EXHIBIT 10.11
STOCKHOLDERS AGREEMENT (this "Agreement") made and entered into
effective as of September 17, 2003 by and among Araios, Inc., a Delaware
corporation (the "Corporation"), and the Stockholders (as hereinafter defined),
with reference to the following facts:
A. Each Stockholder owns or has the right to acquire that number of
shares of Stock (as herein defined) set forth opposite such Stockholder's name
on Schedule 1 hereto.
B. It is deemed to be in the best interests of the Corporation and the
Stockholders that provision be made for the continuity and stability of the
business and policies of the Corporation and, to this end, the Corporation and
the Stockholders hereby set forth their agreement with respect to the Stock
owned by the Stockholders.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and obligations hereinafter set forth, the parties hereto hereby agree
as follows:
SECTION 1. Definitions. As used herein, the following terms shall have the
meanings indicated:
(a) "AAA" has the meaning set forth in Section 21(a).
(b) "Affiliate" means, with respect to any Stockholder, any Person that
directly or indirectly controls, is controlled by or is under common control
with such Stockholder. For purposes of the definition, "control" of a Person
means the power to direct or cause the direction of the management and policies
of such Person, whether directly or indirectly, through ownership of voting
securities, by contract or otherwise.
(c) "Board" shall mean the Board of Directors of the Corporation.
(d) "Call Option" has the meaning set forth in Section 4(a).
(e) "Certificate of Incorporation" shall mean the Amended and Restated
Certificate of Incorporation of the Corporation, as in effect on the date
hereof.
(f) "Common Stock" shall mean the common stock, $0.01 par value per
share, of the Corporation.
(g) "Control" or "Controlled" shall have the meaning ascribed to such
term under Section 368(c) of the Internal Revenue Code of 1986, as amended, and
applicable Treasury Regulations.
(h) "CytRx" means CytRx Corporation, a Delaware corporation, its
successors and assigns, and any Affiliate thereof to which Stock shall be
transferred as permitted in this Agreement.
(i) "CytRx Common Stock" means the common stock, $0.001 par value per
share, of CytRx.
(j) "Czech" means Xx. Xxxxxxx X. Czech.
(k) "Field" means the treatment, prevention and diagnosis of type 2
diabetes and/or obesity.
(l) "Non-Affiliated Person" means any Person that is not an Affiliate
of the Corporation, any Stockholder or any member of the Group of any
Stockholder.
(m) "Person" means any individual, partnership, corporation, group,
trust, joint venture or other legal entity.
(n) "Preferred Stock" means (i) the Series A Preferred Stock, $0.01 par
value per share, of the Corporation, and (ii) any other class or series of the
capital stock of the Corporation that is entitled to at least a fixed sum or
percentage of par or stated value in respect of the rights of the holders
thereof to participate in dividends or in the distribution of assets upon any
liquidation, dissolution or winding up of the Corporation.
(o) "Purchase Agreement" means the Preferred Stock Purchase Agreement,
of even date herewith, between the Corporation and CytRx.
(p) "Put Option" has the meaning set forth in Section 4(b).
(q) "Qualified Merger" means a merger or consolidation of the
Corporation into or with any Non-Affiliated Person in which merger or
consolidation the holders of capital stock of the Corporation receive less than
a majority of the voting power of the resulting or surviving corporation;
provided, however, that in the event that the holders of capital stock of the
Corporation are to receive voting common stock in any such transaction, such
voting common stock must be (A) validly registered under the Securities Act of
1933, as amended (the "Securities Act"), and the Exchange Act of 1934, as
amended (the "Exchange Act"), or any successor provisions thereto, (B) traded on
a national securities exchange or included on the automated quotation system of
the National Association of Securities Dealers, Inc., and (C) immediately upon
issuance to the Stockholders in connection with such transaction, freely
tradeable without any restriction under the Exchange Act or the Securities Act
or any of the rules and regulations promulgated pursuant to such Acts
(including, without limitation, Rule 144 promulgated under the Securities Act or
any successor provision thereto), other than pursuant to Rule 145 promulgated
under the Securities Act or any successor provision thereto.
(r) "Qualified Non-Affiliated Transaction" means any bona fide (i)
Qualified Merger, (ii) Qualified Sale of Assets or (iii) Qualified Stock
Transaction.
(s) "Qualified Public Offering" means the consummation of a bona fide
underwritten public offering of Common Stock of the Corporation at an aggregate
public offering price of not less than $10,000,000.
(t) "Qualified Sale of Assets" means the sale, lease, license, transfer
or other disposition of all or substantially all of the assets of the
Corporation as an entirety to any Non- Affiliated Person, in which transaction
the Corporation would (i) receive solely cash in consideration for such assets,
(ii) dissolve and wind up following the consummation of such transaction, and
(iii) distribute the cash proceeds thereof to its stockholders.
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(u) "Qualified Shares" means (i) with respect to Czech, 650,000 shares
of CytRx Common Stock (appropriately adjusted for any stock split, stock
dividend, reverse stock split, reclassification and the like occurring after the
date hereof), of which 300,000 shares (the "Vested Qualified Shares") shall be
immediately vested upon issuance thereof, and 350,000 shares (the "Restricted
Qualified Shares") shall be subject to the vesting and forfeiture provisions,
all as set forth in the Restricted Stock Agreement, and (ii) with respect to all
other stockholders of the Corporation (other than CytRx and its Affiliates),
shares of CytRx Common Stock commensurate with each such stockholder's
stockholdings in the Corporation.
(v) "Qualified Stock Transaction" means the Sale of all, but not less
than all, of the outstanding capital stock of the Corporation to any
Non-Affiliated Person solely in exchange for cash.
(w) "Qualified CytRx Transaction" means any acquisition of all of the
capital stock, or all or substantially all of the assets, of the Corporation by
CytRx or any Affiliate Controlled by CytRx in a transaction (i) in which Czech
and all other stockholders of the Corporation (other than CytRx and its
Affiliates) receive Qualified Shares only and (ii) which is structured so as to
qualify as a tax-free reorganization for federal income tax purposes unless it
is not possible to do so due to a subsequent change in the tax laws or other
regulatory requirements.
(x) "Restricted Period" means the period commencing on the date of this
Agreement and ending on March 12, 2006.
(y) "Restricted Stock Agreement" means a restricted stock agreement, in
substantially the form attached as Exhibit A, to be entered into between CytRx
and Czech in connection with the exercise of the Call Option or the Put Option
or a Qualified CytRx Transaction.
(z) "SAB" means the Scientific Advisory Board of the Corporation or of
CytRx, as the context requires.
(aa) "Sell" (or "Sale"), as to any Stock, means to sell, or in any
other way directly or indirectly to transfer, assign, pledge, distribute,
encumber or otherwise dispose of, either voluntarily or involuntarily and with
or without consideration, including, but not limited to, any event pursuant to
which an Affiliate which holds Stock ceases to be an Affiliate.
(bb) "Series A Preferred Stock" has the meaning set forth in the
recitals to this Agreement.
(cc) "Stockholders" means Czech and CytRx, and shall include any other
Person who agrees in writing with the parties hereto to be bound by and to
comply with all applicable provisions of this Agreement.
(dd) "Stock" means (i) the outstanding shares of Common Stock and
Preferred Stock and any other issued and outstanding shares of capital stock of
the Corporation, and any options or stock subscription warrants exercisable
therefor (which options and warrants shall be deemed to be equivalent to that
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number of outstanding shares of Common Stock or other capital stock of the
Corporation for which they are convertible or exercisable), (ii) any additional
shares of capital stock of the Corporation hereafter issued and outstanding and
(iii) any shares of capital stock of the Corporation into which such shares may
be converted or for which they may be exchanged or exercised.
(ee) "Termination Date" means the earliest to occur of the date of
consummation of (i) a Qualified Non-Affiliated Transaction or (ii) a Qualified
Public Offering.
(ff) "UMass" means the University of Massachusetts.
SECTION 2. Election of Directors; Voting.
(a) During the term of this Agreement, each Stockholder shall vote all
of his or its Stock and shall take all other necessary or desirable actions
within his or its control (whether in such Stockholder's capacity as a
stockholder of the Corporation or otherwise, and including, without limitation,
attending meetings in person or by proxy for purposes of obtaining a quorum and
executing written consents in lieu of meetings), and the Corporation shall take
all necessary and desirable actions within its control (including, without
limitation, calling special Board and stockholder meetings), so that:
(i) the authorized number of directors on the Board shall
consist of five directors;
(ii) the following individuals shall be elected to the Board
and each committee of the Board:
(A) three individuals designated by CytRx;
(B) the Chief Executive Officer (or President, if
there is no Chief Executive Officer) of the Company; and
(C) one individual who shall be designated and
approved by a majority of the executive officers of the
Corporation in a writing delivered to the Board and the
Stockholders.
(iii) In the event that a party elects not to designate as a
director one or more individuals which such party is entitled to
designate in accordance with Section 2(a)(ii), the Stockholders agree
not to fill such vacancy, or suffer such vacancy to be filled, other
than with an individual designated by such party as provided in Section
2(a)(ii).
(iv) The designation of an individual pursuant to Section
2(a)(ii) at any time shall be effective only upon written notice
thereof to the Corporation by the party or parties making such
designation. Such written notice shall be recorded as soon as
reasonably practical in the minutes of the Corporation and may be
relied upon by the Corporation as conclusive until such time as the
Corporation is in receipt of a subsequent written notice making a new
designation.
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SECTION 3. Limitations on Sales of Stock.
(a) Czech agrees that, during the Restricted Period, he shall not Sell
any Stock except:
(i) pursuant to the exercise of the Call Option or the Put
Option in accordance with Section 4 hereof; or
(ii) pursuant to a Qualified Non-Affiliated Transaction;
(iii) as part of a Qualified Public Offering;
(iv) pursuant to a Qualified CytRx Transaction; or
(v) to a member of Czech's immediate family, or a trust,
partnership or limited liability company for the benefit of Czech or
for the benefit of a member of his immediate family, provided, in each
case, that such transferee agrees in writing in connection with and as
a condition to such Sale to be bound by all of the provisions of this
Agreement.
(b) CytRx agrees that, during the Restricted Period, it shall not Sell
any Stock except:
(i) pursuant to a Qualified Non-Affiliated Transaction; or
(ii) as part of a Qualified Public Offering; or
(iii) to an Affiliate Controlled by CytRx, provided that such
Affiliate agrees in writing in connection with and as a condition to
such Sale to remain an Affiliate Controlled by CytRx throughout the
Restricted Period and to be bound by all of the provisions of this
Agreement.
SECTION 4. Call and Put Options.
(a) Czech hereby agrees that at any time during the period commencing
March 12, 2005 and ending September 12, 2005, CytRx shall have the right and
option (the "Call Option") to purchase all (but not less than all) of Czech's
Stock in exchange for the issuance to Czech of Qualified Shares in a Qualified
CytRx Transaction. The Call Option may be exercised by CytRx by notice ("Notice
of Call Exercise") given to Czech as provided in this Agreement.
(b) CytRx hereby agrees that, unless the Call Option shall previously
have been exercised, at any time during the period commencing September 13, 2005
and ending Xxxxx 00, 0000, Xxxxx shall have the right and option (the "Put
Option") to cause CytRx to purchase all (but not less than all) of Czech's Stock
in exchange for the issuance to Czech of the Qualified Shares in a Qualified
CytRx Transaction. The Put Option may be exercised by Czech by notice (the "Put
Exercise Notice") given to CytRx as provided in this Agreement.
(c) The closing of the sale and purchase of Czech's Stock pursuant to
the exercise of the Call Option or the Put Option shall be held as soon as
practicable following the Notice of Call Exercise or Notice of Put Exercise, as
the case may be, but in no event more than 30 days following such Notice. At the
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closing, Czech shall sell and exchange, and CytRx or any Affiliate of CytRx
shall acquire, all of Czech's Stock, free and clear of any lien, claim,
encumbrance or restriction, other than those imposed by this Agreement. In the
event that any of Czech's Stock is subject to any lien or encumbrance at the
closing other than those imposed by this Agreement (whether or not in breach of
this Agreement), the number of Vested Qualified Shares and Restricted Qualified
Shares to be issued to Czech shall be reduced ratably by the number of Qualified
Shares having a market value equal to the sum of (i) the amount of the lien or
encumbrance and by (ii) the reasonable costs and expenses incurred by CytRx in
connection with removing or satisfying such lien or encumbrance. At the closing:
(i) Czech shall (1) deliver to CytRx or its Affiliate, as the
case may be, one or more stock certificates or other instruments, duly
endorsed or accompanied by stock powers duly endorsed in blank,
evidencing all of Czech's Stock and (2) shall execute and deliver to
CytRx the Restricted Stock Agreement; and
(ii) CytRx or its Affiliate, as the case may be, shall (1)
issue, or cause to be issued, in Czech's name one or more stock
certificates evidencing the Qualified Shares, (2) deliver, or cause to
be delivered one or more stock certificates evidencing the Vested
Qualified Shares and (3) deliver, or cause to be delivered, to Czech
the Restricted Stock Agreement as executed by CytRx.
(d) Notwithstanding any provision of this Agreement, neither the
Corporation nor CytRx or its Affiliates shall have any liability or obligation
to Czech, including without limitation any liability for taxes payable by Czech,
in the event that the exchange and acquisition of Czech's Stock pursuant to the
exercise of the Call Option or the Put Option, or any Qualified CytRx
Transaction, cannot be accomplished as a tax-free transaction to Czech for
federal income tax purposes due to a subsequent change in the tax laws or other
regulatory requirements or a final determination by the IRS, and the sale and
exchange of Czech's Stock pursuant to the exercise of the Call Option or the Put
Option, or pursuant to a Qualified CytRx Transaction, shall not be conditioned
upon such tax treatment.
SECTION 5. Certain Covenants and Representations of Czech. As a material
inducement to the Corporation and CytRx to enter into this Agreement, Czech
hereby represents, warrants and agrees as follows, with such representations,
warranties and covenants to survive the termination of this Agreement and any
transfer by Czech of his Stock except as set forth in Sections 5(d) and (e):
(a) Czech shall use commercially reasonable efforts to acquire by
assignment or, if an assignment is not possible due to applicable UMass
policies, an exclusive license for the Corporation or CytRx to all of the
existing inventions, technologies and other intellectual property in the Field
that have been developed or identified through the date hereof by Czech and his
laboratory;
(b) That, to the best of his knowledge and without independent inquiry,
apart from the inventions, technologies and other intellectual property referred
to in (a) above, UMass holds no inventions, technologies or other intellectual
property (including without limitation any technologies that it may have
licensed to any third parties) that are necessary for the Corporation to carry
out its scientific development plans in accordance with the budget and time
frames contained in the Corporation's Business Plan delivered by Czech to CytRx
in connection with the Purchase Agreement;
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(c) Czech shall use his commercially reasonable best efforts to secure
from UMass exclusive licenses for the Corporation or its Affiliates to genomics
and proteomics databases (inventions disclosures 01-31, 00-37, 02-38 and 03-134)
and a receptor activated reporter system (invention disclosure 93-09) on terms
no less favorable to the Corporation than those set forth in Exhibit B to this
Agreement;
(d) During the term of any SAB Agreement between Czech and either the
Corporation or CytRx, Czech shall use his commercially reasonable best efforts
to obtain from UMass on behalf of the Corporation a right of first refusal for
the Corporation to license from UMass for the exclusive use by the Corporation
in the Field any inventions, technologies or other intellectual property
developed or acquired by UMass after the date of this Agreement of which Czech
becomes aware;
(e) During the term of any SAB Agreement between Czech and either the
Corporation or CytRx, Czech shall assist CytRx in developing a proposed
long-term strategic plan, business plan and annual budget for the Corporation;
(f) Czech shall serve, without compensation, as the Chairman of the
Corporation's SAB and shall serve, for the compensation described in Section
6(b) below, as a member of CytRx's SAB, subject to the standard-form Scientific
Advisory Board Agreements of the Corporation and CytRx in substantially in the
forms attached hereto as Exhibits A and B, respectively (the "SAB Agreements");
and
(g) Except as set forth on Schedule A, Czech is not party to or bound
by any agreement or obligation for personal services, and there exists no other
impediment, contractual or otherwise, restricting him from entering into this
Agreement, the Purchase Agreement or the SAB Agreements, or from performing any
of his obligations hereunder and thereunder in accordance with the terms hereof
and thereof.
SECTION 6. Certain Covenants of CytRx. As a material inducement to Czech to
enter into this Agreement, CytRx hereby represents, warrants and agrees as
follows with such representations, warranties and covenants to survive the
termination of this Agreement and any transfer by Czech of his Stock:
(a) CytRx shall cause the Corporation to engage Czech as Chair of the
SAB pursuant to its standard-form Scientific Advisory Board Agreement;
(b) Czech shall be entitled to receive from CytRx $5,000 per month for
his service on the CytRx SAB, which will be increased to $7,500 per month upon
the Corporation's signing of a strategic alliance that includes a research
agreement satisfactory to CytRx between the Corporation and a major
pharmaceutical company and funding for research and development positions within
the Corporation, a licensing agreement for the Corporation's technology and
other payments to the Corporation;
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(c) Czech shall not receive any compensation for serving as Chair or as
a member of the Corporation's SAB in addition to the cash compensation described
in (b) above, and other of the Corporation's SAB members shall be entitled to
additional equity compensation based on performance, the achievement of
milestones and other relevant criteria;
(d) Czech shall have the right to approve the Board's appointments of
the Chief Executive Officer, President and Vice President of Research of the
Corporation, and to review press releases relating to announcement of this
Agreement and developments in the Field prior to release, with such approval of
appointments and press releases not to be unreasonably delayed or withheld (and
the Corporation agrees that any press releases shall be approved in writing by
CytRx prior to their release);
(e) Czech shall be authorized by the Board to appoint to the
Corporation's SAB up to three high-profile scientists (who shall not include
Xxxx X. Xxxxxx) who enjoy international renown (with additional Corporation SAB
members to be approved by CytRx's Board of Directors), and, subject to approval
by the Board, these scientists will be offered consulting contracts entitling
them up to $7,500 per quarter plus options to purchase up to 20,000 shares of
CytRx common stock at the then trading price;
(f) If the Corporation's SAB members identify technologies that are
attractive to the Corporation and are licensed to the Corporation, such members
will be afforded the opportunity to obtain additional equity in CytRx;
(g) Czech shall approve the recruitment of 12 scientists to the
Corporation, including the President, Vice President of Research and the head of
the Chemistry Section, which approvals shall not be unreasonably withheld or
delayed;
(h) The principal officers of the Corporation shall be established and
maintained in close proximity of Czech's lab at UMass Medical School; and
(i) Czech may serve on the Scientific Advisory Boards of other
companies not in competition with the Corporation or CytRx.
SECTION 7. Czech Approval Rights. During the Restricted Period, the Corporation
shall not, and CytRx shall not suffer or permit the Corporation to, directly or
indirectly, without the affirmative vote or prior written approval of Czech,
adopt or undertake any of the following actions:
(a) sell, abandon, transfer, lease, license or otherwise dispose of all
or substantially all of the Corporation's properties or assets, or all or
substantially all of the capital stock of the Corporation, or merge or
consolidate with or into, or permit any subsidiary of the Corporation to merge
with or into, any other Person other than pursuant to a Qualified CytRx
Transaction or a Qualified Non-Affiliated Transaction;
(b) take any action to voluntarily liquidate, dissolve or wind up, or
carry out any partial liquidation or dissolution or transaction in the nature of
a partial liquidation or dissolution, of the Corporation other than pursuant to
a Qualified CytRx Transaction;
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(c) repurchase, retire or redeem any shares of capital stock except
pursuant to a Qualified CytRx Transaction or a Qualified Non-Affiliated
Transaction; or
(d) sell or issue any shares of capital stock of the Corporation, or
any stock options, warrants or other rights or securities exercisable for, or
convertible into, shares of capital stock of the Corporation, unless, as a
condition to such sale or issuance, the recipient agrees that all such shares
shall be subject to purchase by CytRx in a Qualified CytRx Transaction pursuant
to the exercise of the Call Option or of the Put Option.
SECTION 8. Legend on Stock Certificates. Each certificate representing shares of
Stock held by the Stockholders shall bear a legend containing the following
words:
"THE SALE, TRANSFER, ASSIGNMENT, PLEDGE, OR ENCUMBRANCE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE AND/OR THE RIGHTS OF THE
HOLDER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IN RESPECT OF
THE ELECTION OF DIRECTORS ARE SUBJECT TO THE TERMS AND CONDITIONS OF A
STOCKHOLDERS AGREEMENT DATED AS OF SEPTEMBER __, 2003, AMONG ARAIOS,
INC. AND CERTAIN HOLDERS OF THE OUTSTANDING SECURITIES OF SUCH
CORPORATION. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY
WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE
SECRETARY OF ARAIOS, INC."
SECTION 9. Additional Shares of Stock. In the event additional shares of Stock
are issued by the Corporation to a Stockholder at any time during the term of
this Agreement, either directly or upon the exercise or exchange of securities
of the Corporation exercisable for or exchangeable into shares of Stock, such
additional shares of Stock shall, as a condition to such issuance, become
subject to the terms and provisions of this Agreement.
SECTION 10. Duration of Agreement.
(a) The term of this Agreement shall expire, and except as otherwise
expressly provided herein, all of the provisions of this Agreement shall
terminate and, shall be of no further force or effect and shall not be binding
upon any party hereto, upon the first to occur of (i) the Termination Date and
(ii) the approval of such termination by the Corporation and the Stockholders.
(b) As to any particular Stockholder, except for the provision of
Sections 5 and 6, which shall survive until the termination of this Agreement as
provided in paragraph (a) above, this Agreement shall no longer be binding or of
further force or effect as to such Stockholder as of the date such Stockholder
has transferred all such Stockholder's interest in Stock in accordance with this
Agreement.
SECTION 11. Noncircumvention. The parties hereto shall act in good faith and
shall refrain from taking any actions, or failing to take actions, to circumvent
or frustrate the provisions of this Agreement. Each of the parties further
agrees to execute and deliver any such documents or instruments and to take any
such actions as shall be reasonably necessary to carry out the terms of this
Agreement.
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SECTION 12. Severability; Governing Law. If any provisions of this Agreement
shall be determined to be illegal and unenforceable by any court of law, the
remaining provisions shall be severable and enforceable in accordance with their
terms. This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Delaware applicable to contracts made and to be
performed wholly therein.
SECTION 13. Assignment, Successors and Assigns. Except as otherwise specifically
provided in this Agreement, this Agreement may not be assigned by any party
without the prior written consent of the other parties, which may be granted or
withheld in their sole and absolute discretion. This Agreement shall bind and
inure to the benefit of the parties and their respective permitted successors
and assigns, legal representatives and heirs.
SECTION 14. Notices. All notices, requests, consents and other communications
hereunder to any party shall be deemed to be sufficient if contained in a
written instrument delivered in person or by telecopy or sent by
nationally-recognized overnight courier or first class registered or certified
mail, return receipt requested, postage prepaid, addressed to such party at the
address set forth below or at such other address as may hereafter be designated
in writing by such party to the other parties:
(i) If to the Corporation, to:
Araios, Inc.
000 Xxxxxx Xxxx
Xxxxxx, XX 00000
Attention: President
Telephone: ______________
Telecopy: ______________
(ii) If to CytRx, to:
CytRx Corporation
00000 Xxx Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Chief Executive Officer
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Xxxx & Xxxxx Professional Corporation
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxxxx, XX
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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(iii) If to Czech, to:
Xx. Xxxxxxx X. Czech
00 Xxxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
Telephone: ___-___-____
Telecopy: ___-___-____
with a copy to:
All such notices, requests, consents and other communications shall be
deemed to have been delivered (a) in the case of personal delivery or delivery
by telecopy, on the date of such delivery, (b) in the case of dispatch by
nationally-recognized overnight courier, on the next business day following such
dispatch and (c) in the case of mailing, on the third business day after the
posting thereof.
SECTION 15. Modification. Except as otherwise provided herein, neither this
Agreement nor any provisions hereof can be modified, changed, discharged or
terminated except by an instrument in writing signed by the Corporation and the
Stockholders.
SECTION 16. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be a part
of this Agreement.
SECTION 17. Nouns and Pronouns. Whenever the context may require, any pronouns
used herein shall include the corresponding masculine, feminine or neuter forms,
and the singular form of names and pronouns shall include the plural and
vice-versa.
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SECTION 18. Entire Agreement. This Agreement and the other writings referred to
herein or delivered pursuant hereto contain the entire agreement among the
parties hereto with respect to the subject matter hereof and supersede all prior
and contemporaneous agreements and understandings with respect thereto.
SECTION 19. Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
SECTION 20. Attorneys' Fees. In the event that any party hereto brings an action
or proceeding for a declaration of the rights of the parties under this
Agreement, for injunctive relief, for an alleged breach or default of, or any
other action arising out of, this Agreement or the transactions contemplated
hereby, or in the event any party is in default of its obligations pursuant
hereto, whether or not suit is filed or prosecuted to final judgment, the
prevailing party in any such action or proceeding shall be entitled to
reasonable attorneys' fees, in addition to any court costs incurred and in
addition to any other damages or relief awarded.
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SECTION 21. Dispute Resolution.
(a) Either for any emergency or preliminary injunction or relief which
may be sought and obtained from any court of competent jurisdiction, any
controversy, claim or dispute arising out of or relating to the rights or duties
of the parties under this Agreement or any resulting transaction, shall be
determined by binding arbitration in accordance with this Section 20. Any
controversy regarding whether a dispute is an arbitrable dispute shall be
determined by the arbitrator. The arbitration shall be conducted by a retired
superior court judge or appellate court justice on the panel of JAMS/ENDISPUTE
in Los Angeles, California, or its successor, in accordance with the rules of
JAMS/ENDISPUTE then prevailing for commercial disputes, as modified herein. If
JAMS/ENDISPUTE is not able to conduct the arbitration, then unless the parties
shall otherwise mutually agree, arbitration shall be conducted by a retired
judge of the Superior Court of Los Angeles County, California, or a retired
justice of the Court of Appeals of the State of California for the Second
District, in accordance with the rules of the American Arbitration Association
("AAA"), as modified herein. In either case, there shall be only one arbitrator
who shall be selected by mutual agreement of the parties, failing which the
selection shall be made by the most senior retired judge or justice on the panel
of JAMS/ENDISPUTE or its replacement. The parties further agree irrevocably to
submit themselves, in any suit to confirm the judgment of finding of such
arbitrator, to the jurisdiction of any court of the State of California located
in Los Angeles County and waive any and all objections to jurisdiction that they
may have under the laws of the State of California or the United States.
(b) The rules to be followed in the arbitration shall be as follows:
(i) The petition for arbitration shall be submitted in the
form of a complaint, prepared in conformance with the California Code
of Civil Procedure, section 420 et seq., filed with the arbitrator,
with copies personally served on all responding parties.
(ii) The respondent shall have 30 days to file a response in
the form of any answer, prepared in compliance with California Code of
Civil Procedure section 431.30.
(iii) Demurrers, motions to strike, and other pretrial motions
permitted under the California Code of Civil Procedure shall be
permitted in the arbitration proceeding.
(iv) The matters at issue shall be set for hearing by the
arbitrator.
(v) Within 20 days after the filing of the answer, the
arbitrator shall schedule, upon mutual agreement of the parties, a
pre-hearing conference, discovery and hearing dates. If the parties are
unable so to agree, the arbitrator shall set the appropriate dates. The
parties shall be allowed to conduct discovery under the provisions of
the California Code of Civil Procedure sections 1282.6, 1283 and
1283.05, except subsection (e)of 1283.05. Any disputes concerning
discovery shall be submitted to the arbitrator. At the arbitration
hearing, order of proof shall be governed by the California Code of
Civil Procedure unless the parties mutually agree otherwise.
Admissibility of evidence shall be governed by the California Evidence
Code.
(c) The arbitrator shall comply with, and the decision of the
arbitrator shall be rendered in accordance with, the laws of the State of
California. The parties agree to be bound by the decision of the arbitrator,
which shall be final, shall not be appealable, and which shall not permit trial
13
de novo on the same issues. The arbitrator's decision shall be rendered within
30 days following submission of the matters at issue, but the failure to comply
with this provision shall in no way invalidate any decision or award as may be
rendered more than 30 days after submission. The fees and costs of the
arbitrator shall be shared equally by the Members. The arbitrator shall award
legal fees, disbursements and other expenses to the prevailing party in
accordance with the terms of this Agreement. The judgment upon the award
rendered by the arbitrator may be entered in any court having jurisdiction.
* * *
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
ARAIOS, INC.
By: /s/ Xxxx X. Xxxxxx
----------------------------
Xxxx X. Xxxxxx, Ph.D.
President
CYTRX CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxxx
----------------------------
Xxxxxx X. Xxxxxxxxx
Chief Executive Officer
/s/ Xxxxxxx X. Czech
----------------------------
XX. XXXXXXX X. CZECH
14
SCHEDULE 1
# of Shares of # of Shares of
Common Stock Preferred Stock
--------------- -----------------
Xx. Xxxxxxx X. Czech...................... 100 --
CytRx Corporation......................... -- 2,000
15
SPOUSAL CONSENT
I, _______________, the spouse of Xx. Xxxxxxx X. Czech, one of the
Stockholders named in the foregoing Stockholders Agreement, dated as of
September 17, 2003 (the "Agreement"), acknowledge that I have reviewed and
understand the Agreement and hereby agree to be bound by each and every term and
condition of the Agreement. I agree to sell any shares of capital stock that I
may have in the Corporation or any interest therein, including, but not limited
to, my community property interest in any of the shares of capital stock on the
terms and conditions stated in the Agreement and any of the other Transaction
Documents. By my signature below, I hereby acknowledge that I have been advised
to, and have had the opportunity to, seek independent legal counsel with respect
to these matters.
I ACKNOWLEDGE THAT I HAVE BEEN ADVISED TO HAVE THE AGREEMENT REVIEWED
BY INDEPENDENT LEGAL COUNSEL AND TO CONSULT WITH SUCH COUNSEL REGARDING THE
PROVISIONS AND RESTRICTIONS OF THE AGREEMENT AND ITS IMPACT ON ME. I ACKNOWLEDGE
THAT I HAVE HAD FULL AND ADEQUATE OPPORTUNITY TO HAVE THE AGREEMENT REVIEWED BY
INDEPENDENT LEGAL COUNSEL AND TO DISCUSS THIS AGREEMENT WITH SUCH COUNSEL.
Dated this _____ day of September, 2003.
----------------------------
Signature
----------------------------
Print Name
16
SCHEDULE A
The Scientific Advisory Board Consulting Agreement and related
agreements by and between Xx. Xxxxxxx X. Czech and Metabolix, Inc., a Delaware
corporation, located in Hayward, CA, a copy of which has been provided to the
Company and Araios.
The conflict of interest and intellectual property transfer policies of
the University of Massachusetts ("UMass"), as outlined in that certain letter
dated July 28, 2003 from Xxxxxx X. Xxxxxx of UMass to Dr. Czech, a copy of which
has been provided to the Company and Araios, and the "University of
Massachusetts Uniform Consulting Agreement Provisions" referenced therein and
set forth below:
UNIVERSITY OF MASSACHUSETTS
UNIFORM CONSULTING AGREEMENT PROVISIONS
All faculty at the University of Massachusetts (the "University") are
subject to the University Policy on Faculty Consulting and Outside Activities
(the "Policy"). The Policy recommends that faculty at the University attach
these Uniform Consulting Agreement Provisions ("Uniform Provisions") to any
agreement or arrangement ("Consulting Agreement") under which a faculty member
will provide consulting services to, or will engage in other non-academic
activities in his or her area of expertise on behalf of any for-profit
organization (a "Company"). These Uniform Provisions are intended to clarify,
among other things, the respective legal rights of the University and the
Company in any intellectual property and other work product that may be
developed or discovered by the faculty member in the course of performing
services for the Company. If any term of the Uniform Provisions is inconsistent
with a term of the Consulting Agreement to which the Uniform Provisions are
attached, the terms of the Uniform Provisions govern.
University faculty are permitted to devote the equivalent of one day
within the academic week to the performance of outside activities, including
consulting with Companies. These activities must he reported to the Department
Chair of the faculty member in order to ensure compliance with this time
restriction and the ability of the faculty member to meet his or her
responsibilities to the University. In certain instances, these activities must
also be reviewed by the University's Conflicts Committee. The Conflicts
Committee may impose restrictions on the consulting relationship.
University faculty are ordinarily prohibited from using
University-administered funds, facilities, and equipment in the performance of
services for a Company pursuant to a Consulting Agreement. In addition, faculty
must obtain special approval to involve University students in consulting or
other services for Companies. Companies may obtain access to University
facilities, equipment, and personnel under a sponsored research agreement with
the University.
University faculty may not use the name of the University in relation
to any outside activities, including consulting work, except to describe their
credentials.
University faculty are permitted to assign to a Company their rights in
any invention, discovery, or development (collectively, "Intellectual Property")
that arises while performing services under a Consulting Agreement, provided
that the faculty member did not use University-administered funds, facilities,
or equipment (collectively, "University Resources") in the course of developing
that Intellectual Property. if a faculty member made significant use of
University Resources, the faculty member is contractually obligated to assign to
the University all of his or her rights in that Intellectual Property.
The University presumes that a faculty member did make significant use
of University Resources in the development of Intellectual Property that is the
same as, directly related to, or substantially similar to a research project in
which that faculty member is engaged at the University. In order to avoid any
confusion regarding ownership of Intellectual Property, the University has
determined and Company agrees that the field of services to be provided under
this Consulting Agreement is directly related to or substantially similar to the
research projects undertaken by the faculty member at the University. Therefore,
any Intellectual Property developed by the faculty member during the term of
this Consulting Agreement is owned by the University, and the Company may enter
into negotiations to obtain license rights to the Intellectual Property.
No Consulting Agreement may limit the ability of a University faculty
member to use or publish information that (a) was developed, discovered, or
acquired by the faculty member in the course of research performed at the
University or otherwise outside the scope of the consulting services, (b) was in
the public domain before the consulting services were performed (C) entered the
public domain by means other than an unauthorized disclosure resulting from an
act or omission by the faculty member, (d) was known to the faculty member or
the University before the consulting services were performed, or (e) is required
to be disclosed in order to comply with applicable law, regulations, or a court
order.
A Company may require a faculty member to leave with the Company any
notes, data, and records developed in the performance of consulting services,
provided that the faculty member may retain one copy of those documents for
archival purposes.
Companies should be aware that, in addition to the Policy, University
faculty are subject to the University Intellectual Property Policy and the
University Policy on Conflicts of Interest Relating to Intellectual Property and
Commercial Ventures. The University will make the three policies available upon
request.
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These Uniform Provisions remain in effect during the entire term of the
Consulting Agreement to which they are attached.
AGREED AND ACCEPTED:
Faculty Member Company
By:
------------------------------- --------------------------------------
Printed Name Print Legal Name of Company
Date: By:
------------------------------- ----------------------------------
Printed Name:
---------------------
Title:
--------------------------------
Date:
---------------------------------
University of Massachusetts
By:
-------------------------------
Printed Name
Title:
----------------------------
Date:
-----------------------------
3
