<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 1999
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Transition Period From ___________ to _____________.
Commission File Number 0-22147
ILEX ONCOLOGY, INC.
(Exact name of registrant as specified in its charter)
Delaware 74-2699185
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
11550 I.H. 10 West, Suite 100
San Antonio, Texas 78230
(Address of principal executive offices)
(Zip Code)
(210) 949-8200
(Registrant's telephone number, including area code)
-------------------------
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No[ ]
-------------------------
Indicate the number of shares outstanding of each of the issuers
classes of Common Stock, as of the latest practicable date.
On May 10, 1999, there were outstanding 12,949,924 Common Stock, $.01
par value, of the registrant.
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ILEX ONCOLOGY, INC.
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
PART I: FINANCIAL INFORMATION PAGE
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<S> <C> <C>
Item 1: Financial Statements
Consolidated Balance Sheets - December
31, 1998 and March 31, 1999 3-4
Consolidated Statements of Operations - For
the three month periods ended March 31, 1998
and March 31, 1999 5
Consolidated Statements of Cash Flows - For
the three month period ended March 31, 1998 and
March 31, 1999 6
Notes to the Consolidated Financial Statements 7-9
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations 10-14
Item 2A: Quantitative and Qualitative Disclosures About Market Risk 14
PART II. OTHER INFORMATION
Item 1-6: Other Information 15
SIGNATURES 16
</TABLE>
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ILEX ONCOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands)
<TABLE>
<CAPTION>
March 31,
December 31, 1999
ASSETS 1998 (Unaudited)
------ ------- -------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 6,581 $ 3,566
Investments in marketable securities 18,999 18,475
Accounts receivable, net of allowance for
doubtful accounts of $150 at December 31,
1998 and March 31, 1999:
Billed 2,685 3,231
Unbilled 515 802
Prepaid expenses and other 1,194 1,415
------- -------
Total current assets 29,974 27,489
------- -------
NONCURRENT ASSETS:
Investment in and advances to:
Research and development partnerships 228 515
Contract research affiliate 473 295
Intangible assets, net of amortization 6,704 6,348
Other 75 70
Investments in the marketable securities 445 1,281
------- -------
Total noncurrent assets 7,965 8,509
------- -------
PROPERTY AND EQUIPMENT, Net of accumulated
depreciation and amortization of $1,374 and
$1,664 at December 31, 1998 and March 31,
1999, respectively 4,441 4,722
------- -------
Total assets $42,340 $40,720
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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ILEX ONCOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands)
<TABLE>
<CAPTION>
March 31,
December 31, 1999
LIABILITIES AND STOCKHOLDERS' EQUITY 1998 (unaudited)
------------------------------------ ------------ -----------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable-
Related parties $ 215 $ 245
Other 876 1,017
Accrued subcontractor costs-
Related parties 239 602
Other 1,874 2,034
Accrued liabilities 1,143 832
Deferred revenue 1,685 1,582
-------- --------
Total current liabilities 6,032 6,312
-------- --------
OTHER LONG-TERM LIABILITIES 404 404
-------- --------
COMMITMENTS AND CONTINGENCIES (Note 5)
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value; 40,000 shares
authorized: 12,653 and 12,926 shares issued and
outstanding at December 31, 1998 and March 31,
1999, respectively 127 129
Additional paid-in capital 67,623 70,155
Receivables on sale of common stock (46) 0
Accumulated deficit (31,283) (35,763)
Treasury Stock: 39,000 shares at December 31,
1998 and March 31, 1999 (517) (517)
-------- --------
Total stockholders' equity 35,904 34,004
-------- --------
Total liabilities and stockholders'
equity $ 42,340 $ 40,720
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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ILEX ONCOLOGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
Three Months
ended
March 31,
---------
1998 1999
------- -------
<S> <C> <C>
REVENUE:
Product development $ 811 $ 911
Contract research services, net 2,128 2,536
------- -------
Total revenue 2,939 3,447
------- -------
OPERATING EXPENSES:
Research and development costs 5,738 3,552
Direct costs of research services 2,274 2,844
General and administrative 1,038 1,015
------- -------
Total operating expenses 9,050 7,411
------- -------
OPERATING LOSS (6,111) (3,964)
------- -------
OTHER INCOME (EXPENSE):
Equity in income (losses) of:
Research and development partnerships (1,456) (623)
Contract research affiliate 55 (177)
Interest income 567 311
Gain (loss) on sale of securities -- (27)
------- -------
NET LOSS $(6,945) $(4,480)
======= =======
BASIC AND DILUTED NET LOSS PER SHARE $ (.57) $ (.35)
======= =======
WEIGHTED AVERAGE SHARES USED IN
COMPUTING BASIC AND DILUTED LOSS PER
SHARE OF COMMON STOCK 12,281 12,653
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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ILEX ONCOLOGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------
1998 1999
------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(6,945) $(4,480)
Adjustments to reconcile net loss to net cash used in
operating activities-
Depreciation and amortization 425 647
Net activity of research and development partnerships
and contract research affiliate (602) (109)
Valuation of warrants issued in payment as licensing fees 3,143 0
Change in assets and liabilities-
(Increase) decrease in assets-
Accounts receivable, net 271 (833)
Prepaid expenses and other (32) (221)
Other noncurrent asset 0 5
Increase (decrease) in liabilities-
Accounts payable 110 171
Accrued liabilities (687) 212
Advance billings (734) (103)
Other long-term liabilities (8) 0
------- -------
Net cash used in operating activities (5,059) (4,711)
CASH FLOWS FROM INVESTING ACTIVITIES:
Net activity of marketable securities transactions 1,168 (312)
Purchase of property and equipment (529) (571)
------- -------
Net cash provided by (used in) investing activities 639 (883)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock for cash, net of issuance cost 6 2,533
Collections of receivables on sale of common stock 0 46
------- -------
Net cash provided by financing activities 6 2,579
------- -------
NET DECREASE IN CASH AND CASH EQUIVALENTS (4,414) (3,015)
CASH AND CASH EQUIVALENTS, beginning of period 22,655 6,581
------- -------
CASH AND CASH EQUIVALENTS, end of period $18,241 $ 3,566
======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for-
Interest $ -- --
Income taxes -- --
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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ILEX ONCOLOGY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
March 31, 1999
(Amounts in Thousands, Except Share Information,
Per Share Information or As Otherwise Indicated)
1. PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION:
The accompanying interim consolidated financial statements presented herein
include the accounts of ILEX Oncology, Inc. and its wholly-owned subsidiaries
("the Company"). All significant intercompany transactions and accounts have
been eliminated in consolidation. These interim consolidated financial
statements have been prepared by the Company, without audit, pursuant to the
rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. In management's
opinion, all adjustments which are necessary for a fair presentation of
financial position and results of operations have been made. It is recommended
that these interim consolidated financial statements be read in conjunction with
the financial statements and notes thereto included in the Company's Annual
report on Form 10-K for the year ended December 31, 1998. The results of
operations for any interim period are not necessarily indicative of the results
of operations for the entire year. Certain prior period amounts have been
reclassified to conform to the current period presentation.
2. LOSS PER SHARE:
Diluted net loss per share is equal to basic net loss per share as the effect
of all common stock equivalents is antidilutive.
3. INVESTMENTS IN AND ADVANCES TO RESEARCH AND DEVELOPMENT PARTNERSHIPS AND
CONTRACT RESEARCH AFFILIATE:
In May 1997, the Company entered into an agreement with LeukoSite, Inc.
("LeukoSite"), for an equally owned joint venture, L&I Partners, L.P.
("L&I"), for research collaboration endeavors. The following is summarized
information for L&I as of and for the three months ended March 31, 1999
(unaudited):
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Summarized Income Statement Information
Three Months
Ended
March 31, 1999
Revenue $ -
Research and development expenses 1,286
Other income 1
-------
Net loss $(1,285)
=======
Summarized Balance Sheet Information
March 31, 1999
Assets $ 73
Liabilities 2,032
Partners' equity (deficit) (1,959)
4. STOCKHOLDERS' EQUITY:
During the first quarter of 1999, the Company sold $2.5 million of common
stock to Eli Lilly and Company as part of a collaborative arrangement for the
company to in-license the development of the sulfonylurea ILX-295501. ILEX
will develop the compound and plans to initiate four phase II trials this year.
5. COMMITMENTS & CONTINGENCIES:
On April 5, 1999, the Company issued an irrevocable standby letter of credit
agreement on behalf of Pharma Forschung Kaufbeuren GmbH (PFK-ILEX), its
European affiliate of $1.8 million, to expire on June 30, 1999. During 1998,
the Company guaranteed a $615,000 line of credit for PFK-ILEX, to expire in
June 2000.
6. SEGMENT INFORMATION:
The Company has two reportable segments: products and services. The products
segment is involved in the development of proprietary compounds for the
treatment and prevention of cancer. The services segment provides contract
research services for the development, manufacturing, and regulatory approval
of oncology compounds. The Company's reportable segments are strategic business
units that are managed separately because each business requires different
technology and marketing strategies.
The Company has reclassified certain first quarter 1998 segment income
statement amounts between its two operating segments for purposes of
comparability to current year amounts. The effect of these reclassifications is
to increase research & development costs and the cost of contract research
services by approximately $300,000 and $400,000, respectively, and to reduce
corporate general & administrative costs by approximately $700,000.
The accounting policies of the segments are the same of those of the Company.
The Company evaluates performance based on the profit or loss from operations
before income taxes.
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Selected Segment Information
(unaudited)
<TABLE>
<CAPTION>
For the three months ended For the three months ended
March 31, 1998 March 31, 1999
-------------- --------------
Services Products Total Services Products Total
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues from external customers $ 2,128 $ 811 $ 2,939 $ 2,536 $ 911 $ 3,447
Intersegment revenues 1,628 0 1,628 3,222 0 3,222
------- -------- -------- -------- -------- --------
Total revenues 3,756 811 4,567 5,758 911 6,669
Direct costs 3,604 6,036 9,640 5,040 4,578 9,618
------- -------- -------- -------- -------- --------
Segment operating income (loss) 152 (5,225) (5,073) 718 (3,667) (2,949)
Equity in income (losses) in
research and development
partnerships and clinical
research affiliate 55 (1,456) (1,401) (177) (623) (800)
------- -------- -------- -------- -------- --------
Segment net income (loss) $ 207 $ (6,681) $ (6,474) $ 541 $ (4,290) $ (3,749)
======= ======== ======== ======== ======== ========
</TABLE>
Reconciliation of Segment Information
To Consolidated Totals
<TABLE>
<CAPTION>
Three months ended
March 31
--------
1998 1999
-------- --------
<S> <C> <C>
RESEARCH and DEVELOPMENT COSTS:
Reportable Products segment direct costs $ 6,036 $ 4,578
Elimination of intersegment gross profit (298) (1,026)
-------- --------
Consolidated research and development costs $ 5,738 $ 3,552
======== ========
DIRECT COSTS of RESEARCH SERVICES:
Reportable Services segment direct costs $ 3,604 $ 5,040
Elimination of intersegment expenses (1,330) (2,196)
-------- --------
Consolidated direct costs of research services $ 2,274 $ 2,844
======== ========
OPERATING LOSS:
Reportable segment operating loss $ (5,073) $ (2,949)
Corporate general and administrative expense (1,038) (1,015)
-------- --------
Consolidated operating loss $ (6,111) $ (3,964)
======== ========
NET LOSS:
Reportable segment net loss $ (6,474) $ (3,749)
Corporate general and administrative expense (1,038) (1,015)
Loss on sale of marketable securities 0 (27)
Interest income 567 311
-------- --------
Consolidated net loss $ (6,945) $ (4,480)
======== ========
</TABLE>
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
FORWARD-LOOKING STATEMENTS - CAUTIONARY STATEMENTS
Certain statements contained in this Quarterly Report on Form 10-Q,
including statements regarding the anticipated development and expansion of the
Company's business, expenditures, the intent, belief or current expectations of
the Company, its directors or its officers, primarily with respect to the future
operating performance of the Company and other statements contained herein
regarding matters that are not historical fact, are "forward-looking statements"
(as such term is defined in the Private Securities Litigation Reform Act of
1995). Because such statements include risks and uncertainties, actual results
may differ materially from those expressed or implied by such forward-looking
statements. Factors that could cause actual results to differ materially from
those expressed or implied by such forward-looking statements include, but are
not limited to, those discussed in other filings including those contained in
the Company's Registration Statement on Form S-1, the Company's Annual Report on
Form 10-K for the year ended December 31, 1998, and in other reports filed with
the Securities and Exchange Commission. The Company does not intend to update
these forward-looking statements.
GENERAL
The Company is engaged in the business of (i) acquiring rights to
(generally in exchange for the payment of licensing fees and future royalty
payments), and developing for commercialization, drugs for the treatment of
patients with cancer and for the prevention of cancer and (ii) providing
clinical research, development and manufacturing services on a contract basis
to pharmaceutical and biotechnology companies engaged in the development of
oncology products.
The Company currently has no products available for sale, however, the
Company anticipates CAMPATH(R) will receive FDA approval to be marketed
commercially within the next two years. However, no assurances can be made that
the FDA will grant such approval or, if the FDA does grant such approval that
CAMPATH(R) will be accepted in the marketplace. The Company has incurred losses
and expects to incur losses for the foreseeable future as the Company's research
and development expenditures increase. The Company's revenue for the foreseeable
future will be limited to development funding under its collaborative
relationships, fee-for-service revenues pursuant to contracts with its CRO
clients, interest income, income from partnerships and other miscellaneous
income.
The following is a discussion of the financial condition and results
of operations for the Company for the three month periods ended March 31, 1998
and 1999. It should be read in conjunction with the Interim Consolidated
Financial Statements of the Company, the Notes thereto and other financial
information included elsewhere in this report and in the Company's Annual
Report on Form 10-K for the year ended December 31, 1998.
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RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH
31, 1998
Operating Revenues
Total revenue increased from approximately $2.9 million in the first
quarter of 1998 to $3.4 million in the first quarter of 1999. The increase of
approximately $0.5 million, of 17% was due to an additional $0.4 million of
contract research revenues and $0.1 million in product development revenues.
The $0.4 million, or 19%, increase in contract research services revenues to
$2.5 million, compared to approximately $2.1 million in first quarter 1998,
reflects an increase in both the number of contracts underway as well as in the
size and duration of the contract research projects.
Operating Expenses
Research and Development Costs. Research and development costs
decreased from approximately $5.7 million in the first quarter of 1998 to $3.6
million in the first quarter of 1999. This decrease of $2.1 million, or 37%,
was primarily attributable to costs associated with a one-time fee of $3.3
million in the 1998 first quarter for the in-licensing of THP-Dox, offset
primarily by increased research and development costs associated with the
advancing development of eflornithine.
General and Administrative Costs. General and administrative costs did
not change significantly between the first quarter 1998 and 1999, with costs of
approximately $1.0 million in both periods.
Direct Costs of Research Services. Direct costs of research services
increased from $2.3 million in the first quarter of 1998 to $2.8 million in the
first quarter of 1999. This increase of $0.5 million, or 22%, is primarily
attributable to increases in expenditures required to support growth in the
number and size of contract research contracts, including staffing expenses
and facility and equipment expansion.
Equity in Income (Losses) of Research and Development Partnerships and Contract
Research Affiliate
Equity in losses of research and development partnerships decreased
from $1.5 million in the first quarter of 1998 to $0.6 million in the first
quarter 1999. The decrease of $0.9 million is due to the reduction in
manufacturing costs for CAMPATH(R), which is being developed in a joint venture
with LeukoSite Inc. During the first quarter of 1998, the joint venture incurred
substantial expense for the manufacturing of CAMPATH(R) for use in the ongoing
clinical trials. No such manufacturing expense was incurred in the first
quarter of 1999.
The Company recorded income of $55,000 from its investment in its
European affiliate, PFK, for the first quarter of 1998, compared to a loss of
$177,000 for the first quarter of 1999. The increased loss of $232,000, or
422%, reflects the expense incurred by PFK in reorienting their business to
focus on oncology only.
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Net Interest Income
Net interest income decreased from approximately $0.6 million in the
first quarter of 1998 to $0.3 million in the first quarter of 1999. This
decrease of $0.3 million, or 50%, is attributable to a decrease in aggregate
average balance of cash, cash equivalents and investments in marketable
securities.
Net Loss Per Share
The net loss per share decreased $.22 ($.57) in the first quarter of
1998 to ($.35) in the first quarter of 1999 due to the reasons set forth above.
SEASONALITY
ILEX expects that results of operations in the future will fluctuate
significantly from period to period. Such fluctuations may result from numerous
factors, including the amount and timing of revenues earned under existing or
future collaborative relationships or joint ventures, if any, technological
advances and determinations as to the commercial potential of compounds, the
progress of the Company's drug development programs, the receipt of regulatory
approvals, acquisitions, the timing of start-up expenses for new facilities and
equipment, changes in the Company's mix of services, the cost of preparing,
filing, prosecuting, maintaining, defending and enforcing patent claims and
other intellectual property rights, the status of competing products and
technologies and the timing and availability of financing for the Company,
including existing or future strategic alliances and joint ventures with third
parties. In addition, with respect to the Company's contract research services
revenues, fluctuations may result due to a number of factors, including the
commencement, completion or cancellation of large contracts and progress of
ongoing contracts. ILEX believes that comparisons of its quarterly and annual
historical results may not be meaningful and should not be relied upon as an
indication of future performance.
INCOME TAXES
The availability of the NOL carryforward to reduce U.S. federal
taxable income is subject to various limitations under the Internal Revenue
Code of 1986 (the "Code"), as amended, in the event of an ownership change as
defined in Section 382 of the Code. The Company experienced a change in
ownership interest in excess of 50 percent as defined under the Code upon the
consummation of its offering of Series B convertible preferred stock. The
Company does not believe that this change in ownership significantly impacts
the Company's ability to utilize its net operating loss and tax credit
carryforwards as of December 31, 1998, because the amount of the cumulative
limitation (based upon the Company's current market capitalization) during the
carryforward period exceeds the total amount of NOL and tax credit
carryforwards. The Company did not experience a change in control under the
Code as the result of its initial public offering. There was no material
ownership change during the three-month period ended March 31, 1999.
LIQUIDITY AND CAPITAL RESOURCES
ILEX has financed its operations primarily through the sale of its
capital stock, through development and licensing fee revenues provided by its
collaborative partners under its collaborative agreements and through fee-
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<PAGE> 13
for-service or participatory revenues pursuant to contracts with its CRO
clients. The Company receives payments under collaborative agreements primarily
in the form of development funding, milestone payments, if milestones are
achieved, and royalties, if products are commercialized.
To date, the majority of the Company's expenditures have been for research
and development activities, including associated general and administrative
expense and losses incurred by joint ventures. ILEX expects research and
development expenses to increase for the next several years as its development
programs progress. In addition, general and administrative expenses necessary
to support such expanded programs are also expected to increase over the next
several years. At March 31, 1999, the Company had cash, cash equivalents and
investments in marketable securities of approximately $23.3 million and working
capital of approximately $21.2 million. The Company expects such amount to be
used primarily to support continued research and development of its compounds,
expand its CRO services business, for general and administrative expenses and
for other general corporate purposes.
During the first quarter of 1999, the Company sold $2.5 million of common
stock to Eli Lilly and Company as part of a collaborative arrangement for the
company to in-license the development of the sulfonylurea ILX-295501. ILEX will
develop the compound and plans to initiate four phase II trials this year.
As of March 31, 1999, the Company had no material commitments for capital
expenditures.
On April 5, 1999, the Company issued an irrevocable standby letter of
credit agreement on behalf of Pharma Forschung Kaufbeuren GmbH (PFK-ILEX), its
European affiliate, of $1.8 million, to expire on June 30, 1999. During 1998,
the Company guaranteed a $615,000 line of credit for PFK-ILEX, to expire in June
2000. During 1998 and the first quarter 1999 PFK-ILEX continued to operate at a
loss. Company management is reviewing such losses.
ILEX's future expenditures and capital requirements will depend on
numerous factors, including without limitation, the progress of its research
and development programs, the progress of its non-clinical and clinical
testing, the magnitude and scope of these activities, the time and costs
involved in obtaining regulatory approvals, the cost of filing, prosecuting,
defending and enforcing any patent claims and other intellectual property
rights, competing technological and market developments, changes in or
termination of existing collaborative arrangements, the ability of the Company
to establish, maintain and avoid termination of collaborative arrangements, and
the purchase of capital equipment and acquisitions of compounds, technologies
or businesses. The Company's cash requirements are expected to continue to
increase each year as it expands its activities and operations. There can be no
assurance that the Company will ever be able to generate product revenue or
achieve or sustain profitability. The Company expects its cash, cash
equivalents, and marketable securities will be adequate to cover all of its
obligations for the next year.
COMPUTER SYSTEMS AND YEAR 2000 ISSUES
The "Year 2000" issue concerns the potential exposures related to the
automated generation of business and financial misinformation resulting from
the application of computer programs which have been written using two digits,
rather than four, to define the application year of business transactions. The
Company's information technology management team has
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<PAGE> 14
conducted a comprehensive assessment of the Company's computer systems to
identify the systems that could be affected by the Year 2000, and has
determined that the Company's computer systems are Year 2000 compliant. As
such, the Company believes that, based upon currently available information, it
will incur no material costs associated with becoming Year 2000 compliant. The
Company is completing its confirmation of the Year 2000 readiness of its
material customers, service providers, key licensees, and its material vendors.
Failure of the Company, its software providers or the Company's customers or
vendors to adequately address the Year 2000 issue could result in misstatement
of reported financial information, scientific data or otherwise materially and
adversely affect the Company's business, financial condition and results of
operations.
The above Year 2000 disclosure constitutes a "Year 2000 Readiness
Disclosure" as defined in the "Year 2000 Information and Readiness Disclosure
Act" which was signed into law on October 19, 1998. Such act provides added
protection from liability for certain public and private statements concerning
a company's Year 2000 readiness.
ITEM 2A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk represents the risk of loss that may impact the financial
position, results of operations, or cash flows of the Company due to adverse
changes in financial market prices, including interest rate risk, foreign
currency exchange rate risk, commodity price risk, and other relevant market
rate or price risks.
The Company is exposed to some market risk through interest rates, related
to its investment of its current cash, cash equivalents, and marketable
securities of approximately $23.3 million. These funds are generally invested in
highly liquid treasury bills and money market accounts with short-term
maturities. As such instruments mature and the funds are re-invested, the
Company is exposed to changes in market interest rates. This risk is not
considered material and the Company manages such risk by continuing to evaluate
the best investment rates available for short-term high quality investments. The
Company has not used derivative financial instruments in its investment
portfolio.
The Company's European affiliate operations are denominated in local
currency. The Company has unhedged transaction exposures in these currencies.
The Company has not entered into any forward foreign contracts for speculative,
trading or other purposes.
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<PAGE> 15
PART II - OTHER INFORMATION
Item 1. Legal Proceedings: Not Applicable
Item 2. Changes in Securities:
(c) Recent Sales of Unregistered Securities. On January 22, 1999,
pursuant to the terms of a stock purchase agreement, the Company
issued to Eli Lilly and Company 218,858 shares of the Company's
common stock, $.01 par value (the "Shares"), at a price of $11.42 per
share for a total purchase price of approximately $2,500,000. The
Shares were not registered under the Securities Act of 1933, as
amended (the "Securities Act"), pursuant to the exemptions of such
registration provided under Regulation D ("Regulation D") of the
rules and regulations promulgated under the Securities Act by the
Securities and Exchange Commission and Section 4(2) of the Securities
Act. The Company relied on certain representations and warranties of
Eli Lilly and Company, including, among other things, its ability to
evaluate the merits and risks of its investment in the Shares, its
status as an "accredited investor" (as that term is defined in Rule
501(a) of Regulation D) and that the Shares were acquired solely for
its own account for investment and not with a view to distribution.
Item 3. Defaults Upon Senior Securities: Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders: Not Applicable
Item 5. Other Information: Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 10.1*: Stock Purchase Agreement dated January 22, 1999
between the Company and Eli Lilly Company
Exhibit 10.2*: Registration Rights Agreement dated January 22,
1999 between the Company and Eli Lilly and
Company
Exhibit 10.3*: Letter of Credit Agreement dated April 5, 1999
between the Company and PFK-ILEX
Exhibit 11.1*: Computation of Net Loss Per Share
Exhibit 27.1*: Financial Data Schedule
(b) Reports on Form 8-K: Not Applicable
- ---------
* Filed herewith.
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<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ILEX ONCOLOGY,INC.
(Registrant)
Dated: May 14, 1999 By: /s/ RICHARD L. LOVE
--------------------------------
Richard L. Love
President and Chief Executive Officer
(Principal Executive Officer)
Dated: May 14, 1999 By: /s/ MICHAEL T. DWYER
--------------------------------
Michael T. Dwyer
Vice President and Chief Financial Officer
(Principal Financial and Accounting
Officer)
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<PAGE> 17
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ---------- -----------
<S> <C>
Exhibit 10.1*: Stock Purchase Agreement dated January 22, 1999 between the
Company and Eli Lilly and Company
Exhibit 10.2*: Registration Rights Agreement dated January 22, 1999
between the Company and Eli Lilly and Company
Exhibit 10.3*: Letter of Credit Agreement dated April 5, 1999 between the
Company and PFK-ILEX
Exhibit 11.1*: Computation of Net Loss Per Share
Exhibit 27.1*: Financial Data Schedule
</TABLE>
- --------
* Filed herewith.
<PAGE> 1
EXHIBIT 10.1
ILEX ONCOLOGY, INC.
STOCK PURCHASE AGREEMENT
WITH
ELI LILLY AND COMPANY
JANUARY 22, 1999
<PAGE> 2
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is entered into and
effective as of the 22nd day of January, 1999, by and between, ILEX Oncology,
Inc., a Delaware corporation (the "Company"), and ELI LILLY AND COMPANY, an
Indiana corporation (the "Investor").
ARTICLE I
PURCHASE AND SALE OF SHARES
1.1 PURCHASE AND SALE. Subject to the terms and conditions hereof, the Investor
agrees to purchase from the Company, and the Company agrees to issue and sell
to the Investor, 218,858 shares of the Company's common stock, $.01 par value
(the "Shares"), at a price of $11.42 per share for a total purchase price of
two million five hundred thousand dollars ($2,500,000) (the "Purchase Price").
1.2 THE CLOSING. The closing ("Closing") of the purchase and sale of the Shares
shall take place in such manner as the parties may mutually agree. At the
Closing, the Company shall deliver the Shares to the Investor upon delivery to
the Company by the Investor of a check drawn on a U.S. bank or wire transfer of
funds in the amount of the Purchase Price. The Shares to be delivered to the
Investor will be evidenced by a single certificate registered in the Investor's
name.
ARTICLE II
REPRESENTATIONS OF THE COMPANY
The Company represents and warrants to the Investor as follows:
2.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company: (a) is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware; (b) has all requisite corporate power and
authority to own and operate its properties and assets and to carry on its
business as it is presently being conducted and as proposed to be conducted;
and (c) is qualified and is in good standing as a foreign corporation in all
other jurisdictions in which the failure so to qualify would have a material
adverse effect on its business or properties.
2.2 CAPITALIZATION. Immediately prior to the Closing, the authorized capital of
the Company consists of 60,000,000 shares of Common Stock, of which 12,652,754
shares were issued and outstanding on January 22, 1999, all of which have been
<PAGE> 3
validly issued, and are fully paid and non-assessable, and 20,000,000 shares of
Preferred Stock, none of which were issued and outstanding on January 22, 1999.
Since September 30, 1998, ILEX has not issued any shares of Common Stock other
than shares of Common Stock issued pursuant to ILEX's 1995 Stock Option Plan
and 1996 Non-Employee Director Stock Option Plan.
2.3 AUTHORIZATION. All corporate action on the part of the Company and its
officers, directors and shareholders necessary for the authorization, execution
and delivery of this Agreement, the performance of all obligations of the
Company hereunder and the authorization, issuance and delivery of the Shares
has been taken or will be taken on or prior to the Closing, and this Agreement
constitutes a valid and legally binding obligation of the Company.
2.4 VALID ISSUANCE OF SHARES. When issued in accordance with the terms of this
Agreement, the Shares shall be duly and validly authorized and issued
(including, without limitation, issued in compliance with applicable federal
and state securities laws), fully paid and non-assessable and not subject to
any preemptive rights, liens, claims or encumbrances, or other restriction on
transfer. Furthermore, the certificates representing the Shares are in due and
proper form and have been duly and validly executed by the officers of the
Company named thereon.
2.5 GOVERNMENTAL CONSENTS. All consents, approvals, orders, authorizations,
registrations, qualifications, designations, declarations, or filings of or
with any federal, state or local governmental authority on the part of the
Company required in connection with the consummation of the transactions
contemplated herein have been or shall be obtained prior to the Closing and
shall be effective as of the Closing.
2.6 LITIGATION. There are no actions, suits, proceedings or investigations
pending or, to the best of the Company's knowledge and belief, any basis
therefor or threat thereof, against or affecting the Company which question the
validity of this Agreement or the right of the Company to enter into it, or to
consummate the transactions contemplated hereby, or which might result, either
individually or in the aggregate, in any material adverse change in the
business, prospects, conditions, affairs or operations of the Company or in any
of the properties or assets, or in any material impairment of the right or
ability of the Company to carry on its business as now conducted or as proposed
to be conducted. The foregoing includes, without limitation, actions pending or
threatened (or any basis therefor known to the Company) involving the prior
employment of any of the Company's employees, use in connection with the
Company's business of any information or techniques allegedly proprietary to
any former employers of the Company's employees, or obligations of the
Company's employees under any agreements with their prior employers. The
Company is not a party or subject to the provisions of
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<PAGE> 4
any order, writ, injunction, judgment or decree of any court or governmental
agency or instrumentality. There is no action, suit, proceeding or
investigation by the Company currently pending or which the Company intends to
initiate.
2.7 NO CONFLICT WITH OTHER INSTRUMENTS. The Company is not in violation or
default of any provisions of its Articles of Incorporation or Bylaws or of any
instrument, judgment, order, writ, decree or contract to which it is a party or
by which it is bound or, to its knowledge, of any provision of federal or state
statute, rule or regulation applicable to the Company, which violation or
default would be materially adverse to the Company. The execution, delivery and
performance of this Agreement will not result in any violation of, be in
conflict with, or constitute a default under, with or without the passage of
time or the giving of notice: (a) any provision of the Company's Articles of
Incorporation or Bylaws; (b) any provision of any judgment, decree or order to
which the Company is a party or by which it is bound; (c) any material
contract, obligation or commitment to which the Company is a party or by which
it is bound; or (d) to the Company's knowledge, any statute, rule or
governmental regulation applicable to the Company.
2.8 SECURITIES AND FINANCIAL STATEMENT MATTERS. Company has duly filed in a
timely manner (without any permitted extension) all reports required to be
filed by Company with the SEC under the 1934 Act (the "SEC Reports"). The SEC
Reports (including, in each case, without limiting the generality thereof, the
audited and unaudited financial statements of Company included therein) when
filed contained all statements required to be stated therein in accordance with
the 1934 Act and did not contain any untrue statement of material fact or omit
to state a material fact necessary to make any of the statements contained
therein not misleading in light of the circumstances under which they were made
and otherwise complied in all material respects with the applicable
requirements of the 1934 Act. The consolidated financial statements included in
the SEC Reports comply as to form with the requirements of Regulation S-X, as
promulgated by the SEC under the 1933 Act and are derived from the applicable
books and records of Company, have been prepared in conformity with generally
accepted accounting principles (as required by Regulation S-X) and present
fairly the financial condition, results of operations, changes in security
holders' equity and cash flows of Company on a consolidated basis, as at the
close of business, or for the period ended, on the date of each of such
financial statements.
2.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in the financial
statements referred to in Section 2.8 and Company's Annual Report on Form 10-K
for the year ended December 31, 1997 and Company's Quarterly Report on Form
10-Q for the quarter ended September 30, 1998, or as otherwise disclosed
herein, since September 30, 1998, neither Company nor any of its subsidiaries
or affiliates has incurred any liabilities or obligations, direct or
contingent, or entered into any transactions, not in the ordinary course of
business, that are material to Company and its subsidiaries and affiliates,
taken as a whole, and there has not
-3-
<PAGE> 5
been (i) any material change in the capital stock or indebtedness of Company or
its subsidiaries or affiliates that would have a Material Adverse Effect (as
defined below), or (ii) any event, change or occurrence which individually or
in the aggregate might (x) have a material adverse effect on the condition
(financial or other), assets, business, or results of operations of Company and
its subsidiaries and affiliates, taken as a whole, (y) materially adversely
affect Company's ability to consummate any of the transactions contemplated
hereby or to perform its obligations under this Agreement or (each of (x) and
(y) being referred to herein, individually or in the aggregate as a "Material
Adverse Effect"). No event has occurred since September 30, 1998, with respect
to which Company would be required to file a Current Report on Form 8-K under
the 1934 Act.
2.10 ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed in the financial
statements referred to in Section 2.8, Company's Annual Report on Form 10-K for
the year ended December 31, 1997 and Company's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1998, there are no debts, liabilities or
obligations, contingent or otherwise, of Company or its subsidiaries or
affiliates that would have a Material Adverse Effect.
2.11 CORPORATE DOCUMENTS. The Articles of Incorporation and By-laws of the
Company are in the form previously provided to the Investor.
2.12 REGISTRATION RIGHTS. Except as provided in SCHEDULE 2.12, the Company is
under no contractual obligation to register (now or in the future, whether
contingent or not) under the Securities Act any of its presently outstanding
securities or any of its securities that may subsequently be issued.
2.13 BROKERS AND FINDERS. The Company has not retained any investment banker,
broker, finder, consultant or intermediary and is not obligated to any such
person for any fee, in connection with the transactions contemplated by this
Agreement.
2.14 FULL DISCLOSURE. The Company believes it has provided the Investor with
all information that the Investor has requested for deciding whether to
purchase the Shares and all information reasonably necessary to enable the
Investor to make such decision. Neither this Agreement nor any other statements
or certificates made or delivered in connection herewith contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements not misleading.
2.15 INVENTIONS AND SECRECY AGREEMENTS. Each employee, consultant and
subcontractor of the Company with access to the Company's proprietary
information has executed an agreement customary in the industry regarding
inventions and confidential information which effective assigns all inventions
discovered/conceived within the scope of work performed on behalf of Company to
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<PAGE> 6
Company as well as protecting the secrecy of confidential information of
Company. The Company, after reasonable investigation, is not aware that any
such employee, consultant, or contractor is in violation thereof.
2.16 COMPANY CONTRACTS AND DOCUMENTS.
(a) Except as set forth in the SEC Reports and in the Company's Form S-1
filed December 12, 1996, as amended, and for (i) transactions relating
to purchases of shares of the Company's securities and (ii) regular
salary payments and fringe benefits paid in the ordinary course of the
Company's business, none of the officers, employees, directors or
other affiliates of the Company is a party to any transaction,
agreement or understanding with the Company, and there have been no
assumptions or guarantees by the Company of any obligations of such
persons;
(b) The Company is not a party to and is not bound by any contract,
agreement or instrument, or subject to any restriction under its
Articles of Incorporation or By-laws, which adversely affect, in any
material respect, its business as now conducted or as proposed to be
conducted, or its assets, properties, financial condition or
prospects; and
(c) Except as set forth in SCHEDULE 2.16, the Company has not engaged in
the past one (1) month in any material discussions (i) with any
representative of any corporation or corporations regarding the
consolidation or merger of the Company with or into any such
corporation or corporations; (ii) with any corporation, partnership,
association or other business entity or any individual regarding the
sale, conveyance or disposition of all or substantially all of the
assets of the Company or a transaction or series of transactions in
which more than 50% of the voting power of the Company is disposed of,
or (iii) regarding any other forms of business combination,
liquidation, dissolution or winding up of the Company.
2.17 DISTRIBUTION. There has been no declaration or payment by the Company of
any dividend, nor any distribution by the Company of any assets of any kind, to
any of its shareholders with respect to any of the Company's securities, except
as disclosed in the financial statements referred to in Section 2.8, Company's
Annual Report on Form 10-K for the year ended December 31, 1997 and Company's
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998, June 30,
1998 and September 30, 1998.
-5-
<PAGE> 7
2.18 INVESTMENT COMPANY ACT. The Company is not an "investment company" or a
company controlled by an "investment company" as such terms are defined in the
Investment Company Act of 1980, as amended.
2.19 FDA MATTERS. Except as set forth in SCHEDULE 2.19 of this Agreement, the
United States Food and Drug Administration has not delivered a letter of
nonapproval, or threatened to deliver such a letter, with respect to any
product manufactured, marketed, licensed or developed by the Company, or any
product which the Company intends to manufacture, market, license or develop.
2.20 CONFLICT OF INTEREST. Except as set forth in the SEC Reports and in the
Company's Form S-1 filed December 12, 1996, as amended, the Company and its
executive officers have no interest (other than as holders of securities of a
publicly-traded company), either directly or indirectly, in any entity,
including, without limitation thereto, any corporation, partnership, joint
venture, proprietorship, firm, person, licensee, business or association
(whether as an employee, officer, director, shareholder, agent, independent
contractor, security holder, creditor, consultant or otherwise) that presently
(i) provides any services, or designs, produces and/or sells any products, or
engages in any activity which is the same, similar to or competitive with any
activity or business in which the Company is now engaged or proposes to become
engaged; (ii) is a supplier, customer, or creditor of the Company, or has an
existing contractual relationship with any of the Company's managing employees;
or (iii) has any direct or indirect interest in any asset or property, real or
personal, tangible or intangible, of the Company or any property, real or
personal, tangible or intangible, that is necessary or desirable for the
conduct of the Company's business.
2.21 COMPLIANCE WITH LAW. The business of the Company is not being conducted in
violation of any material law, ordinance or regulation of any governmental
entity (including, without limitation, those relating to environmental
protection and occupational safety and health practices). All material
governmental approvals, permits and licenses required to conduct the current
business of the Company have been obtained and are in full force and effect and
are being complied with in all material respects.
2.22 DEVELOPMENT AGREEMENT. The representations and warranties made by the
Company in the Development and License Agreement dated of even date herewith by
and between the Company and the Investor ("Development Agreement") are true and
correct.
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<PAGE> 8
ARTICLE III
REPRESENTATIONS OF THE INVESTOR
The Investor represents and warrants to the Company as follows:
3.1 AUTHORIZATION. The Investor has full power and authority to enter into this
Agreement. This Agreement constitutes a valid and legally binding obligation of
the Company.
3.2 BROKERS AND FINDERS. The Investor has not retained any investment banker,
broker, finder, consultant or intermediary and is not obligated to any such
person for any fee, in connection with the transactions contemplated by this
Agreement.
ARTICLE IV
SECURITIES LAWS
4.1 SECURITIES LAWS REPRESENTATIONS AND COVENANTS OF THE INVESTOR The Investor
represents, warrants and covenants to the Company as follows:
(a) PURCHASE ENTIRELY FOR OWN ACCOUNT. The Shares are being acquired for
investment for the Investor's own account, not as a nominee or agent,
and not with a view to the resale or distribution of any part thereof,
and the Investor has no present intention of selling, granting any
participation in, or otherwise distributing the same. The Investor
does not have any contract, undertaking, agreement or arrangement with
any person to sell, transfer or grant participation to such person or
to any third person, with respect to any of the Shares. The Investor
was not organized solely for the purpose of acquiring the Shares.
(b) DISCLOSURE OF INFORMATION. The Investor believes it has received all
information it considers necessary or appropriate for deciding whether
to purchase the Shares. The Investor has had an opportunity to ask
questions and receive answers from the Company regarding the terms and
conditions of the offering of the Shares. The foregoing does not,
however, limit or modify the representations and warranties of the
Company in Article II of this Agreement.
(c) INVESTMENT EXPERIENCE. The Investor has previously invested in
companies in the development stage, can bear the economic risks of the
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<PAGE> 9
investment and has such knowledge and experience in financial or
business matters that it is capable of evaluating the merits and risks
of its investment in the Shares.
(d) ACCREDITED INVESTOR. The Investor is an accredited investor as defined
in Rule 501(a) of Regulation D, as amended, of the Securities and
Exchange Commission ("SEC") under the Securities Act.
(e) RESTRICTED SECURITIES. The Investor understands that the Shares it is
purchasing pursuant to this Agreement are characterized as "restricted
securities" under the federal securities laws inasmuch as they are
being acquired from the Company in a transaction not involving a
public offering and that under such laws and applicable regulations
the Shares may be resold without registration under the Securities Act
only in certain limited circumstances. In this connection, the
Investor is familiar with SEC Rule 144, as presently in effect, and
understands the resale limitations imposed thereby and by the
Securities Act.
(f) DISPOSITION OF SHARES. The Investor will not dispose of any of the
Shares (other than pursuant to SEC Rules 144 or 144A or any similar or
analogous rule or rules) unless and until (i) the Investor shall have
notified the Company of the proposed disposition and the circumstances
surrounding the proposed disposition and, if reasonably requested by
the Company, the Investor shall have furnished the Company with an
opinion of counsel reasonably satisfactory in form and substance to
the Company to the effect that such disposition will not require
registration under the Securities Act; or (ii) there is in effect a
registration statement under the Securities Act covering the proposed
disposition and the proposed disposition is made in accordance with
such registration statement.
4.2 LEGENDS. The certificates evidencing the Shares may bear the restrictive
legends set forth below, except that such certificates shall not bear the
legends set forth in (a) and (b) below if: (i) the transfer was made in
compliance with Rule 144; (ii) there is in effect a registration statement
under the Securities Act covering the proposed disposition and the proposed
disposition is made in accordance with such registration statement; or (iii) if
the opinion of counsel, if any, referred to in Section 4.1(f)(i) is to the
effect that such legend is not required in order to establish compliance with
any provisions of the Securities Act:
(a) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("ACT"). THE
SECURITIES MAY NOT BE TRANSFERRED UNLESS A REGISTRATION STATEMENT
UNDER
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<PAGE> 10
THE ACT IS IN EFFECT AS TO SUCH TRANSFER OR SUCH TRANSFER IS MADE
PURSUANT TO RULES 144 OR 144A OF THE ACT OR AN EXEMPTION TO THE
REGISTRATION REQUIREMENTS OF THE ACT."
(b) "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR UNLESS THE CORPORATION RECEIVES AN OPINION OF
COUNSEL REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER
IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF SAID ACT."
(c) Any legend required by the laws of any applicable state or other
jurisdiction governing the Shares.
ARTICLE V
DISCLOSURE OF THE AGREEMENT
Except for that certain press release as contemplated in SCHEDULE
13.11 of the Development and License Agreement of even date herewith, neither
party shall disclose any information about this Agreement, including its
existence, without the prior written consent of the other. Consent shall not be
required, however, for disclosures to tax authorities or to bona fide potential
sublicensees, to the extent required or contemplated by this Agreement,
provided, that in connection with such disclosure, each party agrees to use its
commercially reasonable efforts to secure confidential treatment of such
information. Each party shall have the further right to disclose the terms of
this Agreement as required by applicable law, including the rules and
regulations promulgated by the Securities and Exchange Commission and to
disclose such information to shareholders or potential investors as is
customary for publicly-held companies, provided the disclosing party provides
to the other party a copy of the information to be disclosed and an opportunity
to comment thereon prior to such disclosure and consults within a reasonable
time in advance of the proposed disclosure with the other on the necessity for
the disclosure and the text of the proposed release.
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<PAGE> 11
ARTICLE VI
CONDITIONS OF THE INVESTOR'S OBLIGATIONS AT THE CLOSING
The obligations of the Investor under this Agreement to purchase the Shares
from the Company are subject to the fulfillment on or before the Closing of
each of the following conditions, any of which may be waived in writing by the
Investor:
6.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of the
Company contained in Article II of this Agreement shall be true on and as of
the Closing with the same effect as though such representation and warranties
had been made on and as of the Closing.
6.2 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.
6.3 COMPLIANCE CERTIFICATE. The Company shall have delivered to the Investor a
certificate dated as of the Closing, executed by an executive officer of the
Company and in a form reasonably acceptable to the Investor, certifying that
the conditions set forth in Sections 6.1 and 6.2 have been satisfied and that
there has been no material adverse change in the assets, properties, prospects,
condition, affairs, operations or business of the Company, as now conducted or
as proposed to be conducted, since the date of this Agreement.
6.4 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings taken by the
Company in connection with the transactions contemplated by this Agreement and
all documents incident thereto shall be reasonably satisfactory in form and
substance to the Investor, and the Investor shall have received all such
documents as it may have reasonably requested.
6.5 OPINION OF COUNSEL. The Investor shall have received an opinion from the
Company's counsel, dated as of the Closing and in a form and substance
reasonably acceptable to the Investor, to the effect that:
(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, and the Company
has the requisite corporate power and authority to own its properties
and to conduct its business;
(b) The Company has the corporate power and authority to execute, deliver
and perform its obligations under the terms of the Agreement. This
Agreement has been duly authorized, executed and delivered by the
Company and constitutes a legal, valid and binding obligation of the
Company enforceable against it in accordance with its terms,
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<PAGE> 12
except (i) as the enforceability thereof may be limited by bankruptcy,
insolvency or other laws relating to or affecting creditors' rights
generally, (ii) as rights to indemnity and contribution may be limited
under applicable law or by principles of public policy and (iii) as
such enforceability may be limited or affected by general principles
of equity, whether applied by a court of law or equity;
(c) The authorized capital stock of the Company is as set forth in this
Agreement;
(d) The certificates representing the Shares are in due and proper form;
(e) The execution, delivery and performance by the Company with the terms
of this Agreement do not violate any provision of the Company's
Articles of Incorporation or By-laws and, to such counsel's knowledge,
do not conflict with or constitute a default under the provisions of
any judgment, writ, decree or order known to such counsel or any
material agreement to which the Company is a party or by which it is
bound and which is filed as an exhibit to, or incorporated by
reference in, the Company's Form 10-K for the fiscal year ended
December 31, 1997, and the Company's Form 10-Q's for the quarters
ended March 31, 1998, June 30, 1998 and September 30, 1997;
(f) All consents, approvals, orders or authorizations of, and all
qualifications, registrations, designations, declarations, or filings
with, any federal, Delaware or Texas governmental authority required
to be made prior to the Closing in connection with the consummation of
the transactions contemplated by this Agreement have been made or
obtained, and are effective, and such counsel is not aware of any
proceedings, or threat thereof, which question the validity thereof;
(g) Based in part upon the representations of the Investor set forth in
this Agreement, the offer and sale of the Shares pursuant to the terms
of this Agreement are exempt from the registration requirements of
Section 5 of the Securities Act;
(h) To such counsel's knowledge, there is no action, proceeding or
investigation pending or threatened against the Company, which
questions the validity of this Agreement, or any action be taken by
the Company pursuant to or in connection with the Agreement;
(i) The Shares have been duly authorized and, when issued in compliance
with this Agreement, will be fully paid and non-assessable and will be
free of any liens or encumbrances created by the Company; and
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<PAGE> 13
(j) There are no preemptive rights with respect to the issuance and sale
of the Shares and there are no restrictions on transfer of the Shares
other than those arising under federal and state securities laws.
ARTICLE VII
CONDITIONS OF THE COMPANY'S OBLIGATIONS AT THE CLOSING
The obligations of the Company under this Agreement to issue and sell
the Shares to the Investor are subject to the fulfillment on or before the
Closing of each of the following conditions, any of which may be waived in
writing by the Company:
7.1 REPRESENTATIONS AND WARRANTIES. The representation and warranties of the
Investor contained in Article III and Section 4.1 of this Agreement shall be
true on and as of the Closing with the same effect as though such
representations and warranties had been made on and as of the Closing.
7.2 PAYMENT OF PURCHASE PRICE. The Investor shall at the Closing pay the
Purchase Price upon delivery by the Company of a certificate representing the
Shares.
7.3 BLUE SKY COMPLIANCE. The Company shall have complied with Texas and Indiana
state securities laws as necessary to offer and sell the Shares to the
Investor.
ARTICLE VIII
POST-CLOSING COVENANTS OF THE COMPANY
8.1 FINANCIAL STATEMENTS. The Company shall deliver to the Investor all
financial and other reports required under federal, state or local law and such
other reports as the parties may agree upon. In addition, in the event that
Company becomes a non-publicly held corporation, the Company shall deliver to
the Investor: (i) as soon as practicable, but in any event within 120 days
after the end of each fiscal year of the Company, an income statement for such
fiscal year, a balance sheet as of the end of such year and a schedule as to
the sources and applications of funds for such year, such year end financial
reports to be in reasonable detail, prepared in accordance with generally
accepted accounting principles, consistently applied, and audited and certified
by independent public accountants reasonably acceptable to the Investor; and
(ii) within 30 days of the end of each quarter, an unaudited income statement,
balance sheet and cash flow analysis for and as of the
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<PAGE> 14
end of such quarter, including the foregoing information on a comparative and
year to date basis.
8.2 OPEN COMMUNICATION. In the event that the Company becomes a non-publicly
held corporation, the Company shall permit the Investor at reasonable times to
discuss the Company's affairs, finances and accounts with the Company's
officers.
8.3 INSURANCE. The Company shall maintain insurance coverage covering risks
associated with its business in such amounts as are customary in the industry.
8.4 INVENTION AND SECRECY AGREEMENTS. Each employee and consultant of the
Company who may have access to the Company's and Investor's proprietary
information shall execute an appropriate confidentiality agreement.
8.5 PAYMENT OF DOCUMENTARY, STAMP AND SIMILAR TAXES. The Company shall pay any
and all documentary, stamp, transfer or other taxes which may become due or
payable with respect to or as a result of the issuance and delivery of the
Shares.
8.6 REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a view to making
available to the Investor the benefits of SEC Rule 144 and any other rule or
regulation of the SEC that may at any time permit the Investor to sell
securities of the Company to the public without registration, the Company
agrees to use best efforts to:
(a) make and keep public information available, as those terms are defined
in SEC Rule 144, at all times after ninety (90) days after the
effective date of the first registration statement filed by the
Company for the offering of its securities to the general public;
(b) file with the SEC in a timely manner all reports and other documents
required of the Company under the Securities Act and the 1934 Act; and
(c) furnish to the Investor, so long as the Investor owns Shares, upon
request (i) a written statement by the Company that it has complied
with the reporting requirements of SEC Rule 144, the Securities Act
and the 1934 Act (at any time after it has become subject to such
reporting requirements), (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents
so filed by the Company, and (iii) such other information as may be
reasonably requested in availing the Investor of any rule or
regulation of the SEC which permits the selling of any such securities
without registration or pursuant to such plan.
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<PAGE> 15
ARTICLE IX
REGISTRATION RIGHTS
The Company and the Investor shall enter into the Registration Right
Agreement (the "Registration Rights Agreement") in the form as attached as
SCHEDULE 1.39B of the Development and License Agreement of even date herewith.
The Company shall not amend its Articles of Incorporation or participate in any
reorganization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action for the purpose of avoiding
or seeking to avoid the observance or performance of any of the provisions of
this Article including, without limitation, the provisions of the Registration
Rights Agreement, but will at all times in good faith assist in carrying out
all of its actions as may be reasonably necessary or appropriate in order to
protect the rights of the Investor and permitted assignees.
ARTICLE X
MISCELLANEOUS
10.1 ENTIRE AGREEMENT. This Agreement (together with any attachments or
exhibits including, without limitation, the Registration Rights Agreement)
constitutes the entire agreement between the Company and the Investor relating
to the subject matter hereof, and no party shall be liable or bound to the
other in any manner by any warranties, representations or covenants except as
specifically set forth herein.
10.2 SUCCESSORS AND ASSIGNS. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and
assigns of the parties. Except as expressly provided in this Agreement and the
Registration Rights Agreement, nothing in this Agreement, express or implied,
is intended to confer upon any party, other than the parties hereto or their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
10.3 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without application of the
choice of laws provisions of such laws.
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<PAGE> 16
10.4 COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
10.5 HEADINGS. The headings used in this Agreement are for convenience and
shall not by themselves be considered in construing or interpreting this
Agreement.
10.6 NOTICES. Any notice required or permitted hereunder shall be given in
writing and shall be conclusively deemed effectively given upon either (a)
personal delivery; (b) one day after facsimile transmission to the facsimile
number indicated below and evidenced by a written record of completed
transmission to such number; or (c) five days after deposit in the United
States mail, by registered or certified mail, postage prepaid, addressed to the
following address, or to such other address as the party may designate by ten
(10) days' advance written notice to the other party:
If to the Investor:
Eli Lilly and Company
Lilly Corporate Center
Indianapolis, Indiana 46285
Attn: General Counsel
Facsimile #: 317-276-9152
If to the Company
ILEX Oncology, Inc.
11550 I.H. 10 West, Suite 300
San Antonio, Texas 78230
Attn: President
Facsimile #: 210-949-8410
10.7 SURVIVAL OF WARRANTIES. The warranties, representations and covenants of
the parties contained in or made pursuant to this Agreement shall survive the
execution and deliver of this Agreement and the Closing and shall in no way be
affected by any investigation of the subject matter thereof by or on behalf of
the Investor; provided, however, that such representations and warranties need
only be accurate as of the date of such execution and delivery and as of the
Closing.
10.8 FINDER'S FEES. Each party agrees to indemnify and hold harmless the other
party from and against any liability for any commission or compensation in the
nature of investment banking or finder's fees in connection with the
transactions contemplated by this Agreement (and the costs and expenses of
defending against
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<PAGE> 17
such liability or asserted liability) for which the indemnifying party or any
of its officers, employees or representatives is responsible.
10.9 EXPENSES. Irrespective of whether the Closing is effected, the Company and
the Investor will each pay their respective legal and other fees and expenses
in connection with the negotiation, execution, delivery and performance of this
Agreement.
10.10 AMENDMENTS AND WAIVERS. Except as expressly provided in this Agreement,
any provision of this Agreement may be amended only by the mutual written
agreement of the parties and the observance of any term of this Agreement may
be waived (either generally or in a particular instance and either
retroactively or prospectively) only in a written document executed by the
waiving party.
10.11 SEVERABILITY. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision shall be excluded from this
Agreement and the balance of this Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
IN WITNESS WHEREOF the parties have executed this Agreement effective
as of the day and year first above written.
ILEX ONCOLOGY, INC. ELI LILLY AND COMPANY
By By
--------------------------------- ----------------------------------
Richard L. Love August M. Watanabe
President Executive Vice President
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<PAGE> 18
SCHEDULE 2.12
TO
STOCK PURCHASE AGREEMENT
BETWEEN
COMPANY AND INVESTOR
REGISTRATION RIGHTS
- --------------------------------------------------------------------------------
Registration Rights Agreement dated as of July 9, 1997, among ILEX Oncology,
Inc., a Delaware corporation, and PRN Research, Inc., a Texas corporation.
Fourth Amended and Restate Registration Rights Agreement dated December 11,
1996.
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<PAGE> 19
SCHEDULE 2.16
- --------------------------------------------------------------------------------
The Company has engaged in such discussions with the following entities:
1. LeukoSite, Inc.
2. Matrix Pharmaceutical, Inc.
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<PAGE> 20
SCHEDULE 2.19
TO
STOCK PURCHASE AGREEMENT
BETWEEN
COMPANY AND INVESTOR
FDA MATTERS
- --------------------------------------------------------------------------------
The Company received such a letter dated July 28, 1997, from the FDA regarding
mitoguazone dihydrochloride.
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<PAGE> 1
EXHIBIT 10.2
REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement dated as of January 22, 1999 (this
"Agreement"), among ILEX ONCOLOGY, INC., a Delaware corporation (the
"Company"), and ELI LILLY AND COMPANY, an Indiana corporation, and its
permitted assigns ("Lilly").
PRELIMINARY STATEMENT
The Company and certain holders of its securities (the "Holders", or
if singular, a "Holder") are parties to the Fourth Amended and Restated
Registration Rights Agreement dated December 11, 1996 (the "Prior Agreement"),
and the Registration Rights Agreement dated as of July 9, 1997 ("the "PRN
Agreement")). The Company and Lilly are parties to a Stock Purchase Agreement
dated effective January 22, 1999 (the "Stock Purchase Agreement"), pursuant to
which PRN shall be issued shares of Common (as defined herein). The Company
desires to grant certain registration rights to Lilly in connection with such
issuance of shares. Therefore, in consideration of the mutual representations
and agreements set forth in this Agreement, the Company and Lilly agree as
follows:
AGREEMENT
SECTION 1. DEFINITIONS.
As used in this Agreement, the following terms shall have the
following meanings:
"Affiliate" means any entity controlling, controlled by or under
common control with a designated Person. For the purposes of this definition,
"control" shall have the meaning specified as of the date of this Agreement for
that word in Rule 405 promulgated by the Commission under the Securities Act.
"Board" means the Board of Directors of the Company.
"Commission" means the Securities and Exchange Commission, and any
successor thereto.
"Common" means the Company's Common Stock, $.01 par value per share.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Immediate Family" shall mean spouses, descendants (including adopted
children) and spouses of descendants.
"Person" means an individual, partnership, corporation, business
trust, limited liability company, joint stock company, trust, unincorporated
association, joint venture, or other entity of whatever nature.
"PRN Stock" means, for purposes of this definition, the Registrable
Stock (as defined in the "PRN Agreement") of PRN under the PRN Agreement.
<PAGE> 2
"Registrable Stock" means any shares of Common acquired by Lilly
pursuant to the terms and provisions of the Stock Purchase Agreement and any
and all shares of Common or other securities issued with respect to such shares
by way of stock splits, stock combinations and similar events affecting the
Registrable Stock. As to any particular Registrable Stock, such securities will
cease to be Registrable Stock when they shall have been (x) effectively
registered under the Securities Act and sold by the holder thereof in
accordance with such registration, or (y) sold to the public pursuant to Rule
144 or Rule 701 of the Commission, or any successor rules.
"Rule 144" means Rule 144 promulgated by the Commission under the
Securities Act, as such rule may be amended from time to time, or any successor
rule thereto.
"Rule 701" means Rule 701 promulgated by the Commission under the
Securities Act, as such rule may be amended from time to time, or any successor
rule thereto.
"Securities" means any debt or equity securities of the Company,
whether now or hereafter authorized, and any instrument convertible into, or
exercisable or exchangeable for, Securities or a Security.
"Securities Act" means the Securities Act of 1933, as amended prior to
or after the date of this Agreement, or any federal statute or statutes which
shall be enacted to take the place of such Act, together with all rules and
regulations promulgated thereunder.
SECTION 2. INCIDENTAL/PIGGYBACK REGISTRATION. Each time the Company
proposes to register any of its Securities under the Securities Act for its own
account or for the account of other Security holders or both, it will give at
least 30 days advance written notice of its intention to do so to Lilly. Lilly
may then specify, by written notice to the Company within 25 days of the date
of the Company's notice, the number of shares of Registrable Stock held by it
that it wishes to include in the Company's proposed registration (a "Piggyback
Registration"). Subject to the market cutback limitations of SECTION 7 of this
Agreement, the Company will use its best efforts to effect the Piggyback
Registration under the Securities Act of Registrable Stock specified by Lilly
under this SECTION 2.
SECTION 3. LIMITATIONS ON REGISTRATION RIGHTS. Notwithstanding any
contrary provision of this Agreement, SECTION 2 of this Agreement shall not
apply to a registration effected solely to offer securities for sale pursuant
to, or in connection with, (i) an employee benefit plan or (ii) a transaction
subject to Rule 145 under the Securities Act or in an exchange offer registered
on Form S-4 or any successor form to Form S-4, or to any registration on a form
which does not permit inclusion of Registrable Stock pursuant to Commission
rule or practice.
SECTION 4. REGISTRATION PROCEDURES.
4.1 Whenever the Company is required by this Agreement to
include any Registrable Stock in a registration under the Securities
Act, the Company will, as expeditiously as possible:
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<PAGE> 3
(a) before filing each registration statement or prospectus
or amendment or supplement thereto with the Commission, furnish
counsel for Lilly with copies of all such documents proposed to be
filed, which shall be subject to the reasonable approval of such
counsel;
(b) prepare and file with the Commission a registration
statement with respect to such Registrable Stock with respect to such
securities including executing an undertaking to file post-effective
amendments and use its best efforts to cause such registration
statement to become and remain effective for the period of
distribution contemplated thereby (subject to SECTION 4.2 below);
(c) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for the period of distribution contemplated
thereby (subject to SECTION 4.2 below) and to comply with the
provisions of the Securities Act with respect to the sale or other
disposition of all Registrable Stock covered by such registration
statement in accordance with the sellers' intended methods of
disposition set forth in such registration statement for such period;
(d) promptly prepare and file with the Commission, and notify
Lilly immediately after the filing of, such amendment or supplement to
such registration statement or prospectus as may be necessary to
correct any statements or omissions if, during such periods as a
prospectus relating to such Securities is required to be delivered
under the Securities Act, any event shall have occurred as the result
of which any such prospectus or any other prospectus as then in effect
would include an untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein, in the
light of the circumstances in which they were made, not misleading,
and notify Lilly and underwriter immediately after its discovery of
such event;
(e) furnish to the underwriters and Lilly such numbers of
copies of such registration statement, each amendment and supplement
thereto (in each case, including all exhibits), the prospectus
included in such registration statement (including each preliminary
prospectus) and such other documents as such underwriters or Lilly may
reasonably request in order to facilitate the disposition of the
Registrable Stock in accordance with such registration statement;
(f) use its best efforts to register or qualify any
Registrable Stock covered by such registration statement under the
securities or blue sky laws of such jurisdictions within the United
States of America as Lilly or the underwriters reasonably request, and
to take any other acts which a seller or the underwriters may
reasonably request under such securities or blue sky laws to enable
the consummation of the disposition in such jurisdictions of such
Registrable Stock (provided, however, that the Company shall not be
required under this Agreement (i) to qualify generally to do business
as a foreign corporation in any jurisdiction
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<PAGE> 4
in which it would not otherwise be required to qualify, or (ii) to
consent to general service of process in any such jurisdiction unless
the Company is already subject to service in such jurisdiction);
(g) provide a transfer agent and registrar for all
Registrable Stock sold under the registration statement not later than
the effective date of the registration statement;
(h) use its best efforts to cause all Registrable Stock sold
under the registration statement to be listed on each securities
exchange or to be qualified and eligible for trading in any automated
quotation system, if any, on which similar Securities issued by the
Company are then listed or traded or, if no such listing or
qualification has then occurred, to use its best efforts to cause such
Securities to be so listed or qualified on an exchange or in a trading
system that is reasonably acceptable to the Company and the Holders of
such Registrable Stock;
(i) enter into such customary agreements (including
underwriting agreements in customary form) and take all such other
actions as the underwriters, if any, or Lilly may reasonably request
in order to expedite or facilitate the disposition of such Registrable
Stock (including, without limitation, effecting a stock split or a
combination of shares);
(j) advise Lilly, immediately after it shall receive notice
or obtain knowledge thereof, of the issuance of any stop order by the
Commission suspending the effectiveness of such registration statement
or the initiation or threatening of any proceeding for such purpose
and promptly use reasonable efforts to prevent the issuance of any
stop order or to obtain its withdrawal if such stop order should be
issued;
(k) make available for inspection by Lilly, any underwriter
participating in any disposition pursuant to such registration
statement, and any attorney, accountant or other agent retained by
Lilly or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the
Company's officers, directors, employees and independent accountants
to supply all information reasonably requested by any such seller or
underwriter in connection with such registration statement, all
subject to such limitations as the Company reasonably deems
appropriate in order to protect the Company's confidential or
proprietary information;
(l) comply with all applicable rules and regulations under
the Securities Act and Exchange Act;
(m) if the offering is underwritten and at the request of
Lilly, use its best efforts to furnish on the date that Registrable
Stock are delivered to the underwriters for sale pursuant to such
registration: (i) an opinion dated such date of counsel representing
the Company for the purposes of such registration, addressed to the
underwriters to such effects as reasonably may be requested by counsel
for the underwriters and (ii) a letter dated such date from the
independent public accountants retained by the Company, addressed to
the underwriters stating that they are independent public accountants
within the meaning of the
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<PAGE> 5
Securities Act and that, in the opinion of such accountants, the
financial statements of the Company included in the registration
statement or the prospectus, or any amendment or supplement thereof,
comply as to form in all material respects with the applicable
accounting requirements of the Securities Act, and such letter shall
additionally cover such other financial matters (including information
as to the period ending no more than five (5) business days prior to
the date of such letter) with respect to such registration as such
underwriters reasonably may request;
(n) make available for inspection by Lilly, any underwriter
participating in any distribution pursuant to such registration
statement, and any attorney, accountant or other agent retained by
Lilly or underwriter, reasonable access to all financial and other
records, pertinent corporate documents and properties of the Company,
as such parties may reasonably request, and cause the Company's
officers, directors and employees to supply all information reasonably
requested by Lilly, underwriter, attorney, accountant or agent in
connection with such registration statement;
(o) cooperate with Lilly and the managing underwriter, if
any, to facilitate the timely preparation and delivery of certificates
representing Registrable Stock to be sold, such certificates to be in
such denominations and registered in such names as Lilly or the
managing underwriter may request at least two (2) business days prior
to any sale of Registrable Stock; and
(p) permit Lilly, if, in the sole and exclusive good faith
judgment of the Company, Lilly might be deemed to be a controlling
person of the Company, to participate in good faith in the preparation
of such registration statement.
4.2 For purposes of this Agreement, the period of distribution of
Registrable Stock in a firm commitment underwritten public offering shall be
deemed to extend until each underwriter has completed the distribution of all
securities purchased by it, and the period of distribution of Registrable Stock
in any other registration shall be deemed to extend until the earlier of the
sale of all Registrable Stock covered thereby or 180 days after the effective
date thereof, provided, however, in the case of any registration of Registrable
Stock on Form S-3 or a comparable or successor form which are intended to be
offered on a continuous or delayed basis, such 180-day period shall be
extended, if necessary, to keep the registration statement effective until all
such Registrable Stock are sold, provided that Rule 415, or any successor rule
under the Securities Act, permits an offering on a continuous or delayed basis,
and provided further that applicable rules under the Securities Act governing
the obligation to file a post-effective amendment, permit, in lieu of filing a
post-effective amendment which (y) includes any prospectus required by Section
10(a)(3) of the Securities Act or (z) reflects facts or events representing a
material or fundamental change in the information set forth in the registration
statement, the incorporation by reference of information required to be
included in (y) and (z) above contained in periodic reports filed pursuant to
Section 13 or 15(d) of the Exchange Act in the registration statement.
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<PAGE> 6
SECTION 5. EXPENSES. The Company will pay all Registration Expenses
(as defined below) in connection with each Piggyback Registration of
Registrable Stock permitted pursuant to SECTION 2 of this Agreement. For
purposes of this SECTION 5, "Registration Expenses" means all expenses incident
to the Company's performance of or compliance with SECTION 2 of this Agreement,
including, without limitation, all registration, filing and National
Association of Securities Dealers, Inc. fees, all fees and expenses of
complying with securities or blue sky laws, all word processing, duplicating
and printing expenses, messenger and delivery expenses, the reasonable fees and
disbursements of counsel for the Company and of its independent public
accountants, including the expenses of any special audits or "cold comfort"
letters required by or incident to such performance and compliance, the
reasonable fees and disbursements of one law firm retained by the holders of
Registrable Stock being registered, premiums and other costs of policies of
insurance obtained by the Company against liabilities arising out of the public
offering of the Registrable Stock being registered but excluding all agency
fees and commissions, underwriting discounts and commissions and transfer
taxes, if any.
SECTION 6. INDEMNIFICATION.
6.1 In the event of any registration of any of its Registrable Stock
under the Securities Act pursuant to this Agreement, the Company agrees, to the
fullest extent permitted by law, to indemnify and hold harmless Lilly, and each
officer, partner, director and Affiliate of such seller, against any losses,
claims, damages or liabilities, joint or several, arising out of or based upon:
(a) any untrue statement or alleged untrue statement of any
material fact contained, on the effective date thereof, in any
registration statement under which such Securities were registered
under the Securities Act, any preliminary prospectus or final
prospectus contained in any registration statement, or any other
materials deemed to be a prospectus pursuant to the Securities Act, or
any Securities being registered, or any amendment or supplement
thereto, or any blue sky application or other document executed by the
Company specifically for that purpose or based upon written
information furnished by the Company filed in any state or other
jurisdiction in order to qualify any or all of the Registrable Stock
under the securities laws thereof (any such application, document or
information herein called a "Blue Sky Application"), or
(b) any omission or any alleged omission to state in any such
document a material fact required to be stated therein or necessary to
make the statements therein not misleading, or
(c) any violation by the Company or its agents (other than by
the indemnitee claiming indemnification hereunder) of the Securities
Act or any rule or regulation promulgated under the Securities Act
applicable to the Company or its agents (other than by the indemnitee
claiming indemnification hereunder) and relating to action or inaction
required of the Company in connection with such registration,
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<PAGE> 7
except insofar as any such loss, claim, damage or liability is:
(i) caused by or contained in any information
furnished in writing to the Company by Lilly expressly for
use in connection with such registration; or
(ii) caused by Lilly's failure to deliver a copy of
the registration statement or prospectus or any amendment or
supplement thereto as required by the Securities Act or the
rules or regulations thereunder to be delivered by such
seller, if such delivery would have cured the defect giving
rise to such loss, claim, damage or liability; or
(iii) caused by the delivery by Lilly of a
prospectus or preliminary prospectus or any amendment or
supplement thereto after receipt of notice from the Company
that it should no longer be used.
In connection with an underwritten offering, the Company will
indemnify such underwriters, their officers and directors and each
Person who controls (within the meaning of the Securities Act) such
underwriters to the same extent as provided above with respect to
Lilly. The Company shall reimburse each Person indemnified pursuant to
this SECTION 6.1 for any reasonable legal or other expenses incurred
in connection with investigating or defending any loss, claim, damage,
liability or action indemnified against. The reimbursements required
by this SECTION 6.1 shall be made by periodic payments during the
course of the investigation or defense, as and when bills are received
or expenses incurred. The indemnities provided pursuant to this
SECTION 6.1 shall remain in force and effect regardless of any
investigation made by or on behalf of the indemnified party and shall
survive any transfer of Registrable Stock by Lilly.
6.2 In the event of any registration of any Registrable Stock under
the Securities Act pursuant to this Agreement, Lilly agrees to furnish to the
Company in writing such information and affidavits as the Company reasonably
requests for use in connection with any registration statement, prospectus and
any amendment or supplement thereto in connection with the registration.
6.3 To the fullest extent permitted by law, and subject to the
limitation set forth in the last sentence of this SECTION 6.3, Lilly agrees to
indemnify and hold harmless the Company, its directors and officers, and each
Affiliate of the Company, against:
(a) any losses, claims, damages or liabilities, joint or
several, arising out of or based upon:
(i) any alleged untrue statement of any material
fact contained on the effective date thereof, in any
registration statement under which such Securities were
registered under the Securities Act, any preliminary
prospectus or final prospectus contained therein, or any
summary prospectus contained therein, or any amendment or
supplement thereto, or
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<PAGE> 8
(ii) any alleged omission to state in any such
document a material fact required to be stated therein or
necessary to make the statements therein not misleading,
but only insofar as any such loss, claim, damage or liability is
caused by any information furnished in writing to the Company by Lilly
expressly for use in connection with such registration, and excluding
any such loss, claim, damage or liability which is caused by such
statements, or caused by such omissions, based upon the authority of
an expert as defined in the Securities Act (but only if Lilly had no
grounds to believe, and did not believe, that the statements made on
the authority of an expert were untrue or that there was an omission
to state a material fact); and
(b) any losses, claims, damages or liabilities, joint or
several, arising out of or based upon any failure by Lilly to deliver
a copy of the registration statement or prospectus or any amendment or
supplement thereto if required by the Securities Act or the rules or
regulations thereunder to be delivered by Lilly, if such delivery
would have cured the defect giving rise to such loss, claim, damage or
liability. In connection with an underwritten offering, Lilly will
indemnify such underwriters, their officers and directors and each
Person who controls (within the meaning of the Securities Act) such
underwriters to the same extent as provided above with respect to the
Company and other sellers. Lilly shall reimburse each Person
indemnified pursuant to this SECTION 6.3 in connection with
investigating or defending any loss, claim, damage, liability or
action indemnified against. The reimbursements required by this
SECTION 6.3 shall be made by periodic payments during the course of
the investigation or defense, as and when bills are received or
expenses incurred. The indemnities provided pursuant to this SECTION
6.3 shall remain in force and effect regardless of any investigation
made by or on behalf of the indemnified party and shall survive any
transfer of Registrable Stock by Lilly. Notwithstanding any contrary
provision of this Agreement, however, the liability under this SECTION
6 of Lilly shall be limited in the aggregate, with respect to the
claims of all indemnified Persons taken as a whole, to the amount of
proceeds received by Lilly from the sale of the Registrable Stock sold
by Lilly pursuant to such registration statement.
6.4 Each party entitled to indemnification under this SECTION 6 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified
Party has actual knowledge of any claim as to which indemnity may be sought,
and shall permit the Indemnifying Party to assume the defense of any such claim
or any litigation resulting therefrom; provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not unreasonably be withheld, denied or delayed) and the
Indemnified Party may participate in such defense at such party's expense other
than reasonable costs of investigation and of liaison with counsel so selected
(unless the Indemnified Party shall have reasonably concluded that there may be
reasonable defenses available to it which are different from or additional to
those available to the Indemnifying Party or that the interests of the
Indemnified Party reasonably may be deemed to conflict with the interests of
the Indemnifying Party, in which case the Indemnified Party shall have the
right to select one separate counsel and to assume such legal defenses and
otherwise
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<PAGE> 9
to participate in the defense of such action, with the reasonable expenses and
fees of such separate counsel and other reasonable expenses related to such
participation to be reimbursed by the Indemnifying Party as incurred), and
provided further that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its obligations
under this SECTION 6 unless and to the extent the Indemnifying Party is
materially prejudiced thereby. No Indemnifying Party, in the defense of any
such claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation. Each Indemnified Party shall furnish such
information regarding itself or the claim in question as an Indemnifying Party
may reasonably request in writing and as shall be reasonably required in
connection with the defense of such claim and litigation resulting therefrom.
6.5 If the indemnification provided for in this SECTION 6 is held by a
court of competent jurisdiction (by the entry of a final judgment or decree by
such court and the expiration of time to appeal or the denial of the last right
of appeal) to be unavailable to an Indemnified Party with respect to any loss,
liability, claim, damage or expense referred to herein, then the Indemnifying
Party, in lieu of indemnifying such Indemnified Party hereunder, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such loss, liability, claim, damage or expense in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party on the one
hand and of the Indemnified Party on the other in connection with the
statements or omissions which resulted in such loss, liability, claim, damage
or expense, as well as any other relevant equitable considerations. The
relative fault of the Indemnifying Party and of the Indemnified Party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the Indemnifying Party or by the Indemnified
Party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. Notwithstanding
any contrary provision of this Agreement, however, the liability under this
SECTION 6.5 of each Holder and Lilly which is a seller of Registrable Stock
shall be limited in the aggregate, with respect to the claims of all
indemnified Persons taken as a whole, to the amount of proceeds received by the
indemnifying seller from the sale of the Registrable Stock sold by the
indemnifying seller pursuant to such registration statement.
6.6 Notwithstanding the foregoing, to the extent that the provisions
on indemnification and contribution contained in the underwriting agreement
entered into in connection with any underwritten public offering contemplated
by this Agreement are in conflict with the foregoing provisions, the provisions
in such underwriting agreement shall be controlling, except that under no
circumstances should Lilly's indemnification obligations pursuant to any such
underwriting agreement exceed its obligations under SECTIONS 6.3 AND 6.5 of
this Agreement.
6.7 The foregoing indemnity agreement of the Company and Lilly is
subject to the condition that, insofar as they relate to any loss, claim,
liability or damage made in a preliminary prospectus but eliminated or remedied
in the amended prospectus on file with the Commission at the time the
registration statement in question becomes effective or the amended prospectus
filed with the Commission pursuant to Commission Rule 424(b) (the "Final
Prospectus"), such indemnity agreement shall not inure to the benefit of any
underwriter if a copy of the Final Prospectus was
-9-
<PAGE> 10
furnished to the underwriter and was not sent or furnished to the person if
required by law so to have been delivered asserting the loss, liability, claim
or damage at or prior to the time such action is required by the Securities
Act, and if the Final Prospectus would have cured the defect giving rise to
such loss, liability, claim or damage.
6.8 The indemnities and obligations provided in this SECTION 6 shall
survive the transfer of any Registrable Stock by Lilly.
SECTION 7. MARKETING RESTRICTIONS.
7.1 If:
(a) Lilly requests registration of Common under SECTION 2 of
this Agreement, and
(b) the offering proposed to be made is to be an underwritten
public offering, and
(c) the managing underwriters of such public offering furnish
a written opinion that the total amount of Securities to be included
in such offering would exceed the maximum number of shares of Common
(as specified in such opinion) which can be marketed at a price
reasonably related to the current market value of such Common and
without otherwise materially and adversely affecting such offering
(the "Underwriter Maximum"),
then the rights of (i) Lilly, (ii) the Holders, (iii) the holders of other
Securities having the right to include such Securities in such registration and
(iv) of the Company to participate in such offering shall be in the following
order of priority:
(i) FIRST, (1) if such registration was not
initiated by the Company as a primary registration, then the
Person or Persons requesting such registration pursuant to a
Demand Registration of such Person or Persons shall be
entitled to participate in accordance with the relative
priorities, if any, that shall exist among them, subject to
the limitation that a number of shares of Investor
Registrable Stock (as such term is defined in the Prior
Agreement) equal to 35% of the Underwriter Maximum shall also
be entitled to participate therein, with such shares of
Investor Registrable Stock being allocated pro rata among the
Holders of Investor Registrable Stock owned by such Holders,
and (2) if the Company has initiated such registration as a
primary registration, then the Company shall be entitled to
participate up to the full number of shares of stock which
the Company deems necessary or advisable to fulfill its
strategic capital requirements;
(ii) SECOND, the number of shares of Investor
Registrable Stock requested to be included therein, up to the
remainder of such Underwriter Maximum (after taking into
account the number of shares to be sold pursuant to clause
(i) above) allocated pro rata among the Holders of such
Investor Registrable Stock on the basis of the number of
shares of Investor Registrable Stock owned by such Holders,
with further successive pro rata allocations among the
Holders of Investor Registrable
-10-
<PAGE> 11
Stock if any such Holder of Investor Registrable Stock has
requested the registration of fewer than all of such shares
of Investor Registrable Stock it is entitled to register;
(iii) THIRD, the number of shares of CTRC
Registrable Stock ( as such term is defined in the Prior
Agreement) requested to be included therein, up to such
Underwriter Maximum (after taking into account the number of
shares to be sold pursuant to clauses (i) and (ii) above)
allocated pro rata among the Holders of such CTRC Registrable
Stock on the basis of the number of shares of CTRC
Registrable Stock owned by such Holders, with further
successive pro rata allocations among the Holders of CTRC
Registrable Stock if any such Holder of CTRC Registrable
Stock has requested the registration of fewer than all of
such shares of CTRC Registrable Stock it is entitled to
register.
(iv) FOURTH, the number of shares of Management
Registrable Stock (as defined in the Prior Agreement) and
Vector Registrable Stock (as such term is defined in the
Prior Agreement) requested to be included therein, up to such
Underwriter Maximum (after taking into account the number of
shares of securities to be sold pursuant to clauses (i), (ii)
and (iii) above) allocated pro rata among the Holders of such
Management Registrable Stock and Vector Registrable Stock on
the basis of the number of shares of Management Registrable
Stock and Vector Registrable Stock owned by such Holders,
with further successive pro rata allocations among the
Holders of Management Registrable Stock and Vector
Registrable Stock if any such Holder has requested the
registration of fewer than all of such shares of Management
Registrable Stock or Vector Registrable Stock he is entitled
to register;
(v) FIFTH, the number of shares of PRN Stock
requested to be included therein, up to the Underwriter
Maximum (after taking into account the number of shares of
securities to be sold pursuant to clauses (i), (ii), (iii)
and (iv) above) allocated pro rata among the PRN of such PRN
Stock on the basis of the number of shares of PRN Stock owned
by such Holders shall be entitled to participate, with
further successive pro rata allocations among the Holders of
PRN Stock if any such Holder has requested the registration
of fewer than all of such shares of PRN Stock it is entitled
to register;
(vi) SIXTH, the number of shares of Registrable
Stock requested to be included therein, up to the Underwriter
Maximum (after taking into account the number of shares of
securities to be sold pursuant to clauses (i), (ii), (iii),
(iv) and (v) above allocated pro rata among the holders of
such Registrable Stock on the basis of the number of shares
of Registrable Stock owned by such holders shall be entitled
to participate, with further successive pro rata allocations
among the holders of Registrable Stock if any such holder has
requested the registration of fewer than all of such shares
of Registrable Stock it is entitled to register; and
-11-
<PAGE> 12
(vii) SEVENTH, other securities requested to be
included in such registration up to the Underwriter Maximum
(after taking into account the securities to be sold pursuant
to clauses (i), (ii), (iii), (iv), (v) and (vi) above).
7.2 In connection with any offering involving an underwriting of
Registrable Stock pursuant to SECTION 2 of this Agreement, the Company shall
not be required to include any of the Registrable Stock of a holder in such
offering unless such holder agrees to the terms of the underwriting agreed to
between the Company and the underwriter or underwriters selected by the
Company.
SECTION 8. LOCKUP AGREEMENT. Lilly agrees in connection with the
registration of any Registrable Stock in a public offering that, upon the
request of the Company or the underwriters managing such underwritten offering
of the Company's Securities, it will not sell, make any short sale of, loan,
grant any option for the purchase of, or otherwise dispose of any Securities of
the Company (other than the securities included in the registration and other
than a transfer by Lilly to an Affiliate of Lilly) without the prior written
consent of the Company or such underwriters, as the case may be, for such
period of time (not to exceed 120 days) from the effective date of such
registration as the Company or the underwriters may specify, subject to the
Company obtaining similar agreements from the Company's executive officers and
directors, any holders of five (5) percent or more of the Company's then issued
and outstanding Common, and any other holders of Securities participating in
such registration.
SECTION 9. COMPLIANCE WITH RULE 144. With a view to making available
the benefits of certain rules and regulations of the Commission which may
permit the sale of restricted securities to the public without registration,
the Company agrees to:
(a) make and keep public information available as those terms
are understood and defined in Rule 144, at all times from and after
ninety (90) days following the effective date of the first
registration under the Securities Act filed by the Company for an
offering of its Securities to the general public and for so long as
the Company is subject to the reporting requirements of Section 13 or
15(d) of the Exchange Act;
(b) use its best efforts to file with the Commission in a
timely manner all reports and other documents required of the Company
under the Securities Act and the Exchange Act at any time after it has
become subject to such reporting requirements; and
(c) so long as Lilly owns any Securities, and is not eligible
to sell all such Securities under paragraph (k) of Rule 144, furnish
to Lilly upon request, a written statement by the Company as to its
compliance with the reporting requirements of Rule 144 (at any time
from and after ninety (90) days following the effective date of the
first registration statement filed by the Company for an offering of
its securities to the general public), and of the Securities Act and
the Exchange Act (at any time after it has become subject to such
reporting requirements), a copy of the most recent annual or quarterly
report of the Company, and such other reports and documents so filed
as Lilly may reasonably request in availing itself of any
-12-
<PAGE> 13
rule or regulation of the Commission allowing Lilly to sell any such
securities without registration.
SECTION 10. ASSIGNABILITY OF REGISTRATION RIGHTS. The rights set forth
in this Agreement shall accrue to each subsequent holder of Registrable Stock
who (i) shall have executed a written consent agreeing to be bound by the terms
and conditions of this Agreement, and (ii) owns greater than 12,500 shares of
Registrable Stock (subject to appropriate adjustment for stock splits, stock
combinations and similar events affecting the Registrable Stock).
SECTION 11. DESIGNATION OF UNDERWRITER. The Company shall select the
managing underwriter(s) and all other investment banking advisers to the
Company for all other registrations that may be effected from time to time by
the Company.
SECTION 12. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS.
(a) No Person may participate in any registration hereunder
which is underwritten unless such Person (i) agrees to sell such
Person's securities on the basis provided in any underwriting
arrangements approved by the Person or Persons entitled hereunder to
approve such arrangements (including, without limitation, pursuant to
the terms of any over allotment or "green shoe" option requested by
the managing underwriter(s)), (ii) furnishes to the Company such
information regarding such Person, the Registrable Stock of such
Person to be registered and the intended method of disposition of such
Registrable Stock, and (iii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of
such underwriting arrangements.
(b) If Lilly disapproves of the terms of the underwriting,
Lilly may elect to withdraw therefrom by written notice to the Company
and the managing underwriter; provided that if Lilly withdraws, (i) if
such withdrawal occurs prior to the registration statement being filed
with the Commission, Lilly shall not be responsible for the
Registration Expenses in connection with such registration, and (ii)
if such withdrawal occurs subsequent to the filing of the registration
statement with the Commission, then Lilly shall be responsible for
that portion of the Registration Expenses directly resulting from such
withdrawal; provided, however, that if at the time of such withdrawal,
Lilly has learned of a material adverse change in the conditions,
business or prospects of the Company from that known to them at the
time of their request, then Lilly shall not be required to pay any of
such expenses.
(c) Each Person that is participating in any registration
hereunder agrees that, upon receipt of any notice from the Company of
the happening of any event of the kind described in SECTION 4.1(D)
above, such Person will forthwith discontinue the disposition of its
Registrable Stock pursuant to the registration statement until such
Person's receipt of the copies of a supplemented or amended prospectus
as contemplated by such SECTION 4.1(d).
-13-
<PAGE> 14
SECTION 13. MISCELLANEOUS.
13.1 Modifications; Amendment. Neither this Agreement nor any
provision hereof may be changed, waived, discharged or terminated unless
effected by a writing executed and delivered by the Company and Lilly.
13.2 Severability. In the event that any court or any governmental
authority or agency declares all or any part of any Section of this Agreement
to be unlawful or invalid, such unlawfulness or invalidity shall not serve to
invalidate any other Section of this Agreement, and in the event that only a
portion of any Section is so declared to be unlawful or invalid, such
unlawfulness or invalidity shall not serve to invalidate the balance of such
Section.
13.3 Successors and Assigns. Subject to SECTION 10, this Agreement is
binding upon and inures to the benefit of the Company, its successors and
assigns, and Lilly, its successors and assigns, and legal representatives.
13.4 Notices. All communications in connection with this Agreement
shall be in writing and shall be deemed properly given if hand delivered or
sent by telecopier or overnight courier with adequate evidence of delivery or
sent by registered or certified mail, return receipt requested, and, if to
Lilly, at Lilly's address as shown on the books of the Company or its transfer
agent, and if to the Company, at its offices at:
ILEX ONCOLOGY, INC.
11550 I.H. 10 West, Suite 100
San Antonio, TX 78230
Attention: President
Any notice called for hereunder shall be deemed given when received.
13.5 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York without application of the
choice of laws provisions of such laws.
13.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
together constitute one and the same instrument. A written consent executed
pursuant to SECTION 10 of this Agreement shall be deemed to be part of, and
constitute a counterpart of, this Agreement.
13.7 Headings. The headings used herein are solely for the convenience
of the parties and shall not serve to modify or interpret the text of the
Sections at the beginning of which they appear.
13.8 Entire Agreement. This Agreement embodies the entire agreement
and understanding among the Company and Lilly and supersedes all prior oral and
written agreements and understandings relating to the subject matter hereof.
-14-
<PAGE> 15
13.9 Waiver. Any waiver or consent under this Agreement 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 except as
specifically set forth in such waiver or consent. 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.
13.10 Specific Performance. The Company recognizes that the rights of
the Lilly under this Agreement are unique and, accordingly, Lilly shall, in
addition to such other remedies as may be available to them at law or in
equity, have the right to enforce their rights hereunder by actions for
injunctive relief and specific performance to the extent permitted by law.
13.11 Grant of Registration Rights. The Company shall not hereafter
grant to any third party any registration rights more favorable than, or in any
way conflicting with, any of those contained herein, so long as any of the
registration rights under this Agreement remain in effect, provided, in any
event, (i) any grant of demand or required registration rights shall provide
that Lilly has incidental or "piggyback" registration rights with respect
thereto in accordance with the provisions of SECTION 2 hereof, (ii) such rights
shall not become effective prior to the rights of Lilly hereunder, and (iii)
the recipients of such rights shall be subject to provisions comparable to
those set forth in SECTION 8 hereof.
[signatures on following page]
-15-
<PAGE> 16
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed on the day first above written.
The Company:
- ------------
ILEX ONCOLOGY, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Lilly:
- -----
ELI LILLY AND COMPANY
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
-16-
<PAGE> 1
EXHIBIT 10.3
LETTER OF CREDIT AGREEMENT
Date: April 5, 1999 ILEX Oncology, Inc.
Accepted by: /s/ RICHARD L. LOVE
---------------------
Richard L. Love, President
To:
DG BANK
Deutsche Genossenschaftsbank AG Swift Code: GENODEFF
EZD2: Mrs. Werner Telex-No.: 412 291 dg
Am Platz der Republik
60265 Frankfurt
Gentlemen,
Please advise Raiffeisenbank Buchloe-Kaufbeuren-Marktoberdorf eG,
Gutenbergstrasse 4,87600 Kaufbeuren the following Standby Letter of Credit in
their favour adding your confirmation.
Beneficiary: Applicant:
RAIFFEISENBANK ILEX Oncology, Inc.
Buchloe-Kaufbeuren-Marktoberdorf eG 11550 IH 10 West, Suite 300
Gutenbergstrasse 4 San Antonio, Texas 78230
87600 Kaufbeuren/Germany
STANDBY LETTER OF CREDIT NO. __________ FOR 3.000.000,-DEM IN YOUR FAVOR
Gentlemen,
We hereby open our irrevocable Standby Letter of Credit No. ________ in your
favour for a maximum amount of
3.000.000,-DEM
(Three Million German Marks)
including any interest, commission and sundry expenses in support of the credit
facilities you are ready to grant to
Messrs. P.F.K. Pharma Forschung Kaufbeuren GmbH,
Schraderstrasse 4,87600 Kaufbeuren, account no. 6424.
This Standby Letter of Credit is available at sight and on first demand against
presentation of:
your duly signed written statement certifying that Messrs. P.F.K. Pharma
Forschung Kaufbeuren GmbH, Schraderstrasse 4,87600 Kaufbeuren, Germany,
has not partially or totally fulfilled its obligations towards you in
connection with the repayment of the credit facilities granted to it
and that the amount you present to us for payment represents an amount
past due.
Page 1 of 2
<PAGE> 2
IRREVOCABLE STANDBY LETTERS OF CREDIT NO.
Any statement(s) are to be marked: "drawn under irrevocable Standby Letter of
Credit No.________".
Part applications against this Standby Letter of Credit are allowed, however
grand total not to exceed maximum of 3.000.000,-DEM.
This Standby Letter of Credit expires on May 3, 1999 in Frankfurt am
Main/Germany and is payable at the counters of DG Bank, Deutsche
Genossenschafts Bank AG, Frankfurt am Main/Germany.
All commission and/or fees including issuing banks and confirming bank fee's
are for beneficiary account.
Reimbursement: As per your instructions.
"This Standby Letter of Credit is subject to the Uniform Customs and Practice
for Documentary Credit (1993 Revision) International Chamber of Commerce
Publication No. 500".
- -------------------------------
Authorized Signature, unquote
Page 2 of 2
<PAGE> 3
COMMERCIAL PLEDGE AGREEMENT
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL LOAN DATE MATURITY LOAN NO CALL COLLATERAL ACCOUNT OFFICER INITIALS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$1,841,730.00 04-05-1999 05-03-1999 0299 500 6064 2205524 006
- ----------------------------------------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
BORROWER: ILEX ONCOLOGY, INC. (TIN: 74-2699185) LENDER: THE FROST NATIONAL BANK
11550 IH 10 WEST, SUITE 300 P.O. BOX 1600
SAN ANTONIO, TX 78230 SAN ANTONIO, TX 78296
==================================================================================================================================
</TABLE>
THIS COMMERCIAL PLEDGE AGREEMENT IS ENTERED INTO BETWEEN ILEX ONCOLOGY, INC.
(REFERRED TO BELOW AS "GRANTOR"); AND THE FROST NATIONAL BANK (REFERRED TO BELOW
AS "LENDER").
GRANT OF SECURITY INTEREST. FOR VALUABLE CONSIDERATION, GRANTOR GRANTS TO LENDER
A SECURITY INTEREST IN THE COLLATERAL TO SECURE THE INDEBTEDNESS AND AGREES THAT
LENDER SHALL HAVE THE RIGHTS STATED IN THIS AGREEMENT WITH RESPECT TO THE
COLLATERAL, IN ADDITION TO ALL OTHER RIGHTS WHICH LENDER MAY HAVE BY LAW.
DEFINITIONS. The following words shall have the following meanings when used in
this Agreement:
AGREEMENT. The word "Agreement" means this Commercial Pledge Agreement, as
this Commercial Pledge Agreement may be amended or modified from time to
time, together with all exhibits and schedules attached to this Commercial
Pledge Agreement from time to time.
COLLATERAL. The word "Collateral" means the following specifically
described property, which Grantor has delivered or agrees to deliver (or
cause to be delivered) immediately to Lender, together with all Income and
Proceeds as described below:
ALL OF MY RIGHTS AND INTERESTS IN AN AMOUNT NOT LESS THAN $2,302,163.00
NOW OWNED OR HEREAFTER ACQUIRED, IN AND TO ALL STOCKS, BONDS AND OTHER
SECURITIES (INCLUDING BOTH CERTIFICATED AND UNCERTIFICATED SECURITIES),
OPTIONS, CERTIFICATES OF DEPOSITS, ANNUITIES, NOTES, INSTRUMENTS,
DOCUMENTS, COMMODITIES OR COMMODITIES FUTURES, CERTIFICATES OF TITLE OR
OTHER DOCUMENTS EVIDENCING OWNERSHIP OF PROPERTY, CHATTEL PAPER,
ACCOUNTS, CONTRACT RIGHTS, MONIES, CLAIMS, DEMANDS, INTERESTS IN
PARTNERSHIPS, JOINT VENTURES OR LIMITED PARTNERSHIPS, GENERAL
INTANGIBLES AND OTHER ASSETS OF ANY TYPE WHATSOEVER NOW OR HEREAFTER
DEPOSITED OR HELD IN THAT CERTAIN CUSTODIAL ACCOUNT WITH ADVISORY
SERVICE, ACCOUNT NO. F07555500 (THE "CUSTODIAL ACCOUNT"), WITH LENDER,
WHICH CUSTODIAL ACCOUNT WITH ADVISORY SERVICE IS HELD IN MY NAME;
TOGETHER WITH ALL SUBSTITUTES AND REPLACEMENT OF ANY SUCH ASSETS HELD
IN THE CUSTODIAL ACCOUNT, AND ALL SECURITY FOR THE PAYMENT OF ANY OF
THE FOREGOING, AND ALL POLICIES OF INSURANCE RELATING TO ANY OF THE
FOREGOING; AND ALL BOOKS AND RECORDS RELATING TO ANY OF THE FOREGOING.
In addition, the word "Collateral" includes all property of Grantor, in the
possession of Lender (or in the possession of a third party subject to the
control of Lender), whether now or hereafter existing and whether tangible
or intangible in character, including without limitation each of the
following:
(a) ALL PROPERTY TO WHICH LENDER ACQUIRES TITLE OR DOCUMENTS OF TITLE.
(b) ALL PROPERTY ASSIGNED TO LENDER.
(c) ALL PROMISSORY NOTES, BILLS OF EXCHANGE, STOCK CERTIFICATES, BONDS,
SAVINGS PASSBOOKS, TIME CERTIFICATES OF DEPOSIT, INSURANCE POLICIES,
AND ALL OTHER INSTRUMENTS AND EVIDENCES OF AN OBLIGATION.
(d) ALL RECORDS RELATING TO ANY OF THE PROPERTY DESCRIBED IN THIS
COLLATERAL SECTION, WHETHER IN THE FORM OF A WRITTEN, MICROFILM,
MICROFICHE, OR ELECTRONIC MEDIA.
EVENT OF DEFAULT. The words "Event of Default" mean and include without
limitation any of the Events of Default set forth below in the section
titled "Events of Default."
GRANTOR. The word "Grantor" means ILEX ONCOLOGY, INC., its successors and
assigns.
GUARANTOR. The word "Guarantor" means and includes without limitation each
and all of the guarantors, sureties, and accommodation parties in
connection with the Indebtedness.
INCOME AND PROCEEDS. The words "Income and Proceeds" mean all present and
future income, proceeds, earnings, increases, and substitutions from or for
the Collateral of every kind and nature, including without limitation all
payments, interest, profits, distributions, benefits, rights, options,
warrants, dividends, stock dividends, stock splits, stock rights,
regulatory dividends, distributions, subscriptions, monies, claims for
money due and to become due, proceeds of any insurance on the Collateral,
shares of stock of different par value or no par value issued in
substitution or exchange for shares included in the Collateral, and all
other property Grantor is entitled to receive on account of such
Collateral, including accounts, documents, instruments, chattel paper, and
general intangibles.
INDEBTEDNESS. The word "Indebtedness" means the indebtedness evidenced by
the Note, including all principal and earned interest, together with all
other indebtedness and costs and expenses for which Grantor is responsible
under this Agreement or under any of the Related Documents. In addition,
the word "Indebtedness" includes all other obligations, debts and
liabilities, plus interest thereon, of Grantor, or any one or more of them,
to Lender, as well as all claims by lender against Grantor, or any one or
more of them, whether existing now or later; whether they are voluntary or
involuntary, due or not due, direct or indirect, absolute or contingent,
liquidated or unliquidated; whether Grantor may be liable individually or
jointly with others; whether Grantor may be obligated as guarantor, surety,
accommodation party or otherwise.
LENDER. The word "Lender" means THE FROST NATIONAL BANK, its successors and
assigns.
NOTE. The word "Note" means the note or credit agreement dated April 5,
1999, in the principal amount of $1,841,730.00 from ILEX ONCOLOGY, INC. to
Lender, together with all renewals of, extensions of, modifications of,
refinancings of, consolidations of and substitutions for the note or credit
agreement.
OBLIGOR. The word "Obligor" means and includes without limitation any and
all persons or entities obligated to pay money or to perform some other act
under the Collateral.
RELATED DOCUMENTS. The words "Related Documents" mean and include without
limitation all promissory notes, credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages, deeds
of trust, and all other instruments, agreements and documents, whether now
or hereafter existing, executed in connection with the Indebtedness.
<PAGE> 4
04-05-1999 COMMERCIAL PLEDGE AGREEMENT PAGE 2
LOAN NO 0299 (CONTINUED)
================================================================================
RIGHT OF SETOFF. Grantor hereby grants Lender a contractual security interest in
and hereby assigns, conveys, delivers, pledges, and transfers all of Grantor's
right, title and interest in and to Grantor's accounts with Lender (whether
checking, savings, or some other account), including all accounts held jointly
with someone else and all accounts Grantor may open in the future, excluding,
however, all IRA and Keogh accounts, and all trust accounts for which the grant
of a security interest would be prohibited by law. Grantor authorizes Lender, to
the extent permitted by applicable law, to charge or setoff all Indebtedness
against any and all such accounts.
GRANTOR'S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL.
Grantor represents and warrants to Lender that:
OWNERSHIP. Grantor is the lawful owner of the Collateral free and clear of
all security interests, liens, encumbrances and claims of others except as
disclosed to and accepted by Lender in writing prior to execution of this
Agreement.
RIGHT TO PLEDGE. Grantor has the full right, power and authority to enter
into this Agreement and to pledge the Collateral.
BINDING EFFECT. This Agreement is binding upon Grantor, as well as
Grantor's heirs, successors, representatives and assigns, and is legally
enforceable in accordance with its terms.
NO FURTHER ASSIGNMENT. Grantor has not, and will not, sell, assign,
transfer, encumber or otherwise dispose of any of Grantor's rights in the
Collateral except as provided in this Agreement.
NO DEFAULTS. There are no defaults existing under the Collateral, and there
are no offsets or counterclaims to the same. Grantor will strictly and
promptly perform each of the terms, conditions, covenants and agreements
contained in the Collateral which are to be performed by Grantor, if any.
NO VIOLATION. The execution and delivery of this Agreement will not violate
any law or agreement governing Grantor or to which Grantor is a party, and
its certificate or articles of incorporation and bylaws do not prohibit any
term or condition of this Agreement.
LENDER'S RIGHTS AND OBLIGATIONS WITH RESPECT TO COLLATERAL. Lender may hold the
Collateral until all the Indebtedness has been paid and satisfied and thereafter
may deliver the Collateral to any Grantor. Lender shall have the following
rights in addition to all other rights it may have by law:
MAINTENANCE AND PROTECTION OF COLLATERAL. Lender may, but shall not be
obligated to, take such steps as it deems necessary or desirable to
protect, maintain, insure, store, or care for the Collateral, including
payment of any liens or claims against the Collateral. Lender may charge
any cost incurred in so doing to Grantor.
INCOME AND PROCEEDS FROM THE COLLATERAL. Lender may receive all Income and
Proceeds and add it to the Collateral. Grantor agrees to deliver to Lender
immediately upon receipt, in the exact form received and without
commingling with other property, all Income and Proceeds from the
Collateral which may be received by, paid, or delivered to Grantor or for
Grantor's account, whether as an addition to, in discharge of, in
substitution of, or in exchange for any of the Collateral.
APPLICATION OF CASH. At Lender's option, Lender may apply any cash, whether
included in the Collateral or received as Income and Proceeds or through
liquidation, sale, or retirement, of the Collateral, to the satisfaction of
the Indebtedness or such portion thereof as Lender shall choose, whether or
not matured.
TRANSACTIONS WITH OTHERS. Lender may (a) extend time for payment or other
performance, (b) grant a renewal or change in terms or conditions, or (c)
compromise, compound or release any obligation, with any one or more
Obligors, endorsers, or Guarantors of the Indebtedness as Lender deems
advisable, without obtaining the prior written consent of Grantor, and no
such act or failure to act shall affect Lender's rights against Grantor or
the Collateral.
ALL COLLATERAL SECURES INDEBTEDNESS. All Collateral shall be security for
the Indebtedness, whether the Collateral is located at one or more offices
or branches of Lender and whether or not the office or branch where the
Indebtedness is created is aware of or relies upon the Collateral.
COLLECTION OF COLLATERAL. Lender, at Lender's option, may, but need not,
collect directly from the Obligors on any of the Collateral all Income and
Proceeds or other sums of money and other property due and to become due
under the Collateral, and Grantor authorizes and directs the Obligors, if
Lender exercises such option, to pay and deliver to Lender all Income and
Proceeds and other sums of money and other property payable by the terms of
the Collateral and to accept Lender's receipt for the payments.
POWER OF ATTORNEY. Grantor irrevocably appoints Lender as Grantor's
attorney-in-fact, with full power of substitution, (a) to demand, collect,
receive, receipt for, sue and recover all Income and Proceeds and other
sums of money and other property which may now or hereafter become due,
owing or payable from the Obligors in accordance with the terms of the
Collateral; (b) to execute, sign and endorse any and all instruments,
receipts, checks, drafts and warrants issued in payment for the Collateral;
(c) to settle or compromise any and all claims arising under the
Collateral, and in the place and stead of Grantor, execute and deliver
Grantor's release and acquittance for Grantor; (d) to file any claim or
claims or to take any action or institute or take part in any proceedings,
either in Lender's own name or in the name of Grantor, or otherwise, which
in the discretion of Lender may seem to be necessary or advisable; and (e)
to execute in Grantor's name and to deliver to the Obligors on Grantor's
behalf, at the time and in the manner specified by the Collateral, any
necessary instruments or documents.
PERFECTION OF SECURITY INTEREST. Upon request of Lender, Grantor will
deliver to Lender any and all of the documents evidencing or constituting
the Collateral. When applicable law provides more than one method of
perfection of Lender's security interest, Lender may choose the method(s)
to be used. Upon request of Lender, Grantor will sign and deliver any
writings necessary to perfect Lender's security interest. Grantor hereby
appoints Lender as Grantor's irrevocable attorney-in-fact for the purpose
of executing any documents necessary to perfect or to continue the security
interest granted in this Agreement. THIS IS A CONTINUING SECURITY AGREEMENT
AND WILL CONTINUE IN EFFECT EVEN THOUGH ALL OR ANY PART OF THE INDEBTEDNESS
IS PAID IN FULL AND EVEN THOUGH FOR A PERIOD OF TIME GRANTOR MAY NOT BE
INDEBTED TO LENDER.
EXPENDITURES BY LENDER. If not discharged or paid when due, Lender may (but
shall not be obligated to) discharge or pay any amounts required to be
discharged or paid by Grantor under this Agreement, including without limitation
all taxes, liens, security interests, encumbrances, and other claims, at any
time levied or placed on the Collateral. Lender also may (but shall not be
obligated to) pay all costs for insuring, maintaining and preserving the
Collateral. All such expenditures incurred or paid by Lender for such purposes
will then bear Interest at the Note rate from the date incurred or paid by
Lender to the date of repayment by Grantor. All such expenses shall become a
part of the Indebtedness and, at Lender's option, will (a) be payable on demand,
(b) be added to the balance of the Note and be apportioned among and be payable
with any installment payments to become due during either (i) the term of any
applicable insurance policy or (ii) the remaining term of the Note, or (c) be
treated as a balloon payment which will be due and payable at the Note's
maturity. This Agreement also will secure payment of these amounts. Such right
shall be in addition to all other rights and remedies to which Lender may be
entitled upon the occurrence of an Event of Default.
LIMITATIONS ON OBLIGATIONS OF LENDER. Lender shall use ordinary reasonable care
in the physical preservation and custody of the Collateral in Lender's
possession, but shall have no other obligation to protect the Collateral or its
value. In particular, but without limitation, Lender shall have no
responsibility for (a) any depreciation in value of the Collateral or for the
collection or protection of any Income and Proceeds from the Collateral, (b)
preservation of rights against parties to the Collateral or against third
persons, (c) ascertaining any maturities, calls, conversions, exchanges, offers,
lenders, or similar matters relating to any of the Collateral, or (d) informing
Grantor about any of the above, whether or not Lender has or is deemed to have
knowledge of such matters. Except as provided above, Lender shall have no
liability for depreciation or deterioration of the Collateral.
<PAGE> 5
04-05-1999 COMMERCIAL PLEDGE AGREEMENT PAGE 3
LOAN NO 0299 (CONTINUED)
================================================================================
EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
under this Agreement:
DEFAULT ON INDEBTEDNESS. Failure of Grantor to make any payment when due
on the indebtedness.
OTHER DEFAULTS. Failure of Grantor to comply with or to perform any other
term, obligation, covenant or condition contained in this Agreement or in
any of the Related Documents or in any other agreement between Lender and
Grantor.
DEFAULT IN FAVOR OF THIRD PARTIES. Should Borrower or any Grantor default
under any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or person
that may materially affect any of Borrower's property or Borrower's or any
Grantor's ability to repay the Loans or perform their respective
obligations under this Agreement or any of the Related Documents.
FALSE STATEMENTS. Any warranty, representation or statement made or
furnished to Lender by or on behalf of Grantor under this Agreement, the
Note or the Related Documents is false or misleading in any material
respect, either now or at the time made or furnished.
DEFECTIVE COLLATERALIZATION. This Agreement or any of the Related Documents
ceases to be in full force and effect (including failure of any collateral
documents to create a valid and perfected security interest or lien) at any
time and for any reason.
INSOLVENCY. The dissolution or termination of Grantor's existence as a
going business, the insolvency of Grantor, the appointment of a receiver
for any part of Grantor's property, any assignment for the benefit of
creditors, any type of creditor workout, or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against Grantor.
CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Grantor or by any
governmental agency against the Collateral or any other collateral securing
the Indebtedness. This includes a garnishment of any of Grantor's deposit
accounts with Lender.
EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with
respect to any Guarantor of any of the Indebtedness or such Guarantor dies
or becomes incompetent.
ADVERSE CHANGE. A material adverse change occurs in Grantor's financial
condition, or Lender believes the prospect of payment or performance of
the Indebtedness is impaired.
INSECURITY. Lender, in good faith, deems itself insecure.
RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this
Agreement, at any time thereafter, Lender may exercise any one or more of the
following rights and remedies:
ACCELERATE INDEBTEDNESS. Declare all Indebtedness immediately due and
payable, without notice of any kind to Grantor.
COLLECT THE COLLATERAL. Collect any of the Collateral and, at Lender's
option and to the extent permitted by applicable law, retain possession of
the Collateral while suing on the Indebtedness.
SELL THE COLLATERAL. Sell the Collateral, at Lender's discretion, as a unit
or in parcels, at one or more public or private sales. Unless the
Collateral is perishable or threatens to decline speedily in value or is of
a type customarily sold on a recognized market, Lender shall give or mail
to Grantor, or any of them, notice at least ten (10) days in advance of the
time and place of any public sale, or of the date after which any private
sale may be made. Grantor agrees that any requirement of reasonable notice
is satisfied if Lender mails notice by ordinary mail addressed to Grantor,
or any of them, at the last address Grantor has given Lender in writing. If
a public sale is held, there shall be sufficient compliance with all
requirements of notice to the public by a single publication in any
newspaper of general circulation in the county where the Collateral is
located, setting forth the time and place of sale and a brief description
of the property to be sold. Lender may be a purchaser at any public sale.
REGISTER SECURITIES. Register any securities included in the Collateral in
Lender's name and exercise any rights normally incident to the ownership
of securities.
SELL SECURITIES. Sell any securities included in the Collateral in a
manner consistent with applicable federal and state securities laws,
notwithstanding any other provision of this or any other agreement. If,
because of restrictions under such laws, Lender is or believes it is
unable to sell the securities in an open market transaction, Grantor
agrees that Lender shall have no obligation to delay sale until the
securities can be registered, and may make a private sale to one or more
persons or to a restricted group of persons, even though such sale may
result in a price that is less favorable than might be obtained in an open
market transaction, and such a sale shall be considered commercially
reasonable. If any securities held as Collateral are "restricted
securities" as defined in the Rules of the Securities and Exchange
Commission (such as Regulation D or Rule 144) or state securities
departments under state "Blue Sky" laws, or if Grantor is an affiliate of
the issuer of the securities, Grantor agrees that neither Grantor nor any
member of Grantor's family will sell or dispose of any securities of such
issuer without obtaining Lender's prior written consent.
FORECLOSURE. Maintain a judicial suit for foreclosure and sale of the
Collateral.
TRANSFER TITLE. Effect transfer of title upon sale of all or part of the
Collateral. For this purpose, Grantor irrevocably appoints Lender as its
attorney-in-fact to execute endorsements, assignments and instruments in
the name of Grantor and each of them (if more than one) as shall be
necessary or reasonable.
OTHER RIGHTS AND REMEDIES. Have and exercise any or all of the rights and
remedies of a secured creditor under the provisions of the Uniform
Commercial Code, at law, in equity, or otherwise.
APPLICATION OF PROCEEDS. Apply any cash which is part of the Collateral,
or which is received from the collection or sale of the Collateral, to
reimbursement of any expenses, including any costs for registration of
securities, commissions incurred in connection with a sale, attorney fees
as provided below, and court costs, whether or not there is a lawsuit and
including any fees on appeal, incurred by Lender in connection with the
collection and sale of such Collateral and to the payment of the
indebtedness of Grantor to Lender, with any excess funds to be paid to
Grantor as the interests of Grantor may appear. Grantor agrees, to the
extent permitted by law, to pay any deficiency after application of the
proceeds of the Collateral to the Indebtedness.
CUMULATIVE REMEDIES. All of Lender's rights and remedies, whether
evidenced by this Agreement or by any other writing, shall be cumulative
and may be exercised singularly or concurrently. Election by Lender to
pursue any remedy shall not exclude pursuit of any other remedy, and an
election to make expenditures or to take action to perform an obligation
of Grantor under this Agreement, after Grantor's failure to perform, shall
not affect Lender's right to declare a default and to exercise its
remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
AMENDMENTS. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to
the matters set forth in this Agreement. No alteration of or amendment to
this Agreement shall be effective unless given in writing and signed by
the party or parties sought to be charged or bound by the alteration or
amendment.
APPLICABLE LAW. THIS AGREEMENT HAS BEEN DELIVERED TO LENDER AND ACCEPTED
BY LENDER IN THE STATE OF TEXAS. IF THERE IS A LAWSUIT, AND IF
<PAGE> 6
04-05-1999 COMMERCIAL PLEDGE AGREEMENT PAGE 4
LOAN NO 0299 (CONTINUED)
================================================================================
THE TRANSACTION EVIDENCED BY THIS AGREEMENT OCCURRED IN BEXAR COUNTY,
GRANTOR AGREES UPON LENDER'S REQUEST TO SUBMIT TO THE JURISDICTION OF THE
COURTS OF BEXAR COUNTY, THE STATE OF TEXAS. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS
AND APPLICABLE FEDERAL LAWS.
ATTORNEY'S FEES AND OTHER COSTS. Lender may hire an attorney to help
collect the Note if Grantor does not pay, and Grantor will pay Lender's
reasonable attorneys' fees. Grantor also will pay Lender all other amounts
actually incurred by Lender as court costs, lawful fees for filing,
recording, or releasing to any public office any instrument securing the
Note; the reasonable cost actually expended for repossessing, storing,
preparing for sale, and selling any security; and fees for noting a lien on
or transferring a certificate of title to any motor vehicle offered as
security for the Note, or premiums or identifiable charges received in
connection with the sale of authorized insurance.
CAPTION HEADINGS. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions
of this Agreement.
NOTICES. All notices required to be given under this Agreement shall be
given in writing, may be sent by telefacsimile (unless otherwise required
by law), and shall be effective when actually delivered or when deposited
with a nationally recognized overnight courier or deposited in the United
States mail, first class, postage prepaid, addressed to the party to whom
the notice is to be given at the address shown above. Any party may change
its address for notices under this Agreement by giving formal written
notice to the other parties, specifying that the purpose of the notice is
to change the party's address. To the extent permitted by applicable law,
if there is more than one Grantor, notice to any Grantor will constitute
notice to all Grantors. For notice purposes, Grantor will keep Lender
informed at all times of Grantor's current address(es).
SEVERABILITY. If a court of competent jurisdiction finds any provision of
this Agreement to be invalid or unenforceable as to any person or
circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any
such offending provision shall be deemed to be modified to be within the
limits of enforceability or validity; however, if the offending provision
cannot be so modified, it shall be stricken and all other provisions of
this Agreement in all other respects shall remain valid and enforceable.
SUCCESSOR INTERESTS. Subject to the limitations set forth above on transfer
of the Collateral, this Agreement shall be binding upon and inure to the
benefit of the parties, their successors and assigns.
WAIVER. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by Lender of
a provision of this Agreement shall not prejudice or constitute a waiver of
Lender's right otherwise to demand strict compliance with that provision or
any other provision of this Agreement. No prior waiver by Lender, nor any
course of dealing between Lender and Grantor, shall constitute a waiver of
any of Lender's rights or of any of Grantor's obligations as to any future
transactions. Whenever the consent of Lender is required under this
Agreement, the granting of such consent by Lender in any instance shall not
constitute continuing consent to subsequent instances where such consent is
required and in all cases such consent may be granted or withheld in the
sole discretion of Lender.
OTHER PARTIES AND OTHER COLLATERAL. No renewal or extension of or any other
indulgence with respect to the indebtedness or any part thereof, no release of
any security, no release of any person (including any maker, endorser, guarantor
or surety) liable on the Indebtedness, no delay in enforcement of payment, and
no delay or omission or lack of diligence or care in exercising any right or
power with respect to the Indebtedness or any security thereof or under this
Agreement shall in any manner impair or affect the rights of Lender under the
law, hereunder, or under any agreement pertaining to the Collateral. Lender need
not file suit or assert a claim for personal judgment against any person for any
part of the Indebtedness or seek to realize upon any other security for the
Indebtedness, before foreclosing upon the Collateral for the purpose of paying
the Indebtedness. I waive any right to the benefit of or to require or control
application of any other security or proceeds thereof, and agree that Lender
shall have no duty or obligation to me to apply to the Indebtedness any such
other security or proceeds thereof.
PARTIES BOUND. Lender's rights hereunder shall inure to the benefit of its
successors and assigns, and in the event of any assignment or transfer of the
Note or the Property, Lender thereafter shall be fully discharged from any
responsibility with respect to the Collateral so assigned or transferred, but
Lender shall retain all rights and powers hereby given with respect to the note
or Collateral not so assigned or transferred. All my representations, warranties
and agreements, if more than one, are joint and several, and all shall be
binding upon my personal representatives, heirs, successors and assigns. I may
not assign any rights, duties or obligations hereunder without the prior written
consent of Lender.
CONTINUATION OF SECURITY INTEREST. It is expressly agreed that upon any
termination of the Custodial Account and/or the Credit Line Agreement, the
security interest herein granted in the Property shall remain in full force and
effect until the Indebtedness has been fully paid and discharged,
notwithstanding the termination of the Custodial Account and/or the Credit Line
Agreement or the fact that the assets comprising the Property may no longer be
held in the Custodial Account. I irrevocably appoint Lender, its agents or
employees, as my agent and attorney-in-fact to execute and file any documents
and give any notices which may be necessary to evidence the continuation of
said security interest after termination of the Custodial Account and/or the
Credit Line Agreement.
ENFORCEABILITY. This Pledge Agreement shall remain in full force and effect
regardless of whether the liability of any other Obligor or any other party
liable upon the Indebtedness may have ceased, or irrespective of the validity
or enforceability of any other instrument executed in connection with the
Indebtedness, and notwithstanding the reorganization, death, incapacity or
bankruptcy of any other party liable on the Indebtedness or the reorganization,
my death, incapacity or bankruptcy or any other event or proceeding affecting
me or any other party liable on the Indebtedness. The grant of a security
interest hereunder and all of Lender's rights, powers and remedies in connection
therewith shall remain in full force and effect until Lender has executed a
written termination statement and reassigned or released to me, without
recourse, the Property and all rights conveyed hereby.
FACSIMILE DOCUMENTS AND SIGNATURES. For purposes of negotiating and finalizing
this document, if this document is transmitted by facsimile machine ("fax"), it
shall be treated for all purposes as an original document. Additionally, the
signature of any party on this document transmitted by way of a fax machine
shall be considered for all purposes as an original signature. Any such faxed
document shall be considered to have the same binding legal effect as an
original document. At the request of any party, any faxed document shall be
re-executed by each signatory party in an original form.
<PAGE> 7
04-05-1999 COMMERCIAL PLEDGE AGREEMENT PAGE 5
LOAN NO 0299 (CONTINUED)
===============================================================================
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS PLEDGE AGREEMENT,
AND GRANTOR AGREES TO ITS TERMS. THIS AGREEMENT IS DATED APRIL 5, 1999.
GRANTOR:
ILEX ONCOLOGY, INC.
By: /s/ RICHARD L. LOVE
----------------------------------------
RICHARD L. LOVE, President
===============================================================================
<PAGE> 8
M023
TX-DDD 1436 CST 04/29/99
18
TRT
*166995 FROSTBK
841412291?
088857 1536 04/29
GA
41229-1 DG D
*166995 FROSTBK
TO: DG Bank
DEUTSCHE GENOSSENSCHAFTSBANK AG
EZD2: MRS. WERNER
AM PLATZ DER REPUBLIK
60265 FRANKFURT
MESSAGE NO. 18
THIS TEST IS TESTED WITH CITIBANK N.A., NEW YORK TESTING KEYS FOR
AUTHENTICATION PURPOSES ONLY. PLEASE VERIFY THIS TEST NUMBER WITH THEM. THEIR
TELEX NUMBER NO. 669720
TEST NO. For No Amount
Dated April 29, 1999
Attn: Documentary Credits
We hereby issue Amendment No. 1 to our Irrevocable Standby Letter of Credit No.
22874-S, in the amount of 3,000,000.-DEM in favor of RAIFFEISENBANK,
Buchloe-Kaufbeuren-Marktoberdorf eG Gutenbergstrasse 4, 87600
Kaufbeuren/Germany, for the account of Ilex Oncology, Inc., 11550 IH 10
West-Suite 300, San Antonio, Texas 78230, as follows:
The expiration date is extended to June 30, 1999.
All other terms and conditions remain unchanged.
Note: "If you are unable to comply with this instrument, please advise The
Frost National Bank, San Antonio, Texas in writing within ten (10) business
days. This Amendment is considered accepted if The Frost National Bank is not
notified within ten (10) business days."
Please obtain acceptance of Amendment No. 1 and advise us by tested message of
the acceptance. Thank you for your assistance.
This Telex is the operative instrument as per Article 11-A. No airmail
confirmation will follow.
"This credit is subject to the current Uniform Customs and Practice for
Documentary Credits (1993 Revision) issued by the International Chamber of
Commerce Publication No. 500."
Regards,
Gloria A. Munoz, Vice President
Letters of Credit Dept.
The Frost National Bank, San Antonio, Texas USA
April 29, 1999 GAM/vmb
<PAGE> 1
EXHIBIT 11.1
ILEX ONCOLOGY, INC.
COMPUTATION OF NET LOSS PER SHARE
(In Thousands, Except Per Share Amount)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------
1998 1999
---- ----
<S> <C> <C>
COMPUTATION OF BASIC LOSS PER SHARE
Net Loss $ (6,945) $ (4,480)
Weighted average number of shares of Common
Stock outstanding 12,281 12,653
Basic net loss per share $ (.57) $ (.35)
======== ========
COMPUTATION OF DILUTED LOSS PER SHARE
Net Loss $ (6,945) $ (4,480)
Weighted average number of shares of Common Stock and
Common Stock equivalents outstanding:
Weighted average number of shares of Common
Stock outstanding 12,281 12,653
Weighted average number of Common Stock
equivalents applicable to stock options
and warrants (1) 359 572
-------- --------
Common Stock and Common Stock equivalents 12,640 13,225
======== ========
Diluted net loss per share $ (.55) $ (.34)
======== ========
</TABLE>
(1) This calculation is submitted in accordance with Item
601(b)11 of regulation S-K although it is not required
by SFAS No. 128 because it is antidilutive.
-17-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF MARCH 31, 1999, AND THE STATEMENT OF OPERATIONS FOR THE PERIOD THEN
ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 3,566
<SECURITIES> 19,756
<RECEIVABLES> 4,182
<ALLOWANCES> 150
<INVENTORY> 0
<CURRENT-ASSETS> 27,489
<PP&E> 6,386
<DEPRECIATION> 1,664
<TOTAL-ASSETS> 40,720
<CURRENT-LIABILITIES> 6,312
<BONDS> 0
0
0
<COMMON> 129
<OTHER-SE> 33,875
<TOTAL-LIABILITY-AND-EQUITY> 40,720
<SALES> 0
<TOTAL-REVENUES> 3,447
<CGS> 0
<TOTAL-COSTS> 6,396
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (4,480)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,480)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,480)
<EPS-PRIMARY> (.35)
<EPS-DILUTED> (.35)
</TABLE>
