Document:

exv10w10

 

Exhibit 10.10

Spatializer Audio Laboratories, Inc.

Corporate Headquarters

2025 Gateway Place, Suite 365 West Wing • San Jose, CA 95110

Tel 408.453.4180 • Fax 408.437.5787 

January 6, 2006

Henry R. Mandell

14216 Huron Court

Moorpark, California 93021

Dear Henry:

     As you know, Spatializer Audio Laboratories, Inc. (the “Company”) has engaged Strategic Equity
Group to explore a possible sale, or strategic alliance that may result in the sale, of the assets
and/or the stock of the Company. Although you had indicated your desire to leave the employ of the
Company, the Company very much wants you to continue to render services to the Company to assist
the Company in its transition. The purpose of this letter is to set forth the terms of the
agreement we have reached with respect to your continued employment with the Company. That
agreement is as follows:

     1. You shall be employed by the Company, on the terms and conditions herein contained, from
the date hereof and continuing for a period not to exceed the first to occur of (a) the date of
consummation of a Sale of the Business (as hereinafter defined); (b) the expiration, termination or
non-renewal of the directors’ and officers’ insurance policy of the Company under which you are
covered as a director and officer of the Company; and (c) June 30, 2006 (the “Term”).

     2. During the Term, you will continue as Secretary and Chairman of the Board of Directors of
the Company and as an employee thereof; provided, however, that the services to be rendered by you
during the Term shall include only the following (the “Services”): assisting in a Sale of the
Business (including a sale of the stock or assets of the Company) or entering into a strategic
alliance or other extraordinary transaction between the Company and a third party; coordinating due
diligence and documentary activities in connection with the foregoing; supervising preparation of
financial statements and records; reviewing and authorizing day to day disbursements; reviewing and
responding to certain Company mail, correspondence or emails; supervising all of the Company’s
licensing and business activities; handling stockholder communications; eliminating redundant
and/or unnecessary expenses or commitments; conferring with the Company’s principal engineer by
telephone on any matters of concern; and taking such other customary actions on behalf of the
Company that you deem reasonably necessary to advance the interests of the Company and its
stockholders. The Company agrees that you may provide the Services in person, by telephone, email
or otherwise as you see fit, whether during, before or after normal business hours and/or on
weekends. The Company understands and agrees that you may be employed by another person or entity
during the Term and that the Services to be provided hereunder shall not be of a nature or duration
so as to interfere with said employment or to unduly burden you during normal business hours.

     3. During the Term, the Company shall provide you with the following compensation, subject in
all cases to payroll tax and other applicable withholding, and benefits.

 

 

          (a) During the Term, in payment for your Services, the Company will pay you the following
compensation at the following times:

               (i) a one time lump sum incentive payment of $35,733.33, which payment is being paid
concurrently herewith, receipt of which is hereby acknowledged by you, which payment is being paid
in lieu of severance pay, if any, to which you otherwise may have been entitled, it being
understood that you shall not be entitled to any severance pay upon termination of your employment
on or after the date hereof;

               (ii) a monthly salary of $5,000 per month, such salary to be paid in accordance with the
normal payroll practices of the Company, such salary to commence with January 2006 and to continue
through the termination of your employment as herein provided;

               (iii) for assisting in the preparation of the Company’s Annual Report on Form 10-K to be filed
with the Securities and Exchange Commission (the “Commission”) with respect to the fiscal year
ended December 31, 2005, a bonus of $10,000, such bonus to be due upon the filing of such Form 10-K
(provided such assistance has been provided, such amount shall be due to you regardless of whether
the Form 10-K is filed before or after termination your employment);

               (iv) for assisting in the preparation of any of the Company’s Quarterly Reports on Form 10-Q
to be filed with the Commission with respect to any fiscal quarter ending after December 31, 2005,
a bonus of $5,000 for each such Quarterly Report on Form 10-Q upon which you so assist, such bonus
to be due upon the filing of such each such Form 10-Q (provided such assistance has been provided,
such amount shall be due to you regardless of whether any such Form 10-Q is filed before or after
termination your employment); and

               (v) in the event that the Company consummates any one or more Sales of the Business (including
for these purposes a sale of the stock of the Company, regardless of whether of not the assets of
the Company are sold prior thereto or in connection therewith), a bonus in an amount equal to three
and one-half percent (3.5%) of the gross proceeds from such Sale of the Business, but in no event
shall such bonus exceed $150,000 in the aggregate, such bonus to be paid concurrently with the
consummation of such Sale of the Business (or, to the extent any portion of the consideration
payable in the Sale of the Business transaction is contingent upon any future events or is
deferred, then the portion of the bonus based on such contingent or deferred consideration shall be
paid when such contingent or deferred consideration is actually paid to the Company or its
stockholders or other parties, regardless of whether such amount is actually paid before or after
termination of your employment). Notwithstanding anything else to the contrary in this Agreement,
it is the intention of the parties that regardless of the earlier termination of your employment or
the expiration of this Agreement, the Company shall continue to be obligated to pay you the bonus
provided for in this clause (v) if a Sale of the Business occurs, or a definitive agreement or a
letter of intent with respect to a Sale of the Business in entered into which subsequently results
in a Sale of the Business, on or prior to December 31, 2006 with or to any of the persons or
entities introduced to the Company or any agent thereof by you on or prior to the expiration of the
Term of this Agreement or the termination of your employment by the Company. This Section 3(a)(v)
shall survive expiration of the Term of this Agreement or the termination of your employment by the
Company.

          (b) For purposes of this Agreement, “Sale of the Business” shall have the same meaning as a
“Sale” as defined in that certain agreement between the Company and Strategic Equity Growth, dated
as of October 12, 2005, and, in addition thereto shall include any sale of the Company as a “shell
public company” whether before, after or in connection with any

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disposition of all or substantially all of the assets of the Company, or any new perpetual
license of the Company technologies to one or more parties in conjunction with Sale of the
Business.

          (c) From the date here and while employed by the Company, you will be entitled to participate
in such employee benefit plans or programs, including health insurance coverage, as may be made
available by the Company from time to time subject to the eligibility rules and regulations
applicable to each benefit plan or program. The Company retains sole discretion to change,
eliminate, or expand any employee benefit plans and programs offered.

          (d) Subject to approval of classes or categories of reimbursable expenses and Company policies
regarding same, as established by the Company from time to time, the Company will reimburse you for
all reasonable, actual and necessary business expenses that are incurred directly for the benefit
of the Company while providing services to it. Reimbursement will be made after presentation of
documentation in a form sufficient to permit the Company to determine the necessity and
reasonableness of the expense, to comply with all governmental reporting requirements, and to
substantiate the Company’s right to claim income tax deductions for such expenses.

     4. During the Term and notwithstanding Section 1 above, the Company may terminate your
employment for any reason provided that, if such termination is not in accordance with Section 1
above, then concurrently with and upon the effective date of such termination, the Company pays
you, in one lump sum payment, any portion of the salary and other amounts earned but are unpaid
through the effective date of such termination and thereafter pays such amounts, if any, as may
subsequently become due and payable under Sections 3(a)(iii), (iv) and (v) of this Agreement. You
may resign your employment with the Company at any time, and upon such resignation the Company
shall pay you all sums then due and owing under this Agreement, including amounts subsequently due
and payable under Sections 3(a)(iii), (iv) and (v) of this Agreement. This Section 4 shall survive
expiration of the Term of this Agreement or the termination of your employment by the Company.

     5. You acknowledge that this Agreement and the duties to be performed under it do not violate
any contract to which you are a party or the policies of any other employer by whom you may be
employed during the Term.

     6. During the Term:

          (a) Except as may be required in carrying out your duties under this Agreement, you shall not,
directly or indirectly, within the geographic areas in which the Company currently conducts its
business, carry on or engage in any business that is directly competitive with the business of the
Company, either individually or with any other person, whether as a proprietor, partner, member,
joint venturer, employee, agent, independent contractor, officer, director, shareholder (other than
as a holder of less than ten percent (10%) of the voting stock or other securities of a publicly
traded company), investor, or lender. Notwithstanding the provisions of the preceding sentence,
you shall not be prohibited by this Agreement from engaging in any business that is not directly
competitive with the business of the Company as conducted by the Company as of the date hereof; and

          (b) Without first obtaining the consent of the Company, which consent may be withheld by the
Company in its reasonable discretion, you shall not (i) for yourself or for any entity with which
you are affiliated, solicit or entice, or attempt to solicit or entice, any employee of the Company
to leave the employment of the Company or hire any employee of the Company who has voluntarily left
employment with the Company; or (ii) except as requested by the Company pursuant hereto, solicit
(for yourself or for any person or entity with whom you are affiliated) any business that would be
competitive with the business of the Company from any

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present customer or any person or entity who becomes a customer of the Company prior to the
termination of your employment hereunder or request any such customer to curtail or cancel its
business relationship with the Company (except as may be required in the carrying out of your
duties hereunder)..

     7. The parties agree that:

          (a) Your employment by the Company is such that you had and will continue to have access to
Confidential Information (as defined below). You will not divulge or communicate to any person
(except in performing his duties under this Agreement) or use for your own purpose any Confidential
Information. All documents and objects embodying Confidential Information made, compiled,
received, held or used by you while employed by the Company in connection with the business of the
Company will be and remain the Company’s property and will be delivered by you to the Company upon
the termination of your employment or at any earlier time requested in writing by the Company. The
term “Confidential Information” means manufacturing and marketing data, trade secrets, customer
lists and lists of customer sources and any other information marked “confidential”; provided,
however, that “Confidential Information” shall not include information that (i) is or becomes
generally available to the public other than as a result of disclosure by you, (ii) is generally
known in the industry in which the Company transacts business, (iii) must be disclosed under
federal or state securities laws or regulations, or (iv) must be disclosed, upon advice of counsel,
in order to comply with other applicable laws or regulations or with any requirements imposed by
judicial or administrative process, provided, in this latter case, you shall give the Company two
days’ notice prior to making such disclosure.

          (b) Any breach or threatened breach by you of any obligation set forth in subparagraph (a) of
this Section 7 would cause great and irreparable harm to the Company for which there would be no
adequate remedy at law. Therefore, in addition to any other rights or remedies the Company may
have, the parties agree that if you breach or threaten to breach any obligation set forth in such
subparagraph, the Company will be entitled to temporary and permanent injunctive relief without the
necessity of proving actual damages, posting a bond or making any undertaking.

          (c) Nothing herein is intended to supersede, modify or amend any confidentiality agreement,
proprietary information and/or other similar agreement between you and the Company (including such
provisions as are set forth in the Employment Agreement, as hereinafter defined) to the extent that
the provisions hereof are less restrictive than those set in such agreements, each of which
agreements is, subject to Section 14 hereof, hereby confirmed in all respects and shall remain in
full force and effect in accordance with its respective terms.

     8. This Agreement shall be binding upon and shall inure to the benefit of the Company and you
and your respective heirs, legal representatives, successors and assigns, provided, that, neither
you nor the Company may make any assignments of this Agreement or any interest herein, by operation
of law or otherwise, without the prior written consent of the other party hereto.

     9. This Agreement, and the agreements referred to in Section 7(c) above, contain the entire
understanding between the Company and you with respect to the matters referenced herein and
supersedes any and all agreements, either oral or in writing, between the parties hereto with
respect to such matters. You and the Company each acknowledge that no representations,
inducements, promises, or agreements, orally or otherwise, have been made by any party, or anyone
acting on behalf of any party, which is not embodied herein.

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     10. This Agreement cannot be modified or changed except by an instrument in writing, signed by
both parties to the Agreement.

     11. This Agreement is entered into in the State of California and shall be construed and
interpreted in accordance with its law. The language of all parts of this Agreement shall in all
cases be construed as a whole, according to its fair meaning, and not strictly for or against any
of the parties. Paragraph headings contained in this Agreement are for convenience only and shall
not be considered for any purpose in construing the Agreement.

     12. The waiver by either party hereto of any breach or violation of any provision of this
Agreement by the other party shall not operate as or be construed to be a waiver of any subsequent
breach by such waiving party.

     13. In the event of invalidity or unenforceability of any one or more provisions of this
Agreement, such invalidity or unenforceability shall not affect the validity or enforceability of
the other provisions hereof and such other provisions shall be deemed to remain in full force and
effect.

     14. We hereby agree that Sections 1 through 4 and Sections 6 through 8 of that certain
Employment Agreement, effective as of November 12, 1999, between you and the Company, as such
Sections of, and the Employment Agreement itself, have been amended to date (such Employment
Agreement, as amended to date, is referred to herein as the “Employment Agreement”) are hereby
terminated and of no further force and effect as of the date hereof (which sections include, among
other things, provisions relating to your compensation, benefits and severance pay) but we hereby
confirm that Section 5 and Sections 9 through 21 of the Employment Agreement are not being amended
or terminated hereby and shall remain in full force and effect in accordance with the terms
thereof.

     If the foregoing accurately sets forth your understandings of our agreement, please sign and
return to me the enclosed copy of this Agreement.

	 	 	 	 	 	 	 
	 	 	Spatializer Audio Laboratories, Inc.
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ CarloCivelli	 	 
	 

	 	 	 	 	 	 

	 	 	 
	Acknowledge and Agreed as of January 6, 2006:
	 	 
	 
	 	 
	/s/ Henry R. Mandell
 

Henry R. Mandell

	 	 

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EXHIBIT 10.1

FIRST AMENDMENT TO LEASE AGREEMENT

     THIS FIRST AMENDMENT TO LEASE AGREEMENT (this “First Amendment”) is dated as of March 24,
2006, by and between ARE-ONE INNOVATION DRIVE, LLC, a Delaware limited liability company
(“Landlord”), and CYTRX CORPORATION (formerly known as Araios, Inc.), a Delaware corporation
(“Tenant”), with respect to the following Recitals:

RECITALS

     A. Landlord and Tenant are parties to that certain Lease Agreement dated as of November 19,
2003 (the “Lease”). Pursuant to the Lease, Tenant leases certain space from Landlord known as
Suite 330, consisting of approximately 6,897 rentable square feet in a building known as One
Innovation Drive, Worcester, Massachusetts (the “Premises”). All capitalized terms used herein
without definition shall have the meanings ascribed to them in the Lease.

     B. The Base Term expired on December 31, 2005 (the “Original Termination Date”). Tenant
failed to exercise its option to extend the Term of the Lease in accordance with Section 41
of the Lease (the “Extension Option Failure”). Tenant also failed to vacate the Premises as of the
Original Termination Date.

     C. Commencing on the day immediately following the Original Termination Date through, and
including, February 28, 2006 (the “Holdover Period”), Tenant has remained in possession of the
Premises pursuant to Section 8 of the Lease (Holding Over). During the Holdover Period,
Tenant has paid to Landlord the Base Rent required to be paid pursuant to Section 8 of the
Lease (the “Holdover Rent”).

     D. Subject to all of the terms and conditions set forth herein, Landlord and Tenant desire to
amend the Lease to, among other things, extend the Term of the Lease.

     NOW, THEREFORE, in consideration of the foregoing Recitals, which are incorporated herein by
this reference, the mutual promises and conditions contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and
Tenant hereby agree as follows:

	1.	 	Term. The Base Term of the Lease is reinstated as of March 1, 2006, and shall
terminate on December 31, 2007. Section 41 of the Lease (Right to Extend) is deleted
in its entirety and shall have no further force or effect.
	 
	2.	 	Base Rent for the Premises. Commencing on the March 1, 2006, Base Rent shall be
$12,804.80 per month. Commencing on January 1, 2007, Base Rent shall be increased to
$13,188.95 per month.
	 
	3.	 	Holdover Rent. Notwithstanding anything in the Lease or this First Amendment to the
contrary, including, without limitation, Section 2 hereof, (a) the Base Rent for the
Holdover Period shall be the Holdover Rent, (b) the Holdover Rent has been fully earned by
Landlord, (c) the Holdover Rent has been applied to Tenant’s obligation to pay Base Rent
during the Holdover Period, (d) the Holdover Rent shall not be applied to any obligation of
Tenant under the Lease other than the obligation to pay Base Rent for the Holdover Period, and
(e) Tenant shall have no right to the return of any Holdover Rent.

 

 

	4.	 	Section 40. Section 40 of the Lease (Right to Expand) is hereby deleted in
its entirety and shall have no further force or effect.
	 
	5.	 	Miscellaneous.

     (a) This First Amendment is the entire agreement between the parties with respect to
the subject matter hereof and supersedes all prior and contemporaneous oral and written
agreements and discussions. This First Amendment may be amended only by an agreement in
writing, signed by the parties hereto.

     (b) This First Amendment is binding upon and shall inure to the benefit of the parties
hereto, their respective successors and assigns.

     (c) This First Amendment may be executed in any number of counterparts, each of which
shall be deemed an original, but all of which when taken together shall constitute one and
the same instrument. The signature page of any counterpart may be detached therefrom
without impairing the legal effect of the signature(s) thereon provided such signature page
is attached to any other counterpart identical thereto except having additional signature
pages executed by other parties to this First Amendment attached thereto.

     (d) Landlord and Tenant each represent and warrant that it has not dealt with any
broker, agent or other person (collectively, “Broker”) in connection with this transaction
and that no other Broker was the procuring cause of this transaction. Landlord and Tenant
each hereby agree to indemnify and hold the other harmless from and against any claims by
any Broker claiming a commission or other form of compensation by virtue of having dealt
with Tenant or Landlord, as applicable, with regard to the transaction documented by this
First Amendment.

     (e) Except as amended and/or modified by this First Amendment, the Lease is hereby
ratified and confirmed and all other terms of the Lease shall remain in full force and
effect, unaltered and unchanged by this First Amendment. In the event of any conflict
between the provisions of this First Amendment and the provisions of the Lease, the
provisions of this First Amendment shall prevail. Whether or not specifically amended by
this First Amendment, all of the terms and provisions of the Lease are hereby amended to the
extent necessary to give effect to the purpose and intent of this First Amendment.

[SIGNATURES ON NEXT PAGE]

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     IN WITNESS WHEREOF, the parties hereto have executed this First Amendment as of the day and
year first above written.

	 	 	 	 	 	 	 	 	 	 
	 	 	TENANT:
	 
	 	 	 	 	 	 	 	 
	 	 	CYTRX CORPORATION,
a Delaware corporation
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Steven A. Kriegsman
	 	 	 	 	 
	 	 	Its:	 	President and Chief Executive Officer
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	LANDLORD:
 
ARE-ONE INNOVATION DRIVE, LLC,
a Delaware limited liability company
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	AREE-HOLDINGS, L.P.,
a Delaware limited partnership,
managing member
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	ARE-GP HOLDINGS QRS CORP.,
a Delaware corporation, general partner
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:
	 	/s/ Jennifer Pappas
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Its:
	 	Vice President and Assistant Secretary

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