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EXHIBIT
10.3
LOCK-UP
AGREEMENT
THIS AGREEMENT (this “
Agreement ”) is dated as of September 24, 2007 by
and among Avicena Group, Inc., a Delaware corporation (the “
Company ”), and the Stockholder of the Company named
on the signature page below (the “ Stockholder
”).
WHEREAS, to induce the
Company and the Purchasers (the “ Purchasers ”)
to enter into the Series C Convertible Preferred Stock Purchase
Agreement dated on or about September 24, 2007 (the “
Purchase Agreement ”) by and among the Company and the
Purchasers, the directors, executive officers and 5% stockholders
of the Company, including the Stockholder, have agreed not to sell
any shares of the Company’s common stock, $0.001 par value
per share (the “ Common Stock ”), that such
stockholders presently own or may acquire after the date hereof,
except in accordance with the terms and conditions set forth
herein. Capitalized terms used herein without definition shall have
the meanings assigned to such terms in the Purchase
Agreement.
NOW, THEREFORE, in
consideration of the covenants and conditions hereinafter
contained, the parties hereto agree as follows:
1. Restriction on
Transfer; Term . The Stockholder hereby agrees with the Company
that such Stockholder will not offer, sell, contract to sell,
assign, transfer, hypothecate, pledge or grant a security interest
in, or otherwise dispose of, or enter into any transaction which is
designed to, or might reasonably be expected to, result in the
disposition of (whether by actual disposition or effective economic
disposition due to cash settlement or otherwise by the Company or
any affiliate of the Company or any person in privity with the
Company or any affiliate of the Company), directly or indirectly,
any of the shares of Common Stock during the period commencing on
the Initial Closing Date and expiring on the date that is twelve
months following the effective date of the registration statement
(the “ Effective Date ”) filed by the Company
with the Securities and Exchange Commission providing for the
resale of the shares of Common Stock issuable upon conversion of
the Preferred Shares and exercise of the Warrants issued pursuant
to the Purchase Agreement (the “ Period
”).
2. Permitted
Dispositions . The following dispositions of Common Stock shall
not be subject to the restriction on transfer set forth in
Section 1:
(a) The Stockholder may
transfer Common Stock to his or her spouse, siblings, parents or
any natural or adopted children or other descendants or to any
personal trust for the sole benefit of such family members and/or
Stockholder;
(b) The Stockholder may
transfer Common Stock on his or her death to such
Stockholder’s estate, executor, administrator or personal
representative or to such Stockholder’s beneficiaries
pursuant to a devise or bequest or by laws of descent and
distribution;
(c) The Stockholder may
transfer Common Stock as a gift or other transfer without
consideration;
(d) The Stockholder may make
a bona fide pledge of Common Stock to a lender;
(e) The Stockholder may
participate in any transaction in which all holders of the Common
Stock of the Company participate or have the opportunity to
participate pro rata, including, without limitation, a merger,
consolidation or binding share exchange involving the Company, a
disposition of the Common Stock in connection with the exercise of
any rights, warrants or other securities distributed to the
Company’s stockholders, or a tender or exchange offer for the
Common Stock; and
(f) Beginning on the date
that is six months following the Effective Date, the Stockholder
may sell, in any three month period during the Period, up to the
number of shares of Common Stock which such Stockholder would be
able to sell during such period under the volume restrictions of
Rule 144(e) as promulgated by the Securities and Exchange
Commission (the “Rule 144 Limitation Amount”), provided
that, in any thirty (30) day period during the Period, the
Stockholder may not sell more than one-third (1/3) of the Rule
144 Limitation Amount,
provided, however , that in the
case of any transfer of Common Stock pursuant to clauses (a), (c),
and (d), the transferor shall, at the request of the Company,
provide evidence (which may include, without limitation, an opinion
of counsel satisfactory in form, scope and substance to the Company
in its sole discretion as the issuer thereof) satisfactory to the
Company that the transfer is exempt from the registration
requirements of the Securities Act, and such Common Stock shall
remain subject to this Agreement and, as a condition of the
validity of such disposition, the transferee shall be required to
execute and deliver a counterpart of this Agreement. Thereafter,
such transferee shall be deemed to be the Stockholder for purposes
of this Agreement.
3. Ownership . During
the Period, the Stockholder shall retain all rights of ownership in
the Common Stock, including, without limitation, voting rights and
the right to receive any dividends, if any, that may be declared in
respect thereof.
4. Company and Transfer
Agent . The Company is hereby authorized to disclose the
existence of this Agreement to its transfer agent. The Company and
its transfer agent are hereby authorized to decline to make any
transfer of the Common Stock if such transfer would constitute a
violation or breach of this Agreement and the Purchase
Agreement.
5. Notices . All
notices, demands, consents, requests, instructions and other
communications to be given or delivered or permitted under or by
reason of the provisions of this Agreement or in connection with
the transactions contemplated hereby shall be in writing and shall
be deemed to be delivered and received by the intended recipient as
follows: (i) if personally delivered, on the business day of
such delivery (as evidenced by the receipt of the personal delivery
service), (ii) if mailed certified or registered mail return
receipt requested, four
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(4) business days after being mailed,
(iii) if delivered by overnight courier (with all charges
having been prepaid), on the business day of such delivery (as
evidenced by the receipt of the overnight courier service of
recognized standing), or (iv) if delivered by facsimile
transmission, on the business day of such delivery if sent by 6:00
p.m. in the time zone of the recipient, or if sent after that time,
on the next succeeding business day (as evidenced by the printed
confirmation of delivery generated by the sending party’s
telecopier machine). If any notice, demand, consent, request,
instruction or other communication cannot be delivered because of a
changed address of which no notice was given (in accordance with
this Section 5), or the refusal to accept same, the notice,
demand, consent, request, instruction or other communication shall
be deemed received on the second business day the notice is sent
(as evidenced by a sworn affidavit of the sender). All such
notices, demands, consents, requests, instructions and other
communications will be sent to the following addresses or facsimile
numbers as applicable.
If to the Company:
Avicena Group,
Inc.
228 Hamilton Avenue, Third
Floor
Palo Alto, CA
94301
Attn: Chief Executive
Officer
Fax:
(415) 397-2898
With copies to:
Barack Ferrazzano
Kirschbaum & Nagelberg LLP
200 West Madison Street,
Suite 3900
Chicago, Illinois
60606
Attn: Lance R.
Rodgers
Fax:
(312) 984-3150
If to the Stockholder, to the
address set forth on the signature page of this
Agreement,
or to such other address as any party
may specify by notice given to the other party in accordance with
this Section 5.
6. Amendment . This
Agreement may not be modified, amended, altered or supplemented,
except by a written agreement executed by each of the parties
hereto.
7. Entire Agreement .
This Agreement contain the entire understanding and agreement of
the parties relating to the subject matter hereof and supersedes
all prior and/or contemporaneous understandings and agreements of
any kind and nature (whether written or oral) among the parties
with respect to such subject matter, all of which are merged
herein.
8. Governing Law .
This Agreement shall be governed by and construed in accordance
with the laws of the State of New York applicable to agreements
made and to be
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performed in that state, without regard
to any of its principles of conflicts of laws or other laws which
would result in the application of the laws of another
jurisdiction. This Agreement shall be construed and interpreted
without regard to any presumption against the party causing this
Agreement to be drafted.
9. Waiver of Jury
Trial . EACH OF THE PARTIES HEREBY UNCONDITIONALLY AND
IRREVOCABLY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION, SUIT
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY. EACH OF THE PARTIES
UNCONDITIONALLY AND IRREVOCABLY CONSENTS TO THE EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK LOCATED IN NEW
YORK COUNTY AND THE FEDERAL DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK WITH RESPECT TO ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY, AND EACH OF THE PARTIES HEREBY UNCONDITIONALLY
AND IRREVOCABLY WAIVES ANY OBJECTION TO VENUE IN NEW YORK COUNTY OR
SUCH DISTRICT, AND AGREES THAT SERVICE OF ANY SUMMONS, COMPLAINT,
NOTICE OR OTHER PROCESS RELATING TO SUCH SUIT, ACTION OR OTHER
PROCEEDING MAY BE EFFECTED IN THE MANNER PROVIDED IN SECTION
5.
10. Severability . The
parties agree that if any provision of this Agreeme
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