Fisk Ventures, LLC v. Segal

2009 WL 73957 (Del. Ch. 2009)

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Nature of the Case

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Facts

Genitrix, LLC was formed by Dr. Andrew Segal (D) in 1996 to commercialize his biotechnology concepts of directing the human immune system to attack cancer and infectious diseases. In forming Genitrix, D obtained a patent rights license from the Whitehead Institute of Biomedical Research (“Whitehead”) concerning the Company’s core technology. It provides for the exclusive license to Genitrix of certain patent rights, owned by Whitehead. Genitrix paid for the prosecution and issuance of the patents owned by Whitehead. Fisk Ventures, LLC, (P) became an investor in Genitrix. P contributed $842,000 in cash in exchange for Class B interests in Genitrix. Investments by other Class C investors brought the total cash investment in Genitrix to $1.1 million. Segal received a $500,000 Class A investment credit in exchange for his contribution of patent rights that he obtained from Whitehead. To continue operating, Genitrix has relied on equity and debt investments and grants from institutions to provide capital. In recent years, both P and D have paid for certain Company expenses. P negotiated a “Put Right” with respect to the Class B membership interests, which allows “the holders of the Class B Interests . . . to sell any or all of such Member’s Class B Interests to the Company on such terms as are set forth herein,” at any time after “the fourth anniversary of the date of this Agreement.” P has been free to exercise the Put Right ever since September 11, 2001. A four-person Board was organized to manage the affairs of Genitrix, with D and P each appointing two representatives. D ceased to be CEO of the Company in March 2006 but continues to serve as President. Only a handful of Board meetings have been held over the entire course of Genitrix’s existence. D and his appointees declined to attend Board meetings from about September 2006 until July 2008, requesting instead that the Board conduct business by e-mail. P moved the court to dissolve the company.