Description
This is an Advisor Agreement that would be used to engage and compensate a member of an advisory board. It is essentially a specialized form of consulting agreement.
It addresses the following key issues:
1. Commitment to Meetings. Often the obligations to meet with the advisory board or advise the company are not terribly burdensome. The advisor brings much of their value simply by associating themselves with and effectively endorsing the company publicly. If the advisor proves unable or unwilling to meet as much as the company would like, the relationship can be terminated. This form requires that the advisor attend at least a specified number of advisory board meetings per year. Other obligations such as time spent with the company leadership could also be specified, but if they appear too onerous, it may complicate securing the engagement.
2. Conflicts. Advisory board members are usually selected for their status as a recognized authority in the field in which the company operates. Accordingly, often advisors are employees of or affiliated with other organizations. In particular, they are often professors and researchers at universities. Universities often have various policies governing their employees' conduct and activities, including outside of the university and advisors may be sensitive to ensuring they will not run afoul of these obligations. This form has a section acknowledging that the advisor may be subject to such policies and that those policies may constrain the advisor's ability to perform his or her duties as an advisor. It requires only that the advisor notify the company if that becomes the case without prescribing any particular resolution. It also requires the advisor to notify the company if the advisor becomes engaged by a competitor of the company, which again, would put the issue on the table for discussion and resolution.
3. Compensation. As is customary, the form provides for compensation paid in the form of a grant of an option to purchase equity in the company and for that option to vest over time. However, generally companies with advisory boards also have compensatory equity plans in place and this section should be revised to align with the manner and nature of equity based compensation grants under its plan.
4. Confidentiality and Invention Assignment. Advisors are of course likely to be made privy to sensitive confidential information and so this form has typical confidentiality obligations. Advisors are engaged for strategic advice and, as or more importantly, the credibility their reputation brings to the company and not principally for purposes of developing intellectual property or tangibly contributing to the company's research and development efforts. However, given their expertise, they may make such contributions by design or not and, given the importance of a company maintaining clear rights in its intellectual property, this form has invention assignment provisions. This can be a tricky area to navigate as the advisor may be working on his or her own research and development in the same area and may be sensitive to the prospect of assigning intellectual property or rights to the company that the advisor may want to reserve or that may belong to the university where they perform their research.
5. Term and Termination. The form provides for a term of a specified number of years and is terminable for convenience by either party upon notice.
