Document:

oxbt_ex102.htm

Exhibit 10.2

 

SECOND AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT

 

THIS SECOND AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”), is made as of November 13, 2013 (the “Effective Date”) by and between Oxygen Biotherapeutics, Inc., a Delaware corporation, with its principal place of business in North Carolina (the “Company”), and Michael B. Jebsen (the “Executive”).

 

W I T N E S S E T H:

 

WHEREAS, the Executive is currently employed by the Company as Chief Financial Officer pursuant to an Amended and Restated Employment Agreement dated May 19, 2011 (the “Prior Agreement”); and

 

WHEREAS, the Company and the Executive desire to continue their employment relationship with respect to the Executive’s position as Chief Financial Officer, and desire to amend and restate the Prior Agreement by entering into this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing, of the mutual promises herein, and of other good and valuable consideration, the receipt and sufficiency of which the parties acknowledge, the Company and the Executive agree as follows:

1. Employment.  The Company hereby employs the Executive and the Executive hereby accepts employment as Chief Financial Officer of the Company upon the terms and conditions of this Agreement.

 

2. Duties.  The Executive will have such authority, and will faithfully perform all of the duties, normally associated with the position of Chief Financial Officer, including but not limited to all duties set forth in this Agreement, and all additional duties consistent with such position that are reasonably prescribed from time to time by the Board of Directors of the Company (the “Board”). The Executive shall devote such business time and attention as reasonably necessary to perform his duties and responsibilities on behalf of the Company and in furtherance of its best interests; provided, however, that he, subject to his obligations hereunder, shall be permitted to make personal investments, perform reasonable volunteer services and serve on the boards of directors (or similar governing bodies) of nonprofit entities and/or for profit entities that are not in competition with the Company. The Executive shall comply with all Company policies, standards, rules and regulations (the “Company Policies”) as may exist from time-to-time and all applicable government laws, rules and regulations that are now or hereafter in effect.

 

3. Term.  Unless earlier terminated as provided herein, the initial term of this Agreement shall commence on the Effective Date and shall continue until the one-year anniversary of the Effective Date (the “Initial Term”).  After the Initial Term, this Agreement shall automatically renew for successive one-year terms on the same terms and conditions set forth herein unless:  (a) earlier terminated or amended as provided herein; or (b) either party gives the other written notice of non-renewal at least ninety (90) days prior to the end of the Initial Term or any renewal term of this Agreement, in which case, this Agreement shall terminate on the expiration of the then-current Term.  The Initial Term of this Agreement and all applicable renewals thereof are referred to herein as the “Term.”

 

4. Compensation.  During the Term, as compensation for the services rendered by the Executive under this Agreement, the Executive shall be entitled to receive the following (all payments are subject to applicable withholdings):

 

(a) Base Salary.  The Executive shall receive an annual salary of Two Hundred and Eighty Five Thousand and 00/100 Dollars ($285,000) (less applicable withholdings) (“Base Salary”) payable in accordance with the payroll policies of the Company as such policies may exist from time to time or as otherwise agreed upon by the parties.  The Board shall review, on an annual basis, the Executive’s salary and may increase or decrease such salary as the Board deems appropriate; provided, however, that any decrease shall only be effective if it is a result of an across-the-board decrease affecting all senior executives as a group.

 

(b) Bonuses.  Each fiscal year during the Term, the Executive shall be entitled to an annual bonus the amount of which is based on percentage achievement of annual goals set by the Company, after consultation with the Executive, at the beginning of each fiscal year for such fiscal year (“Annual Bonus”), which achievement shall be determined as of the last day of such fiscal year.  If the Executive achieves one hundred percent (100%) of the annual goals, the Annual Bonus shall be fifty percent (50%) of his Base Salary (“Target Bonus”).  There is no cap on the Annual Bonus for exceeding one hundred percent (100%) of annual goals; for example, an achievement of two hundred percent (200%) of annual goals would result in an Annual Bonus equal to one hundred percent (100%) of his Base Salary.  The Annual Bonus shall be paid in accordance with the Company’s regular bonus payment procedures, and, in all events, will be paid no later than sixty (60) days following the end of the fiscal year in which the Annual Bonus was earned.  Except as otherwise set forth in Section 5(d)(ii)(C), in order to be eligible to receive the Annual Bonus, the Executive must be employed by the Company on the last day of the fiscal year in which the Annual Bonus was earned.

 

  

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(c) Benefits.  The Executive shall be entitled to receive those benefits provided from time to time to other executive employees of the Company, in accordance with the terms and conditions of the applicable plan documents, provided that the Executive meets the eligibility requirements thereof.  All such benefits are subject to amendment or termination from time to time by the Company without the consent of the Executive or any other employee of the Company.

 

(d) Car Allowance.  The Executive shall be entitled to Eight Hundred and 00/100 Dollars ($800.00) per month for expenses incurred for the Executive’s use and maintenance of an automobile used, in part, by the Executive in the course of his employment hereunder.

 

(e) Business Expenses.  The Company shall pay, or reimburse the Executive for, all reasonable expenses incurred by the Executive directly related to conduct of the business of the Company; provided that the Executive complies with the Company’s policies for the reimbursement or advancement of business expenses that are now or hereafter in effect.  The Company shall provide such payments or reimbursements within thirty (30) days following the Executive’s incurrence of the expense.

 

(f) Option Award. As soon as practicable following approval by the Company’s stockholders of an amendment to the Company’s 1999 Amended Stock Plan, as amended and restated June 17, 2008 and as further amended from time to time (the “Plan”), to increase the number of shares authorized for issuance thereunder to at least 4,000,000 (the “Share Increase”), the Executive shall receive a nonstatutory stock option entitling the Executive to purchase up to 893,220 shares of Company Common Stock (the “Option”) at the fair market value as of the date of grant as determined by the Board in its sole discretion.  For the avoidance of doubt, the Option will not be granted unless and until the stockholders and the Board approve the Share Increase. The terms and conditions, including vesting, for the Option will be set forth in a Nonstatutory Stock Option Agreement between the Executive and the Company in the form set forth on Exhibit A.

 

(g) Restricted Stock Awards. The Executive shall be entitled to receive on or about the first day of each fiscal year of the Company: (i) Two Hundred and Fifty (250) shares of restricted common stock of the Company, which shall vest in approximately equal monthly installments over a 12-month period, and (ii) if the Executive is then serving as the Treasurer of the Company, One Hundred and Eighty (180) shares of restricted common stock of the Company, of which Fifteen (15) shares shall vest each month (in the 12-month period following the date of grant) during which the Executive served as the Treasurer of the Company, each such award to be issued under the Plan in accordance with the terms of the Company’s standard Restricted Stock Agreement.

 

5. Termination and Obligations of the Company upon Termination.  This Agreement and the Executive’s employment by the Company shall or may be terminated, as the case may be, as set forth below.

 

(a) Termination upon Expiration of the Term.  This Agreement and the Executive’s employment by the Company shall terminate upon the expiration of the Term.

 

(b) Termination by the Executive.  The Executive may terminate this Agreement and his employment with the Company as follows:

 

(i) Voluntary Resignation.  For any reason other than Good Reason thirty (30) days after written notice of the Executive’s resignation is received by the Company (“Voluntary Resignation”).

 

(ii) For Good Reason.  For purposes of this Agreement, the Executive’s termination of his employment will be deemed to have been for “Good Reason” if the Executive resigns within six (6) months after any of the following conditions having arisen without his prior written consent and after having given the Company written notice of the existence of such condition within ninety (90) days of the Executive’s knowledge of the existence of the condition and providing the Company with thirty (30) days to remedy the condition:

 

	
(A)  

	
a material diminution in the Executive’s base salary;

 

	
(B)  

	
a material diminution in the Executive’s authority, duties, or responsibility by the assignment to him of authority, duties, or responsibilities materially inconsistent with his position as Chief Financial Officer. Such material diminution shall include, without limitation, the termination and/or material reduction of the Executive’s staff reporting and available to the Executive without his express written consent;

 

	
(C)  

	
the Executive’s place of employment is relocated by more than fifty (50) miles; or

 

	
(D)  

	
any breach by the Company of any material provision of this Agreement or any other written agreement with the Executive.

 

  

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(c) Termination by the Company.  The Company may terminate this Agreement and the Executive’s employment by the Company immediately upon written notice to the Executive (or his personal representative):

 

(i) Without Cause.  At any time and for any reason other than reasons set forth in Sections 5(c)(ii) (Death), (iii) (Disability) or (iv) (Cause) (“Without Cause”);

 

(ii) Death.  Upon the death of the Executive, in which case this Agreement shall terminate immediately; provided that, such termination shall not prejudice any benefits payable to the Executive’s spouse or beneficiaries which are fully vested as of the date of death (“Death”);

 

(iii) Disability.  If the Executive is “permanently disabled” (as defined herein), in which case this Agreement shall terminate immediately; provided that, such termination shall not prejudice any benefits payable to the Executive, the Executive’s spouse or beneficiaries which are fully vested as of the date of the termination of this Agreement.  For purposes of this Agreement, the Executive shall be considered “permanently disabled” when a qualified medical doctor mutually acceptable to the Company and the Executive or the Executive’s personal representative shall have certified in writing that the Executive has been unable, because of a medically determinable physical or mental disability, to perform substantially all of the Executive’s duties, with or without a reasonable accommodation, for more than one hundred eighty (180) calendar days measured from the last full day of work (“Disability”);

 

(iv) For “Cause”.  The term “Cause”, as used herein, shall mean:

 

	
  

	
(A)

	
Any willful material breach of the terms of this Agreement, or of any other written agreement with the Executive, by the Executive, which breach is not cured by the Executive within thirty (30) days after the Company provides the Executive with written notice specifying the nature of such breach;

 

	
  

	
(B)

	
The Executive’s material misappropriation of the Company’s tangible or intangible property, or material and intentional breach of the Confidentiality Agreement (provided, however, that for this purpose, the Executive will not be deemed to have breached the Confidentiality Agreement in connection with any disclosure made pursuant to a court order, subpoena or other legal obligation);

 

	
  

	
(C)

	
The Executive’s material failure to comply with the Company Policies or any other reasonable policies and/or directives of the Board, which failure is not cured by the Executive within thirty (30) days after the Company provides the Executive with written notice specifying the nature of such failure;

 

	
  

	
(D)

	
The Executive’s abuse of illegal drugs or any illegal substance, or the Executive’s abuse of alcohol in any manner that materially interferes with the performance of the Executive’s duties under this Agreement;

 

	
  

	
(E)

	
Any dishonest or illegal action (including, without limitation, embezzlement) by the Executive which is detrimental to the interest and well-being of the Company, including, without limitation, harm to its reputation; or

 

	
  

	
(F)

	
The Executive’s failure to disclose any conflict of interest known to the Executive that the Executive may have with the Company in a transaction between the Company and any third party which failure is detrimental to the interest and well-being of the Company.

 

(d) Obligations upon Termination.

 

(i) Upon the termination of this Agreement and the Executive’s employment with the Company pursuant to the expiration of the Term following the Executive’s notice of non-renewal pursuant to Section 3, by the Executive pursuant to Section 5(b)(i) (Voluntary Resignation), or by the Company pursuant to Section 5(c)(ii) (Death), (iii) (Disability) or (iv) (Cause), the Company shall have no further obligations hereunder other than the payment of all compensation and other benefits payable to the Executive (or his estate or heirs) through the date of such termination in accordance with the Company’s normal payroll cycle and terms of the applicable benefit plans and programs in existence at the time the Executive’s employment is terminated.

 

  

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(ii) Upon termination of this Agreement and the Executive’s employment with the Company by the Company pursuant to Section 5(c)(i) (Without Cause), upon expiration of the Term following the Company’s notice of non-renewal pursuant to Section 3, or by the Executive pursuant to Section 5(b)(ii) (Good Reason), the Executive shall be entitled to the following,  with those benefits described in Sections 5(d)(ii)(B), (C) and (D) specifically conditioned upon Executive’s execution and nonrevocation of a valid release under Section 6 and compliance with his obligations under Section 7:

 

	
(A)  

	
payment of all compensation and other benefits payable to the Executive through the date of such termination in accordance with the Company’s normal payroll cycle and terms of the applicable benefit plans and programs in existence at the time the Executive’s employment is terminated;

 

	
(B)  

	
payment of an amount equal to twelve (12) months of his then current Base Salary (less applicable withholdings), payable in a lump sum on the sixtieth (60th) day following the date of the Executive’s separation from service (the “Severance Payment Date”);

 

	
(C) 

	
a lump sum payment in an amount equal to the Target Bonus for the fiscal year in which such termination occurred, multiplied by a fraction, the numerator of which is the number of days during which the Executive was employed by the Company in the fiscal year of his termination and the denominator of which is 365 (less applicable withholdings), with such payment to be made on the Severance Payment Date; and

 

	
(D) 

	
reimbursement for premium payments the Executive makes under the Consolidated Budget Reconciliation Act (“COBRA”) to continue the Executive and, if applicable, the Executive’s family’s health insurance coverage under the Company’s group health insurance plan for twelve (12) months from the date of termination.  Reimbursements for COBRA premium payments shall begin on the Severance Payment Date and shall be made as soon as possible following the Executive’s submission to the Company of proof of timely payments, but not later than thirty (30) days after the Executive’s submission of proof of timely payments; provided, however, all such claims for reimbursement shall be submitted by the Executive and paid by the Company no later than fifteen (15) months following the termination of the Executive’s employment.  Any obligation for the Company to make payments for COBRA reimbursement under this Agreement shall immediately cease when the Executive becomes eligible for health insurance from a subsequent employer, and the Executive shall promptly notify the Company of such subsequent eligibility.  If the Executive desires COBRA coverage, the Executive shall bear full responsibility for applying for COBRA coverage and nothing herein shall constitute a guarantee of COBRA benefits.  Under no circumstances will the Executive be entitled to a cash payment or other benefit in lieu of reimbursements for the actual costs of premiums for COBRA continuation hereunder.  The amount of expenses eligible for reimbursement during any calendar year shall not be affected by the amount of expenses eligible for reimbursement in any other calendar year.

 

6. Release of Claims.  Notwithstanding any provision of this Agreement to the contrary (other than the last sentence of this Section 6), the Company’s obligation to provide the payments and benefits under Section 5(d)(ii)(B),(C) and (D) of this Agreement is conditioned upon the Executive’s execution and non-revocation of an enforceable release of claims and his compliance with his obligations under Section 7 of this Agreement.  If the Executive chooses not to execute such a release, timely revokes his execution of the release, or fails to comply with his obligations under Section 7 of this Agreement, then the Company’s obligation to compensate him ceases upon the termination of his employment except as to amounts due at the time pursuant to Section 5(d)(ii)(A).  The Company shall provide the release of claims to the Executive within seven (7) days of his separation from service, and the Executive must execute it within the time period specified in the release (which shall not be longer than forty five (45) days from the date of receipt).  Such release shall not be effective until any applicable revocation period has expired.

 

7. Confidential Information and Competitive Business Activities.  The Executive acknowledges that by virtue of his employment and position with the Company, he has or will have access to confidential information of the Company, including valuable information about its business operations and entities with which it does business in various locations, and has developed or will develop relationships with parties with whom it does business in various locations. The Executive also acknowledges that the confidential information provisions set forth in the Employee Non-Disclosure and Invention Assignment Agreement executed by the Executive on January 14, 2010 (the “Confidentiality Agreement”), and the Competitive Business Activities provisions set forth in this Agreement, are reasonably necessary to protect the Company’s legitimate business interests, are reasonable as to the time, territory and scope of activities which are restricted, do not interfere with public policy or public interest and are described with sufficient accuracy and definiteness to enable him to understand the scope of the restrictions imposed on him.

 

(a) Competitive Business Activities.  During his employment and for a period of one (1) year following the termination of his employment (regardless of the reason for termination), the Executive will not engage in the following activities:

 

(i) on the Executive’s own or on another’s behalf, whether as an officer, director, stockholder, partner, associate, owner, employee, consultant or in any other individual or representative or participating capacity, compete with the Company within the Restricted Territory, as defined below, in the development, manufacture, marketing, distribution, sale of, or research directed to, any product, service, or technology that the Company is developing, manufacturing, marketing, distributing, or selling, or to which the Company is directing research during the Term hereof; provided that the foregoing restriction shall only apply to the extent that the Executive participated in the same or substantially similar activities during the Executive’s employment with the Company.  As of the date of this Agreement, the Company is researching, developing, manufacturing, marketing, distributing, and selling products focused on (1) the delivery of oxygen to tissue including its current products, Oxycyte, Dermacyte, and Wundecyte and (2) the treatment of low cardiac output syndrome, including its current product, levosimendan (Simdax);

 

  

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(ii) within the Restricted Territory, be employed, or otherwise engaged, in (x) a management capacity, (y) other capacity providing the same services which the Executive provided to the Company, or (z) any capacity connected with competitive business activities, or with respect to which it would be reasonably anticipated that Employee would use, or rely upon Confidential Information for any person or entity that competes with the Company;

 

(iii) solicit customers or prospective customers of the Company with whom the Executive had contact during the last twelve (12) months of his employment by the Company for the purpose of providing any service or selling any product that is competitive with the Company; or

 

(iv) offer employment to or otherwise solicit for employment any employee who has voluntarily terminated employment with the Company and who was employed by the Company during the last twelve (12) months of the Executive’s employment with the Company.

 

The restrictions set forth in Sections 7(a)(i) and (ii) apply to the following geographical areas (the “Restricted Territory”):  the continental United States; any state, including the District of Columbia, in which the Company is engaged in business; the State of North Carolina; a 100 mile radius of the Executive’s principal place of employment with the Company; within a 100 mile radius of the Company’s corporate headquarters in Morrisville, North Carolina.

Notwithstanding the foregoing, the Executive’s ownership, directly or indirectly, of not more than one percent (1%) of the issued and outstanding stock of a company the shares of which are regularly traded on a national securities exchange or in the over-the-counter market shall not violate Section 7(a).

(b) Remedies.  The Executive acknowledges that his failure to abide by the Competitive Business Activities provisions of this Agreement would cause irreparable harm to the Company for which legal remedies would be inadequate.  Therefore, in addition to any legal or other relief to which the Company may be entitled by virtue of the Executive’s failure to abide by the provisions set forth in Section 7(a): (i) the Company will be released of its obligations under this Agreement to make any post-termination payments; (ii) the Company may seek legal and equitable relief, including but not limited to preliminary and permanent injunctive relief, for the Executive’s actual or threatened failure to abide by these provisions; (iii) the Executive will return all post-termination payments received pursuant to this Agreement; and (iv) the Executive will indemnify the Company for all reasonable and documented expenses, including attorneys’ fees, incurred by it in successfully enforcing these provisions.  In the event that the Company exercises its right to discontinue payments under this provision and/or the Executive returns all post-termination payments received pursuant to this Agreement, the Executive shall remain obligated to abide by the Competitive Business Activities provisions set forth in this Agreement.

 

(c) Tolling.  The period during which the Executive must refrain from the activities set forth in Sections 7(a) shall be tolled during any period in which he fails, as determined by a court of competent jurisdiction, to abide by these provisions.

 

8. Representations and Warranties.

 

(a) The Executive represents and warrants to the Company that the Executive’s performance of this Agreement and as an employee of the Company does not and will not breach any noncompetition agreement or any agreement to keep in confidence proprietary information acquired by the Executive in confidence or in trust prior to the Executive's employment by the Company.  The Executive represents and warrants to the Company that the Executive has not entered into, and agrees not to enter into, any agreement that conflicts with or violates this Agreement.

 

(b) The Executive represents and warrants to the Company that the Executive has not brought and shall not bring with the Executive to the Company, or use in the performance of the Executive's responsibili­ties for the Company, any materials or documents of a former employ­er which are not generally available to the public or which did not belong to the Executive prior to the Executive’s employment with the Company, unless the Executive has obtained written authorization from the former employer or other owner for their possession and use and provided the Company with a copy thereof.

 

  

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9. Notices.  All notices, requests, consents, approvals, and other communications to, upon, and between the parties shall be in writing and shall be deemed to have been given, delivered, made, and received when:  (a) personally delivered; (b) deposited for next day delivery by Federal Express, or other similar overnight courier services; (c) transmitted via telefacsimile or other similar device to the attention of the Company’s Chief Executive Officer with receipt acknowledged; or (d) three (3) days after being sent or mailed by certified mail, postage prepaid and return receipt requested, addressed as follows:

 

	
If to the Company:

	  
	
Oxygen Biotherapeutics, Inc.

Attn: Chief Executive Officer

	
One Copley Parkway

	
Suite 490

	
Morrisville, NC  27560

	  
	
If to the Executive:

	  
	
Michael Jebsen

10004 Hidden Vale Drive

Raleigh, NC 27614

 

10. Indemnification, Liability Insurance. The Company shall indemnify and hold the Executive harmless to the fullest extent permitted by the laws of the Company’s state of incorporation in effect at the time against and in respect of any and all actions, suits, proceedings, claims, demands, judgments, costs, expenses (including advancement of reasonable attorney’s fees), losses, and damages resulting from the Executive’s performance of the Executive’s duties and obligations with the Company.  The Executive will be entitled to be covered, both during and, while potential liability exists, by the insurance policies that the Company maintains generally for the benefit of officers and directors of the Company against all costs, charges and expenses incurred in connection with any action, suit or proceeding to which the Executive may be made a party by reason of being an officer or director of the Company in the same amount and to the same extent as the Company covers its other officers and directors.  These obligations shall survive the termination of the Executive’s employment with the Company.

 

11. Effect/Assignment.  This Agreement shall be binding on and inure to the respective benefit of the Company and its successors and assigns and the Executive and his personal representatives.  The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation, reorganization or otherwise) to all or substantially all of the business or assets of the Company, within fifteen (15) days of such succession, expressly to assume and agree to perform this Agreement in the same manner and to the same extent as the Company would be required to perform if no such succession had taken place.  The Executive may not assign this Agreement or delegate his obligations hereunder. As used in this Agreement, “Company” shall mean the Company and any such successor which assumes and agrees to perform the duties and obligations of the Company under this Agreement by operation of law or otherwise.

 

12. Entire Agreement.  Except as expressly provided in this Agreement and except for the Confidentiality Agreement, this Agreement:  (i) supersedes all other understandings and agreements, oral or written, between the parties with respect to the subject matter of this Agreement; and (ii) constitutes the sole agreement between the parties with respect to this subject matter.  Each party acknowledges that: (A) no representations, inducements, promises or agreements, oral or written, have been made by any party or by anyone acting on behalf of any party, which are not embodied in this Agreement; and (B) no agreement, statement or promise not contained in this Agreement shall be valid.  No change or modification of this Agreement shall be valid or binding upon the parties unless such change or modification is in writing and is signed by the parties.

 

13. Severability.  If a court of competent jurisdiction holds that any provision or sub-part thereof contained in this Agreement is invalid, illegal or unenforceable, that invalidity, illegality or unenforceability shall not affect any other provision in this Agreement.

 

14. Amendment and Waiver.  No provision of this Agreement, including the provisions of this Section, may be amended, modified, deleted, or waived in any manner except by a written agreement executed by the parties. Further, the Company’s or the Executive’s waiver of any breach of a provision of this Agreement shall not waive any subsequent breach by the other party.

 

  

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15. Governing Law.  This Agreement and the employment relationship created by it shall be governed by North Carolina law without giving effect to North Carolina choice of law provisions.

 

16. Consent to Jurisdiction and Venue.  Each of the parties agrees that any suit, action, or proceeding arising out of this Agreement may be instituted against it in the Superior Court of Wake County, North Carolina or in the United States District Court for the Eastern District of North Carolina (assuming that such court has subject matter jurisdiction over such suit, action or proceeding).  Each of the parties hereby waives any objection that it may have to the venue of any such suit, action, or proceeding, and each of the parties hereby irrevocably consents to the personal jurisdiction of any such court in any such suit, action, or proceeding.

 

17. Counterparts.  This Agreement may be executed in more than one counterpart, each of which shall be deemed an original, and all of which shall be deemed a single agreement.

 

18. Headings.  The headings herein are for convenience only and shall not affect the interpretation of this Agreement.

 

19. Taxes.

 

(a) Section 409A of the Internal Revenue Code.

 

(i) Parties’ Intent. The parties intend that the provisions of this Agreement comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the regulations thereunder (collectively, “Section 409A”), or an exemption, and all provisions of this Agreement shall be construed in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A. If any provision of this Agreement (or of any award of compensation, including equity compensation or benefits) would cause the Executive to incur any additional tax or interest under Section 409A, the Company shall, upon the specific request of the Executive, use its reasonable business efforts to in good faith reform such provision to comply with Code Section 409A; provided, that to the maximum extent practicable, the original intent and economic benefit to the Executive and the Company of the applicable provision shall be maintained. The Company shall timely use its reasonable business efforts to amend any plan or program in which the Executive participates to bring it in compliance with Section 409A.

 

(ii) Separation from Service.  A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement relating to the payment of any amounts or benefits upon or following  a termination of employment unless such termination also constitutes a “Separation from Service” within the meaning of Section 409A and, for purposes of any such provision of this Agreement, references to a “termination,” “termination of employment,” “separation from service” or like terms shall mean Separation from Service.

 

(iii) Separate Payments.  Each installment payment required under this Agreement shall be considered a separate payment for purposes of Section 409A.

 

(iv) Delayed Distribution to Specified Employees.  If the Company determines in accordance with Sections 409A and 416(i) of the Code and the regulations promulgated thereunder, in the Company’s sole discretion, that the Executive is a specified employee of the Company, determined in accordance with Section 409A, any payments and/or benefits provided under this Agreement that constitute "nonqualified deferred compensation" subject to Section 409A that are provided to Executive on account of his Separation from Service shall not be provided until the day after the six-month anniversary of Executive’s termination date ("Specified Employee Payment Date"). The aggregate amount of any payments that would otherwise have been made to Executive during such six-month period shall be paid in a lump sum to Executive on the Specified Employee Payment Date without interest and, thereafter, any remaining reimbursements shall be paid without delay in accordance with their original schedule.

 

(b) Withholdings.  The Company shall withhold any amounts required from any payment due the Executive hereunder in accordance with state and federal tax law requirements.

 

 [Signatures on following page]

 

  

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IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated Employment Agreement as of the day and year first above written.

 

	 	

Oxygen Biotherapeutics, Inc.

	 
	 	 	 	 
	 	
By: 

	/s/ Gregory Pepin	 
	 	 	

Name: Gregory Pepin

	 
	 	 	

Title: Chairman of the Compensation Committee

	 
	 	 	 	 
	 	

Michael B. Jebsen

	 
	 	 	 	 
	 	

By: 

	

/s/ Michael B. Jebsen

	 

 

  

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Exhibit A

Nonstatutory Stock Option Agreement

OXYGEN BIOTHERAPEUTICS, INC.

NONSTATUTORY STOCK OPTION AGREEMENT

THIS NONSTATUTORY STOCK OPTION AGREEMENT (this “Agreement”) is dated as of [____________], 2013 (the “Grant Date”), by and between Oxygen Biotherapeutics, a Delaware corporation (the “Company”) and [______________________] (“Optionee”).  All capitalized terms used herein and not otherwise defined shall have the meaning ascribed to such terms in the 1999 Amended Stock Plan, as amended and restated June 17, 2008, as amended (the “Plan”).

W I T N E S S E T H:

WHEREAS, the Board of Directors (the “Board”) and stockholders of the Company have adopted the Plan for the purpose of attracting and retaining the services of key employees (including officers and directors), non-employee Board members and consultants and other independent advisors;

WHEREAS, the Company and Optionee have entered into an [Offer Letter][Executive Employment] Agreement, dated November [_], 2013, providing, among other things, that the Company will grant Optionee a Nonstatutory Stock Option to purchase from the Company shares of the Company’s common stock, par value $0.0001 per share (“Common Stock”);

NOW, THEREFORE, it is hereby agreed as follows:

1. Grant of Option.  Subject to and upon the terms and conditions set forth in this Agreement, the Company hereby grants to Optionee, as of the Grant Date, the right, privilege and option (this “Option”) to purchase [____________] shares of its Common Stock (the “Optioned Stock”) at an exercise price of $[____] per share (the “Exercise Price”).

2. Option Term.  This Option shall expire at the close of business on the six (6) year anniversary of the Grant Date (the “Expiration Date”), unless sooner terminated under the Plan.

3. Limited Transferability.  This Option shall be exercisable only by Optionee during Optionee’s lifetime and shall not be transferable or assigned by Optionee other than by will or by the laws of descent and distribution following Optionee’s death.

4. Vesting and Exercisability of Option.  This Option shall become vested and exercisable pursuant to the Vesting Schedule set forth on Exhibit A.  Notwithstanding anything to the contrary herein, this Option shall not become exercisable for any additional Optioned Stock following termination of Optionee’s Continuous Status as an Employee or Consultant.  As the Option becomes exercisable for one or more installments, those installments shall accumulate, and the Option shall remain exercisable for the accumulated installments until the Expiration Date or sooner termination of the Option (a) on the date that is three (3) months following the date of termination of Optionee’s Continuous Status as an Employee or Consultant, as provided in Section 7(c)(iii) of the Plan, (b) on the date that is twelve (12) months following the date of termination of Optionee’s Continuous Status as an Employee or Consultant due to disability, as provided in Section 7(c)(iv) of the Plan, (c) on the date that is twelve (12) months following the date of termination of Optionee’s Continuous Status as an Employee or Consultant due to death, as provided in Section 7(c)(v) of the Plan, or (d) the date of termination of the Option pursuant to Section 18 of the Plan.

5. Privilege of Stock Ownership.  The holder of this Option shall not have any of the rights of a stockholder with respect to the Optioned Stock until such individual shall have exercised the Option and paid the exercise price for the Optioned Stock so purchased.

  

9

  

6. Exercising Option.  In order to exercise this Option with respect to all or any part of the Optioned Stock for which this Option is at the time exercisable, Optionee (or in the case of exercise after Optionee’s death, Optionee’s executor, administrator, heir or legatee, as the case may be) must take the following actions and otherwise comply with the requirements of the Plan:

(a) Deliver to the Corporate Secretary of the Company an executed notice of exercise in substantially the form of Exhibit B to this Agreement (the “Exercise Notice”) in which there is specified the number of shares of Optioned Stock that are to be purchased under the exercised Option.

(b) Pay the aggregate Exercise Price for the purchased shares in cash or by check made payable to the Company’s order.

7. Governing Law.  The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the state of Delaware without resort to that state’s conflict-of-laws provisions.

8. No Employment/Service Contracts.  Nothing in this Agreement or in the Plan shall confer upon Optionee any right to continue in the Service of the Company (or any Subsidiary employing or retaining Optionee) for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company (or any such Subsidiary) or Optionee, which rights are hereby expressly reserved by each party, to terminate Optionee’s Service at any time for any reason whatsoever, with or without cause.

9. Notices.  Any notice required to be given or delivered to the Company under the terms of this Agreement shall be in writing and addressed to the Company in care of the Company Chief Financial Officer at the Company’s offices at ONE Copley Parkway, Suite 490, Morrisville, North Carolina 27560.  Any notice required to be given or delivered to Optionee shall be in writing and addressed to Optionee as shown on the records of the Company or at such other address as Optionee, by notice to the Company, may designate in writing from time to time.  All notices shall be deemed to have been given or delivered upon personal delivery or upon deposit in the U. S. Mail, by registered or certified mail, postage prepaid and properly addressed to the party to be notified.

10. Construction.  This Agreement and the Option evidenced hereby are made and granted pursuant to the Plan and are in all respects limited by and subject to the express terms and provisions of the Plan.  All decisions of the Administrator with respect to any question or issue arising under the Plan or this Agreement shall be conclusive and binding on all persons having an interest in this Option.

11. Tax Withholding.  Optionee shall make appropriate arrangements with the Company or any Subsidiary employing Optionee for the satisfaction of all Federal, state or local income and employment tax withholding requirements applicable to the exercise of this Option.

12. Restrictions Under Securities Laws.  The shares of Common Stock issuable upon exercise of the Option have not been registered under the Securities Act of 1933 and applicable state statutes, and can only be sold in reliance on exemptions from the registration provisions of the Securities Act of 1933 and applicable state statutes.  Optionee agrees and acknowledges that any purported exercise of the Option is conditioned on, and subject to, any compliance with requirements of applicable Federal and state securities laws deemed necessary by the Company, and the inability or failure of the Company to satisfy any such requirements and, therefore, reject exercise of the Option, shall not subject the Company to any liability to Optionee.  The shares of Common Stock issued on exercise of the Option shall be (unless registered under applicable Federal and state securities laws) unregistered or “restricted” securities and may be sold by Optionee only if registered under the Securities Act of 1933 and, in some cases, under the applicable state securities laws or under an exemption from such registration requirements.

[Signature Page Follows]

  

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IN WITNESS WHEREOF, this Agreement is effective as of the day and year first above written.

 

	 	

OXYGEN BIOTHERAPEUTICS, INC.

	 
	 	 	 	 
	 	
By: 

	 	 
	 	 	Name: Michael B. Jebsen 	 
	 	 	Title: Chief Financial Officer and Interim Chief Executive Officer	 
	 	 	 	 
	 	 	 	 
	 	

OPTIONEE

	 
	 	 	 	 
	 	 	 	 

[Signature Page to Second Amended and Restated Employment Agreement]

 

  

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EXHIBIT A – VESTING SCHEDULE

1. Definitions.  When used in this Vesting Schedule, any capitalized terms not defined herein, or in the Plan, shall have the meaning ascribed to such terms in the Asset Purchase Agreement dated as of October 21, 2013 by and among Oxygen Biotherapeutics, Inc., Phyxius Pharma, Inc., the Stockholders of Phyxius Pharma, Inc. and Life Newco, Inc.

 

2. Vesting Schedule.  The Option shall vest and become exercisable for purchase of the Optioned Stock on the following schedule:

	
Performance Milestones

	 	
Percentage of Optioned Stock Vested

	 	 	 
	
(i) Initiation of the Phase III Clinical Trial or (ii) Parent attaining a Market Capitalization of at least $50,000,000

	 	
25% Optioned Stock

	 	 	 
	
(ii) Database Lock with respect to the Phase III Clinical Trial or (ii) Parent attaining a Market Capitalization of at least $100,000,000

	 	
25% Optioned Stock

	 	 	 
	
Acceptance For Review of an NDA for the Product for LCOS

	 	
25% Optioned Stock

	 	 	 
	
Approval of the Product for LCOS

	 	
25% Optioned Stock

 

Notwithstanding anything to the contrary in the Plan, the Option shall fully vest and become exercisable upon (i) any consolidation or merger of the Company, except one effected exclusively to change the domicile of the Company, with or into any other corporation or other entity or person, or any other corporate reorganization, in which the capital stock of the Company immediately prior to such consolidation, merger or reorganization, represents less than fifty percent (50%) of the voting power of the surviving entity (or, if the surviving entity is a wholly owned subsidiary, its parent) immediately after such consolidation, merger or reorganization; or (ii) any transaction or series of related transactions to which the Company is a party in which in excess of fifty percent (50%) of the Company’s voting power is transferred; provided, however, that the foregoing shall not include any transaction or series of transactions principally for bona fide equity financing purposes in which cash is received by the Company or any successor or indebtedness of the Company is cancelled or converted or a combination thereof; or (iii) sale, lease, exclusive license or other disposition of all or substantially all of the assets of the Company.

 

  

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EXHIBIT B – FORM OF PURCHASE

(to be signed only upon exercise of Option)

TO:           Oxygen Biotherapeutics, Inc.

Optionee, holder of the attached Option, hereby irrevocable elects to exercise the purchase rights represented by the Option for, and to purchase thereunder, ____________________________________ shares of Common Stock of Oxygen Biotherapeutics, Inc., and herewith makes payment therefor, and requests that the certificate(s) for such shares be delivered to Optionee at:

______________________________________________________________________________

______________________________________________________________________________

______________________________________________________________________________

Optionee agrees and acknowledges that this purported exercise of the Option is conditioned on, and subject to, any compliance with requirements of applicable federal and state securities laws deemed necessary by the Company, and to Optionee’s satisfaction of all Federal, state or local income and employment tax withholding requirements applicable to this exercise.

DATED this ________ day of ________________________________, __________.

____________________________________

Signature

13froz_ex101.htm

Exhibit 10.42

 

­Note: October 9, 2013

 

NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

THIS NOTE DOES NOT REQUIRE PHYSICAL SURRENDER OF THE NOTE IN THE EVENT OF A PARTIAL REDEMPTION OR CONVERSION.  AS A RESULT, FOLLOWING ANY REDEMPTION OR CONVERSION OF ANY PORTION OF THIS NOTE, THE OUTSTANDING PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE MAY BE LESS THAN THE PRINCIPAL AMOUNT AND ACCRUED INTEREST SET FORTH BELOW.

10% CONVERTIBLE PROMISSORY NOTE

OF

FROZEN FOOD GIFT GROUP INC

Issuance Date:  October 9, 2013

Beginning Value of this Note: $21,000

Original Issue Discount: $2,500

Total Face Value of Note: $23,500

This Note (“Note” or “Note”) is a duly authorized Convertible Promissory Note of FROZEN FOOD GIFT GROUP INC a corporation duly organized and existing under the laws of the State of Delaware (the “Company”), designated as the Company's 10% Convertible Promissory Note Due October 9, 2014 (“Maturity Date”) in the original principal amount of Twenty Three Thousand Five Hundred Dollars ($23,500.00) (the “Note”).

 

For Value Received, the Company hereby promises to pay to the order of Tangiers Investors, LP or its registered assigns or successors-in-interest (“Holder”) the principal sum of Twenty Three Thousand Five Hundred Dollars ($23,500.00) together with all accrued but unpaid interest thereon, if any, on the Maturity Date, to the extent such principal amount and interest has not been repaid or converted into the Company's Common Stock, $0.00001 par value per share (the “Common Stock”), in accordance with the terms hereof.

 

Interest on the unpaid principal balance hereof shall accrue at the rate of 10% per annum from the date of original issuance hereof (the “Issuance Date”) until the same becomes due and payable on the Maturity Date, or such earlier date upon acceleration or by conversion or redemption in accordance with the terms hereof or of the other Agreements. Notwithstanding anything contained herein, this Note shall bear interest on the due and unpaid Principal Amount from and after the occurrence and during the continuance of an Event of Default pursuant to Section 2(h) at the rate (the “Default Rate”) equal to the lower of twenty (20%) per annum or the highest rate permitted by law.  Unless otherwise agreed or required by applicable law, payments will be applied first to any unpaid collection costs, then to unpaid interest and fees and any remaining amount to principal.

 

For purposes hereof the following terms shall have the meanings ascribed to them below:

 

“Bankruptcy Event” means any of the following events: (a) the Company commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the Company thereof; (b) there is commenced against the Company any such case or proceeding that is not dismissed within 60 days after commencement; (c) the Company is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered; (d) the Company suffers any appointment of any custodian or the like for it or any substantial part of its property that is not discharged or stayed within 60 days; (e) the Company makes a general assignment for the benefit of creditors; (f) the Company fails to pay, or states that it is unable to pay or is unable to pay, its debts generally as they become due; (g) the Company calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts; or (h) the Company, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing.

 

  

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“Business Day” shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the City of New York are authorized or required by law or executive order to remain closed.

 

“Change in Control Transaction” will be deemed to exist if (i) there occurs any consolidation, merger or other business combination of the Company with or into any other corporation or other entity or person (whether or not the Company is the surviving corporation), or any other corporate reorganization or transaction or series of related transactions in which in any of such events the voting stockholders of the Company prior to such event cease to own 50% or more of the voting power, or corresponding voting equity interests, of the surviving corporation after such event (including without limitation any “going private” transaction under Rule 13e-3 promulgated pursuant to the Exchange Act or tender offer by the Company under Rule 13e-4 promulgated pursuant to the Exchange Act for 20% or more of the Company's Common Stock), (ii) there is a replacement of more than one-half of the members of the Company’s Board of Directors which is not approved by those individuals who are members of the Company's Board of Directors on the date thereof, (iii) in one or a series of related transactions, there is a sale or transfer of all or substantially all of the assets of the Company, determined on a consolidated basis, or (iv) the Company enters into any agreement providing for an event set forth in (i), (ii), (iii) or (iv) above.

 

“Conversion Ratio” means, at any time, a fraction, of which the numerator is the entire outstanding Principal Amount of this Note (or such portion thereof that is being redeemed or repurchased), and of which the denominator is the Conversion Price as of the date such ratio is being determined.

 

“Conversion Price” shall be equal to fifty percent (50%) of the lowest trading price of any day during the twenty (20) consecutive trading days prior to the date on which Holder elects to convert all or part of the Note.

 

“Convertible Securities” means any convertible securities, warrants, options or other rights to subscribe for or to purchase or exchange for, shares of Common Stock.

 

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

 “Market Price” shall equal the closing sale price per share of the Common Stock on the Principal Market on the Trading Day next preceding the date on which such price is being determined.

 

 “Principal Amount” shall refer to the sum of (i) the original principal amount of this Note, (ii) all accrued but unpaid interest hereunder, and (iii) any default payments owing under the Agreements but not previously paid or added to the Principal Amount.

 

“Principal Market” shall mean the OTC Bulletin Board or such other principal market or exchange on which the Common Stock is then listed for trading.

 

“Securities Act” shall mean the Securities Act of 1933, as amended.

“Trading Day” shall mean a day on which there is trading on the Principal Market.

 

“Underlying Shares” means the shares of Common Stock into which the Note is convertible (including interest or principal payments in Common Stock as set forth herein) in accordance with the terms hereof.

 

The following terms and conditions shall apply to this Note:

 

Section 1.00  Conversion.

 

(a) Conversion Right.  Subject to the terms hereof and restrictions and limitations contained herein, the Holder shall have the right, at the Holder's option, at any time and from time to time to convert the outstanding Principal Amount and Interest under this Note in whole or in part by delivering to the Company, or directly to Company’s Transfer Agent, a fully executed notice of conversion in the form of conversion notice attached hereto as Exhibit A (the “Conversion Notice”), which may be transmitted by facsimile.

 

  

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(b) The date of any Conversion Notice hereunder and any Payment Date shall be referred to herein as the “Conversion Date”.  If the Holder is converting less than all of the outstanding Principal Amount hereunder pursuant to a Conversion Notice, the Company shall promptly deliver to the Holder (but no later than five Trading Days after the Conversion Date) a Note for such outstanding Principal Amount as has not been converted if this Note has been surrendered to the Company for partial conversion. The Holder and the Company shall maintain records showing the outstanding Principal Amount so converted and repaid and the dates of such conversions or repayments or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender of this Note upon each such conversion or repayment.

 

(i) Stock Certificates or DWAC.  The Company will deliver to the Holder, or Holder’s authorized designee) not later than two (2) Trading Days after the Conversion Date, a certificate or certificates (which certificate(s) shall be free of restrictive legends and trading restrictions) representing the number of shares of Common Stock being acquired upon the conversion of this Note.  In lieu of delivering physical certificates representing the shares of Common Stock issuable upon conversion of this Note, provided the Company's transfer agent is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer (“FAST”) program, upon request of the Holder, the Company shall use commercially reasonable efforts to cause its transfer agent to electronically transmit such shares issuable upon conversion to the Holder (or its designee), by crediting the account of the Holder’s (or such designee’s) prime broker with DTC through its Deposits and Withdrawal at Custodian (DWAC) program (provided that the same time periods herein as for stock certificates shall apply).  If in the case of any conversion hereunder, such certificate or certificates are not delivered to or as directed by the Holder by the fifth Trading Day after the Conversion Date, the Holder shall be entitled by notice to the Company at any time on or before its receipt of such certificate or certificates thereafter, to rescind such conversion, in which event the Company shall immediately return this Note tendered for conversion.

 

If the Company fails to deliver to the Holder such certificate or certificates (or shares through DTC) pursuant to this Section (free of any restrictions on transfer or legends) in accordance herewith, prior to the third Trading Day after the Conversion Date, the Company shall pay to the Holder as liquidated damages, in cash, an amount equal to One Thousand Dollars ($1,000) per day, until such certificate or certificates are delivered. Such liquidated damages will be added to the principal value of the Note. The Company acknowledges that it would be extremely difficult or impracticable to determine Tangiers’ actual damages and costs resulting from the delay in making delivery of the unrestricted stock certificate and the inclusion herein of any such additional amounts are the agreed upon liquidated damages representing a reasonable estimate of those damages and costs and do not constitute a penalty.

 

(c) Conversion Price Adjustments.

 

(i) Stock Dividends, Splits and Combinations.  If the Company or any of its subsidiaries, at any time while this First Note is outstanding (A) shall pay a stock dividend or otherwise make a distribution or distributions on any equity securities (including instruments or securities convertible into or exchangeable for such equity securities) in shares of Common Stock, (B) subdivide outstanding Common Stock into a larger number of shares, or (C) combine outstanding Common Stock into a smaller number of shares, then each Affected Conversion Price (as defined below) shall be multiplied by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding before such event and the denominator of which shall be the number of shares of Common Stock outstanding after such event.  Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision or combination.

 

(ii) Distributions.  If the Company or any of its subsidiaries, at any time while the Note is outstanding, shall distribute to all holders of Common Stock evidences of its indebtedness or assets or cash or rights or warrants to subscribe for or purchase any security of the Company or any of its subsidiaries (excluding those referred to in the Section above), then concurrently with such distributions to holders of Common Stock, the Company shall distribute to the Holder the amount of such indebtedness, assets, cash or rights or warrants which the Holder would have received had the Note been converted into Common Stock at the Conversion Price immediately prior to the record date for such distribution.

 

(iii) Rounding of Adjustments. All calculations under this Section 1 or any other provision of this Note shall be made to 4 decimal places for dollar amounts or the nearest 1/100th of a share, as the case may be.

 

(iv) Notice of Certain Events.  If:

 

	
  

	
A.

	
the Company shall declare a dividend (or any other distribution) on its Common Stock; or

	
  

	
B.

	
the Company shall declare a special nonrecurring cash dividend on or a redemption of its Common Stock; or

	
  

	
C.

	
the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights; or

	
  

	
D.

	
the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock of the Company, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, of any compulsory share of exchange whereby the Common Stock is converted into other securities, cash or property; or

	
  

	
E.

	
the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company;

  

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then the Company shall cause to be filed at each office or agency maintained for the purpose of conversion of this Note, and shall cause to be mailed to the Holder at its last address as it shall appear upon the books of the Company, on or prior to the date notice to the Company's stockholders generally is given, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange.

 

(d) Reservation and Issuance of Underlying Securities.  The Company covenants that it will at all times reserve and keep available out of its authorized and unissued Common Stock solely for the purpose of issuance upon conversion of this Note (including repayments in stock), free from preemptive rights or any other actual contingent purchase rights of persons other than the Holder, not less than three times (3x) the number of shares of Common Stock as shall be issuable (taking into account the adjustments under this Section 1 but without regard to any ownership limitations contained herein) upon the conversion of this Note hereunder in Common Stock (including repayments in stock).  The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully-paid, non-assessable and freely-tradable. The Company agrees that this is a material term of this Note.

 

(e) Charges, Taxes and Expenses.  Issuance of certificates for shares of Common Stock upon the conversion of this Note (including repayment in stock) shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder.

 

(f) Cancellation.  After all of the Principal Amount (including accrued but unpaid interest and default payments at any time owed on this Note) have been paid in full or converted into Common Stock, this Note shall automatically be deemed canceled and the Holder shall promptly surrender the Note to the Company at the Company’s principal executive offices.

 

(g) Conversion Limitation.  Notwithstanding anything to the contrary contained herein, the number of shares of Common Stock that may be acquired by the Holder upon conversion pursuant to the terms hereof shall not exceed a number that, when added to the total number of shares of Common Stock deemed beneficially owned by the Holder (other than by virtue of the ownership of securities or rights to acquire securities (including this Note) that have limitations on the Holder’s right to convert, exercise or purchase similar to the limitation set forth herein), together with all shares of Common Stock deemed beneficially owned at such time (other than by virtue of the ownership of securities or rights to acquire securities that have limitations on the right to convert, exercise or purchase similar to the limitation set forth herein) by the Holder’s “affiliates” at such time (as defined in Rule 144 of the Act) (“Aggregation Parties”) that would be aggregated for purposes of determining whether a group under Section 13(d) of the Securities Exchange Act of 1934 as amended, exists, would exceed 9.99% of the total issued and outstanding shares of the Common Stock (the “Restricted Ownership Percentage”) unless the Holder elects to exceed said percentage amount, as noted below. The Holder shall have the right (w) at any time and from time to time to reduce its Restricted Ownership Percentage immediately upon notice to the Company and (x) (subject to waiver) at any time and from time to time, to increase its Restricted Ownership Percentage immediately in the event of the announcement as pending or planned, of a Change in Control Transaction.

 

Section 2.00 Defaults and Remedies.

 

(h) Events of Default.  Events of Default. An “Event of Default” is:  (i) a default in payment of any amount due hereunder which default continues for more than two (2) business days after the due date thereof; (ii) a default in the timely issuance of Underlying Shares upon and in accordance with terms hereof, which default continues for two (2) Business Days after the Company has received notice informing the Company that it has failed to issue shares or deliver stock certificates within the second (2nd) day following the Conversion Date; (iii) failure by the Company for two (2) days after notice has been received by the Company to comply with any material provision of the Exchange Agreement (including without limitation the failure to issue the requisite number of shares of Common Stock upon conversion hereof and the failure to redeem Notes upon the Holder’s request following a Change in Control Transaction pursuant to Section 1(c); (iv) any default after any cure period under, or acceleration prior to maturity of, any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by the Company in excess of $50,000 or for money borrowed the repayment of which is guaranteed by the Company  in excess of $50,000, whether such indebtedness or guarantee now exists or shall be created hereafter; (v) any failure of the Company to satisfy its  “filing” obligations under the rules and guidelines issued by OTC Markets News Service, OTC Markets.com and their affiliates; (vi) failure of the Company to issue any of the shares of the Company’s Common Stock due the Holder upon conversion of this Note; (vii) failure to have sufficient number of authorized and unreserved, but unissued shares of the Company’s Common Stock available for any said conversion; (viii) any delisting for any reason; (ix) failure of Company’s stock to maintain a bid price in its trading market which occurs for two (2) consecutive days; (x) failure by Company to pay any of its Transfer Agent fees or to maintain a Transfer Agent of record; (xi) failure of the company to remain compliant with DTCC, thus incurring a “Chilled” status with DTCC; (xii) any trading suspension imposed by the Securities and Exchange Commission under Sections 12(j) or 12(k) of the 1934 Act; (xiii) the Company is subject to any Bankruptcy Event; (xiv) any default by the Company on any of its outstanding obligations to the Holder.

 

  

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(k)  Remedies.  If an Event of Default occurs and is continuing with respect to the Note, the Holder may declare all of the then outstanding Principal Amount of this Note, including any interest due thereon, to be due and payable immediately, except that in the case of an Event of Default arising from events described in Section 2(h), this Note shall become due and payable without further action or notice. In the event of such acceleration, the amount due and owing to the Holder shall be the 150% of the outstanding Principal Amount of the Notes held by the Holder plus all accrued and unpaid interest, fees, and liquidated damages, if any.  Additionally, this Note shall bear interest on any unpaid principal from and after the occurrence and during the continuance of an Event of Default pursuant to Section 2(h) at the Default Rate. Finally, the Note will accrue liquidated damages of five hundred dollars ($500) per day from and after the occurrence and during the continuance of an Event of Default pursuant to Section 2(h). The Company acknowledges that it would be extremely difficult or impracticable to determine Tangiers’ actual damages and costs resulting from the delay in making delivery of the unrestricted stock certificate and the inclusion herein of any such additional amounts are the agreed upon liquidated damages representing a reasonable estimate of those damages and costs and do not constitute a penalty. The remedies under this Note shall be cumulative and added to the principal value of the Note.

 

Section 3.00 General.

 

(i) Payment of Expenses.  The Company agrees to pay all reasonable charges and expenses, including attorneys' fees and expenses, which may be incurred by the Holder in successfully enforcing this Note and/or collecting any amount due under this Note.

 

(j) Savings Clause.  In case any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and the validity and enforceability of the remaining provisions of this Note will not in any way be affected or impaired thereby.  In no event shall the amount of interest paid hereunder exceed the maximum rate of interest on the unpaid principal balance hereof allowable by applicable law.  If any sum is collected in excess of the applicable maximum rate, the excess collected shall be applied to reduce the principal debt.  If the interest actually collected hereunder is still in excess of the applicable maximum rate, the interest rate shall be reduced so as not to exceed the maximum allowable under law.

 

(k) Amendment.  Neither this Note nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the Company and the Holder.

 

(l) Assignment, Etc.  The Holder may assign or transfer this Note to any transferee only with the prior written consent of the Company, which may not be unreasonably withheld or delayed, provided that (i) the Holder may assign or transfer this Note to any of such Holder's affiliates without the consent of the Company and (ii) upon any Event of Default, the Holder may assign or transfer this Note without the consent of the Company.  The Holder shall notify the Company of any such assignment or transfer promptly.  This Note shall be binding upon the Company and its successors and shall inure to the benefit of the Holder and its successors and permitted assigns.

 

(m) No Waiver.  No failure on the part of the Holder to exercise, and no delay in exercising any right, remedy or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise by the Holder of any right, remedy or power hereunder preclude any other or future exercise of any other right, remedy or power.  Each and every right, remedy or power hereby granted to the Holder or allowed it by law or other agreement shall be cumulative and not exclusive of any other, and may be exercised by the Holder from time to time.

 

(n) Governing Law; Jurisdiction.

 

(i) Governing Law.  THIS NOTE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD TO ANY CONFLICTS OF LAWS PROVISIONS THEREOF THAT WOULD OTHERWISE REQUIRE THE APPLICATION OF THE LAW OF ANY OTHER JURISDICTION.

 

  

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(ii) Jurisdiction.  Any dispute or claim arising to or in any way related to this Note or the rights and obligations of each of the parties hereto shall be settled by binding arbitration in San Diego, California.  All arbitration shall be conducted in accordance with the rules and regulations of the American Arbitration Association ("AAA").  AAA shall designate an arbitrator from an approved list of arbitrators following both parties' review and deletion of those arbitrators on the approved list having a conflict of interest with either party.  Each party shall pay its own expenses associated with such arbitration. A demand for arbitration shall be made within a reasonable time after the claim, dispute or other matter has arisen and in no event shall such demand be made after the date when institution of legal or equitable proceedings based on such claim, dispute or other matter in question would be barred by the applicable statutes of limitations.  The decision of the arbitrators shall be rendered within 60 days of submission of any claim or dispute, shall be in writing and mailed to all the parties included in the arbitration. The decision of the arbitrator shall be binding upon the parties and judgment in accordance with that decision. The Company agrees that the service of process upon it mailed by certified or registered mail (and service so made shall be deemed complete three days after the same has been posted as aforesaid) or by personal service shall be deemed in every respect effective service of process upon it in any such suit or proceeding. Nothing herein shall affect the Holder's right to serve process in any other manner permitted by law.  The Company agrees that a final non-appealable judgement in any such suit or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on such judgment or in any other lawful manner.

 

(iii) No Jury Trial.  The Company hereto knowingly and voluntarily waives any and all rights it may have to a trial by jury with respect to any litigation based on, or arising out of, under, or in connection with, this Note.

 

(o) Replacement Notes.  This Note may be exchanged by the Holder at any time and from time to time for a Note or Notes with different denominations representing an equal aggregate outstanding Principal Amount, as reasonably requested by the Holder, upon surrendering the same.  No service charge will be made for such registration or exchange.  In the event that Holder notifies the Company that this Note has been lost, stolen or destroyed, a replacement Note identical in all respects to the original Note (except for registration number and Principal Amount, if different than that shown on the original Note), shall be issued to the Holder, provided that the Holder executes and delivers to the Company an agreement reasonably satisfactory to the Company to indemnify the Company from any loss incurred by it in connection with this Note.  If such replacement occurs, the term “Note” as used herein shall be deemed to refer to any such replacement Note.

 

  

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IN WITNESS WHEREOF, the Company has caused this Convertible Promissory Note to be duly executed on the day and in the year first above written.

	 	

FROZEN FOOD GIFT GROUP, INC.

	 
	 	 	 	 
	

Date: October 9, 2013

	
By: 

	/s/ Jonathan Irwin	 
	 	 	Name: Jonathan Irwin 	 
	 	 	Title: CEO 	 
	 	 	 	 

This Note is acknowledged as:                                                    Note of October 9, 2013

  

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EXHIBIT A

FORM OF CONVERSION NOTICE

(To be executed by the Holder in order to convert that certain $23,500 Convertible Promissory Note identified as the Note)

DATE:                                ____________________________

FROM:                                Tangiers Investors, LP

	
  

	
Re:

	
$23,500 Note (this “Note”) originally issued by FROZEN FOOD GIFT GROUP INC, a Delaware corporation, to Tangiers Investors, LP on October 9, 2013.

The undersigned on behalf of Tangiers Investors, LP, hereby elects to convert $_______________________ of the aggregate outstanding Principal Amount (as defined in the Note) indicated below of this Note into shares of Common Stock, $0.00001 par value per share, of FROZEN FOOD GIFT GROUP INC (the “Company”) according to the conditions hereof, as of the date written below.  If shares are to be issued in the name of a person other than undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith.  No fee will be charged to the holder for any conversion, except for such transfer taxes, if any.  The undersigned represents as of the date hereof that, after giving effect to the conversion of this Note pursuant to this Conversion Notice, the undersigned will not exceed the “Restricted Ownership Percentage” contained in this Note.

	
Conversion information:

	 

Date to Effect Conversion

	
  

	 

	
  

	
Aggregate Principal Amount of Note Being Converted

	
  

	 

	
  

	
Aggregate Interest on Amount Being Converted

	
  

	 

	
  

	
Number of Shares of Common Stock to be Issued

	
  

	 

Applicable Conversion Price

	
  

	 

Signature

	
  

	 

Name

	
  

	 

Address

 

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