Document:

ex101.htm

EXHIBIT 10.1

JOINT VENTURE AGREEMENT

This Joint Venture Agreement dated as of June 29, 2011 by and between:

	
  

	
(1)

	
John E. Repine, M.D., with an address of  70 Cherry Hills Farm Drive, Englewood, CO 80113 (“Repine”),

	
  

	
(2)

	
Oxis International, Inc., a Delaware corporation having a place of business at 468 N. Camden Dr., 2nd Floor, Beverly Hills, CA 90210 (“Oxis”), and

	
  

	
(3)

	
Ergo ARDS, LLC, a Delaware limited liability company having a place of business at 70 Cherry Hills Farm Drive, Englewood, CO 80113 (the “Company”).

Repine has formed the Company initially to conduct the Business (defined below) on the terms and conditions set forth herein.

In connection with the formation of the Company, at the Closing (defined below) Repine shall assign to the Company the Existing IP (defined below) in consideration for 40% of the outstanding membership interests of the Company, and Oxis shall supply Ergo (defined below) to the Company and bear certain expenses related to the IP (defined below) and to the administration of the Company, in consideration for 60% of the outstanding membership interests of the Company.

 

 

The parties desire to reflect their various agreements regarding the Company (the “Agreement”).

NOW, THEREFORE, for good and valuable consideration, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

1.1  Definitions.  As used in this Agreement, terms defined in the preamble of this Agreement shall have the meanings set forth therein and the following terms shall have the meanings set forth below.

Additional Oxis Milestone Shares:  As set forth in Section 3.4.

Affiliates: Any Person directly or indirectly controlling, controlled by or under common control with the relevant party to this Agreement.  “Control” means the ownership of more than fifty percent (50%) of the issued share capital or the legal power to direct or cause the direction of the general management and policies of the party in question.

Agreement: This Agreement.

ARDS: (i) Acute Respiratory Distress Syndrome, (ii) Acute Lung Injury, a milder form of lung injury, (iii) all ARDS Predisposing Conditions, (iv) all ARDS Predisposing Disorders and (v) all ARDS Complicating Disorders.

ARDS Complicating Disorders:  Include, but are not limited to, multiple organ failure, pulmonary fibrosis and pneumothorax.

  

  

  

ARDS Predisposing Conditions: Includes all related predisposing conditions, complicating conditions or other consequences of any medical problem that leads to and/or is associated with ARDS, including insults produced by terrorism or weapons of mass destruction.

ARDS  Predisposing Disorders:  Include, but are not limited to, sepsis, cardiac arrest, surgery, shock, blast injury, irradiation, chemical toxins, infections, pneumonia, pancreatitis, fat emboli, hemorrhage, drug reactions, aspiration, drug overdoses, transplantation, transfusions, hyperoxia, burns, smoke inhalation, neurogenic, chemotherapy, stem cell therapy, other forms of non-cardiogenic pulmonary edema and traumatic injuries and any recognized or presumed predisposing cause of ARDS (including ARDS of unknown etiology).

Assignment:  The Assignment, dated as of the date of the Closing, of the Existing IP from Repine to the Company, in the form annexed hereto as Exhibit A.

Board:  The Board of Directors of the Company.

Business:  Developing, acquiring and marketing Dietary Supplements, Cosmeceutical Products, Nutraceutical Products, Medical Foods and Pharmaceuticals in the Field.

Claim: As set forth in Section 7.4.

Clinical Trial:  A Phase I Clinical Trial, Phase II Clinical Trial or Phase III Clinical Trial.

Closing:  As set forth in Section 2.4.

Closing Shares:  The Initial Oxis Shares, the Stage 2 Rat Study Funding Shares and the Stage 2 Large Animal Study Funding Shares.

Combination Product:  Any product that combines any Pharmaceutical Product with any other product, technique, treatment or technology.

Consulting Agreement:  The Consulting Agreement, dated as of June 28, 2011, between Oxis and Repine, in the form annexed hereto as Exhibit B.

Cosmeceutical Products:  Cosmetic products with a biologically active ingredient purporting to have medical or drug-like benefits.

Default: The occurrence of any event which of itself or with the giving of notice or the passage of time or both would constitute an event of default under the applicable agreement, contract or instrument or would permit the other party thereto to cancel or terminate performance or seek damages for breach.

Diagnostics:  Tests used in the diagnosis of disease and its precursors and related conditions, including for biochemical estimation or the qualitative detection of antigen or antibody.

Dietary Supplements:  A preparation intended to supply nutrients that may be missing from or are not consumed in a sufficient quantity in a person’s diet, as defined under the Dietary Supplement Health and Education Act of 1994.

Dispute:  As set forth in Section 9.9.1.

  

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Dollars, or $: Dollars of the United States of America.

Eilenberg:  Adam Eilenberg.

EK:  Eilenberg & Krause LLP.

Ergo:  L-Ergothioneine (“ERGO”) and all derivatives, salts, enantiomers, crystal structures, metabolites, esters, and polymorphs, formulations and improvements thereof.

Ergo Patent Application:  PCT Application No. PCT/US2009/003704 “Compositions and Materials for Treating Lung Disorders” issued during the term of this Agreement by the US PTO or any like foreign body with respect thereto and any continuations, substitutions, extensions (including supplemental protection certificates), registrations, confirmations, renewals and divisions, as well as any reissues or reexaminations of patent.

Existing IP:  The Ergo Patent Application and all Know-how related to the Ergo Patent Application to be assigned by Repine to the Company at the Closing.

Expiration Date: As set forth in Section 7.1.

Field:  Any and all uses, including but not limited to, the therapeutic, diagnostic, preventative, ameliorative and/or prognostic, of Ergo in Dietary Supplements, Cosmeceutical Products, Nutraceutical Products, Medical Foods and Pharmaceuticals for individuals at-risk for and with ARDS.

Governmental Entity: With respect to the United States or any other country, the United States, or other national government, the government of any of the states constituting the United States (in the case of the United States), any municipality and any other national or provincial or regional government, and all of their respective branches, departments, agencies, instrumentalities, non-appropriated fund activities, subsidiary corporations or other subdivisions.

IP:  the Existing IP and the New Included IP.

 

 

Indemnitee: As set forth in Section 7.4.

Indemnitor: As set forth in Section 7.4.

Initial Oxis Shares:  As set forth in Section 3.1(a).

Know-how: All confidential information, business information, technical knowledge and information, processes, computer programs, algorithms, methods, formulae, prototypes, trade secrets, materials, designs, drawings and data relating to the Business, and technology, compound, formulation, product or process, in all forms of media (including digital formats), including (i) pre-clinical and clinical research and data, data relating to pharmacology and toxicology, technical information and data relating to manufacture and use and all information contained in any issued patent or patent application, and other regulatory applications and approvals and (ii) sales materials (including analyses and strategies), competitive analyses, marketing materials (including analyses and strategies), advertising and promotional materials and supplier lists.

Laws: Any law, statute, code, ordinance, rule, regulation, order, judgment or decree promulgated by any Governmental Entity.

  

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Liquidity Event:  A consolidation or merger of Company or a sale of all or substantially all of its assets or the closing of a firm commitment underwritten public offering of shares of common stock of Company for total gross offering proceeds of not less than $15,000,000.

Litigation Expense: Any expenses incurred in connection with investigating, defending or asserting any claim, action, suit or proceeding incident to any matter indemnified against under this Agreement, including, without limitation, court filing fees, court costs, arbitration fees or costs, witness fees and reasonable fees and disbursements of legal counsel (whether incurred in any action or proceeding between the parties to this Agreement or between any party to this Agreement and any third party), investigators, expert witnesses, accountants and other professionals.

Loss: Any loss, obligation, claim, liability, settlement payment, award, judgment, fine, penalty, interest charge, expense, damage or deficiency or other charge, other than Litigation Expense.

Medical Foods:  Foods prescribed by a physician to manage a patient’s disease or health condition.

New Excluded IP:  all new Know-how and intellectual property created as a result of the collaboration by Repine and Oxis hereunder which, if commercially exploited, would not infringe and/or be covered by a claim being prosecuted in the Ergo Patent Application or would not infringe any other Existing IP covered by the Assignment.

New Included IP:  all new Know-how and intellectual property created as a result of the collaboration by Repine and Oxis hereunder (except for the New Excluded IP), including, without limitation, patents, patent applications, goodwill and know-how.

Nutraceutical Products:  Natural, bioactive chemical compounds that have health promoting, disease preventing or medicinal properties.

Operating Agreement:  The Operating Agreement of the Company dated as of the date of the Closing between Oxis and Repine, the form of which is attached hereto as Exhibit C.

Oxis Milestone Shares:  As set forth in Section 3.3.

Person: An individual, a corporation, a partnership, a limited liability company, a limited liability partnership, a joint venture, a trust, an unincorporated association, a Governmental Entity or any other entity or any other entity, wherever located or organized.

Pharmaceutical Product:  A drug or potential drug containing Ergo.

Pharmaceuticals:  Therapeutics and Diagnostics.

Phase I Clinical Trial:  A human clinical trial in any country conducted by the Company to initially evaluate the safety of a Pharmaceutical Product in human subjects or that would otherwise satisfy the requirements of 21 CFR 312.21(a) or the equivalent laws, rules or regulations in a regulatory jurisdiction outside the United States.

Phase II Clinical Trial:  A human clinical trial in any country conducted by the Company to initially evaluate the effectiveness of a Pharmaceutical Product in human subjects with the disease or indication under study or that would otherwise satisfy the requirements of 21 CFR 312.21(b) or the equivalent laws, rules or regulations in a regulatory jurisdiction outside the United States.

  

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Phase III Clinical Trial:  The first patient dosed in a pivotal human clinical trial in any country conducted by the Company the results of which could be used to establish safety and efficacy of a Pharmaceutical Product as a basis for approval of an NDA for such Pharmaceutical Product or a Combination Product or that would otherwise satisfy the requirements of 21 CFR 312.21(c) or the equivalent laws, rules or regulations in a regulatory jurisdiction outside the United States.

Stage 1:  Formation of the Company, assignment of the Ergo Patent Application by Repine to the Company and the issuance of the Closing Shares by Oxis to Repine.

Stage 2:  Animal studies of Ergo; first study of Ergo in hemorrhaged rats and second study of Ergo in large animals (most likely, pigs).

Stage 3:  Decision to proceed with human clinical studies of Ergo, either as Pharmaceutical Products, which would involve Clinical Trials, or as Dietary Supplements, Cosmeceutical Products, Nutraceutical Products and/or Medical Foods.

Stage 4:  Clinical Trials of Ergo (for Pharmaceuticals) or Human Use (for Dietary Supplements, Cosmeceutical Products, Nutraceutical Products or Medical Foods).

Stage 2 Large Animal Study Funding Shares: As set forth in Section 3.1.

Stage 2 Large Animal Study Completion Shares:  As set forth in Section 3.3.

Stage 2 Rat Study Funding Shares:  As set forth in Section 3.1.

Stage 2 Rat Study Completion Shares:  As set forth in Section 3.2.

 

 

Therapeutics:  The use of drugs and the method of their administration in the treatment or prevention of disease and its precursors and related conditions.

Transactions: The transactions contemplated by this Agreement, the Assignment and the Operating Agreement.

1.2  Other Rules of Construction.  References in this Agreement to any gender shall include references to all genders.  Unless the context otherwise requires, references in the singular include references in the plural and vice versa.  References to a party to this Agreement or to other agreements described herein means those Persons executing such agreements.  The words “include”, “including” or “includes” shall be deemed to be followed by the phrase “without limitation” or the phrase “but not limited to” in all places where such words appear in this Agreement.  The phrases “have heretofore been provided” or “has provided” or similar words mean that one party has delivered such information to the other party.  This Agreement is the joint drafting product of Repine and Oxis and each provision has been subject to negotiation and agreement and shall not be construed for or against either party as drafter thereof.

 

  

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ARTICLE II

 

THE JOINT VENTURE; ISSUANCE OF MEMBERSHIP INTERESTS; OPERATING AGREEMENT

 

2.1  Formation of Company; Initial Activities.  The parties have formed the Company for the purpose of conducting the Business.  In connection with the formation of the Company, at the Closing Repine shall assign to the Company the Existing IP pursuant to the Assignment.  Repine represents and warrants that he has already obtained funding to conduct and complete the Stage 2 animal studies, and has provided to Oxis evidence confirming the status of such funding to its reasonable satisfaction.  Repine will be responsible for conducting the Stage 2 animal studies (at no cost to the Company or to Oxis) and, together with Adam Eilenberg (“Eilenberg”), for advising Oxis on the status of the development of the Company’s Business, all pursuant to the terms of the Consulting Agreement.  Oxis will be responsible for supplying Ergo to the Company (at no cost to the Company or to Repine) for the Stage 2 animal studies.  Oxis also will pay all IP prosecution and maintenance costs and the costs of filing any new patent applications for New Included IP through the completion of Stage 3 (“IP Costs”) and will also pay directly or reimburse Repine for any filing and related costs of establishing and maintaining the Company as a Delaware limited liability company as well as the costs of accounting and preparing appropriate tax returns and/or K-1 statements for the members of the Company (“Administrative Costs”).  Oxis shall also be responsible, though the completion of Stage 3, for paying the costs of all insurance obtained by the Company pursuant to Section 5.10 (“Insurance Costs”).

2.2  Issuance of Membership Interests.  In consideration for their respective contributions, at the Closing the Company will issue 6,000 membership interests (designated as “Shares”) to Oxis and 4,000 membership interests to Repine.  Such membership interests are also characterized as “Shares” of the Company, as provided in the Operating Agreement.  The Company acknowledges that Repine and Eilenberg have a separate agreement covering Eilenberg’s beneficial ownership of a portion of Repine’s Shares.  To the extent the Company will issue certificates representing the Shares, the Company will issue a certificate for a portion of Repine’s Shares in Eilenberg’s name, based upon written instructions from Repine.

2.3  The Operating Agreement.  The respective rights and obligations of Oxis and Repine relating to the Company, its management and operations, and their ownership and disposition of their Shares, will be governed by the provisions of the Operating Agreement.  To the extent there is any inconsistency between the provisions of this Agreement and the Operating Agreement, the provisions of this Agreement will govern.

2.4  The Closing.  The Closing (the “Closing”) will occur simultaneously with the execution of this Agreement.  At the Closing, (i) Repine shall execute and deliver the Assignment, (ii) the Company, Oxis and Repine each shall execute and deliver the Operating Agreement, and (iii) Oxis shall issue the Closing Shares and shall cause certificates representing the Closing Shares to be delivered, free of any restricted legends or other restrictions on transferability.

  

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ARTICLE III

CONSULTING PAYMENTS TO REPINE

3.1  Stage 1 Milestone and Closing Shares.  In consideration for Repine serving as a consultant to Oxis in connection with the development of the Business, Oxis shall immediately issue to Repine the Closing Shares, consisting of $100,000 in value of shares of Oxis Common Stock (“the Initial Oxis Shares”), plus $50,000 in value for the Stage 2 Rat Study Funding Shares (the “the Stage 2 Rat Study Funding Shares”) and $100,000 in value for the Stage 2 Large Animal Study Funding Shares (the “Stage 2 large Animal Study Funding Shares”).  The aggregate number of Closing Shares shall equal that number of shares of Oxis’ Common Stock equal to (x) $250,000, divided by (y) the average closing stock price for such Common Stock for the five days immediately prior to June 28, 2011, the date of the Consulting Agreement.  The additional shares of Oxis common stock issuable to Repine pursuant to Sections 3.2, 3.3 and 3.4 shall also be in consideration of the consulting services being performed by him.  The issuance by Oxis of the Closing Shares will be covered by a current registration statement on Form S-8.

3.2  Stage 2 Milestone – First Study.  Upon the completion of the first Stage 2 animal study and Repine’s delivery to Oxis of a summary presentation of the findings of the study, Oxis shall issue to Repine that number of shares of its Common Stock equal to (x) $50,000, divided by (y) the average closing stock price for such Common Stock for the five trading days immediately prior to the date Repine notified Oxis and the Company of the completion of such animal study and presented a summary presentation of the findings of such study (the “Stage 2 Rat Study Completion Shares”).  The issuance by Oxis of the Stage 2 Rat Study Completion Shares will be covered by a current registration statement on Form S-8.

 

3.3  Stage 2 Milestone – Second Study.  Upon the completion of the second Stage 2 animal study and Repine’s delivery to Oxis of a summary presentation of the findings of the study, Oxis shall issue to Repine that number of shares of its Common Stock equal to (x) $100,000, divided by (y) the average closing stock price for such Common Stock for the five trading days immediately prior to the date Repine notified Oxis and the Company of the completion of such animal study and presented a summary presentation of the findings of such study (the “Stage 2 Large Animal Study Completion Shares”; together with the Closing Shares , the Stage 2 Rat Study Completion Shares, the “Oxis Milestone Shares”).  The issuance by Oxis of the Stage 2 Large Animal Completion Shares will be covered by a current registration statement on Form S-8.

3.4  Issuance of Additional Oxis Milestone Shares.  On each date that is six months following the date of issuance of any of the Oxis Milestone Shares (an “Adjustment Date”), if the market value of such Oxis Milestone Shares is less than $250,000 or $50,000 or $100,000, as applicable, Oxis shall issue to Repine that number of additional unregistered shares of Oxis Common Stock (“Additional Oxis Milestone Shares”) such that the sum of the value of (x) the relevant Oxis Milestone Shares, based on the closing price of Oxis’common stock on the relevant Adjustment Date, and (y) the value of the Additional Oxis Milestone Shares to be issued, will equal $250,000, $50,000 or $100,000, as applicable.  The number of Additional Oxis Milestone Shares to be issued will equal (i) the dollar amount by which the market value of the relevant Oxis Milestone Shares is less than $250,000, $50,000 or $100,000, as applicable, on the Adjustment Date, divided by (ii) the average closing stock price for Oxis’ Common Stock for the five days immediately prior to the Adjustment Date.  Notwithstanding the foregoing, no Additional Oxis Milestone Shares will be issued for any corresponding Oxis Milestone Shares that were sold by Repine  prior to the relevant Adjustment Date for such Oxis Milestone Shares, and the value of Additional Oxis Milestone Shares to be issued to make the adjustment required by this Section 3.4 will be adjusted accordingly on a pro rata basis.  For example, if Repine sold 20% of the Closing Shares prior to the Adjustment Date, the number of Additional Milestone Shares to be issued will be based on the sum of the value of (x) the remaining unsold Closing Shares, taking into account the closing price of

  

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Oxis’common stock on such Adjustment Date, and (y) the value of the Additional Oxis Milestone Shares to be issued, which will equal 80% of $250,000, or $200,000.  The issuance by Oxis of the Additional Oxis Milestone Shares will be covered by a current registration statement on Form S-8.

3.5  Stage 4 Milestones – Pharmaceutical.  The Company (as opposed to Oxis) shall be responsible for paying the following cash amounts to Repine (subject to Repine directing the Company to pay a portion thereof to Eilenberg) upon the attainment of the following milestones:

	
  

	
(i)

	
Licensing the IP to a pharmaceutical company -- $1,000,000;

	
  

	
(ii)

	
Completion of Phase I Clinical Trial -- $250,000;

	
  

	
(iii)

	
Completion of Phase II Clinical Trial --  $1,000,000;

	
  

	
(iv)

	
Completion of pivotal Phase III Clinical Trial -- $1,500,000; and

	
  

	
(v)

	
Receipt of FDA Marketing approval -- $3,000,000.

3.6  Stage 4 Milestones – Nutraceutical.   The Company (as opposed to Oxis) shall be responsible for paying the following cash amounts to Repine (subject to Repine directing the Company to pay a portion thereof to Eilenberg) upon the attainment of the following milestones:

 

	
  

	
(i)

	
Licensing the IP to, or entering into a distribution agreement with, a nutraceutical or similar company -- $100,000; and

	
  

	
(ii)

	
Gross sales of products utilizing Ergo in the Field -- 5% of annual gross sales by the Company or any licensee or distributor (including Oxis).

ARTICLE IV

FUNDRAISING FOR THE COMPANY

4.1  Stage 3 Fundraising.  Following the successful completion of the Stage 2 animal studies, Oxis and Repine will make a joint decision whether or not to commence human clinical trials (in the case of Pharmaceuticals) and/or testing and distribution for human use (in the case of Dietary Supplements, Cosmeceutical Products, Nutraceutical Products and Medical Foods).  If the parties do not agree to proceed, this Agreement shall terminate and all IP of the Company shall be assigned to the party that elected to proceed.  If neither party elected to proceed, the IP shall continue to be held by the Company or otherwise disposed of by agreement of the parties.  If the parties elect to proceed, Oxis will be responsible in raising at least $3 million for the Company (from its own capital or from third parties), whether in the form of equity, debt, convertible debt or by means of funding from a new strategic partner, or any combination thereof.  Any equity (or securities convertible into equity) raised for the Company shall dilute Oxis and Repine equally up until the point that Repine’s equity interest, on an as-converted, fully diluted basis, is reduced to 10% of the Company, and after such point, Repine’s interest in the Company shall no longer be diluted without its permission.  If Oxis fails to raise such funding, Repine, in its sole discretion, may terminate this Agreement, and all IP of the Company shall be assigned to Repine.

4.2  Post Fundraising Expenses of the Company.  If the $3 million in financing referred to in Section 4.1 has been successfully raised and the Company continues operations into human trials (Stage 4), Oxis shall no longer be responsible for paying the IP Costs, the Insurance Costs or the Administrative Costs.  The parties shall negotiate in good faith a fair and appropriate price for the Ergo to be supplied to the Company by Oxis for ongoing research and development and clinical use.

  

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ARTICLE V

OPERATIONS; EXCLUSIVITY

5.1  Management.  Following the Closing, the Company will initially be managed by Repine as Manager and as Chief Executive Officer, who will be responsible for establishing Company’s research and development activities for the Stage 2 animal studies; provided, however, that Repine shall only be responsible for conducting one rat study and one large animal study.  The Company’s offices initially will be in the Denver, Colorado area, with the specific location to be determined by Dr. Repine on behalf of the Company.  The parties recognize that while Dr. Repine shall devote the time necessary to the Business and the Company to advance the Stage 2 animal studies, his business and professional activities shall not be limited to that of the Company, particularly relating to his academic commitments to the University of Colorado and to his private medical practice, and that any obligations he has to the University of Colorado shall take priority to his obligations hereunder.  The officers of Company initially will be Dr. Repine, Chief Executive Officer and Treasurer, and Adam Eilenberg, Secretary.  Repine, in his discretion, may cause the Company to enter into agreements with research scientists and others relating to the Company’s use of data from their own separate research endeavors.  To the extent such data becomes Know-how, Repine may grant such third parties permission to use such Know-how for their own academic, research and non-commercial purposes if, in his reasonable belief, such use by them may be in the best interests of the Company.

5.2  Other Payments to Repine.  Apart from the issuance of the Oxis Milestone Shares and the Additional Oxis Milestone Shares to Repine as set forth in Article III, Repine shall not initially receive any payments or compensation from the Company, but the Board may elect in its discretion to establish an additional consulting or employment arrangement with Repine in the future and /or to pay bonus or other compensation to Repine following the successful completion of the Stage 2 animal studies or future Stage 4 milestones.

5.3  The Board; Creation of Company Scientific Advisory Board.  Following the Closing and until a Liquidity Event occurs, the Board will consist of five members, two of whom will be designees of Repine (initially Repine and Eilenberg), and three of whom will be designees of Oxis.  Decisions of the Board shall be made by a majority vote, except approval of Repine and Eilenberg will be required (i) to proceed with the first or second animal study of Stage 2, (ii) to proceed with the Clinical Trials or human use in Stage 4, (iii) to enter into any licensing arrangement or similar strategic partnering transaction involving the Company or its assets, (iv) the sale of all or substantially all of the Company or the Business, whether by means of merger, stock issuance or otherwise, (v) the admission of new members to the Company or the issuance of any Shares to any Person, (vi) the hiring of any senior management of the Company, (vii) the financing transaction identified in Section 4.1 hereof and (viii) payments to or compensation of any Board or Scientific Advisory Board members, consultants or employees, in the form or cash and/or equity securities of the Company .  The Board shall create a Scientific Advisory Board for Company, which will include Repine and others to be determined by the Chief Executive Officer or the Board.

5.4  Financing.  If the Company is proceeding with the Stage 3 financing, Repine will use his best efforts to assist Oxis in obtaining the required $3 million financing identified in Section 4.1 hereof.  The parties acknowledge that, following the Closing, apart from Repine’s assignment of the Existing IP pursuant to the Assignment and Oxis’ agreement hereunder to fund the IP Costs, the Insurance Costs and the Administrative Costs and to provide Ergo to the Company through the completion of the Stage 2 animal studies, neither party has any obligation to make any further investment in the Company or to loan money or otherwise provide any form of financial assistance to the Company.

  

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5.5  Ownership of Intellectual Property; Confidentiality.  All Existing IP, which shall be assigned by Repine to the Company pursuant to the Assignment, and all New Included IP created as a result of the collaboration by Repine and Oxis hereunder (but not the New Excluded IP), shall be owned by the Company and will be maintained by the parties and their Affiliates in confidence during the term of this Agreement and for a period of three (3) years following the termination of this Agreement.  The IP may not be used by any party or its Affiliates without the prior approval of the Company, as determined by the disinterested members of the Board, except that each of Repine and Oxis, as well as their Affiliates, shall have a perpetual, non-exclusive, royalty free license to use the IP for research purposes.  The New Excluded IP will be owned by Repine personally and/or by the University of Colorado, other academic or research institutions or scientists who were responsible for the creation of such New Excluded IP, and neither the Company nor Oxis shall have any rights to the New Excluded IP.

5.6  Public Announcements.  Repine and Oxis shall not (nor shall they permit any of their respective Affiliates to), without prior consultation with the other party and such other party’s review of and consent to any public announcement concerning this Agreement or the Transactions or any subsequent development relating to Company or the Business, issue any press release or make any public announcement with respect to the Transactions except such disclosures as may be required by Law.  Repine and Oxis shall, to the extent practicable, allow the other party reasonable time to review and comment on such release or announcement in advance of its issuance and use reasonable efforts in good faith to reflect the reasonable and good faith comments of such other party, provided, however, no party shall be prevented from making any disclosure required by Law at the time so required.  The parties intend that the initial announcement of the terms of this Agreement concurrently or shortly after the execution hereof shall be made by joint press release of Repine and Oxis, and Repine acknowledges that in Oxis’case, public disclosure of the execution of this Agreement may be required under applicable securities laws.

5.7  Accounting.  The Company shall keep written records and reports relating to the Transactions and the Business it conducts.  All of such financial records and reports promptly shall be made available to Repine and Oxis and their representatives. Oxis shall be responsible for paying the Administrative Costs until the $3 million in financing referred to in Section 4.1 has been successfully raised and the Company continues operations into human trials (Stage 4), at which point the Company will bear the Administrative Costs.

5.8  Inspection of Books and Records.  During the regular office hours of the Company, and upon reasonable notice to the Company, each of Repine and Oxis, shall have (a) full access to all properties, books of account and records of the Company and (b) the right to make copies from such books and records at his or its own expense.  Upon the request of either Repine or Oxis and on reasonable notice, Company shall permit, at the expense of the requesting party (Repine or Oxis, as the case may be), an independent certified public accountant reasonably acceptable to the Company and the requesting party, to have access during reasonable business hours to such records as may be necessary (a) to obtain any additional information and records as may be required to comply with financial reporting and disclosure requirements of such party or (b) to determine the correctness of any fee or payment statements and actual payments made under this Agreement.  Any information obtained by Repine or Oxis through the exercise of the rights granted under this Section 5.8 shall be kept confidential by the parties, except as otherwise required by Law.

5.9  Additional Assurances.   The parties shall and shall cause their Affiliates to take such additional actions and execute any such additional documents and instruments as may be reasonably necessary to effectuate the Transactions.

  

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5.10  Liability Insurance.  The Company shall use reasonable commercial efforts to purchase and maintain in effect a policy of commercial, general product liability insurance to protect the Company, its officers, directors, employees and stockholders, from any liabilities, claims, demands, damages, judgments, losses and expenses of any nature, including without limitation legal expenses and attorneys’ fees, arising out of any theory of liability and the death, personal injury or illness of any Person relating to their use of any other product of the Company, or resulting from their production, manufacture, sale, consumption or advertisement (collectively “Product Liability Claims”).  Oxis shall assist the Company in identifying and obtaining such insurance coverage and shall be responsible for paying Insurance Costs until the $3 million in financing referred to in Section 4.1 has been successfully raised and the Company continues operations into human trials (Stage 4), at which point the Company will bear the Insurance Costs.  

5.11  Exclusivity.  During the term of this Agreement and for two years thereafter, Repine, Oxis, and their respective Affiliates, will not, outside of Company, directly or indirectly engage in the Business or (b) provide services to, or have any ownership interest in, any Person engaged in the Business.  Notwithstanding the foregoing, Repine shall not be restricted from any other academic or commercial activities relating to ARDS that do not involve Ergo, and the foregoing restrictions do not limit in any respect Dr. Repine’s non-commercial, research or academic activities or any of his other current responsibilities to the University of Colorado.  Additionally, Oxis shall not be prohibited from developing and marketing any Dietary Supplements, Cosmeceutical Products, Nutraceutical Products or Medical Foods containing Ergo that are not designed to treat or prevent ARDS.

5.12  Injunctive Relief.  Because of the unique nature of the joint venture created by this Agreement and the confidential information to be shared, each party understands and agrees that  Company and the other party will suffer irreparable harm in the event that such party fails to comply, or threatens not to comply, with any of its obligations under this Agreement, in particular its obligations under Sections 5.1 hereof, and acknowledges that monetary damages will be inadequate to compensate Company and the other party for such breach.  Accordingly, each party agrees that Company and the other party will, in addition to any other remedies available to it at law or in equity, be entitled to preliminary and permanent injunctive relief in the federal or state courts located in Denver, Colorado York (to which the parties consent to jurisdiction), and wherever else the parties can obtain jurisdiction, to enforce the terms of this Agreement.  Any such injunction shall be available without the requirement that the Company or such other party post any bond or other security and each party hereby consents to the issuance of any such injunction without the requirement of posting any bond.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES

6.1  By Repine.  Repine represents and warrants to Oxis that:

6.1.1 This Agreement, the Assignment, the Consulting Agreement and the Operating Agreement each is (or when executed and delivered, will be) a valid and binding obligation of Repine, enforceable against him in accordance with its respective terms.

6.1.2  Repine has all requisite power and authority to enter into this Agreement, the Assignment, the Consulting Agreement and the Operating Agreement and to perform all of its obligations hereunder and thereunder.

  

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6.1.3  The execution, delivery and performance of this Agreement, the Assignment, the Consulting Agreement and the Operating Agreement by Repine and the consummation of the Transactions do not and will not constitute a breach by Repine of, or result in a Default under or cause the acceleration of any payments pursuant to, any agreement, contract, indenture, lease or mortgage to which Repine is a party, or violate any provision of any Law to which Repine is subject.

6.1.4  No permit, consent, approval or authorization of, or designation, declaration or filing with, any Governmental Entity or any other Person on the part of Repine is required in connection with the execution or delivery by Repine of this Agreement,  the Assignment, the Consulting Agreement or the Operating Agreement or the consummation of the Transactions.

6.1.5  There are no actions, suits, proceedings, orders, grievance procedures or claims pending by or against or, to Repine’s knowledge, threatened against, or investigations involving Repine related to this Agreement, the Assignment, the Consulting Agreement or the Operating Agreement or the Transactions; and Repine is not subject to, or in Default of, any outstanding order, writ, injunction, judgment or decree of any Governmental Entity.

6.2  By Oxis.  Oxis represents and warrants to Repine that:

6.2.1  Oxis is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware, and has all requisite corporate power and authority to carry on its business as it is now being conducted and to own and operate the properties and assets now owned and operated by it.

6.2.2  This Agreement, the Consulting Agreement and the Operating Agreement each is (or when executed and delivered, will be) a valid and binding obligation of Oxis, enforceable against it in accordance with its respective terms.

6.2.3  Oxis has all requisite corporate power and authority to enter into this Agreement , the Consulting Agreement and the Operating Agreement and to perform all of its obligations hereunder, including without limitation to issue the Oxis Milestone Shares and the Additional Oxis Milestone Shares.  The Board of Directors of Oxis has duly authorized the execution and delivery of this Agreement, the Consulting Agreement and the Operating Agreement and the performance of the Transactions, including without limitation the issuance of the Oxis Milestone Shares and the Additional Oxis Milestone Shares.  No approval of the stockholders of Oxis is required with respect to the consummation of the Transactions, including without limitation the issuance of the Oxis Milestone Shares and the Additional Oxis Milestone Shares.   When issued in accordance with the provisions of this Agreement the Oxis Milestone Shares and the Additional Oxis Milestone shares will be duly and validly issued, fully paid and non-assessable shares of Common Stock of Oxis.  The issuance by Oxis of the Oxis Milestone Shares and the Additional Oxis Milestone Shares will be covered under a currently effective registration statement on Form S-8.

  

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6.2.4  The execution, delivery and performance of this Agreement, the Consulting Agreement and the Operating Agreement by Oxis and the consummation of the Transactions, including without limitation the issuance of the Oxis Milestone Shares and the Additional Oxis Milestone Shares, do not and will not (a) contravene any provision of the Certificate of Incorporation or By-Laws of Oxis; (b) constitute a breach by Oxis of, or result in a Default under or cause the acceleration of any payments pursuant to, any agreement, contract, indenture, lease or mortgage to which Oxis is a party, or violate any provision of any Law to which Oxis is subject.

6.2.5  No permit, consent, approval or authorization of, or designation, declaration or filing with, any Governmental Entity or any other Person on the part of Oxis is required in connection with the execution or delivery by Oxis of this Agreement, the Consulting Agreement or the Operating Agreement or the consummation of the Transactions, including without limitation the issuance of the Oxis Milestone Shares and the Additional Oxis Milestone Shares.

6.2.6  There are no actions, suits, proceedings, orders, grievance procedures or claims pending by or against or, to Oxis’s knowledge, threatened against, or investigations involving Oxis related to this Agreement, the Consulting Agreement or the Operating Agreement or the Transactions, including without limitation the issuance of the Oxis Milestone Shares and the Additional Oxis Milestone Shares; and Oxis is not subject to, or in Default of, any outstanding order, writ, injunction, judgment or decree of any Governmental Entity.

6.2.7  Oxis is not currently engaged in any aspect of the Business and has not currently directly or indirectly invested in any Person that is currently engaged in any aspect of the Business.

6.3  Additional Representations by Repine with respect to Company.  Repine represents to Oxis that:

6.3.1  The Company is a limited liability company duly organized, validly existing, and in good standing under the laws of Delaware, and has all requisite corporate power and authority to carry on its business as it is now being conducted and to own and operate the properties and assets now owned and operated by it.

6.3.2  This Agreement, the Consulting Agreement and the Operating Agreement each is (or when executed and delivered, will be) a valid and binding obligation of the Company, enforceable against it in accordance with its respective terms.

6.3.3  The Company has all requisite corporate power and authority to enter into this Agreement, the Consulting Agreement and the Operating Agreement and to perform all of its obligations hereunder and thereunder.  The Board of Directors of the Company has duly authorized the execution and delivery of this Agreement, the Consulting Agreement and the Operating Agreement and the performance of the Transactions.

6.3.4  The execution, delivery and performance of this Agreement, the Consulting Agreement and the Operating Agreement by the Company and the consummation of the Transactions do not and will not (a) contravene any provision of the Certificate of Organization of the Company; (b) constitute a breach by the Company, or result in a Default under or cause the acceleration of any payments pursuant to, any agreement, contract, indenture, lease or mortgage to which Company a party, or violate any provision of any Law to which the Company is subject.

  

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6.3.5  No permit, consent, approval or authorization of, or designation, declaration or filing with, any Governmental Entity or any other Person on the part of the Company is required in connection with the execution or delivery by the Company of this Agreement, the Consulting Agreement or the Operating Agreement or the consummation of the Transactions.

6.3.6  There are no actions, suits, proceedings, orders, grievance procedures or claims pending by or against or, to the Company’s knowledge, threatened against, or investigations involving Company related to this Agreement, the Consulting Agreement or the Operating Agreement or the Transactions; and the Company is not subject to, or in Default of, any outstanding order, writ, injunction, judgment or decree of any Governmental Entity.

6.3.7  The Company has not commenced operations prior to the date of this Agreement.  Company has authorized membership interests of 10,000 Shares.  There currently are no Shares outstanding, or obligations to issue Shares or other ownership interests of the Company, other than the obligation hereunder to issue 6,000 Shares to Oxis and 4,000 Shares to Repine at the Closing.  Such shares, when issued in accordance with the provision of this Agreement, will be duly and validly issued, fully paid and non-assessable membership interests of the Company.  There are no currently outstanding convertible securities, options, warrants or other contractual rights of any Person to acquire any securities of the Company.

ARTICLE VII

SURVIVAL AND INDEMNIFICATION

 

7.1  Survival of Representations, Warranties and Covenants.  The representations and warranties of the parties contained in this Agreement shall survive for two (2) years following the date of the Agreement.  In the event notice of any claim for indemnification under this Article VII shall have been given prior to midnight on the last day of the applicable survival period (the “Expiration Date”), the representations and warranties that are the subject of such indemnification claim shall survive until the claim is finally resolved.  The covenants and agreements of the parties contained in this Agreement shall survive until fully performed.

 

7.2  Indemnification by Repine.  Repine shall indemnify and hold harmless Oxis and its Affiliates, and their respective employees, directors, agents and representatives, from and against any and all Loss and Litigation Expense, which they or any of them may suffer or incur as a result of or arising from any of the following:  (a) any misrepresentation or breach of warranty of Repine contained in this Agreement or (b) the failure of Repine to perform his covenants contained in this Agreement.

7.3  Indemnification by Oxis.  Oxis shall indemnify and hold harmless Repine and his Affiliates, and their respective members, employees, directors, agents and representatives, from and against any and all Loss and Litigation Expense which they, or any of them, may suffer or incur as a result of or arising from any of the following:  (a) any misrepresentation or breach of warranty of Oxis contained in this Agreement, (b) the failure of Oxis to perform its covenants contained in this Agreement.

 

7.4  Procedure.  Promptly after acquiring knowledge of any Loss, or any action, suit, investigation, proceeding, demand, assessment, audit, judgment, or claim (“Claim”) which may result in a Loss, and prior to the Expiration Date, the Person seeking indemnity under this Article VII (the “Indemnitee”) shall give written notice thereof to the party from whom indemnity is sought (the “Indemnitor”).  The Indemnitor shall have the right, at its expense, to defend, contest or compromise such Claim, through counsel of its choice (unless such Indemnitor is relieved of its liability hereunder with respect to such Claim and Loss and Litigation Expense by the Indemnitee) and shall not then be liable for

 

  

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fees or expenses of the Indemnitee’s attorneys (unless the Indemnitor and Indemnitee are parties to the action and there exists a conflict of interest between the Indemnitor and the Indemnitee, in which event the Indemnitor will be responsible for the reasonable fees and expenses of one firm), and the Indemnitee and the Indemnitor shall provide to each other all necessary and reasonable cooperation in the defense of all Claims.  In the event that the Indemnitor shall undertake to compromise or defend any Claim, it shall promptly notify the Indemnitee of its intention to do so.  In the event that the Indemnitor, after written notice from Indemnitee, fails to take timely action to defend the same, the Indemnitee shall have the right to defend the same by counsel of its own choosing, but at the cost and expense of the Indemnitor, provided that no settlement of a Claim by Indemnitee shall be effected without the consent of the Indemnitor unless Indemnitee waives any right to indemnification therefor.  The Indemnitor may settle or compromise the entry of any judgment (a) which includes the unconditional release by the Person asserting the Claim and any related claimants of Indemnitee from all liability with respect to such Claim in form and substance reasonably satisfactory to Indemnitee, and (b) which would not adversely affect the right of Indemnitee and its Affiliates to own, hold use and operate their respective assets and businesses.

 

7.5  Exclusive Remedy.  The exclusive remedies for any breach of any representation, warranty, covenant or agreement hereunder shall be the indemnification provided by this Article VII, and each party expressly waives any other rights or remedies it may have, provided, however, that equitable relief, including the remedies of specific performance and injunction, shall be available with respect to the breach of any covenant to be performed hereunder.

 

ARTICLE VIII

TERMINATION

8.1           Events of Termination.  This Agreement may be terminated with no further action by Repine or Oxis by written notice of termination only as follows:

 

	
  

	
8.1.1

	
Mutual Consent.  By mutual written consent of Repine and Oxis;

 

8.1.2           By Oxis.  Provided that Oxis or its Affiliates has not (a) misstated in a material respect any representation, or (b) breached in a material respect any covenant, undertaking or restriction contained herein and which breach shall not have been cured within five (5) business days following receipt by Oxis party of notice of such breach, Oxis may terminate this Agreement on thirty (30) days’ prior written notice in the event that:

	
  

	
(i)

	
Repine has misstated in a material respect any representation or breached in any material respect any covenant, undertaking or restriction contained herein and which breach shall not have been cured within five (5) business days following receipt by Repine of notice of such breach;

	
  

	
(ii)

	
the first animal study for Stage 2 (hemorrhaged rats) shall not have been completed and an initial summary report shall not have been delivered to the Company by the second anniversary of the Closing, other than as a result of Oxis’ failure to provide Ergo as is required by this Agreement;

	
  

	
(iii)

	
the second animal study for Stage 2 (large animal, most likely pigs) shall not have been completed and an initial summary report shall not have been delivered to the Company by the fourth anniversary of the date of the Closing , other than as a result of Oxis’ failure to provide Ergo as is required by this Agreement.

  

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8.1.3           By Repine.  Provided that Repine or his Affiliates has not (a) misstated in a material respect any representation, or (b) breached in a material respect any covenant, undertaking or restriction contained herein and which breach shall not have been cured within five (5) business days following receipt by Repine of notice of such breach, Repine may terminate this Agreement on thirty (30) days’ prior written notice in the event that:

	
  

	
(i)

	
if Oxis fails to pay or reimburse the Company for IP expenses, as provided by this Agreement;

	
  

	
(ii)

	
fails to provide reasonable amounts of Ergo for the either of the Stage 2 animal studies, as is required by this Agreement;

	
  

	
(iii)

	
fails to issue any of the Oxis Milestone Shares or Additional Oxis Milestone Shares to Repine (or its designees) pursuant to Section 3 hereof in a timely manner; or

	
  

	
(iv)

	
fails to raise the financing required in Section 4.1, following the agreement by Repine and Oxis to proceed with such financing, within 6 months after the successful completion of the Stage 2 large animal trial.

8.2           Consequences of Termination.  Upon termination of this Agreement pursuant to Section 8.1.1, the parties shall determine in good faith how to dispose of the existing IP of the Company.  Upon termination of this Agreement by Oxis pursuant to Section 8.1.2, all IP of the Company shall be transferred to Oxis.  Upon termination of this Agreement by Repine pursuant to Section 8.1.3, all IP of the Company shall be transferred to Repine.  Any termination of this Agreement shall be without any liability on the part of any of the parties, their Affiliates and their respective directors, officers or stockholders in respect of this Agreement, except for any breach of the Agreement by a party, and the termination by the other party shall be without prejudice to its rights to recover damages for any such breach by the breaching party (subject to the provisions of Section 7.5).

 

8.3           Limitations on Termination Rights.  Oxis shall not have any right to terminate this Agreement pursuant to Sections 8.1.2 following the completion of the Stage 2 animal studies and the decision of the parties during Stage 3 to proceed with Stage 4 human trials or use.  Repine shall not have any right to terminate this Agreement pursuant to Sections 8.1.3 following the successful completion of the $3 million financing for the Company referred to in Section 4.1.

 

ARTICLE IX

MISCELLANEOUS

9.1  Headings and References.  The headings in this Agreement are for convenience of reference only and shall not affect its interpretation.  Any reference in this Agreement to an Article or Section, unless it clearly refers to another instrument, means the specified Article or Section of this Agreement.

 

9.2  Severability.  The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof.  If any provision of this Agreement, or the application thereof to any Person or any circumstance, is invalid or unenforceable, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (b) the remainder of this Agreement and the application of such provision to other persons, entities or circumstances shall not be affected by such invalidity or unenforceability.

 

  

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9.3  Expenses.  Except as otherwise expressly provided herein, each of Repine and Oxis shall be responsible for his and its own expenses in connection with the negotiation and preparation of the Agreement.

 

9.4  Notices.  All notices and other communications hereunder shall be in writing and shall be deemed given to the Person if delivered personally, buy fax or upon sending a copy thereof by first class or express mail, postage prepaid, or by Federal Express or other recognized overnight courier, charges prepaid, to such party’s address (or to such party’s telecopier):

 

If to Repine, to:

John E. Repine, M.D. Inc.

70 Cherry Hills Farm Drive

Englewood, CO 80113

Fax:

With a copy to:

Eilenberg & Krause LLP

11 East 44th Street, 19th Floor

New York, NY 10017

Attention: Adam Eilenberg, Esq.

Fax: 212-986-2399

If to Oxis, to:

Oxis International, Inc.

468 N. Camden Dr., 2nd Floor

Beverly Hills, CA 90210

Attention:

Fax:

With a copy to:

 

_________

_________

_________

Fax:

If to the Company, to:

both Oxis and Repine at the addresses set forth above

 

or to such other Person or address as any of the foregoing may have designated for that purpose by notice to the others.

 

  

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9.5  Waiver; Consents.  The failure by any party to exercise any right under, or to object to the breach by any other party of any term, provision or condition of, this Agreement shall not constitute a waiver thereof and shall not preclude such party from thereafter exercising that or any other right, or from thereafter objecting to that or any prior or subsequent breach of the same or any other term, provision or condition of the Agreement.  Any consent granted pursuant to this Agreement shall be in writing, executed by the person authorized by the consenting party to receive notices, and shall be a consent only to the transaction, act or agreement specifically referred to in the consent and not to other similar transactions, acts or agreements.

 

9.6  Assignment.  This Agreement shall not be assigned by any party without the prior written consent of the other party.  Any attempted assignment in contravention with the foregoing shall be void.  This Agreement shall be binding on and inure to the benefit of the parties hereto, their successors and any permitted assigns.

 

9.7  Governing Law.  This Agreement, including any dispute or controversy arising out of or related to this Agreement or the breach thereof, shall be subject to, governed by, and construed in accordance with, the substantive and procedural laws of the State of Colorado, without reference to its principles of conflict of laws.

 

9.8  Parties in Interest.  This Agreement is binding upon and shall inure to the benefit of the parties hereto and their successors and permitted assigns.  Nothing contained in this Agreement, express or implied, shall give any other Person any legal or equitable right, remedy or claim under or with respect to this Agreement or the transactions contemplated by this Agreement except as expressly provided in Article VII.

 

 

9.9  Dispute Resolution.  

 

 

	
  

	
9.9.1

	
Management Meeting.  In the event that Repine and Oxis are unable, after exercising good faith efforts, to reach agreement on any disputes, questions or claims relating to this Agreement (the “Dispute”), then upon written notice to the other, the Dispute shall be referred to Repine and the Chief Executive Officer of Oxis, or other members of senior management of Oxis, each with full authority to settle the Dispute.  Such designees shall meet within fifteen (15) Business Days of receipt of such notice and use good faith efforts to reach agreement on the Dispute.  If either such designee intends to be accompanied at the meeting by counsel, the other shall be given at least five (5) business days notice of such intention and may also be accompanied by counsel.  All negotiations pursuant to this Subsection 9.9.1 shall be confidential and treated as compromise and settlement negotiations and shall not be admissible in any arbitration or other proceeding.  In the event that the designees are unable to reach agreement on the Dispute within fifteen (15) business days following the meeting, either party may by notice to the other party submit the Dispute to arbitration in accordance with the provisions below.

 

 

	
  

	
9.9.2

	
Arbitration.  The Dispute shall be finally settled by arbitration by three arbitrators who shall be impartial and disinterested individuals who do not have a direct or indirect interest in either Repine or Oxis or the subject matter of the arbitration.  The parties agree that notices served in the manner provided herein shall be valid for such arbitration. Any such arbitration shall be conducted in English and shall be held in Denver, Colorado.  The arbitrators shall apply the substantive law that the Parties have chosen as the governing law pursuant to Section 9.7 hereof.

 

  

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9.9.3

	
Arbitration Panel.  Within fifteen (15) business days after the receipt of the notice provided for in Subsection 9.9.1 of this Agreement, Repine and Oxis each shall appoint an independent expert, knowledgeable in the field of the Dispute, to serve on the arbitration panel.  The two independent experts so appointed by the parties shall, within fifteen (15) business days thereafter, appoint a neutral third independent expert, knowledgeable in the field of the Dispute.  Such neutral third independent expert shall serve as the chairperson of the arbitration panel.  Each of the members of the arbitration panel shall be required to sign a confidentiality agreement, acceptable in form to both parties, with respect to any information provided by either party during the arbitration procedure.

 

 

	
  

	
9.9.4

	
Statement.  Within fifteen (15) business days after the chairperson of the arbitration panel is appointed, Repine and Oxis each shall submit, to each member of the arbitration panel and to the other party, a written statement setting forth the relevant facts with respect to the Dispute in reasonable detail and arguments and documentation supporting such party’s position with respect to the resolution of the Dispute.

 

 

	
  

	
9.9.5

	
Decision.  Pending the issuance of the arbitrators’ decision, Repine and Oxis shall continue to operate under the Agreement as it existed on the date the Dispute notice was given; provided, however, that the arbitrators’ decision shall be retroactive to such date. The parties hereby exclude any right of appeal to any court on the merits of the Dispute. Judgment on the award may be entered in any court having jurisdiction over the award or any of the Parties or their assets.  The award may grant any relief appropriate under the applicable law, including without limitation declaratory relief and/or specific performance.

 

 

	
  

	
9.9.6

	
Costs.  Repine and Oxis each shall bear his or its own costs incurred in connection with the arbitration (including without limitation the fees and expenses of attorneys and experts, the travel and other expenses of witnesses, as well as the fees and expenses in any collateral actions, such as actions for enforcement), provided, however, that the nonprevailing party shall bear the fees, costs and expenses of the arbitration panel.

 

9.10  Conflict of Interest Waiver; Counsel.  The parties acknowledge that Eilenberg and EK are representing Repine in connection with this Agreement, the Assignment, the Consulting Agreement and the Operating Agreement and the Transactions.  Oxis and the Company each acknowledges and agrees that it is in their respective and mutual interests to have Eilenberg and his law firm EK provide legal services to the Company going forward.  Oxis and Repine have each agreed to waive any conflict of interest arising out of Eilenberg’s and EK’s prior engagements, and that each party will not object to the representation of the Company by Eilenberg and EK.  Additionally, Oxis and Repine each acknowledges the following:  (i)  Although the interests of Oxis and Repine in this joint venture are generally consistent, differences may exist or become evident during the course of the transaction; (ii) Eilenberg and EK in the past separately have represented both Repine, on the one hand, and Oxis, on the other hand; (iii) Eilenberg has a separate with Repine regarding his beneficial interest in Repine’s interest in this Agreement, and neither Mr. Eilenberg nor EK will be representing the interests of Oxis or in connection with this Agreement, the Assignment, the Consulting Agreement or the Operating Agreement; and (iv) any legal services to be provided to the Company by EK after the execution and delivery of this Agreement, the Assignment, the Consulting Agreement and the Operating Agreement and the consummation of the Transactions (including, but not limited to, the negotiation of any strategic partnering agreement on behalf of the Company with a pharmaceutical company) will be provided at its customary billing rates for so long as the Board of Directors of the Company wishes to retain and used the

  

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services of EK and/or Eilenberg for the Business.  Oxis each further acknowledges and agrees that it has had an opportunity to retain its own counsel, other than EK, in connection with the negotiation, preparation and review of this Agreement, the Assignment, the Consulting Agreement and the Operating Agreement and the Transactions.

 

 

9.11  Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but such counterparts shall together constitute one and the same Agreement.

 

9.12  Entire Agreement; Amendments.  This Agreement, and the exhibits hereto, constitutes the entire understanding among the parties hereto with respect to the subject matter contained herein and therein and supersede any prior understandings and agreements among them respecting such subject matter.  This Agreement may be amended, supplemented, and terminated only by a written instrument duly executed by Repine, Oxis and the Company.  Each of Repine and Oxis recognizes that the liability and remedy provisions of this Agreement are material to the Agreement and have been bargained for and are reflected in the mutual promises and agreements set forth in the Agreement.

 

[remainder of page left intentionally blank]

 

  

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized officers on the date first above written.

 

_____________________

John E. Repine, M.D.

OXIS INTERNATIONAL, INC.

By:_____________________________

Name:

Title:

ERGO ARDS, LLC

By:_____________________________

Name:  John E. Repine, M.D.

Title:  Chief Executive Officer

 

 

21exh10_1.htm

 

 

Exhibit 10.1

Revolving Judgment Note And Security Agreement

 

this note contains a confession of judgment.

read it carefully.

 

 

 

	 $10,000,000 	   Philadelphia, Pennsylvania
	 	 July 7, 2011
	 	 

 

 

FOR VALUE RECEIVED, RESOURCE CAPITAL CORP., a Maryland corporation (“RCC”), and RCC REAL ESTATE, INC., a Delaware corporation (“RCC Real Estate,” together with RCC, jointly, severally and collectively, herein “Borrower”), having an office at One Crescent Drive, Suite 203, Navy Yard Corporate Center, Philadelphia, PA 19112, hereby promises to pay to the order of THE BANCORP BANK (“Bank”), at its office 1818 Market Street, 28th Floor, Philadelphia, PA 19103, or at such other place as the holder may, from time to time, designate, the sum of Ten Million Dollars ($10,000,000), lawful money of the United States of America, together with interest thereon from the date hereof at the rates hereinafter provided, and both payable as hereinafter provided (this “Note”)

 

1.           Interest Rate.

 

(a)           The principal sum outstanding under this Note from time to time hereunder shall bear interest at a rate per year equal to the Wall Street Journal Prime Rate, plus 275 basis points (2.75 percentage points).  The Wall Street Journal Prime Rate for any day is a fluctuating rate of interest equal to the highest rate published from time to time in the “Money Rates” section of The Wall Street Journal as the Prime Rate for such day (or, if such source is not available, such alternate source as reasonably determined by the Bank).

 

(b)           Unless the Expiration Date (as defined in Paragraph 2(a)) is extended by mutual agreement of Borrower and Bank, during the period commencing on the date immediately following the Expiration Date and expiring on the date on which this Note is paid in full, interest on the unpaid principal balance outstanding from time to time hereunder shall bear interest at the Default Rate (as defined in Paragraph 13 below).

 

(c)           The annual interest rate shall be calculated on the basis of a 360 day year and the actual number of days elapsed.

 

2.           Availability Period; Borrowing and Repayment Procedures.

 

(a)           This is a revolving line of credit to provide bridge financing for Borrower (“Bridge Loans”) to fund real estate loans to third parties (“Third Party Loans”) prior to the sale of such loans as part of a collateralized debt obligation (“CDO”).  During the availability period, the Borrower may repay principal amounts and reborrow them.  The availability period shall begin on the date hereof and end on June 30, 2012.  The unpaid principal balance of this Note then outstanding, together with all accrued and unpaid interest, shall become due and payable on June 30, 2012 (“Expiration Date”).

 

(b)           Prior to the Expiration Date Borrower may, in accordance with the terms of this Note, request, repay and reborrow Bridge Loans up to the principal amount of this Note.

 

(c)           Borrower shall provide Bank the documents, instruments or other items Bank may request as a condition precedent or subsequent to disbursing any Bridge Loan requested by Borrower, including payment of an amount equal to .5% of the entire principal amount ($50,000) as a one-time commitment fee for Bank.  It is agreed that Bank’s counsel fees shall be paid from the commitment fee.

 

 

  

  

  

 

(d)           Each request for a Bridge Loan must be made on the form of Request for Advance attached to this Note as Exhibit 2(d), and accompanied by (i) a summary of the Third Party Loan intended to be funded with the proceeds of the Bridge Loan and (ii) payment of an advance fee equal to .25% of the principal amount of each Bridge Loan as an advance fee for Bank.  Each Request for Advance must be made no less than four business days prior to the date of disbursement requested by Borrower for a Bridge Loan.  In no event shall the principal amount outstanding under this Note exceed 25% of the par value of the Collateral (as defined in Section 4(a) below).

 

(e)           Each Bridge Loan must be repaid by Borrower to Bank on the earlier of (i) sale of the Third Party Loan to the CDO or (ii) the fifth business day following disbursement of the Bridge Loan to Borrower.  Any Bridge Loan outstanding more than five business days will bear interest at the Default Rate (as defined in Paragraph 13 below).

 

3.           Payments of Principal and Interest.

 

(a)           Borrower shall have the right at any time to prepay all or any portion of the unpaid principal balance of this Note prior to the date otherwise due.

 

(b)           Any prepayment hereunder, whether voluntary or involuntary, shall be applied first to any accrued and unpaid interest hereunder up to the date of such prepayment, then to any other sums which may be payable to Bank under this Note up to the date of such prepayment and then to the principal sum hereunder.  The acceptance of any such prepayment when there is an event of default in existence under this Note shall not constitute a waiver, release or accord and satisfaction thereof or of any rights with respect thereto by Bank.

 

(c)           Nothing herein, nor any transaction related hereto, shall be construed or so operate as to require Borrower to pay interest at a greater rate than shall be lawful.  Should any interest or other charges paid by Borrower in connection with the obligation evidenced by this Note result in the computation or earning of interest in excess of the maximum legal contract rate of interest which is legally permitted under the laws of the Commonwealth of Pennsylvania for transactions of this kind, then any and all such excess shall be, and the same is hereby waived by Bank, and any such excess paid shall be automatically credited against and in reduction of the balance due under this indebtedness and any portion which exceeds the balance due under this Note shall be repaid by Bank to Borrower.  At maturity (or prior thereto, in the event Bank accelerates payment hereof), if the total amount of the interest paid, including any service fee, and any other charge upon the principal amount, exceeds the maximum legal contract rate permitted by law, such interest shall be recomputed and any such excess shall be credited to the principal amount due, or returned to Borrower.

 

4.           Security.

 

(a)           For good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, RCC Real Estate hereby pledges, assigns and grants to Bank a security interest and lien in the securities and the accounts described on Schedule 4(a) attached hereto (the “Debt Securities”), together with all proceeds thereof (the “Collateral”) to secure the payment of and the performance under this Note.

 

(b)           All additions to, substitutes and replacements for and proceeds of the Collateral (including all income and benefits resulting from any of the above, such as interest, premium and principal payments; redemption proceeds), which shall comprise proceeds of, the Collateral, shall be deemed Collateral, shall be held in trust for Bank.  Any cash proceeds shall be held in trust for Bank.

 

(c)           To the extent permitted by applicable law, a carbon, photographic or other reproduction of this Note or any financing statement covering the Collateral shall be sufficient as a financing statement.  Bank is authorized to file financing statements without the signature of RCC Real Estate and to execute and file such financing statements on behalf of RCC Real Estate as specified by the Pennsylvania Uniform Commercial Code (“Code”) to perfect or maintain Bank’s security interest in all of the Collateral.

 

 

  

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(d)           Contemporaneously with the execution of this Note, Borrower has executed and delivered a security control agreement with the financial institution holding the Collateral (the “Brokerage House”) pursuant to which Bank will have direction and control over the Collateral upon and following the occurrence of an event of default (beyond any and all applicable periods of notice and cure, if any) under this Note (the “Control Agreement”).

 

(e)           Borrower hereby authorizes Bank to file such financing statements as Bank may deem necessary to perfect this security interest.  Borrower agrees that Bank shall have all of the rights and remedies of a secured party under the Code, as amended from time to time, and such other rights and remedies as Bank may enjoy under the law with respect to the Collateral following an event of default (beyond any and all applicable periods of notice and cure, if any).

 

(f)           This Note shall continue in full force and effect until obligations and liabilities evidenced by this Note are paid in full and Bank is no longer obligated to extend financial accommodations to Borrower, even if, from time to time, there are no amounts outstanding respecting this Note.  The Bank must file a termination statement in accordance with Section 9-513(b) of the Code when this Note shall cease to be in full force and effect.

 

(g)           Following an event of default, upon ten calendar days’ prior notice to Borrower, which Borrower hereby acknowledges to be sufficient, commercially reasonable and proper, Bank is hereby authorized to sell or otherwise dispose of any or all of the Collateral at any time and from time to time at public or private sale, with or without advertisement thereof and apply the proceeds of any such sale first to Bank’s expenses in preparing the Collateral for sale (including reasonable attorneys’ fees), second to the complete satisfaction of the sums owed to Bank under this Note, and third, as required by the Code.  Borrower waives the benefit of any marshalling doctrine with respect to Bank’s exercise of its rights and remedies hereunder.

 

(h)           The rights, remedies, powers and privileges provided for herein shall not be deemed exclusive, but shall be cumulative and shall be in addition to all other rights, remedies, powers and privileges in Borrower’s favor at law or in equity.

 

5.           Late Charge.  If any payment of principal or interest due to Bank hereunder shall not be paid when due, Borrower shall pay Bank on demand a “late charge” computed at the rate of five cents ($.05) for each dollar (or part thereof) of the amount not paid, to cover the extra expense and inconvenience to Bank in ensuring payment of such delinquent amount.  Borrower acknowledges that its failure to pay any amount due hereunder will result in the loss of the use of the money due and frustration to Bank in meeting its loan commitments, that the damages to Bank in connection with such late payment are extremely difficult and impractical to ascertain, and that a sum equal to five cents ($.05) for each dollar which is not paid when due is a reasonable estimate of the damages incurred by Bank in connection with any such late payment.  The amount of any such “late charge” not paid promptly following demand therefor shall be deemed outstanding and payable pursuant to this Note.

 

6.           Representations and Warranties.  Borrower hereby represents and warrants to Bank (which representations and warranties shall survive until this Note has been paid in full) that:

 

(a)           Power and Authority; Authorization; Enforceability.  Borrower has full power, authority and legal right to execute, deliver and comply with the terms of this Note and, upon execution hereof, this Note shall constitute a valid and legally binding obligation of Borrower enforceable in a court of competent jurisdiction for its term.  All necessary consents and approvals of any individual, entities, governmental or regulatory authorities and securities exchanges have been obtained to effectuate the validity of this Note.

 

 

  

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(b)           Conflict; Breach.  The execution and delivery of and compliance with this Note by Borrower will not conflict with or result in a breach of any applicable law, judgment, order, writ, injunction, decree, rule or regulation of any court, administrative agency or other governmental authority, or of any agreement or other document or instrument to which Borrower is a party or by which Borrower is bound.

 

(c)           Financing Statements.  No financing statement covering the Collateral is or will be on file in any public office, except the financing statements relating to the security interest created hereby, and no security interest, other than the one created herein, has attached or been perfected in the Collateral or any part thereof.

                                                                                                                                                                                                                                    

(e)           Restrictions on Transfer of the Collateral.  The Brokerage House has been instructed not to trade, sell, or offer any of the Collateral for bids other than on the instruction of Bank or in accordance with the Control Agreement.  Without the prior consent of Bank, RCC Real Estate shall not change the Brokerage House or the foregoing instruction.  Upon execution of this Note RCC Real Estate will confirm the forgoing restrictions in writing to Brokerage House, together with a copy of this Note, and shall provide a copy of such correspondence to Bank.  

 

7.           Covenants.

 

(a)           Collateral Valuation Report.  On or prior to execution of this Note Borrower has provided to Bank a Note Valuation Report, prepared by Bank of America/Merrill Lynch CDO Trust Service, dated February 18, 2011 (the “Note Valuation Report”).  The Note Valuation Report is true, correct and accurate.  On or before the tenth day of each calendar month during the availability period under this Note Borrower must provide Bank a current/updated version of the Note Valuation Report.

 

(b)           Annual Reports.  On or prior to March 15 of each calendar year during the availability period under this Note Borrower will deliver to Bank a copy of RCC’s annual report on Form 10-K for the prior calendar year.

 

(c)           Quarterly Reports.  On or prior to 45 days following the end of each of its first three calendar quarters (i.e., prior to May 15, August 14 and November 14 of each calendar year) during the availability period under this Note Borrower will deliver to Bank a copy of RCC’s quarterly report on Form 10-Q for the prior calendar quarter.

 

(d)           Other Reports.  Promptly provide such other books, records, statements, lists of property and accounts, budgets, forecasts or reports as to either Borrower as Bank may reasonably request.

 

  

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       8.           Debt Securities.

 

(a)           The Debt Securities listed on Schedule 4(a) hereto as it may be modified and substituted from time to time (the “Rule 144/145 Securities”) are or may be deemed restricted or control securities for purposes of Rule 144 of the General Rules and Regulations under the Securities Act of 1933 (“Rule 144”) promulgated by the Securities and Exchange Commission and Rule 145 of said General Rules and Regulations (“Rule 145”).

 

(b)           With respect to the Rule 144/145 Securities listed as Item No. 1 on Schedule 4(a), RCC Real Estate has held such Rule 144/145 Securities and borne the full economic risk thereof for at least one year prior to the date of this Note.

 

(c)           Borrower further represents, warrants and covenants with Bank that all of the information set forth on Schedule 4(a)  with respect to the Rule 144/145 Securities owned by Borrower, or otherwise provided in writing by Borrower to Bank with respect thereto, including without limitation, any questionnaires submitted by Borrower with respect to the Rule 144/145 Securities, is true and correct in all material respects and Borrower has not omitted to state any material fact necessary to make such information provided not misleading.  Borrower agrees to notify Bank immediately in writing of any material change in any of the factual information set forth on Schedule 4(a) with respect to the Rule 144/145 Securities owned by Borrower and to provide an updated Schedule 4(a) upon pledge of any additional Collateral to Bank which is subject to any statutory, regulatory or contractual restriction on transfer, or as otherwise reasonably requested by Bank.  Borrower further acknowledges and agrees that to the extent that any material change in the factual information regarding the Rule 144/145 Securities owned by Borrower is deemed by Bank to materially affect Bank’s ability to sell such Collateral in a timely manner, Bank may require Borrower to provide substitute Collateral acceptable to Bank in its sole and absolute discretion and that the failure of Borrower to do so in timely manner shall constitute an event of default under this Note.

 

(d)           If (i) an event of default has occurred or may occur as a result of the sale by Borrower of any securities of the same class or convertible into the same class of securities as the Rule 144/145 Securities and any volume limitations are applicable to Borrower under Rule 144 or Rule 145 with respect to the Rule 144/145 Securities, or (ii) for any reason, the Rule 144/145 Securities shall not be available for immediate sale by or at the direction of Bank without restriction or limitation under Rule 144 without the requirement for registration under the Securities Act of 1933, as amended (the “Securities Act”), then (A) Borrower will not sell any securities of the same class or convertible into the same class of securities as the Rule 144/145 Securities, whether or not such securities are pledged hereunder, without the prior written consent of Bank (which consent may be withheld in Bank’s sole and absolute discretion), and in the event of any such sale consented to by Bank, Borrower will furnish Bank with a copy of any Form 144 filed in respect of such sale; and (B) Borrower will cause any person, party or entity with whom it shall be deemed one “person” for purposes of Rule 144(a)(2) to refrain from selling any securities of the same class or convertible into the same class of securities as the Rule 144/145 Securities, whether or not such securities are pledged hereunder, without the prior written consent of Bank (which consent may be withheld in Bank’s sole and absolute discretion), and in the event of any such sale consented to by Bank, Borrower will furnish Bank with a copy of any Form 144 filed in respect of such sale.

 

(e)           Borrower will cooperate fully with Bank with respect to any sale by Bank of any of the Rule 144/145 Securities, including full and complete compliance with all requirements of Rule 144 and/or Rule 145, and will give to Bank all information and will do all things necessary, including the execution of all documents, forms, instruments and other items, to comply with Rule 144 and/or Rule 145 for the complete and unrestricted sale and/or transfer of the Rule 144/145 Securities and will exercise its best efforts to have the issuer of any Rule 144/145 Securities, upon the request of Bank, take all such action as may be required to satisfy the public information requirements of Rule 144(c).

 

  

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(f)           Borrower will use Borrower’s best efforts, upon Bank’s written request, to obtain and publish all information necessary to satisfy Rule 144 and/or Rule 145 if any issuer of the Rule 144/145 Securities is not current in its filings under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) at the time of a foreclosure sale by Bank.

 

(g)           If any issuer of the Rule 144/145 Securities defaults in its reporting obligations under the Exchange Act, Borrower, upon request of Bank, will substitute new Collateral satisfactory to Bank in its sole and absolute discretion for such Rule 144/145 Securities.

 

(i)           The Debt Securities are freely and fully marketable by Borrower or Bank, as pledgee, without regard to any holding period, manner of sale, volume limitation, public information or notice requirement.

 

9.           Events of Default.  In addition to any other event referred to herein, the occurrence of which, by the terms hereof, constitutes an event of default hereunder, the occurrence of any one or more of the following events shall constitute an event of default hereunder:

 

(a)           Borrower shall fail to make any payment of principal and/or interest due to Bank under this Note when the same shall become due and payable, whether an installment, at maturity or by acceleration or otherwise;

 

(b)           Other than failure to make a payment required under this Note (which is an event of default under Paragraph 9(a)), Borrower shall fail to observe or perform any of the covenants or agreements on its part to be observed or performed under this Note within 30 days after written notice from Bank of such non-compliance;

 

(c)           Any representation or warranty of Borrower under this Note shall be untrue;

 

(d)           Borrower shall apply for or consent to the appointment of a receiver, trustee or liquidator of Borrower or any of Borrower’s property, admit in writing an inability to pay debts as they mature, make a general assignment for the benefit of creditors, be adjudicated a bankrupt or insolvent or file a voluntary petition in bankruptcy, or a petition or an answer seeking reorganization or an arrangement with creditors or to take advantage of any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation law or statute, or an answer admitting the material allegations of a petition filed against it or him in any proceeding under any such law, or if action shall be taken by Borrower for the purpose of effecting any of the foregoing; or

 

(e)           Any order, judgment or decree shall be entered by any court of competent jurisdiction, approving a petition seeking reorganization of Borrower or all or a substantial part of Borrower’s assets, or appointing a receiver, sequestrator, trustee or liquidator of Borrower or any of Borrower’s property, and such order, judgment or decree shall continue unstayed and in effect for any period of 90 days.

 

10.           Remedies.

 

(a)           Upon the occurrence of any event of default, then the entire unpaid principal sum hereunder plus all interest accrued thereon plus all other sums due and payable to Bank under this Note shall, at the option of Bank, become due and payable immediately without presentment, demand, notice of nonpayment, protest, notice of protest or other notice of dishonor, all of which are hereby expressly waived by Borrower.

 

(b)           In addition to the foregoing, upon the occurrence of any event of default, Bank may forthwith exercise singly, concurrently, successively or otherwise any and all rights and remedies available to Bank under this Note or available to Bank by at law, in equity, under statute or otherwise.

 

 

  

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11.           CONFESSION OF JUDGMENT.  the following paragraphs set forth warrants of authority for an attorney to confess judgment against borrower.  in granting this right to confess judgment against borrower, borrower hereby knowingly, intentionally, voluntarily and irrevocably and, on the advice of the separate counsel of borrower, unconditionally waives any and all rights borrower had or may have to prior notice and an opportunity for hearing under the respective constitutions and laws of the united states and the commonwealth of pennsylvania.

 

 

to further secure payment of this note and whether or not borrower is in default hereunder, borrower hereby knowingly, intentionally, voluntarily and irrevocably authorizes and empowers bank, by its attorney, or by the prothonotary or clerk of any court of record in the commonwealth of pennsylvania or in any jurisdiction where permitted by law, to appear for borrower and confess and enter judgment against borrower in favor of bank in any jurisdiction in which borrower or any of its property is located for the amount of all obligations, together with costs of suit and other costs and expenses of collection (including reasonable attorneys’ fees of the greater of five percent (5%) of the principal amount then due or $1,000), with or without declaration, without stay of execution and with release of all procedural errors and the right to issue execution forthwith, and also waives the right of inquisition of any real estate levied on, voluntarily condemns the same, authorizes the prothonotary or clerk to enter the writ of execution of said voluntary condemnation, agrees that said real estate may be sold on a writ of execution; and also waives and releases all relief from any and all appraisement, stay or exemption law of any state now in force or enacted in the future. 

 

           if a copy of this note, verified by affidavit of bank or someone on bank’s behalf, has been filed in such action, it will not be necessary to file the original note as a warrant of attorney.  the authority and power to appear for and enter judgment against borrower will not be exhausted by the initial exercise of the authorized power, and the power may be exercised from time to time as often as bank deems necessary or desirable to fully collect all obligations of borrower hereunder, and this instrument will be a sufficient warrant, any rule of court, custom or practice to the contrary notwithstanding.   

 

by signing this note, borrower acknowledges that it has read, understood and agreed to the provisions which may result in a court judgment against borrower, and the seizure of borrower’s assets, without prior notice or hearing, and that this note may be collected from borrower regardless of any claim borrower may now or in the future have against bank. 

 

           borrower has been advised by its legal counsel, or has been afforded the opportunity to be advised by its legal counsel, in connection with the execution and delivery of this note and the transactions contemplated hereby, including the confession of judgment pursuant to the warrant of attorney set forth above.    

 

           borrower understands that the effect of the foregoing will include the entry of a judgment against borrower prior to any default by borrower hereunder, entitling bank to execute on and seize assets of borrower, including real estate, without further notice to borrower and without affording borrower the opportunity to participate in any hearing. 

 

borrower understands and intends these results, hereby knowingly, voluntarily and freely waiving any and all due process rights or other rights to object

thereto and releasing any and all claims against bank or any other person or entity acting by, through or on behalf of bank for any action taken under or pursuant to this note.  

 

  

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12.           Remedies Cumulative, etc.

 

(a)           No right or remedy conferred upon or reserved to Bank hereunder or now or hereafter existing at law or in equity or by statute or other legislative enactment, is intended to be exclusive of any other right or remedy, and each and every such right or remedy shall be cumulative and concurrent, and shall be in addition to every other such right or remedy, and may be pursued singly, concurrently, successively or otherwise, at the sole discretion of Bank, and shall not be exhausted by any one exercise thereof but may be exercised as often as occasion therefor shall occur.  No act of Bank shall be deemed or construed as an election to proceed under any one such right or remedy to the exclusion of any other such right or remedy; furthermore, each such right or remedy of Bank shall be separate, distinct and cumulative and none shall be given effect to the exclusion of any other.  The failure to exercise or delay in exercising any such right or remedy, or the failure to insist upon strict performance of any term of this Note, shall not be construed as a waiver or release of the same, or of any event of default thereunder, or of any obligation or liability of Borrower thereunder.

 

(b)           Borrower hereby waives presentment, demand, notice of nonpayment, protest, notice of protest or other notice of dishonor, and any and all other notices in connection with any default in the payment of, or any enforcement of the payment of, all amounts due under this Note.  To the extent permitted by law, Borrower waives the right to any stay of execution and the benefit of all exemption laws now or hereafter in effect.  Borrower further waives and releases all procedural errors, defects and imperfections in any proceedings instituted by Bank under the terms of this Note.

 

(c)           Borrower agrees that Bank may release, compromise, forbear with respect to, waive, suspend, extend or renew any of the terms of this Note (and Borrower hereby waives any notice of any of the foregoing), and that Bank may resort to any Collateral in such order and manner as it may think fit, or accept the assignment, substitution, exchange, pledge or release of all or any portion of any Collateral, for such consideration, or none, as it may require, without in any way affecting the validity of any liens over or other security interest in the remainder of any such Collateral (or the priority thereof or the position of any subordinate holder of any lien or other security interest with respect thereto); and any action taken by Bank pursuant to the foregoing shall in no way be construed as a waiver or release of any right or remedy of Bank, or of any event of default, or of any liability or obligation of the Borrower, under this Note.

 

(d)           Borrower agrees that any action or proceeding against it to enforce the Note may be commenced in state or federal court in the Commonwealth of Pennsylvania and Borrower irrevocably consents to the exclusive jurisdiction of such courts (and of the appropriate appellate courts) in any such action or proceeding and irrevocably waives any objection based upon inconvenience of the forum or otherwise to venue laid therein.  Notwithstanding the foregoing, nothing in this Paragraph is intended to prevent Bank from instituting an action in any jurisdiction for the sole and exclusive purpose of enforcing a judgment by a court in the jurisdictions referred to in the preceding sentence.

 

(e)           Borrower waives personal service of process and agrees that a summons and complaint commencing an action or proceeding in any such court shall be properly served if served by registered or certified mail in accordance with the notice provisions set forth herein and Borrower expressly waives any and all defenses to an exercise of personal jurisdiction by any such court.

 

(f)           Borrower hereby knowingly, voluntarily and intentionally waives the right it may have to a trial by jury in respect of any litigation based hereon, arising out of, under or in connection with this Note, or any course of conduct, course of dealing, statements (whether verbal or written) or actions of Borrower or Bank.  This provision is a material inducement for Bank entering into this Note.

 

 

  

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13.           Default Rate.  Following the occurrence of any event of default (beyond any and all applicable periods of notice and cure, if any) and until the principal sum of then outstanding under this Note and all other sums payable under this Note are paid in full, the principal sum outstanding hereunder shall bear interest at the rate of five percent (5%) (i.e., 500 basis points) in excess of the interest rate provided in Paragraph 1(a) (the “Default Rate”).

 

14.           Costs and Expenses.  Following the occurrence of any event of default (beyond any and all applicable periods of notice and cure, if any), Borrower shall pay upon demand all reasonable costs and expenses (including all reasonable amounts paid to attorneys, accountants, brokers and other advisors employed by Bank and/or to any contractors for labor and materials), incurred by Bank in the exercise of any of its rights, remedies or powers under this Note with respect to such event of default, and any amount thereof not paid promptly following demand therefor shall be added to the principal sum hereunder and shall bear interest at the Default Rate from the date of such demand until paid in full.  In connection with and as part of the foregoing, in this Note is placed in the hands of an attorney for the collection of any sum payable thereunder, Borrower agrees to pay reasonable attorneys’ fees for the collection of the amount being claimed under this Note, as well as all costs, disbursements and allowances provided by law.

 

15.           Stamp Taxes, etc.  Borrower shall pay the cost of any revenue, tax or other stamps now or hereafter required by the laws of the Commonwealth of Pennsylvania or the United States to be affixed to this Note and Borrower shall pay or reimburse Bank upon demand the amount of such taxes without credit against any indebtedness by this Note.  If Borrower does not or may not do so, Bank may at its option accelerate the indebtedness evidenced by this Note to maturity as in the case of default by Borrower.

 

16.           Severability.  In the event that for any reason one or more of the provisions of this Note or their application to any person or circumstance shall be held to be invalid, illegal or unenforceable in any respect or to any extent, such provisions shall nevertheless remain valid, legal and enforceable in all such other respects and to such extent as may be permissible.  In addition, any such invalidity, illegality or unenforceability shall not affect any other provisions of this Note, but this Note shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein.

 

17.           Successors and Assigns.  This Note inures to the benefit of Bank and binds Borrower, and their respective successors and assigns, as applicable, and the words “Bank” and “Borrower” whenever occurring herein shall be deemed and construed to include such respective successors and assigns, as applicable.

 

18.           Notices.

 

(a)           All notices required to be given to any of the parties hereunder shall be in writing and shall be deemed to have been sufficiently given for all purposes when presented personally to such party or sent by recognized overnight courier or certified or registered mail, return receipt requested, as follows: (a) if to Borrower, at the address set forth in the initial Paragraph of this Note, Attention:  David Bryant, and (b) if to Lender, at the address set forth herein, Attention: Brian R. Ford Jr.

 

(b)           Such notice shall be deemed to be given when received if delivered personally, or two days after the date mailed if sent by recognized overnight courier or certified or registered mail, return receipt requested.  Any notice of any change in such address shall also be given in the manner set forth above.  Whenever the giving of notice is required, the giving of such notice may be waived in writing by the party entitled to receive such notice.

 

19.           Definitions; Number and Gender.  In the event Borrower consists of more than one entity, the obligations and liabilities hereunder of each of such entities shall be joint and several and the word “Borrower” shall mean all or some or any of them.  For purposes of this Note, the singular shall be deemed to include the plural and the neuter shall be deemed to include the masculine and feminine, as the context may require.

 

 

  

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20.           Captions.  The captions or headings of the paragraphs in this Note are for convenience only and shall not control or affect the meaning or construction of any of the terms or provisions of this Note.

 

21.           Governing Law.  This Note, to the fullest extent permissible, shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania.

 

22.           Additional Documents. Borrower shall sign and deliver any papers furnished by Bank which are necessary or desirable in the judgment of Bank to obtain, maintain and perfect the security interest created hereunder and to enable Bank to comply with any federal or state law in order to obtain or perfect Bank’s interest in the Collateral or to obtain proceeds of the Collateral.

 

IN WITNESS WHEREOF, and intending to be legally bound, the undersigned hereto has executed this Note and Security Agreement as an instrument under seal on the day and year first written above.

 

BORROWER:

 

RESOURCE CAPITAL CORP.

 

By: /s/ David J. Bryant                                                     (SEAL)

Name:  David J. Bryant 

Title:     SVP & CFO                                                                

 

 

RCC REAL ESTATE, INC.

 

By: /s/ David J. Bryant                                                     (SEAL)

Name:  David J. Bryant 

Title:     SVP & CFO                                                                

 

 

	
THE BANCORP BANK

 

	
By:  /s/ Daniel Sacho

	 

	
Name:  Daniel Sacho

	 

	
Title:     EVP

	 

 

 

  

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Exhibit 2(d)

Request for Credit Form

 

REQUEST FOR ADVANCE*

(No. ____)

 

Resource Capital Corp. and RCC Real Estate, Inc. ( collectively, “Borrower”), in connection with that certain Revolving Judgment Note and Security Agreement (the “Note”) dated July 7, 2011 entered into between The Bancorp Bank (“Bank”) and Borrower, hereby certifies to and requests Bank as follows:

 

(a)             Prior Advances.  As of the date hereof, Borrower has requested and received advances against the Note in the cumulative amount of $________________, which said sum was used solely for making real estate secured loans to unrelated third parties.  Borrower acknowledges and confirms that the maximum amount that may be advanced under the Note is Ten Million Dollars ($10,000,000).

 

(b)             Request to Bank for Advance.  Pursuant to the terms of the Note, Borrower hereby requests Bank to make an advance against the Note in the amount of $_____________.

 

(c)             Additional Documentation.  Pursuant to Section 2(e) of the Note, Borrower attached to this Request for Advance is a true and correct summary of the terms of the Third Party Loan, including the identity of the borrower thereunder and the location of the real property securing the Third Party Loan, that will be funded by the Bridge Loan.

 

(d)             Representations.  Borrower hereby represents to Bank that (i) all funds advanced to Borrower under the Note have been used solely to fund Third Party Loans, (ii) all funds requested under this Request for Advance will be used solely to fund Third Party Loans, (iii) all of the representations and warranties of Borrower contained in the Note continue to be true and correct, (iv) there has been no material adverse change in or to Borrower since July 7, 2011, and (v) no event of default exists or is reasonably likely to occur under the Note.

 

RESOURCE CAPITAL CORP.

 

By: ________________________                                                  (SEAL)

Name:  _____________________

Title:   ______________________                                                             

 

 

RCC REAL ESTATE, INC.

                                  

                               By: ________________________                                                  (SEAL)

                                                       Name:  _____________________

                                                                                   Title:   ______________________                                                             

  

* All terms used in this Request for Advance shall have the meanings given to such terms in the Note.

 

 

  

  

  

 

Schedule 4(a)

 

LIST OF COLLATERAL

 

Date Note Purchased                                               Class/CDO Tranche (CDO Name)                                                                CUSIP          Par Value

 

1.           2-26-2010                                              Class A-1 (RREF CDO 2006-1)                                                                76122VAA2                      $20,000,000.00

 

2.           7-14-2010                                                              Class A-1 (RREF CDO 2006-1)                                                                76122VAA2                      $20,000,000.00

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