassification Consultant would
otherwise be eligible for such benefits.


 


5.                                       INDEPENDENT CONTRACTOR


 


It is the express intention of the parties that each
of WCA and Consultant be an independent contractor.  Nothing in this Agreement shall in any way be
construed to constitute WCA or Consultant as an agent, employee or
representative of the Corporation; the Services shall be performed by
Consultant, through WCA, as an independent contractor.  WCA and Consultant agree to indemnify and
hold harmless the Corporation and its directors, officers, and employees from
and against all taxes, losses, damages, liabilities, costs and expenses,
including attorney’s fees and other legal expenses, arising directly or
indirectly from (i) any negligent, reckless or intentionally wrongful act
of Consultant, Consultant’s assistants, or WCA’s employees or agents, (ii) a
determination by a court or agency that WCA or the Consultant is not an
independent contractor, or (iii) any breach by WCA or Consultant of any of
the covenants contained in this Agreement.


 


6.                                       OTHER SERVICES; CONFIDENTIAL INFORMATION


 


During the term of this Service Agreement, WCA and
Consultant will remain free to engage in any other labor service work for any
other company except as set forth in Section 8 hereof, but agrees that in
so doing WCA and Consultant will not divulge to others any Confidential
Information.  “Confidential
Information” means any of the Corporation’s proprietary or confidential
information, technical data, trade secrets or know-how, including, but not
limited to, intellectual property information, research, product plans, market
assessments, business plans, products, services, suppliers, customer lists and
customers (including, but not limited to, customers of the Corporation on whom
WCA or Consultant called or with whom WCA or Consultant became acquainted
during this service relationship), prices and costs, markets, software,
developments, inventions, laboratory notebooks, processes, formulas,
technology, designs, drawings, engineering, hardware configuration information,
marketing, licenses, finances, budgets or other business information disclosed
to WCA or Consultant by the Corporation either directly or indirectly in writing,
orally or by drawings or observation of parts or equipment or discussions or
created by WCA or Consultant during the period of this service relationship,
whether or not during working hours. 
Confidential Information does not include any 


 





















 


of the foregoing items, which has become publicly
and widely known and made generally available through no wrongful act or
omission of WCA, Consultant or of others who were under confidentiality
obligations as to the item or items involved. 
WCA and Consultant acknowledge that the rendering of services to the
Corporation creates a relationship of trust and confidence between the
Corporation on the one hand, and WCA and Consultant, on the other hand.  During and after WCA’s and Consultant’s
rendering of services to the Corporation, neither WCA nor Consultant will use
or disclose or allow anyone else to use or disclose any Confidential
Information or knowledge relating to the Corporation, its employees, products,
consultants or customers, except as may be necessary in the performance of WCA’s
and/or Consultant’s work for the Corporation or as may be authorized in advance
by appropriate officials of the Corporation. 
Neither WCA nor Consultant will disclose directly or indirectly to any
third party or parties any information or knowledge WCA or Consultant may
acquire with respect to such Confidential Information, including but not
limited to innovations, business strategies, financial information, employee
lists, customer lists, inventories, designs, methods, systems, improvements,
trade secrets, or other private or confidential matters of the Corporation
without the Corporation’s prior written consent.


 


7.                                       ASSIGNMENT OF INVENTIONS


 


Consultant and WCA will
promptly disclose to the Corporation in writing all improvements, inventions,
works of authorship, formulas, ideas, developments, concepts, processes,
techniques, know-how and data, whether or not patentable, made or conceived,
developed, reduced to practice or learned by WCA or Consultant, either alone or
jointly with others, during the period of this service relationship (whether or
not during business hours) that are either related to the scope of the services
performed or make or use, in any manner, the resources of the Corporation
(collectively, “Inventions”).  WCA and
Consultant hereby assign to the Corporation any and all rights, including but
not limited to intellectual property rights, WCA or Consultant may have or
acquire in such Inventions, which shall be the sole property of the Corporation
and its assigns.  During the term of this
Agreement and continuing after any termination or expiration of this Agreement,
WCA and Consultant will assist the Corporation in every proper way to obtain,
perfect the Corporation’s interest in and/or enforce patents, copyrights or
other rights on said Inventions in any and all countries, and will execute all
documents reasonably necessary, desirable or appropriate for this purpose.  WCA and Consultant shall be compensated for
such assistance as specified in Section 4, above.  WCA and Consultant (to the extent Consultant
has not previously designated and/or appointed WCA) also hereby irrevocably
designate and appoints the Corporation and its duly authorized officers and
agents as their agents and attorneys-in-fact-to act for and in their behalf for
the purpose of executing and filing any such document and doing all acts to
accomplish the foregoing purposes.


 


The parties acknowledge and
agree that intellectual property rights claimed to be held by WCA and
Consultant: (i) that were in existence prior to the Effective Date, were
not derived from or attributable to, a service relationship with the
Corporation and did not make or use, in any manner, the resources of the
Corporation; or (ii) that are independently developed by WCA or Consultant
during the period of this service relationship, are unrelated to the scope of
the services performed and do not make or use, in any manner, the resources of
the Corporation, shall in the case of each of (i) and (ii) be
excluded from the assignment effected hereby.


 


8.                                       CONFLICT OF INTEREST


 


Neither WCA nor Consultant shall accept a similar
relationship with a competitor of the Corporation nor shall WCA or Consultant
themselves compete with the Corporation, during the term of this Agreement
without the Corporation’s prior written consent.  WCA and Consultant represent that neither WCA
nor Consultant has any other agreements or commitments that would hinder WCA’s
or Consultant’s performance of their obligations under this Agreement, and that
neither WCA nor Consultant will enter into any such agreements during the term
hereof.


 





















 


Each of WCA and Consultant hereby represents that
its performance of all terms of this Agreement have not breached and will not
breach any agreement to keep in confidence proprietary information, knowledge
or data acquired by WCA or Consultant in confidence or trust prior or
subsequent to the commencement of WCA’s and Consultant’s service relationship
with the Corporation, and WCA and Consultant will not disclose to the
Corporation, or induce the Corporation to use, any inventions, confidential or
proprietary information or material belonging to any previous employer or any
other party.


 


9.                                       RETURN OF LIPID MATERIALS


 


Upon termination of WCA’s and Consultant’s services
to the Corporation, WCA and Consultant will promptly return to the Corporation,
and will not take or use, all items of any nature that belong to the
Corporation.


 


10.                                 ASSIGNMENT


 


Each of WCA and Consultant agrees that it/he may not
assign this Agreement or delegate its/his duties herein without the Corporation’s
prior written consent.  The Corporation
agrees that it may not assign this Agreement without the prior written consent
of each of WCA and Consultant.


 


11.                                 MISCELLANEOUS


 


(a)          Amendments and Waivers.  Any
term of this Agreement may be amended or waived only with the written consent
of the parties.


 


(b)         Sole Agreement.  This
Agreement constitutes the sole agreement of the parties and supersedes all oral
negotiations and prior writings with respect to the subject matter hereof,
except for the Letter Agreement.


 


(c)          Advice of Counsel.  EACH
PARTY ACKNOWLEDGES THAT, IN EXECUTING THIS AGREEMENT, SUCH PARTY HAS HAD THE
OPPORTUNITY TO SEEK THE ADVICE OF INDEPENDENT LEGAL COUNSEL, AND HAS READ AND
UNDERSTOOD ALL OF THE TERMS AND PROVISIONS OF THIS AGREEMENT.  THIS AGREEMENT SHALL NOT BE CONSTRUED AGAINST
ANY PARTY BY REASON OF THE DRAFTING OR PREPARATION HEREOF.


 


(d)         Counterparts.  This
Agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which together will constitute one and the same
instrument.


 


(e)          Severability.  If
one or more provisions of this Agreement are held to be unenforceable under
applicable law, the parties agree to renegotiate such provision in good
faith.  In the event that the parties
cannot reach a mutually agreeable and enforceable replacement for such
provision, then (i) such provision shall be excluded from this Agreement, (ii) the
balance of the Agreement shall be interpreted as if such provision were so
excluded and (iii) the balance of the Agreement shall be enforceable in
accordance with its terms.


 


(f)            Choice of Law.  The
laws of the State of California shall govern the validity, interpretation,
construction and performance of this Agreement, without giving effect to the
principles of conflict of laws.


 


(g)         Arbitration.  The
parties agree that any and all disputes arising out of the terms of this
Agreement, their interpretation, and any of the matters herein released, shall
be subject to binding arbitration in Alameda County before the American
Arbitration Association under its Commercial Arbitration Rules.  Each party to such dispute shall select an
arbitrator, and if the number of selected arbitrators is even the selected
arbitrators shall select an additional arbitrator.  If the arbitrators who have been selected by
the parties have selected an additional arbitrator, such arbitrator shall act
as chair of the panel, and if not, the arbitrators shall, by majority vote, select
a chair of the panel.  The arbitrators
shall be certified public accountants, 


 





















 


attorneys or other persons, in each case, who are
experienced in consulting arrangements in the biotechnology or medical device
industry.  If the arbitrators selected by
the parties fail to agree upon the appointment of an additional arbitrator
within 30 days, the American Arbitration Association shall appoint an
additional arbitrator.  The parties agree
that the prevailing party in any arbitration shall be entitled to injunctive
relief in any court of competent jurisdiction to enforce the arbitration
award.  The parties agree that the
prevailing party in any arbitration shall be awarded its reasonable attorneys’
fees and costs.  The parties hereby agree to waive their right to have
any dispute between them resolved in a court of law by a judge or jury.  This paragraph will not prevent
any party from seeking injunctive relief (or any other provisional remedy) from
any court having jurisdiction over the parties and the subject matter of their
dispute relating to WCA’s and Consultant’s obligations under this
Agreement.  The Federal Arbitration Act
shall apply to the construction, interpretation and enforcement of this
arbitration provision.


 


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IN
WITNESS WHEREOF, the parties have duly executed this Agreement on the 28th
day of July, 2005 with effectiveness of this Agreement made as of the date
first written above.


 


 


	
   

  	
   

  	
  WASHINGTON CARDIOVASCULAR 

  ASSOCIATES, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ H. Bryan Brewer, Jr.,
  M.D.

  
	
   

  	
   

  	
    (Signature)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
    H. Bryan Brewer, Jr.,
  M.D.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
    Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  H. BRYAN BREWER, JR., M.D.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
    /s/ H. Bryan Brewer, Jr., M.D

  
	
   

  	
   

  	
    (Signature)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LIPID SCIENCES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ S. Lewis Meyer, Ph.D.

  
	
   

  	
   

  	
    (Signature)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
    S. Lewis Meyer, Ph.D.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
    President & CEO