EXHIBIT 10.10
PREFERRED STOCK PURCHASE AGREEMENT
THIS PREFERRED STOCK PURCHASE AGREEMENT (this "Agreement") is made as
of September 16, 2003 by and among Araios, Inc., a Delaware corporation (the
"Company"), and CytRx Corporation, a Delaware Corporation (the "Purchaser").
WHEREAS the Company desires to issue and sell to the Purchaser and the
Purchaser desires to purchase on the terms and subject to the conditions set
forth in this Agreement two thousand (2,000) shares (the "Shares") of the
Company's Series A Convertible Preferred Stock, par value $0.01 per share (the
"Series A Preferred Stock");
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement the parties hereto agree as follows:
ARTICLE 1
PURCHASE AND SALE OF SERIES A PREFERRED STOCK
1.1 Authorization of Series A Preferred Stock. The Company has, or
before the Closing (as hereinafter defined) will have, authorized the issuance
and sale of the Shares of its Series A Preferred Stock, having the rights,
restrictions, privileges and preferences as set forth in the Amended and
Restated Certificate of Incorporation of the Corporation (the "Restated
Certificate") attached to this Agreement as Exhibit A.
1.2 Closing. Subject to the terms and conditions set forth in this
Agreement, at the Closing the Company agrees to issue and sell to the Purchaser
and the Purchaser agrees to purchase from the Company the Shares, at a purchase
price of $3,500 per share, for an aggregate purchase price of $7,000,000 (the
"Aggregate Purchase Price"). The closing of the purchase and sale of the Shares
(the "Closing") shall take place at the offices of Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, at 10:00 A.M.
on September 17, 2003 or at such time and date thereafter as the Purchaser and
the Company may agree (the "Closing Date"). At the Closing, the Company will
deliver to the Purchaser a certificate for the Shares registered in its name (or
its nominee), against a transfer of funds to the account of the Company by wire
transfer representing the Aggregate Purchase Price.
ARTICLE 2
THE COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce the Purchaser to enter into this Agreement and to
consummate the transactions contemplated hereby, the Company (with the personal
knowledge of ▇▇. ▇▇▇▇▇▇▇ ▇. Czech and ▇▇▇▇ ▇. ▇▇▇▇▇▇, Ph.D. being attributable
to the Company) hereby makes the following representations and warranties to the
Purchaser effective as of the date hereof:
2.1 Incorporation, Standing and Qualification of the Company. The
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware. The Company has requisite
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted and as proposed to be conducted.
2.2 Subsidiaries. The Company does not (i) own of record or
beneficially, directly or indirectly, (A) any shares of capital stock of any
other corporation or (B) any participating interest in any partnership, joint
venture or other non-corporate business enterprise, or (ii) control, directly or
indirectly, any other entity.
2.3 Corporate Power and Authority. The Company has the requisite power
and authority to execute and deliver this Agreement, the Shares, and other
agreements and the certificates contemplated hereby to which it is a party
(collectively, the "Related Agreements"), to perform its obligations hereunder
and thereunder and to engage in the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and each of the Related
Agreements by the Company and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action and no further action is required by the Company, its Board of
Directors or its stockholders in connection with such authorization. This
Agreement has been duly executed and delivered and is, and upon the execution
and delivery thereof the Shares and each of the Related Agreements will be,
legal, valid and binding obligations of the Company, enforceable in accordance
with their terms, subject to laws of general application from time to time in
effect affecting creditors' rights and the exercise of judicial discretion in
accordance with general equitable principles.
2.4 Certificate of Incorporation and By-Laws. The Company has made
available to the Purchaser true, correct and complete copies of its Certificate
of Incorporation and By-Laws, and all amendments to and restatements of each as
of the date hereof. Prior to the Closing, the Company shall have properly filed
the Restated Certificate to permit the Company to fulfill its obligations under
this Agreement.
2.5 Litigation; Compliance with Laws.
(a) Litigation. There is no action, suit, claim, litigation,
proceeding, investigation, arbitration or governmental inquiry, at law
or in equity, or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, or arbitration involving private
parties (collectively, a "Proceeding") pending or, to the knowledge of
the Company, threatened against the Company or affecting any of its
properties or assets. There are no Proceedings pending or, or to the
Company's knowledge, threatened which might call into question the
validity of this Agreement, any of the Shares, any of the Related
Agreements or any action taken or to be taken pursuant hereto or
thereto.
(b) Compliance with Laws. The Company has complied with, and
is not in violation of or in default (with due notice or lapse of time
or both) with respect to, all laws, governmental rules, governmental
regulations, governmental orders, judgments, decrees, writs,
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injunctions and awards of any arbitration, court or governmental
authority applicable to it and its business, as conducted or
contemplated to be conducted, except where such failure to comply,
violation or default would not have, or be reasonably expected to
result in, either individually or in the aggregate, a material adverse
effect on the business, financial condition, assets, liabilities,
contractual rights or prospects of the Company (a "Material Adverse
Effect"). The Company has, or can obtain on commercially reasonable
terms, all material permits, licenses and other rights, privileges and
authorizations (including all licenses of technologies from the
University of Massachusetts Medical School ("UMMS")) required to
conduct its business, as conducted or contemplated to be conducted,
except where failure to have any such franchises, permits, licenses or
other rights, privileges or authorizations would not have, or be
reasonably expected to result in, either individually or in the
aggregate, a Material Adverse Effect. There is no existing law,
governmental rule, governmental regulation or governmental order
applicable to or binding upon the Company, and the Company is not aware
of any proposed law, governmental rule, governmental regulation or
governmental order, whether federal or state, which would prohibit or
materially restrict the Company from, or otherwise materially adversely
affect the Company in, conducting its business in any jurisdiction in
which it is now conducting business.
2.6 Conflicting Agreements; Violations of Charter Provisions. The
Company is not bound by any agreement or instrument or subject to any charter or
other corporate restriction which materially and adversely affects the business,
properties, operations, condition, prospects or affairs, financial or otherwise,
of the Company. The Company is not in violation or default of its Certificate of
Incorporation, By-laws or other corporate restriction, or of any material
agreement or instrument to which it is a party or by which it or any of its
assets is bound, where any such violation, noncompliance or default would have,
or be reasonably expected to result in, either individually or in the aggregate,
a Material Adverse Effect. Neither the authorization, execution, delivery and
performance of this Agreement or the Related Agreements, nor the sale, issuance
and delivery of the Shares, nor the consummation of the transactions herein and
therein contemplated, nor the fulfillment of or compliance with the terms hereof
and thereof, will conflict with or result in a breach or default of any of the
terms of the charter or By-laws or any other corporate restriction, or of any
statute, law, rule or regulation, or of any judgment, decree, writ, injunction,
order or award of any arbitrator, court or governmental authority, or of any
material provision of any agreement or instrument, which is applicable to the
Company or by which the Company or any of its assets is bound, or constitute a
material default thereunder, or result in the creation or imposition of any
material Lien upon any of the assets of the Company.
2.7 Governmental Approvals. Subject to the accuracy of the
representations and warranties of the Purchaser set forth in Article 3, no
registration or filing with, or consent or approval of or other action by, any
federal, state or other governmental agency or instrumentality, domestic or
foreign, under laws and regulations thereof as now in effect is or will be
necessary for the valid execution, delivery and performance by the Company of
this Agreement, or any of the Related Agreements, the issuance, sale and
delivery of the Shares and the Conversion Shares (as defined in Section 2.8(a)),
other than filings pursuant to state securities laws (all of which filings have
been made by the Company or will be made within the period of time required by
such state securities laws) in connection with the sale of the Shares.
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2.8 Capitalization; Status of Capital Stock.
(a) The authorized capital of the Company (immediately prior
to the Closing but after the filing of the Restated Certificate)
consists of (a) 5,000 shares of Common Stock, of which, immediately
after the Closing, (i) 100 shares will be issued and outstanding and
(ii) at least 2,000 shares will be reserved for the conversion of the
Shares, and (b) 2,000 shares of preferred stock, $0.01 par value per
share, all of which will have been designated as Series A Convertible
Preferred Stock and which, immediately after the Closing, 2,000 will be
issued and outstanding. All the outstanding shares of capital stock of
the Company have been duly authorized, are validly issued and are fully
paid and non-assessable. As of immediately prior to the Closing, the
designations, powers, preferences, rights, qualifications, limitations
and restrictions in respect of the authorized capital stock of the
Company will be as set forth in the Restated Certificate, and all such
designations, powers, preferences, rights, qualifications, limitations
and restrictions will be valid, binding and enforceable and in
accordance with all applicable laws. The Shares, when issued and
delivered in accordance with the terms hereof, and the shares of Common
Stock when issued and delivered upon the conversion of the Shares (as
adjusted from time to time in accordance the Restated Certificate, the
"Conversion Shares"), will be duly authorized, validly issued, fully
paid and non-assessable and will be free and clear of all Liens or
restrictions imposed by or through the Company except as set forth in
this Agreement. Immediately after the Closing, the shares of Series A
Preferred Stock held by the Purchaser will represent not less than 95%
of the outstanding shares of Common Stock, calculated on a Fully
Diluted Basis. The Conversion Shares have been duly reserved for
issuance.
(b) Set forth in Schedule 2.8(b) is a true and complete list
of the number of shares of Common Stock or other securities of the
Company which, as of immediately after the Closing will be held by each
stockholder of the Company. Except for the Shares and as set forth in
Schedule 2.8(b), there are no subscriptions, options, warrants or other
rights (contingent or otherwise) to purchase or otherwise acquire
shares of capital stock or other securities of the Company authorized,
issued or outstanding, nor is the Company obligated in any other manner
to issue shares of its capital stock, subscriptions, warrants, options,
convertible securities, or other such rights or to distribute to
holders of any of its equity securities any evidence of indebtedness or
asset. Except as set forth in Schedule 2.8(b), there are no outstanding
shares of capital stock or other securities of the Company.
(c) Except as contemplated by this Agreement or set forth in
the Restated Certificate, (i) there are no restrictions on the transfer
of shares of capital stock of the Company other than those imposed by
relevant state and Federal securities laws; (ii) there are no
agreements, understandings, proxies, trusts or other collaborative
arrangements concerning the voting, pledge or purchase and sale of the
capital stock of the Company; (iii) no holder of any security of the
Company is entitled to preemptive, first refusal or similar statutory
or contractual rights, either arising pursuant to any agreement or
instrument to which the Company is a party, or which are otherwise
binding upon the Company, or to the best of the Company's knowledge, to
which any other Person is a party; and (iv) the Company has no
obligation (contingent or otherwise) to purchase, redeem or otherwise
acquire any of its equity securities or any interest therein or to pay
any dividend or make any other distribution in respect thereof.
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(d) Assuming that the representations and warranties of the
Purchaser contained in Article 3 of this Agreement are true, it is not
necessary in connection with the offer, sale and delivery of the Shares
in the manner contemplated by this Agreement to register the Shares or
the Conversion Shares under the Securities Act or under applicable
state securities or Blue Sky laws regulating the issuance or sale of
securities.
2.9 Liabilities. Except for covenants and other obligations referred to
herein, the Company does not have any material liabilities or obligations of any
nature (absolute, accrued, contingent or otherwise).
2.10 Broker's Fees. No fees or commissions or similar payments with
respect to the transactions contemplated by this Agreement of the Related
Agreement have been paid or will be payable by the Company to any broker,
financial advisor, finder, investment banker or bank.
2.11 Transactions With Affiliates. Except for covenants and other
obligations referred to herein, none of the officers, directors or employees of
the Company, or any of their respective affiliates, is presently a party to any
transaction with the Company.
2.12 Contracts. Except as described on Schedule 2.13 there are no
contracts, agreements, arrangements, understandings, leases, subleases, license,
sublicenses, instruments of indebtedness or commitments, in each case, whether
oral or written, to which the Company is a party or by which it or its assets is
bound or affected.
2.13 Employees. The Company has no officers, employees or consultants
other than ▇▇. ▇▇▇▇▇▇▇ ▇. Czech and ▇▇▇▇ ▇. ▇▇▇▇▇▇, Ph.D., or any employment or
consulting agreements with Dr. Czech or any other individual.
ARTICLE 3
THE REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Company as follows:
3.1 Power and Authority Relative to this Transaction. The Purchaser has
full power and authority and has taken all action necessary to permit it to
execute and deliver and to carry out the terms of this Agreement and all other
documents or instruments required hereby. This Agreement constitutes the legal,
valid and binding obligation of the Purchaser, enforceable in accordance with
its terms, subject to laws of general application from time to time in effect
affecting creditors' rights and the exercise of judicial discretion in
accordance with general equitable principles.
3.2 Accredited Investor. The Purchaser was not formed for the purpose
of acquiring the Shares and is an "accredited investor" as that term is defined
in Rule 501 of Regulation D promulgated under the Securities Act.
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3.3 Investment Representations. The Purchaser is acquiring the Shares
for its own account and the Shares were acquired by it for the purpose of
investment and not with a view to distribution or resale thereof in violation of
the Securities Act and the rules and regulations promulgated thereunder. The
Purchaser understands that none of the Shares and Conversion Shares has been
registered under the Securities Act or any other applicable securities laws,
and, therefore, cannot be resold unless they are subsequently registered under
the Securities Act and other applicable securities laws or unless an exemption
from such registration is available. The Purchaser agrees not to resell or
otherwise dispose of all or any part of the Shares purchased by it or the
Conversion Shares, except as permitted by law, including, without limitation,
any regulations under the Securities Act and other applicable securities laws;
the Company does not have any present intention and is under no obligation to
register the Shares or Conversion Shares under the Securities Act and other
applicable securities laws. The Purchaser further represents that it understands
and agrees that all certificates evidencing any of the Shares or Conversion
Shares, whether upon initial issuance or upon any transfer thereof, shall bear a
legend, prominently stamped or printed thereon, reading substantially as
follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY OTHER SECURITIES
LAWS. THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A
VIEW TO DISTRIBUTION OR RESALE. SUCH SECURITIES MAY NOT BE OFFERED FOR
SALE, SOLD, DELIVERED AFTER SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT COVERING SUCH
SECURITIES UNDER THE SECURITIES ACT OF 1933 AND ANY OTHER APPLICABLE
SECURITIES LAWS, UNLESS THE HOLDER SHALL HAVE OBTAINED AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION THAT SUCH
REGISTRATION IS NOT REQUIRED OR THE TRANSFEREE IS AN AFFILIATE OF THE
HOLDER."
3.4 Access To Information. The Purchaser acknowledges that during the
course of this transaction and prior to the purchase of any Shares, it has had
the opportunity to ask questions of and receive answers from representatives of
the Company concerning the terms and conditions of the offering of the Shares,
and to obtain additional information, documents, records and books relative to
the Company, its business, and an investment in the Company.
3.5 Knowledge and Experience. The Purchaser has sufficient knowledge
and experience in business and financial matters and with respect to investment
in the securities of privately held companies so as to enable it to analyze and
evaluate the merits and risks of the investment contemplated hereby and is
capable of protecting its interest in connection with this transaction. The
Purchaser is able to bear the economic risk of such investment including a
complete loss of the investment.
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ARTICLE 4
CLOSING CONDITIONS & COVENANTS
4.1 Conditions to the Purchaser's Obligations. The Purchaser's
obligations to purchase and pay for the Shares are subject to the following
conditions:
(a) Representations and Warranties; Covenants; Officer's
Certificate. The Company's representations and warranties contained in
Article 2 shall be true, correct and complete on and as of the date of
the Closing with the same effect as if made on and as of the date of
the Closing. All agreements and conditions to be performed or satisfied
by the Company hereunder on or before the date of the Closing shall
have been duly performed or satisfied.
(b) Restated Certificate. The Restated Certificate shall be in
the form set forth in Exhibit A and filed with the Secretary of State
of Delaware.
(c) Stockholders Agreement. The Company and Purchaser shall
enter into a Stockholders Agreement in the form set forth in Exhibit B.
(d) Employment and SAB Agreements. The Company shall enter
into an employment agreement with ▇▇▇▇ ▇. ▇▇▇▇▇▇, Ph.D. in the form set
forth in Exhibit C and a Scientific Advisory Board Member Agreement
with ▇▇▇▇▇▇▇ ▇. Czech, Ph.D. in the form set forth in Exhibit D. The
Company shall also have secured written commitments from ▇▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, Dr. C. ▇▇▇▇▇▇ ▇▇▇▇, and ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ to enter into a
Scientific Advisory Board Member Agreement in substantially the form
set forth in Exhibit E.
(e) Closing Documents. The Purchaser or its counsel shall have
received:
(i) A certificate dated as of the Closing as to the
good standing and legal existence of the Company in the State
of Delaware;
(ii) A certificate of the Secretary of the Company
dated the Closing Date and certifying that attached thereto is
a true and complete copy of (A) the By-Laws of the Company as
in effect on the date of such certification, and (B) all
resolutions adopted by the Board of Directors and the
stockholders of the Company authorizing the execution,
delivery and performance of this Agreement, the approval and
adoption of the Restated Certificate, the issuance, sale and
delivery of the Shares and the reservation, issuance and
delivery of the Conversion Shares; and
(iii) Such additional supporting documents and other
information with respect to the operations and affairs of the
Company as the Purchaser or its counsel reasonably may
request.
(f) Board of Directors. The size of the Board of Directors of
the Company shall be set at five (5) and immediately following the
Closing shall consist of ▇▇▇▇ ▇. ▇▇▇▇▇▇, Ph.D.; three members
designated by the Purchaser, who shall initially be ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
and two additional persons to be designated by the Purchaser after the
date of this Agreement and one member designated by the management of
the Company and elected after the Closing.
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(g) Performance. The Company shall have performed and complied
with all agreements, obligations and conditions contained in this
Agreement that are required to be performed or complied with by it on
or before the Closing.
(h) Qualifications. All authorizations, approvals, or permits,
if any, of any governmental authority or regulatory body of the United
States or of any state that are required in connection with the lawful
issuance and sale of the Shares pursuant to this Agreement shall be
duly obtained and effective as of the Closing.
(i) UMMS License and Consents. The Purchaser shall have
entered into an exclusive license agreement with UMMS substantially in
the form set forth in Exhibit F (the "UMMS License"), and ▇▇▇▇▇▇▇ ▇.
Czech, Ph.D. and/or the Company shall have obtained consent from UMMS
to enter into this Agreement, the Related Agreements and the
transactions contemplated hereby, including acknowledgment from UMMS
that, with the Purchaser's payment of the Aggregate Purchase Price, the
Purchaser has fully satisfied its obligations to raise $10 million
under its existing license agreements with UMMS.
4.2 Conditions to the Company's Obligations. The Company's obligation
to issue the Shares to the Purchaser is subject to the satisfaction of the
following conditions:
(a) Representations and Warranties. The representations and
warranties of the Purchaser contained in Article 3 shall be true,
correct and complete on and as of the date of the Closing with the same
effect as if made on and as of the date of the Closing.
(b) Stockholders Agreement. The Company and Purchaser shall
enter into a Stockholders Agreement in the form set forth in Exhibit B.
(c) Employment and SAB Agreements. The Company shall enter
into an employment agreement with ▇▇▇▇ ▇. ▇▇▇▇▇▇, Ph.D. in the form set
forth in Exhibit C and a Scientific Advisory Board Member Agreement
with ▇▇▇▇▇▇▇ ▇. Czech, Ph.D. in the form set forth in Exhibit D. The
Company shall also have secured written commitments from ▇▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, Dr. C. ▇▇▇▇▇▇ ▇▇▇▇, and ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ to enter into a
Scientific Advisory Board Member Agreement in substantially the form
set forth in Exhibit E.
(d) Closing Documents. The Company or its counsel shall have
received:
(i) A certificate dated as of the Closing as to the
good standing and legal existence of the Purchaser in the
State of Delaware;
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(ii) A certificate of the Secretary of the Purchaser
dated the Closing Date and certifying that attached thereto is
a true and complete copy of (A) the By-Laws of the Purchaser
as in effect on the date of such certification, and (B) all
resolutions adopted by the Board of Directors of the Purchaser
authorizing the execution, delivery and performance of this
Agreement and the Stockholders Agreement; and
(iii) Such additional supporting documents and other
information with respect to the operations and affairs of the
Purchaser or the Parent as the Company or its counsel
reasonably may request.
(e) Performance. Each of the Purchaser and Parent shall have
performed and complied with all agreements contained in this Agreement
required to be performed and complied with it prior to or at the
Closing.
(f) UMMS License and Consents. The Company shall have entered
into the UMMS License and ▇▇▇▇▇▇▇ ▇. Czech, Ph.D. and the Company shall
have obtained consent from UMMS to enter into this Agreement, the
Related Agreements and the transactions contemplated hereby, including
acknowledgment from UMMS that, with the Purchaser's payment of the
Aggregate Purchase Price, the Purchaser has fully satisfied its
obligations to raise $10 million under its existing license agreements
with UMMS.
(g) Payment of Counsel Expenses. The Purchaser shall have paid
the fees of the Company's counsel as set forth in Section 6.18.
4.3 Termination. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to the Closing:
(a) by written agreement of the parties;
(b) by the Company, if the Purchaser has breached any
representation, warranty, covenant or agreement contained in this
Agreement in and has not cured such breach within ten days after
written notice to the Purchaser (provided, that the Company is not then
in material breach of the terms of this Agreement, and provided
further, that no cure period shall be required for a breach which by
its nature cannot be cured);
(c) by Purchaser, if the Company has breached any
representation, warranty, covenant or agreement contained in this
Agreement and has not cured such breach within ten days after written
notice to the Company (provided, that the Purchaser is not then in
material breach of the terms of this Agreement, and provided further,
that no cure period shall be required for a breach which by its nature
cannot be cured);
(d) by any party, if the Closing has not occurred on or before
November 15, 2003; provided, however, that a party may not terminate
this Agreement pursuant to this Section if the failure of such party to
fulfill any of its obligations hereunder shall have been the principal
reason that the Closing shall not have occurred on or before said date;
and
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(e) by any party if there shall be a change of law or
regulation that makes consummation of the transactions contemplated
hereby illegal or otherwise prohibited or if consummation of the
transactions contemplated hereby would violate any nonappealable, final
order, decree or judgment of any court or governmental body having
competent jurisdiction.
4.4 Notice. The party desiring to terminate this Agreement pursuant to
Section 4.3 shall given notice of such termination to the other parties hereto.
4.5 Effects of Termination. If this Agreement is terminated as provided
in Section 4.4, such termination shall be without liability of either party to
the other parties to this Agreement except as otherwise provided herein,
provided, that this Section 4.5 shall remain in effect, and provided, further,
that if such termination shall result from the (i) willful failure by any party
to fulfill a condition to the performance of the obligations of the other party,
(ii) failure by any party to perform a covenant of this Agreement, or (iii)
breach by any party hereto of any representation, warranty, covenant or
agreement contained herein, such party shall be fully liable for any and all
damages incurred or suffered by the other parties as a result of such failure or
breach.
4.6 Post-Closing Covenants. Each of the parties to this Agreement shall
use its respective reasonable best efforts in good faith to take or cause to be
taken as promptly as practicable the following actions:
(a) Company Budget. The Company and the Purchaser will develop
a proposed budget for the Company. The Company shall be operated in a
manner so that the Aggregate Purchase Price will provide sufficient
equity funding to the Company to meet its initial budgeted financial
requirements for its first two years of operations. Additional
scientific staffing and research and development expenditures will be
funded through a research agreement that will be sought by the Company
with a major pharmaceutical company. The Purchaser will fund executive
staffing (i.e., CEO or other executives who are not already Parent
employees) and other infrastructure expenditures in accordance with the
budget.
(b) Parent Scientific Advisory Board. The Purchaser shall
appoint ▇▇▇▇▇▇▇ ▇. Czech, Ph.D. to is Scientific Advisory Board,
pursuant to Purchaser's Scientific Advisory Board Agreement in the form
set forth in Exhibit G. Compensation to Czech for membership on the
Parent SAB will be $5,000 per month. Upon reaching first milestone,
compensation for SAB membership will be increased to $7,500 per month.
First milestone will be signing of a strategic alliance that will
include a research agreement satisfactory to the Purchaser between the
Company and a major pharmaceutical company that includes funding for
research and development positions within the Company, licensing
agreement for Company technology and other payments.
(c) Stock Option Pool. The Purchaser shall seek approval from
its Board of Directors and stockholders to increase its stock option
plans to set aside 900,000 shares (as adjusted for any stock splits,
recapitalizations, combinations, etc.) of its common stock for equity
incentive grants to employees of the Company. The actual amount of such
grants shall be determined from time to time by the Purchaser's
Compensation Committee after consultation with the Company's Board of
Directors.
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(d) Services Agreement. As soon as practicable following the
Closing, the Company and the Purchaser shall enter into a services
agreement pursuant to which the Purchaser shall agree to provide to the
Company certain cash management, accounts payable and accounts
receivable, payroll, tax, insurance, audit, corporate secretary,
corporate finance, strategic development, public relations and similar
general and administrative services. The parties agree that the Company
shall pay the Purchaser a monthly amount, estimated at $50,000, as
reimbursement for such services.
ARTICLE 5
DEFINITIONS
5.1 Definitions.Except as otherwise defined in this Agreement or as the
context may otherwise require, the following terms shall have the respective
meanings set forth below whenever used in this Agreement:
"Aggregate Purchase Price" shall have the meaning assigned to
that term in Section 1.2 of this Agreement.
"Closing" shall have the meaning assigned to that term in
Section 1.2 of this Agreement.
"Closing Date" shall have the meaning assigned to that term in
Section 1.2 of this Agreement.
"Company" shall have the meaning assigned to that term in the
preamble of this Agreement.
"Conversion Shares" shall have the meaning assigned to that
term in Section 2.8 of this Agreement.
"Fully Diluted Basis" shall mean assuming and giving effect to
the exercise, conversion or exchange in full, for Common Stock, of all
then outstanding options, warrants, subscription or purchase rights,
and all exchangeable or convertible securities, and the issuance of all
other shares of Common Stock authorized or reserved for issuance
pursuant to any stock based equity award or similar plan, whether or
not awards with respect to such shares are then outstanding.
"Lien" shall mean: (i) any interest in property (whether real,
personal or mixed and whether tangible or intangible) which secures an
obligation owed to, or a claim by, a Person other than the owner of
such property, whether such interest is based on the common law,
statute or contract, including, without limitation, any such interest
arising from a lease, mortgage, charge, pledge, security agreement,
conditional sale, trust receipt or deposit in trust, or arising from a
consignment of bailment given for security purposes (other than a trust
11
receipt or deposit given in the ordinary course of business which does
not secure any obligation for borrowed money), (ii) any encumbrance
upon such property which does not secure such an obligation, and (iii)
any exception to or defect in the title to or ownership interest in
such property, including, without limitation, reservations, rights of
entry, possibilities of reverter, encroachments, easements, rights of
way, restrictive covenants, licenses and profits a prendre. For
purposes of this Agreement, any Person shall be deemed to be the owner
of the leasehold or other interest in any property which it has
acquired or holds subject to a lease and the owner of any property
which it has acquired or holds subject to a conditional sale agreement
or other similar arrangement pursuant to which title to the property
has been retained by or vested in some other Person for security
purposes.
"Material Adverse Effect" shall have the meaning assigned to
that term in Section 2.5 of this Agreement.
"Person" shall include any individual, a corporation, an
association, a partnership, a trust or estate, a government and any
agency or political subdivision thereof, or any other entity.
"Purchaser" shall have the meaning assigned to that term in
the preamble of this Agreement.
"Proceeding" shall have the meaning assigned to that term in
Section 2.5 of this Agreement.
"Related Agreements" shall have the meaning assigned to that
term in Section 2.3 of this Agreement.
"Restated Certificate" shall have the meaning assigned to that
term in Section 1.1 of this Agreement.
"Series A Preferred Stock" shall have the meaning assigned to
that term in the preamble of this Agreement.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and any similar or successor federal statute, and the rules
and regulations of the Commission thereunder, all as the same shall be
in effect from time to time.
"Shares" shall have the meaning assigned to that term in the
preamble of this Agreement.
"UMMS" shall have the meaning assigned to that term in Section
2.5(b).
12
ARTICLE 6
MISCELLANEOUS
6.1 Notices. All notices, requests, consents and other communications
hereunder shall be in writing, shall be addressed to the receiving party's
address set forth below or to such other address as a party may designate by
notice hereunder, and shall be either (i) delivered by hand, (ii) made by
telecopy or facsimile transmission, (iii) sent by overnight courier, or (iv)
sent by certified mail, return receipt requested, postage prepaid.
If to the Purchaser: CytRx Corporation
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Chief Executive Officer
With a copy to: ▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
If to the Company: Araios, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: ______________________
Fax: ______________________
Attn: President
With a copy to: Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
All notices, requests, consents and other communications hereunder
shall be deemed to have been given (i) if by hand, at the time of the delivery
thereof to the receiving party at the address of such party set forth above,
(ii) if made by telecopy or facsimile transmission, at the time that receipt
thereof has been acknowledged by electronic confirmation or otherwise, (iii) if
sent by overnight courier, on the next business day (or if sent overseas, on the
second business day) following the day such notice is delivered to the courier
service, or (iv) if sent by registered or certified mail, on the 5th business
day (or if sent overseas, on the 10th business day) following the day such
mailing is made.
13
6.2 Entire Agreement. This Agreement, together with the exhibits and
schedules hereto, and the other agreements executed and delivered herewith
embody the entire agreement and understanding between the Purchaser and the
Company, and supersede all prior oral or written agreements and understandings
relating to the subject matter hereof. No statement, representation, warranty,
covenant or agreement of any kind not set forth in this Agreement, including the
exhibits and schedules hereto, shall affect, or be used to interpret, change or
restrict, the express terms and provisions of this Agreement.
6.3 Modifications and Amendments. This Agreement may not be changed,
modified or discharged orally, nor may any waivers or consents be given orally
hereunder, and every such change, modification, discharge, waiver or consent
shall be in writing and signed by the Person against which enforcement thereof
is sought.
6.4 Waivers and Consents. Any waiver or consent hereunder shall be
effective only in the specific instance and for the purpose for which it was
given, and shall not constitute a continuing waiver or consent.
6.5 Binding Effect, Assignment. This Agreement shall be binding upon
and inure to the benefit of the Company and the Purchaser and their respective
successors (including, without limitation, by sale or transfer of all or
substantially all assets, merger or consolidation) and permitted assigns, except
that the Company shall not have the right to delegate its obligations hereunder
or to assign its rights hereunder or any interest herein except by a consent
complying with Section 6.3 above.
6.6 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware (without giving effect to the
principles of conflicts of law thereof).
6.7 Severability. In the event that any court of competent jurisdiction
shall determine that any provision, or any portion thereof, contained in this
Agreement shall be unenforceable in any respect, then such provision shall be
deemed limited to the extent that such court deems it enforceable, and as so
limited shall remain in full force and effect. In the event that such court
shall deem any such provision, or portion thereof, wholly unenforceable, the
remaining provisions of this Agreement shall nevertheless remain in full force
and effect.
6.8 Interpretation. The parties hereto acknowledge and agree that (i)
each party and its counsel, if so represented, reviewed and negotiated the terms
and provisions of this Agreement excluding the Schedules and have contributed to
its revision and (ii) the rule of construction to the effect that any
ambiguities are resolved against the drafting party shall not be employed in the
interpretation of this Agreement.
6.9 Headings and Captions. The headings and captions of the various
subdivisions of this Agreement are for convenience of reference only and shall
in no way modify or affect the meaning or construction of any of the terms or
provisions hereof.
6.10 No Waiver of Rights, Powers and Remedies. No failure or delay by a
party hereto in exercising any right, power or remedy under this Agreement, and
no course of dealing between the parties hereto, shall operate as a waiver of
14
any such right, power or remedy of the party. No single or partial exercise of
any right, power or remedy under this Agreement by a party hereto, nor any
abandonment or discontinuance of steps to enforce any such right, power or
remedy, shall preclude such party from any other or further exercise thereof or
the exercise of any other right, power or remedy hereunder. The election of any
remedy by a party hereto shall not constitute a waiver of the right of such
party to pursue other available remedies. No notice to or demand on a party not
expressly required under this Agreement shall entitle the party receiving such
notice or demand to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the party giving such
notice or demand to any other or further action in any circumstances without
such notice or demand.
6.11 Survival. All representations and warranties made by the parties
hereto in this Agreement or in any other Related Agreement shall survive the
Closing and shall remain in full force and effect thereafter.
6.12 Further Assurances. From and after the date of this Agreement,
upon the request of the Purchaser or the Company, the Company and the Purchaser
shall execute and deliver such instruments, documents and other writings as may
be reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement.
6.13 Counterparts. This Agreement may be executed in one or more
counterparts, and by different parties hereto on separate counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
6.14 Use of Definitions; Gender. Any definitions used herein defined in
the plural shall be deemed to include the singular as the context may require
and any definitions used herein defined in the singular shall be deemed to
include the plural as the context may require. Wherever reference is made herein
to the male, female or neuter genders, such reference shall be deemed to include
any of the other genders as the context may require.
6.15 Jurisdiction and Service of Process. Any legal action or
proceeding with respect to this Agreement may be brought in the courts of the
Suffolk County, Commonwealth of Massachusetts or of the United States of America
for the District of Massachusetts. By execution and delivery of this Agreement,
each of the parties hereto accepts for itself and in respect of its property,
generally and unconditionally, the nonexclusive jurisdiction of the aforesaid
courts. Each of the parties hereto irrevocably consents to the service of
process of any of the aforementioned courts in any such action or proceeding by
the mailing of copies thereof by certified mail, postage prepaid, to the party
at its address set forth in Section 6.1 hereof.
6.16 Publicity. No party shall issue any press releases or otherwise
make any public statement with respect to the transactions contemplated by this
Agreement without the prior written consent of the other party, except as may be
required by law.
15
6.17 No Conflict with University of Massachusetts. Notwithstanding
anything else to the contrary in this Agreement or in any of the Related
Agreements or the transactions contemplated hereby, no point of this Agreement
or in any of the Related Agreements or the transactions contemplated hereby
shall conflict with the obligations of ▇▇▇▇▇▇▇ ▇. Czech, Ph.D. to the UMMS or to
any other university with which he becomes affiliated.
6.18 Expenses. All costs and expenses, including, without limitation,
fees and disbursements of counsel, financial advisors and accountants, incurred
in connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such costs and expenses, whether or not the
Closing shall have occurred; provided, however, that the Purchaser shall pay at
Closing (or if the Closing fails to occur for any reason, not later than
November 15, 2003) the fees and expenses incurred by the Company's legal
counsel, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., in connection with
this Agreement and the transactions contemplated hereby in an aggregate amount
not to exceed $55,724 (of which $20,352 previously has been paid by the
Purchaser).
16
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused this Agreement to be executed by their duly authorized representatives,
as of the date first written above.
COMPANY:
ARAIOS, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, Ph.D.
Its: President
PURCHASER:
CYTRX CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Its: Chief Executive Officer
17
EXHIBIT A
FORM OF RESTATED CERTIFICATE OF INCORPORATION
EXHIBIT B
FORM OF STOCKHOLDERS AGREEMENT
EXHIBIT C
FORM OF ▇▇▇▇▇▇ EMPLOYMENT AGREEMENT
EXHIBIT D
FORM OF CZECH SAB AGREEMENT
EXHIBIT E
FORM OF CYTRX SAB AGREEMENT
EXHIBIT F
FORM OF UMMS LICENSE AGREEMENT
EXHIBIT G
FORM OF ARAIOS SAB AGREEMENT
EXHIBIT A
CERTIFICATE OF AMENDMENT
TO
RESTATED CERTIFICATE OF INCORPORATION
OF CYTRX CORPORATION
CytRx Corporation, a Delaware corporation (the "Company"), hereby
certifies that:
1. The following resolution has been unanimously adopted by the
Company's Board of Directors and has been approved by the holders of a majority
of the Company's outstanding common stock in accordance with the Delaware
General Corporation Law for the purpose of amending the Company's Restated
Certificate of Incorporation:
RESOLVED, that the Restated Certificate of Incorporation of
the Corporation be amended by deleting in its entirety the Fourth Article and by
replacing it with the following:
"FOURTH: The total number of shares of all classes of stock
that the corporation shall have the authority to issue is One Hundred and Five
Million (105,000,000), of which One Hundred Million (100,000,000) shall be
common stock, par value $.001 per share (the "Common Stock"), and Five Million
(5,000,000) shall be preferred stock, par value $.01 per share (the "Preferred
Stock").
The Board of Directors is hereby authorized, subject to any
limitations prescribed by law, to provide for the issuance of the shares of
Preferred Stock in series, and by filing a Certificate pursuant to the
applicable law of the State of Delaware (hereinafter referred to as a "Preferred
Stock Designation"), to establish from time to time the number of shares to be
included in each such series, and to fix the designations, powers, preferences,
and rights of the shares of each such series, any qualifications, limitations or
restrictions thereof."
2. The above amendment was duly adopted by the Company in accordance
with the provisions of Section 242 of the Delaware General Corporation Law.
IN WITNESS WHEREOF, CytRx Corporation has caused this Certificate of
Amendment to be signed by a duly authorized officer of this ____________ 2003
CytRx Corporation
By:
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
EXHIBIT B
FORM OF STOCKHOLDERS AGREEMENT
FILED SEPARATELY IN CYTRX CORPORATION'S FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2003
EXHIBIT C
FORM OF ▇▇▇▇▇▇ EMPLOYMENT AGREEMENT
FILED SEPARATELY IN CYTRX CORPORATION'S FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2003
EXHIBIT D
CYTRX CORPORATION
SCIENTIFIC ADVISORY BOARD AGREEMENT
This Agreement, dated as of September 17, 2003 (the "Agreement") is
made by and between CytRx Corporation, a Delaware corporation (the "Company"),
and ▇▇. ▇▇▇▇▇▇▇ ▇. Czech ("Advisor") with reference to the following facts.
1. Company has formed a scientific advisory board (the "Scientific
Advisory Board") that will (i) advise the Company on matters related to the
Company's research and development and the Company's acquisition of new products
and technologies, (ii) advise the Company with respect to its dealings with the
United States Food and Drug Administration and other such regulatory agencies,
and (iii) advise the Company with respect to strategic planning in the
pharmaceutical, biopharmaceutical, genomics, and other related areas.
2. Advisor's expertise and stature will materially benefit the Company
in its operations, research and development activities or strategic planning
efforts.
WHEREAS, the Company and Advisor wish to enter into this Agreement,
whereby Advisor shall become a member of the Scientific Advisory Board.
NOW, THEREFORE, in consideration of the premises and the agreements set
forth herein, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
(a) Services. Advisor agrees to provide to the Company such services as
are customarily performed by a member of a scientific advisory board to a
company such as the Company. These services will include, without limitation:
o Consulting with the Company's management within the Advisor's
professional area of expertise from time to time as reasonably
requested by the Company;
o Exchanging strategic and business development ideas with the
Company;
o Attending scientific or medical meetings with the Company's
management, such as United States Food & Drug Administration
meetings and other meetings relevant to Advisor's area of
expertise; and
o Attending meetings of the entire Scientific Advisory Board,
which the Company expects will occur approximately once per
year.
Advisor's relationship with the Company shall be that of an independent
contractor and not that of an employee. Advisor shall have no authority to enter
into contracts that bind the Company or create obligations on the part of the
Company unless otherwise first agreed to by the Company and Advisor in writing.
The services under this Agreement shall not include those services prohibited by
the University of Massachusetts Medical School (the "Principal Institution") as
set forth in Schedule A attached hereto and incorporated herein or any academic
institution or any hospital with which Advisor is affiliated (each such
Principal Institution, academic institution and hospital an "Affiliated
Institution"). Advisor may join advisory boards of other companies and
institutions who do not compete with the Company, provided that such commitments
do not conflict with his obligations hereunder. The SAB Member shall provide
copies to the Company of all status reports he delivers and other material
correspondence he has with any Affiliated Institution concerning this Agreement
or the services he provides under this Agreement within three days of his
delivery or receipt of such report or correspondence.
(b) Term & Termination. The Advisor's term of service on the
Scientific Advisory Board and the parties' ability to terminate this Agreement
shall be the same as set forth in Sections 5 and 6 of the Scientific Advisory
Board Agreement by and between Advisor and Araios, Inc. ("Araios") dated as of
September 17, 2003, except that this Agreement may be terminated by Advisor and
not the Company at any time upon 30 days prior written notice.
(c) Compensation. The Company will compensate Advisor for joining
the Scientific Advisory Board and for providing the services to the Company set
forth in this Agreement. The compensation will be in the form of a monthly
payment during the term of this Agreement of $5,000 per month, which will
increase to $7,500 per month upon Araios or any subsidiary of the Company that
acquires Araios entering into a strategic alliance with a major pharmaceutical
company that is satisfactory to the Company and that includes funding for
research and development positions within Araios, a licensing agreement for
Araios technology and other payments.
In addition, the Company shall pay Advisor for all reasonable
out-of-pocket expenses actually incurred by Advisor relating to Advisor's
provision of services under this Agreement, including attending meetings as set
forth above, in each case pursuant to a prior written approval of the expenses
by the Company.
Should Advisor perform extraordinary services on behalf of the Company,
he may receive additional compensation, upon agreement with the Company.
However, absent any such additional agreement between the Company and Advisor,
this Agreement shall not imply the right to receive any such additional
compensation.
(d) Confidential Information. Advisor will hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated companies,
and their respective businesses and is not generally known to the public
(collectively, "Confidential Information"). Confidential Information shall not
include information that (i) is in the public domain on the date of this
Agreement, (ii) is or was disclosed to the Advisor by a third party having no
fiduciary relationship with the Company or its affiliates and having no known
obligation of confidentiality with respect to such information or (iii) was
independently known or developed by Advisor without reference to the
Confidential Information as demonstrated by Advisor by written records. Advisor
will not, without the prior written consent of the Company, or as may otherwise
be required by law or legal process, communicate or divulge any such
Confidential Information, knowledge or data to anyone other than to the Company
and those designated by the Company in writing. Nothing herein shall be
construed to restrict the Advisor's right to publish material which does not
contain Confidential Information. Furthermore, upon termination of this
2
Agreement or of Advisor's service to the Company as a member of the Scientific
Advisory Board, Advisor will promptly deliver to the Company all books,
memoranda, records and written data of every kind relating to Confidential
Information that may then be in his personal possession. Advisor acknowledges
and agrees that this provision regarding Confidential Information will survive
termination of this Agreement or of the Advisor's service to the Company as a
member of the Scientific Advisory Board.
(e) Nonsolicitation. During the term of this Agreement and for one
(1) year thereafter, Advisor will not, without the Company's prior written
consent, solicit the employment of any employee of the Company with whom Advisor
has had contact in connection with the relationship arising under this
Agreement.
(f) No Conflict. Advisor represents that Advisor's performance of
all the terms of this Agreement and that Advisor's retention as an advisor by
the Company does not and will not breach any agreement to keep in confidence any
proprietary information acquired by Advisor in confidence prior to Advisor's
retention as an advisor by the Company. Advisor has not entered into, and agrees
Advisor will not enter into, any agreement, either written or oral, in conflict
with the foregoing sentence. Advisor understands as part of the consideration
for the offer to retain Advisor as an advisor, and of Advisor's retention as an
advisor by the Company, that Advisor has not brought and will not bring with
Advisor any equipment, supplies, facility or trade secret information of any
current or former employer which are not generally available to the public.
Advisor also understands that, in Advisor's retention as an advisor with the
Company, Advisor is not to breach any obligation of confidentiality that Advisor
has to others, and Advisor agrees that Advisor shall fulfill all such
obligations during Advisor's retention as an advisor with the Company.
(g) License and Assignment of Rights. Advisor acknowledges that
all inventions, original works of authorship, developments, concepts, know-how,
improvements or trade secrets which are made by Advisor (solely or jointly with
others) within the scope of and as part of Advisor's consultancy with the
Company (collectively referred to herein as "Inventions") are "works made for
hire" (to the greatest extent permitted by applicable law) and are compensated
by such amounts paid to Advisor under this Agreement, unless regulated otherwise
by the mandatory law of the State of California. Advisor also agrees and
warrants that Advisor will not use or incorporate third party proprietary
materials into Inventions or disclose third party proprietary information to
Company.
(h) Resolution of Disputes. Any dispute arising under or in
connection with any matter related to this Agreement or any related agreement
shall be resolved exclusively by arbitration. The arbitration will be in
conformity with and subject to the applicable rules and procedures of the
American Arbitration Association. All parties agree to be (i) subject to the
jurisdiction and venue of the arbitration in Los Angeles, California; and (ii)
bound by the decision of the arbitrator as the final decision with respect to
the dispute. This provision will survive the termination of this Agreement on
Advisor's participation on the Scientific Advisory Board.
3
(i) Governing Law. This agreement shall be governed by and
construed in accordance with the laws of the State of California without regard
to the choice of law rules thereof.
(j) Amendment. This Agreement may only be amended by a writing
executed by both parties.
(k) Disclosure of Relationship. The parties each shall be entitled
to disclose that Advisor is serving on the Scientific Advisory Board, including
in any business plan press release, advertisement, prospectus or other offering
document of the Company.
(l) Entire Agreement. Except for any non-disclosure agreement
previously entered into by the parties and any shareholders agreement between
the Company and Advisor relating to Araios, this Agreement constitutes the
entire agreement between the parties hereto with respect to Advisor's service on
the Company's Scientific Advisory Board, and supercedes all prior oral or
written understandings or agreements between the parties hereto.
(m) Severability. If any provision of this Agreement is held to be
unenforceable under applicable law, such provision shall be severed and the
remaining provisions of this Agreement shall continue in full force and effect.
(n) Principal Institution; Other Agreements. Notwithstanding
anything to the contrary contained herein, the Company recognizes that Advisor
has entered into those agreements set forth on Schedule A and that the
activities of Advisor are or will be subject to the rules and regulations of the
Principal Institution, including but not limited to the principles set forth in
Schedule A, and any Affiliated Institution, now or in the future, and the
Company agrees that Advisor shall be under no obligation to perform any services
or agreements hereunder if such performance would conflict with such rules and
regulations, or constitute a conflict of interest under the relevant policies of
any Affiliated Institution. In the event of any conflict with any agreement or
policy of any Affiliated Institution, the agreement or policy of the Affiliated
Institution shall control.
(o) Advice of Counsel. EACH PARTY ACKNOWLEDGES THAT, IN EXECUTING
THIS AGREEMENT, SUCH PARTY HAS HAD THE OPPORTUNITY TO SEEK THE ADVICE OF
INDEPENDENT LEGAL COUNSEL, AND HAS READ AND UNDERSTOOD ALL OF THE TERMS AND
PROVISIONS OF THIS AGREEMENT. THIS AGREEMENT SHALL NOT BE CONSTRUED AGAINST ANY
PARTY BY REASON OF THE DRAFTING OR PREPARATION THEREOF.
4
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
CYTRX CORPORATION
By:
----------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Chief Executive Officer
ADVISOR
By:
----------------------------------------------
▇▇. ▇▇▇▇▇▇▇ ▇. Czech
5
SCHEDULE A
The Scientific Advisory Board Consulting Agreement and related agreements by and
between ▇▇. ▇▇▇▇▇▇▇ ▇. Czech and Metabolex, 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 ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 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.
6
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.
7
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.
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:
---------------------------
8
EXHIBIT E
CYTRX CORPORATION
SCIENTIFIC ADVISORY BOARD AGREEMENT
This Agreement, dated as of ______, 2002 (the "Agreement") is made by
and between CytRx Corporation, a Delaware corporation (the "Company"), and
________________________ ("Advisor") with reference to the following facts.
A. Company has formed a scientific advisory board (the "Scientific
Advisory Board") that will (i) advise the Company on matters related to the
Company's research and development and the Company's acquisition of new products
and technologies, (ii) advise the Company with respect to its dealings with the
United States Food and Drug Administration and other such regulatory agencies,
and (iii) advise the Company with respect to strategic planning in the
pharmaceutical biopharmaceutical genomics and other related areas.
B. Advisor's expertise and stature will materially benefit the Company
in its operations, research and development activities or strategic planning
efforts.
WHEREAS, the Company and Advisor wish to enter into this Agreement,
whereby Advisor shall become a member of the Scientific Advisory Board.
NOW, THEREFORE, in consideration of the premises and the agreements set
forth herein, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Services. Advisor agrees to provide to the Company such services as
are customarily performed by a member of a scientific advisory board to a
company such as the Company. These services will include, without limitation:
o Consulting with the Company's management within the Advisor's
professional area of expertise from time to time as reasonably
requested by the Company;
o Exchanging strategic and business development ideas with the
Company;
o Attending scientific or medical meetings with the Company's
management, such as United States Food & Drug Administration
meetings and other meetings relevant to Advisor's area of
expertise; and
o Attending meetings of the entire Scientific Advisory Board,
which the Company expects will occur approximately once per
year.
Advisor's relationship with the Company shall be that of an independent
contractor and not that of an employee. Advisor shall have no authority to enter
into contracts that bind the Company or create obligations on the part of the
Company unless otherwise first agreed to by the Company and Advisor in writing.
2. Term. The Advisor's term of service on the Scientific Advisory Board
will begin as of the date hereof, and will continue until either Advisor or the
Company terminates this Agreement or the Advisor's participation in the
Scientific Advisory Board by sending written notice to the other party.
3. Compensation. The Company will compensate Advisor for joining the
Scientific Advisory Board and for providing the services to the Company set
forth in this Agreement. The compensation will be in the form of a grant to
Advisor of non-qualified options under the CytRx Corporation 2000 Long-Term
Incentive Plan to purchase 2,000 shares of common stock of the Company at the
per share closing price on the date hereof of the Company's publicly traded
common stock (the "Options"). The Options will vest fully upon the one year
anniversary of their grant on the date hereof. The Options may be exercised at
any time through four years after the one year anniversary date.
In addition, the Company shall pay Advisor for all reasonable
out-of-pocket expenses actually incurred by Advisor relating to Advisor's
provision of services under this Agreement, including attending meetings as set
forth above, in each case pursuant to a prior written approval of the expenses
by the Company.
Should Advisor perform extraordinary services on behalf of the Company,
he may receive additional compensation, upon agreement with the Company.
However, absent any such additional agreement between the Company and Advisor,
this Agreement shall not imply the right to receive any such additional
compensation.
4. Confidential Information. Advisor will hold in a fiduciary capacity
for the benefit of the Company all secret or confidential information, knowledge
or data relating to the Company or any of its affiliated companies, and their
respective businesses. Advisor will not, without the prior written consent of
the Company, or as may otherwise be required by law or legal process,
communicate or divulge any such information, knowledge or data to anyone other
than to the Company and those designated by the Company in writing. Furthermore,
upon termination of this Agreement or of Advisor's service to the Company as a
member of the Scientific Advisory Board, Advisor will promptly deliver to the
Company all books, memoranda, records and written data of every kind relating to
the business and affairs of the Company that may then be in his personal
possession. Advisor acknowledges and agrees that this provision regarding
confidential information will survive termination of this Agreement or of the
Advisor's service to the Company as a member of the Scientific Advisory Board.
5. Non-Compete; Nonsolicitation. During the term of this Agreement and
for one (1) year thereafter, Advisor will not, without the Company's prior
written consent,
(a) directly or indirectly work on any products or services that
are or will be competitive with products or services (i) being commercially
developed or exploited by the Company during Advisor's consultancy and (ii) on
which Advisor worked or about which Advisor learned confidential or proprietary
information during Advisor's consultancy with the Company; or
2
(b) solicit the employment of any employee of the Company with
whom Advisor has had contact in connection with the relationship arising under
this Agreement.
6. No Conflict. Advisor represents that Advisor's performance of all
the terms of this Agreement and that Advisor's retention as an advisor by the
Company does not and will not breach any agreement to keep in confidence any
proprietary information acquired by Advisor in confidence prior to Advisor's
retention as an advisor by the Company. Advisor has not entered into, and agrees
Advisor will not enter into, any agreement, either written or oral, in conflict
with the foregoing sentence. Advisor understands as part of the consideration
for the offer to retain Advisor as an advisor, and of Advisor's retention as an
advisor by the Company, that Advisor has not brought and will not bring with
Advisor any equipment, supplies, facility or trade secret information of any
current or former employer which are not generally available to the public.
Advisor also understands that, in Advisor's retention as an advisor with the
Company, Advisor is not to breach any obligation of confidentiality that Advisor
has to others, and Advisor agrees that Advisor shall fulfill all such
obligations during Advisor's retention as an advisor with the Company.
7. License and Assignment of Rights. Advisor acknowledges that all
inventions, original works of authorship, developments, concepts, know-how,
improvements or trade secrets which are made by Advisor (solely or jointly with
others) within the scope of and as part of Advisor's consultancy with the
Company (collectively referred to herein as "Inventions") are "works made for
hire" (to the greatest extent permitted by applicable law) and are compensated
by such amounts paid to Advisor under this Agreement, unless regulated otherwise
by the mandatory law of the State of California. Advisor also agrees and
warrants that Advisor will not use or incorporate third party proprietary
materials into Inventions or disclose third party proprietary information to
Company.
8. Resolution of Disputes. Any dispute arising under or in connection
with any matter related to this Agreement or any related agreement shall be
resolved exclusively by arbitration. The arbitration will be in conformity with
and subject to the applicable rules and procedures of the American Arbitration
Association. All parties agree to be (i) subject to the jurisdiction and venue
of the arbitration in Los Angeles, California; and (ii) bound by the decision of
the arbitrator as the final decision with respect to the dispute. This provision
will survive the termination of this Agreement on Advisor's participation on the
Scientific Advisory Board.
9. Governing Law. This agreement shall be governed by and construed in
accordance with the laws of the State of California without regard to the choice
of law rules thereof.
10. Amendment. This Agreement may only be amended by a writing executed
by both parties.
11. Disclosure of Relationship. The parties each shall be entitled to
disclose that Advisor is serving on the Scientific Advisory Board, including in
any business plan press release, advertisement, prospectus or other offering
document of the Company.
3
12. Entire Agreement. Except for any non-disclosure agreement
previously entered into by the parties, this Agreement constitutes the entire
agreement between the parties hereto with respect to Advisor's service on the
Scientific Advisory Board, and supercedes all prior oral or written
understandings or agreements between the parties hereto.
13. Severability. If any provision of this Agreement is held to be
unenforceable under applicable law, such provision shall be severed and the
remaining provisions of this Agreement shall continue in full force and effect.
14. Advice of Counsel. EACH PARTY ACKNOWLEDGES THAT, IN EXECUTING THIS
AGREEMENT, SUCH PARTY HAS HAD THE OPPORTUNITY TO SEEK THE ADVICE OF INDEPENDENT
LEGAL COUNSEL, AND HAS READ AND UNDERSTOOD ALL OF THE TERMS AND PROVISIONS OF
THIS AGREEMENT. THIS AGREEMENT SHALL NOT BE CONSTRUED AGAINST ANY PARTY BY
REASON OF THE DRAFTING OR PREPARATION THEREOF.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
CYTRX CORPORATION
By:
--------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Chief Executive Officer
ADVISOR
By:
--------------------------------------------
Print Name:
4
EXHIBIT F
FORM OF UMMS LICENSE AGREEMENT
FILED SEPARATELY IN CYTRX CORPORATION'S FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2003
EXHIBIT G
ARAIOS, INC.
SCIENTIFIC ADVISORY BOARD AGREEMENT
This Scientific Advisory Board Agreement (the "Agreement") between ▇▇.
▇▇▇▇▇▇▇ ▇. Czech (the "SAB Member") and Araios, Inc., a Delaware corporation
(the "Company"), is made effective as of September 17, 2003 (the "Effective
Date"). In connection with the appointment of the SAB Member to serve as the
Chairman of the Scientific Advisory Board (the "SAB") of the Company and the
mutual promises of the parties hereunder, it is agreed as follows:
1. General. The Company hereby retains the SAB Member, and the SAB
Member hereby agrees to serve, as the Chairman of the SAB and to consult with
the Company with regard to its Business (such services and consultation being
herein referred to as the "Services"). The term "Business" currently relates to
drug discovery and development, manufacturing and marketing of products for the
prevention, treatment and diagnosis of type-2 diabetes and obesity (the
"Business"). Such Services shall not include those services prohibited by the
Principal Institution (as defined in Section 2 below) as set forth in Schedule A
attached hereto and incorporated herein or any Affiliated Institution (as
defined in Section 2 below). The SAB Member is agreeing to provide the Services
under this Agreement in consideration of CytRx Corporation ("CytRx") agreeing to
purchase preferred stock of the Company. SAB member may join advisory boards of
other companies and institutions who do not compete with the Business, provided
that such commitments do not conflict with his obligations hereunder.
2. Performance of Services. As of the Effective Date, the SAB Member
agrees to make himself available to render the Services, at such time or times
and location or locations as may be mutually agreed, from time to time at the
request of the Company. The SAB Member agrees not to perform any Services for
the Company on the premises of the University of Massachusetts Medical School
(the "Principal Institution"), any academic institution or any hospital with
which he is affiliated (each such Principal Institution, academic institution
and hospital an "Affiliated Institution") or with the respective facilities or
funds of any such Affiliated Institution which could result in claims by such
Affiliated Institution of rights in any Inventions (as defined in Section 8
hereof), without the express prior agreement of Company and the Affiliated
Institution, as appropriate. Unless covered by an appropriate agreement between
any third party and the Company, the SAB Member shall not engage in any
activities or use any facilities in the course of providing Services which could
result in claims of ownership to any Inventions being made by such third party.
The SAB Member agrees to devote his best efforts to the performance of the
Services. The SAB Member agrees to chair meetings of the SAB, act in a
leadership roll in determining the scientific areas of interest and direction of
the Company with respect to the Business, perform any other services typically
performed by the chairman of the scientific advisory board of a company such as
the Company and attend at least four SAB meetings per year and to devote at
least four hours per month to the performance of other Services as the Company
may request. In connection therewith, the Company shall have the right to
publicize the SAB Member's affiliation with the Company. The Company and SAB
Member further agree that the SAB Member shall have the further rights and
responsibilities set forth in Sections 5 and 6 of that certain Stockholders
Agreement dated as of September 17, 2003 by and among the Company, CytRx and the
SAB Member (the "Stockholders Agreement").
3. Compensation. The Company shall not be required to pay the SAB
Member any compensation for the Services. The Company shall promptly reimburse
the SAB Member for reasonable out-of-pocket expenses, including, without
limitation, travel expenses incurred by him in the performance of the Services
(including attendance at all SAB meetings), following the Company's receipt of a
request for reimbursement from the SAB Member. If requested by the Company, the
SAB Member shall provide the Company with documentation supporting all such
expenses.
4. Principal Institution. The Company recognizes that the activities of
the SAB Member are or will be subject to the rules and regulations of the
Principal Institution or Affiliated Institution, now or in the future, and the
Company agrees that SAB Member shall be under no obligation to perform Services
if such performance would conflict with such rules and regulations, or
constitute a conflict of interest under the relevant policies of the Affiliated
Institution. The SAB Member has no reason to believe that the SAB Member's
performance of any of the services contemplated by this Agreement will conflict
with the applicable rules or policies of any Affiliated Institution, each as
presently in effect. In the event such rules and regulations shall, in the
Company's opinion, substantially interfere with the performance of Services by
the SAB Member, the Company may terminate this Agreement upon 30 days notice to
the SAB Member. The SAB Member shall provide copies to the Company of all status
reports he delivers and other material correspondences he has with any
Affiliated Institution concerning this Agreement or the Services within three
days of his delivery or receipt of such report or correspondence.
5. Term. The SAB Member's performance of Services shall commence on the
Effective Date of this Agreement and unless terminated earlier, this Agreement
shall continue for a period of five (5) years thereafter (such period, including
any extension of such period, the "Term"), unless either the SAB Member or the
Company terminates this Agreement pursuant to Section 6 hereof.
6. Termination; Effect of Termination. This Agreement may be terminated
by the Company at any time upon 30 days prior written notice. If either party
breaches any of its material obligations under this Agreement in any material
respect, the non-breaching party may terminate this Agreement (in addition to
any other available remedy), in the event that such breach is not cured within
ten days after receipt by such party of written notice thereof.
Such termination shall not relieve the SAB Member or the Company of any
obligations hereunder which by their terms are intended to survive the
termination of the SAB Member's association with the Company, including, but not
limited to, the obligations of Sections 8, 9, 10, 11, 12, 14 and 22.
Upon termination of this Agreement for any reason, the SAB Member shall
promptly deliver to the Company any and all property of the Company or its
customers, licensees, licensors, or affiliates which may be in his possession or
control, including without limitation, products, cell lines, materials,
memoranda, notes, diskettes, records, reports, laboratory notebooks, or other
documents or photocopies of the same and shall destroy any Confidential
Information (as defined in Section 9 hereof) in intangible form.
2
7. Independent Contractor. It is understood and agreed that the SAB
Member is an independent contractor and that neither this Agreement nor the
Services to be rendered hereunder shall for any purpose whatsoever or in any way
or manner create any employer-employee relationship between the parties. The SAB
Member shall not be entitled to any fringe benefits generally provided to
employees of the Company and the Company shall not be required to maintain
workers' compensation coverage for the SAB Member.
8. Inventions. The SAB Member shall promptly disclose to the Company,
and hereby assigns and agrees to assign to the Company (or as otherwise directed
by the Company), his full right, title and interest to all Inventions (as
defined below). The SAB Member agrees to cooperate fully with the Company, its
attorneys and agents, in the preparation and filing of all papers and other
documents as may be required to perfect the Company's rights in and to any of
such Inventions, including, but not limited to, execution of any and all
applications for domestic and foreign patents, copyrights or other proprietary
rights and the performance of such other acts (including, among others, the
execution and delivery of instruments of further assurance or confirmation)
requested by the Company to assign the Inventions to the Company and to permit
the Company to file, obtain and enforce any patents, copyrights or other
proprietary rights in the Inventions, all at the Company's expense. The SAB
Member hereby designates the Company as his agent, and grants to the Company a
power of attorney with full power of substitution, which power of attorney shall
be deemed coupled with an interest, for the purpose of effecting any such
assignment hereunder from the SAB Member to the Company. "Inventions" shall
mean, for purposes of this paragraph, ideas, discoveries, creations, manuscripts
and properties, innovations, improvements, know-how, inventions, trade secrets,
apparatus, developments, techniques, methods, biological processes, cell lines,
laboratory notebooks and formulas (whether or not patentable or copyrightable or
constituting trade secrets) conceived, made or discovered by the SAB Member
(whether alone or with others) within the Business as a result of consulting
with the Company under this Agreement and/or as a result of Confidential
Information (as defined in Section 9 hereof) received from the Company. In no
event, however, shall the SAB Member's obligations hereunder relate to any
right, title or interest that the SAB Member may have in inventions,
discoveries, developments, methods and processes (whether or not patentable or
copyrightable or constituting trade secrets) conceived, made or discovered by
the SAB Member (whether alone or with others) with the use of facilities or
fundings of any Affiliated Institution and that the SAB Member is required to
assign to his Affiliated Institution pursuant to the rules and regulations of
such Affiliated Institution. The SAB Member agrees to not knowingly use or
incorporate any third party proprietary information into any Inventions or to
disclose such information to the Company. Upon termination of this Agreement
with the Company, the SAB Member shall provide to the Company in writing a full,
signed statement of all Inventions in which the SAB Member participated prior to
termination of this Agreement.
9. Confidentiality. During the period of this Agreement, the SAB Member
will be exposed to certain information concerning the Company's or CytRx's
research, business, Inventions, products, proposed new products, designs,
clinical testing programs, manufacturing processes and techniques, customers,
and other information and materials that embody trade secrets or technical or
business information that is confidential and proprietary to the Company or
CytRx and is not generally known to the public (collectively, "Confidential
Information"). Confidential Information shall not include information that (i)
is in the public domain on the Effective Date of this Agreement, (ii) is or was
3
disclosed to the SAB Member by a third party having no fiduciary relationship
with the Company or CytRx and having no known obligation of confidentiality with
respect to such information or (iii) was independently known or developed by the
SAB Member without reference to the Confidential Information as demonstrated by
the SAB Member by written records. The SAB Member hereby agrees not to disclose
or make use of, or allow others to use, any Confidential Information, except to
Company employees and representatives, without the Company's prior written
consent, unless such information becomes publicly available, through no fault of
the SAB Member. In addition, the SAB Member further agrees not to make any notes
or memoranda relating to the business of the Company other than for the benefit
of the Company or CytRx and not to use or permit to be used at any time any such
notes or memoranda other than for the benefit of the Company.
10. Injunctive Relief. The SAB Member agrees that any breach of this
Agreement by him could cause irreparable damage to the Company and that in the
event of such breach the Company shall have the right to obtain injunctive
relief, including, without limitation, specific performance or other equitable
relief to prevent the violation of his obligations hereunder. It is expressly
understood and agreed that nothing herein contained shall be construed as
prohibiting the Company from pursuing any other remedies available for such
breach or threatened breach, including, without limitation, the recovery of
damages by the Company.
11. No Assignment by the SAB Member. The Services to be rendered by the
SAB Member are personal in nature. The SAB Member may not assign or transfer
this Agreement or any of his rights or obligations hereunder. In no event shall
the SAB Member assign or delegate responsibility for actual performance of the
Services to any other natural person.
12. Publications. The SAB Member agrees that he will not at any time
publish any Confidential Information that becomes known to him as a result of
his relationship with the Company which is, or pursuant to the terms hereof
becomes, the property of the Company or any of its clients, customers,
consultants, licensors, licensees, or affiliates except to such extent as may be
necessary in the ordinary course of performing in good faith his duties as a
member of the SAB of the Company and with the prior written consent of the
Company.
During the Term and for a period of two years thereafter, the SAB
Member agrees to submit to the Company for a period of at least 30 days (the
"Review Period") a copy of any proposed manuscript or other materials to be
published or otherwise publicly disclosed by the SAB Member (each a "Proposed
Publication") which contains information derived, in whole or in part, from
Services performed for the Company in sufficient time to enable the Company to
determine if patentable Inventions or Confidential Information of the Company
would be disclosed. Nothing herein shall be construed to restrict the SAB
Member's right to publish material which does not contain Confidential
Information. Following the expiration of the Review Period, if the Proposed
Publication does not disclose patentable Inventions or Confidential Information
such Proposed Publication shall be deemed to be approved by the Company for
publication. In addition, the SAB Member will cooperate with the Company in this
respect and will delete from the manuscript or other disclosure any Confidential
Information if requested by the Company and will assist the Company in filing
for patent protection for any patentable Inventions prior to publication or
other disclosure.
4
13. No Conflicting Agreements. The SAB Member represents and warrants
that, other than as provided in Section 4 or as set forth on Schedule A attached
hereto, he is not a party to any commitments or obligations inconsistent with
this Agreement and hereby agrees to indemnify and hold the Company harmless
against any claim based upon circumstances alleged to be inconsistent with such
representation and warranty. During the Term, the SAB Member will not enter into
any agreement either written or oral in conflict with this Agreement and will
arrange to provide Services under this Agreement in such a manner and at times
that such Services will not conflict with his responsibilities under any other
agreement, arrangement or understanding or pursuant to any employment
relationship he has at any time with any third party. In the event of any
conflict with any agreement or policy of any Affiliated Institution, the
agreement or policy of the Affiliated Institution shall control.
14. Nonsolicitation. During the Term and for one year thereafter, the
SAB Member will not, without the Company's prior written consent, solicit the
employment of any employee of the Company with whom the SAB Member has had
contact in connection with the relationship arising under this Agreement.
15. Disclosure of Relationship. The parties each shall be entitled to
disclose that the SAB Member is serving on the SAB, including in any business
plan, press release, advertisement, prospectus or other offering document of the
Company or CytRx; provided that SAB Member shall have the opportunity to review
press releases relating to announcement of this Agreement and developments in
the Business prior to release, with approval of such press releases not to be
unreasonably delayed or withheld. Notwithstanding the foregoing, the Company
shall not require the approval by the SAB Member of any press release or
governmental filing that in the opinion of the Company's counsel is required to
be made.
16. Notices. All notices and other communications hereunder shall be
delivered or sent by facsimile transmission, recognized courier service,
registered or certified mail, return receipt requested.
If to the Company:
▇▇▇▇ ▇. ▇▇▇▇▇▇, Ph.D.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the SAB Member:
▇▇. ▇▇▇▇▇▇▇ ▇. Czech
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax:
Such notice or communication shall be deemed to have been given as of
the date sent by the facsimile or delivered to a recognized courier service, or
three days following the date sent by registered or certified mail.
5
17. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective legal representatives,
successors and permitted assigns. The SAB Member agrees that the Company may
assign this Agreement, in whole or in part, to any person or entity controlled
by, in control of, or under common control with, the Company, and to any
purchaser of all or substantially all of its assets or to any successor
corporation resulting from any merger or consolidation of the Company with or
into such corporations.
18. Entire Agreement. This Agreement together with the Stockholders
Agreement constitute the entire agreement between the parties as to the subject
matter hereof. To the extent that the Stockholders Agreement imposes broader or
additional obligations on the Company or the SAB Member with respect to any of
the matters covered by this Agreement, the Company and the SAB Member shall be
subject to such broader or additional obligations that do not conflict herewith.
No provision of this Agreement shall be waived, altered or cancelled except in
writing signed by the party against whom such waiver, alteration or cancellation
is asserted. Any such waiver shall be limited to the particular instance and the
particular time when and for which it is given.
19. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Delaware, without regard to
conflict of law principles.
20. Enforceability. The invalidity or unenforceability of any provision
hereof as to an obligation of a party shall in no way affect the validity or
enforceability of any other provision of this Agreement, provided that if such
invalidity or unenforceability materially adversely affects the benefits the
other party reasonably expected to receive hereunder, that party shall have the
right to terminate this Agreement. Moreover, if one or more of the provisions
contained in this Agreement shall for any reason be held to be excessively broad
as to scope, activity or subject so as to be unenforceable at law, such
provision or provisions shall be construed by limiting or reducing it or them,
so as to be enforceable to the extent compatible with the applicable law as it
shall then appear.
21. Construction. This Agreement has been prepared jointly and shall
not be strictly construed against either Party.
22. Resolution of Disputes. Any dispute arising under or in connection
with any matter related to this Agreement or any related agreement shall be
resolved exclusively by arbitration. The arbitration will be in conformity with
and subject to the applicable rules and procedures of the American Arbitration
Association. All parties agree to be (i) subject to the jurisdiction and venue
of the arbitration in Los Angeles, California; and (ii) bound by the decision of
the arbitrator as the final decision with respect to the dispute.
23. Advice of Counsel. Each party acknowledges that, in executing this
Agreement, such party has had the opportunity to seek the advice of independent
legal counsel, and has read and understood all of the terms and provisions of
this Agreement.
6
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as a sealed instrument as the date first written above.
ARAIOS, INC.
By:
--------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, Ph.D.
President
-------------------------------
Name: ▇▇. ▇▇▇▇▇▇▇ ▇. Czech
Social Security Number:
-------------------------------
7
SCHEDULE A
Conflicting Agreements
(a) The Scientific Advisory Board Consulting Agreement and related
agreements by and between ▇▇. ▇▇▇▇▇▇▇ ▇. Czech and Metabolex, Inc., a Delaware
corporation, located in Hayward, CA, a copy of which has been provided to the
Company and CytRx.
(b) 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 ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ of UMass to Dr. Czech,
a copy of which has been provided to the Company and CytRx, 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.
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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:
----------------------------
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