<PAGE>
<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 17, 1996
REGISTRATION NO. 333-3830
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
PRE-EFFECTIVE
AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
BIGMAR, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<S> <C> <C>
DELAWARE 2834 31-1445779
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER)
</TABLE>
6660 DOUBLETREE AVENUE
COLUMBUS, OH 43229
(614) 848-8380
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
JOHN G. TRAMONTANA
BIGMAR, INC.
6660 DOUBLETREE AVENUE
COLUMBUS, OH 43229
(614) 848-8380
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
WITH COPIES TO:
<TABLE>
<S> <C>
EDWARD KLIMERMAN, ESQ. SAMUEL F. OTTENSOSER, ESQ.
RUBIN BAUM LEVIN CONSTANT & FRIEDMAN BAER MARKS & UPHAM LLP
30 ROCKEFELLER PLAZA 805 THIRD AVENUE
NEW YORK, NEW YORK 10112 NEW YORK, NEW YORK 10022
(212) 698-7700 (212) 702-5700
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If the delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
________________________________________________________________________________
<PAGE>
<PAGE>
BIGMAR, INC.
CROSS REFERENCE SHEET
REQUIRED BY ITEM 501(B) OF REGULATION S-K
<TABLE>
<CAPTION>
FORM S-1 ITEM LOCATION IN PROSPECTUS
----------------------------------------------------------------------- ------------------------------------
<C> <S> <C>
1. Forepart of the Registration Statement and Outside Front Cover Page of
Prospectus............................................................. Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages of Prospectus................ Inside Front and Outside Back Cover
Pages
3. Summary Information, Risk Factors and Ratio of Earnings to Fixed
Charges................................................................ Prospectus Summary; Risk Factors
4. Use of Proceeds........................................................ Prospectus Summary; Use of Proceeds
5. Determination of Offering Price........................................ Outside Front Cover Page;
Underwriting
6. Dilution............................................................... Dilution
7. Selling Security Holders............................................... Not Applicable
8. Plan of Distribution................................................... Outside Front Cover Page;
Underwriting
9. Description of Securities to Be Registered............................. Prospectus Summary; Capitalization;
Description of Capital Stock
10. Interests of Named Experts and Counsel................................. Legal Matters; Experts
11. Information with Respect to the Registrant............................. Outside Front Cover Page; Prospectus
Summary; Risk Factors; Dividend
Policy; Capitalization; Selected
Financial Data; Management's
Discussion and Analysis of
Financial Condition and Results of
Operations; Business; Management;
Principal Stockholders; Certain
Transactions; Description of
Capital Stock; Shares Eligible for
Future Sale; Financial Statements
12. Disclosure of Commission Position on Indemnification for Securities Act
Liabilities............................................................ Management
</TABLE>
<PAGE>
<PAGE>
SUBJECT TO COMPLETION, DATED JUNE 17, 1996
PROSPECTUS
1,250,000 SHARES
BIGMAR, INC.
COMMON STOCK
[LOGO]
------------------------
All of the 1,250,000 shares of Common Stock, par value $.001 per share
('Common Stock'), offered hereby are being offered by Bigmar, Inc. ('Company').
It is currently anticipated that the initial public offering price per share
will be between $7.00 and $9.00. See 'Underwriting' for information relating to
the factors considered in determining the initial public offering price.
Prior to the offering ('Offering'), there has been no public market for the
Common Stock. Subject to official notice of issuance, the Company has received
approval to have the Common Stock quoted on the Nasdaq SmallCap MarketSM under
the trading symbol 'BGMR' and listed on the Boston Stock Exchange under the
trading symbol 'BIG.'
In this Prospectus, all references to 'Dollars' or '$' are to U.S. Dollars.
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK AND
IMMEDIATE SUBSTANTIAL DILUTION. SEE 'RISK FACTORS' BEGINNING ON PAGE 8 AND
'DILUTION' ON PAGE 23 OF THIS PROSPECTUS FOR CERTAIN INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
UNDERWRITING
PRICE DISCOUNTS AND PROCEEDS TO
TO PUBLIC COMMISSIONS(1) COMPANY(2)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share................................................... $ $ $
- ----------------------------------------------------------------------------------------------------------------------------
Total(3).................................................... $ $ $
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Does not include (a) warrants to be issued to LT Lawrence & Co., Inc.
('Representative') to purchase 125,000 shares of Common Stock at an exercise
price per share equal to 130% of the initial public offering price per share
('Representative's Warrants') or (b) a non-accountable expense allowance
payable to the Representative equal to 2 1/2% of the gross proceeds of the
Offering. The Representative's Warrants are exercisable for a period of four
years commencing one year from the date of this Prospectus. The
Representative may allow to certain dealers, and such dealers may reallow,
concessions and a portion of the Representative's Warrants. The Company has
agreed to indemnify the Underwriters against, or contribute to losses
arising out of, certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See 'Underwriting.'
(2) Before deducting estimated Offering expenses, including the Representative's
non-accountable expense allowance, of $975,000 in the aggregate (or
$1,012,500 if the Underwriters' over-allotment option is exercised in full),
all of which are payable by the Company. See 'Underwriting.'
(3) The Company has granted to the Underwriters an option, exercisable for a
period of 45 days from the date of this Prospectus, to purchase up to
187,500 additional shares of Common Stock, upon the same terms and
conditions as the shares of Common Stock being offered hereby, solely to
cover over-allotments, if any. If the Underwriters exercise the
over-allotment option in full, the total Price to Public, Underwriting
Discounts and Commissions and Proceeds to Company will be $ ,
$ , and $ , respectively.
------------------------
The shares of Common Stock are being offered by the several Underwriters
named herein on a firm commitment basis, subject to prior sale, when, as and if
accepted by them and subject to certain conditions. It is expected that delivery
of certificates for the shares of Common Stock will be made against payment
therefor on or about , 1996, at the offices of LT Lawrence & Co.,
Inc., 3 New York Plaza, New York, New York 10004.
------------------------
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
LT LAWRENCE & CO., INC.
, 1996
<PAGE>
<PAGE>
[Photograph of packages of calcium leucovorin.]
The Company markets calcium leucovorin, a generic oncological drug used for
rescue therapy, to Medac GmbH for resale to the German market.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ SMALLCAP MARKETSM, THE BOSTON STOCK
EXCHANGE, THE PACIFIC STOCK EXCHANGE OR OTHERWISE. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
------------------------
The Company intends to furnish its stockholders with annual reports
containing audited financial statements of the Company, after the end of each
fiscal year, and make available such other periodic reports as the Company may
deem appropriate or as may be required by law.
<PAGE>
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information, including the financial
statements and notes thereto, appearing elsewhere in this Prospectus. In this
Prospectus, all references to 'Dollars' or '$' are to U.S. Dollars. The
information in this Prospectus gives effect to the following events: (i) a
contribution to the Company on April 8, 1996 of 99% of the shares of Common
Stock then owned by the stockholders of the Company ('Contribution'); (ii) a
stock-for-stock exchange on April 9, 1996 whereby Bigmar Pharmaceuticals SA
('Bigmar Pharmaceuticals') and Bioren SA ('Bioren') became subsidiaries of the
Company ('Exchange'); (iii) a 2.105263-for-1 reverse stock split of the
outstanding shares of Common Stock effected on April 16, 1996 ('Reverse Split');
and (iv) an increase in the number of authorized shares of Common Stock from
10,000,000 to 15,000,000 effected on April 16, 1996. Except where otherwise
indicated, all information in this Prospectus assumes no exercise of the
Underwriters' over-allotment option or the Representative's Warrants. Certain
technical terms used in this Prospectus are defined in the 'Glossary.' For more
information, see 'The Company,' 'Management's Discussion and Analysis of
Financial Condition and Results of Operations,' 'Certain Transactions' and
'Description of Capital Stock.'
THE COMPANY
The Company is currently engaged in manufacturing and marketing 14 types of
intravenous infusion solutions ('IV Solutions') in Switzerland and Lichtenstein
and marketing in Germany raw materials used to manufacture medications for the
treatment of prostate enlargement ('Prostate Materials') and two generic
oncological products, mercaptopurine and calcium leucovorin. Over the next 24
months, the Company's strategy is to manufacture, in its state-of-the-art
facilities in Switzerland, and market generic oncological drugs. In addition,
the Company is in the process of preparing to market certain licensed
proprietary oncological and biotechnological products.
The Company markets IV Solutions through its own sales force to health care
providers and third-party payors and markets Prostate Materials, mercaptopurine
and calcium leucovorin to pharmaceutical companies. The Company does not intend
to market its other products directly to the public. For the year ended December
31, 1995, on a pro forma basis after giving effect to the Bioren Acquisition (as
defined below) as if the transaction had occurred on January 1, 1995, the
Company's sales of IV Solutions and antibiotics were approximately $6.5 million,
sales of medical products, including Prostate Materials, were approximately $1.4
million, and sales of generic oncological products were approximately $670,000.
For the three months ended March 31, 1996, sales of these products aggregated
approximately $1.4 million, $319,000 and $210,000, respectively.
In 1995, the Company obtained distribution rights to, among other products,
sodium leucovorin and five generic oncological products, including methotrexate
and calcium leucovorin, from Sapec ('Sapec'), a division of Cerbios Pharma SA, a
privately-held Swiss pharmaceutical company ('Cerbios Pharma'), and
approximately 20 generic oncological products, including mercaptopurine, calcium
leucovorin and methotrexate, from AB Cernelle ('Cernelle'), a privately-held
Swedish pharmaceutical company. Sodium leucovorin is designed to alleviate
certain side effects associated with chemotherapy more effectively than its
currently distributed counterpart, calcium leucovorin.
The Company has received approval for the marketing in Switzerland of two
generic oncological products, methotrexate and doxorubicin, and expects to begin
marketing these products during the second half of 1996. The Company also
expects that all regulatory approvals for the sale of sodium leucovorin in
Germany will be obtained during the second half of 1996 and that the marketing
of this product will begin shortly thereafter. There can be no assurance,
however, that such regulatory approvals will be obtained during these time
periods, or that such approvals will ever be obtained. In addition, the Company
has also obtained the rights to use, manufacture and market, among other
products, a form of recombinant urokinase from Bioferment ('Bioferment'), a
division of Cerbios Pharma. Recombinant urokinase is a biotechnological product
used in the treatment of cardiovascular disease.
3
<PAGE>
<PAGE>
The Company has entered into exclusive arrangements with the following
non-affiliated pharmaceutical companies to market certain proprietary and
generic oncological or biotechnological products, manufactured or licensed by
the Company, in various territories: Medac GmbH ('Medac') in Germany and the
United Kingdom; Boehringer Mannheim Italia Spa ('Boehringer') in Italy; Laevosan
International AG ('Laevosan') in Switzerland; Laboratories Vita SA ('Vita') in
Spain; and Protyde Pharmaceuticals, Inc. ('Protyde') worldwide, except for
certain major European countries. Medac, Boehringer, Laevosan and Vita are
established pharmaceutical companies. Protyde is a development stage company.
The Company's business strategy over the next 24 months is to:
manufacture and market approximately seven injectable and lyophilized
oncological products, including sodium leucovorin;
manufacture and market additional oncological products as the patents
relating to the products expire;
increase the number of pharmaceutical companies in Europe through
which the Company's oncological products are marketed and the
territories in which they are distributed;
market recombinant urokinase; and
expand the marketing of IV Solutions in Switzerland through the
Company's own sales force.
For the past 25 years, John G. Tramontana, the Company's Chairman of the
Board, President and Chief Executive Officer, a United States citizen, served in
various senior executive positions at a number of privately-held pharmaceutical
companies including Adria Laboratories Inc. (acquired by Pharmacia & Upjohn,
Inc.), a company specializing in the manufacture of oncological products, Ben
Venue Laboratories, Inc., a company specializing in the manufacture of sterile,
injectable pharmaceutical products, Sapec, a division specializing in the
manufacture of pharmaceutical products, and Bioferment, a division engaged in
the research and development of biotechnological products. At the time of the
negotiation and execution of the Company's agreements with Sapec, Cernelle and
Bioferment, Mr. Tramontana was the chief operating officer and a director of
Cerbios Pharma, chairman of the board of Cernelle and a director of Chemholding
SA ('Chemholding'), a principal stockholder of the Company. Chemholding is the
sole stockholder of Cerbios Pharma and Cerbios Pharma is the sole stockholder of
Cernelle. In March 1996, Mr. Tramontana resigned from all of his positions with
Chemholding, Cerbios Pharma and Cernelle. There can be no assurance that the
Company will continue its arrangements with Sapec, Cernelle or Bioferment or any
other collaborators. See 'Risk Factors -- Reliance on Collaborative
Arrangements; Management Affiliations with Collaborators.'
The Company was incorporated in Delaware in September 1995 and has three
wholly-owned subsidiaries, Bigmar Pharmaceuticals, a Swiss corporation formed in
January 1992, Bigmar Therapeutics, Inc., a Delaware corporation formed in
September 1995 ('Bigmar Therapeutics'), and Bioren, a Swiss corporation formed
in July 1986. In June 1995, Bigmar Pharmaceuticals purchased all of the
outstanding capital stock of Bioren ('Bioren Acquisition') and simultaneously
sold 50% of the outstanding capital stock of Bioren to certain stockholders of
Bigmar Pharmaceuticals. On April 9, 1996, in the Exchange, all of the
stockholders of Bigmar Pharmaceuticals exchanged all of their shares of capital
stock in Bigmar Pharmaceuticals for an aggregate of 2,000,938 shares of Common
Stock of the Company and all of the stockholders of Bioren, other than Bigmar
Pharmaceuticals, exchanged all of their shares of capital stock in Bioren for an
aggregate of 350,312 shares of Common Stock of the Company. See 'The Company'
and 'Certain Transactions.'
Unless the context indicates otherwise, the term 'Company' as used in this
Prospectus refers to the Company and its subsidiaries as a whole. The Company's
principal executive offices are located at 6660 Doubletree Avenue, Columbus,
Ohio 43229, and its telephone number is (614) 848-8380.
4
<PAGE>
<PAGE>
THE OFFERING
<TABLE>
<CAPTION>
Common Stock Offered............................... 1,250,000 shares
<S> <C>
Common Stock Outstanding before the Offering....... 2,375,000 shares(1)
Common Stock Outstanding after the Offering........ 3,625,000 shares(1)
Use of Proceeds.................................... Net proceeds from the Offering will be used to acquire, test
and/or manufacture oncological and biotechnological
products; to repay debt; and for general corporate
purposes, including working capital. See 'Use of
Proceeds.'
Risk Factors....................................... An investment in the Common Stock offered hereby involves a
high degree of risk and immediate substantial dilution to
the public investors. See 'Risk Factors' and 'Dilution.'
Trading Symbols:
Nasdaq SmallCap MarketSM...................... 'BGMR'
Boston Stock Exchange......................... 'BIG'
</TABLE>
- ------------
(1) Does not include: (i) 300,000 shares of Common Stock reserved for issuance
under the Company's 1996 stock option plan ('Option Plan'); (ii) 50,000
shares of Common Stock reserved for issuance under the Company's director
option plan ('Director Option Plan'); (iii) up to 187,500 shares of Common
Stock issuable upon exercise of the Underwriters' over-allotment option; and
(iv) 125,000 shares of Common Stock issuable upon exercise of the
Representative's Warrants. See 'Management -- Option Plan and -- Director
Option Plan,' 'Description of Capital Stock' and 'Underwriting.'
5
<PAGE>
<PAGE>
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
The following table sets forth summary historical financial data for (i)
Bioren SA (predecessor company) for the years ended December 31, 1993 and 1994
and for the six months ended June 30, 1995, and (ii) Bigmar, Inc. for the years
ended December 31, 1993, 1994 and 1995 and for the three months ended March 31,
1995 and 1996 (after giving effect to the reorganization described in Note 1 to
the Company's financial statements). The summary historical financial data of
Bioren and Bigmar, Inc. has been derived from the audited financial statements
(and notes thereto) of the respective companies included elsewhere in this
Prospectus. The summary financial data presented as of March 31, 1995 and 1996
and for the three months ended March 31, 1995 and 1996 are derived from the
unaudited financial statements of the Company which appear elsewhere in this
Prospectus. In the opinion of management, the summary financial data for the
three months ended March 31, 1995 and 1996 have been prepared on the same basis
as the audited financial statements and reflect all adjustments, which are of a
normal recurring nature, necessary to present fairly the financial data for the
periods presented. The results of operations for any interim period are not
necessarily indicative of the Company's results of operations for the full
fiscal year. The summary historical financial data should be read in conjunction
with the financial statements (and notes thereto) of Bioren and Bigmar, Inc. and
'Management's Discussion and Analysis of Financial Condition and Results of
Operations' included elsewhere in this Prospectus. The following table also sets
forth pro forma operating data of the Company as if the Bioren Acquisition had
occurred as of January 1, 1995. The unaudited pro forma financial data is for
informational purposes only, does not purport to represent what the Company's
results of operations would have been if such transaction had in fact occurred
as of such date and is not necessarily indicative of the Company's future
results of operations.
<TABLE>
<CAPTION>
BIOREN SA (PREDECESSOR COMPANY) BIGMAR, INC.(1)
-------------------------------------- ----------------------------------------------------------
SIX MONTHS THREE MONTHS
YEARS ENDED DECEMBER 31, ENDED ENDED
JUNE 30, YEARS ENDED DECEMBER 31, MARCH 31,
------------------------- ---------- -------------------------------- -----------------------
1993 1994 1995 1993 1994 1995(1) 1995 1996
----------- ----------- ---------- -------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Net sales..................... $ 4,103,921 $ 5,879,685 $2,928,965 $264,077 $707,627 $5,600,362 $1,185,710 $1,898,002
Cost of sales................. 3,558,350 4,479,243 1,694,290 182,075 611,040 4,001,891 1,059,955 1,151,099
----------- ----------- ---------- -------- -------- ---------- ---------- ----------
Gross profit.................. 545,571 1,400,442 1,234,675 82,002 96,587 1,598,471 125,755 746,903
----------- ----------- ---------- -------- -------- ---------- ---------- ----------
Operating Expenses:
Research and development
expense................... 61,297 40,736 26,671 -- -- 23,144 -- 88,394
Selling, general and
administrative expense.... 1,572,903 1,858,192 1,060,049 50,810 16,269 1,493,055 21,452 547,463
Loss on abandonment of
building improvements and
machinery................. 830,912 2,295,850 -- -- -- -- -- --
----------- ----------- ---------- -------- -------- ---------- ---------- ----------
Total operating expenses...... 2,465,112 4,194,778 1,086,720 50,810 16,269 1,516,199 21,452 635,857
----------- ----------- ---------- -------- -------- ---------- ---------- ----------
Operating income (loss)....... (1,919,541) (2,794,336) 147,955 31,192 80,318 82,272 104,303 111,046
Other income (expense)........ 115,349 (190,066) (28,644) (7,909) (1,660) (179,476) (13,532) (59,365)
----------- ----------- ---------- -------- -------- ---------- ---------- ----------
Income (loss) before
extraordinary item.......... (1,804,192) (2,984,402) 119,311 23,283 78,658 (97,204) 90,771 51,681
Extraordinary item............ -- 1,468,429 -- -- -- -- -- --
----------- ----------- ---------- -------- -------- ---------- ---------- ----------
Net income (loss)............. $(1,804,192) $(1,515,973) $ 119,311 $ 23,283 $ 78,658 $ (97,204) $ 90,771 $ 51,681
----------- ----------- ---------- -------- -------- ---------- ---------- ----------
----------- ----------- ---------- -------- -------- ---------- ---------- ----------
PER SHARE DATA:
Net income (loss)..................................................... $.06 $.20 $(.07) $.23 $.02
Weighted average number of shares outstanding......................... 400,188 400,188 1,337,292 400,188 2,375,000
-------- -------- ---------- ---------- ----------
-------- -------- ---------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
BIGMAR, INC.
-----------------------------------
PRO FORMA
THREE MONTHS PRO FORMA
ENDED YEAR ENDED
MARCH 31, 1995 DECEMBER 31, 1995
-------------- -----------------
<S> <C> <C>
PRO FORMA OPERATING DATA:
Net sales..................... $2,702,351 $ 8,529,327
Cost of sales................. 1,984,306 5,696,181
-------------- -----------------
Gross profit.................. 718,045 2,833,146
-------------- -----------------
Research and development
expense..................... 10,855 49,815
Selling, general and
administrative expense(2)... 575,186 2,570,104
-------------- -----------------
Total operating expenses...... 586,041 2,619,919
-------------- -----------------
Operating income (loss)....... 132,004 213,227
Other income (expense)........ (31,133) (208,120)
-------------- -----------------
Net income.................... $ 100,871 $ 5,107
-------------- -----------------
-------------- -----------------
PER SHARE DATA:
Net income.................. $0.04 $0.00
Weighted average number of
shares outstanding........ 2,375,000 1,510,942
(table continued on next page)
</TABLE>
6
<PAGE>
<PAGE>
(table continued from previous page)
<TABLE>
<CAPTION>
BIGMAR, INC.
-----------------------------
MARCH 31, 1996
-----------------------------
HISTORICAL AS ADJUSTED(3)
----------- --------------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital............... $ (137,433) $ 8,160,141
Total assets.................. 19,300,275 25,578,091
Long-term obligations......... 10,839,442 10,839,442
Retained earnings............. 56,619 56,619
Stockholders' equity.......... 3,845,877 11,970,877
</TABLE>
- ------------
(1) On April 9, 1996, a reorganization of companies under common control took
place whereby the Company acquired 100% of Bigmar Pharmaceuticals and 50% of
Bioren. Accordingly, the financial statements of the Company include the
results of operations of Bigmar Pharmaceuticals for all periods presented
and the results of operations of Bioren from July 1, 1995 (the date of
acquisition).
(2) Effective upon consummation of the Offering, John G. Tramontana, the
Company's Chairman of the Board, President and Chief Executive Officer, will
begin to receive an annual base salary of $200,000, subject to adjustment,
plus a bonus of at least 25% of his base salary and Gerald T. Sweeney, the
Company's Chief Financial Officer and Vice President -- Finance, will begin
to receive an annual base salary of $80,000, subject to adjustment, plus a
bonus of 15% of his base salary. The pro forma operating data does not
reflect such salaries or bonuses (if any). See 'Management.'
(3) As adjusted to give effect to the sale of 1,250,000 shares of Common Stock
in the Offering (after deduction of underwriting discounts and commissions
and estimated expenses to be incurred by the Company in connection with the
Offering) and the application of a portion of the net proceeds thereof to
pay approximately $2,000,000 in indebtedness. See 'Use of Proceeds' and
'Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources.'
7
<PAGE>
<PAGE>
RISK FACTORS
An investment in the Common Stock offered hereby involves a high degree of
risk. Prior to making any investment decision, prospective investors should
carefully consider the following risk factors together with the other
information presented in this Prospectus including the financial statements (and
notes thereto).
DEVELOPMENT STAGE; HISTORY OF LOSSES. The Company was incorporated in
September 1995 and was a development stage company until it effectuated the
Exchange resulting in the Company's ownership of Bioren and Bigmar
Pharmaceuticals. In addition, the Company and its subsidiaries have incurred net
losses in the past. For the years ended December 31, 1993 and 1994, Bioren
incurred net losses, before extraordinary item, of approximately $1,804,000 and
$2,984,000, respectively, and for the year ended December 31, 1995, the Company
(which includes the results of operations of Bioren from July 1, 1995) incurred
a net loss of approximately $97,000. For at least the current fiscal year, the
Company may incur additional losses which may be substantial as a result of,
among other things, its expansion strategy. There can be no assurance that the
Company's operations will achieve profitability at any time in the future or, if
achieved, that such profitability will be sustained. See 'Selected Financial
Data' and 'Management's Discussion and Analysis of Financial Condition and
Results of Operations.'
EXPANSION OF OFFERED PRODUCTS; LIMITED EXPERIENCE. The Company's business
strategy relies primarily on its success in manufacturing and marketing
oncological products and marketing biotechnological products, an area in which
the Company has limited experience. The success of its business strategy should
be considered in light of the risks, expenses and difficulties frequently
encountered in entering into industries characterized by intense competition;
completing product development; obtaining regulatory approvals in certain
European countries, the United States and elsewhere for its proposed products;
gaining market acceptance of the Company's proposed products; entering into new
collaborative agreements and maintaining existing collaborative arrangements.
There can be no assurance that the Company will be able to manufacture or market
its proposed products, maintain or expand its market share or achieve commercial
revenues from its proposed products in the future. In addition, aspects of the
Company's business strategy can only be implemented if the Company's
manufacturing facility in Barbengo, Switzerland ('Bigmar Facility') and a
dedicated area of the Company's manufacturing facility in Couvet, Switzerland
('Bioren Facility') become fully operational and all necessary regulatory
approvals are obtained. Some of the foregoing factors are not within the
Company's control and there can be no assurance that the Company will be able to
implement its business strategy, that the facility or area under construction
will become operational (including obtaining regulatory approvals) or that its
business strategy will result in profitability. See 'Use of Proceeds,'
'Management's Discussion and Analysis of Financial Condition and Results of
Operations,' 'Business -- Proposed Products and -- Facilities' and the Company's
financial statements and notes thereto.
RELIANCE ON COLLABORATIVE ARRANGEMENTS; MANAGEMENT AFFILIATIONS WITH
COLLABORATORS. The Company has obtained the rights to manufacture and/or market
certain proprietary and generic oncological and biotechnological products
developed by other companies. In 1995, the Company entered into distribution and
supply agreements with (i) Cernelle relating to approximately 20 generic
oncological products, including mercaptopurine, calcium leucovorin, and
methotrexate ('Cernelle Agreement'), and (ii) Sapec relating to, among other
products, certain proprietary and generic oncological products, including sodium
leucovorin ('Sapec Agreement'). In addition, in 1995, the Company entered into a
license and supply agreement with Bioferment relating to certain
biotechnological products, including recombinant urokinase ('Bioferment
Agreement'). Pursuant to the terms of these agreements, the Company is obligated
to, among other things, pay either substantial one-time fees or make payments
that, in some instances, may be substantial upon the completion of certain
regulatory milestones with respect to the products covered by the agreements. In
addition, the Cernelle Agreement, the Sapec Agreement and the Bioferment
Agreement may be terminated by either party under certain specified
circumstances. There can be no assurance that the Company will fulfill its
obligations under any of these agreements or that one or more of these
agreements will not be terminated. The loss or diminution of rights or the
termination of any of these agreements would have a material adverse effect on
the Company. See 'Business -- Products and -- Proposed Products.'
At the time of the negotiation and execution of the Cernelle Agreement, the
Sapec Agreement and the Bioferment Agreement, John G. Tramontana, the Company's
Chairman of the Board, President, and Chief Executive Officer, was the chief
operating officer and a director of Cerbios Pharma, chairman
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of the board of Cernelle and a director of Chemholding. Chemholding, a principal
stockholder of the Company, is the sole stockholder of Cerbios Pharma and
Cerbios Pharma is the sole stockholder of Cernelle. In March 1996, Mr.
Tramontana resigned from all of his positions with Chemholding, Cerbios Pharma
and Cernelle. See ' -- Conflicts of Interest,' 'Use of Proceeds,' 'Management's
Discussion and Analysis of Financial Condition and Results of Operations,'
'Business -- Products and -- Proposed Products' and 'Certain
Transactions -- Transactions with Principal Stockholders.'
CONFLICTS OF INTEREST. Chemholding, a principal stockholder of the Company,
is the sole stockholder of Cerbios Pharma. Sapec and Bioferment are divisions of
Cerbios Pharma and Cerbios Pharma is the sole stockholder of Cernelle. Certain
officers, directors and stockholders of Chemholding own directly and indirectly
in the aggregate approximately 51% of the Company's issued and outstanding
Common Stock prior to the Offering and will own approximately 34% of the
Company's issued and outstanding Common Stock following the consummation of the
Offering. The Company is a party to agreements with Sapec, Bioferment and
Cernelle. Prior to March 1996, Mr. Tramontana was an officer and/or director of
each of the foregoing companies. The Company believes that the terms of these
agreements are no more favorable to the Company or the other parties thereto
than they would be to unaffiliated third parties. There can be no assurance,
however, that the Company will continue to maintain its rights under these
agreements or that these agreements will not be terminated in the future. John
G. Tramontana is not a stockholder of Chemholding, Cerbios Pharma or Cernelle.
See ' -- Reliance on Collaborative Arrangements; Management Affiliations with
Collaborators,' 'Business -- Products and -- Proposed Products,' 'Principal
Stockholders' and 'Certain Transactions.'
RELIANCE ON PLM. For the year ended December 31, 1995, on a pro forma
basis, sales of IV Solutions comprised approximately 64% of the Company's total
sales. For the three months ended March 31, 1996, these sales comprised
approximately 72% of the Company's total sales. In March 1995, Bioren entered
into an agreement with PLM Langeskov A/S ('PLM') pursuant to which Bioren
acquired the exclusive right to purchase intravenous solution containers from
PLM and to package and distribute IV Solutions in these containers in
Switzerland and Lichtenstein ('PLM Agreement'). Under the terms of the PLM
Agreement, PLM is entitled to terminate the exclusivity portion of the agreement
if, among other things, Bioren does not purchase a minimum number of intravenous
solution containers each year. The PLM Agreement expires in the year 2005,
unless it is earlier terminated. In addition, the PLM Agreement may be
terminated by either party upon the occurrence of certain specified conditions,
including if the products or their production infringe, or are alleged to
infringe, the intellectual property rights of third parties. The termination of
the PLM Agreement would have a material adverse effect on the Company. See
'Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Results of Operations' and 'Business -- Products.'
RELIANCE ON NETWORK OF PHARMACEUTICAL COMPANIES FOR MARKETING; DEPENDENCE
ON ADDITIONAL COLLABORATIVE ARRANGEMENTS. The Company has granted certain
companies such as Medac, Boehringer, Laevosan, Vita and Protyde the exclusive
right to market and distribute, in certain territories, selected oncological or
biotechnological products of the Company and the right of first refusal to
market and distribute certain of the Company's proposed products. As a result,
the Company may not market products or proposed products that are covered by
those agreements independently and may not enter into strategic alliances or
collaborative arrangements with others relating to any products covered by (i)
an exclusivity arrangement or (ii) a right of first refusal (without in the
latter instance first offering such right to the holders). Restrictions
regarding exclusivity and rights of first refusal limit the Company's ability to
pursue and negotiate collaborative arrangements with other entities on terms
which may be more favorable to the Company. In addition, the amount of resources
and the time that any of these collaborators devote towards marketing the
Company's products or proposed products are not within the Company's control.
There can be no assurance that any marketing, sales or other efforts undertaken
by the Company or its collaborators will be successful. Each of the agreements
terminates under certain specified circumstances and any termination would have
a material adverse effect on the Company. Consistent with its business strategy,
the Company intends to pursue additional collaborative arrangements with third
parties. There can be no assurance, however, that the Company will be able to
find additional collaborators or negotiate additional collaborative arrangements
on terms acceptable to the Company, if at all, that the collaborative
arrangements with the Company will be successful or, that collaborators will
devote sufficient resources to the Company's products, proposed products or
technologies. In addition, there can be no assurance that future collaborative
arrangements will not
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allow others to enter into arrangements with the Company's collaborators for the
commercialization of the same product or that collaborators will not pursue
alternative products either on their own or in collaboration with others,
including the Company's competitors. See 'Business -- Collaborative Agreements.'
DEPENDENCE ON SIGNIFICANT CUSTOMERS. For the years ended December 31, 1994
and 1995, all of the Company's sales of Prostate Materials were to one customer,
Pharma Stroschein GmbH ('Stroschein'). These sales amounted to approximately
$470,000 and $1,023,000, respectively, and represented approximately 66% and 18%
of the net sales of the Company for the years ended December 31, 1994 and
December 31, 1995, respectively. In addition, for the years ended December 31,
1994 and 1995, and the three months ended March 31, 1996, the Company's sales of
oncological products to Medac amounted to approximately $214,000, $670,000 and
$210,000, respectively and represented approximately 30%, 12% and 11%,
respectively of the net sales. On a pro forma basis, giving effect to the Bioren
Acquisition as if the transaction occurred on January 1, 1995, the 1995 sales to
Stroschein and Medac represented approximately 12% and 8%, respectively, of the
Company's sales. The loss of either of these customers or any other significant
customer would have a material adverse effect on the Company.
DEPENDENCE ON KEY SUPPLIERS. The majority of raw materials needed to
manufacture the Company's products and proposed products generally are not
readily available and must be purchased from limited sources. In addition, the
Company obtains containers for IV Solutions from a sole supplier. See
' -- Reliance on PLM.' The Company's reliance on a sole or limited number of
suppliers involves several risks, including obtaining an adequate supply of raw
materials and components in order to manufacture or market products or proposed
products, increased raw material or component costs and reduced control over
pricing, quality and timely delivery. Any interruption in the supply of raw
materials or components could have a material adverse effect on the Company. In
addition, obtaining raw materials from a new source may require regulatory
approval. Furthermore, certain potential alternative suppliers may have
pre-existing exclusive relationships with competitors of the Company and others
which may preclude the Company from manufacturing certain of its proposed
products. See 'Business -- Manufacturing and Suppliers.'
MANUFACTURING FACILITIES FOR PROPOSED PRODUCTS UNDER CONSTRUCTION. The
Company intends to manufacture cytotoxic oncological products in the Bigmar
Facility and non-cytotoxic oncological products in a dedicated area of the
Bioren Facility, where it currently manufactures IV Solutions. The Bigmar
Facility is currently being equipped and the Company will not begin
manufacturing oncological products until the facility is fully operational and
regulatory approvals are obtained, which the Company believes will occur in the
last quarter of 1996. The Company intends to use a portion of the net proceeds
from the Offering to equip a dedicated area of the Bioren Facility and expects
that the area for manufacturing non-cytotoxic oncological products will be fully
operational and that all regulatory approvals will be obtained by the end of
1996. There can be no assurance that the Bigmar Facility or the dedicated area
of the Bioren Facility will be successfully equipped, that the anticipated
regulatory approvals will be obtained or that the Company will be able to
manufacture these products directly and any failure to do so would have a
material adverse effect on the Company. The Company may have to enter into
contractual arrangements with other companies to manufacture its proposed
oncological products. Further, the Company intends to enter into an agreement
with another party pursuant to which that company will manufacture recombinant
urokinase. The amount of resources and the time that the other party will devote
towards producing recombinant urokinase on behalf of the Company and
manufacturing procedures and quality control will not be within the Company's
control. In addition, there can be no assurance that the Company will be able to
enter into any arrangements with third parties on acceptable terms, if at all,
or that any third party will be able to meet the demand for the Company's
products on a timely basis or that other parties will meet the standards
required to obtain regulatory approvals. See 'Business -- Manufacturing and
Suppliers and -- Facilities.'
NO ASSURANCE OF SUCCESSFUL PRODUCT DEVELOPMENT; UNCERTAINTY OF MARKET
ACCEPTANCE OF CERTAIN PROPOSED PRODUCTS. Although the Company currently markets
certain oncological products, it has not sold any oncological or
biotechnological products manufactured at its facilities and does not anticipate
manufacturing oncological products until the end of 1996. Any unexpected
developmental, regulatory or manufacturing problems could delay the
commercialization of the Company's proposed products and
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have a material adverse effect on the Company and its prospects. In addition,
the market acceptance of any of the Company's proposed products, such as sodium
leucovorin and recombinant urokinase, will be substantially dependent on the
ability of the Company's collaborators to demonstrate to the medical and
healthcare communities the capabilities, perceived benefits, and efficacy of the
Company's proposed products as well as sell commercial quantities of the
proposed products at acceptable costs. There can be no assurance that the
Company will be able to ultimately successfully develop its proposed products or
that it will be able to gain market acceptance for its proposed products. See
'Business -- Proposed Products and -- Other Proposed Products.'
NEED FOR ADDITIONAL FINANCING. The Company has funded its operations to
date primarily through equity and debt financings. The Company anticipates that
the net proceeds from the Offering, together with cash flow from operations (if
any), should be sufficient to fund the Company's operations, including its
proposed expansion, for approximately 12 months. However, there can be no
assurance that events affecting the Company's operations will not result in the
Company depleting its funds before that time. The Company may need to raise
substantial additional funds to continue to fund operating expenses or its
expansion strategy. There can be no assurance that additional financing will be
available, or, if available, that such financing will be on terms favorable to
the Company. Failure to obtain such additional financing would have a material
adverse effect on the Company. See 'Use of Proceeds,' 'Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources' and the Company's financial statements and notes thereto.
SUBSTANTIAL INDEBTEDNESS DUE AFTER 1997. At March 31, 1996, the Company had
an aggregate of $12,686,626 in outstanding indebtedness, including $1,847,184
which is payable from the net proceeds of the Offering and $1,071,821 of
accounts payable to equipment vendors which the Company intends to pay with the
proceeds of its existing credit facilities. Of such total indebtedness,
$4,846,977 (or 38%) is governed by contractual arrangements which expire on
December 31, 1997 and $2,518,892 (or 20%) is governed by contractual
arrangements which expire on May 17, 1999. After such dates, $4,846,977 of such
loans are automatically due and $2,518,892 are payable upon demand if the
Company does not renegotiate these arrangements. The Company intends to
renegotiate the terms of the Bigmar Pharmaceuticals loans (including extending
the term of the loans) upon completion of the Bigmar Facility and the terms of
the Bioren loan prior to its due date (May 17, 1999). The holder of the
indebtedness has advised the Company that it is prepared to negotiate extensions
of the loans upon expiration. In the event the Company is not successful in
renegotiating the terms of the loans, there can be no assurance that the loans
will not become due. In addition, there can be no assurance that the Company
will be able to renegotiate the terms of indebtedness on favorable terms to the
Company or at all. The failure of the Company to renegotiate the indebtedness
would have a material adverse effect upon the Company. See 'Management's
Discussion and Analysis of Financial Condition and Results of Operation' and
'Business -- Facilities.'
COMPETITION AND RAPID TECHNOLOGICAL CHANGE. The pharmaceutical and
biotechnology industries are subject to intense competition and rapid and
significant technological change. The Company faces competition from other
pharmaceutical and biotechnology companies, particularly regarding its generic
products, many of which have substantially greater financial and other resources
than the Company and, therefore, are able to spend more than the Company in
areas such as product development, manufacturing and marketing. Although a
company with greater resources will not necessarily receive regulatory approval
for a particular generic drug before its smaller competitors, substantial
resources enable a company to support many regulatory applications
simultaneously, thereby improving the likelihood of at least some of its generic
drugs being among the first to receive regulatory approval. Drug companies have
also increasingly introduced generic versions of their own proprietary products
prior to the expiration of the patents for those drugs in efforts to obtain
greater market share following expiration of the applicable patents. In
addition, the market for the Company's products and proposed products is
characterized by frequent product improvements and evolving technology. The
Company's revenues and profitability could be adversely affected by
technological change. Competitors may develop products which may render the
Company's products or proposed products uneconomical or result in products being
commercialized that may be superior to the Company's products. In addition,
alternative treatments for cancer could be developed, which would have a
material adverse effect on the
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Company. See 'Business -- Proposed Products, -- Competition and -- Patents and
Proprietary Rights' and 'Governmental Regulations.'
UNCERTAIN PROTECTION OF PATENTS AND PROPRIETARY RIGHTS. The Company relies
on a combination of patent applications, licenses, trademarks, and trade secrets
to protect its proprietary technology, rights and know-how. In addition, the
Company is currently in the process of implementing a policy that requires its
personnel to execute non-disclosure agreements. There can be no assurance that
such patent applications or any resulting patents or any licenses or trademarks
will not be infringed upon, that the Company's trade secrets will not otherwise
become known to or independently developed by competitors, that non-disclosure
agreements will not be breached, or that the Company would have adequate
remedies for any such infringement or breach. Litigation may be necessary to
enforce proprietary rights of the Company or to defend the Company against
third-party claims of infringement. Such litigation could result in substantial
cost to, and a diversion of effort by, the Company and its management and may
have a material adverse effect on the Company. The Company currently is the
exclusive and non-exclusive licensee of various oncological and biotechnological
products and technologies and may in the future desire or be required to obtain
other licenses to develop, manufacture and market commercially viable products.
The Company's success and potential competitive advantage is dependent upon its
ability to exploit the technology under these licenses. There can be no
assurance that the Company will be able to exploit the technology covered by
these license agreements or that it will be able to do so exclusively. In
addition, there can be no assurance that any patents or patent applications
pursuant to which the Company has obtained licenses are valid and enforceable,
or that any licenses required to be obtained by the Company in the future will
be valid and enforceable or obtainable on commercially reasonable terms, if at
all.
Patents concerning pharmaceutical or biotechnological products generally
are highly uncertain, involve complex legal, scientific and factual questions
and have recently been the subject of much litigation. To date, no consistent
policy has emerged regarding the breadth of claims allowed or the degree of
protection afforded under these patents. Accordingly, there can be no assurance
that patent applications which underlie the Company's licenses will result in
patents being issued, or that, if issued, the patents will afford protection
against competitors with similar technology. Although the Company is not aware
of any claim against it for infringement, the Company's ability to commercialize
its products and proposed products depends on is not infringing the proprietary
rights of competitors. Laws regarding the enforceability of intellectual
property vary from country to country. Therefore, there can be no assurance that
intellectual property issues will be uniformly resolved, or that local laws will
provide the Company with consistent rights and benefits. In addition, there can
be no assurance that competitors will not be issued patents which may prevent
the manufacturing or marketing of the Company's products or proposed products or
require licensing and the payment of fees or royalties by the Company in order
for the Company to be able to manufacture or market certain products. See
'Business -- Patents and Proprietary Rights.'
FDA, INTERNATIONAL AND OTHER GOVERNMENTAL REGULATIONS. The development,
manufacturing and marketing of the Company's products and proposed products is
or may be subject to extensive and rigorous governmental regulations in the
United States and other countries. The process of obtaining and maintaining
required regulatory approvals is lengthy, expensive, and uncertain. In the
United States, the United States Food and Drug Administration ('FDA') regulates,
where applicable, the development, testing, labeling, manufacturing,
registration, notification, clearance or approval, marketing, distribution,
recordkeeping, and reporting requirements for drugs. The Company has not
requested or received FDA approval to market any of its products or proposed
products in the United States. The Company intends to submit abbreviated new
drug applications ('ANDAs') to the FDA for six generic oncological products in
the foreseeable future. The average time for obtaining FDA approval for ANDAs is
one to three years. However, due to management's prior experience in submitting
ANDAs to the FDA, the Company believes it will be able to obtain FDA approval of
these ANDAs in approximately one year from the date of the submission of the
applications. There can be no assurance, however, that any of the Company's
products or proposed products will obtain regulatory approval in the time
periods indicated or will ever obtain the regulatory clearance or approval
required for marketing in the United States. Delays in any part of the approval
process or the inability of the
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Company to obtain regulatory approval of its products, proposed products or
facilities could adversely affect the Company.
The Company will be subject to the FDA's good manufacturing practices
('GMP'), good laboratory practices ('GLP') and extensive record keeping and
reporting requirements for manufacturing products for sale in the United States.
As a result, the Company's manufacturing facilities will be subject to periodic
inspections by the FDA and other United States federal agencies when the
Company's products are offered for sale in the United States. The Company's
operations have not yet been inspected by the FDA and there can be no assurance
they will pass any inspections by the FDA. The Company has retained independent
consultants to assist it in complying with FDA standards including the GMP
requirements. Failure to comply with applicable regulatory requirements can
result in, among other things, import detentions, fines, civil penalties,
suspensions or losses of approvals, recalls or seizures of products, operating
restrictions and criminal prosecutions.
To date, substantially all of the Company's revenues have been derived from
the sales of its products in Switzerland, Lichtenstein and Germany. The
distribution of the Company's products and proposed products outside the United
States is subject to extensive governmental regulations. These regulations,
including the requirements of inspections and approvals to market, the time
required for regulatory review and the sanctions imposed for violations, vary
from country to country. There can be no assurance that the Company will pass
any such inspections, that the Company or its collaborators will obtain or
maintain the required regulatory approvals in any particular country or that the
Company will not be required to incur significant costs in obtaining or
maintaining its regulatory approvals. Failure to obtain necessary regulatory
approvals, the restriction, suspension or revocation of existing approvals or
any other failure to comply with regulatory requirements would have a material
adverse effect on the Company.
Because the Company's products are currently being sold primarily in
Germany, Switzerland and Lichtenstein, the Company is subject to regulation by
these countries, and the European Medicines Evaluation Agency ('EMEA') of the
European Union ('EU'). In Germany, drugs for human use may be sold only if they
are approved in advance by either the German regulatory authority or the EU
after a review of all applicable safety, quality and effectiveness data.
Clinical trials in Germany are monitored by the state authorities and must
comply with those portions of the EU good clinical practices recommendation that
have been adopted into German law. In practice, it takes the German authority
generally three to five years to approve drugs for use on humans, although the
Company believes it will receive regulatory approval for certain of its proposed
products earlier.
In January 1995, the EU established new procedures that provide for a
compulsory review of biotechnological preparations and an optional review of
certain other pharmaceutical products by the EMEA in London. For other types of
products, there is a decentralized procedure under which a marketing application
is submitted first to one EU member state where it is reviewed. Once marketing
approval in such country is obtained, a company can then file additional
applications in the other EU member states.
Although recombinant urokinase is a biotechnological product, the Company
believes that marketing clearance will be obtained in the second half of 1997
from the German regulatory authority as opposed to from the EMEA because
recombinant urokinase does not pose a risk of viral contamination and would
replace the naturally derived urokinase that is currently on the market in
Germany. There can be no assurance, however, that the requisite approval of
recombinant urokinase will be obtained in Germany, that approval from the EMEA
in London will not be required, or that approval will be obtained in 1997 or at
any time thereafter.
In Switzerland, approval of the production and sale of drugs for human use
is regulated on a cantonal level rather than a federal level. The cantons of
Switzerland have organized the Intercantonal Office for the Control of
Medications ('IKS') as an authority for the approval of pharmaceuticals. Based
on approval by the IKS, the cantons then grant permission for the production and
sale of such approved pharmaceuticals, although each canton is still entitled to
deny approval of a particular medication.
The IKS reviews all applicable safety, quality and efficacy data as well as
data relating to the cost effectiveness of a particular product. To obtain
approval from the IKS, the manufacturer must submit
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analytical, chemical, pharmacological and toxicological data based on animal
trials and human clinical studies. The IKS also will inspect the manufacturing
facility to determine if the manufacturer is complying with good manufacturing
practices before approval is granted to produce the drug product. For generic
products, pharmacological and toxicological data is not required to be submitted
to the IKS. To date, all of the Company's pharmaceutical products which have
been approved by the IKS are generic products. There can be no assurance,
however, that the Company will obtain the requisite approvals to market its
proposed products in Switzerland in the time periods indicated or at any time
thereafter. See 'Business -- Governmental Regulations.'
RESTRICTIONS ON RETAINED EARNINGS. The Company is a Delaware corporation
which owns 100% of the capital stock of two Swiss corporations. The Swiss
Federal Code of Obligation provides that at least 5% of a Swiss company's net
income each year must be appropriated to a legal reserve until such time as the
reserve equals 20% of the company's paid-in share capital. In addition, 10% of
any distribution made by a company in excess of a 5% dividend also must be
appropriated to the Company's legal reserve. The reserve of up to 50% of the
share capital is not available for distribution to stockholders. These
requirements may adversely impact the amount of dividends to be issued by the
Company through its subsidiaries and may limit cash flow. See 'Dividend Policy'
and 'Management's Discussion and Analysis of Financial Condition and Results of
Operations.'
ENVIRONMENTAL MATTERS. As an enterprise engaged in the pharmaceutical
business in Switzerland, the Company's facilities are or will be subject to
comprehensive environmental laws and regulations governing, among other things,
air emissions, waste water discharge and solid and hazardous waste disposal.
Although there can be no assurance, the Company believes its current facilities
are in compliance in all material respects with applicable Swiss environmental
laws. However, environmental laws have changed in recent years and the Company
may become subject to increasingly stringent environmental standards in the
future. While the Company anticipates that from time to time it will incur
capital expenditures in connection with environmental matters, it is unable to
predict the extent or timing of future expenditures which may be required in
connection with complying with environmental laws. There can be no assurance
that future developments, administrative actions or liabilities arising from
environmental matters will not have a material adverse effect on the Company.
See 'Business -- Environmental Regulations.'
DEPENDENCE ON THIRD-PARTY REIMBURSEMENT; PRICE CONTROLS; HEALTH CARE REFORM
MEASURES. The Company's success in generating revenues from the sale of certain
products may depend on the extent to which reimbursement for the costs of such
products and related treatments will be available from third-party payors such
as government health administration authorities, private insurance companies,
self-insured employers, health maintenance organizations and other
organizations. The level of revenues and profitability of the Company, like
those of other companies in the pharmaceutical and biotechnology industry, are
affected by the continuing efforts of third-party payors to contain or reduce
the costs of health care by lowering reimbursement or payment rates, increasing
case management review of services and negotiating reduced contract pricing and
reimbursement caps.
In some markets outside of the United States, such as Germany, government
reimbursement is generally available for the purchase of the Company's products
and proposed products, subject to constraints such as reimbursement limitations.
In addition, third-party payors may refuse to provide reimbursement in cases
where drugs, such as oncological drugs, are used for unapproved uses.
Approximately 70% of the drugs sold in Germany are subject to maximum
reimbursement. To date, no oncological products have been affected by a maximum
reimbursement limitation, although there can be no assurance that the Company's
oncological products or proposed products will not be affected by a maximum
reimbursement limitation in the future. Although a manufacturer may sell its
products at prices that are higher than the maximum reimbursement rate, patients
are required to pay any difference between that price and the maximum
reimbursement rate. If the products of the Company become subject to a maximum
reimbursement rate, this may adversely affect the prices the Company will be
able to charge.
In Switzerland, reimbursement for pharmaceutical products is regulated on
the federal level. There are two categories of drugs subject to reimbursement.
The first category consists of medications which are required to be reimbursed
by private health insurers. The second category contains medications for
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which reimbursement by health insurers is recommended. Private health insurers
generally provide reimbursement for products on the recommended list. There can
be no assurance that payments under governmental and third-party payor programs
will remain at levels comparable to present levels or will, in the future, be
sufficient to cover the costs allocable to patients eligible for reimbursement
pursuant to such programs.
From time to time, the Clinton Administration, the U.S. Congress and
legislators of certain foreign governments have proposed or are considering a
variety of reforms to the health care systems. The Company cannot predict what
health care reform legislation, if any, will be enacted in the United States or
elsewhere. Changes in the health care system in the United States or elsewhere
could have a significant impact on the manner in which the Company conducts its
business and may impose additional regulations governing the conduct of the
Company's business. These changes could have a material adverse effect on the
Company. See 'Business -- Third-Party Reimbursement.'
POTENTIAL PRODUCT LIABILITY; AVAILABILITY OF INSURANCE; RISK OF PRODUCT
RECALL. The testing, clinical trials, manufacturing, and marketing of the
Company's products and proposed products involve the inherent risks of product
liability claims or similar legal theories against the Company, some of which
may cause the Company to incur significant defense costs. Although the Company
currently maintains product liability insurance coverage which it believes is
adequate, there can be no assurance that the coverage limits of its insurance
are adequate or that all such claims will be covered by insurance. In addition,
these policies generally must be renewed every two years. While the Company has
been able to obtain product liability insurance in the past, there can be no
assurance it will be able to obtain insurance in the future on its products or
proposed products. Product liability insurance varies in cost, is difficult to
obtain and may not be available in the future on terms acceptable to the
Company, if it is available at all. A successful product liability claim or
other judgment against the Company in excess of its insurance coverage could
have a material adverse effect upon the Company or its reputation. Certain of
the Company's collaborative arrangements contain cross indemnification
provisions with respect to product liability claims concerning products covered
by the arrangements. The Company may be required to make payments, which in some
cases could be substantial, under these arrangements. In addition, products such
as those sold or proposed to be sold by the Company may be subject to recall for
unforeseen reasons. Such a recall could have a material adverse effect on the
Company and its reputation. In Germany, an injured party may recover for damages
on a strict liability basis without having to prove negligence on the part of
the manufacturer or distributor. In Switzerland, there is no special product
liability law for pharmaceuticals. The Swiss federal product liability law,
which covers drug products, provides that manufacturers are subject to strict
liability for injuries caused by defective products. See 'Business -- Product
Liability and Insurance.'
UNCERTAINTY OF CURRENCY FLUCTUATIONS. All of the Company's revenues for the
fiscal years ended December 31, 1993, 1994 and 1995 and for the three months
ended March 31, 1996 were derived from sales outside of the United States.
Because the Company's international operations are conducted in various foreign
currencies, it may be materially and adversely affected by fluctuations in
currency exchange rates. As a result, the Company will be exposed to foreign
currency exchange risks due to fluctuations in the exchange rates between the
foreign currencies and the U.S. dollar. If the Company executes hedging
transactions in the future, there can be no assurance that the Company will be
successful in these activities. See 'Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources.'
DEPENDENCE ON KEY PERSONNEL. The Company is dependent on the experience,
abilities and continued services of John G. Tramontana, its Chairman of the
Board, President and Chief Executive Officer. The Company has entered into a
five-year employment agreement with Mr. Tramontana which begins upon the
consummation of the Offering and expires in 2001 and has obtained a $2,000,000
key man life insurance policy on the life of Mr. Tramontana, for the benefit of
the Company, effective June 15, 1996. The loss or reduction of services of Mr.
Tramontana or any other key employee could have a material adverse effect on the
Company. In addition, the Company's future success depends in large part upon
its ability to attract and retain highly qualified personnel, including
experienced manufacturing personnel. The Company faces competition for such
personnel from other companies and organizations, many of which have
significantly greater resources than the Company. There can be no assurance that
the Company will be able to attract and retain the necessary personnel on
acceptable
15
<PAGE>
<PAGE>
terms or at all. See 'Management -- Directors, Executive Officers and Key
Personnel and -- Employment Agreements.'
CONTROL OF COMPANY. Upon consummation of the Offering, the Company's
directors, executive officers and existing stockholders will beneficially own,
in the aggregate, approximately 2,375,000 shares of the outstanding Common
Stock, representing approximately 65.5% of the issued and outstanding Common
Stock. Accordingly, these stockholders will be in a position to control the
management and policies of the Company in general, and can determine the outcome
of any corporate transaction or other matter submitted to the Company's
stockholders for approval including the election of directors, mergers,
acquisitions, consolidations or the sale of all or substantially all of the
Company's assets. See 'Principal Stockholders' and 'Description of Capital
Stock.'
ENFORCEABILITY OF CIVIL LIABILITIES AGAINST THE COMPANY. Substantially all
of the assets of the Company are located outside of the United States. As a
result, it may be difficult for investors to enforce judgments against the
Company obtained in United States courts including judgments predicated on the
civil liability provisions of the United States securities laws. The United
States does not currently have a treaty providing for reciprocal recognition and
enforcement of judgments in civil and commercial matters with Switzerland or
Germany and there is doubt whether (i) a final judgment for the payment of money
rendered by a Federal or state court in the United States based on civil
liability, whether or not predicated solely upon the civil liability provisions
of the United States securities laws, would be enforceable in Switzerland or
Germany against the Company and (ii) an action could be brought in Switzerland
or Germany against the Company in the first instance on the basis of liability
predicated solely upon the provisions of the United States securities laws.
ABSENCE OF PUBLIC MARKET; DETERMINATION OF OFFERING PRICE; VOLATILITY.
Prior to the Offering, there has been no public trading market for the Company's
Common Stock and there can be no assurance that an active trading market will
develop following the Offering or, if developed, will be sustained. The initial
public offering price of the Common Stock will be determined by negotiations
between the Company and the Representative. There can be no assurance that the
Common Stock will trade in the public market at or above the initial public
offering price following the consummation of the Offering. The trading price of
the Common Stock could be subject to significant fluctuations in response to
variations in quarterly operating results and other factors and such
fluctuations could cause the market price of the Common Stock to fluctuate
substantially. In addition, the stock markets in the United States have, from
time to time, experienced significant price and volume fluctuations that are
unrelated or disproportionate to the operating performance of individual
companies. Such fluctuations may adversely affect the price of the Common Stock.
See 'Management's Discussion and Analysis of Financial Condition and Results of
Operations' and 'Underwriting.'
LACK OF UNDERWRITING HISTORY. The Representative was organized in February
1992 and first registered as a broker-dealer in 1993. Prior to this Offering,
the Representative has participated as a sole or co-manager in three public
offerings. Prospective purchasers of the Common Stock offered hereby should
consider the lack of experience of the Representative in being a manager of an
underwritten public offering. See 'Underwriting.'
CONTINUED QUOTATION ON THE NASDAQ SMALLCAP MARKET.SM Subject to official
notice of issuance, the Company has received approval to have the Common Stock
quoted on the Nasdaq SmallCap MarketSM upon consummation of the Offering.
However, there can be no assurance that it will be able to satisfy the criteria
for continued quotation on the Nasdaq SmallCap MarketSM following the Offering.
Failure to meet the maintenance criteria in the future may result in the Common
Stock not being eligible for quotation on the Nasdaq SmallCap MarketSM or
otherwise. In such event, an investor may find it more difficult to dispose of,
or to obtain accurate quotations as to the market value of, the Common Stock.
See 'Description of Capital Stock.'
POSSIBLE ADVERSE EFFECTS OF ISSUANCE OF PREFERRED STOCK; ANTI-TAKEOVER
PROVISIONS. The Company's Restated and Amended Certificate of Incorporation
('Restated Certificate') authorizes the issuance of a maximum of 5,000,000
shares of preferred stock, par value $.001 per share ('Preferred Stock'), with
designations, rights and preferences as determined from time to time by the
Board of Directors. As a result of the foregoing, the Board of Directors can
issue, without further stockholder approval, Preferred Stock with dividend,
liquidation, conversion, voting or other rights that could
16
<PAGE>
<PAGE>
adversely affect the voting power or other rights of the holders of the Common
Stock. The issuance of Preferred Stock could, under certain circumstances,
discourage, delay or prevent a change in control of the Company. In addition,
the issuance of Preferred Stock could dilute the rights of holders of the Common
Stock and the market price of the Common Stock. Although the Company has no
plans to issue any shares of Preferred Stock, there can be no assurance that it
will not issue Preferred Stock at some future date. Upon consummation of the
Offering, the Company will be subject to Delaware General Corporation Law
('DGCL') provisions that prohibit the Company from entering into certain
business combinations without the approval of its Board of Directors and, as
such, could prohibit or delay mergers or other transactions or changes in
control with respect to the Company. Such provisions, accordingly, may
discourage attempts to acquire the Company. See 'Description of Capital Stock --
Preferred Stock and -- Delaware Anti-Takeover Law.'
SHARES ELIGIBLE FOR FUTURE SALE; EXERCISE OF REGISTRATION RIGHTS. Upon
consummation of the Offering, there will be 3,625,000 shares of Common Stock
outstanding, of which 2,375,000 shares of Common Stock are 'restricted
securities' under Rule 144 under the Securities Act of 1933, as amended (the
'Securities Act'), and (except for shares purchased by 'affiliates' of the
Company as such term is defined in Rule 144) would be eligible for sale in May
1998, without regard to lock-up restrictions with the Representative. In the
future, the 2,375,000 shares may be sold only pursuant to a registration
statement under the Securities Act or an applicable exemption, including
pursuant to Rule 144. Under Rule 144, a person who has owned Common Stock for at
least two years may, under certain circumstances, sell within any three-month
period, a number of shares of Common Stock that does not exceed the greater of
1% of the then outstanding shares of Common Stock or the average weekly trading
volume during the four calendar weeks prior to such sale. In addition, a person
who is not deemed to have been an affiliate of the Company at any time during
the three months preceding a sale, and who has beneficially owned the restricted
securities for the last three years is entitled to sell all such shares without
regard to the volume limitations, current public information requirements,
manner of sale provisions and notice requirements. Sales or the expectation of
sales of a substantial number of shares of Common Stock in the public market
following this Offering could adversely affect the prevailing market price of
the Common Stock. The Securities and Exchange Commission ('Commission') has
proposed an amendment to Rule 144 which would reduce the holding period before
shares subject to Rule 144 become eligible for sale in the public market. This
proposal, if adopted, could substantially increase the number of shares of
Common Stock eligible for sale following the lock-up restriction described
immediately below.
The Company and its officers, directors and existing stockholders have
agreed with the Representative not to directly or indirectly register, issue,
offer, sell, offer to sell, contract to sell, hypothecate, pledge or otherwise
dispose of any shares of Common Stock (or any securities convertible into or
exercisable or exchangeable for shares of Common Stock) for a period of one year
from the date of this Prospectus, without the prior written consent of the
Representative, subject to certain exceptions. See 'Underwriting' and 'Shares
Eligible for Future Sale.'
The holders of the Representative's Warrants have been granted registration
rights with respect to the 125,000 shares issuable upon exercise of the
Representative's Warrants. The sale, or availability for sale, of the
outstanding Common Stock underlying the Representative's Warrants in the public
market subsequent to the Offering could adversely affect the prevailing market
price of the Common Stock and could impair the Company's ability to raise
additional capital. See 'Description of Capital Stock -- Registration Rights'
and 'Shares Eligible for Future Sale.'
IMMEDIATE AND SUBSTANTIAL DILUTION; NO DIVIDENDS ANTICIPATED. Purchasers of
shares of the Common Stock offered hereby will incur immediate and substantial
dilution of the net tangible book value of the Common Stock of $4.88 per share
(or 61%) from the assumed initial public offering price of $8.00 per share. In
addition, an immediate increase in the Company's net tangible book value of
$1.85 per share to the existing shareholders will result upon the consummation
of the Offering. Thus, the net tangible book value per share will be
significantly lower than the price per share paid by the public investors. The
Company has never paid any dividends on its Common Stock and does not anticipate
the payment of dividends in the foreseeable future. See 'Dividend Policy,'
'Dilution' and 'Description of Capital Stock.'
17
<PAGE>
<PAGE>
THE COMPANY
The Company is currently engaged in manufacturing and marketing 14 types of
IV Solutions in Switzerland and Lichtenstein and marketing in Germany Prostate
Materials and two generic oncological products, mercaptopurine and calcium
leucovorin. Over the next 24 months, the Company's strategy is to manufacture,
in its state-of-the-art facilities in Switzerland, and market generic
oncological drugs. In addition, the Company is in the process of preparing to
market certain licensed proprietary oncological and biotechnological products.
The Company markets IV Solutions through its own sales force to health care
providers and third-party payors and markets Prostate Materials, mercaptopurine
and calcium leucovorin to pharmaceutical companies. The Company does not intend
to market its other products directly to the public. For the year ended December
31, 1995, on a pro forma basis after giving effect to the Bioren Acquisition as
if the transaction had occurred on January 1, 1995, the Company's sales of IV
Solutions and antibiotics were approximately $6.5 million, sales of medical
products, including Prostate Materials, were approximately $1.4 million, and
sales of generic oncological products were approximately $670,000. For the three
months ended March 31, 1996, sales of these products aggregated approximately
$1.4 million, $319,000 and $210,000, respectively.
The Company was incorporated in Delaware in September 1995 and has three
wholly-owned subsidiaries, Bigmar Pharmaceuticals, Bigmar Therapeutics and
Bioren. Bigmar Pharmaceuticals is a Swiss corporation that was formed in January
1992 under the name BVI, SA. Bigmar Therapeutics is a Delaware corporation that
was formed in September 1995 under the name Bioren, Inc. Bioren is a Swiss
corporation that was formed in July 1986.
In June 1995, all of the outstanding capital stock of Bioren was purchased
by Bigmar Pharmaceuticals in the Bioren Acquisition, for an aggregate purchase
price of approximately $9.4 million, consisting of approximately $5.2 million in
cash and the assumption of certain of the seller's liabilities in the aggregate
principal amount of $4.2 million. In addition, in connection with the Bioren
Acquisition, Bigmar Pharmaceuticals became a guarantor on a bank loan to Bioren
in the principal amount of $2.6 million, which was collateralized by the Bioren
Facility, and provided a guarantee on a second mortgage in the aggregate
principal amount of approximately $1.7 million on the Bioren Facility. In
addition, in June 1995, Bigmar Pharmaceuticals sold one-half of its equity
interest in Bioren to Bigmar Pharmaceuticals' stockholders ('Bioren Holders')
for approximately $2.6 million. See 'Certain Transactions.'
In September 1995, the Company sold an aggregate of 2,375,000 shares of
Common Stock to its existing stockholders and on April 8, 1996 the existing
stockholders contributed 99% of these shares of Common Stock to the Company in
the Contribution. On April 9, 1996, in the Exchange, all of the stockholders of
Bigmar Pharmaceuticals exchanged all their shares of capital stock in Bigmar
Pharmaceuticals for an aggregate of 2,000,938 shares of Common Stock of the
Company and all of the Bioren Holders exchanged all of their shares of capital
stock in Bioren for an aggregate of 350,312 shares of Common Stock of the
Company. See 'Certain Transactions.'
18
<PAGE>
<PAGE>
The following illustrates the series of transactions leading to the current
structure of the Company:
<TABLE>
<CAPTION>
July 1986 January 1992 June 1995 September 1995 April 8, 1996 April 9, 1996
- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
Bioren is formed Bigmar Bigmar Bigmar, Inc. is Stockholders of The Bioren Hold-
as a Swiss com- Pharmaceuticals Pharmaceuticals incorporated as a Bigmar, Inc. con- ers exchange all
pany is formed as a acquires all of Delaware corpo- tribute 99% of of their shares
Swiss company the capital stock ration and issues their common of capital stock
of Bioren 2,375,000 shares stock to Bigmar, of Bioren for
of common stock Inc. 350,312 shares of
Bigmar common stock of
Pharmaceuticals Bigmar Therapeu- Bigmar, Inc.
sells one-half of tics is
its equity incorporated as All stockholders
interest in a Delaware of Bigmar
Bioren to the corporation and Pharmaceuticals
Bioren Holders. issues 5,000,000 exchange all of
shares of common their shares of
stock to Bigmar, capital stock
Inc. of Bigmar
Pharmaceuticals
for 2,000,938
shares of common
stock of Bigmar,
Inc.
</TABLE>
19
<PAGE>
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 1,250,000 shares of
Common Stock offered hereby, after deduction of underwriting discounts and
commissions, Offering expenses including the Representative's non-accountable
expense allowance, will be approximately $8,125,000 ($9,452,500 if the
Underwriters' over-allotment option is exercised in full), assuming an initial
public offering price of $8.00 per share. The Company intends to use the net
proceeds of the Offering as follows: (i) approximately $4,000,000 to acquire,
test and/or manufacture oncological and biotechnological products, including (a)
payments of up to $500,000 to Bioferment, pursuant to the Bioferment Agreement,
and up to $100,000 to each of Cernelle and Sapec pursuant to the Cernelle
Agreement and the Sapec Agreement, respectively, (b) approximately $1,000,000
for the purchase of equipment that will be used to manufacture the Company's
generic oncological products for which it will be seeking approvals from the FDA
and (c) approximately $400,000 to purchase raw materials and pay for the costs
incurred in conducting stability and bioequivalence studies and clinical trials
for oncological and biotechnological products; (ii) approximately $1,850,000 to
repay in full a working capital loan originally assumed pursuant to the Bioren
Acquisition from Sigal SA ('Sigal'), a company owned by Galenica Holding AG
('Galenica'), the seller of Bioren, bearing interest at the rate of 6% and
payable to Galenica upon consummation of the Offering; and (iii) approximately
$2,275,000 for general corporate purposes, including working capital. See 'The
Company' and 'Management's Discussion and Analysis of Financial Condition and
Results of Operations.'
John G. Tramontana, the Company's Chairman of the Board, President and
Chief Executive Officer, was an officer and director of Cerbios Pharma, of which
Bioferment and Sapec are divisions, and the chairman of the board of Cernelle at
the time of the negotiation and execution of the Bioferment Agreement, the Sapec
Agreement and the Cernelle Agreement. See 'Risk Factors -- Reliance on
Collaborative Arrangements; Management Affiliations with Collaborators' and
'Certain Transactions -- Transactions with Principal Stockholders.'
The foregoing represents the Company's estimate of its allocation of the
net proceeds from the Offering. The actual cost, timing and amount of funds
required for any particular project may vary depending on numerous factors
including the rate of the Company's progress in the development of some of its
proposed products, the results of clinical trials, the timing of regulatory
approvals, the amount and timing of payments under collaborative agreements
entered into by the Company, the activities of competitors, the costs in
prosecuting or defending patent claims or license rights and other factors.
Pending application of the net proceeds of the Offering, the Company will
make temporary investments in interest-bearing savings accounts, certificates of
deposit, money market accounts established by major commercial banks or
financial institutions, United States government obligations or high-grade
commercial paper. The Company currently intends to use any additional net
proceeds that it may receive upon the exercise of the Underwriters'
over-allotment option to reduce outstanding indebtedness. See 'Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources.'
The Company believes that the proceeds from the Offering, together with
cash flow from operations (if any), should be sufficient to fund its operations,
including its proposed expansion, for approximately 12 months. However, there
can be no assurance that events affecting the Company's operations will not
result in the Company depleting its funds before that time. The Company may need
to raise substantial additional funds to continue to fund operating expenses or
its expansion strategy. The Company may seek this funding through public or
private financings, corporate collaborations or other sources. However, there
can be no assurance that additional financing will be available through any of
these sources or, if available, that such financing will be on acceptable terms.
See 'Risk Factors -- Need for Additional Financing' and 'Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources.'
20
<PAGE>
<PAGE>
DIVIDEND POLICY
The Company has never paid cash dividends on its Common Stock and does not
anticipate paying dividends in the foreseeable future. The Company currently
intends to retain future earnings, if any, to finance its expansion strategy.
The payment of future cash dividends by the Company on its Common Stock will be
at the discretion of the Board of Directors and will depend on the Company's
earnings (if any), financial condition, cash flows, capital requirements, any
contractual prohibitions with respect to the payment of dividends and other
considerations as the Board of Directors may consider relevant. In addition, the
Swiss Federal Code of Obligation provides further restrictions on the Company's
ability to pay dividends to its stockholders. See 'Risk Factors -- Restrictions
on Retained Earnings.'
21
<PAGE>
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company (i) as of
March 31, 1996 giving effect to the Contribution, the Exchange and the Reverse
Split as if each of the transactions had occurred on such date, and (ii) as of
March 31, 1996 as adjusted to reflect the issuance and sale by the Company of
the 1,250,000 shares of Common Stock offered hereby (at an assumed initial
public offering price of $8.00 per share), after deduction of underwriting
discounts and commissions and estimated Offering expenses payable by the Company
and the application of a portion of the net proceeds therefrom to repay
indebtedness.
<TABLE>
<CAPTION>
MARCH 31, 1996
--------------------------
HISTORICAL AS ADJUSTED
----------- -----------
<S> <C> <C>
Current portion of long-term debt.................................................. $ 1,847,184 $
----------- -----------
Non-current portion of long-term debt.............................................. 10,839,442 10,839,442
----------- -----------
Stockholders' Equity(1):
Preferred Stock, $.001 par value per share; 5,000,000 shares authorized, no
shares issued and outstanding................................................ -- --
Common Stock, $.001 par value per share; 15,000,000 shares authorized,
2,375,000 shares presently issued and outstanding; 3,625,000 shares
outstanding as adjusted(1)................................................... 2,375 3,625
Additional paid in capital(1)................................................. 3,900,875 12,024,625
Cumulative translation adjustment............................................. (113,992) (113,992)
Retained earnings............................................................. 56,619 56,619
----------- -----------
Total stockholders' equity.................................................... 3,845,877 11,970,877
----------- -----------
Total capitalization................................................ $16,532,503 $22,810,319
----------- -----------
----------- -----------
</TABLE>
- ------------
(1) Does not include: (i) 300,000 shares of Common Stock reserved for issuance
under the Option Plan; (ii) 50,000 shares of Common Stock reserved for
issuance under the Director Option Plan; (iii) up to 187,500 shares of
Common Stock issuable upon exercise of the Underwriters' over-allotment
option; and (iv) 125,000 shares of Common Stock issuable upon exercise of
the Representative's Warrants. See 'Management -- Option Plan and
-- Director Option Plan,' 'Description of Capital Stock' and
'Underwriting.'
22
<PAGE>
<PAGE>
DILUTION
At March 31, 1996, the net tangible book value of the Company was
$3,016,725, or $1.27 per share of Common Stock after giving effect to the
Exchange as if it had occurred on such date. Net tangible book value per share
is determined by dividing tangible book value (total tangible assets less total
liabilities) by the number of shares of issued and outstanding Common Stock at
that date. After giving effect to the sale of the 1,250,000 shares of Common
Stock offered hereby (at an assumed initial public offering price of $8.00 per
share) and the application of the net proceeds therefrom, after deducting
underwriting discounts and commissions and Offering expenses, the pro forma net
tangible book value of the Company at March 31, 1996 would have been $11,314,299
or $3.12 per share. This represents an immediate increase in net tangible book
value of $1.85 per share to existing stockholders and an immediate dilution of
$4.88 per share to investors purchasing shares of Common Stock in the Offering.
The following table illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price............................................................ $8.00
Net tangible book value per share at March 31, 1996......................................... $1.27
Increase in net tangible book value per share attributable to new investors................. 1.85
-----
Pro forma net tangible book value per share after the Offering................................... 3.12
-----
Dilution per share to new investors.............................................................. $4.88
-----
-----
</TABLE>
The following table summarizes, on a pro forma basis as of March 31, 1996,
the difference between existing stockholders and investors purchasing shares of
Common Stock in the Offering with respect to the number and percentage of shares
of Common Stock purchased from the Company, the total consideration and
percentage of total consideration paid to the Company and the average
consideration per share paid (at an assumed initial public offering price of
$8.00 per share):
<TABLE>
<CAPTION>
SHARES PURCHASED(1) TOTAL CONSIDERATION AVERAGE
--------------------- ----------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders............... 2,375,000 65.5% $ 3,903,250 28.1% $1.64
New investors....................... 1,250,000 34.5 10,000,000 71.9 8.00
--------- ------- ----------- -------
Total.......................... 3,625,000 100.0% $13,903,250 100.0%
--------- ------- ----------- -------
--------- ------- ----------- -------
</TABLE>
- ------------
(1) Does not include: (i) 300,000 shares of Common Stock reserved for issuance
under the Option Plan; (ii) 50,000 shares of Common Stock reserved for
issuance under the Director Option Plan; (iii) up to 187,500 shares of
Common Stock issuable upon exercise of the Underwriters' over-allotment
option; and (iv) 125,000 shares of Common Stock issuable upon exercise of
the Representative's Warrants. See 'Management -- Option Plan
and -- Director Option Plan,' 'Description of Capital Stock' and
'Underwriting.'
23
<PAGE>
<PAGE>
SELECTED FINANCIAL DATA
The selected financial data presents historical financial data for (i)
Bioren SA (predecessor company) for the years ended December 31, 1991, 1992,
1993 and 1994 and for the six months ended June 30, 1995, and (ii) Bigmar, Inc.
for the years ended December 31, 1992, 1993, 1994 and 1995 and for the three
months ended March 31, 1995 and 1996 (after giving effect to the reorganization
described in Note 1 to the Company's financial statements). The historical
financial data of Bioren and Bigmar, Inc. has been derived from the financial
statements (and notes thereto) of the respective companies, which financial
statements have been audited by Richard A. Eisner & Company, LLP, independent
auditors, included elsewhere in this Prospectus. The selected data presented as
of March 31, 1995 and 1996 and for the three months ended March 31, 1995 and
1996 are derived from the unaudited financial statements of the Company which
appear elsewhere in this Prospectus. In the opinion of management, the selected
financial data for the three months ended March 31, 1995 and 1996 have been
prepared on the same basis as the audited financial statements and reflect all
adjustments, which are of a normal recurring nature, necessary to present fairly
the financial data for the periods presented. The results of operations for any
interim period are not necessarily indicative of the Company's results of
operations for the full fiscal year. The selected financial data should be read
in conjunction with the financial statements (and notes thereto) of Bioren and
Bigmar, Inc. and 'Management's Discussion and Analysis of Financial Condition
and Results of Operations' included elsewhere in this Prospectus. The selected
financial data also sets forth pro forma operating data of the Company as if the
Bioren Acquisition had occurred as of January 1, 1995. The unaudited pro forma
financial data is for informational purposes only, does not purport to represent
what the Company's results of operations would have been if such transaction had
in fact occurred as of such date and is not necessarily indicative of the
Company's future results of operations.
<TABLE>
<CAPTION>
BIOREN SA (PREDECESSOR COMPANY)
------------------------------------------------------------------
SIX MONTHS
ENDED JUNE
YEARS ENDED DECEMBER 31, 30,
----------------------------------------------------- ----------
1991 1992 1993 1994 1995
----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Net sales.............. $ 6,858,044 $ 6,055,311 $ 4,103,921 $ 5,879,685 $2,928,965
Cost of sales.......... 6,616,425 5,747,043 3,558,350 4,479,243 1,694,290
----------- ----------- ----------- ----------- ----------
Gross profit........... 241,619 308,268 545,571 1,400,442 1,234,675
----------- ----------- ----------- ----------- ----------
Operating Expenses:
Research and
development
expense............ 8,866 41,122 61,297 40,736 26,671
Selling, general and
administrative
expense............ 1,693,536 1,427,353 1,572,903 1,858,192 1,060,049
Loss on abandonment
of building
improvements and
machinery.......... -- -- 830,912 2,295,850 --
----------- ----------- ----------- ----------- ----------
Total operating
expenses............. 1,702,402 1,468,475 2,465,112 4,194,778 1,086,720
----------- ----------- ----------- ----------- ----------
Operating income
(loss)............... (1,460,783) (1,160,207) (1,919,541) (2,794,336) 147,955
Other income
(expense)............ (241,987) (201,521) 115,349 (190,066) (28,644)
----------- ----------- ----------- ----------- ----------
Net income (loss)
before extraordinary
item................. (1,702,770) (1,361,728) (1,804,192) (2,984,402) 119,311
Extraordinary item..... 2,758,620 -- -- 1,468,429 --
----------- ----------- ----------- ----------- ----------
Net income............. $ 1,055,850 $(1,361,728) $(1,804,192) $(1,515,973) $ 119,311
----------- ----------- ----------- ----------- ----------
----------- ----------- ----------- ----------- ----------
<CAPTION>
BIGMAR, INC.(1)
--------------------------------------------------------------------
THREE MONTHS
ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
------------------------------------------ -----------------------
1992 1993 1994 1995(1) 1995 1996
------- -------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Net sales.............. $ $264,077 $707,627 $5,600,362 $1,185,710 $1,898,002
Cost of sales.......... 182,075 611,040 4,001,891 1,059,955 1,151,099
------- -------- -------- ---------- ---------- ----------
Gross profit........... 82,002 96,587 1,598,471 125,755 746,903
------- -------- -------- ---------- ---------- ----------
Operating Expenses:
Research and
development
expense............ -- -- -- 23,144 -- 88,394
Selling, general and
administrative
expense............ 10,012 50,810 16,269 1,493,055 21,452 547,463
Loss on abandonment
of building
improvements and
machinery.......... -- -- -- -- --
------- -------- -------- ---------- ---------- ----------
Total operating
expenses............. 10,012 50,810 16,269 1,516,199 21,452 635,857
------- -------- -------- ---------- ---------- ----------
Operating income
(loss)............... (10,012) 31,192 80,318 82,272 104,303 111,046
Other income
(expense)............ 10,212 (7,909) (1,660) (179,476) (13,532) (59,365)
------- -------- -------- ---------- ---------- ----------
Net income (loss)
before extraordinary
item................. 200 23,283 78,658 (97,204) 90,771 51,681
Extraordinary item..... -- -- -- -- -- --
------- -------- -------- ---------- ---------- ----------
Net income............. $ 200 $ 23,283 $ 78,658 $ (97,204) $ 90,771 $ 51,681
------- -------- -------- ---------- ---------- ----------
------- -------- -------- ---------- ---------- ----------
PER SHARE DATA:
Net income (loss)...... $.00 $.06 $.20 $(.07) $.23 $.02
Weighted average number
of shares outstanding.. 400,188 400,188 400,188 1,337,292 400,188 2,375,000
</TABLE>
<TABLE>
<CAPTION>
BIGMAR, INC.
-----------------------------------
PRO FORMA
THREE MONTHS PRO FORMA
ENDED YEAR ENDED
MARCH 31, 1995 DECEMBER 31, 1995
-------------- -----------------
<S> <C> <C>
PRO FORMA OPERATING DATA:
Net sales..................... $2,702,351 $ 8,529,327
Cost of sales................. 1,984,306 5,696,181
-------------- -----------------
Gross profit.................. 718,045 2,833,146
-------------- -----------------
Research and development
expense..................... 10,855 49,815
Selling, general and
administrative expense(2)... 575,186 2,570,104
-------------- -----------------
Total operating expenses...... 586,041 2,619,919
-------------- -----------------
Operating income.............. 132,004 213,227
Other (expense)............... (31,133) (208,120)
-------------- -----------------
Net income.................... $ 100,871 $ 5,107
-------------- -----------------
-------------- -----------------
PER SHARE DATA:
Net income.................. $0.04 $0.00
Weighted average number of
shares outstanding........ 2,375,000 1,510,942
</TABLE>
(table continued on next page)
24
<PAGE>
<PAGE>
(table continued from previous page)
<TABLE>
<CAPTION>
BIGMAR, INC.
------------------------------------------------------------------------------------
DECEMBER 31, MARCH 31, 1996
------------------------------------------------ --------------------------------
1992 1993 1994 1995 HISTORICAL AS ADJUSTED(3)
------- -------- ---------- ----------- -------------- --------------
(HISTORICAL)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital........... $82,074 $113,573 $ 98,526 $ 1,204,461 $ (137,433) $ 8,160,141
Total assets.............. 84,560 152,022 2,173,621 15,493,126 19,300,275 25,578,091
Long-term obligations..... -- -- 1,500,767 8,436,971 10,839,442 10,839,442
Retained earnings......... 200 23,483 102,142 4,938 56,619 56,619
Stockholders' equity...... 90,290 113,573 192,492 3,911,404 3,845,877 11,970,877
</TABLE>
- ------------
(1) On April 9, 1996, a reorganization of companies under common control took
place whereby the Company acquired 100% of Bigmar Pharmaceuticals and 50% of
Bioren. Accordingly, the financial statements of the Company include the
results of operations of Bigmar Pharmaceuticals for all periods presented
and the results of operations of Bioren from July 1, 1995 (the date of
acquisition). See 'The Company.'
(2) Effective upon consummation of the Offering, John G. Tramontana, the
Company's Chairman of the Board, President and Chief Executive Officer, will
begin to receive an annual base salary of $200,000, subject to adjustment,
plus a bonus of at least 25% of his base salary and Gerald T. Sweeney, the
Company's Chief Financial Officer and Vice President -- Finance, will begin
to receive an annual base salary of $80,000, subject to adjustment, plus a
bonus of 15% of his salary. The pro forma operating data does not reflect
such salaries or bonuses (if any). See 'Management.'
(3) As adjusted to give effect to the sale of 1,250,000 shares of Common Stock
in the Offering (after deduction of underwriting discounts and commissions
and estimated expenses to be incurred by the Company in connection with the
Offering) and the application of a portion of the net proceeds thereof to
pay approximately $2,000,000 in indebtedness. See 'Use of Proceeds' and
'Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources.'
25
<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the financial statements and notes thereto appearing elsewhere in this
Prospectus.
OVERVIEW
The Company is currently engaged in manufacturing and marketing 14 types of
IV Solutions in Switzerland and Lichtenstein and marketing in Germany Prostate
Materials and two generic oncological products, mercaptopurine and calcium
leucovorin. Over the next 24 months, the Company's strategy is to manufacture,
in its state-of-the-art facilities in Switzerland, and market generic
oncological drugs. In addition, the Company is in the process of preparing to
market certain licensed proprietary oncological and biotechnological products.
The Company markets IV Solutions through its own sales force to health care
providers and third-party payors and markets Prostate Materials, mercaptopurine
and calcium leucovorin to pharmaceutical companies. The Company does not intend
to market its other products directly to the public. For the year ended December
31, 1995, on a pro forma basis after giving effect to the Bioren Acquisition as
if the transaction had occurred on January 1, 1995, the Company's sales of IV
Solutions and antibiotics were approximately $6.5 million, sales of medical
products, including Prostate Materials, were approximately $1.4 million, and
sales of generic oncological products were approximately $670,000. For the three
months ended March 31, 1996, sales of these products aggregated approximately
$1.4 million, $319,000 and $210,000, respectively. For the year ended December
31, 1995, approximately $1.0 million (or approximately 12%) of the Company's
sales on a pro forma basis were attributable to sales of antibiotics. For the
three months ended March 31, 1996, approximately $145,000 (or approximately 8%)
of the Company's sales were attributable to such products. Sales of antibiotics
have been progressively abandoned by the Company, and as a result the Company
expects the percentage of sales attributable to antibiotic products for the year
ended December 31, 1996 to be significantly lower than the percentage of sales
for the prior year.
The Company's revenues and profitability may be affected by the ongoing
efforts of third-party payors to contain or reduce the costs of healthcare by
lowering reimbursement payment rates, increasing case management review of
services and negotiating reduced contract pricing and reimbursement caps. In the
event any of the Company's products become subject to a maximum reimbursement
rate, the prices the Company will be able to charge its customers and, as a
result its results of operations, may be adversely affected. See 'Risk
Factors -- Dependence on Third-Party Reimbursement; Price Controls; Health Care
Reform Measures.'
PLAN OF OPERATION
The Company intends to expand its manufacturing operations to produce
generic oncological products in its facilities and market oncological and
biotechnological products to pharmaceutical companies for resale to the public.
The Company expects to begin marketing methotrexate and doxorubicin (two generic
oncological products) to pharmaceutical companies during the second half of
1996. In addition, the Company obtained the distribution rights to, among other
products, sodium leucovorin and five generic oncological products including
methotrexate and calcium leucovorin from Sapec and approximately 20 generic
oncological products including mercaptopurine, calcium leucovorin and
methotrexate from Cernelle. The Company anticipates that all regulatory
approvals for the sale of sodium leucovorin in Germany will be obtained during
the second half of 1996 and that the marketing of this product will begin
shortly thereafter. There can be no assurance, however, that such regulatory
approvals will be obtained during these time periods, or that such approvals
will ever be obtained. The Company also has obtained the rights to use,
manufacture and market, among other products, a form of recombinant urokinase
from Bioferment. Although the Company does not intend to manufacture recombinant
urokinase, the Company anticipates that all regulatory approvals for the sale of
recombinant urokinase in Germany will be obtained during the second half of 1997
and that the marketing of this product will begin shortly thereafter. There can
be no assurance, however, that such regulatory approvals will be obtained during
this time period, or at all. The Company's management had affiliations with
Sapec, Cernelle and Bioferment at the time of the negotiation and execution of
the
26
<PAGE>
<PAGE>
agreements with these parties. See 'Risk Factors -- Reliance on Collaborative
Arrangements; Management Affiliations with Collaborators' and
'Management -- Directors, Executive Officers and Key Personnel.'
The Company's business strategy over the next 24 months is to:
manufacture and market approximately seven injectable and lyophilized
oncological products, including sodium leucovorin;
manufacture and market additional oncological products as the patents
relating to the products expire;
increase the number of pharmaceutical companies in Europe through
which the Company's oncological products are marketed and the
territories in which they are distributed;
market recombinant urokinase; and
expand the marketing of IV Solutions in Switzerland through the
Company's own sales force.
The Company has entered into exclusive arrangements with non-affiliated
pharmaceutical companies to market certain proprietary and generic oncological
or biotechnological products in various territories. The following table lists
the generic oncological products that the Company intends to manufacture and
market to pharmaceutical companies for resale in Switzerland, Germany and the
United States over the next 24 months and the estimated time periods for each
product.
<TABLE>
<CAPTION>
ESTIMATED YEAR OF INTRODUCTION
--------------------------------
PRODUCT NAME DOSAGE FORM PRESCRIBED USE SWITZERLAND GERMANY USA
- ------------------- ----------------- -------------------------------- ----------- ------- ----
<S> <C> <C> <C> <C> <C>
Calcium Leucovorin Injection/Liquid Rescue Therapy 1996 1995* 1997
Doxorubicin Injection Neoplastic Conditions 1996 1997 1997
Dacarbazine Injection Malignant Melanoma 1997 1996 1997
Fluorouracil Injection Colon, Rectum, Breast, Stomach, 1997 1996 1999
Pancreas Carcinomas
Methotrexate Injection/Liquid Neoplastic Conditions 1996 1996 1997
Vinblastine Sulfate Injection Neoplastic Conditions -- -- 1998
</TABLE>
- ------------
* Introduced.
There can be no assurance that the Company will manufacture or market any
of the foregoing products during the time periods indicated or at all. The
commercialization of these products will depend on a number of factors
including, but not limited to, the successful results of the Company's clinical
toxicity studies and obtaining regulatory approval. Although the Company
believes that each of these proposed products has commercial value, the Company
may choose not to manufacture or market some or all of these products. See 'Risk
Factors -- No Assurance of Successful Product Development; Uncertainty of Market
Acceptance of Certain Proposed Products and -- FDA, International and other
Governmental Regulations' and 'Business -- Proposed Products.'
RESULTS OF OPERATIONS
BIGMAR, INC.
Bigmar, Inc. was incorporated in September 1995. On April 9, 1996, in the
Exchange, Bigmar, Inc. acquired 100% of Bigmar Pharmaceuticals and 50% of the
Bioren capital stock owned by the Bioren Holders. Accordingly, both Bigmar
Pharmaceuticals and Bioren are 100% owned subsidiaries of Bigmar, Inc. The
acquisition was accounted for as a reorganization of companies under common
control. Accordingly, the financial statements of Bigmar, Inc. were restated to
include the results of Bigmar Pharmaceuticals for all periods presented and
Bioren from July 1, 1995 (the date of acquisition).
BIGMAR THERAPEUTICS
Bigmar Therapeutics was incorporated in September 1995 and its only
activity since inception has been the execution and delivery of an agreement
with Protyde Oncology Therapeutics, Inc. ('Protyde Therapeutics') to form a
partnership, Protyde - Bigmar Therapeutics ('Partnership'), for the purpose of
coordinating the manufacturing and marketing of certain pharmaceutical products
for the treatment of
27
<PAGE>
<PAGE>
cancer, such as mercaptopurine, calcium leucovorin, methotrexate and
doxorubicin, worldwide, except for certain major European countries.
BIGMAR PHARMACEUTICALS AND BIOREN
Bigmar Pharmaceuticals commenced operations in January 1992. The following
discussion and analysis describes the results of operations of the Company for
the years ended December 31, 1993, 1994 and 1995 and Bioren from July 1, 1995 .
Effective June 30, 1995, Bigmar Pharmaceuticals acquired 100% of the outstanding
capital stock of Bioren in the Bioren Acquisition, and immediately sold 50% of
the stock to the Bioren Holders. The Company's financial statements include the
results of Bigmar Pharmaceuticals for all periods presented and Bioren from July
1, 1995.
Bioren currently manufactures IV Solutions and other hospital-based
products. Since the Bioren Acquisition, sales of IV Solutions have increased
while sales of antibiotics (the other market in which Bioren historically
operated) have been progressively abandoned. In the near future, Bioren intends
to continue to manufacture and market IV Solutions and expects to add
non-cytotoxic products used in the treatment of cancer.
The following sets forth, in tabular form, a comparison of the results of
operations of the Company as a percentage of the Company's sales for the years
ended December 31, 1993, 1994 and 1995 (including the operating results of
Bioren from July 1, 1995), and for the three months ended March 31, 1995 and
1996. The fiscal year of the Company ends on December 31 of each year. The
financial information included in this Prospectus is not necessarily indicative
of the Company's future operating results or financial condition.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------------------- ----------------------
1993 1994 1995 1995 1996
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Sales.................................. 100% 100% 100% 100% 100%
Cost of goods sold..................... 68.9% 86.4% 71.5% 89.4% 60.6%
Selling, general and administrative
expenses............................. 18.8% 2.3% 24.4% 1.8% 26.3%
Depreciation and amortization.......... 0.4% -- 2.3% -- 2.5%
Interest expense....................... (.1%) (.1%) 3.3% (.8%) 4.4%
Income taxes........................... 3.1% 1.5% (0.1%) 1.9% 0%
Net income (loss)...................... 8.8% 11.1% (1.7%) 7.7% 2.7%
</TABLE>
THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED MARCH 31, 1995
Net Sales. Net sales increased by $712,292 to $1,898,002 for the three
months ended March 31, 1996 as compared to $1,185,710 for the comparable period
in 1995. This increase was attributable to the addition of Bioren sales of
$1,525,672 in 1996, offset by a decline of $813,380 in Bigmar Pharmaceutical
sales to $372,330. Bigmar Pharmaceuticals sales in 1995 were disproportionately
skewed in the first quarter, as the Company made two large sales of Prostate
Materials amounting to $1.0 million. Although there can be no assurance, the
Company expects to generate similar sales of Prostate Materials for the year
ended December 31, 1996. Sales of other products, primarily calcium leucovorin,
increased in 1996 by approximately $200,000. Bioren sales for the three months
ended March 31, 1996 increased by $9,030 from the comparable period in 1995.
Cost of Goods Sold. Cost of goods sold increased by $91,144 to $1,151,099
for the three months ended March 31, 1996 as compared to $1,059,955 for the
comparable period in 1995. This increase was primarily due to increased sales.
Gross Profit. Gross profit increased by $621,148 to $746,903 for the three
months ended March 31, 1996 over the comparable period in 1995. This increase
was attributable to the addition of Bioren gross profit in 1996 of $651,694,
partially offset by a decline in gross profit from Bigmar Pharmaceutical sales.
Without the addition of Bioren, gross profit for the period ended March 31, 1996
declined by $30,547 to $95,208 as compared to $125,755 for the comparable period
in 1995. This decline was due to lower sales partially offset by improved gross
margins. Gross profit on Bioren sales for the three months ended
28
<PAGE>
<PAGE>
March 31, 1996 was $651,694, an increase of $59,404 over the comparable period
in 1995. This increase was due to a more favorable product mix.
As a percentage of sales, gross profit for the three months ended March 31,
1996 was 39.4%, an increase from 10.6% for the comparable period in 1995. Bigmar
Pharmaceuticals gross profit as a percentage of sales increased to 25.6% from
10.6% for the comparable period in 1995. This improvement reflects a change in
the mix of products sold from period to period as Prostate Materials were sold
in 1995 at materially lower margins than other products. No sales of Prostate
Materials were made during the three months ended March 31, 1996. Bioren gross
profit as a percentage of sales for the three months ended March 31, 1996
increased to 42.7% from 39.1% for the comparable period in 1995. This increase
resulted primarily from a reduced emphasis on antibiotics in favor of infusion
products.
Research and Development Expenses. Research and development expenses for
the three months ended March 31, 1996 were $88,394, with no such expenses in the
comparable period in 1995. The increase reflects expenditures related to the
formulation and development of oncology and related products. Bigmar
Pharmaceuticals incurred additional expenditures of approximately $300,000
during the three months ended March 31, 1996 related to equipment and facility
validation activities. These expenditures were deferred and will be expensed
upon commencement of operations at the Bigmar Facility. Pursuant to its business
strategy, the Company expects to significantly expand its research and
development activities in order to obtain regulatory approval for manufacturing
and marketing oncology products.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by $526,011 to $547,463 for the three months
ended March 31, 1996 as compared to $21,452 for the comparable period in 1995.
The increase was due to, the addition of Bioren's selling, general and
administrative expenses of $499,418. Bioren's selling, general and
administrative expenses were $553,734 in the comparable period in 1995.
Approximately 44% of Bioren's selling, general and administrative expenses
related to employee salaries and benefits.
Interest Expense. Interest expense for the three months ended March 31,
1996 amounted to $83,460 primarily due to approximately $6.0 million of debt
incurred in conjunction with, and assumed in, the Bioren Acquisition. The
Company also incurred debt, aggregating approximately $5.3 million at March 31,
1996, for the construction of the Bigmar Facility and validation and other
facility start-up activities. Interest on these borrowings of approximately
$62,000 was capitalized in the three months ended March 31, 1996. See
' -- Liquidity and Capital Resources.'
Other Income (net). Other income for the three months ended March 31, 1996
was $24,095, an increase of $116 over Bioren's other income for the comparable
period in 1995. This income represents payments to Bioren from a company which
leases a portion of the Bioren Facility on a year-to-year basis.
Income Taxes. The Company is a Delaware corporation which owns 100% of the
capital stock of two Swiss corporations. The tax charge in Switzerland is an
accumulation of taxes due to the city, canton (state) and the federal
authorities. While the actual rate is a function of the percentage of
profitability in relation to taxable equity, the Company believes that 20% is a
fair approximation of the effective accumulative rate. Swiss law precludes
consolidated tax filings and thus the ability to offset taxable income in one
entity by losses of another. The tax liability for the three months ended March
31, 1996 is not significant, particularly because the Company's income for the
period was generated by Bioren which has a significant tax loss carry-forward.
Net Income. The consolidated net income of $51,681 for the three months
ended March 31, 1996 represents a decline of $39,090 from the comparable period
in 1995 and was primarily attributable to higher interest expense.
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994
(INCLUDING BIOREN FOR THE PERIOD FROM JULY 1, 1995 TO DECEMBER 31, 1995)
Net Sales. Net sales increased by $4,892,735 to $5,600,362 for the year
ended December 31, 1995 as compared to $707,627 for the year ended December 31,
1994. Excluding Bioren sales, the increase in net sales was $1,350,745, from
$707,627 in 1994 to $2,058,372 in 1995. This increase was primarily due to the
increases in sales of pharmaceutical products by $309,416, Prostate Materials by
$580,619, and oncological products by $460,710 which the Company began selling
in June 1993, November 1994, and
29
<PAGE>
<PAGE>
August 1994, respectively. For the years ended December 31, 1995 and 1994, sales
of Prostate Materials to Stroschein were approximately $1.0 million and
$470,000, respectively. These sales were pursuant to an agreement ('Stroschein
Agreement') with Stroschein, a German pharmaceutical company, pursuant to which
Bigmar Pharmaceuticals acts as the exclusive supplier of Prostate Materials to
Stroschein, and Stroschein distributes the Prostate Materials in Germany and
other countries. See 'Business -- Products.' For the year ended December 31,
1995, sales of generic oncological products consisting of mercaptopurine and
calcium leucovorin were approximately $670,000. For the period from July 1, 1995
through December 31, 1995 Bioren sales were $3,541,990.
Cost of Goods Sold. Cost of goods sold increased by $3,390,851 to
$4,001,891 for the year ended December 31, 1995 as compared to $611,040 for the
year ended December 31, 1994. This increase was primarily due to the increase in
sales.
Gross Profit. Gross profit increased by $1,501,884 to $1,598,471 for the
year ended December 31, 1995 as compared to $96,587 for the year ended December
31, 1994. Gross profit on Bigmar Pharmaceuticals sales was $439,535 for the year
ended December 31, 1995 as compared to $96,587 for the year ended December 31,
1994. The increase of $342,948 was due primarily to increased sales. Gross
profit as a percentage of net sales increased to 28.5% for the year ended
December 31, 1995 as compared to 13.6% for the year ended December 31, 1994.
Without Bioren sales, gross profit as a percentage of sales in 1995 would have
been 21.3%, an increase of 7.7%, as compared to 13.6% for 1994. This increase
was due primarily to the introduction of a new dosage form of lyophilized
calcium leucovorin in April 1995 which yielded a higher margin.
Gross profit on Bioren sales for the period from July 1, 1995 to December
31, 1995 was $1,158,936 or 32.7% of such sales. Bioren gross profit decreased
from 42.2% of net sales for the six months prior to the Bioren Acquisition as a
result of a shutdown of the Bioren Facility for a four-week period during the
latter half of 1995 for the installation of a new tank in order to increase the
capacity of the Bioren Facility's water system.
Research and Development Expenses. Research and development expenses were
$23,144 for the year ended December 31, 1995 with no such expenses for the year
ended December 31, 1994. The research costs were incurred by Bioren in the
second half of 1995 for the registration of new IV Solutions. Pursuant to its
business strategy, the Company intends to expand its business by manufacturing
and marketing certain oncological and biotechnological products and expects its
research and development expenses to be significant in future years.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by $1,473,786 to $1,493,055 (26.7% of net
sales) for the year ended December 31, 1995 as compared to $16,269 (2.3% of net
sales) for the year ended December 31, 1994. The increase was primarily due to
the addition of Bioren expenses of $1,091,074 since July 1, 1995 (the date of
the Bioren Acquisition). Bioren expenses include consulting fees of $332,055,
promotional expenses of $223,845, employee benefits and other personnel costs of
$170,631, shipping costs of $92,084 and other administrative costs of $272,459.
Without the Bioren expenses, selling, general and administrative expenses were
$401,981 for the year ended December 31, 1995. The increase of $385,712 as
compared to selling, general and administrative expenses of $16,269 in 1994 was
due to greater marketing costs and expenses associated with efforts to increase
sales.
Interest Expense. Interest expense was $182,476 for the year ended December
31, 1995 as compared to no interest expense in 1994. The interest expense was
primarily due to interest on indebtedness incurred in connection with the Bioren
Acquisition and interest on borrowings owed by Bioren to its former owner,
Galenica. In addition, the Company capitalized interest costs of $235,000 and
$40,000 for the years ended December 31, 1995 and 1994, respectively. The
capitalized interest was incurred in connection with borrowings used to finance
the construction and equipment of the Bigmar Facility. See ' -- Liquidity and
Capital Resources.'
Income Taxes. The tax charge in Switzerland is an accumulation of the taxes
due to the city, the canton (state) and the federal authorities. Therefore, the
tax burden varies from one entity to another depending upon its location. While
the actual tax rate is a function of the percentage of profitability in relation
to taxable equity, the Company believes that 20% is a fair approximation of the
effective cumulative rate. In addition, as Swiss tax laws do not permit
consolidated tax filings, possible tax losses
30
<PAGE>
<PAGE>
in one entity do not offset taxable income in another. Tax expense for the year
ended December 31, 1995 was not significant due to the amount of the loss and
the provision of a full valuation allowance on the deferred tax asset arising
from the benefit of the Company's operating losses. Tax expense for the year
ended December 31, 1994 was $10,553.
Net Loss. The Company sustained a net loss of $97,204 for the year ended
December 31, 1995 as compared to net income of $78,658 for the year ended
December 31, 1994. Such loss was primarily due to higher interest and other
expenses of Bioren.
YEAR ENDED DECEMBER 31, 1994 COMPARED TO YEAR ENDED DECEMBER 31, 1993
BIGMAR PHARMACEUTICALS
Net Sales. Net sales increased by $443,550 to $707,627 for the year ended
December 31, 1994 as compared to $264,077 for the year ended December 31, 1993.
The increase was due to sales of approximately $205,000 of calcium leucovorin in
Germany beginning in August 1994, increased sales of approximately $442,000 of
Prostate Materials, a reduction of approximately $224,000 in other medical
product sales and approximately $21,000 due to a change in the average exchange
rate between the Swiss franc and the U.S. dollar.
Cost of Goods Sold. Cost of goods sold increased by $428,965 to $611,040
(86% of net sales) for the year ended December 31, 1994 as compared to $182,075
(69% of net sales) for the year ended December 31, 1993. The increase was due to
increased sales of Prostate Materials which have a higher cost of goods sold
than the Company's other products.
Gross Profit. Gross profit increased by $14,585 to $96,587 for the year
ended December 31, 1994 as compared to $82,002 for the year ended December 31,
1993. Gross profit as a percentage of net sales decreased to 14% for the year
ended December 31, 1994 as compared to 31% for the year ended December 31, 1993.
This decrease was due to changes in the Company's product mix, including the
introduction of oncological products in August 1994 and Prostate Materials in
November 1994, which have a higher cost of goods sold than the Company's other
products.
Research and Development Expenses. The Company incurred no research and
development expenses in either of the years ended December 31, 1994 and 1993.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased by $34,541 to $16,269 for the year ended
December 31, 1994 as compared to $50,810 for the year ended December 31, 1993.
The decrease was primarily due to lower selling expenses, related travel
expenses and lower levels of legal services required by the Company.
Income Taxes. The Company's income taxes increased by $2,257 to $10,553 for
the year ended December 31, 1994 as compared to $8,296 for the year ended
December 31, 1993.
Net Income. Net income for the year ended December 31, 1994 was $78,658 as
compared to $23,283 for the year ended December 31, 1993. The increase was due
primarily to increased sales and decreased selling, general and administrative
expenses.
BIOREN SA (PREDECESSOR COMPANY)
Net Sales. Net sales increased by $1,775,764 to $5,879,685 for the year
ended December 31, 1994 as compared to $4,103,921 for the year ended December
31, 1993. The increase in sales was attributable to sales of $914,000 in
antibiotics, $410,000 in IV Solution products and $452,000 due to a change in
the average exchange rate between the Swiss franc and the U.S. dollar.
Cost of Goods Sold. Cost of goods sold increased by $920,893 to $4,479,243
(76% of net sales) for the year ended December 31, 1994 as compared to
$3,558,350 (87% of net sales) for the year ended 1993. This increase was
primarily due to an increase in sales.
Gross Profit. Gross profit increased by $854,871 to $1,400,442 for the year
ended December 31, 1994 as compared to $545,571 for the year ended December 31,
1993. Gross profit as a percentage of sales increased to 24% for the year ended
December 31, 1994 as compared to 13% for the comparable period in 1993. The
increase in the gross profit percentage was the result of higher sales, an
increase in sales of higher margin infusion products and a more favorable mix
within the antibiotics product line.
Research and Development Expenses. Research and development expenses
decreased by $20,561 to $40,736 for the year ended December 31, 1994 as compared
to $61,297 for the year ended December 31,
31
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<PAGE>
1993. The decrease was primarily due to the reduction in antibiotic product
registrations resulting from management's decision to re-focus the business
toward infusion products sales.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by $285,289 to $1,858,192 for the year ended
December 31, 1994 as compared to $1,572,903 for the year ended December 31,
1993. The increase was primarily due to higher salary and personnel expenses in
support of the increase in sales.
Loss on Abandonment of Building Improvements and Machinery. Bioren incurred
a loss on the abandonment of building improvements and machinery for the years
ended December 31, 1994 and 1993 of $2,295,850 and $830,912, respectively. These
losses reflect the reduction in net value of certain equipment and building
improvements due to excess capacity and a change in product strategy.
Other Income (net). Other income decreased by $189,127 to $94,178 for the
year ended December 31, 1994 as compared to $283,305 for the year ended December
31, 1993. This decrease was a result of a reduction in consulting fees for
accounting and technical services provided to a subsidiary of Galenica.
Interest Expense. Interest expense increased by $116,288 to $284,244 for
the year ended December 31, 1994 as compared to $167,956 for the year ended
December 31, 1993. This increase was primarily due to an increase in borrowings
for the year ended December 31, 1994.
Extraordinary Income. Extraordinary income of $1,468,429 was recorded
during the year ended December 31, 1994 reflecting the forgiveness of a bank
loan.
Net Loss. Net loss was $1,515,973 for the year ended December 31, 1994 as
compared to a net loss of $1,804,192 for the year ended December 31, 1993. The
decrease in the net loss for the year ended December 31, 1994 as compared to the
prior year was the result of higher gross profit and the bank loan forgiveness
partially offset by a larger loss on abandonment of building improvements and
machinery.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1996 and December 31, 1995, the Company had cash and cash
equivalents of $1,257,555 and $1,425,603, respectively. The Company's working
capital approximated $(137,433) and $1,204,461 at March 31, 1996 and December
31, 1995, respectively.
In March 1996, Protyde Therapeutics paid $750,000 to the Company. This
payment is part of its required capital contributions to the Partnership. See
'Business -- Collaborative Agreements.'
Trade accounts payable to third parties were $2,673,835 and $826,532 at
March 31, 1996 and December 31, 1995, respectively. The increase is due mainly
to liabilities incurred from construction at the Bigmar Facility of $1,297,924.
These liabilities are expected to become due in the second half of 1996. The
Company intends to pay $1,071,821 of these liabilities with proceeds from its
current credit lines.
At March 31, 1996, the Company had an aggregate of $12,686,626 in
outstanding indebtedness, including $1,847,184 which is payable upon
consummation of the Offering and including the $1,071,821 of accounts payable to
equipment vendors.
Through March 31, 1996, the Company had borrowed an aggregate of $1,794,312
from a company owned by certain stockholders of the Company. This loan is
payable in installments of approximately $179,432 per annum from June 30, 1997
through December 31, 2006 and bears interest at a rate of 9% per annum.
Through June 30, 1995 (the date of the Bioren Acquisition), the operations
of Bioren were financed with loans from Galenica and Sigal. At March 31, 1996,
outstanding loans due to Galenica were $1,679,261 and $1,847,184, respectively.
The $1,679,261 loan is due in installments of principal of $419,815 in 1997,
$419,815 in 1998 and $839,631 in 1999. The $1,847,184 loan will be paid in full
upon consummation of the Offering from a portion of the net proceeds received by
the Company.
The Company's capital expenditures for the three months ended March 31,
1996 aggregated $1,441,417. The majority of these expenditures were for the
purchase of manufacturing equipment at the Bigmar Facility and were financed
with a bank loan aggregating $1,551,428 at March 31, 1996 which bears interest
at the rate of up to 6.5% per annum until December 31, 1997. This loan
commitment has a limit of $1,847,187 from which the Company may draw, and is
collateralized by the building and
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machinery at the Bigmar Facility. The principal of the loan is due on December
31, 1997 and may be extended by an agreement between the parties.
The Company has other outstanding bank loans aggregating $1,973,728 used
for the construction of the Bigmar Facility. These loans bear interest at the
rate of up to 6.5% per annum through December 31, 1997 and are collateralized by
the building and machinery at the Bigmar Facility. The bank loan has a limit of
$2,749,790 from which the Company may draw. The principal amount of the loan is
due on December 31, 1997 and may be extended by an agreement between the
parties.
The Company has a bank mortgage on the Bioren Facility in the amount of
$2,518,892. This loan bears interest at 5% per annum through May 16, 1999. The
principal amount of the loan is due upon demand after May 17, 1999 and may be
extended by an agreement between the parties.
The Company has other outstanding bank loans aggregating approximately
$250,000 bearing interest at an adjustable rate of up to 6.5% per annum through
December 31, 1997. The principal amount of the loan is due on December 31, 1997
and may be extended by an agreement between the parties.
The foregoing loan arrangements with the bank contain restrictive covenants
and provisions for events of default.
On January 8, 1995, Chemholding agreed to be a surety for Bigmar
Pharmaceuticals in the amount of $1.4 million for the foregoing loans with
respect to the Bigmar Facility. See 'Business -- Facilities' and 'Certain
Transactions.'
Anticipated capital expenditures for the next 12 months include
approximately $1.0 million for the purchase of equipment that will be used to
manufacture the Company's generic oncological products for which it will be
seeking approvals from the FDA. See 'Use of Proceeds.'
In May 1995, Bigmar Pharmaceuticals issued 1,380 shares of its capital
stock to two principal stockholders of the Company and received net proceeds
therefore of approximately $1.2 million. See 'Certain Transactions.'
The results of the Company's operations are affected by changes in exchange
rates between currencies. Changes in exchange rates may negatively affect the
Company's consolidated net sales and gross profit margins from international
operations. The Company is exposed to the risk that the dollar-value equivalent
of anticipated cash flow will be adversely affected by the changes in foreign
currency exchange rates. At such time as the Company determines that this risk
is significant, the Company may attempt to manage the risk by utilizing hedging
techniques, although there can be no assurance that the Company will be
successful in these activities. See 'Risk Factors -- Uncertainty of Currency
Fluctuations.'
The Company anticipates that the net proceeds from the Offering, together
with cash flow from operations (if any), should be sufficient to fund the
Company's operations, including its proposed expansion, for approximately 12
months. However, there can be no assurance that events affecting the Company's
operations will not result in the Company depleting its funds before that time.
The Company may be required to raise substantial additional funds to continue to
fund operating expenses or its expansion strategy. There can be no assurance
that the Company will be able to obtain such additional financing or that such
financing, if available, will be on acceptable terms. See 'Risk Factors -- Need
for Additional Financing,' and 'Use of Proceeds.'
At December 31, 1995, the Company had a net operating loss carryforward for
Swiss federal and canton income tax purposes of approximately $14,122,000 which
can only be used to offset future taxable income, if any, of Bioren. See Note 10
of Notes to the consolidated financial statements of Bigmar, Inc. In the future,
the Company will also be subject to taxes in the United States.
The Company is a Delaware corporation which owns 100% of the capital stock
of two Swiss corporations. The Swiss Federal Code of Obligation provides that at
least 5% of a Swiss company's net income each year must be appropriated to a
legal reserve until such time as this reserve is equivalent to 20% of the
company's paid-in share capital. In addition, 10% of any distribution made by a
company in excess of a 5% dividend must also be appropriated to the legal
reserve. The reserve of up to 50% of the share capital is not available for
distribution to stockholders. See 'Risk Factors -- Restrictions on Retained
Earnings.'
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BUSINESS
GENERAL
The Company is currently engaged in manufacturing and marketing 14 types of
IV Solutions in Switzerland and Lichtenstein and marketing in Germany of
Prostate Materials and two generic oncological products, mercaptopurine and
calcium leucovorin. Over the next 24 months, the Company's strategy is to
manufacture, in its state-of-the-art facilities in Switzerland, and market
generic oncological drugs. In addition, the Company is in the process of
preparing to market certain licensed proprietary oncological and
biotechnological products.
The Company markets IV Solutions through its own sales force to health care
providers and third-party payors and markets Prostate Materials, mercaptopurine
and calcium leucovorin to pharmaceutical companies. The Company does not intend
to market its other products directly to the public. For the year ended December
31, 1995, on a pro forma basis after giving effect to the Bioren Acquisition as
if the transaction had occurred on January 1, 1995, the Company's sales of IV
Solutions and antibiotics were approximately $6.5 million, sales of medical
products, including Prostate Materials, were approximately $1.4 million, and
sales of generic oncological products were approximately $670,000. For the three
months ended March 31, 1996, sales of these products aggregated approximately
$1.4 million, $319,000 and $210,000, respectively.
In 1995, the Company obtained distribution rights to, among other products,
sodium leucovorin and five generic oncological products including methotrexate
and calcium leucovorin, from Sapec, and approximately 20 generic oncological
products, including mercaptopurine, calcium leucovorin and methotrexate, from
Cernelle. Sodium leucovorin is designed to alleviate certain side effects
associated with chemotherapy more effectively than its currently distributed
counterpart, calcium leucovorin.
The Company has received approval for the marketing in Switzerland of two
generic oncological products, doxorubicin and methotrexate, and expects to begin
marketing these products during the second half of 1996. The Company anticipates
that all regulatory approvals for the sale of sodium leucovorin in Germany will
be obtained during the second half of 1996 and that the marketing of this
product will begin shortly thereafter. There can be no assurance, however, that
such regulatory approvals will be obtained during these time periods, or that
such approvals will ever be obtained. In addition, the Company has also obtained
the rights to use, manufacture and market, among other products, a form of
recombinant urokinase from Bioferment. Recombinant urokinase is a
biotechnological product used in the treatment of cardiovascular disease.
The Company has entered into exclusive arrangements with the following
non-affiliated pharmaceutical companies to market certain proprietary and
generic oncological or biotechnological products, manufactured or licensed by
the Company, in various territories: Medac in Germany and the United Kingdom;
Boehringer in Italy; Laevosan in Switzerland; Vita in Spain; and Protyde
worldwide, except for certain major European countries. Medac, Boehringer,
Laevosan and Vita are established pharmaceutical companies. Protyde is a
development stage company.
BUSINESS STRATEGY
GENERAL
The Company's business strategy over the next 24 months is to:
manufacture and market approximately seven injectable and lyophilized
oncological products, including sodium leucovorin;
manufacture and market additional oncological products as the patents
relating to the products expire;
increase the number of pharmaceutical companies in Europe through
which the Company's oncological products are marketed and the
territories in which they are distributed;
market recombinant urokinase; and
expand the marketing of IV Solutions in Switzerland through the
Company's own sales force.
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PRODUCTS
IV SOLUTIONS
The Company manufactures, at its Bioren Facility, and markets 14 different
IV Solutions. The Company's IV Solutions generally consist of different chemical
entities, such as sodium chloride, electrolytes, carbohydrates and other
nutrients, which are intravenously administered to a patient. The Company
markets IV Solutions, through its own sales force, to hospitals, clinics,
retirement homes, nursing homes, managed health care organizations, home
infusion providers and other health care providers in Switzerland and
Lichtenstein. For the year ended December 31, 1995, on a pro forma basis after
giving effect to the Bioren Acquisition and the Exchange as if each of the
transactions had occurred on January 1, 1995, the Company's sales of IV
Solutions were approximately $5.5 million. For the three months ended March 31,
1996, sales of IV Solutions approximated $1.4 million. The Company intends to
continue manufacturing and marketing IV Solutions and is seeking to penetrate
additional markets in Switzerland. See ' -- Marketing and Sales.'
In March 1995, Bioren and PLM entered into the PLM Agreement which grants
Bioren the exclusive right to distribute its IV Solutions throughout Switzerland
and Lichtenstein in PLM's collapsable containers. The PLM Agreement expires in
the year 2005, unless it is earlier terminated. Under the terms of the PLM
Agreement, PLM is entitled to terminate the exclusive right contained in the
agreement if, among other things, Bioren does not purchase a minimum number of
intravenous solution containers each year. In addition, the PLM Agreement may be
terminated by either party, upon the occurrence of certain specified conditions,
including if the products or the production infringe, or are alleged to
infringe, upon any intellectual property right of any third party. The
termination of the PLM Agreement would have a material adverse effect on the
Company. See 'Risk Factors -- Reliance on PLM.'
PROSTATE MATERIALS
The Company markets natural medications used for the treatment of
non-infectious prostate enlargement. The Prostate Materials are composed of
natural pollen derived from plant extracts. For the year ended December 31,
1995, the Company's sales of Prostate Materials to Stroschein were approximately
$1.0 million. For the three months ended March 31, 1996, there were no sales of
Prostrate Materials to Stroschein.
In October 1994, Bigmar Pharmaceuticals entered into the Stroschein
Agreement with Stroschein, pursuant to which Bigmar Pharmaceuticals acts as the
exclusive supplier of Cernilton, a Prostate Material, and Stroschein distributes
the Prostate Material in Germany. The Stroschein Agreement provides for annual
minimum quantity requirements in order to maintain exclusivity. The Stroschein
Agreement expires in October 1999 and will be automatically renewed for
consecutive two year periods, unless terminated by the parties. In the event
that Stroschein terminates the agreement as a result of Bigmar Pharmaceuticals'
breach or default thereunder, Bigmar Pharmaceuticals is required to transfer to
Stroschein the Cernilton product registration and the necessary know-how and
authorizations to enable Stroschein to manufacture Cernilton. The termination of
the Stroschein Agreement would have a material adverse effect on the Company.
See 'Risk Factors -- Dependence Upon Significant Customers.'
ONCOLOGICAL PRODUCTS
The Company currently markets two generic oncological products in Germany,
mercaptopurine and calcium leucovorin. For the year ended December 31, 1995, on
a pro forma basis, the Company's sales of generic oncological products were
approximately $670,000. For the three months ended March 31, 1996 these sales
aggregated approximately $210,000.
In November 1995, Bigmar Pharmaceuticals and Cernelle entered into the
Cernelle Agreement pursuant to which Bigmar Pharmaceuticals obtained the
exclusive worldwide distribution rights to approximately 20 generic oncological
products including calcium leucovorin, methotrexate and mercaptopurine
('Cernelle Products') manufactured by Cernelle. The Cernelle Agreement provides
for a one time payment of $100,000 for the grant of such exclusive rights and
licenses which is payable upon notification by Cernelle that the Cernelle
Products are ready for initial shipment to Bigmar Pharmaceuticals. In addition,
Bigmar Pharmaceuticals will be responsible for ongoing fees based upon
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the size of its orders for Cernelle Products. The initial term of the Cernelle
Agreement is 15 years, commencing on the date of the first commercial sale by
Bigmar Pharmaceuticals of the Cernelle Products. Upon termination of the
Cernelle Agreement, Bigmar Pharmaceuticals will retain a non-exclusive worldwide
right to distribute the Cernelle Products for three additional years, at prices
and on terms no less favorable to Bigmar Pharmaceuticals than the prices and
terms extended by Cernelle to any other person or entity for the Cernelle
Products. Either party may terminate the Cernelle Agreement upon the occurrence
of certain specified conditions. The termination of the Cernelle Agreement would
have a material adverse effect on the Company. See 'Risk Factors -- Reliance on
Collaborative Arrangements; Management Affiliations with Collaborators.'
In November 1995, Bigmar Pharmaceuticals and Cernelle entered into an
exclusive technical services agreement ('Cernelle TSA'), pursuant to which
Cernelle will prepare abbreviated new drug application ('ANDA') submissions for
Bigmar Pharmaceuticals to submit to the FDA or other appropriate authority with
jurisdiction over the Cernelle Products. Generally, Bigmar Pharmaceuticals is
obligated to pay Cernelle a fee of $20,000 for each ANDA submitted to and
accepted by Bigmar Pharmaceuticals with respect to a Cernelle Product. Cernelle
will assign to Bigmar Pharmaceuticals the sole and exclusive right, title and
interest in and to each ANDA. The term of the Cernelle TSA is 15 years and is
renewable upon the mutual written agreement of the parties. Either party may
terminate the Cernelle TSA upon the occurrence of certain specified conditions.
The termination of the Cernelle TSA would have a material adverse effect on the
Company. See 'Risk Factors -- Reliance on Collaborative Arrangements; Management
Affiliations with Collaborators.'
PROPOSED PRODUCTS
GENERIC ONCOLOGICAL PRODUCTS
The Company has identified approximately 30 oncological drugs which are
currently generic and 15 additional oncological drugs that the Company believes
will become generic by the year 2000. Generic drugs are the chemical and
therapeutic equivalents of brand name (proprietary) drugs and generally are
marketed once the patent on the proprietary drug has expired.
The following table lists the generic oncological products that the Company
intends to manufacture and market to pharmaceutical companies for resale in
Switzerland, Germany and the United States over the next 24 months and the
estimated time periods for each product.
<TABLE>
<CAPTION>
ESTIMATED YEAR OF INTRODUCTION
------------------------------
PRODUCT NAME DOSAGE FORM PRESCRIBED USE SWITZERLAND GERMANY USA
- -------------------- ----------------- -------------------------------------- ----------- ------- ----
<S> <C> <C> <C> <C> <C>
Calcium Leucovorin Injection/Liquid Rescue Therapy 1996 1995* 1997
Doxorubicin Injection Neoplastic Conditions 1996 1997 1997
Dacarbazine Injection Malignant Melanoma 1997 1996 1997
Fluorouracil Injection Colon, Rectum, Breast, Stomach, 1997 1996 1999
Pancreas Carcinomas
Methotrexate Injection/Liquid Neoplastic Conditions 1996 1996 1997
Vinblastine Sulfate Injection Neoplastic Conditions -- -- 1998
</TABLE>
- ------------
* Introduced.
The Company believes that it will be able to obtain approval of these
products in Germany, as indicated above, because it intends to purchase approved
marketing applications from Medac and transfer the manufacturing site from
Germany to the Bigmar Facility. Although this transfer of manufacturing site
requires the approval of the German regulatory authority, the time for such
approval is much faster than the three to five year time period for approval of
full marketing applications in Germany.
Over the next 24 months the Company's strategy is to manufacture, in its
state-of-the-art facilities, in Switzerland and market additional oncological
products as their patents expire.
There can be no assurance that the Company will manufacture or market any
of the foregoing products during the time periods indicated if at all. The
commercialization of these products will depend on a number of factors
including, but not limited to, the successful results of the Company's clinical
toxicity studies and obtaining regulatory approval. Although the Company
believes that each of these proposed products has commercial value, the Company
may choose not to manufacture or market some
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or all of these products. See 'Risk Factors -- No Assurance of Successful
Product Development; Uncertainty of Market Acceptance of Certain Proposed
Products and -- FDA, International and Other Governmental Regulations.'
SODIUM LEUCOVORIN AND OTHER PROPOSED PRODUCTS
Sodium leucovorin is designed to alleviate certain side effects of
chemotherapy more effectively than its currently distributed counterpart,
calcium leucovorin. For many years, the calcium salt of leucovorin has been used
as a major adjuvant drug in oncology. Specifically, calcium leucovorin is used
in rescue therapy for purposes of reducing toxicity in methotrexate treatments.
When combined with high-dosage calcium leucovorin, high dosage methotrexate
therapy has shown strong clinical results.
Some oncologists have identified a need for the development of a more
soluble form of leucovorin to reduce the overall volume of solution injected as
well as to reduce the amount of salts administered that are not directly related
to the active drug substance. In response to this need, a more soluble form of
leucovorin, sodium leucovorin, has been developed by Sapec. Sodium leucovorin is
more than five times as soluble as calcium leucovorin, allowing solutions to be
prepared containing sodium leucovorin at 5% (50 mg/ml) in isotonic saline.
Solutions of sodium leucovorin at 50 mg/ml are isotonic and do not require
supplementation with additional salts. As a result, sodium leucovorin reduces
the overall volume of solution injected and reduces the amount of salts
administered which are not directly related to the active drug. See 'Risk
Factors -- No Assurance of Successful Product Development; Uncertainty of Market
Acceptance of Certain Proposed Products.'
In February 1994, Sapec filed a patent application in Switzerland and then
extended the application to the United States and the EU covering the
composition of matter and the manufacturing process for sodium leucovorin. An
application was filed for the sale of calcium leucovorin in Germany in 1993. In
1995, an amendment to this application was filed to change the liquid form of
calcium leucovorin to sodium leucovorin. Sodium leucovorin is a new chemical
entity which has never been approved before in Germany. The Company believes
that the German regulatory authority might act on its application more quickly
than it does for generic drugs because of its similarity to calcium leucovorin.
The Company believes that all regulatory approvals will be obtained during the
second half of 1996 and that marketing of this product will begin shortly
thereafter. However, there can be no assurance the Company will obtain the
requisite regulatory approvals by that time or at all. See 'Risk Factors --
Reliance on Collaborative Arrangements; Managment Affiliations with
Collaborators, -- Uncertain Protection of Patents and Proprietary Rights, and
-- FDA, International and Other Governmental Regulations.'
In 1995, Bioren and Sapec entered into the Sapec Agreement which provides
that, subject to restrictions on the resale of certain Sapec Products (as
hereinafter defined) to pharmaceutical companies in selected territories, Bioren
shall be the exclusive worldwide distributor of, among other products, sodium
leucovorin and five generic oncological products developed by Sapec ('Sapec
Products'). The Sapec Agreement provides that Sapec will obtain all regulatory
approval necessary for Bioren, or its designee, to import, distribute and sell
any Sapec Products throughout the world. Bioren has agreed to pay Sapec a
one-time fee of $100,000 for the grant of such exclusive rights and licenses
which is payable upon notification by Sapec that the Sapec Products are ready
for initial shipment to Bioren. The Sapec Agreement provides for a one time
payment of $100,000 for the grant of such exclusive rights and licenses which is
payable upon notification by Sapec that the Sapec Products are ready for initial
shipment to Bioren. In addition, Bioren will be responsible for ongoing fees
based upon the size of its orders for Sapec Products. The Sapec Agreement
terminates 15 years from the date of the first commercial sale by Bioren of a
Sapec Product. Bioren will have a non-exclusive worldwide right to distribute
the Sapec Products for three additional years after the expiration of the
initial term or any renewal term, as the case may be, at prices and on terms, no
less favorable to Bioren than the prices and terms extended by Sapec to any
other person or entity. Either party may terminate the Sapec Agreement upon the
occurrence of certain specified conditions. The termination of the Sapec
Agreement would have a material adverse effect on the Company. See 'Risk
Factors -- Reliance on Collaborative Arrangements; Management Affiliations with
Collaborators.'
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BIOTECHNOLOGICAL PRODUCTS
In November 1995, Bigmar Pharmaceuticals and Bioferment entered into the
Bioferment Agreement pursuant to which Bioferment granted Bigmar Pharmaceuticals
the exclusive worldwide rights to use, manufacture and market recombinant
urokinase, a recombinant form of human growth hormone and a recombinant form of
interferon as well as other pharmaceutical products that Bioferment may develop
as may be agreed upon by Bioferment and Bigmar Pharmaceuticals (collectively
'Bioferment Products'). Bioferment either owns the intellectual property rights
with respect to the Bioferment Products or has the exclusive rights to make, use
and sell the Bioferment Products.
The Bioferment Agreement provides that all regulatory applications for
approval to import, register and market, the Bioferment Products shall be filed
in the name of, and owned by, Bigmar Pharmaceuticals. The Bioferment Agreement
will terminate 15 years after the first commercial sale of the last Bioferment
Product introduced by Bigmar Pharmaceuticals, its affiliates or sublicensees.
The Bioferment Agreement may be terminated by either party upon the occurrence
of certain specified conditions. The termination of the Bioferment Agreement
would have a material adverse effect on the Company. See 'Risk
Factors -- Reliance on Collaborative Arrangements; Management Affiliations with
Collaborators.'
Pursuant to the Bioferment Agreement, Bigmar Pharmaceuticals agreed to pay
Bioferment (i) $100,000 on March 1, 1996 (which has been extended to July 1,
1996), (ii) $100,000 promptly following the first filing by Bigmar
Pharmaceuticals with the FDA of an investigational new drug application ('IND')
relating to a Bioferment Product, (iii) $100,000 promptly following the first
filing with the FDA of a New Drug Application ('NDA') for a Bioferment Product,
and (iv) $100,000 promptly following the approval by the FDA of the NDA or
Product License Application ('PLA') for each Bioferment Product for which
approval is sought by Bigmar Pharmaceuticals (payment not to be required for
more than two products). The license fee aggregating $500,000 shall be credited
against the royalty obligations due to Bioferment from Bigmar Pharmaceuticals
pursuant to the Bioferment Agreement. Commencing with the first commercial sale
of a Bioferment Product by Bigmar Pharmaceuticals, Bigmar Pharmaceuticals has
agreed to pay Bioferment, on a quarterly basis, a royalty equal to a percentage
of the Company's net sales of these products. The license fee due under this
agreement, will be paid from the net proceeds of the Offering. See 'Use of
Proceeds.'
During the first three years of the Bioferment Agreement, if Bioferment
materially breaches any material provision relating to purchase and supply, and
such breach shall fail to be cured within 60 days after written notice is given
by Bigmar Pharmaceuticals, or in the event that Bioferment is unable to
adequately provide Bigmar Pharmaceuticals with a stable and reliable source for
Bioferment Products, Bigmar Pharmaceuticals shall have an exclusive,
transferrable, sublicensable license to manufacture the Bioferment Products for
the use of Bigmar Pharmaceuticals and Bigmar Pharmaceuticals' affiliates and
sublicensees in Bigmar Pharmaceuticals' field of use.
Recombinant Urokinase
Recombinant urokinase is a biotechnological product used in the treatment
of cardiovascular disease. Recombinant urokinase is designed to eliminate the
risk of viral contamination that exists with natural urokinase products.
Bioferment uses a culture media in the manufacturing process of recombinant
urokinase. In 1993, a patent application was filed by Dr. Ferruccio Messi for
this culture media in major European countries. Bioferment and Bigmar
Pharmaceuticals have been granted non-exclusive licenses to use the culture
media. The Company believes that recombinant urokinase is in the final stages of
development. The Company does not intend to manufacture recombinant urokinase.
The Company is collaborating with Medac to initiate the regulatory filings in
Germany, including limited toxicology studies and human clinical trials. The
Company anticipates that regulatory approvals for the sale of recombinant
urokinase in Germany will be obtained during the second half of 1997 and that
the marketing for this product will begin shortly thereafter. The Company
believes that marketing clearance from the German regulatory authority will be
obtained in the second half of 1997, as opposed to from the EMEA because
recombinant urokinase does not pose a risk of viral contamination, and would
replace the naturally derived urokinase that is currently on the market in
Germany. However, there can
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be no assurance that the requisite regulatory approvals will be obtained by that
time or at all. See 'Risk Factors -- Reliance on Collaborative Arrangements;
Management Affiliations with Collaborators, -- Manufacturing Facilities for
Proposed Products, -- Uncertain Protection of Patents and Proprietary Rights,
and -- FDA, International and Other Governmental Regulations.'
OTHER PROPOSED PRODUCTS
Recombinant Human Growth Hormone and Recombinant Interferon
In November 1995, Bigmar Pharmaceuticals acquired the licenses from
Bioferment to use, manufacture and market a form of recombinant human growth
hormone, a biotechnological product which is used in connection with assisting
children in the growth process and a form of recombinant interferon, a
biotechnological product which may be used for and in the treatment of cancer.
Recombinant human growth hormone and recombinant interferon are in the early
stages of development. No assurance can be given that these proposed products
will ever be developed. See 'Risk Factors -- No Assurance of Successful Product
Development; Uncertainty of Market Acceptance of Certain Proposed Products.'
Virosome and Liposome Technologies
In December 1995, Bigmar Pharmaceuticals and Bioferment entered into an
agreement ('Bioferment Distribution Agreement') for the exclusive worldwide
distribution by Bigmar Pharmaceuticals of existing Bioferment products derived
from Bioferment's other technologies such as the virosome and liposome
technologies and any additional products developed by Bioferment using these
technologies for the term of the Bioferment Distribution Agreement. Pursuant to
the Bioferment Distribution Agreement, Bigmar Pharmaceuticals has the right of
first refusal for any products derived from these technologies. The Bioferment
Distribution Agreement provides for one-time payment by Bigmar Pharmaceuticals
of $100,000 for the grant of such exclusive rights and licenses which is payable
upon notification by Bioferment that the Bioferment Products are ready for
initial shipment to Bigmar Pharmaceuticals. In addition, Bigmar Pharmaceuticals
is responsible for ongoing fees based upon the size of its orders for such
Bioferment products, which are payable pursuant to the Bioferment Distribution
Agreement. The Bioferment Distribution Agreement will terminate 15 years from
the date of the first commercial sale by Bigmar Pharmaceuticals of a product
covered by the Bioferment Distribution Agreement and is renewable upon mutual
agreement of the parties. Bigmar Pharmaceuticals will have a non-exclusive
worldwide right to distribute the products covered by the Bioferment
Distribution Agreement for three additional years after the expiration of the
initial term or any renewal term. No assurance can be given that these proposed
technologies or proposed products will ever be developed.
COLLABORATIVE AGREEMENTS
The Company has entered into exclusive arrangements with the following
non-affiliated companies to market certain proprietary and generic oncological
products, proposed oncological products or biotechnological products,
manufactured or licensed by the Company, in various territories. Restrictions
regarding exclusivity and right of first refusal limit the Company's ability to
pursue and negotiate collaborative arrangements with other entities on terms
which may be more favorable to the Company. See 'Risk Factors -- Reliance on
Network of Pharmaceutical Companies for Marketing; Dependence on Additional
Collaborative Arrangements.'
Medac
In September 1995, Bigmar Pharmaceuticals and Medac entered into a series
of international distribution agreements (the 'Medac Agreements') relating to
certain oncological products such as mercaptopurine and doxorubicin. Pursuant to
these agreements, Bigmar Pharmaceuticals and Medac have divided, subject to
future adjustment, the exclusive right to sell the oncological products covered
by the agreements in various countries in Europe, South America, Asia and the
United States. Pursuant to the Medac Agreements, the Company anticipates that
Medac will market certain of the Company's oncological products and proposed
products in Germany and the United Kingdom.
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Boehringer
In December 1995, Bigmar Pharmaceuticals and Boehringer entered into an
agreement ('Boehringer Agreement') for the exclusive distribution by Boehringer
of certain oncological products such as methotrexate, doxorubicin, calcium
leucovorin and mercaptopurine ('Boehringer Products') in Italy, Vatican City and
the San Marino Republic ('Boehringer Territory'). Pursuant to the Boehringer
Agreement, the Company will supply Boehringer with the products on an exclusive
basis and has granted Boehringer an option to distribute new products in the
Boehringer Territory. Under the terms of the Boehringer Agreement, the Company
will receive a flat payment from Boehringer for each product distributed in the
Boehringer Territory. The Boehringer Agreement terminates in December 2005, but
is subject to automatic one year extensions unless earlier terminated by the
parties. Either party may terminate the Boehringer Agreement upon the occurrence
of certain specified conditions.
Laevosan
In December 1995, Bigmar Pharmaceuticals and Laevosan entered into an
exclusive distribution agreement ('Laevosan Agreement') pursuant to which Bigmar
Pharmaceuticals will supply certain oncological products such as doxorubicin and
methotrexate to Laevosan for sale in Switzerland. Under the Laevosan Agreement,
Laevosan is required to sell minimum quantities each year and, if Laevosan fails
to sell such amounts, Bigmar Pharmaceuticals can convert the Laevosan Agreement
to a non-exclusive distribution arrangement. The Laevosan Agreement terminates
on December, 1998, but is subject to automatic one year extensions, unless
earlier terminated by the parties. Either party may terminate the Laevosan
Agreement upon the occurrence of certain specified conditions.
Vita
In July 1995, Bigmar Pharmaceuticals and Vita entered into a distribution
agreement ('Vita Agreement') pursuant to which Vita will buy certain oncological
products exclusively from Bigmar Pharmaceuticals and will commercialize such
products in Spain. In the event Vita ceases to commercialize any product, the
marketing authorization for that product will be transferred to Bigmar
Pharmaceuticals at a nominal fee. The Vita Agreement terminates in September
2005 but may be extended automatically for an additional one year period. Either
party may terminate the Vita Agreement upon the occurrence of certain specified
conditions.
Protyde
In October 1995, Bigmar Therapeutics and Protyde Therapeutics, a
wholly-owned subisidiary of Protyde, a development stage company, formed the
Partnership, for the purpose of manufacturing and marketing certain
pharmaceutical products ('Partnership Products'). The business of the
Partnership is to obtain FDA approval to market the Partnership Products, and to
commence the manufacturing and marketing of the Partnership Products. Each of
the partners initially has a 50% interest in the Partnership and neither may
sell, assign, pledge or otherwise transfer any portion of their respective
interests, except to affiliates of the Company and Protyde, without the other
partner's prior consent. As its initial capital contribution to the Partnership,
Protyde Therapeutics will contribute to the Partnership up to $3,075,000 in
cash, the first $750,000 of which was paid to the Company on March 29, 1996,
with the balance to be contributed at such times and in such amounts so as to
enable the Partnership to timely satisfy its obligations, and to make its
payments under the terms of its manufacturing agreement. As Bigmar Therapeutics'
capital contribution to the Partnership, Bigmar Therapeutics will cause the
Company to make its manufacturing capacity available to the Partnership under
the terms of the Manufacturing Agreement (as defined below). Under the
Partnership Agreement, the Partnership is the sole owner of all right, title and
interest in all FDA-approved ANDAs for the Partnership Products. Unless
terminated by either party upon the occurrence of certain specified conditions,
the Partnership will continue until December 31, 2005.
In October 1995, the Partnership and Protyde entered into a sales and
marketing agreement ('Marketing Agreement') pursuant to which the Partnership
appointed Protyde, on an exclusive basis, to market, sell and distribute the
Partnership Products worldwide, except for certain designated countries, and to
assist the Partnership in certain pre-manufacturing activities relating to the
Partnership Products. Unless terminated by either party upon the occurrence of
certain specified conditions, the
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Marketing Agreement will remain in effect until the earlier of the dissolution
of the Partnership or December 31, 2005.
In October 1995, the Partnership and the Company entered into a
manufacturing agreement ('Manufacturing Agreement') pursuant to which the
Partnership engaged the Company to, among other things (i) acquire and perform
stability testing on all raw materials and packaging materials necessary for the
manufacture of the Partnership Products, (ii) make its production capacity
available to the Partnership in order to meet production obligations, and (iii)
undertake all measures for quality control which are either required by the FDA
or requested by the Partnership. The Manufacturing Agreement sets forth the
minimum production capacity which the Company must make available to fill
Partnership orders and the minimum annual orders of Partnership Products which
the Partnership must place. If, with respect to any Partnership Product, the
Partnership fails to satisfy the minimum annual orders, the Company may
terminate the Manufacturing Agreement with respect to that product on 180 days
prior notice. Unless terminated by either party upon the occurrence of certain
specified conditions, the Manufacturing Agreement shall remain in effect until
the earlier of the dissolution of the Partnership or December 31, 2005.
MANUFACTURING AND SUPPLIERS
The Company has two facilities, the Bioren Facility and the Bigmar
Facility. The Bioren Facility is a 57,000 square foot, state-of-the-art,
facility in Couvet, Switzerland where the Company manufactures and markets IV
Solutions and will develop and manufacture non-cytotoxic oncological products.
The Company intends to dedicate approximately 25,000 square feet of the Bioren
Facility to test and manufacture certain oncological products such as sodium
leucovorin. The Bigmar Facility is a 25,000 square foot, state-of-the-art,
facility, in Barbengo, Switzerland where the Company will develop and
manufacture cytotoxic oncological products. There can be no assurance that the
Bigmar Facility or the dedicated area of the Bioren Facility will be fully
operational or that regulatory approvals will be obtained in a timely manner, if
at all. Further, the Company intends to enter into an agreement with another
party pursuant to which such company will manufacture recombinant urokinase,
which the Company will market. The amount of resources and the time that the
other party will devote towards producing the products on behalf of the Company
and the manufacturing procedures and quality control will not be within the
Company's control. See 'Risk Factors -- Manufacturing Facilities for Proposed
Products.'
The Company's manufacturing facilities will be subject to periodic
inspections by the FDA and other United States federal agencies and the FDA may
choose to inspect the Company's facilities before approving the Company's
products for sale in the United States. The Company's facilities have not yet
been inspected by the FDA, however, the Company has retained independent
consultants to assist in this process of ensuring compliance with GMP
requirements. The IKS will also inspect the manufacturing facility to determine
if the manufacturer is complying with good manufacturing practices before
approval is granted to produce the drug product.
Quality monitoring and testing programs and procedures have been
established by the Company to assure that all critical activities associated
with the production, control and distribution of its products will be carefully
controlled and evaluated. The Company's strategy is to seek to meet the highest
quality standards, with the goal of assuring the purity and safety of each of
its products.
The capital costs associated with equipping a facility and manufacturing
oncological products are substantial and the manufacturing process is complex.
Further, because some oncological products are highly toxic, the facility in
which they are manufactured, the method of manufacture, as well as the
employees' working conditions, are regulated by the FDA and foreign regulatory
authorities. As the manufacturing of cytotoxic oncological products is expensive
and complex, only a few companies throughout the world engage in their
manufacture.
The majority of raw materials needed to manufacture the Company's products
and proposed products generally are not readily available and must be purchased
from limited sources. In addition, the Company obtains containers for IV
Solutions from a sole supplier. The Company's reliance on a sole or a limited
number of suppliers involves several risks including, among others, the
inability to obtain an adequate supply of required raw materials and components
in order to manufacture or market a
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product or proposed product, increased raw material or component costs and
reduced control over pricing, quality and timely delivery. Any interruption in
the supply of raw materials or components could have a material adverse effect
on the Company. Furthermore, obtaining raw materials from a new source may
require additional regulatory approval. In addition, certain potential alternate
suppliers may have pre-existing exclusive relationships with competitors of the
Company and others which may preclude the Company from being able to manufacture
certain of its proposed products. See 'Risk Factors -- Reliance on PLM and
-- Dependence on Key Suppliers.'
RESEARCH AND DEVELOPMENT
To date, substantially all of the Company's research and development
efforts have been performed by collaborators. Upon consummation of the Offering,
the Company intends to retain approximately 15 employees or consultants,
including chemists, biologists and technical personnel. The Company expects to
use a portion of the proceeds of the Offering for the development of its
proposed products and intends to continue the development and testing of
oncological products, such as sodium leucovorin and biotechnological products,
such as recombinant urokinase; purchasing and formulating raw materials into a
finished product, scaling up the development of the product from the laboratory
phase to the production phase; conducting clinical trials and conducting
stability and bioequivalence testing of the finished product. See 'Use of
Proceeds.'
MARKETING AND SALES
The Company markets IV Solutions through its own sales force to hospitals,
clinics, retirement homes, nursing homes, managed health care organizations,
home infusion providers and other health care providers, and markets Prostate
Materials, mercaptopurine and calcium leucovorin, to pharmaceutical companies.
The Company does not intend to market its other products or proposed products
directly to the public. During 1995, the Company granted certain companies such
as Medac, Boehringer, Laevosan, Vita and Protyde the exclusive marketing and
distribution rights to certain of the Company's oncological products and future
oncological products in certain territories. The amount of resources and the
time that any of these collaborators devote towards marketing and sales of the
Company's products and proposed products are not within the control of the
Company. All of the agreements terminate under certain circumstances. The
termination of any of these agreements would have a material adverse effect on
the Company. See 'Risk Factors -- Reliance on Network of Pharmaceutical
Companies for Marketing; Dependence on Additional Collaborative Arrangements.'
COMPETITION
The pharmaceutical and biotechnology industries are subject to intense
competition and rapid and significant technological change. Competitors of the
Company are numerous and include United States and international companies. In
the intravenous infusion market, the Company faces competition from Braun and
Fresenius and in the Prostate Material market, the Company faces competition
from Allergon, a division of Pharmacia & Upjohn, Inc. In addition, in the
oncological and biotechnological markets, the Company faces competition from
Bristol-Myers Squibb Co., Chiron Inc., Pharmachemie, BV and Pharmacia & Upjohn,
Inc. Furthermore, in oncological and biotechnology markets the Company may face
competition from alternative methods of treatment such as, in the case of its
oncological products, surgical procedures, radiation treatments and other
treatments.
Many of the Company's competitors, including all of the companies referred
to above, have substantially greater financial and technical resources and
production and marketing capabilities than the Company. The Company believes
that the principal competitive factors affecting its products and proposed
products are timing of product introduction, price, quality, and service. The
Company believes that quality and service continue to be an advantage in the
sale of IV Solutions and Prostate Materials. The Company believes that price,
timing, quality, customer service and breadth of its product line are all
important competitive factors for its oncological products, proposed oncological
products and proposed biotechnological products. The ability to introduce
generic versions of products promptly after a proprietary drug's patent expires
and the breadth of the product line may give companies a competitive advantage
over the Company. See 'Risk Factors -- Competition and Rapid Technological
Change.'
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PATENTS AND PROPRIETARY RIGHTS
The Company relies on a combination of patent applications, licenses,
trademarks, trade secrets and non-disclosure agreements to protect its
proprietary technology, rights and know-how and the technology, rights and
know-how licensed from others. In addition, the Company is currently in the
process of implementing a policy that requires its personnel to execute
non-disclosure agreements. There can be no assurance that such patent
applications or any resulting patents or any licenses or trademarks will not be
infringed upon, that the Company's trade secrets will not otherwise become known
to or independently developed by competitors, that non-disclosure agreements
will not be breached, or that the Company would have adequate remedies for any
such infringement or breach. Litigation may be necessary to enforce patents
issued to the Company, to protect the Company's proprietary rights, or to defend
the Company against third-party claims of infringement of proprietary rights of
others. Such litigation could result in substantial cost to the Company and a
diversion of effort of the Company and its management. Patents concerning
pharmaceutical or biotechnological products generally are highly uncertain,
involve complex legal, scientific and factual questions and have recently been
the subject of much litigation. To date, no consistent policy has emerged
regarding the breadth of claims allowed or the degree of protection afforded
under these patents. Accordingly, there can be no assurance that patent
applications which underlie the Company's licenses will result in patents being
issued, or that, if issued, the patents will afford protection against
competitors with similar technology. Because of the extensive time required for
development, testing and regulatory review of a potential product, it is
possible that before any of the Company's potential products can be
commercialized, any related patent may expire, or remain in existence for only a
short period following commercialization, thus reducing any advantage of the
patent. Although the Company is not aware of any claim against it of patent
infringement, the Company's ability to commercialize its products will depend on
not infringing the patents of others. Litigation concerning patents and
proprietary technologies can be protracted and expensive. Laws regarding the
enforceability of intellectual property vary from country to country. Therefore,
there can be no assurance that intellectual property issues will be uniformly
resolved, or that local laws will provide the Company with consistent rights and
benefits. In addition, there can be no assurance that others will not be issued
patents which may prevent the sale of the Company's products or require
licensing and the payment of fees or royalties by the Company in order for the
Company to be able to market certain products.
The Company currently is the exclusive and non-exclusive licensee of
various oncological and biotechnological products and technologies. The Company
may in the future be required or may desire to obtain other licenses to develop,
manufacture and market other products or to market products in additional
territories, the rights to which may be held by additional parties. There can be
no assurance that licenses will be obtainable on commercially reasonable terms,
if at all, or that any licensed patents or proprietary rights will be valid and
enforceable. Bioferment and Bigmar Pharmaceuticals have the rights to patent
applications for the culture media used for the process of manufacturing
recombinant urokinase that were filed on July 11, 1993. Cerbios Pharma has the
rights to patent applications for sodium leucovorin that were filed on February
14, 1994. See ' -- Proposed Products.'
To the extent that consultants, key employees or other third parties apply
technological information independently developed by them or by others to the
Company's projects, third parties may own all or part of the proprietary rights
to such information, and disputes may arise as to the ownership of the
proprietary rights to such information which may not be resolved in favor of the
Company. To the extent that the Company requires rights to any resulting
technologies, it may be necessary to negotiate additional license agreements or
the Company may be unable to utilize such technologies. See 'Risk
Factors -- Uncertain Protection of Patents and Proprietary Rights.'
GOVERNMENTAL REGULATIONS
UNITED STATES. The Company's research and development activities and the
production and marketing of the Company's licensed and owned products and
proposed products are subject to regulation for safety, efficacy and compliance
with a wide range of regulatory requirements by numerous governmental
authorities in the United States, in states thereof and in other countries. In
the United States, drugs are subject to rigorous FDA review. The Federal Food,
Drug, and Cosmetic Act
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and other Federal statutes and regulations govern or influence the research,
testing, manufacture, safety, labeling, storage, recordkeeping, approval,
distribution, reporting, advertising and promotion of such products.
Noncompliance with applicable requirements can result in recall, injunction or
seizure of products, refusal to permit products to be imported into the United
States, refusal of the government to approve or clear product approval
applications or to allow the Company to enter into government supply contracts,
withdrawal of previously approved applications and criminal prosecution.
In order to obtain FDA approval of a drug, companies must generally submit
proof of safety and efficacy. In some cases such proof entails extensive
clinical and preclinical laboratory tests. The testing, preparation of necessary
applications and processing of those applications by the FDA is expensive and
may take several years to complete. There is no assurance that the FDA will act
favorably or in a timely manner in reviewing submitted applications, and the
Company may encounter significant difficulties or costs in its efforts to obtain
FDA approvals which could delay or preclude the Company from marketing any
products it may develop. The FDA may also require postmarketing testing and
surveillance of approved products, or place other conditions on the approvals.
These requirements could cause it to be more difficult or expensive to sell the
products, and could therefore restrict the commercial applications of such
products. Product approvals may be withdrawn if compliance with regulatory
standards is not maintained or if problems occur following initial marketing.
For patented products or technologies, delays imposed by the governmental
approval process may materially reduce the period during which the Company will
have the exclusive right to exploit such technologies; however, an additional
period of up to five years may be added to the term of the patent in such
circumstance.
New Drug Application ('NDA'). Generally, with respect to drugs with active
ingredients not previously approved by FDA, a prospective manufacturer must
conduct and submit to FDA adequate and well-controlled clinical studies to prove
that drug's safety and efficacy. Currently, FDA approval of an NDA takes
approximately two to three years on average after its initial submission to FDA,
based on information published by FDA.
Following drug discovery, the steps required before a new pharmaceutical
product may be marketed in the United States include (1) preclinical laboratory
and animal tests, (2) the submission to the FDA of an application for an IND,
(3) clinical and other studies to assess safety and parameters of use, (4)
adequate and well-controlled clinical trials to establish the safety and
effectiveness of the drug, (5) the submission of an NDA to the FDA, and (6) FDA
approval of the NDA prior to any commercial sale or shipment of the drug.
Typically, preclinical studies are conducted in the laboratory and in
animal model systems to gain preliminary information on the drug's pharmacology
and toxicology and to identify any potential safety problems that would preclude
testing in humans. The results of these studies are submitted to the FDA as part
of the IND application. Testing in humans may commence 30 days after submission
of the IND unless the FDA places the IND on 'clinical hold.' A three phase
clinical trial program is usually required for FDA approval of a pharmaceutical
product. Phase I clinical trials are designed to determine the metabolism and
pharmacologic effects of the drug in humans, the side effects associated with
increasing doses, and, possibly, to obtain early indications of efficacy. These
studies generally involve a small number of healthy volunteer subjects, but may
be conducted in people with the disease the drug is intended to treat. Phase II
studies are conducted to evaluate the effectiveness of the drug for a particular
indication and thus involve patients with the disease under study. These studies
also provide evidence of the short term side effects and risks associated with
the drug. Phase III studies are generally designed to provide the substantial
evidence of safety and effectiveness of a drug required to obtain FDA approval.
They often involve a substantial number of patients in multiple study centers
and may include chronic administration of the drug in order to assess the
overall benefit-risk relationship of the drug. Upon completion of clinical
testing which demonstrates that the product is safe and effective for a specific
indication, an NDA may be submitted to the FDA. This application includes
details of the manufacturing and testing processes, preclinical studies and
clinical trials. The FDA closely monitors the progress of each of the three
phases of clinical testing and may, at its discretion, re-evaluate, alter,
suspend or terminate the testing based on the data that have been accumulated to
that point and its assessment of the risk/benefit ratio to the patient. Typical
estimates of the total time required for
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completing such clinical testing vary between four and ten years. The clinical
testing and FDA review process for new drugs are likely to require substantial
time, effort and expense. The Company anticipates that proprietary oncological
products will be approved through the NDA process. There can be no assurance
that any approval will be granted to the Company on a timely basis, if at all.
The FDA may refuse to approve an NDA if applicable statutory and/or regulatory
criteria are not satisfied, or may require additional testing or information.
There can be no assurance that such additional testing or the provision of such
information, if required, will not have a material adverse effect on the
Company. The regulatory process can be modified by Congress or the FDA in
specific situations.
Abbreviated New Drug Application ('ANDA'). The Drug Price Competition and
Patent Term Restoration Act of 1984 ('Drug Price Act') established a new
abbreviated procedure for obtaining FDA approval for those generic drugs that
are equivalents of brand name drugs. For drugs that contain the same active
ingredient as drugs already approved for use in the United States, FDA
ordinarily requires bioequivalence data illustrating that the generic drug
formulation is, within an acceptable range, equivalent to a previously approved
drug. A generic drug manufacturer is not required to submit the clinical data to
establish the safety and effectiveness of the product. Instead, the Drug Price
Act allows the FDA to rely on bioequivalence data to approve ANDAs.
'Bioequivalence' compares the bioavailability of one drug product with another
and, when established, indicates that the rate of absorption and the levels of
concentration of a generic drug in the body are substantially equivalent to
those of the previously approved drug. The Company anticipates that ANDAs will
be submitted to the FDA for approval of those generic oncological products which
are intended to be marketed in the United States. See ' -- Proposed Products.'
According to information published by FDA, currently it takes approximately one
to three years on average to obtain FDA approval of an ANDA following the date
of its first submission to FDA. Due to the experience of its senior management
in submitting ANDAs to the FDA, the Company believes that it will be able to
obtain FDA approval for each of its proposed oncological products approximately
one year after each ANDA is submitted. Generally, a generic manufacturer may not
submit an ANDA for a period of five years from the date of approval of the brand
name product.
The Drug Price Act, in addition to establishing a new ANDA procedure,
created new statutory protection for approved brand name drugs. Prior to
enactment of the Drug Price Act, FDA gave no consideration to the patent status
of a previously approved drug in deciding whether to approve an ANDA. Under the
Drug Price Act, however, the effective date of approval of an ANDA can depend,
under certain circumstances, on the patent status of the brand name drug.
Additionally, the Drug Price Act, in certain circumstances, provides for
extension of the term of certain patents to cover a drug by up to an additional
five years to compensate the patent holder for the reduction of the effective
market life of a patent due to the time involved in federal regulatory review.
Good Manufacturing Practices ('GMP'). The Company will be subject to the
FDA's GMP, GLP and extensive record keeping and reporting requirements for
manufacturing products for sale in the United States. As a result, the Company's
manufacturing facilities will be subject to periodic inspections by the FDA and
other United States federal agencies when the Company's products are offered for
sale in the United States. The Company's operations have not yet been inspected
by the FDA and there can be no assurance they will pass any inspections by the
FDA. The Company has retained independent consultants to assist it in complying
with FDA standards including the GMP requirements. Failure to comply with
applicable regulatory requirements can result in, among other things, import
detentions, fines, civil penalties, suspensions or losses of approvals, recalls
or seizures of products, operating restrictions and criminal prosecutions.
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GERMANY. In Germany, drugs for human use can be marketed only if they are
approved in advance either by the Federal Institute for Medicinal Products and
Medical Devices ('BfArM') in Berlin or by the European Union ( 'EU') Commission
after a substantive review of all safety, quality and efficacy data. The
application for a marketing authorization requires the preparation and
submission of extensive data and files. The applicant must produce the results
of analytical, pharmacological/toxicological and clinical studies and related
experts' opinions. The production of these data usually requires a long-term
pre-clinical examination phase. The details of the requirements are prescribed
in administrative regulations such as the Medicinal Products Guidelines.
Clinical trials in Germany are monitored by the state authorities.
The BfArM can reject the application if the data are incomplete, the drug
product has not been sufficiently examined, the product does not conform with
the acknowledged pharmaceutical quality rules, effectiveness has not been
established, or there is a suspicion of unacceptable side effects. In theory,
once a complete application has been submitted to the BfArM, a decision must be
issued within four months, in exceptional cases within seven months. In
practice, however, these terms are not met and a term of review by the BfArM is
expected to take generally three to five years. The marketing authorization of a
new substance triggers fees to the BfArM of over $66,000. The exact amount of
fees can vary, depending on the amount of work required of the authority, the
kind of procedure and the result of such procedure.
For safety reasons, drug products are also subject to close monitoring
after approval is granted. There are a variety of restrictions which the federal
agencies and the state authorities may impose including the withdrawal of
marketing authorizations and the recall of products.
The importation of drug products into Germany from other EU and E.E.A.
(European Economic Area) countries does not require special permission. However,
the product must be approved in Germany. Approval of the drug product in other
EU member states does not replace German approval. The importer must obtain a
separate approval for the repackaging and labeling of imported products.
Sales of high-price pharmaceuticals (such as oncology drugs) are affected
by parallel imports and re-imports. Independent importers purchase products in
the producing EU country, ship them to Germany and, in most cases, offer them at
far lower prices than the manufacturers of the original preparations and/or
their official importers. The European Court of Justice has ruled that the
importing member state may not prohibit parallel imports.
Where a drug product has not been produced in an EU country or imported
through another EU member country (such as from Switzerland or the U.S.), the
importer must obtain special permission to import the product. To do so, the
importer must produce a certificate from the regulatory authority of the country
where the drug was manufactured showing, among other things, that the product is
approved in that country and that it conforms to applicable standards of the
World Health Organization ('WHO') or of the Pharmaceutical Inspection Convention
('PIC'). See 'Risk Factors -- FDA, International and Other Governmental
Regulations.'
SWITZERLAND. In Switzerland, approval of the production and sale of drugs
for human use is regulated on a cantonal level rather than a federal level. The
cantons of Switzerland have organized the IKS as an authority for the approval
of pharmaceuticals. Based on approval by the IKS, the cantons then grant
permission for the production and sale of such approved pharmaceuticals.
Theoretically, each canton is still entitled to deny approval of a particular
medication. However, cantons generally follow the decision of the IKS as they
are bound by the Intercantonal Treaty for the Control of Medications.
The IKS reviews all applicable safety, quality and effectiveness data, as
well as data relating to the cost effectiveness of the product. To obtain
approval from the IKS, the manufacturer must submit analytical, chemical,
pharmacological and toxicological data based on animal trials and human clinical
studies. The IKS approves the manufacturing of products only after having
checked the conformity to applicable standards of the WHO or the PIC. The IKS
also will inspect the manufacturing facility to determine if the manufacturer is
complying with good manufacturing practices before approval is granted to
produce the drug product. For generic products, pharmacological and
toxicological data are not required to be submitted to the IKS. To date, all of
the Company's pharmaceutical products which have been approved by the IKS to
date are generic products.
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RECENT EU PROCEDURES. On January 1, 1995, the EU established new procedures
for the approval of pharmaceuticals, and a new coordinating body, the EMEA was
created. Germany is a member of the EU; Switzerland is not an EU member. Under
the new procedures, which are compulsory for biotechnological preparations and
optional for certain other pharmaceutical products, in particular those with new
chemical agents, applications are filed with the EMEA and are evaluated
scientifically by the Committee for Proprietary Medicinal Products ('CPMP').
This is known as the centralized procedure. The CPMP consists of representatives
of the national registration authorities. For each application, a Rapporteur,
(i.e. one of the national authorities) is appointed and has the overall
responsibility for the review of the application. The Rapporteur prepares an
assessment report for the CPMP. The EU Commission will generally follow the
CPMP's scientific evaluation. If one or more member states objects, the EU
Council will decide the matter, otherwise the decision is rendered by the EU
Commission on the basis of the CPMP evaluation.
A decentralized approval procedure is used for most other marketing
authorization applications. The applicant submits the application to one member
state where the application is reviewed. Once the first marketing authorization
is obtained, the company files identical applications in the other EU member
states. The marketing authorities of such other member states are supposed to
acknowledge the first decision within 90 days. If there is disagreement between
the authorities that cannot be resolved, the CPMP will be involved and will
issue a scientific evaluation. If this scientific evaluation is not further
disputed, the EU Commission will render a decision on this basis. If the
disagreement continues, the EU Council will vote to decide the matter.
Because the EMEA guidelines have been in effect for a limited period of
time, the Company is unable to reliably predict how long it will take on average
for drugs to be approved under these new procedures.
THIRD-PARTY REIMBURSEMENT
Successful commercialization of the Company's own or licensed products may
depend in part on the availability of adequate reimbursement from third-party
health care payors such as Medicare, Medicaid, and private insurance plans.
Reimbursement rules vary from payor to payor, and reimbursement also may depend
upon the setting in which a particular item or service is furnished.
In general, payors exclude payment for items and services that are deemed
to be not medically 'reasonable and necessary,' or which are considered to be
not safe and effective, experimental or investigative, or not medically
appropriate for the patient. In making these determinations, payors typically
rely on studies published in peer-reviewed medical journals, the opinions of
recognized medical specialty societies, and the practices of physicians in the
local medical community. Some payors are also beginning to consider the cost of
a new item or service in comparison to existing alternatives in determining
whether and how much they will reimburse for a new technology. FDA clearance or
approval to begin marketing a drug generally is required by payors as a
condition of coverage, but such clearance or approval alone does not assure that
the payor will reimburse for the drug treatment.
Most medical procedures involve payment for the physician service and, in
cases where the service is provided outside of the physician's office, payment
for the facility costs, including supplies, furnished in connection with the
procedure. Medicare, which is a Federal government program that primarily
reimburses health care furnished to the elderly and disabled, pays for physician
services based on a physician fee schedule, which assigns a payment weight for
each covered physician procedure.
The trend towards managed health care and the concurrent growth of HMOs
which could control or significantly influence the purchase of health care
services and products, as well as legislative proposals to reform health care,
may all result in lower prices for the Company's products. There can be no
assurance that the Company's products will be considered cost-effective by
third-party payors, that reimbursement will be available or, if currently
available, will continue to be available, or that payors' reimbursement policies
will not adversely affect the Company's ability to sell products on a profitable
basis, if at all. The cost containment measures that health care providers are
instituting in the face of the uncertainty and the ultimate effect of any health
care reform could have an adverse effect on the Company's ability to sell its
products and may have a material adverse effect on the Company.
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Virtually every state as well as the District of Columbia has enacted
legislation permitting the substitution of equivalent generic prescription drugs
for brand name drugs where authorized or not prohibited by the prescribing
physician and currently 13 states mandate generic substitution in Medicaid
programs.
In Germany, about 90% of the population are members of statutory health
insurance programs. These health insurance providers are public bodies
independent from the government and are funded equally by employers and
employees. Their catalogue of services for which they will provide reimbursement
is widely influenced by government regulations. Managed Care and HMO's are still
unknown in Germany although various elements of these systems will probably be
adopted in the future. The economic success of a drug product in Germany is
widely dependent upon acceptance of the drug by the statutory health insurance
providers.
Certain drugs are generally excluded from reimbursement, however. This
includes medications to treat minor diseases like colds and influenza and drugs
which have been determined by the Federal Ministry of Health to be
'uneconomical,' e.g., medicinal products with more than three active
ingredients. The Federal Ministry of Health is authorized to amend this
'negative list' at any time. Health insurance providers generally deny
reimbursement for drugs used in clinical trials. Although drugs can generally be
prescribed by a doctor off label, i.e., beyond their approved indication, and
still be reimbursed, there are cases where the reimbursement of oncological
drugs off-label was denied on the basis that the treatment was experimental.
The health insurance providers are also authorized to set maximum
reimbursement levels for generic drugs. As soon as two products with identical
or chemically similar ingredients or similar therapeutic effects are on the
market, the health insurance providers may set a maximum reimbursement amount.
This amount will usually be an average of the lowest and the highest price.
Typically, the maximum reimbursement is fixed on the basis of the lowest price
plus 1/3 of the price range to the most expensive product. About 70% of drugs
sold in Germany are subject to maximum reimbursement. So far, no oncological
products have been affected by a maximum reimbursement cap. This may, however,
change at any time. A manufacturer is legally free to continue to sell its
products at higher than the maximum reimbursement rate, but patients must then
pay the difference. So far, the Company believes no manufacturer has tried to
sell its products at prices exceeding the maximum reimbursement. If the products
of the Company become subject to a maximum reimbursement rate, this may
adversely affect the prices the company will be able to charge. See 'Risk
Factors -- Dependence on Third-Party Reimbursement; Price Controls; Health Care
Reform.'
In addition to maximum reimbursement caps, pharmaceutical prices are
subject to statutory limitations on the amounts that can be spent on drugs by
the statutory health insurance providers. As a consequence, pharmaceutical
prices decreased in the last several years and may decrease further in the
future.
In Switzerland, reimbursement for pharmaceuticals is regulated on a federal
level. There are two categories of drugs subject to reimbursement. The first
category consists of medications which are required to be reimbursed by private
health insurers. The second category contains specialty medications for which
reimbursement is recommended. In practice, private health insurers grant
reimbursement for the specialty products on the recommended list.
ENVIRONMENTAL REGULATIONS
In Switzerland, Bigmar Pharmaceuticals and Bioren are subject to applicable
environmental laws such as the Environment Protection Act of 1983, the Water
Protection Act of 1991 and the Toxic Substance Act of 1969, as well as all
applicable regulations. Swiss environmental protection laws govern, among other
things, all emissions to the air, soil and water, waste water discharge and
solid and hazardous waste disposal. Bigmar Pharmaceuticals and Bioren are
subject periodically to environmental compliance reviews by various Swiss
regulatory offices.
The Company believes its facilities in Switzerland are in compliance with
applicable environmental laws. However, environmental laws have changed in
recent years and the Company may become subject to increasingly stringent
environmental standards in the future. While the Company anticipates that it
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may from time to time incur expenditures in connection with environmental
matters, it does not anticipate making substantial expenditures for those
matters within the next twelve months and beyond that is unable to predict the
extent or timing of future expenditures which may be required in connection with
complying with environmental laws.
PRODUCT LIABILITY AND INSURANCE
The testing, clinical trials, manufacturing, and marketing of the Company's
products and proposed products involve the inherent risks of product liability
claims against the Company. The Company currently maintains product liability
insurance coverage on IV Solutions in the amount of $45,000,000, but such
insurance is expensive, subject to various exclusions and may not be obtainable
or maintainable by the Company in the future on terms acceptable to the Company.
There can be no assurance that the amount and scope of any coverage will be
adequate to protect the Company in the event that a product liability claim is
successfully asserted against the Company. Products, such as those sold or
proposed to be sold by the Company, may be subject to recall for unforeseen
reasons. A recall of the Company's products could have a material adverse effect
on the Company and its reputation.
Rules on strict liability of drugs are in effect in Germany. The person
responsible for placing the product on the market (who can, but need not be, the
manufacturer) is liable. Only personal injuries are recoverable, and there is no
mandated compensation for pain or suffering. The maximum amount recoverable by
an individual is DM 1 million (approximately US $666,000).
The manufacturer or the person responsible for placing the product on the
market is obliged to obtain insurance coverage against potential liabilities.
This obligation can be fulfilled either by entering into a contract with a
German insurance company, or by obtaining a confirmation of coverage from a
credit institution in Germany or within the EU. The German insurance industry
has created a so-called 'pharma pool.' This working relationship enables all
major German insurance companies to pool the risks from the statutory strict
liability and therefore provide affordable insurance.
Compensation for pain and suffering or for personal damages exceeding the
amounts set forth above can only be demanded on the basis of tort rules as laid
down in the Civil Code. If a claim is sustained there is unlimited liability. No
compulsory insurance coverage is prescribed by statute. Compensation for pain
and suffering can be assessed by the courts but usually remains below the levels
under United States law.
In Switzerland, there is no special product liability law for
pharmaceuticals. The Swiss federal product liability law, which covers drug
products, provides that manufacturers are subject to strict liability for
injuries caused by defective products.
FACILITIES
The Company's principal executive offices are located in approximately
1,440 square feet in Columbus, Ohio. The Company entered into a sublease
agreement, dated March 1, 1996, with Cernitin America, Inc. ('Cernitin'). The
sublease terminates on February 28, 1998. The sublease is at a rental of
approximately $22,315 per annum. Mr. Tramontana was the President and a director
of Cernitin and Michael K. Medors was the treasurer and general manager of
Cernitin at the time of the negotiation and execution of the sublease. See
'Certain Transactions.'
The Company owns two pharmaceutical plants, the Bigmar Facility and the
Bioren Facility.
During 1995, Bigmar Pharmaceuticals purchased the Bigmar Facility, a 25,000
square foot facility in Barbengo, Switzerland, for developing and manufacturing
oncological products. The Bigmar Facility also houses warehousing and storage,
manufacturing, labeling and packaging, and administrative and record-keeping
areas. The Bigmar Facility and the equipment contained therein is subject to two
bank loans in the principal amounts of approximately $1,551,000 and $1,974,000,
respectively. The loans are secured by mortgages on the Bigmar Facility and
certain machinery. Interest on the loans is payable at a rate of up to 6.5% per
annum until December 31, 1997. The principal amounts of such loans are due on
December 31, 1997 and may be extended by an agreement between the parties. The
first loan is pursuant to a bank commitment with a limit of $1,847,187 from
which the Company may draw. The second loan has a limit of $2,749,790 from which
the Company may draw. See 'Management's
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Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources.' The Bigmar Facility is currently
being equipped and the Company will not begin manufacturing oncological products
until the facility is fully operational and regulatory approval is obtained,
which the Company believes will occur in the last quarter of 1996. See 'Risk
Factors -- Manufacturing Facilities for Proposed Products.'
The Bioren Facility is a 57,000 square foot facility in Couvet, Switzerland
that houses manufacturing operations, laboratory facilities for quality
assurance and quality control activities, including batch testing and
multiple-batch stability testing operations, labeling and packaging operations,
warehousing and storage operations, administrative and record-keeping areas. A
25,000 square foot area in the Bioren Facility will be used as a dedicated area
for scaling up the development and manufacturing supporting (rescue therapy)
oncological products, such as sodium leucovorin. A 21,000 square foot area in
the Bioren Facility is used for manufacturing and marketing IV Solutions. A
portion of the Bioren Facility is leased to an unaffiliated third party on a
year-to-year basis. The Bioren Facility is subject to a mortgage in the
approximate principal amount of $2,500,000 which is due on May 16, 1999 and may
be extended by an agreement between the parties. Interest until May 16, 1999 is
5% per annum. The Bioren Facility is also subject to a second mortgage payable
to Galenica in the amount of $1,679,261. This second mortgage is payable
$419,815 in 1997, $419,815 in 1998 and $839,631 in 1999. Interest on this second
mortgage is at a variable rate which is currently 5.5% and is subject to
adjustment based upon commercial mortgage rates. In addition, the Bioren
Facility is subject to a third mortgage payable to Galenica securing a debt of
$1,847,187 which debt will be paid out of the proceeds of the Offering. See
'Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources.'
The Company believes that its facilities are sufficient for its current and
reasonably anticipated operations. The Company owns all of its manufacturing
equipment, subject to the mortgage referred to above, and believes that its
equipment is well maintained and suitable for its requirements. Additionally,
the Company maintains property and casualty insurance in amounts it believes are
sufficient and consistent with practices for firms of its size in the
prescription drug industry. See ' -- Manufacturing and Suppliers.'
LEGAL PROCEEDINGS
The Company is not a party to any material legal proceedings.
HUMAN RESOURCES
As of May 28, 1996, the Company employed 40 full-time employees, three
employees in development, 30 employees in manufacturing and quality control,
three employees in marketing, and four employees in management and
administration. The Company has one part-time employee providing secretarial
services and three consultants providing technical services (not including
medical and scientific advisors). Substantially all of the Company's employees
are located in Switzerland. The Company believes that the success of its
business will depend, in part, on its ability to attract and retain highly
qualified personnel.
During the 12-month period following completion of the Offering, the
Company intends to hire approximately 15 additional employees, including one
employee in the area of marketing, 10 employees in the area of development, two
employees in the areas of manufacturing and quality control and one employee in
the area of management and administrative services. See 'Use of Proceeds,'
' -- Research and Development,' and 'Management.'
The Company's employees are not a party to any collective bargaining
agreements. The Company believes that it has good relations with its employees.
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MANAGEMENT
DIRECTORS, EXECUTIVE OFFICERS AND KEY PERSONNEL
The following table sets forth certain information with respect to the
directors, executive officers and key personnel of the Company. Eric M. Chen, a
managing director of the Representative, James M. McCormick and Thomas W.
D'Alonzo will be elected directors of the Company effective upon consummation of
the Offering.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- --------------------------------- --- --------------------------------------------------------------
<S> <C> <C>
John G. Tramontana............... 50 Chairman of the Board, President and Chief Executive Officer
Albert Z. Hodge.................. 43 Vice President -- Quality Assurance
Michael K. Medors................ 37 Treasurer, Secretary and Director
Gerald T. Sweeney................ 47 Chief Financial Officer and Vice President -- Finance
Bernard Kramer................... 42 Vice President -- Marketing and Director
Kandid Oehen..................... 36 Director of Production
Eric M. Chen..................... 25 Director
James M. McCormick............... 71 Director
Thomas W. D'Alonzo............... 51 Director
</TABLE>
The business experience of each of the directors, executive officers and
key employees of the Company for at least the last five years is as follows:
John G. Tramontana has served as Chairman of the Board, President and Chief
Executive Officer of the Company since its inception in September 1995. From
November 1989 to March 1996, Mr. Tramontana was the chief operating officer and
a director of Chemholding, a holding company for five pharmaceutical companies
involved in the development, manufacture, and commercialization of active
pharmaceutical ingredients and finished pharmaceutical products. Chemholding is
a principal stockholder of the Company. Mr. Tramontana had significant
responsibilities in the development, manufacture and commercialization of
products of Chemholding. Mr. Tramontana was the chief operating officer and a
director of Cerbios-Pharma, chairman of the board of Cernelle and the president
and a director of Cernitin, a cosmetic and health products distributor. In March
1996, Mr. Tramontana resigned from all his positions with Chemholding,
Cerbios-Pharma, Cernelle and Cernitin. From 1985 to 1989, Mr. Tramontana was
chief operating officer, vice president -- finance and a director of Ben Venue
Laboratories, Inc., a pharmaceutical company specializing in the manufacture of
sterile, injectable pharmaceutical products. From 1974 until 1985, Mr.
Tramontana worked at Adria Laboratories Inc. (now Pharmacia & Upjohn, Inc.), the
U.S. operating division of Erbamont NV, a prominent manufacturer and marketer of
oncological products where from 1978 to 1984 he was treasurer, vice-
president -- finance. Mr. Tramontana and Mr. Medors are brothers-in-law.
Albert Z. Hodge has served as Vice President -- Quality Assurance of the
Company since May 1996. From April 1993 to April 1996, Mr. Hodge served as
Director of Quality Compliance and Manager of Regulatory Compliance for CIBA
Vision Corp. where he was responsible for the development and implementation of
ISO/GMP Quality Systems and facility validation programs. From February 1992 to
March 1993, Mr. Hodge served as Regulatory Compliance Manager at Bausch and Lomb
Pharmaceuticals, Inc. From 1989 to 1992, Mr. Hodge was Director of Quality
Assurance at Life Technologies, Inc., a biotechnology company. From 1985 to
1989, Mr. Hodge served as Quality Assurance Manager at Organon Teknika, Inc., a
pharmaceutical and medical device company. From 1980 to 1985, Mr. Hodge was a
Safety and Quality Service Inspector for the United States Department of
Agriculture.
Michael K. Medors has served as Treasurer, Secretary and a director of the
Company since its inception in September 1995. From 1991 to 1995, Mr. Medors was
treasurer and general manager of Cernitin, a cosmetic and health products
distributor. From October 20, 1982 to January 31, 1991, Mr. Medors was tax
department supervisor of Automatic Data Processing, a company offering a diverse
portfolio of employer, tax, banking and insurance services. Mr. Tramontana and
Mr. Medors are brothers-in-law.
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Gerald T. Sweeney has served as the Chief Financial Officer and Vice
President -- Finance of the Company since April 1996. From June 1994 to December
1995, Mr. Sweeney served as the chief financial officer of Neurovation, Inc., a
pharmaceutical company. From October 1992 to March 1994, Mr. Sweeney was the
chief financial officer of Adria Laboratories Inc. (now Pharmacia & Upjohn,
Inc.). From April 1989 to October 1992, Mr. Sweeney served as director of
finance at Liebert Corporation, a manufacturer and marketer of computer
environment control systems. From 1984 to 1989, Mr. Sweeney served in various
financial management positions at Erbamont NV. From 1979 to 1984, Mr. Sweeney
served as a senior financial analyst for the Upjohn Company (now Pharmacia &
Upjohn, Inc.).
Bernard Kramer has served as Vice President -- Marketing and a director of
the Company since April 1996. From January 1988 until April 1996, Mr. Kramer
worked at Bioren where he was a manager, responsible for quality control and
business development of pharmaceutical products. Prior to 1988, Mr. Kramer held
various senior management positions in the technical, quality control and
regulatory affairs areas. From 1980 to 1987, Mr. Kramer was manager of the
biological quality control and validation department at Vifor SA in Geneva. From
1979 to 1980, Mr. Kramer successfully completed postgraduate practice in
research and development at Ciba-Geigy in Basel.
Kandid Oehen has served as Director of Production of the Company since
April 1996. From 1995 until March 1996, Mr. Oehen was manager of drug regulatory
affairs at Cerbios-Pharma. From 1991 to 1995, Mr. Oehen was production director
at Togal-Werk SA, Lugano, Switzerland where he was responsible for manufacturing
pharmaceutical products. From 1982 to 1991, Mr. Oehen worked at Hoffman-La Roche
AG, Basel, Switzerland initially in formulation development and then in the
development of organic electrochemical synthesis.
Eric M. Chen will, upon consummation of the Offering, serve as a director
of the Company. Since April 1996, Mr. Chen has served as a managing director of
the Representative. From April 1995 to April 1996, Mr. Chen was a vice-president
of Fechtor, Detwiler & Co., Inc., an investment banking firm. From June 1994 to
April 1995, Mr. Chen was a research associate with Hambrecht & Quist
Incorporated where he was responsible for selected biotechnology companies. From
October 1992 to June 1994, Mr. Chen was an analyst with Furman Selz
Incorporated, where he was working with a variety of companies in the media and
entertainment and consumer retailing industries. Mr. Chen received a B.A. in
Biology from Harvard University in 1992.
James M. McCormick will, upon consummation of the Offering, serve as a
director of the Company. Mr. McCormick has more than 40 years experience in the
oncology sector of the pharmaceutical industry. Since 1990, Mr. McCormick has
been the president and chief executive officer of Market Initiatives, Inc., a
consulting firm specializing in oncology and other select health care markets.
From June 1995, through December 1995, Mr. McCormick was the president and chief
executive officer of Neurovation, Inc., a pharmaceutical company. Since then,
Mr. McCormick has served as consultant to Neurovation, Inc. From June 1991 until
November 1994 Mr. McCormick was the president and chief executive officer of
Optical Analytical Inc., a company engaged in diagnostic laser technology. Prior
to starting Market Initiatives, Inc. in September 1990, Mr. McCormick held
various senior management positions at Adria Laboratories Inc., a company which
he founded in 1974. From 1967 to 1974, Mr. McCormick was vice president of
marketing for Beecham Pharmaceuticals, a pharmaceutical company which he founded
in the United States in 1967. Prior to starting Beecham Pharmaceuticals, Mr.
McCormick held various sales and marketing positions within Pfizer Laboratories
for 16 years. Mr. McCormick is currently a director of Ascalon Pharmaceuticals
Inc., a pharmaceutical company and was previously a director of several other
pharmaceutical companies.
Thomas W. D'Alonzo will, upon consummation of the Offering, serve as a
director of the Company. Since June 1993, Mr. D'Alonzo has been chief executive
officer of Genvec, a biotechnology company developing gene therapy products for
life-threatening diseases. Prior to 1993, Mr. D'Alonzo held a number of
positions at Glaxo Inc., ultimately serving as president. In addition to his
corporate responsibilities, Mr. D'Alonzo also is a member of various industrial
associations including The National Wholesale Druggists Association, The
National Pharmaceutical Council and the North Carolina Healthy Start Foundation.
Mr. D'Alonzo is a director of Goodmark Foods, Inc.
All directors hold office until the next annual meeting of stockholders of
the Company and until their successors are elected and qualified or until their
earlier resignation or removal. All officers of the
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Company are appointed by and serve at the discretion of the Board of Directors,
except that John G. Tramontana has an employment agreement with the Company. See
' -- Employment Agreements.'
John G. Tramontana and Michael K. Medors are brothers-in-law. There are no
other family relationships between any director, executive officer or person
nominated or chosen to become a director or executive officer and any other such
person.
Pursuant to the Underwriting Agreement (as defined below), for a period of
five years from the consummation of the Offering, the Representative may
designate one representative to be a member of the Board of Directors of the
Company. The Representative has initially designated Eric M. Chen, a managing
director of the Representative, to be a director of the Company. See
'Underwriting.'
BOARD COMMITTEES
The Company will establish, effective upon consummation of the Offering, an
Executive Committee, a Compensation and Stock Option Committee, and an Audit
Committee. The Executive Committee will exercise all the power and authority of
the Board of Directors in the management and affairs of the Company between
meetings of the Board of Directors, to the extent permitted by law. The members
of the Executive Committee will be Eric M. Chen, Thomas W. D'Alonzo and John G.
Tramontana.
The Compensation and Stock Option Committee will make recommendations to
the Board of Directors concerning compensation, including incentive
arrangements, of the Company's officers and key employees and others and will
administer the Option Plan and will determine the officers, key employees and
others to be granted options under the Option Plan and the number of shares
subject to such options. In addition, the Compensation and Stock Option
Committee will administer the Director Option Plan. The members of the
Compensation and Stock Option Committee will be Michael K. Medors, Eric M. Chen,
and Thomas W. D'Alonzo.
The Audit Committee will review and evaluate the results and scope of the
audit and other services provided by the Company's independent accountants, as
well as the Company's accounting principles and system of internal accounting
controls. The members of the Audit Committee will be Eric M. Chen, Thomas W.
D'Alonzo and James M. McCormick.
SCIENTIFIC ADVISORS
The following is a list of the scientific advisors ('Scientific Advisors')
of the Company and, based upon information supplied by each of them, the
institutions with which they are affiliated. The affiliations are provided for
informational purposes only and do not indicate a relationship between such
institutions and the Company. To date, the Scientific Advisors have not held any
meetings.
<TABLE>
<CAPTION>
Dr. Francesco Cavalli............ Director, Division of Oncology, Saint John Hospital, Bellinzona, Switzerland;
responsible for coordination of all medical oncology within the southern part
of Switzerland; member of key European oncology societies, including Early
Clinical Trials Group (past Chairman), Scientific Board of the European
School of Oncology, European Organization for Research on Treatment of
Cancer, and the Federation of European Cancer Societies of Europe; Editor-in-
Chief of the Annals of Oncology; and serves on the editorial boards of four
additional scientific journals.
<S> <C>
Dr. F. Messi..................... Biologist; founder of 'Dr. F.M. Cell Culture Technologies'; consultant for
Ciba-Geigy Switzerland and for Boehringer Mannheim Germany; Collaborator of
Research Group at National Institute of Health (NIH) Bethesda, Maryland;
Medical Department Oncology and Hematology, Albert Ludwig Clinic, Germany;
Biomedical Laboratories, University of Kent, Cambridge, UK.
</TABLE>
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<TABLE>
<S> <C>
Dr. Carlo M. Croce............... Director, Kimmel Cancer Institute; Professor and Chairman, Department of
Microbiology and Immunology, Jefferson Medical School of Thomas Jefferson
University; immediate past Member, Board of Scientific Counselors, Division
of Cancer Treatment, National Cancer Institute; 1995 recipient of the CLAS
Distinguished Scientist Award; author of over 450 scientific publications;
and Editor-in-Chief of the journal Cancer Research.
Dr. Thomas G. Tachovsky.......... Biologist; Executive Vice President, Research and Development Protyde
Pharmaceuticals; over 22 years of academic and industrial research and
development experience; founding partner of MATCO & Associates, a management
consulting firm specializing in the identification and evaluation of new
health care technologies; has held a variety of research and management
positions with Ortho Diagnostics, a division of Johnson & Johnson, Creative
BioMolecules and Cytogen Corporation.
</TABLE>
The Company intends to enter into scientific advisory agreements ('Advisory
Agreements') with each of the Scientific Advisors which will generally require
the Scientific Advisor to: (i) advise the Company of advances in his field of
expertise; (ii) consult with the Company; (iii) assess the feasibility of
research and development programs under consideration by the Company in his
field; and (iv) offer guidance for future research and clinical applications of
the Company's technology in his field. Each Advisory Agreement will provide that
the Scientific Advisor agree to meet individually and in groups to advise the
Company on its research, development, operations and commercialization of its
technology, consult on the Company's projects and attend meetings of the
Scientific Advisors. Generally, any further activities if requested shall be on
an 'as available' basis and at an agreed upon fee. The agreements with each
Scientific Advisor will contain confidentiality provisions.
The Scientific Advisors are not expected to otherwise actively participate
in the development of the Company's technologies or products. Each Advisory
Agreement will be for a term of three years. In consideration for their
services, each Scientific Advisor will receive a fee of $1,000 per annum, and
each will be reimbursed for reasonable expenses incurred in the performance of
their duties for the Company. In addition, upon the consummation of the
Offering, each Scientific Advisor will be granted options to purchase 3,000
shares of Common Stock, under the Option Plan, at an exercise price per share
equal to the initial public offering price. The options will vest in three equal
installments, the first commencing one year following the date of this
Prospectus and the second and third commencing on the second and third
anniversary dates of the date of this Prospectus, each of which will be
exercisable for a period of three years following the date of vesting. The
Advisory Agreements will provide for indemnification of the Scientific Advisor,
against any liabilities arising from their good faith services thereunder.
The Company's Scientific Advisors are employed on a full-time basis by
employers other than the Company, and certain of those individuals have
additional consulting or other advisory arrangements. Accordingly, they are
expected to devote only a small portion of their time to the Company.
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
The Company has included in its Restated Certificate provisions to
indemnify its directors and officers to the fullest extent permitted by Delaware
law. The Company's Restated Certificate also includes provisions to eliminate
the personal liability of the Company's directors and officers to the fullest
extent permitted by Delaware law. Under current law, such exculpation would
extend to an officer's or director's breaches of fiduciary duty, except for (i)
breaches of such person's duty of loyalty, (ii) those instances where such
person is found not to have acted in good faith and (iii) those instances where
such person received an improper personal benefit as the result of such breach.
The Company's Restated By-Laws ('By-Laws') provide that the Company may
indemnify any person, including officers and directors, with regard to any
action or proceeding to the fullest extent permitted by Delaware law.
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The Company will enter into an indemnification agreement ('Indemnification
Agreement') with each of its directors and officers. Each Indemnification
Agreement will provide that the Company will indemnify the indemnitee against
expenses, including reasonable attorneys' fees, judgments, penalties, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with any civil or criminal action or administrative proceeding arising out of
his performance of his duties as a director or officer, other than an action
instituted by the director or officer. Such indemnification is available if the
indemnitee acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the Company, and, with respect to any
criminal action, had no reasonable cause to believe his conduct was unlawful.
Each Indemnification Agreement also will require that the Company indemnify the
director or other party thereto in all cases to the fullest extent permitted by
applicable law. The term of each Indemnification Agreement will be the later of
(i) 10 years after the date that the indemnitee ceases to serve as a director or
officer of the Company, or (ii) the final termination of all proceedings, as
defined in the Indemnification Agreement, in which the indemnitee is granted
rights of indemnification.
Each Indemnification Agreement will permit the indemnitee to bring suit to
seek recovery of amounts due under such Indemnification Agreement and will
require that the Company indemnify the director or other party thereto in all
cases to the fullest extent permitted by applicable law. Although the Company
intends to seek to obtain directors' and officers' liability insurance, such
insurance is generally very expensive. If the Company is not able to obtain
director' and officers' liability insurance to cover such amounts, any payments
made by the Company under an Indemnification Agreement will have an adverse
impact on the Company.
It is the position of the Commission that insofar as the Company's Restated
Certificate, By-Laws or any Indemnification Agreement may be invoked by any
director, officer or stockholder as a means of indemnifying them against
liabilities arising under the Securities Act, that such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable.
EXECUTIVE COMPENSATION
The Company did not pay any compensation exceeding $100,000 to its
executive officers for the year ended December 31, 1995. John G. Tramontana, the
Company's President and Chief Executive Officer received no compensation during
this period. See ' -- Employment Agreements.'
DIRECTOR COMPENSATION
Directors of the Company who are not salaried officers will receive a fee
of $500 for attending each Board meeting or meeting of a committee of the Board
of which they are a member. In addition, all directors will be reimbursed for
their reasonable out-of-pocket expenses in connection with attending meetings of
the Board or any committee thereof. All directors who are not otherwise
affiliated with the Company will receive options to purchase Common Stock. See
' -- Directors Option Plan.'
EMPLOYMENT AGREEMENTS
In April 1996, the Company entered into an employment agreement with Mr.
Tramontana to serve as the Company's President and Chief Executive Officer. The
employment agreement is for a five-year term effective upon consummation of the
Offering and is subject to automatic annual renewal unless earlier terminated.
Pursuant to the terms of this employment agreement, Mr. Tramontana is required
to devote his full business time and attention to fulfill his duties and
responsibilities to the Company. Mr. Tramontana will receive a base salary of
$200,000 for the first year of the term of the employment agreement with
subsequent annual cost of living increases at the discretion of the Company's
Board of Directors. In addition to his base salary, Mr. Tramontana is entitled
to receive an annual bonus, at the discretion of the Board of Directors,
provided such bonus is equal to at least 25% of his base salary. Mr.
Tramontana's employment agreement provides that the Company is required to
provide Mr. Tramontana with an automobile allowance of $6,000 per annum and the
Company is required to obtain life insurance coverage on the life and for the
benefit of Mr. Tramontana in an amount equal to $500,000, assuming he is
insurable. Mr. Tramontana will also have the right to participate in all benefit
55
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plans afforded or which may be afforded to other executive officers during the
term of the agreement including, without limitation, group insurance, health,
hospital, dental, major medical, life and disability insurance, stock option
plans and other similar fringe benefits. If Mr. Tramontana dies or is unable to
perform his duties on account of illness or other incapacity and the agreement
is terminated, he or his legal representative shall receive from the Company the
base salary which would otherwise be due to the end of the month during which
the termination of employment occurred plus three additional months of base
salary in the event of death and six additional months of base salary in the
event of illness or other incapacity. The agreement further provides that if the
Company terminates Mr. Tramontana's employment for cause or if Mr. Tramontana
voluntarily leaves the employment of the Company, Mr. Tramontana shall receive
his salary through the end of the month in which the termination occurred. If
Mr. Tramontana's employment is terminated by the Company without cause, Mr.
Tramontana shall receive from the Company the base salary which would otherwise
be due to the end of the month during which the termination of employment
occurred plus four additional months. Mr. Tramontana's employment agreement
contains certain confidentiality and non-competition provisions. The Company has
obtained $2,000,000 of key-person life insurance for the benefit of the Company
on the life of Mr. Tramontana effective on June 15, 1996.
Upon the consummation of the Offering, the Company intends to enter into an
employment agreement with Mr. Sweeney to serve as the Company's Vice President
and Chief Financial Officer for a two-year term. Pursuant to the terms of this
employment agreement, Mr. Sweeney will be required to devote his full time and
attention to the Company's business and affairs and will receive a base salary
of $80,000 for the first year of the term with an annual review of such salary.
In addition to his base salary, Mr. Sweeney will be entitled to receive an
annual bonus of 15% of his base salary. Mr. Sweeney's employment agreement will
provide that the Company is required to provide Mr. Sweeney with an automobile
allowance of $250 per month. Mr. Sweeney will also have the right to participate
in all benefit plans afforded or which may be afforded to other executive
officers during the term of the agreement including, without limitation, group
insurance, health, hospital, dental, major medical, life and disability
insurance, stock option plans and other similar fringe benefits. Mr. Sweeney's
employment agreement will contain certain confidentiality and non-competition
provisions.
OPTION PLAN
In April 1996, the Board of Directors adopted and the stockholders approved
the Option Plan. The Option Plan provides for the grant of incentive stock
options ('ISOs') (within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended) and non-qualified stock options ('NQSOs') to directors,
officers and employees of the Company. The Option Plan further provides for the
grant of NQSOs to directors and agents of, and consultants to, the Company,
whether or not employees of the Company. The purpose of the Option Plan is to
attract and retain exemplary directors, employees, agents, and consultants. All
options granted under the Option Plan will be at an exercise price of not less
than the fair market value of the Common Stock on the date of grant. All options
granted under the Option Plan will not be transferable by the optionee other
than by will, by the laws of descent and distribution or as required by law.
Options granted under the Option Plan may not be exercisable for terms in
excess of 10 years from the date of grant. In addition, no options may be
granted under the Option Plan later than 10 years after the Option Plan's
effective date. The total number of shares of Common Stock with respect to which
options will be granted under the Option Plan is 300,000. The shares subject to
and available under the Option Plan may consist, in whole or in part, of
authorized but unissued stock or treasury stock not reserved for any other
purpose. Any shares subject to an option that terminates, expires or lapses for
any reason, and any shares purchased pursuant to an option and subsequently
repurchased by the Company pursuant to the terms of the option, shall again be
available for grant under the Option Plan.
The Option Plan is administered by the Board of Directors of the Company
which determines, in its discretion, among other things, the recipients of
grants, whether a grant will consist of ISOs or NQSOs, or a combination thereof,
and the number of shares of Common Stock to be subject to such options. The
Board of Directors of the Company may, in its discretion, delegate its power,
duties and
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responsibilities under the Option Plan to a committee consisting of two or more
directors who are 'disinterested persons' within the meaning of Rule 16b-3
promulgated under the Securities Act of 1934, as amended. The Compensation and
Stock Option Committee, which is responsible for administering the Option Plan,
will be composed of Michael K. Medors, Eric M. Chen and Thomas W. D'Alonzo.
The Option Plan contains certain limitations applicable only to ISOs
granted thereunder. To the extent that the aggregate fair market value, as of
the date of grant, of the shares to which ISOs become exercisable for the first
time by an optionee during the calendar year exceeds $100,000, the ISO will be
treated as a NQSO. In addition, if an optionee beneficially owns more than 10%
of the Common Stock at the time the individual is granted an ISO, the option
price per share cannot be less than 110% of the fair market value per share and
the term of the option cannot exceed five years.
DIRECTOR OPTION PLAN
Prior to the consummation of the Offering, the Company intends to adopt a
director stock option plan ('Director Option Plan') pursuant to which directors
who are not otherwise affiliated with the Company (such as employees or
consultants of the Company, or an affiliate thereof) will receive options to
purchase Common Stock. The purpose of the Director Option Plan is to promote the
overall financial objectives of the Company and its stockholders by motivating
directors to achieve long-term growth in stockholder equity in the Company, to
further align the interest of the directors with those of the Company's
stockholders and to recruit and retain the association of these directors. The
Director Option Plan will provide for the award of up to an aggregate of 50,000
shares of Common Stock and will be administered by the Compensation and Stock
Option Committee.
The Director Option Plan will provide for (i) the grant of an option to
purchase 3,000 shares of Common Stock to each director who was not an employee
or consultant of the Company upon the consummation of the Offering and (ii) the
grant of an option to purchase 1,500 shares of Common Stock on the date of each
regular annual stockholder meeting to each participant who either is continuing
as a director subsequent to the meeting or who is elected at such meeting to
serve as a director. Options granted under the Director Option Plan must provide
for the purchase of shares of Common Stock at an exercise price of not less than
the fair market value of the Common Stock on the date of grant. No option under
the plan may be exercisable 10 years after its date of grant. Options granted
under the Director Option Plan will not be transferable by the optionee other
than by will, by the laws of descent and distribution or as required by law.
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PRINCIPAL STOCKHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of Common Stock, as of the date of this Prospectus, and as
adjusted to reflect the sale by the Company of the 1,250,000 shares of Common
Stock offered hereby, by (i) each person who is known by the Company to
beneficially own more than five percent of the outstanding Common Stock, (ii)
each director of the Company, (iii) each of the Company's executive officers,
and (iv) all executive officers and directors of the Company as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY OWNED
PRIOR TO OFFERING PERCENT OF CLASS
------------------ -----------------------------------
BENEFICIAL OWNER SHARES BEFORE OFFERING AFTER OFFERING
- ------------------------------------------------------ ------------------ --------------- --------------
<S> <C> <C> <C>
Chemholding SA(1)..................................... 1,010,563 42.6% 27.9%
John G. Tramontana(2)................................. 973,368 41.0 26.9
Albert Z. Hodge....................................... -- -- --
Gerald T. Sweeney..................................... -- -- --
Eric M. Chen(3)(4).................................... -- -- --
James M. McCormick(3)(4).............................. -- -- --
Thomas W. D'Alonzo(3)(4).............................. -- -- --
Bernard Kramer........................................ -- -- --
Michael K. Medors..................................... -- -- --
All executive officers and directors (including
director designees) as a group(3) (8 persons)....... 973,368 41.0 26.9
</TABLE>
- ------------
(1) Chemholding is a Swiss holding company for five pharmaceutical companies
involved in the development, manufacture, and commercialization of active
pharmaceutical ingredients and finished pharmaceutical products. Maria Pia
Melera, Jan Jacob Van Troostenburg, Pier Angelo Ghirlanda and Patrizia
Melera Kaar are each officers, directors and/or principal stockholders of
Chemholding and own in the aggregate approximately 80% of its outstanding
capital stock. As such, these individuals may be considered to beneficially
own, and have shared investment and voting power with respect to, all of the
shares of Common Stock owned by Chemholding. Maria Pia Melera is the mother
of Patrizia Melera Kaar. Each of Ms. Melera, Mr. Van Troostenburg and Mr.
Ghirlanda directly own an additional 70,775 shares of Common Stock. The
address of Chemholding is Via Pian Scairolo 6, CH-6917 Barbengo,
Switzerland.
(2) Mr. Tramontana's business address is 6660 Doubletree Avenue, Columbus, Ohio
43229.
(3) Does not include options to purchase 3,000 shares of Common Stock to be
granted to each of Messrs. Chen, McCormick and D'Alonzo under the Director
Option Plan upon consummation of the Offering. See 'Management -- Director
Option Plan.'
(4) Messrs. Chen, McCormick and D'Alonzo will become directors of the Company
upon the consummation of this Offering. See 'Management -- Directors,
Executive Officers and Key Personnel.'
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<PAGE>
CERTAIN TRANSACTIONS
BIOREN ACQUISITION
In June 1995, all of the outstanding capital stock of Bioren was purchased
by Bigmar Pharmaceuticals in the Bioren Acquisition for an aggregate purchase
price of approximately $9.4 million, consisting of approximately $5.2 million in
cash, and the assumption of certain of the seller's liabilities in the aggregate
principal amount of approximately $4.2 million. In addition, in connection with
the Bioren Acquisition, Bigmar Pharmaceuticals became a guarantor on a new bank
loan to Bioren in the principal amount of $2.6 million, which was collateralized
by the Bioren Facility, and provided a guarantee of a second mortgage in the
aggregate principal amount of approximately $1.7 million on the Bioren Facility.
In addition, in June 1995 Bigmar Pharmaceuticals sold one-half of its equity
interest of Bioren to the Bioren Holders for approximately $2.6 million. This
sale included 500 shares (10% of Bioren's outstanding stock) to John G.
Tramontana, the Company's Chairman of the Board, President and Chief Executive
Officer, for $500,000.
CONTRIBUTION
On April 8, 1996, in the Contribution, all of the then existing
stockholders of the Company contributed 99% of the shares of Common Stock then
owned by each of these stockholders to the Company for no cash consideration.
EXCHANGE
On April 9, 1996, in the Exchange, the Bioren Holders exchanged their
capital stock in Bioren (representing 50% of the outstanding Bioren capital
stock) for 350,312 shares of Common Stock of the Company with an approximate
fair market value (based on an estimated initial public offering price of $8.00
per share) of $2,802,496 and the stockholders of Bigmar Pharmaceuticals
exchanged all of the capital stock of Bigmar Pharmaceuticals for 2,000,938
shares of Common Stock of the Company with an approximate fair market value
(based on an estimated initial public offering price of $8.00 per share) of
$16,007,504.
TRANSACTIONS WITH PRINCIPAL STOCKHOLDERS
In November 1995, Bioren entered into an exclusive distribution and supply
agreement with Sapec and Bigmar Pharmaceuticals entered into an exclusive
distribution and supply agreement with Cernelle, each relating to certain
oncological products. Pursuant to the terms of each agreement, Bioren or Bigmar
Pharmaceuticals, as the case may be, is obligated to pay either Sapec or
Cernelle a one-time fee of $100,000 upon notification by Sapec or Cernelle that
their respective oncological products are ready for shipment. In addition, in
November 1995, Bigmar Pharmaceuticals entered into an exclusive license and
supply agreement with Bioferment relating to certain biotechnological products.
Pursuant to the terms of this agreement, Bigmar Pharmaceuticals will pay
Bioferment a license fee aggregating $500,000 upon the completion of certain
regulatory milestones. The full amount of this license fee shall be credited
against future royalty obligations due to Bioferment under the agreement. See
'Business -- Products.' At the time of negotiation and execution of the
foregoing agreements, John G. Tramontana, the Company's Chairman of the Board,
President, and Chief Executive Officer, was the Chief Operating Officer and a
director of Cerbios Pharma, Chairman of the Board of Cernelle and a director of
Chemholding, a principal stockholder of the Company. Chemholding is the sole
stockholder of Cerbios Pharma of which Sapec and Bioferment are divisions.
Cerbios Pharma is the sole stockholder of Cernelle. Certain stockholders of the
Company own in the aggregate approximately 80% of the capital stock of
Chemholding. John G. Tramontana is not a stockholder of Chemholding, Cerbios
Pharma or Cernelle. The Company believes that the terms of these agreements are
no more favorable to the Company or the other parties thereto than they would be
to unaffiliated third parties. See 'Risk Factors -- Reliance on Collaborative
Arrangements; Management Affiliations with Collaborators.'
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<PAGE>
In 1995, Unione Farmaceutica SA, which is owned by certain stockholders of
the Company, loaned $1,809,524 to the Company bearing interest at the rate of 9%
per annum. The principal on the loan is payable over a 10 year period in the
amount of approximately $179,000 per annum commencing June 30, 1997. For the
fiscal year ended December 31, 1995, the Company made interest payments to
Unione Farmaceutica in the amount $151,000. For the three months ended March 31,
1996, interest expense on this loan aggregated $39,000. As of March 31, 1996,
accrued interest to Unione Farmaceutica on this loan was approximately $115,000.
In 1994, Chemholding loaned approximately $380,000 to Bigmar
Pharmaceuticals bearing interest at the rate of 6.25% per annum. This loan,
including interest, was repaid.
On January 8, 1995, Chemholding agreed to be a surety for Bigmar
Pharmaceuticals in the amount of $1.4 million for the loans with respect to the
Bigmar Facility. See 'Management's Discussion and Analysis of Financial
Condition and Results of Operations,' 'Business -- Facilities' and 'Certain
Transactions.'
For the fiscal year ended December 31, 1995, the Company purchased
inventory from Cernelle and Cerbios Pharma in the aggregate amount of $206,000
and paid selling, general and administrative expenses and freight charges to
Cerbios Pharma in the amount of $169,000. For the three months ended March 31,
1996, such purchases aggregated $100,000 and such selling, general and
administrative expenses aggregated $66,000.
In May 1995, Chemholding purchased 690 shares of the capital stock of
Bigmar Pharmaceuticals for $575,000.
In September 1995, Chemholding purchased 10,094 shares of Common Stock from
the Company for $2,125.
In September 1995, the Company sold an aggregate of 2,375,000 shares of
Common Stock to its existing stockholders for $5,000 and on April 8, 1996, in
the Contribution, the existing stockholders contributed 99% of these shares of
Common Stock to the Company for no cash consideration.
TRANSACTIONS WITH DIRECTORS AND EXECUTIVE OFFICERS
In May 1995, John G. Tramontana, the Company's Chairman of the Board,
President and Chief Executive Officer, purchased 690 shares of the capital stock
of Bigmar Pharmaceuticals for $575,000.
In June 1995, John G. Tramontana, the Company's Chairman of the Board,
President and Chief Executive Officer, purchased 500 shares of the capital stock
of Bioren for an aggregate purchase price of $500,000. See ' -- Bioren
Acquisition.'
In September 1995, John G. Tramontana, the Company's Chairman of the Board,
President and Chief Executive Officer, purchased 9,889 shares of Common Stock
from the Company for $2,082.
In March 1996 the Company entered into a sublease agreement with Cernitin.
The sublease terminates on February 28, 1998. The sublease is at a rental of
approximately $22,315 per annum. Mr Tramontana was the President and a director
of Cernitin and Michael K. Medors was the treasurer and general manager of
Cernitin at the time of the negotiation and execution of the sublease. See
'Business -- Facilities.'
In April 1996, John G. Tramontana entered into five-year employment
agreement with the Company. See 'Management.'
Upon consummation of the Offering, Gerald T. Sweeney will enter into a
two-year employment agreement with the Company. See 'Management.'
Eric M. Chen, a director designee, is a managing director of the
Representative. The Representative and the Company have entered into certain
arrangements with respect to the Offering. See 'Management' and 'Underwriting.'
Mr. Tramontana and Chemholding may be deemed to be founders or promoters of
the Company as that term is defined under the Securities Act.
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<PAGE>
Certain of the transactions set forth above have been entered into by the
Company with certain persons who, at the time of such transactions, might have
been deemed control persons or affiliates of the Company. Notwithstanding the
foregoing, the Company believes that the terms of these transactions are no less
favorable to the Company than it would have obtained from unaffiliated third
parties. The Company anticipates that all future transactions and loans between
the Company and its officers, directors, 5% stockholders and affiliates will be
on terms no less favorable than could be obtained from unaffiliated third
parties and that such transactions and loans will be approved by a majority of
the independent disinterested directors of the Company.
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<PAGE>
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 20,000,000 shares,
of which 15,000,000 shares are Common Stock, par value $.001 per share, and
5,000,000 are Preferred Stock, par value $.001 per share. There are 2,375,000
shares of Common Stock held of record by seven stockholders and no shares of
Preferred Stock outstanding. All information in this Prospectus gives effect to
the following events: (i) the Contribution, on April 8, 1996, to the Company of
99% of the shares of Common Stock then owned by the stockholders of the Company;
(ii) the Exchange, on April 9, 1996, whereby Bigmar Pharmaceuticals and Bioren
became subsidiaries of the Company; (iii) a Reverse Split, effected on April 16,
1996, of the outstanding shares of Common Stock; and (iv) an increase in the
number of authorized shares of Common Stock from 10,000,000 to 15,000,000,
effected on April 16, 1996. Upon consummation of the Offering, 3,625,000 shares
of Common Stock will be issued and outstanding, assuming no exercise of the
Underwriters' over-allotment option and no exercise of the Representative's
Warrants.
Prior to the Offering, there has been no public market for the Common Stock
of the Company. Subject to official notice of issuance, the Company has received
approval to have the Common Stock quoted on the Nasdaq SmallCap MarketSM under
the trading symbol 'BGMR' and listed on the Boston Stock Exchange under the
trading symbol 'BIG.'
The following description of the capital stock of the Company and certain
provisions of the Company's Restated Certificate and By-Laws is a summary and is
qualified in its entirety by the provisions of the Restated Certificate and
By-Laws, which have been filed as exhibits to the Company's Registration
Statement, of which this Prospectus forms a part.
COMMON STOCK
The issued and outstanding shares of Common Stock are, and the shares being
offered hereby will, upon payment therefor, be validly issued, fully paid and
nonassessable. Subject to the rights of the holders of the Preferred Stock, the
holders of outstanding shares of Common Stock are entitled to receive dividends
out of assets legally available therefor at such times and in such amounts as
the Board of Directors may from time to time determine. See 'Risk
Factors -- Restrictions on Retained Earnings' and 'Dividend Policy.' The shares
of Common Stock are neither redeemable nor convertible, and the holders thereof
have no preemptive or subscription rights to purchase any securities of the
Company. Upon liquidation, dissolution or winding up of the Company, the holders
of Common Stock are entitled to receive, pro rata, the assets of the Company
which are legally available for distribution, after payment of all debts and
other liabilities and subject to the prior rights of any holders of Preferred
Stock then outstanding. Each outstanding share of Common Stock is entitled to
one vote on all matters submitted to a vote of stockholders. There is no
cumulative voting for the election of directors.
PREFERRED STOCK
The Company's Restated Certificate authorizes the Board of Directors to
issue the Preferred Stock in classes or series and to establish the
designations, preferences, qualifications, limitations and restrictions of any
class or series with respect to the rate and nature of dividends, the price and
terms and conditions on which shares may be redeemed, the terms and conditions
for conversion or exchange into any other class or series of such stock, voting
rights and other terms. The Company may, without approval of the holders of
Common Stock, issue Preferred Stock which has voting, dividend or liquidation
rights superior to those of the Common Stock and which may adversely affect the
rights of holders of Common Stock. The issuance of Preferred Stock, while
providing flexibility in connection with possible acquisitions and other
corporate purposes, could, among other things, adversely affect the voting power
of the holders of Common Stock and could have the effect of delaying, deferring
or preventing a change in control of the Company. See 'Risk Factors -- Possible
Adverse Effects of Issuance of Preferred Stock.'
62
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<PAGE>
OPTIONS AND WARRANTS
As of the date of this Prospectus, other than as described in this
Prospectus, there will be no outstanding options or warrants to purchase, or
securities convertible into, Common Stock of the Company.
DELAWARE ANTI-TAKEOVER LAW
The Company is subject to Section 203 ('Section 203') of DGCL which,
subject to certain exceptions, prohibits a Delaware corporation from engaging in
any 'business combination' with any 'interested stockholder' for a period of
three years following the date that such stockholder became an interested
stockholder, unless: (i) prior to such date, the Board of Directors of the
corporation, approved either the business combination or the transaction which
resulted in the stockholder becoming an interested stockholder; (ii) upon
consummation of the transaction which resulted in the stockholder becoming an
interested stockholder, the interested stockholder owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced, excluding for purposes of determining the number of shares
outstanding those shares owned by persons who are directors and also officers
and by employee stock plans in which employee participants do not have the right
to determine confidentially whether shares held subject to the plan will be
tendered in a tender or exchange offer; or (iii) on or subsequent to such date,
the business combination is approved by the Board of Directors and authorized at
an annual or special meeting of stockholders, and not by written consent, by the
affirmative vote of at least 66 2/3% of the outstanding voting stock which is
not owned by the interested stockholder. Under Section 203, the restrictions
described above also do not apply to certain business combinations proposed by
an interested stockholder following the announcement or notification of one of
certain extraordinary transactions involving the corporation and a person who
had not been an interested stockholder during the previous three years or who
became an interested stockholder with the approval of a majority of the
corporation's directors and which transaction is approved or not opposed by the
majority of the board of directors then in office.
Section 203 generally defines a business combination to include: (i) any
merger or consolidation involving the corporation and the interested
stockholders; (ii) any sale, transfer, pledge or other disposition of 10% or
more of the assets of the corporation to the interested stockholder; (iii)
subject to certain exceptions, any transaction which results in the issuance or
transfer by the corporation of any stock of the corporation to the interested
stockholder; (iv) any transaction involving the corporation which has the effect
of increasing the proportionate share of the stock of any class or series of the
corporation beneficially owned by the interested stockholder; or (v) the receipt
by the interested stockholder of the benefit of any loans, advances, guarantees,
pledges or other financial benefits provided by or through the corporation. In
general, Section 203 defines an interested stockholders as any entity or person
beneficially owning 15% or more of the outstanding voting stock of the
corporation and any entity or person affiliated with or controlling or
controlled by such entity or person.
REGISTRATION RIGHTS
Upon the consummation of the Offering, the Company will sell to the
Representative warrants to purchase 125,000 shares of Common Stock. The
Representative's Warrants will be exercisable for a period of four years
commencing one year from the date of this Prospectus. In addition, holders of
the Representative's Warrants will have demand registration rights for a period
of five years and piggyback registration rights for a period of seven years from
the date of this Prospectus with respect to the Representative's Warrants and
the underlying shares of Common Stock. See 'Underwriting.'
THE COMPANY'S TRANSFER AGENT
American Stock Transfer & Trust Company, 40 Wall Street, New York, NY
10005, will serve as the Company's transfer agent for the Common Stock.
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SHARES ELIGIBLE FOR FUTURE SALE
GENERAL
Upon the consummation of the Offering, the Company will have outstanding an
aggregate of 3,625,000 shares of Common Stock (exclusive of (i) the 300,000
shares of Common Stock reserved for issuance under the Option Plan, (ii) 50,000
shares of Common Stock reserved for issuance under the Director Option Plan,
(iii) 125,000 shares of Common Stock issuable upon exercise of the
Representative's Warrants and (iv) up to 187,500 shares of Common Stock issuable
upon exercise of the Underwriters' over-allotment option). All of the 1,250,000
shares of Common Stock sold in the Offering will be freely tradeable without
restriction under the Securities Act except for any shares purchased by
'affiliates' of the Company (as that term is defined in the rules and
regulations under the Securities Act). The remaining 2,375,000 shares of Common
Stock were issued by the Company in private transactions not involving a public
offering, are treated as 'restricted securities' for purposes of Rule 144, and
may not be resold unless they are registered under the Securities Act or are
resold pursuant to an exemption from registration, including the exemption
provided under Rule 144 of the Securities Act.
In general, under Rule 144, as currently in effect, a stockholder (or
stockholders whose shares are aggregated) who has beneficially owned for at
least two years shares of Common Stock that are treated as 'restricted
securities,' would be entitled to sell, within any three-month period, that
number of shares which does not exceed the greater of 1% of the then outstanding
shares of Common Stock or the average weekly trading volume in the Common Stock
during the four calendar weeks preceding the date on which notice of such sale
is given. A stockholder who is not deemed to have been an affiliate of the
Company at any time during the 90 days preceding a sale, and who has
beneficially owned for at least three years shares of Common Stock that are
treated as 'restricted securities,' would be entitled to sell such shares under
Rule 144(k) immediately upon the effectiveness of the Offering without regard to
foregoing volume limitations and manner of sale, notice and availability of
current public information requirements. Sales or the expectation of sales of a
substantial number of shares of Common Stock in the public market following the
Offering could adversely affect the prevailing market price of the Common Stock.
In addition, the sale of substantial amounts of Common Stock acquired through
the exercise of the (i) options granted pursuant to the Option Plan or Director
Option Plan, (ii) Representative's Warrants, or (iii) the Underwriters'
over-allotment option could adversely affect prevailing market prices for the
Common Stock. The Company and its officers, directors and existing stockholders
have agreed with the Representative not to, directly or indirectly, register,
issue, offer, sell, offer to sell, contract to sell, hypothecate, pledge or
otherwise dispose of any shares of Common Stock, (or any securities convertible
into or exercisable or exchangeable for shares of Common Stock), for a period of
one year from the date of this Prospectus, without the prior written consent of
the Representative, subject to certain exceptions.
The Commission has recently proposed shortening the basic Rule 144 holding
period from two years to one year; no assurance can be given as to when or
whether such change will occur.
In connection with the Offering, the Company has agreed to sell to the
Representative the Representative's Warrants. See 'Underwriting.'
On or about 18 months following the consummation of the Offering, the
Company may file a Registration Statement under the Securities Act to register
an aggregate of 300,000 shares of Common Stock reserved for issuance under the
Option Plan and/or 50,000 shares of Common Stock reserved for issuance under the
Director Option Plan, thus permitting the resale of these shares of Common Stock
in the public market without restriction under the Securities Act, subject to
the vesting requirements of the options pursuant to which these shares of Common
Stock may be issued, the lock-up agreements described above and the provisions
of the Option Plan or Director Option Plan. See 'Management.'
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UNDERWRITING
Under the terms and subject to the conditions contained in the underwriting
agreement ('Underwriting Agreement'), dated the date of this Prospectus, each
Underwriter named below has severally agreed to purchase, and the Company has
agreed to sell to such Underwriters, shares of Common Stock which equal the
number of shares set forth opposite the name of such Underwriter below.
<TABLE>
<CAPTION>
UNDERWRITERS NUMBER OF SHARES
- ------------------------------------------------------------------------------------- ----------------
<S> <C>
LT Lawrence & Co., Inc...............................................................
----------------
Total........................................................................... 1,250,000
----------------
----------------
</TABLE>
The Underwriters are obligated to purchase all of the shares of Common
Stock, if any are purchased.
The Underwriters for whom LT Lawrence & Co., Inc. is acting as the
representative ('Representative') have advised the Company that they propose
initially to offer the shares of Common Stock to the public on the terms set
forth on the cover page of this Prospectus. The Underwriters may allow a
concession of not more than $ per share to selected dealers; and the
Underwriters may allow, and such dealers may reallow, a concession of not more
than $ per share to certain other dealers. After the consummation of the
Offering, the consession to selected dealers and the reallowance to other
dealers may be changed by the Underwriters. The shares of Common Stock are
offered subject to receipt and acceptance by the Underwriters and to certain
other conditions, including the right to reject orders in whole or in part.
Upon the consummation of the Offering, the Company will grant to the
Underwriters an option to purchase up to 187,500 additional shares of Common
Stock solely to cover over-allotments, if any. The option is exercisable for 45
days from the date of this Prospectus at the initial public offering price, less
the underwriting discount set forth on the cover page of this Prospectus. To the
extent the Representative exercises the option, the Underwriters will be
committed, subject to certain conditions, to purchase the additional shares.
The Company has agreed to sell to the Representative, for an aggregate of
$125, Representative's Warrants to purchase 125,000 shares of Common Stock at an
exercise price per share equal to 130% of the initial public offering price set
forth on the cover page of this Prospectus. The Representative's Warrants will
be exercisable for a period of four years, commencing one year from the date of
this Prospectus, and will contain anti-dilution provisions providing for
appropriate adjustment of the exercise price and number of shares that may be
purchased upon the occurrence of certain events. The Representative's Warrants
may not be sold, transferred or pledged until one year from the date of this
Prospectus, except that they may be transferred, in whole or in part, at any
time to, among others, any officer of the Representative. Holders of the
Representative's Warrant have demand and piggyback registration rights with
respect to the Representative's Warrants and the underlying securities. See
'Description of Capital Stock -- Registration Rights.'
For a period of five years from the date of this Prospectus, the
Representative will have the right to nominate one member to the Company's Board
of Directors. Eric M. Chen, a managing director of the Representative, will be
the Representative's initial nominee to the Board of Directors. See
'Management -- Directors, Executive Officers and Key Personnel.'
The Company and its officers, directors and existing stockholders have
agreed with the Representative not to directly or indirectly register, issue,
offer, sell, offer to sell, contract to sell, hypothecate, pledge or otherwise
dispose of any shares of Common Stock (or any securities convertible into or
exercisable or exchangeable for shares of Common Stock) for a period of one year
from the date
65
<PAGE>
<PAGE>
of this Prospectus, without the prior written consent of the Representative,
subject to certain exceptions.
Prior to the Offering, there has been no public market for the Common
Stock. Consequently, the initial public offering price will be determined
through negotiations between the Company and the Representative. Among the
factors considered in making such determination are the prevailing market
conditions, the Company's financial condition and operating history, the
operating history of Bioren and Bigmar Pharmaceuticals, the Company's prospects,
the prospects for the pharmaceutical and biotechnology industries in general,
the management of the Company, the market prices of securities for companies in
businesses similar to that of the Company and other factors deemed relevant.
The Company has agreed to pay the Representative a non-accountable expense
allowance equal to 2.5% of the gross proceeds of the Offering, of which none has
been paid as of the date of this Prospectus. The Company has also agreed to
indemnify the Underwriters against, or contribute to losses arising out of,
certain liabilities, including liabilities arising under the Securities Act.
The Representative was organized in February 1992 and was registered as a
broker-dealer in 1993. Prior to this Offering, the Representative has
participated as a sole or co-manager in three public offerings. See 'Risk
Factors -- Lack of Underwriting History.'
The Representative does not intend to sell Common Stock from the Offering
to any discretionary accounts.
66
<PAGE>
<PAGE>
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Rubin Baum Levin Constant & Friedman, New York, NY.
Rubin Baum Levin Constant & Friedman serves as general counsel to Protyde. Irwin
M. Rosenthal, a partner of Rubin Baum Levin Constant & Friedman, is a director
and principal stockholder of Protyde. Other partners or attorneys associated
with Rubin Baum Levin Constant & Friedman are stockholders of Protyde. From time
to time, Rubin Baum Levin Constant & Friedman has acted as counsel for the
Representative in connection with other public offerings. The statements related
to United States regulatory matters have been passed upon by Hyman, Phelps &
McNamara, P.C., Washington, D.C. The statements related to Swiss matters have
been passed upon by Wenger Mathys Plattner, Basel, Switzerland. Wenger Mathys
Plattner is acting as special counsel to the Company and the Underwriters in
connection with the Offering. Certain United States legal matters will be passed
upon for the Underwriters by Baer Marks & Upham LLP, New York, NY.
EXPERTS
The consolidated financial statements of Bigmar, Inc. and Subsidiaries as
of December 31, 1994 and 1995, and for the years ended December 31, 1993,
December 31, 1994, and December 31, 1995 included herein and elsewhere in the
Registration Statement, of which this Prospectus forms a part, have been audited
by Richard A. Eisner & Company, LLP, independent auditors, as set forth in their
report thereon appearing elsewhere in the Registration Statement, and are
included in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
The financial statements of Bioren SA for the six months ended June 30,
1995, and the two years ended December 31, 1994 included herein and elsewhere in
the Registration Statement, of which this Prospectus forms a part, have been
audited by Richard A. Eisner & Company, LLP, independent auditors, as set forth
in their report thereon appearing elsewhere in the Registration Statement, and
are included in reliance upon such report given upon the authority of such firm
as experts in accounting and auditing.
ADDITIONAL INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-1 (together with all amendments, schedules and exhibits thereto, 'Registration
Statement') under the Securities Act with respect to the Common Stock offered
hereby. This Prospectus, which constitutes a part of the Registration Statement,
does not contain all of the information set forth in the Registration Statement
to which reference is hereby made. Statements made in this Prospectus as to the
contents of any contract, agreement or other document referred to are not
necessarily complete. With respect to each such contract, agreement or other
document filed as an exhibit to the Registration Statement, reference hereby is
made to the exhibit for a more complete description of the matter involved, and
each such statement shall be deemed qualified in its entirety by such reference.
For further information with respect to the Company and the Common Stock offered
hereby, reference is made to the Registration Statement. The Registration
Statement filed by the Company may be inspected, without charge, at the public
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, NW, Washington, DC 20549, and at the Commission's regional
offices at Northwestern Atrium Center, 500 West Madison Street, Room 1400,
Chicago, IL 60661, and 7 World Trade Center, Suite 1300, New York, NY 10048.
Prior to this Offering, the Company has not been a reporting company under
the Securities Exchange Act of 1934, as amended. Reports and other information
filed by the Company may be inspected and copied at the public reference
facilities of the Commission at 450 Fifth Street, N.W. Washington, D.C. and at
the regional offices referred to above, and copies of such material can be
obtained from the public reference section of the Commission, Washington, D.C.
20549 at prescribed rates. Reports and other information concerning the Company
can also be inspected at The Nasdaq Stock Market, Inc., 1735 K Street,
Washington, D.C. 20006 and The Boston Stock Exchange, One Boston Place, Boston,
Massachusetts 02108.
67
<PAGE>
<PAGE>
GLOSSARY
<TABLE>
<S> <C>
Biotechnological...................... Products manufactured using molecular biology and genetic engineering
technologies.
Calcium Leucovorin.................... The chemically synthesized calcium salt of folinic acid.
Cancer................................ Uncontrolled growth resulting in the development of a mass of cells,
commonly called a tumor or neoplasm (new growth); often characterized by
the spread (metastasis) of cells and their invasion into other tissues.
Chemotherapy.......................... Special chemicals used to treat disease, also called pharmaceutical
products or drugs.
Cytotoxic............................. A toxin or antibody that has a specific toxic action upon cells of special
organs.
Human Growth Hormone.................. The substance produced by the body that is responsible for growth.
Intravenous Infusion Solutions........ Substances, including electrolytes, carbohydrates and chemotherapy drugs,
administered by direct introduction into the body via a blood vessel.
Lyophilized........................... The result of removing water through freezing under a vacuum, a process
called freeze drying.
Methotrexate.......................... An anti-neoplastic antimetabolite used in the treatment of certain
neoplastic diseases.
Neoplastic Condition.................. Any new and abnormal growth; specifically a new growth of tissue in which
the growth is uncontrolled and progressive and the multiplication of
cells under conditions that would not elicit, or would cause cessation
of, multiplication of normal cells.
Oncology.............................. The medical discipline that studies and treats cancer.
Oral Dosage Form...................... Chemotherapy agents manufactured as capsules or tablets to be taken orally
for the treatment of disease.
Prostate Enlargement.................. Swelling of the prostate gland in the male which surrounds the neck of the
bladder and the urethra. Symptoms include diminution in the caliber and
force of the urinary stream, hesitating in initiating voiding, inability
to terminate voiding abruptly, and others, depending of the severity of
the condition.
Recombinant Urokinase................. Urokinase that is produced from the recombination of genes within the
deoxyribonucleic acid molecule.
Rescue Therapy........................ Therapy employed to alleviate the side effects of chemotherapy.
Sodium Leucovorin..................... A proprietary, new form of chemically synthesized folinic acid.
Urokinase............................. An enzyme produced by the body that is responsible for the dissolution of
blood clots.
</TABLE>
68
<PAGE>
<PAGE>
BIGMAR, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Bigmar, Inc. and subsidiaries
Report of Independent Auditors........................................................................ F-2
Consolidated Balance Sheets........................................................................... F-3
Consolidated Statements of Operations................................................................. F-4
Consolidated Statements of Changes in Stockholders' Equity............................................ F-5
Consolidated Statements of Cash Flows................................................................. F-6
Notes to Consolidated Financial Statements............................................................ F-7
Bioren SA
Report of Independent Auditors........................................................................ F-15
Statements of Operations.............................................................................. F-16
Statements of Cash Flows.............................................................................. F-17
Notes to Financial Statements......................................................................... F-18
Bigmar, Inc. and subsidiaries
Pro forma Statements of Operations.................................................................... F-20
</TABLE>
F-1
<PAGE>
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholders
BIGMAR, INC.
We have audited the accompanying consolidated balance sheets of Bigmar,
Inc., and subsidiaries as at December 31, 1994 and December 31, 1995 and the
related consolidated statements of operations, changes in stockholders' equity
and cash flows for each of the years in the three-year period ended December 31,
1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements enumerated above present fairly,
in all material respects, the consolidated financial position of Bigmar, Inc.
and Subsidiaries, as at December 31, 1994 and December 31, 1995, and the
consolidated results of their operations and their cash flows for each of the
years in the three-year period ended December 31, 1995, in conformity with
generally accepted accounting principles.
RICHARD A. EISNER & COMPANY, LLP
New York, New York
March 25, 1996
With respect to Note 1,
April 16, 1996
With respect to Note 11D
March 29, 1996
F-2
<PAGE>
<PAGE>
BIGMAR, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------- MARCH 31,
1994 1995 1996
---------- ----------- -------------,
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash.............................................................. $ 117,475 $ 1,425,603 $ 1,257,555
Accounts receivable, net of allowances of $39,039, $51,948 and
$50,378 at December 31, 1994, December 31, 1995 and March 31,
1996, respectively.............................................. 458,240 1,588,345 1,971,783
Due from related party............................................ 170,648
Inventory (Notes 3 and 4)......................................... 1,986 1,051,948 1,132,620
Prepaid expenses and other current assets......................... 1,187 112,668 115,565
---------- ----------- -----------
Total current assets......................................... 578,888 4,349,212 4,477,523
Property, plant and equipment, at cost, less accumulated depreciation
and amortization (Notes 3 and 5)..................................... 1,594,733 10,717,834 12,425,939
Deposits on equipment.................................................. 1,567,661
Goodwill (Notes 1 and 3)............................................... 328,564 320,350
Deferred charges and other assets...................................... 97,516 508,802
---------- ----------- -----------
Total........................................................ $2,173,621 $15,493,126 $19,300,275
---------- ----------- -----------
---------- ----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.................................................. $ 451,471 $ 826,532 $ 1,602,014
Note payable (Note 6)............................................. 1,960,385 1,847,184
Due to related parties............................................ 175,440
Advances on reimbursable expenses (Note 11)....................... 750,000
Accrued expenses and other current liabilities.................... 28,891 357,834 240,318
---------- ----------- -----------
Total current liabilities.................................... 480,362 3,144,751 4,614,956
Long-term debt (Note 7)................................................ 1,154,073 6,627,447 7,973,309
Accounts payable-equipment (Note 7).................................... 1,071,821
Related party loan (Note 8)............................................ 346,694 1,809,524 1,794,312
---------- ----------- -----------
Total liabilities............................................ 1,981,129 11,581,722 15,454,398
---------- ----------- -----------
Stockholders' equity (Notes 1, 9 and 16):
Preferred Stock ($.001 par value; 5,000,000 shares authorized;
none issued)....................................................
Common stock ($.001 par value; 15,000,000 shares authorized;
400,188 shares issued and outstanding December 31, 1994,
2,375,000 shares issued and outstanding December 31, 1995 and
March 31, 1996)................................................. 400 2,375 2,375
Additional paid in capital........................................ 89,690 3,900,875 3,900,875
Cumulative translation adjustment................................. 260 3,216 (113,992)
Retained earnings................................................. 102,142 4,938 56,619
---------- ----------- -----------
Total stockholders' equity................................... 192,492 3,911,404 3,845,877
---------- ----------- -----------
Total........................................................ $2,173,621 $15,493,126 $19,300,275
---------- ----------- -----------
---------- ----------- -----------
</TABLE>
The accompanying notes to financial statements are an integral part hereof.
F-3
<PAGE>
<PAGE>
BIGMAR, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
---------------------------------- ------------------------
1993 1994 1995 1995 1996
-------- -------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net sales (Note 14)............................ $264,077 $707,627 $5,600,362 $1,185,710 $1,898,002
Cost of goods sold............................. 182,075 611,040 4,001,891 1,059,955 1,151,099
-------- -------- ---------- ---------- ----------
Gross margin................................... 82,002 96,587 1,598,471 125,755 746,903
-------- -------- ---------- ---------- ----------
Operating expenses:
Research and development.................. 23,144 88,394
Selling, general and administrative....... 50,810 16,269 1,493,055 21,452 547,463
-------- -------- ---------- ---------- ----------
Total................................ 50,810 16,269 1,516,199 21,452 635,857
-------- -------- ---------- ---------- ----------
Operating income............................... 31,192 80,318 82,272 104,303 111,046
Other income................................... 7,927 24,095
Interest expense (income)...................... (387) (966) 182,476 (9,168) 83,460
-------- -------- ---------- ---------- ----------
Income (loss) before income taxes.............. 31,579 89,211 (100,204) 113,471 51,681
-------- -------- ---------- ---------- ----------
Income taxes (benefit) (Note 9):
Current................................... 1,296 1,553 13,000 20,100 5,400
Deferred.................................. 7,000 9,000 (16,000) 2,600 (5,400)
-------- -------- ---------- ---------- ----------
8,296 10,553 (3,000) 22,700 0
-------- -------- ---------- ---------- ----------
Net income (loss).............................. $ 23,283 $ 78,658 $ (97,204) $ 90,771 $ 51,681
-------- -------- ---------- ---------- ----------
-------- -------- ---------- ---------- ----------
Net income (loss) per share.................... $0.06 $0.20 ($0.07) $0.23 $0.02
Weighted average shares outstanding............ 400,188 400,188 1,337,292 400,188 2,375,000
-------- -------- ---------- ---------- ----------
-------- -------- ---------- ---------- ----------
</TABLE>
The accompanying notes to financial statements are an integral part hereof.
F-4
<PAGE>
<PAGE>
BIGMAR, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK
-------------------
NUMBER CUMULATIVE
OF ADDITIONAL PAID RETAINED TRANSLATION
SHARES AMOUNT IN CAPITAL EARNINGS ADJUSTMENT
--------- ------ --------------- -------- -----------
<S> <C> <C> <C> <C> <C>
Balance -- December 31, 1992..................... 400,188 $ 400 $ 89,690 $ 201
Net income, year ended
December 31, 1993.............................. 23,283
--------- ------ --------------- -------- -----------
Balance -- December 31, 1993..................... 400,188 400 89,690 23,484
Net income, year ended
December 31, 1994.............................. 78,658
Translation adjustment........................... $ 260
--------- ------ --------------- -------- -----------
Balance -- December 31, 1994..................... 400,188 400 89,690 102,142 260
Purchase of 50% interest in Bioren SA for cash... 350,312 350 2,599,199
Issuance of common stock to Bigmar
Pharmaceuticals stockholders for cash.......... 1,600,750 1,601 1,207,010
Issuance of common stock to Bigmar Inc.,
stockholders................................... 23,750 24 4,976
Net (loss), year ended December 31, 1995......... (97,204)
Translation adjustment........................... 2,956
--------- ------ --------------- -------- -----------
Balance -- December 31, 1995..................... 2,375,000 2,375 3,900,875 4,938 3,216
Net income, three months ended March 31, 1996.... 51,681
Translation adjustment........................... (117,208)
--------- ------ --------------- -------- -----------
Balance -- March 31, 1996 (unaudited)............ 2,375,000 $2,375 $ 3,900,875 $ 56,619 $ (113,992)
--------- ------ --------------- -------- -----------
--------- ------ --------------- -------- -----------
</TABLE>
The accompanying notes to financial statements are an integral part hereof.
F-5
<PAGE>
<PAGE>
BIGMAR, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------------- --------------------------
1993 1994 1995 1995 1996
-------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)................................ $ 23,283 $ 78,658 $ (97,204) $ 90,771 $ 51,681
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization................ 174,184 48,743
Loss on sale of equipment.................... 48,693
Changes in operating assets and liabilities:
(Increase) in accounts receivable........ (25,393) (421,634) (424,712) (191,607) (425,615)
(Increase) decrease in related party
receivable............................. (170,648) 163,975
(Increase) decrease in inventory......... (1,943) 578,755 2,172 (111,439)
(Increase) decrease in other current
assets................................. 1,295 (1,160) 206,671 1,297 95,522
Increase in due to related party......... 68,013
(Increase) in other assets............... (37,782)
Increase in accounts payable............. 8,112 430,073 492,777 537,083 793,198
Increase in advances on reimbursable
expenses............................... 750,000
Increase (decrease) in accrued expenses
and other current liabilities.......... 30,704 (7,048) 29,634 (8,264) (105,729)
-------- ----------- ----------- ----------- -----------
Net cash provided by operating
activities......................... 38,001 76,946 800,368 431,452 1,328,349
-------- ----------- ----------- ----------- -----------
Cash flows from investing activities:
Purchase of property, plant and equipment........ (1,560,488) (3,120,133) (965,463) (988,633)
Deposits on equipment............................ (1,553,315)
Purchase of Bioren SA (net of cash acquired)..... (4,906,110)
Increase of other assets......................... (35,324) (240,566)
Proceeds from sale of equipment.................. 255,972
-------- ----------- ----------- ----------- -----------
Net cash (used in) investing
activities......................... (1,560,488) (7,805,595) (965,463) (2,782,514)
-------- ----------- ----------- ----------- -----------
Cash flows from financing activities:
Short-term borrowings............................ 20,140
Proceeds from issuance of common stock........... 3,813,160
Long-term borrowings............................. 1,467,711 4,455,955 1,621,933 1,559,731
Deferred offering costs.......................... (31,059) (141,515)
-------- ----------- ----------- ----------- -----------
Net cash provided by financing
activities......................... 1,467,711 8,238,056 1,642,073 1,418,216
-------- ----------- ----------- ----------- -----------
Effect of exchange rate changes on cash.............. 411 10,096 75,299 73,141 (132,099)
-------- ----------- ----------- ----------- -----------
Net increase (decrease) in cash...................... 38,412 (5,735) 1,308,128 1,181,203 (168,048)
Cash -- at beginning of period....................... 84,798 123,210 117,475 117,475 1,425,603
-------- ----------- ----------- ----------- -----------
Cash -- at end of period............................. $123,210 $ 117,475 $ 1,425,603 $ 1,298,678 $ 1,257,555
-------- ----------- ----------- ----------- -----------
-------- ----------- ----------- ----------- -----------
Supplemental disclosure of cash flow information:
Cash paid during the period for
Interest....................................... $ 0 $ 36,032 $ 427,311 $ 0 $ 13,284
Income taxes................................... $ 809 $ 0 $ 12,195 $ 0 $ 8,673
Equipment purchases included in accounts payable --
equipment.......................................... $ 1,071,821
</TABLE>
The accompanying notes to financial statements are an integral part hereof.
F-6
<PAGE>
<PAGE>
BIGMAR, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NOTE 1) -- THE COMPANY:
Bigmar, Inc. (the 'Company') was formed in September 1995 by Chemholding
SA, Chemholding's principal stockholders and John G. Tramontana for the purpose
of manufacturing and distributing various oncological and biotechnical products
including six oncological products, the distribution rights to which were
acquired from affiliates of Chemholding SA. Certain stockholders of the Company
owned 100% of Bigmar Pharmaceuticals SA ('Pharmaceuticals') and 50% of Bioren SA
('Bioren'), two Swiss corporations. The other 50% of Bioren is owned by
Pharmaceuticals. On April 9, 1996 the Company acquired 100% of Pharmaceuticals
and 50% of Bioren in a stock for stock exchange. Since there was a high degree
of common ownership, the acquisition was accounted for as a reorganization of
companies under common control. Accordingly, the financial statements of the
Company have been restated to include the results of operations of
Pharmaceuticals for all periods presented and the results of Bioren from July 1,
1995, the date that Pharmaceuticals and certain stockholders of the Company
acquired their interests.
Pharmaceuticals is engaged in the distribution of oncological products in
various countries in Europe and Bioren is primarily a manufacturer and
distributor of intravenous infusion solutions in Switzerland. In addition, the
Company intends to become a manufacturer and a distributor of pharmaceutical
products and under the four collaborative agreements described in Note 11.
The Company intends to have an initial public offering of its common stock.
In connection therewith, the Company expects to incur significant costs which,
if the offering is not consummated, will be charged to expense.
In April, 1996 the stockholders of the Company contributed 99% of their
shares to the Company. Also in April, 1996, the Company restated and amended its
certificate of incorporation, increasing its authorized shares of common stock
from 10,000,000 to 15,000,000, authorizing 5,000,000 shares of preferred stock,
and effecting a 2.105263 for one reverse stock split. These transactions are
reflected retroactively in the accompanying financial statements.
(NOTE 2) -- BIOREN ACQUISITION:
On June 30, 1995, Pharmaceuticals acquired 100% of the outstanding stock of
Bioren for $5,195,000 and immediately sold 50% of the stock to certain
stockholders of Pharmaceuticals and the Company.
The consolidated financial statements include the accounts of Bioren from
July 1, 1995, the date of acquisition from a nonaffiliated party. Had the
acquisition of Bioren occurred at the beginning of 1994, the Company's results
would have been as follows:
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS
DECEMBER 31, ENDED
------------------------- MARCH 31,
1994 1995 1995
----------- ---------- ------------
<S> <C> <C> <C>
Sales............................................ $ 6,587,312 $8,529,327 $2,702,351
Gross profit..................................... 1,497,029 2,833,146 718,045
Income (loss) before extraordinary item.......... (2,905,744) 5,107 100,871
Income (loss) before extraordinary item per
share.......................................... $(3.87) $.00 $.13
</TABLE>
(NOTE 3) -- SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF PREPARATION:
The consolidated financial statements include the accounts of Bigmar, Inc.
and its wholly owned subsidiaries, Pharmaceuticals, Bioren and Bigmar
Therapeutics, Inc. ('Therapeutics'), a Delaware corporation formed in September
1995 to enter into a partnership agreement (see Note 11). All
F-7
<PAGE>
<PAGE>
BIGMAR, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
significant intercompany accounts and transactions have been eliminated in the
consolidated financial statements.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that afffect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS:
The carrying value of cash, trade receivables and trade payables
approximates the fair value because of the short maturity of those instruments.
For long-term debt, the carrying value approximates the fair value because
no major changes have occurred in the applicable interest rates.
INVENTORY:
Inventory is stated at the lower of cost or market using the first-in,
first-out (FIFO) method.
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment are stated at cost. Maintenance and repairs
are charged to operations as incurred. Depreciation is calculated on a
straight-line basis utilizing the assets' estimated useful lives of 3 to 25
years.
ORGANIZATION EXPENSES:
Costs associated with the organization of the Company are capitalized and
amortized over five years.
GOODWILL:
Goodwill is amortized over a 10 year period. The Companies intend to
evaluate the continuing value of goodwill based on undiscounted cash flows.
INCOME TAXES:
Income taxes are accounted for by the asset/liability approach. Deferred
taxes arise from differences between the financial reporting and tax bases of
assets and liabilities.
FOREIGN CURRENCY TRANSACTIONS:
Gains and losses resulting from foreign currency transactions and changes
in foreign currency positions are included in income or expense currently. Such
amounts were insignificant in 1995, 1994, and 1993.
FOREIGN CURRENCY TRANSLATION:
The Company's operations are located in Switzerland and its net assets,
revenues and expenses are substantially all denominated in Swiss francs, while
the Company presents its consolidated financial statements in US dollars. Assets
and liabilities are translated at the exchange rates in effect at the balance
sheet date. Revenues and expenses are translated at the weighted average
exchange rates for the period. Net gains and losses arising upon translation of
local currency financial statements to US dollars are accumulated in a separate
component of stockholders' equity, the cumulative translation
F-8
<PAGE>
<PAGE>
BIGMAR, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
adjustment account, which may be realized upon the eventual disposition by the
Company of part or all of its investments in its Swiss operations.
PER SHARE DATA:
Net income (loss) per share is based on the weighted average number of
shares outstanding during each period after giving retroactive effect to the
reorganization, the capital contribution and the reverse stock split, all
described in Note 1.
(NOTE 4) -- INVENTORIES:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- MARCH 31,
1994 1995 1996
------ ---------- ----------
<S> <C> <C> <C>
Raw materials..................................................... $ 519,414 $ 412,110
Finished goods.................................................... $1,986 532,534 720,510
------ ---------- ----------
Total........................................................ $1,986 $1,051,948 $1,132,620
------ ---------- ----------
------ ---------- ----------
</TABLE>
(NOTE 5) -- PROPERTY, PLANT AND EQUIPMENT:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------- MARCH 31,
1994 1995 1996
---------- ----------- -----------
<S> <C> <C> <C>
Building and building improvements......................... $1,551,288 $ 8,455,743 $ 9,815,669
Land....................................................... 121,212 117,548
Machinery.................................................. 43,445 2,205,390 2,591,503
Equipment.................................................. 66,162 75,357
---------- ----------- -----------
1,594,733 10,848,507 12,600,077
Less accumulated depreciation.............................. 130,673 174,138
---------- ----------- -----------
Total................................................. $1,594,733 $10,717,834 $12,425,939
---------- ----------- -----------
---------- ----------- -----------
</TABLE>
For the years ended December 31, 1994, December 31, 1995 and the three
months ended March 31, 1996 interest of $40,000, $235,000 and $62,000,
respectively was capitalized. Such interest was incurred in connection with bank
and related party borrowings which were utilized to finance the construction of
the Pharmaceuticals facility. Total interest incurred, including such
capitalized amounts was approximately $40,000 and $417,000 in 1994 and 1995,
respectively and $12,000 and $145,000 for the three months ended March 31, 1995
and March 31, 1996, respectively.
(NOTE 6) -- NOTE PAYABLE:
The note payable of $1,960,385 and $1,847,184 at December 31, 1995 and
March 31, 1996, respectively is due to a company owned by the seller of Bioren
with interest at 6%. Repayment is due in 1996.
F-9
<PAGE>
<PAGE>
BIGMAR, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(NOTE 7) -- LONG-TERM DEBT:
Long-term debt consists of:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1996
------------ ----------
<S> <C> <C>
Bank loan collateralized by mortgage on the Bioren building; interest at 5%
per annum through May 1999, adjustable thereafter; subject to certain
restrictive covenants and subject to demand by the bank after May
1999..................................................................... $2,597,405 $2,518,892
Installment loan from seller of Bioren collateralized by a second mortgage
on the Bioren building, interest rate based on market rate on industrial
mortgages; rate at December 31, 1995 and March 31, 1996 was 5.5% per
annum; payable in installments of $419,815 in 1997, $419,815 in 1998 and
$839,631 in 1999......................................................... 1,731,602 1,679,261
Construction loans due to a bank under a $2,749,790 line of credit
agreement; partially secured by the Pharmaceuticals building and
equipment; subject to certain restrictive covenants; principal payable
December 31, 1997; interest payable at an adjustable rate not to exceed
6.5% through December 31, 1997; and partially guaranteed by a major
stockholder of the Company............................................... 575,065 1,973,728
Bank loan pursuant to a $1,847,187 line of credit agreement; collateralized
by mortgage on the Pharmaceuticals building and equipment; subject to
certain restrictive covenants; principal payable December 31, 1997;
interest payable at an adjustable rate not to exceed 6.5% through
December 31, 1997; and partially guaranteed by a major stockholder of the
Company.................................................................. 1,623,375 1,551,428
Bank loan pursuant to a $251,889 line of credit; principal payable December
31, 1997; interest payable at an adjustable rate not to exceed 6.5%
through December 31, 1997 and subject to certain restrictive covenants... 100,000 250,000
------------ ----------
$6,627,447 $7,973,309
------------ ----------
------------ ----------
</TABLE>
- ------------
(1) Accounts payable -- equipment of $1,071,821 will be paid using the remaining
proceeds of these credit facilities.
Future maturities of Long Term Debt are as follows:
<TABLE>
<CAPTION>
LONG TERM RELATED
YEAR ENDED DECEMBER 31, DEBT PARTY LOAN
- ------------------------------------------------------------------ ---------- ----------
<S> <C> <C>
1997........................................................... $4,194,971 $ 179,432
1998........................................................... 419,815 179,432
1999........................................................... 3,358,523 179,431
2000........................................................... 179,431
Thereafter..................................................... 1,076,586
---------- ----------
$7,973,309 $1,794,312
---------- ----------
---------- ----------
</TABLE>
(NOTE 8) -- RELATED PARTY LOAN:
Pharmaceuticals owes $1,809,524 and $1,794,312 at December 31, 1995 and
March 31, 1996, respectively, to a company owned by certain stockholders of the
Company. This loan bears interest at 9% and is payable in semiannual
installments of $89,716 from June 30, 1997 through December 31, 2006. The
balance includes accrued interest of approximately $78,000 and $115,050 at
December 31, 1995 and March 31, 1996, respectively.
F-10
<PAGE>
<PAGE>
BIGMAR, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(NOTE 9) -- LEGAL RESERVE:
The Swiss Federal Code of Obligation provides that at least 5% of a
company's net income each year must be appropriated to a legal reserve until
such time as this reserve equals 20% of the company's share capital. In
addition, 10% of any distribution in excess of a 5% dividend also must be
appropriated to the legal reserve. The legal reserve of up to 5% of the share
capital is not available for distribution.
(NOTE 10) -- INCOME TAXES:
Deferred income tax assets and liabilities are provided for temporary
differences between financial statement amounts and the amounts currently
taxable in the jurisdictions in which the Companies operate. Deferred taxes are
provided principally in relation to operating loss carryforwards of Bioren which
can only be utilized to offset future taxable income, if any, of Bioren for up
to six years after incurring the losses, depending on the applicable tax
legislation. The deferred tax asset at December 31, 1995 has been fully reserved
as the future utilization of such asset is uncertain.
The deferred tax asset as of December 31, 1995 and March 31, 1996, was as
follows:
<TABLE>
<CAPTION>
Benefit of operating loss carryforwards of Bioren.................... $ 2,500,000
<S> <C>
Valuation allowance.................................................. (2,500,000)
-----------
Total........................................................... $ 0
-----------
-----------
</TABLE>
The tax charge in Switzerland is an accumulation of the taxes due to the
city, the canton (state) and the federal authorities. Therefore, the tax burden
varies from one entity to another depending upon its location. While the actual
tax rate is a function of the percentage of profitability in relation to taxable
equity, the Companies believe that 20% is a fair approximation of their
effective cumulative tax rates. In addition, as Swiss tax laws do not permit
consolidated tax filings, possible tax losses in one entity do not offset
taxable income in another.
On January 1, 1995, a new federal tax law, and for most Swiss cantons, a
new cantonal tax law, came into force in Switzerland. The new laws provide for a
change in the system of assessment from a two-year past assessment period to a
one-year current assessment period. Because these changes may create a gap
during which certain profits made in prior years may not be taxed or may be only
partially taxed, the new laws have provided for a transition period during which
a special method is followed to calculate income taxes. Since the 1995 taxes due
based on the old methods of assessment had been fully accrued for during 1993
and 1994, the 1995 tax charge only relates to the adjustment needed based on the
1995 income.
A reconciliation between the actual income tax expense and income taxes
computed by applying the United States Federal income tax rate of 34% to
earnings before taxes is as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------ ------------------
1993 1994 1995 1995 1996
------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
Computed income taxes (benefit) at 34% rate..... $10,737 $30,332 $(34,069) $38,580 $17,572
Impact of difference between Swiss effective
rate and US tax rate.......................... (4,421) (12,490) 14,029 (15,886) (7,235)
Increase (decrease) in valuation reserve on
deferred tax assets resulting from net
operating loss carryforwards.................. 14,868 (10,337)
Other........................................... 1,980 (7,289) 2,172 6
------- ------- -------- ------- -------
$ 8,296 $10,553 $ (3,000) $22,700 $ 0
------- ------- -------- ------- -------
------- ------- -------- ------- -------
</TABLE>
F-11
<PAGE>
<PAGE>
BIGMAR, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(NOTE 11) -- COLLABORATIVE AGREEMENTS WITH RELATED PARTIES:
(A) THE CERNELLE AGREEMENT:
On November 5, 1995 Pharmaceuticals entered into an exclusive distribution
and supply agreement ('Cernelle Agreement') with AB Cernelle, a Swedish
corporation owned by a principal stockholder of Bigmar ('Cernelle'). The
Cernelle Agreement provides that Pharmaceuticals shall be the exclusive
worldwide distributor of certain oral dosage cancer products ('Cernelle
Products') and is for a term of 15 years from the date of the first commercial
sale by Pharmaceuticals of the Cernelle Products. Pharmaceuticals shall pay to
Cernelle a one-time amount of $100,000 upon notification by Cernelle that the
Cernelle Products are ready for shipment to Pharmaceuticals and shall purchase
the Cernelle Products at certain prices as defined in the agreement. In the
event the term of the Cernelle Agreement or any renewal thereof is not extended,
Pharmaceuticals shall have, at a minimum, a nonexclusive worldwide right to
distribute the Cernelle Products for three additional years.
Pharmaceuticals also entered into a technical services agreement, dated
November 5, 1995, with Cernelle ('Cernelle TSA'). The Cernelle TSA provides that
Cernelle will prepare abbreviated new drug applications ('ANDA') submissions to
the United States Food and Drug Administration ('FDA') covering the Cernelle
Products. Pharmaceuticals shall pay Cernelle a fee of $20,000 for each ANDA
submitted to and accepted by Pharmaceuticals. Pursuant to the agreement,
Cernelle assigned to Pharmaceuticals the sole and exclusive right, title and
interest in and to the technical services without further consideration. The
term of this agreement is for 15 years and is renewable on the mutual written
agreement of the parties.
(B) THE BIOFERMENT AGREEMENT:
Pharmaceuticals entered into a license and supply agreement dated November
14, 1995, with Bioferment, a division of Cerbios Pharma, a Swiss corporation
owned by a principal stockholder of Bigmar ('Bioferment'), which develops
pharmaceutical products. Subject to the payment of the license fees and subject
to a contingent license to manufacture and a security agreement, Bioferment
grants to Pharmaceuticals an exclusive paid-up license to make, use and sell
certain Bioferment products worldwide.
Pursuant to the agreement Pharmaceuticals shall pay to Bioferment a
$500,000 license fee, all of which is nonrefundable and shall be payable
$100,000 on July 1, 1996, and four further $100,000 payments as certain FDA
filing and approval milestones are met. The license fee shall be credited
against future royalty obligations due to Bioferment from Pharmaceuticals.
The agreement will terminate fifteen years after the first commercial sale
of the last Bioferment product introduced by Pharmaceuticals, its affiliates or
sublicensees.
On December 14, 1995, Pharmaceuticals and Bioferment entered into another
agreement for the worldwide exclusive distribution by Pharmaceuticals of
products derived from certain other Bioferment technologies. This agreement
requires a one-time payment by Pharmaceuticals of $100,000 and terminates
fifteen years from the date of the first commercial sale by Pharmaceuticals of
the products.
(C) THE SAPEC AGREEMENT:
Bioren entered into an exclusive distribution and supply agreement, dated
November 14, 1995, with Sapec, a division of Cerbios Pharma, a company owned by
a principal stockholder of Bigmar ('Sapec Agreement'). Sapec is a manufacturer
of pharmaceutical products for commercial distribution. Pursuant to the Sapec
Agreement, Bioren was appointed Sapec's exclusive worldwide distributor, subject
to certain exceptions, of products developed by Sapec. The Sapec Agreement
provides that Bioren obtain any private or public regulatory or licensing
approval necessary for Bioren or its designee to import, distribute and sell the
Sapec Products in any country throughout the world. Bioren shall pay Sapec a
one-time fee for the grant of such exclusive rights and licenses in the amount
of $100,000, which
F-12
<PAGE>
<PAGE>
BIGMAR, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
is payable upon notification by Sapec that the Sapec Products are ready for
initial shipment to Bioren. The pricing for the Sapec Products is set forth in
the Sapec Agreement.
The Sapec Agreement shall continue for a term of fifteen years from the
date of first commercial sale by Bioren of Sapec Products and is renewable as
mutually agreed upon.
(D) THE PROTYDE AGREEMENTS:
Pursuant to an agreement dated as of October 1995 Therapeutics and a wholly
owned subsidiary of Protyde Pharmaceuticals, Inc. 'Protyde', have formed a
partnership, Protyde-Bigmar Therapeutics ('Partnership'), for the purpose of
coordinating the manufacture and marketing of certain pharmaceutical products
('products'), for the treatment of human cancer.
The business of the Partnership is to obtain FDA approval to market certain
products, to manufacture the products, and to market the products. Pursuant to
the Partnership Agreement, each of the partners initially has a 50% interest in
the Partnership. The Company will account for its investment in the Partnership
on the equity method. As its initial contribution to the Partnership, Protyde
will contribute to the Partnership up to $3,075,000 in cash, the first $750,000
of which was paid to the Company on March 29, 1996, with the balance to be
contributed at such times and in such amounts so as to enable the Partnership to
timely satisfy its obligations, and to make its payments under the terms of its
manufacturing agreement. As Therapeutics' capital contribution to the
Partnership, Therapeutics will cause the Company to make its manufacturing
capacity available to the Partnership under the terms of the manufacturing
agreement.
Under the Partnership Agreement, the Partnership is the sole owner of all
right, title and interest in all FDA-approved ANDAs for any products submitted
for approval by the Partnership. The Partnership is also the sole owner of all
right, title and interest in and to proprietary information and marketing
information which is developed or acquired by a partner or its affiliates, using
partnership funds, or while performing activities subject to reimbursement by
the Partnership. However, during the term of the Partnership each of the
partners has a royalty-free, worldwide right to use and practice any such
proprietary information and marketing information for any purpose outside the
scope of the Partnership's business.
Pursuant to the Partnership Agreement, the Partnership will continue until
December 31, 2005, unless earlier terminated.
The Company has entered into a manufacturing agreement with the Partnership
and Protyde has entered into a marketing agreement with the Partnership.
Pursuant to the manufacturing agreement, the Company's responsibilities include
(i) acquiring and performing stability testing on all raw materials and
packaging materials necessary for the manufacture of the products, (ii)
providing production capacity available to the Partnership in order to meet
production obligations, and (iii) undertaking all measures for quality control
which are either required by the FDA or requested by the Partnership.
(NOTE 12) -- COMMITMENTS:
EMPLOYMENT AGREEMENT:
In April 1996 the Company entered into a five year employment agreement
with its President and Chief Executive Officer providing for an annual salary of
$200,000, commencing upon consummation of the initial public offering subject to
increases based on the consumer price index, and bonuses of at least 25% of the
base salary.
The Company also intends to enter into a two-year employment agreement with
its Vice President and Chief Financial Officer providing for an annual salary of
$80,000 subject to an annual review and bonuses of 15% of the base salary.
F-13
<PAGE>
<PAGE>
BIGMAR, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
LEASES:
In March, 1996 the Company entered into an agreement to sublease executive
office space from a company of which the Company's President was formerly an
officer. The sublease is for a term of two years and provides for rent of
$22,315 per annum.
Bioren sub-leases part of its Couvet facility pursuant to a year to year
lease. The rental income from July 1, 1995 (date of acquisition of Bioren) to
December 31, 1995 and for the three months ended March 31, 1996 was $49,144 and
$24,095, respectively.
(NOTE 13) -- CONCENTRATION OF CREDIT RISK:
Bioren's main customers for intravenous products are hospitals located in
Switzerland. A significant number of these hospitals are owned by the canton
(state) or the city where they are located and the credit risk traditionally is
not significant. For other pharmaceutical products, the customers are privately
owned and credit risk is greater. The management has recorded its estimate of
credit loss through the allowance for doubtful accounts.
(NOTE 14) -- SIGNIFICANT CUSTOMERS:
Sales to significant customers were as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31,
----------------------------------------- ---------------------------------------
1994 1995 1995 1996
------------------ -------------------- ------------------ ------------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
-------- ------- ---------- ------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Prostate materials (one customer)... $470,000 66% $1,023,340 18% $984,100 83% $ 0 0%
Oncological products (one
customer)......................... 214,000 30 668,511 12 0 0 210,000 11
</TABLE>
(NOTE 15) -- RELATED PARTY TRANSACTIONS:
<TABLE>
<CAPTION>
DECEMBER 31,
------------- MARCH 31,
1994 1995 1996
---- ---- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Freight charges paid to related party..................................... $ 35
Purchases from related party.............................................. $31 206 $ 100
Selling, general and administrative expenses paid to related party........ 11 134 66
Interest paid to related parties.......................................... 151 39
</TABLE>
(NOTE 16) -- COMMON STOCK:
The Company intends to adopt an option plan providing for the grant of
incentive stock options and non-qualified stock options to directors, officers,
employees, agents and consultants of the Company. The plan provides for the
grant of options to purchase up to 300,000 shares with exercise terms not to
exceed ten years. In addition, the Company intends to adopt a director option
plan providing for awards of up to 50,000 shares of Common Stock to directors
who are not otherwise affiliated with the Company.
F-14
<PAGE>
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholders
BIOREN SA
We have audited the accompanying statements of operations and cash flows of
Bioren SA for the six months ended June 30, 1995 and for each of the years in
the two-year period ended December 31, 1994. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements enumerated above present fairly,
in all material respects, the results of operations and cash flows of Bioren SA
for the six months ended June 30, 1995 and for each of the years in the two-year
period ended December 31, 1994, in conformity with generally accepted accounting
principles.
RICHARD A. EISNER & COMPANY, LLP
New York, New York
March 25, 1996
F-15
<PAGE>
<PAGE>
BIOREN SA
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS
-------------------------- ENDED JUNE
1993 1994 30, 1995
----------- ----------- ----------
<S> <C> <C> <C>
Net sales............................................................. $ 4,103,921 $ 5,879,685 $2,928,965
Cost of goods sold.................................................... 3,558,350 4,479,243 1,694,290
----------- ----------- ----------
Gross profit.......................................................... 545,571 1,400,442 1,234,675
----------- ----------- ----------
Operating expenses:
Research and development......................................... 61,297 40,736 26,671
Selling, general and administrative.............................. 1,572,903 1,858,192 1,060,049
Loss on abandonment of building improvements and machinery....... 830,912 2,295,850
----------- ----------- ----------
Total....................................................... 2,465,112 4,194,778 1,086,720
----------- ----------- ----------
Operating income (loss)............................................... (1,919,541) (2,794,336) 147,955
Other income.......................................................... 283,305 94,178 57,969
Interest expense...................................................... 167,956 284,244 86,613
----------- ----------- ----------
Income (loss) before extraordinary income............................. (1,804,192) (2,984,402) 119,311
Extraordinary income -- forgiveness of bank indebtedness (Note 6)..... 1,468,429
----------- ----------- ----------
Net income (loss)..................................................... $(1,804,192) $(1,515,973) $ 119,311
----------- ----------- ----------
----------- ----------- ----------
</TABLE>
The accompanying notes to financial statements are an integral part hereof.
F-16
<PAGE>
<PAGE>
BIOREN SA
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS
-------------------------- ENDED JUNE
1993 1994 30, 1995
----------- ----------- ----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)................................................. $(1,804,192) $(1,515,973) $ 119,311
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:
Depreciation and amortization................................ 1,636,559 741,132 15,448
Loss on abandonment of building improvements and machinery... 2,295,850
Gain on sale of equipment.................................... (8,954) (61,674)
Changes in operating assets and liabilities:
Decrease in accounts receivable......................... 840,870 392,784 178,667
(Increase) decrease in inventory........................ 345,997 36,711 (239,466)
(Increase) decrease in other current assets............. (26,557) 39,191 (264,213)
Increase (decrease) in accounts payable................. 193,476 (103,131) 151,400
Increase (decrease) in payable to related party......... (7,180,643) 526,671 630,917
Increase (decrease) in accrued expenses................. (109,390) (120,588) 121,050
----------- ----------- ----------
Net cash provided by (used in) operating
activities....................................... (6,112,834) 2,230,973 713,114
----------- ----------- ----------
Cash flows from investing activities:
Purchase of property, plant and equipment......................... (68,778) (100,124) (108,102)
Proceeds from sale of equipment................................... 45,115 61,674
----------- ----------- ----------
Net cash (used in) investing activities............ (23,663) (38,450) (108,102)
----------- ----------- ----------
Cash flows from financing activities:
Proceeds from issuance of common stock............................ 678,426
Repayment of long-term borrowings................................. (2,909,324) (394,625)
Borrowings from parent company.................................... 5,452,816
----------- ----------- ----------
Net cash provided by (used in) financing
activities....................................... 6,131,242 (2,909,324) (394,625)
----------- ----------- ----------
Effect of exchange rate changes on cash................................ (3,336) 49,114 18,659
----------- ----------- ----------
Net increase (decrease) in cash........................................ (8,591) (667,687) 229,046
Cash at beginning of year.............................................. 777,833 769,242 101,555
----------- ----------- ----------
Cash at end of year.................................................... $ 769,242 $ 101,555 $ 330,601
----------- ----------- ----------
----------- ----------- ----------
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest..................................................... $ 339,531 $ 319,110 $ 100,611
Income taxes................................................. 12,052 14,107 22,326
</TABLE>
The accompanying notes to financial statements are an integral part hereof.
F-17
<PAGE>
<PAGE>
BIOREN SA
NOTES TO FINANCIAL STATEMENTS
(NOTE 1) -- NATURE OF BUSINESS:
Bioren SA ('Company') manufactures intravenous and pharmaceutical products
for the Swiss and foreign markets.
Bigmar Pharmaceuticals SA ('Pharmaceuticals') acquired 100% of the
outstanding stock of the Company on June 30, 1995 for $5,195,000 and immediately
sold 50% of the stock to certain shareholders of Pharmaceuticals and
shareholders of Bigmar, Inc., a Delaware corporation for $2,597,500.
(NOTE 2) -- SIGNIFICANT ACCOUNTING POLICIES:
INVENTORY:
Inventories are stated at the lower of cost or market using the first-in,
first-out (FIFO) method. Provisions for obsolete items are recorded to the
extent considered necessary by the Company.
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment are carried at cost. Maintenance and repairs
are charged to operations. Depreciation is calculated on a straight-line basis
utilizing the assets' estimated useful lives of 3 to 25 years.
INCOME TAXES:
Income taxes are accounted for by the asset/liability approach. Deferred
taxes arise from differences between the financial reporting and tax bases of
assets and liabilities.
FOREIGN CURRENCY TRANSACTIONS
Gains and losses resulting from foreign currency transactions and changes
in foreign currency positions are included in income or expense currently. Such
amounts were insignificant for the six months ended June 30, 1995 and for each
of the years in the two year period ended December 31, 1994.
FOREIGN CURRENCY TRANSLATION
The Company's operations are located in Switzerland and its net assets,
revenues and expenses are substantially all denominated in Swiss francs, while
the Company presents its consolidated financial statements in US dollars. Assets
and liabilities are translated at the exchange rates in effect at the balance
sheet date. Revenues and expenses are translated at the weighted average
exchange rates for the period. Net gains and losses arising upon translation of
local currency financial statements to US dollars are accumulated in a separate
component of Stockholders' Equity, the Cumulative Translation Adjustment
account, which may be realized upon the eventual disposition by the Company of
part or all of its investments in its Swiss operations.
(NOTE 3) -- INCOME TAXES:
The tax charge in Switzerland is an accumulation of the taxes due to the
city, the canton (state) and the federal authorities. Therefore, the tax burden
varies from one entity to another depending upon its location. While the actual
tax rate is a function of the percentage of profitability in relation to taxable
equity, the Company believes that 20% is a fair approximation of its effective
cumulative tax rate.
On January 1, 1995, a new federal tax law, and for most Swiss cantons, a
new cantonal tax law, came into force in Switzerland. The new laws provide for a
change in the system of assessment from a two year past assessment period to a
one year current assessment period. Because these changes may create a gap
during which certain profits made in prior years may not be taxed or may be only
partially
F-18
<PAGE>
<PAGE>
BIOREN SA
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
taxed, the new laws have provided for a transition period during which a special
method is followed to calculate income taxes. Since the 1995 taxes due based on
the old methods of assessment had been fully accrued for during 1993 and 1994,
the 1995 tax charge only relates to the adjustment needed based on the 1995
income.
There is no tax expense in 1995 due to the reduction of the valuation
allowance on the Company's deferred tax asset, resulting from the utilization of
the Company's operating loss carryforwards, offsetting the provision for income
taxes.
(NOTE 4) -- LEASE:
The Company leases part of its Couvet facility. The rental income for 1995,
1994 and 1993 was $49,144 (six months), $84,477 and $84,704, respectively.
(NOTE 5) -- RELATED PARTY TRANSACTIONS:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------ JUNE 30,
1993 1994 1995
------------ -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Debt forgiveness from stockholder treated as additional paid-in capital............ $ 2,713 $1,468
Other selling, general and administrative expenses paid to stockholder............. 45 38 $117
Interest paid to stockholder....................................................... 135 47
Interest paid to a company owned by a principal stockholder of the Company......... 71 3 25
Consulting fees charged to stockholder............................................. 129
Gain on sale of machine to a company owned by a principal stockholder of the
Company.......................................................................... 23
</TABLE>
(NOTE 6) -- EXTRAORDINARY INCOME:
Extraordinary income of $1,468,429 consists of forgiveness of bank
indebtedness.
F-19
<PAGE>
<PAGE>
BIGMAR, INC. AND SUBSIDIARIES
PRO FORMA STATEMENTS OF OPERATIONS
The accompanying unaudited pro forma statement of operations combines the
results of operations of Bioren with the results of operations of the Company
for the year ended December 31, 1995 as if the acquisition of Bioren by the
Company had taken place on January 1, 1995. This statement should be read in
conjunction with the audited financial statements of Bioren and the Company and
the respective notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
PRO FORMA
BIGMAR, INC. BIOREN SA RESULTS OF
& SUBSIDIARIES SIX MONTHS OPERATIONS
YEAR ENDED ENDED PRO FORMA YEAR ENDED
DECEMBER 31, 1995 JUNE 30, 1995 ADJUSTMENT DECEMBER 31, 1995
----------------- ------------- ---------- -----------------
<S> <C> <C> <C> <C>
Net sales.................................... $ 5,600,362 $ 2,928,965 $ 8,529,327
Cost of goods sold........................... 4,001,891 1,694,290 5,696,181
----------------- ------------- -----------------
Gross margin................................. 1,598,471 1,234,675 2,833,146
----------------- ------------- -----------------
Operating expenses:
Research and development................ 23,144 26,671 49,815
Selling, general and administrative..... 1,493,055 1,060,049 $ 17,000(1) 2,570,104
----------------- ------------- ---------- -----------------
Total.............................. 1,516,199 1,086,720 17,000 2,619,919
----------------- ------------- ---------- -----------------
Operating income............................. 82,272 147,955 213,227
Other income................................. 57,969 57,969
Interest expense (income).................... 182,476 86,613 269,089
----------------- ------------- ---------- -----------------
Income (loss) before income taxes............ (100,204) 119,311 (17,000) 2,107
----------------- ------------- ---------- -----------------
Income taxes (benefit):
Current................................. 13,000 13,000
Deferred................................ (16,000) (16,000)
----------------- ------------- ---------- -----------------
(3,000) (3,000)
----------------- ------------- ---------- -----------------
Net income (loss)............................ $ (97,204) $ 119,311 $(17,000) $ 5,107
----------------- ------------- ---------- -----------------
----------------- ------------- ---------- -----------------
Net income per share......................... $.00
Weighted average number of shares
outstanding................................ 1,510,942
</TABLE>
- ------------
(1) Amortization of goodwill
F-20
<PAGE>
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
<PAGE>
[Photograph of manufacturing equipment at the Company's
Couvet, Switzerland facility.]
The Company manufactures 14 types of intravenous infusion solutions at its
state-of-the-art facility in Couvet, Switzerland and markets these solutions in
Switzerland and Lichtenstein through its sales force.
[Photograph of quality control equipment at the Company's
Couvet, Switzerland facility.]
The Company's 57,000 square foot facility in Couvet, Switzerland includes
laboratories for quality assurance and quality control activity.
<PAGE>
<PAGE>
________________________________________________________________________________
NO UNDERWRITER, DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS
OFFERING, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY
SECURITIES OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE
DATE OF THIS PROSPECTUS.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary............................. 3
Risk Factors................................... 8
The Company.................................... 18
Use of Proceeds................................ 20
Dividend Policy................................ 21
Capitalization................................. 22
Dilution....................................... 23
Selected Financial Data........................ 24
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................... 26
Business....................................... 34
Management..................................... 51
Principal Stockholders......................... 58
Certain Transactions........................... 59
Description of Capital Stock................... 62
Shares Eligible for Future Sale................ 64
Underwriting................................... 65
Legal Matters.................................. 67
Experts........................................ 67
Additional Information......................... 67
Glossary....................................... 68
Index to Financial Statements.................. F-1
</TABLE>
------------------------
UNTIL , 1996 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS),
ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
________________________________________________________________________________
1,250,000 SHARES
BIGMAR, INC.
COMMON STOCK
-------------------------
PROSPECTUS
-------------------------
LT LAWRENCE & CO., INC.
, 1996
________________________________________________________________________________
<PAGE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following are the estimated expenses of the Company ('Registrant') in
connection with the issuance and distribution of the common stock being
registered.
<TABLE>
<CAPTION>
<S> <C>
SEC registration fee.............................................................. $ 5,000
NASD filing fee................................................................... 2,000
Listing fees...................................................................... 30,000
Printing and engraving expenses................................................... 200,000
Fees and expenses of counsel...................................................... 325,000
Fees and expenses of accountants.................................................. 90,000
Transfer agent and registrar fees................................................. 4,000
Blue sky fees and expenses........................................................ 50,000
Representative's non-accountable expense allowance................................ 250,000
Miscellaneous..................................................................... 19,000
--------
Total........................................................................ $975,000
--------
--------
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under Section 145 of the Delaware General Corporation Law ('DGCL'), the
Registrant has broad powers to indemnify its directors, officers and other
employees. This section (i) provides that the statutory indemnification and
advancement of expenses provisions of the DGCL are not exclusive, provided that
no indemnification may be made to or on behalf of any director or officer if a
judgment or other final adjudication adverse to the director or officer
establishes that his acts were committed in bad faith or were the result of
active and deliberate dishonesty and were material to the cause of action so
adjudicated, or that he personally gained in fact a financial profit or other
advantage to which he was not legally entitled, (ii) establishes procedures for
indemnification and advancement of expenses that may be contained in the
certificate of incorporation or by-laws, or, when authorized by either of the
foregoing, set forth in a resolution of the stockholders or directors or an
agreement providing for indemnification and advancement of expenses, (iii)
applies a single standard for statutory indemnification for third-party and
derivative suits by providing that indemnification is available if the director
or officer acted in good faith, for a purpose which he reasonably believed to be
in the best interests of the corporation, and, in criminal actions, had no
reasonable cause to believe that his conduct was unlawful, and (iv) permits the
advancement of litigation expenses upon receipt of an undertaking to repay such
advance if the director or officer is ultimately determined not to be entitled
to indemnification or to the extent the expenses advanced exceed the
indemnification to which the director or officer is entitled. Section 145(g) the
DGCL permits the purchase of insurance to indemnify a corporation or its
officers and directors to the extent permitted.
As permitted by Section 145(e) of the DGCL, the Registrant's By-laws
provide that the Registrant shall indemnify its officers and directors, as such,
to the fullest extent permitted by applicable law, and that expenses reasonably
incurred by any such officer or director in connection with a threatened or
actual action or proceeding shall be advanced or promptly reimbursed by the
Registrant in advance of the final disposition of such action or proceeding upon
receipt of an undertaking by or on behalf of such officer or director to repay
such amount if and to the extent that it is ultimately determined that such
officer or director is not entitled to indemnification.
Article Sixth of the Registrant's Restated and Amended Certificate of
Incorporation provides that no director of the Registrant shall be personally
liable to the Registrant or its stockholders for monetary damages for breaches
of fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Registrant or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the DGCL, or (iv) for any
transaction from which the director derived an improper personal benefit.
II-1
<PAGE>
<PAGE>
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Set forth below is information as to securities of the Registrant sold
within the past three years which were not registered under the Securities Act.
The issuance of all such securities were made in reliance upon an exemption from
the registration provisions of the Securities Act afforded by Section 4(2)
thereof, as transactions by an issuer not involving a public offering. The
Registrant will place stop transfer instructions with its transfer agent with
respect to all such securities. No underwriters were involved in any of the
sales so there were no underwriting discounts or commissions.
<TABLE>
<CAPTION>
NUMBER OF AGGREGATE AGGREGATE
SHARES CASH NON-CASH
STOCKHOLDER DATE SOLD CONSIDERATION CONSIDERATION
- --------------------------------- ---------- --------- ------------- -----------------------------
<S> <C> <C> <C> <C>
Chemholding SA .................. 9/28/95 10,094* $ 2,125
John G. Tramontana............... 9/28/95 9,889* 2,082
Fabio Giovannini................. 9/28/95 919* 193
Giovanni Pelli................... 9/28/95 712* 150
Maria Pia Melera................. 9/28/95 712* 150
PierAngelo Ghirlanda............. 9/28/95 712* 150
Jan Jacob van Troostenburg de
Bruyn.......................... 9/28/95 712* 150
Chemholding SA .................. 4/10/96 1,000,469** 750 shares of Bigmar
Pharmaceuticals SA
John G. Tramontana............... 4/10/96 900,423** 675 shares of Bigmar
Pharmaceuticals SA
Fabio Giovannini................. 4/10/96 100,046** 75 shares of Bigmar
Pharmaceuticals SA
John G. Tramontana............... 4/10/96 63,057** 450 shares of Bioren SA
Giovanni Pelli................... 4/10/96 70,063** 500 shares of Bioren SA
Maria Pia Melera................. 4/10/96 70,063** 500 shares of Bioren SA***
PierAngelo Ghirlanda............. 4/10/96 70,063** 500 shares of Bioren SA
Jan Jacob van Troostenburg de
Bruyn.......................... 4/10/96 70,063** 500 shares of Bioren SA
Fabio Giovannini................. 4/10/96 7,003** 50 shares of Bioren SA
</TABLE>
- ------------
* The above numbers of shares are reflected after the contribution to the
Registrant of 999,281, 979,061, 90,756, 70,538, 70,538, 70,538 and 70,538 by
Chemholding SA, Mr. Tramontana, Mr. Giovannini, Mr. Pelli, Ms. Melera, Mr.
Ghirlanda and Mr. van Troostenburg, respectively.
** Such shares were issued in a stock-for-stock exchange for all of the
outstanding capital stock of Bigmar Pharmaceuticals SA and Bioren SA.
*** Owned by Attilio Melera.
II-2
<PAGE>
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- --------------- --------------------------------------------------
<C> <S>
1.1* -- Form of Underwriting Agreement
3.1`DD' -- Restated and Amended Certificate of
Incorporation of the Registrant
3.1(a)* -- Certificate of Correction to Restated and
Amended Certificate of Incorporation of the
Registrant
3.2* -- Restated By-Laws of the Registrant
3.2(a)`DD' -- Amendment to Restated By-Laws of the Registrant
4.1`DD' -- Specimen Common Stock Certificate
4.2`DD' -- Form of Representative's Warrant
5.1`DD' -- Opinion of Rubin Baum Levin Constant & Friedman
10.1 -- Intentionally Omitted
10.2*** -- Partnership Agreement, dated as of October
1995, between Bigmar Therapeutics, Inc. and
Protyde Oncology Therapeutics, Inc.
10.3** -- Sales and Marketing Agreement, dated as of
October 1995, between Protyde-Bigmar
Therapeutics and Protyde Corporation
10.4** -- Manufacturing Agreement, dated as of October
1995, between Protyde-Bigmar Therapeutics and
the Registrant
10.5* -- Sublease Agreement, dated as of March 1, 1996,
between the Registrant and Cernitin America,
Inc.
10.6* -- Form of Indemnification Agreement
10.7`DD' -- Employment Agreement, dated as of April 15,
1996, between the Registrant and John G.
Tramontana
10.8* -- Form of Medical Advisory Agreement
10.9* -- Form of Scientific Advisory Agreement
10.10*** -- Exclusive Distribution and Supply Agreement,
dated November 5, 1995, between Bigmar
Pharmaceuticals SA and AB Cernelle
10.11* -- Technical Services Agreement, dated November 5,
1995, between Bigmar Pharmaceuticals SA and AB
Cernelle
10.12** -- License and Supply Agreement, dated November
14, 1995, between Bigmar Pharmaceuticals SA and
Bioferment division of Cerbios Pharma SA.
10.13** -- Exclusive Distribution and Supply Agreement,
dated as of December 14, 1995, between Bigmar
Pharmaceuticals SA and Bioferment division of
Cerbios Pharma SA
10.14** -- Exclusive Distribution Agreement, dated
November 14, 1995, between Bioren SA and SAPEC
division of Cerbios Pharma SA
10.15* -- Stock for Stock Exchange Agreement, dated April
9, 1996, between the Registrant and its
stockholders
10.16* -- Contribution Agreement, dated April 8, 1996,
between the Registrant and its stockholders
10.17**`DD'`DD' -- Exclusive Distribution Agreement, dated
December 22, 1995, between Bigmar
Pharmaceuticals SA and Boehringer Mannheim
Italia S.p.A.
10.18** -- International Activities Agreements, dated
March 3, 1994, between Bigmar Pharmaceuticals SA
and Medac GmbH
10.19** -- Distribution Agreement, dated October 10, 1994
between Bigmar Pharmaceuticals SA and Pharma
Stroschein GmbH
10.20** -- Distribution Agreement, dated July 31, 1995,
between Bigmar Pharmaceuticals SA and
Laboratorios Vita S.A.
10.21** -- Supply and Collaboration Agreement, dated March
8, 1995, between Bioren SA and PLM Langeskov A/S
10.22**`DD'`DD' -- Agreement, dated December 21, 1995, between
Laevosan International AG and Bigmar
Pharmaceuticals SA
10.23`DD' -- Loan documentation between Bioren SA and Union
Bank of Switzerland
10.24`DD' -- Loan documentation between Bigmar
Pharmaceuticals SA and Union Bank of Switzerland
10.25* -- Registrant's 1996 Stock Option Plan
</TABLE>
II-3
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- --------------- --------------------------------------------------
<C> <S>
10.26* -- Form of Non-qualified Stock Option Agreement
under the 1996 Stock Option Plan
10.27* -- Form of Incentive Stock Option Agreement under
the 1996 Stock Option Plan
10.28`DD' -- Form of Registrant's Director Option Plan
10.29* -- Acquisition Agreement, dated June 22, 1995,
between Galenica Holding AG and the Registrant
10.30* -- Extension of Licensing Agreement, dated October
27, 1995, between Dr. F. Messi Cell Culture
Technologies and Bigmar Pharmaceuticals SA
10.31`DD' -- Agreements between Bigmar Pharmaceuticals SA
and Unione Farmaceutica SA
21.1* -- Subsidiaries of the Company
23.1`DD' -- Consent of Richard A. Eisner & Company, LLP
23.2`DD' -- Consent of Rubin Baum Levin Constant & Friedman
(contained in Exhibit 5.1)
23.3* -- Consent of Wenger Mathys Plattner
23.4* -- Consent of Hyman, Phelps & McNamara, P.C.
24.1* -- Power of Attorney (contained on the signature
page to the Registration Statement)
27.1`DD' -- Financial Data Schedule
99.1* -- Consent of Eric M. Chen, director designee
99.2* -- Consent of James M. McCormick, director
designee
99.3* -- Consent of Thomas W. D'Alonzo, director
designee
</TABLE>
- ------------
`DD' Filed herewith.
* Previously filed.
** Previously filed in redacted form subject to a request for confidential
treatment pursuant to Rule 406 under the Securities Act with the initial
filing of this Registration Statement. The confidential information that has
been omitted has been filed separately with the Commission with the request
for confidential treatment.
*** Filed herewith in redacted form subject to a request for confidential
treatment pursuant to Rule 406 under the Securities Act with the initial
filing of this Registration Statement. The confidential information that has
been omitted has been filed separately with the Commission with the request
for confidential treatment.
`DD'`DD' Previously filed in the original foreign language version and the
English translation of the agreement.
(b) Financial Statement Schedules:
All Schedules are omitted because of the absence of conditions under which
they are required or because the required information is included in the
financial statements or notes thereto.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes the following:
(a)(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the Prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represents a fundamental change in the information set forth
in the Registration Statement; and
II-4
<PAGE>
<PAGE>
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the Offering.
(b) To provide to the Underwriters at the closing specified in the
Underwriting Agreement, certificates in such denominations and registered
in such names as required by the Underwriters to permit prompt delivery to
each purchaser.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a director, officer, or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
(d)(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered herein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-5
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 2 to Registration Statement No. 333-3830 on
Form S-1, to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Columbus, State of Ohio, on June 17, 1996.
BIGMAR, INC.
By: /S/ JOHN G. TRAMONTANA
.................................
JOHN G. TRAMONTANA
CHAIRMAN OF THE BOARD, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to Registration Statement No. 333-3830 on Form S-1 has been signed by the
following persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ -------------------------------------------- -------------------
<C> <S> <C>
/s/ JOHN G. TRAMONTANA Chairman of the Board of Directors, June 17, 1996
......................................... President and Chief Executive Officer
(JOHN G. TRAMONTANA) (Principal Executive Officer)
/s/ MICHAEL K. MEDORS Treasurer, Secretary and Director June 17, 1996
......................................... (Principal Financial Officer)
(MICHAEL K. MEDORS) (Principal Accounting Officer)
/s/ BERNARD KRAMER Vice President and Director June 17, 1996
.........................................
(BERNARD KRAMER)
</TABLE>
II-6
<PAGE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
LOCATION OF EXHIBIT
IN SEQUENTIAL
EXHIBIT NUMBER DESCRIPTION OF DOCUMENT NUMBERING SYSTEM
- --------------- -------------------------------------------------- --------------------
<C> <S> <C>
1.1* -- Form of Underwriting Agreement.................
3.1`DD' -- Restated and Amended Certificate of
Incorporation of the Registrant.................
3.1(a)* -- Certificate of Correction to Restated and
Amended Certificate of Incorporation of the
Registrant......................................
3.2* -- Restated By-Laws of the Registrant.............
3.2(a)`DD' -- Amendment to Restated By-Laws of the
Registrant......................................
4.1`DD' -- Specimen Common Stock Certificate..............
4.2`DD' -- Form of Representative's Warrant...............
5.1`DD' -- Opinion of Rubin Baum Levin Constant &
Friedman........................................
10.1 -- Intentionally Omitted..........................
10.2*** -- Partnership Agreement, dated as of October
1995, between Bigmar Therapeutics, Inc. and
Protyde Oncology Therapeutics, Inc..............
10.3** -- Sales and Marketing Agreement, dated as of
October 1995, between Protyde-Bigmar
Therapeutics and Protyde Corporation............
10.4** -- Manufacturing Agreement, dated as of October
1995, between Protyde-Bigmar Therapeutics and
the Registrant..................................
10.5* -- Sublease Agreement, dated as of March 1, 1996,
between the Registrant and Cernitin America,
Inc.............................................
10.6* -- Form of Indemnification Agreement..............
10.7`DD' -- Employment Agreement, dated as of April 15,
1996, between the Registrant and John G.
Tramontana......................................
10.8* -- Form of Medical Advisory Agreement.............
10.9* -- Form of Scientific Advisory Agreement..........
10.10*** -- Exclusive Distribution and Supply Agreement,
dated November 5, 1995, between Bigmar
Pharmaceuticals SA and AB Cernelle..............
10.11* -- Technical Services Agreement, dated November 5,
1995, between Bigmar Pharmaceuticals SA and AB
Cernelle........................................
10.12** -- License and Supply Agreement, dated November
14, 1995, between Bigmar Pharmaceuticals SA and
Bioferment division of Cerbios Pharma SA........
10.13** -- Exclusive Distribution and Supply Agreement,
dated as of December 14, 1995, between Bigmar
Pharmaceuticals SA and Bioferment division of
Cerbios Pharma SA...............................
10.14** -- Exclusive Distribution Agreement, dated
November 14, 1995, between Bioren SA and SAPEC
division of Cerbios Pharma SA...................
10.15* -- Stock for Stock Exchange Agreement, dated April
9, 1996, between the Registrant and its
stockholders....................................
10.16* -- Contribution Agreement, dated April 8, 1996,
between the Registrant and its stockholders.....
10.17**`DD'`DD' -- Exclusive Distribution Agreement, dated
December 22, 1995, between Bigmar
Pharmaceuticals SA and Boehringer Mannheim
Italia S.p.A....................................
10.18** -- International Activities Agreements, dated
March 3, 1994, between Bigmar Pharmaceuticals SA
and Medac GmbH..................................
10.19** -- Distribution Agreement, dated October 10, 1994
between Bigmar Pharmaceuticals SA and Pharma
Stroschein GmbH.................................
10.20** -- Distribution Agreement, dated July 31, 1995,
between Bigmar Pharmaceuticals SA and
Laboratorios Vita S.A...........................
10.21** -- Supply and Collaboration Agreement, dated March
8, 1995, between Bioren SA and PLM Langeskov
A/S.............................................
10.22**`DD'`DD' -- Agreement, dated December 21, 1995, between
Laevosan International AG and Bigmar
Pharmaceuticals SA..............................
10.23`DD' -- Loan documentation between Bioren SA and Union
Bank of Switzerland.............................
10.24`DD' -- Loan documentation between Bigmar
Pharmaceuticals SA and Union Bank of
Switzerland.....................................
10.25* -- Registrant's 1996 Stock Option Plan............
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
LOCATION OF EXHIBIT
IN SEQUENTIAL
EXHIBIT NUMBER DESCRIPTION OF DOCUMENT NUMBERING SYSTEM
- --------------- -------------------------------------------------- --------------------
<C> <S> <C>
10.26* -- Form of Non-qualified Stock Option Agreement
under the 1996 Stock Option Plan................
10.27* -- Form of Incentive Stock Option Agreement under
the 1996 Stock Option Plan......................
10.28`DD' -- Form of Registrant's Director Option Plan......
10.29* -- Acquisition Agreement, dated June 22, 1995,
between Galenica Holding AG and the
Registrant......................................
10.30* -- Extension of Licensing Agreement, dated October
27, 1995, between Dr. F. Messi Cell Culture
Technologies and Bigmar Pharmaceuticals SA......
10.31`DD' -- Agreements between Bigmar Pharmaceuticals SA
and Unione Farmaceutica SA......................
21.1* -- Subsidiaries of the Company....................
23.1`DD' -- Consent of Richard A. Eisner & Company, LLP....
23.2`DD' -- Consent of Rubin Baum Levin Constant & Friedman
(contained in Exhibit 5.1)......................
23.3* -- Consent of Wenger Mathys Plattner..............
23.4* -- Consent of Hyman, Phelps & McNamara, P.C.......
24.1* -- Power of Attorney (contained on the signature
page to the Registration Statement).............
27.1`DD' -- Financial Data Schedule........................
99.1* -- Consent of Eric M. Chen, director designee.....
99.2* -- Consent of James M. McCormick, director
designee........................................
99.3* -- Consent of Thomas W. D'Alonzo, director
designee........................................
</TABLE>
- ------------
`DD' Filed herewith.
* Previously filed.
** Previously filed in redacted form subject to a request for confidential
treatment pursuant to Rule 406 under the Securities Act with the initial
filing of this Registration Statement. The confidential information that
has been omitted has been filed separately with the Commission with the
request for confidential treatment.
*** Filed herewith in redacted form subject to a request for confidential
treatment pursuant to Rule 406 under the Securities Act with the initial
filing of this Registration Statement. The confidential information that
has been omitted has been filed separately with the Commission with the
request for confidential treatment.
`DD'`DD' Previously filed in the original foreign language version and the
English translation of the agreement.
STATEMENT OF DIFFERENCES
------------------------
The double dagger symbol shall be expressed as `DD'
<PAGE>
<PAGE>
RESTATED AND AMENDED
CERTIFICATE OF INCORPORATION
OF
BIGMAR, INC.
(A Delaware corporation)
Duly adopted pursuant to Sections 242 and 245 of
the Delaware General Corporation Code
BIGMAR, INC., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the "General
Corporation Law"), does hereby certify as follows:
By written consent of the Board of Directors a resolution was
duly adopted, pursuant to Sections 242 and 245 of the General Corporation Law,
setting forth a Restated and Amended Certificate of Incorporation of the
Corporation and declaring said Restated Certificate of Incorporation advisable.
All of the stockholders of the corporation duly approved said proposed Restated
and Amended Certificate of Incorporation by written consent in accordance with
Sections 228, 242 and 245 of the General Corporation Law. The resolution setting
forth the Restated and Amended Certificate of Incorporation is as follows:
RESOLVED: That the Certificate of Incorporation of Bigmar, Inc., which
was originally filed with the Secretary of State of the State of
Delaware on September 28, 1995, be and hereby is amended and restated in
its entirety so that the same shall read as follows:
FIRST: The name of the Corporation is: Bigmar,
Inc. (hereinafter referred to as the "Corporation").
SECOND: The address of the registered office of the Corporation
in the State of Delaware is c/o Corporation Service Company, 1013 Centre Road,
Wilmington, Delaware 19805 ( New Castle County). The name of its registered
agent at such address is Corporation Service Company.
THIRD: The purpose of the Corporation is to engage in
any lawful act or activity for which corporations may be
organized under the General Corporation Law.
FOURTH: The total number of shares of all classes of stock which
the Corporation shall have authority to issue is twenty million (20,000,000),
consisting of the following classes: (i) fifteen million (15,000,000) shares of
common stock, par value $.001; and (ii) five million (5,000,000) shares of
preferred stock, $.001 par value.
(a) Preferred Stock. The Board of Directors of the Corporation is
authorized, subject to the limitations prescribed by law and the provisions of
this Article, to provide for the issu-
<PAGE>
<PAGE>
ance, from time to time in one or more series, of any number of shares of
Preferred Stock, and by filing a certificate of designations pursuant to Section
151 of the General Corporation Law, to establish the number of shares to be
included in each series of Preferred Stock and to fix the powers, designations,
preferences, relative rights, qualifications and restrictions thereof. The
authority of the Board of Directors with respect to each series of Preferred
Stock shall include, but not be limited to, a determination of the following:
(a) The number of shares of Preferred Stock constituting that
series and the distinctive designation of that series;
(b) The dividend rate on the shares of Preferred Stock of that
series, whether dividends shall be cumulative, and if so, from which
date or dates, and whether they shall be payable in preference to, or in
such relation to, the dividends payable on any other class or classes or
of any other series of the capital stock of the Corporation;
(c) Whether that series shall have any voting rights in addition
to those provided by law, and if so, the terms of such additional voting
rights;
(d) Whether that series shall have conversion or exchange
privileges, and if so, the terms and conditions of such conversion or
exchange, including provision for adjustment of the conversion or
exchange rate in such events as the Board of Directors shall determine;
(e) Whether or not the shares of that series shall be redeemable,
and if so, the terms and conditions of such redemption, including the
manner of selecting shares for redemption if less than all of the shares
are to be redeemed, the date or dates upon or after which they shall be
redeemable and the type and amount of consideration payable per share in
case of redemption, which amount may vary under different conditions and
at different redemption dates;
(f) Whether that series shall be entitled to the benefits of a
sinking fund to be applied to the purchase or redemption of shares of
that series, and if so, the terms and amount of such sinking fund;
(g) The right of shares of that series to the benefit of
conditions and restrictions upon the creation of indebtedness of the
Corporation or any subsidiary, upon the issuance of any additional stock
(including additional shares of such series or of any other series) and
upon the payment of dividends or the making of other distributions on,
and the purchase or redemption or other acquisition by the Corporation
or any subsidiary of, any outstanding stock of the Corporation;
(h) The rights of the shares of that series in the event of a
voluntary or involuntary liquidation, dissolution or
<PAGE>
<PAGE>
winding up of the Corporation and whether such rights shall be in
preference to, or in another relation to, the comparable rights of any
other class or classes or series of capital stock; and
(i) Any other relative, participating, optional or other special
rights, qualifications, limitations or restrictions of that series.
(b) Common Stock.
1. Dividends may be paid upon the Common Stock as and when
declared by the Board of Directors out of any funds legally available therefor.
2. Upon any liquidation, dissolution or winding up of the
Corporation, the holders of the Common Stock shall be entitled to receive any
and all assets of the Corporation remaining to be paid or distributed.
3. Except as otherwise provided by statute or by any express
provision of this Certificate, all rights to vote and all voting power shall be
exclusively vested in the Common Stock and the holders thereof shall be entitled
to one vote for each share of Common Stock for the election of directors and
upon all other matters.
(c) All Stock. The Corporation shall be entitled to treat the
person in whose name any share, right or option is registered as the owner
thereof, for all purposes, and shall not be bound to recognize any equitable or
other claim to or interest in such share, right or option on the part of any
other person, whether or not the Corporation shall have notice thereof, save as
may be expressly provided by the laws of the State of Delaware.
(d) Stock Split. Effective at the close of business on the date
that this Restated and Amended Certificate of Incorporation is filed with the
Secretary of State of the State of Delaware, and without further action on the
part of the Corporation or the holders of its outstanding common stock
immediately prior thereto (the "Outstanding Common"), each share of Outstanding
Common shall be automatically converted into the quotient of 1 divided by
2.105263 shares of Common Stock. No fractional shares shall be issued in
connection with the foregoing reclassification and, in lieu thereof, the Company
shall round all shares of Common Stock to the nearest whole number. Effective at
the close of business on such date, each certificate representing shares of
Outstanding Common shall be deemed to represent the quotient of 1 divided by
2.105263 shares of Common Stock. As promptly as practicable thereafter, the
Corporation, upon delivery and surrender of existing certificates representing
shares of the Outstanding Common By the holders thereof, which certificates, if
the Board of Directors of the Corporation so requests, shall be duly endorsed to
the Corporation in blank or accompanied by proper instruments of transfer to the
Corporation (such endorsements or instruments of transfer to be
<PAGE>
<PAGE>
in form satisfactory to the Corporation), shall issue and deliver or cause to be
delivered to each such holder a certificate or certificates representing the
quotient of 1 divided by 2.105263 shares of Common Stock. No dividend or other
distributions, if any, that are declared by the Board of Directors after the
close of business on the aforementioned date of filing with respect to the
Common Stock shall be paid to the holders of Outstanding Common until such
holders shall have delivered and surrendered their certificates representing
shares of Outstanding Common pursuant to this paragraph.
FIFTH: (a) The number of directors of the Corporation which shall
constitute the whole Board of Directors of the Corporation shall be such as from
time to time may be fixed by or in the manner provided in the By-laws, but in no
case shall the number of directors be less than one. Except as may otherwise be
required by law, vacancies in the Board of Directors of the Corporation and
newly created directorships resulting from any increase in the authorized number
of directors may be filled by a majority of the directors then in office, though
less than a quorum, or by a sole remaining director.
(b) All corporate powers of the Corporation shall be
exercised by the Board of Directors except as otherwise provided herein or by
law. In furtherance of the powers conferred by statute and by law, the Board of
Directors shall have the power to adopt, alter, amend or repeal the By-laws of
the Corporation, without any action on the part of the Corporation's
stockholders.
SIXTH: A director of the Corporation shall not be personally
liable to the Corporation or its stockholders for monetary damages for breaches
of fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the General Corporation
Law, or (iv) for any transaction from which the director derived an improper
personal benefit; it being the intention of the foregoing provision to eliminate
the liability of the Corporation's directors to the fullest extent permitted
by Section 102(b)(7) of the General Corporation Law, as amended from time to
time.
SEVENTH: The Corporation shall indemnify and advance expenses to
the fullest extend permitted by Section 145 of the General Corporation Law, as
amended from time to time, each person who is or was a director or officer of
the Corporation and the heirs, executors and administrators of such person. Any
expenses (including attorneys' fees) incurred by each person who is or was a
director or officer of the Corporation, and the heirs, executors and
administrators of such person, in connection with defending any such proceeding
in advance of its final disposition shall be paid by the Corporation; provided,
however, that if the General Corporation Law requires, an advancement of
expenses incurred by an indemnitee in his capacity as a director or officer (and
not in any
<PAGE>
<PAGE>
other capacity in which service was or is rendered by such indemnitee,
including, without limitation, service to an employee benefit plan) shall be
made only upon delivery to the Corporation of an undertaking by or on behalf of
such indemnitee to repay all amounts so advanced, if it shall ultimately be
determined that such indemnitee is not entitled to be indemnified for such
expenses under this Article or otherwise.
EIGHTH: Whenever a compromise or arrangement is proposed between
this Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code, order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this Corporation, as the case may be,
and also on this Corporation.
NINTH: Meetings of stockholders may be held within or without the
State of Delaware, as the By-Laws may provide. The books of the Corporation may
be kept (subject to any provision contained in the statutes) outside the State
of Delaware at such place or places as may be designated from time to time by
the Board of Directors or in the By-Laws of the Corporation. Elections of
Directors need not be by written ballot unless the By-Laws of the Corporation
shall so provide.
TENTH: The Corporation reserves the right to amend, alter, change
or repeal any provision contained in this Restated and Amended Certificate of
Incorporation in the manner now or hereafter prescribed by law, and all rights
and power conferred herein upon directors, stockholders and officers are granted
subject to this reserved power.
ELEVENTH: The Board of Directors is authorized to make, alter,
amend, change, add to or repeal the Corporation's by-laws at any regular or
special meeting of the Board of Directors.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Restated
and Amended Certificate of Incorporation as of this 11th day of April, 1996.
/s/ John G. Tramontana
---------------- --------------------
John G. Tramontana
President
ATTEST:
/s/ Michael K. Medors
- -------- ------------------
Name: Michael K. Medors
Title: Treasurer & Secretary
<PAGE>
<PAGE>
UNANIMOUS WRITTEN CONSENT
OF
THE BOARD OF DIRECTORS
OF
BIGMAR, INC.
The undersigned, being all of the members of the Board of
Directors of Bigmar, Inc., a Delaware corporation (the "Corporation"), pursuant
to Section 141(f), of the Delaware General Corporation Law and Article III,
Section 15, of the By-laws of the Corporation, do hereby consent to the adoption
of and do hereby adopt the following resolutions:
RESOLVED, that, in accordance with Article VIII of the By-Laws
of the Corporation, this Board of Directors deems it advisable that the
By-Laws of the Corporation be amended so as to provide for the issuance
of uncertificated shares in accordance with Section 158 of the Delaware
General Corporation Law, and for such purpose, to restate Article V,
Section 1 thereof, to read as follows:
"SECTION 1. Stock Certificates. Every holder of stock in the
Corporation shall be entitled to have a certificate, signed
by, or in the name of the Corporation by, the Chairman of the
Board or the President or a Vice-President and by the
Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary of the Corporation, certifying the number
of shares owned by him in the Corporation, provided, however,
that upon resolution of the Board, the Corporation may issue
uncertificated shares. If the Corporation shall be authorized
to issue more than one class of stock or more than one series
of any class, the designations, preferences and relative,
participating, optional or other special rights of each class
of stock or series thereof and the qualifications, limitations
or restriction of such preferences and/or rights shall be set
forth in full or summarized on the face or back of the
certificate which the Corporation shall issue to represent
such class or series of stock, provided that, except as
otherwise provided in Section 202 of the General Corporation
Law of the State of Delaware, in lieu of the foregoing
requirements, there may be set forth on the face or back of
the certificate which the Corporation shall issue to represent
such class or series of stock, a statement that the
Corporation will
<PAGE>
<PAGE>
furnish without charge to each stockholder who so requests the
designations, preferences and relative, participating,
optional or other special rights of each class of stock or
series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights."
; and be it further
RESOLVED, that, in accordance with Article VIII of the By-Laws
of the Corporation, this Board of Directors deems it advisable that the
By-Laws of the Corporation be amended so as to provide that the holders
of at least 10% of the outstanding stock entitled to vote at special
meetings be entitled to call such meetings, and for these purposes, to
restate Article II, Section 2 thereof to read as follows:
"SECTION 3. Special Meeting. Special meetings of
stockholders, unless otherwise prescribed by statute,
may be called at any time by the Board of Directors, by
the Chairman of the Board, if one shall have been
elected, or by any holder of at least 10% of the
outstanding stock entitled to vote at such meetings."
; and be it further
RESOLVED, that, the Corporation is hereby authorized to issue
any all shares of the Corporation's common stock, par value $.001 per
share, to be issued in connection with the proposed initial public
offering of common stock, par value $.001, of the Corporation, in
uncertificated form, in accordance with Article V, Section 1 of the
By-Laws, as amended above.
This Unanimous Written Consent of the Board of Directors may
be executed in one or more counterparts, each of which shall be deemed an
original, but all of which together will constitute one and the same document.
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<PAGE>
<PAGE>
IN WITNESS WHEREOF, the undersigned, being all of the members
of the Board of Directors of Bigmar, Inc., have executed this consent as of this
13th day of June, 1996.
/s/ John G. Tramontana
_________________________________________
John G. Tramontana
/s/ Michael K. Medors
_________________________________________
Michael K. Medors
/s/ Bernard Kramer
_________________________________________
Bernard Kramer
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<PAGE>
<PAGE>
NUMBER SHARES
CS
COMMON STOCK COMMON STOCK
BIGMAR INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
CUSIP 08989 3101
THIS IS TO CERTIFY THAT
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK PAR VALUE $.01 PER
SHARE, OF
BIGMAR, INC.
(hereinafter the 'Corporation') transferable on the books of the Corporation by
the registered holder hereof in person or by duly authorized attorney, upon
surrender of this certificate properly endorsed.
This certificate and the shares represented hereby are issued and shall be
held subject to the laws of the State of Delaware and the provisions of the
Restated and Amended Certificate of Incorporation of the Corporation and
Restated Bylaws, as now or hereafter amended, to all of which the holder of this
certificate, by acceptance hereof, assents.
This certificate is not valid until countersigned and registered by the
Transfer Agent.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
signed by the facsimile signatures of its duly authorized officers and its
facsimile corporate seal to be hereunto affixed.
Dated
[CORPORATE SEAL]
/s/ Michael K. Medors /s/ John G. Tramontana
SECRETARY PRESIDENT AND CHIEF EXECUTIVE OFFICER
COUNTERSIGNED AND REGISTERED:
AMERICAN STOCK TRANSFER & TRUST COMPANY
TRANSFER AGENT
BY
AUTHORIZED SIGNATURE
<PAGE>
<PAGE>
BIGMAR, INC.
The corporation is authorized to issue more than one class or series of
stock. The corporation will furnish without charge to each stockholder upon
written request the full text of the preferences, voting powers, qualifications
and special and relative rights of the shares of each class of stock (and any
series thereof) authorized to be issued by the corporation as set forth in the
Restated and Amended Certificate of Incorporation of the corporation and
amendments thereto filed with the Secretary of State of the State of Delaware.
Such request may be made to the office of the transfer agent.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM --as tenants in common UNIF GIFT MIN ACT -- ________ Custodian _______
TEN ENT --as tenants by the entireties (Cust) (Minor)
JT TEN --as joint tenants with right under Uniform Gifts to Minors
of survivorship and not as
tenants in common Act ________________________
(State)
COM PROP --as community property
</TABLE>
Additional abbreviations may also be used though not in the above list.
For value received, __________________ hereby sell, assign and transfer
unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
|______________________________|________________________________________________
________________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF
ASSIGNEE
________________________________________________________________________________
________________________________________________________________________________
____________________________________________________________________ Shares
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint _____________________________________________
________________________________________________________________________________
Attorney to transfer the said stock on the books of the within-named Corporation
with full power of substitution in the premises.
Dated, _______________________________
____________________________________
Signature(s) Guaranteed:
_______________________________________________________________
THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME
AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATEVER AND
MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION (AS DEFINED IN
RULE 17Ad-15 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED) WHICH MAY INCLUDE A COMMERCIAL BANK OR TRUST COMPANY,
SAVINGS ASSOCIATION, OR A MEMBER FIRM OF THE AMERICAN STOCK
EXCHANGE, NEW YORK STOCK EXCHANGE, PACIFIC STOCK EXCHANGE OR
MIDWEST STOCK EXCHANGE.
<PAGE>
<PAGE>
THE TRANSFER OF THIS WARRANT IS
RESTRICTED AS DESCRIBED HEREIN
NOT EXERCISABLE PRIOR TO JUNE __, 1997
VOID AFTER 5:00 P.M. NEW YORK TIME, ON JUNE __, 2001
BIGMAR, INC.
Warrant to Purchase Shares of Common Stock
125,000 Shares
THIS CERTIFIES that, for receipt in hand of $125.00 and other value
received, [NAME AND ADDRESS OF HOLDER] (the "Holder"), is entitled to subscribe
for, and purchase from, BIGMAR, INC., a Delaware corporation (the "Company"),
upon the terms and conditions set forth herein, at any time or from time to time
after June __, 1997, and before 5:00 P.M. New York time on June __, 2001 (the
"Exercise Period"), 125,000 shares of the Company's common stock, par value
$0.001 per share (the "Common Stock"), subject to adjustment as provided herein
(the "Warrant Shares"), at a price of $_____ per share, subject to adjustment as
provided herein (the "Exercise Price"). This Warrant is not redeemable by the
Company. This warrant is the warrant or one of the warrants (collectively,
including any warrant issued upon the exercise or transfer of any such warrants,
in whole or in part, the "Warrants") issued pursuant to the Underwriting
Agreement, dated June __, 1996, between the Company and the Holder, as
representative of the several Underwriters named therein. This Warrant may not
be sold, transferred, assigned or hypothecated until June __, 1997, except that
it may be transferred, in whole or in part, at any time to (i) one or more
officers of the Holder (who are either stockholders or employees), (ii) any
successor to the Holder or the officers or partners of such successor, (iii) any
purchaser of substantially all of the assets of the Holder, or (iv) by operation
of law. As used herein, the term "Holder" shall include any transferee to whom
this Warrant has been transferred in accordance with the immediately preceding
sentence.
1. Method of Exercise. This Warrant may be exercised during the
Exercise Period, as to the whole or any lesser number of Warrant Shares, by the
surrender of this Warrant (with the election at the end hereof duly executed) to
the Company at its offices at 6660 Doubletree Avenue, Columbus, Ohio 43229 or at
such other place as may be designated in writing by the Company, together with a
certified or bank cashier's check payable to the order of the Company in an
amount equal to the Exercise Price multiplied by the number of Warrant Shares
for which this Warrant is being exercised. Notwithstanding the foregoing, in
lieu of any cash payment required hereunder, the Holder of this Warrant shall
have the right at any time during the Exercise Period to exercise the Warrant in
full or in part by surrender of this Warrant (with the
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<PAGE>
election at the end hereof duly executed) to the Company at its offices in
exchange for the number of Warrant Shares equal to the product of (a) the number
of Warrant Shares as to which the Warrant is being exercised multiplied by (b) a
fraction, the numerator of which is the Current Market Price (as defined in
Section 5(b) below) of the Common Stock less the Exercise Price and the
denominator of which is the Current Market Price.
2. Issuance of Certificates. Upon each exercise of the Holder's right
to purchase Warrant Shares, the Holder shall be deemed to be the holder of
record of the Warrant Shares issuable upon such exercise, notwithstanding that
the transfer books of the Company shall then be closed or certificates
representing such Warrant Shares shall not then have been actually delivered to
the Holder. As soon as practicable after each such exercise of this Warrant, the
Company shall issue and deliver to the Holder a certificate or certificates for
the Warrant Shares issuable upon such exercise, registered in the name of the
Holder or its designee. If this Warrant should be exercised in part only, upon
surrender of this Warrant for cancellation, the Company shall execute and
deliver a new Warrant evidencing the right of the Holder to purchase the balance
of the Warrant Shares (or portions thereof) subject to purchase hereunder.
3. Recording of Transfer. Any Warrants issued upon the transfer or
exercise in part of this Warrant shall be numbered and shall be registered in a
Warrant Register as they are issued. The Company shall be entitled to treat the
registered holder of any Warrant on the Warrant Register as the owner in fact
thereof for all purposes and shall not be bound to recognize any equitable or
other claim to or interest in such Warrant on the part of any other person, and
shall not be liable for any registration or transfer of Warrants which are
registered or to be registered in the name of a fiduciary or the nominee of a
fiduciary unless made with the actual knowledge that a fiduciary or nominee is
committing a breach of trust in requesting such registration or transfer, or
with the knowledge of such facts that its participation therein amounts to bad
faith. This Warrant shall be transferable only on the books of the Company upon
delivery thereof duly endorsed by the Holder or by his or its duly authorized
attorney or representative, or accompanied by proper evidence of succession,
assignment or authority to transfer. In all cases of transfer by an attorney,
executor, administrator, guardian or other legal representative, duly
authenticated evidence of his or its authority shall be produced. Upon any
registration of transfer, the Company shall deliver a new Warrant or Warrants to
the person entitled thereto. This Warrant may be exchanged, at the option of the
Holder hereof, for another Warrant, or other Warrants of different
denominations, of like tenor and representing in the aggregate the right to
purchase a like number of Warrant Shares (or portions thereof), upon surrender
to the Company or its duly authorized agent.
4. Reservation of Common Stock. The Company shall at all times reserve
and keep available out of its authorized and unissued Common Stock, solely for
the purpose of providing for the exercise of the Warrants, such number of shares
of Common Stock as shall, from time to time, be sufficient therefor. The Company
covenants that all shares of Common Stock issuable upon exercise of this
Warrant, upon receipt by the Company of the full payment therefor, shall be
validly issued, fully paid, nonassessable and free of preemptive rights.
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<PAGE>
<PAGE>
5. Exercise Price Adjustments and Warrant Shares Issuable Upon
Exercise. Subject to the provisions of this Section 5, the Exercise Price in
effect from time to time and the number of Warrant Shares issuable upon exercise
of the Warrants shall be subject to adjustment, as follows:
(a) In case the Company shall at any time after the date
hereof (i) declare a dividend on the outstanding Common Stock payable in shares
of its capital stock, (ii) subdivide the outstanding Common Stock, (iii) combine
the outstanding Common Stock into a smaller number of shares, or (iv) issue any
shares of its capital stock by reclassification of the Common Stock (including
any such reclassification in connection with the consolidation or merger of the
Company with or into another corporation), then, in each case, the Exercise
Price in effect, and the number of shares of Common Stock issuable upon exercise
of the Warrants outstanding, at the time of the record date for such dividend or
at the effective date of such subdivision, combination or reclassification,
shall be proportionately adjusted so that the holder of the Warrants after such
time shall be entitled to receive the same number and kind of shares which, if
such Warrants had been exercised immediately prior to such time, such holders
would have owned upon such exercise and been entitled to receive by virtue of
such dividend, subdivision, combination or reclassification. Such adjustment
shall be made successively whenever any event listed above shall occur.
(b) In case the Company shall issue rights, options or
warrants to subscribe for or purchase Common Stock (or securities convertible
into or exchangeable for, Common Stock) at a price per share (or having a
conversion price per share, if a security is convertible into, or exchangeable
for, Common Stock) less than the Current Market Price per share of Common Stock
(as determined pursuant to Section 5(h) hereof) in effect immediately prior to
the earlier of the issuance thereof or the record date therefor, then, effective
immediately following the earlier of the issuance of such rights, options or
warrants or the record date therefor, as the case may be, in each case, the
Exercise Price shall be adjusted by multiplying the Exercise Price in effect
immediately prior to such issuance or record date, as the case may be, by a
fraction, the numerator of which shall be the sum of (i) the total number of
shares of Common Stock outstanding on such date, and (ii) the number of shares
of Common Stock which the aggregate exercise, conversion or exchange price of
the rights, options or warrants to be issued would purchase at such Current
Market Price, and the denominator of which shall be the total number of shares
of Common Stock outstanding on such date plus the number of additional shares of
Common Stock to be offered for subscription or purchase (or into which the
convertible or exchangeable securities so to be offered are initially
convertible or exchangeable). In case any subscription price may be paid for a
consideration part or all of which shall be in a form other than cash, the value
of such consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be conclusive absent
manifest error. If any change shall occur in the price per share provided for in
any of the options, rights or warrants referred to in this Section 5(b), or in
the price per share or ratio at which the securities referred to in this Section
5(b) are convertible or exchangeable (in either case, other than changes in such
prices or ratios arising pursuant to anti-dilution adjustments in such options,
rights, warrants, convertible or exchangeable securities or the instruments
pursuant to which they
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<PAGE>
<PAGE>
were issued, provided that such options, rights, warrants, convertible or
exchangeable securities or instruments pursuant to which they were issued do not
contain anti-dilution provisions any more favorable to the holder thereof than
those contained herein), such options, rights or warrants or convertible or
exchangeable securities, as the case may be, to the extent not theretofore
exercised, shall be deemed to have expired or terminated on the date when such
price change became effective in respect of shares not theretofore issued
pursuant to the exercise or conversion or exchange thereof, and the Company
shall be deemed to have issued upon such date new options, rights or warrants or
convertible or exchangeable securities.
(c) In case the Company shall sell or otherwise issue any
shares of Common Stock for a consideration per share less than the Current
Market Price (as determined pursuant to Section 5(h) hereof), then, in each
case, the Exercise Price in effect immediately prior to such sale shall be
adjusted to a price determined by multiplying the Exercise Price in effect
immediately prior to such sale by a fraction the numerator of which shall be the
sum of (i) the total number of shares of Common Stock outstanding immediately
prior to such sale, and (ii) the number of shares of Common Stock that could be
purchased at the Current Market Price in effect immediately prior to such sale
or other issuance for the consideration received by the Company upon the sale or
other issuance, and the denominator of which shall be the total number of shares
of Common Stock outstanding immediately after such sale; provided, however, that
in no event shall the Exercise Price be adjusted pursuant to this computation to
an amount in excess of the Exercise Price in effect immediately prior to such
computation. For the purposes of any adjustment to be made in accordance with
this Section 5(c), in case of the sale or other issuance of Common Stock for a
consideration part or all of which shall be cash, the amount of the cash portion
of the consideration therefor deemed to have been received by the Company shall
be (i) the subscription price, if shares of Common Stock are offered by the
Company for subscription, or (ii) the public offering price (before deducting
therefrom any compensation paid or discount allowed in the sale, underwriting or
purchase thereof by underwriters or dealers or others performing similar
services), if such securities are sold to underwriters or dealers for public
offering without a subscription offering, or (iii) the gross amount of cash
actually received by the Company for such securities in any other case, in each
case, without deduction for any expenses incurred by the Company in connection
with such transaction. In case of the sale of shares of Common Stock for a
consideration part or all of which shall be in a form other than cash, the value
of such consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be conclusive absent
manifest error.
(d) In case the Company shall distribute to all holders of
Common Stock (including any such distribution made to the stockholders of the
Company in connection with a consolidation or merger in which the Company is the
continuing corporation) evidences of its indebtedness, cash or assets (other
than distributions and dividends payable in shares of Common Stock), then, in
each case, the Exercise Price shall be adjusted by multiplying the Exercise
Price in effect immediately prior to the record date for the determination of
stockholders entitled to receive such distribution by a fraction, the numerator
of which shall be the Current Market Price (as determined pursuant to Section
5(h) hereof) per share of Common Stock on such record date,
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less the fair market value (as determined in good faith by the Board of
Directors of the Company, whose determination shall be conclusive absent
manifest error) of the portion of the evidences of indebtedness or assets so to
be distributed, or the amount of such cash, applicable to one share of Common
Stock, and the denominator of which shall be such Current Market Price per share
of Common Stock. Such adjustment shall become effective at the close of business
on such record date.
(e) In any case in which this Section 5 shall require that an
adjustment in the number of Warrant Shares be made effective as of a record date
for a specified event (an "Event"), the Company may elect to defer, until the
occurrence of such Event, issuing to the Holder, if the Holder exercised this
Warrant after such record date, the shares of Common Stock, if any, issuable
upon such exercise over and above the number of Warrant Shares, if any, issuable
upon such exercise on the basis of the number of Warrant Shares in effect prior
to such adjustment; provided, however, that the Company shall deliver to the
Holder an appropriate instrument evidencing the Holder's right to receive such
additional shares upon the occurrence of the Event requiring such adjustment.
(f) Whenever there shall be an adjustment as provided in this
Section 5, the Company shall, within five (5) business days thereafter, cause
written notice thereof to be sent by registered mail, postage prepaid, to the
Holder, at his or its address as it shall appear in the Warrant Register, which
notice shall be accompanied by an officer's certificate setting forth the number
of Warrant Shares issuable hereunder and the exercise price thereof after such
adjustment and setting forth a brief statement of the facts requiring such
adjustment and the computation thereof, which officer's certificate shall be
conclusive evidence of the correctness of any such adjustment absent manifest
error.
(g) The Company shall not be required to issue fractions of
shares of Common Stock or other capital stock of the Company upon the exercise
of this Warrant. If any fraction of a share would be issuable upon the exercise
of this Warrant (or specified portions thereof), the Company shall purchase such
fraction for an amount in cash equal to the same fraction of the Current Market
Price of such share of Common Stock on the date of exercise of this Warrant.
(h) The "Current Market Price" per share of Common Stock on
any date shall be deemed to be the average of the daily closing prices for the
thirty (30) consecutive trading days immediately preceding the date in question.
The closing price for each day shall be the last reported sales price regular
way or, in case no such reported sale takes place on such day, the closing bid
price regular way, in either case on the principal national securities exchange
(including, for purposes hereof, the Nasdaq National Market(TM)) on which the
Common Stock is listed or admitted to trading, or, if the Common Stock is not
listed or admitted to trading on any national securities exchange, the highest
reported bid price for the Common Stock as furnished by the National Association
of Securities Dealers, Inc. (the "NASD") or a similar organization if the NASD
is no longer reporting such information (including for purposes hereof Nasdaq).
If on any such date the Common Stock is not listed or admitted to trading on any
national
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securities exchange and is not quoted by The Nasdaq Stock Market, Inc. or any
similar organization, the fair value of a share of Common Stock on such date, as
determined in good faith by the Board of Directors of the Company, whose
determination shall be conclusive absent manifest error, shall be used.
(i) No adjustment in the Exercise Price shall be required if
such adjustment is less than $0.05; provided, however, that any adjustments
which by reason of this Section 5 are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Section 5 shall be made to the nearest cent. For purposes of any
calculation pursuant to this Section 5, shares of Common Stock owned by, or held
for the account of, the Company shall not be deemed outstanding for the purpose
of any such computation.
(j) Upon each adjustment of the Exercise Price as a result of
the calculations made in this Section 5, the Warrants shall thereafter evidence
the right to purchase, at the adjusted Exercise Price, that number of shares of
Common Stock (calculated to the nearest hundredth) obtained by dividing (i) the
product obtained by multiplying the number of shares of Common Stock purchasable
upon exercise of the Warrants prior to any adjustment of the number of shares of
Common Stock by the Exercise Price in effect prior to adjustment of the Exercise
Price by (ii) the Exercise Price in effect after such adjustment of the Exercise
Price.
(k) Notwithstanding anything to the contrary contained herein,
no adjustment of the Exercise Price or in the number of shares of Common Stock
issuable upon exercise of the Warrants shall be made as a result of, or in
connection with, (i) the issuance of stock options pursuant to the stock option
plans described in the Company's Registration Statement on Form S-1,
Registration Number 333-3830, as being in existence as of the date hereof so
long as the aggregate amount of Common Stock covered by all of such options does
not exceed 350,000 shares; (ii) the issuance or sale of shares of Common Stock
upon the exercise of options referred to in clause (i) above, and (iii) the
issuance of any shares of Common Stock upon exercise of the Warrants pursuant to
this Agreement.
6. (a) Consolidations and Mergers. In case of any consolidation with,
or merger of the Company with or into, another corporation, or in case of any
sale, lease or conveyance to another corporation of all or substantially all of
the property and assets of the Company (such actions being hereinafter
collectively referred to as "Reorganizations"), there shall thereafter be
deliverable upon exercise of this Warrant (in lieu of the number of shares of
Common Stock theretofore deliverable) the kind and amount of shares of stock or
other securities, cash or other property which would otherwise have been
deliverable to a holder of the number of shares of Common Stock upon the
exercise of this Warrant upon such Reorganization if this Warrant had been
exercised in full immediately prior to such Reorganization. In case of any
Reorganization, appropriate adjustment, as determined in good faith by the Board
of Directors of the Company, shall be made in the application of the provisions
herein set forth with respect to the rights and interests of the Holder so that
the provisions set forth herein shall thereafter be applicable, as nearly as
possible, in relation to any shares or other property thereafter deliverable
upon exercise
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of this Warrant. Any such adjustment shall be made by, and set forth in, a
supplemental agreement between the Company, or any successor thereto, and the
Holder and shall for all purposes hereof conclusively be deemed to be an
appropriate adjustment. The Company shall not effect any such Reorganization
unless upon or prior to the consummation thereof the successor corporation, or
if the Company shall be the surviving corporation in any such Reorganization and
is not the issuer of the shares of stock or other securities or property to be
delivered to holders of shares of the Common Stock outstanding at the effective
time thereof, then such issuer shall assume by written instrument the obligation
to deliver to the Holder such shares of stock, securities, cash or other
property as the Holder shall be entitled to purchase in accordance with the
foregoing provisions.
(b) In case of any reclassification or change of the shares of
Common Stock issuable upon exercise of this Warrant, or in case of any
consolidation or merger of another corporation into the Company in which the
Company is the continuing corporation and in which there is a reclassification
or change (including a change to the right to receive cash or other property) of
the shares of Common Stock, the Holder shall have the right thereafter to
receive upon exercise of this Warrant solely the kind and amount of shares of
stock and other securities, property, cash or any combination thereof receivable
upon such reclassification, change, consolidation or merger by a holder of the
number of shares of Common Stock for which this Warrant might have been
exercised immediately prior to such reclassification, change, consolidation or
merger. Thereafter, appropriate provision shall be made for adjustments which
shall be as nearly equivalent as practicable to the adjustments in Section 5.
(c) The above provisions of this Section 6 shall similarly
apply to successive reclassifications and changes of shares of Common Stock and
to successive consolidations, mergers, sales, leases, or conveyances.
7. Notice of Certain Events. In case at any time the Company shall
propose:
(a) to pay any dividend or make any distribution on shares of
Common Stock in shares of Common Stock or to make any other distribution to all
holders of Common Stock; or
(b) to issue any rights, warrants or other securities to all
holders of Common Stock entitling them to purchase any additional shares of
Common Stock or any other rights, warrants or other securities; or
(c) to effect any reclassification or change of outstanding
shares of Common Stock or any consolidation, merger, sale, lease or conveyance
of property, described in Section 6; or
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(d) to effect any liquidation, dissolution or winding-up of
the Company; then, and in any one or more of such cases, the Company shall give
written notice thereof, by registered mail, postage prepaid, to the Holder at
the Holder's address as it shall appear in the Warrant Register, mailed at least
fifteen (15) business days prior to (i) the date as of which the holders of
record of shares of Common Stock to be entitled to receive any such dividend,
distribution, rights, warrants or other securities are to be determined or, (ii)
the date on which any such reclassification, change of outstanding shares of
Common Stock, consolidation, merger, sale, lease, conveyance of property,
liquidation, dissolution or winding-up is expected to become effective and the
date as of which it is expected that holders of record of shares of Common Stock
shall be entitled to exchange their shares for securities or other property, if
any, deliverable upon such reclassification, change of outstanding shares,
consolidation, merger, sale, lease, conveyance of property, liquidation,
dissolution or winding-up.
8. Taxes. The issuance of any shares or other securities upon the
exercise of this Warrant and the delivery of certificates or other instruments
representing such shares or other securities shall be made without charge to the
Holder for any tax or other charge in respect of such issuance. The Company
shall not, however, be required to pay any tax which may be payable in respect
of any transfer involved in the issue and delivery of any certificate in a name
other than that of the Holder.
9. Registration Rights. (a) If at any time during the period commencing
on June __, 1997 and ending on June __, 2003, the Company shall file a
registration statement (other than on Form S-4, Form S-8, or any successor form)
with the Securities and Exchange Commission (the "Commission"), the Company
shall give all the then holders of any Warrants or Warrant Shares (the "Eligible
Holders") at least thirty (30) days prior written notice of the filing of such
registration statement. If requested by any Eligible Holder in writing within
thirty (30) days after receipt of any such notice, the Company shall, at the
Company's sole expense (other than the fees and disbursements of counsel for the
Eligible Holders and any underwriting discounts), register or qualify all or, at
each Eligible Holder's option, any portion of the Warrant Shares of any Eligible
Holder who shall have made such request, concurrently with the registration of
such other securities, all to the extent requisite to permit the public offering
and sale of the Warrant Shares through the facilities of all appropriate
securities exchanges and the over-the-counter market, and will use its best
efforts through its officers, directors, auditors and counsel to cause such
registration statement to become effective as promptly as practicable.
(b) If, on any two occasions during the period commencing on
June __, 1996 and ending on June __, 2000, the Company shall receive a written
request from Eligible Holders who in the aggregate own (or upon exercise of all
Warrants then outstanding would own) a majority of the total number of shares of
Common Stock then included (or upon such exercises would be included) in the
Warrant Shares (the "Majority Holders"), to register the sale of all or part of
such Warrant Shares, the Company shall, as promptly as practicable, but in no
event later than 60 days following the date of such request, prepare and file
with the Commission a registration statement sufficient to permit the public
offering and sale of the Warrant Shares
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through the facilities of all appropriate securities exchanges and the
over-the-counter market, and will use its best efforts through its officers,
directors, auditors and counsel to cause such registration statement to become
effective as promptly as practicable; provided, that the Company shall only be
obligated for all expenses (other than underwriting discounts) incurred by the
Holders in connection with the first filing of the registration statement under
this Section 9(b). Within five (5) business days after receiving any request
contemplated by this Section 9(b), the Company shall give written notice to all
the other Eligible Holders, advising each of them that the Company is proceeding
with such registration and offering to include therein all or any portion of any
such other Eligible Holders' Warrant Shares, provided that the Company receives
a written request to do so from such Eligible Holders within thirty (30) days
after receipt by them of the Company's notice.
(c) In the event of a registration pursuant to the provisions
of this Section 9, the Company shall use its best efforts to cause the Warrant
Shares so registered to be registered or qualified for sale under the securities
or blue sky laws of such jurisdictions as the Holder or such holders may
reasonably request.
(d) The Company shall keep effective any registration or
qualification contemplated by this Section 9 and shall, from time to time, amend
or supplement each applicable registration statement, preliminary prospectus,
final prospectus, application, document and communication for such period of
time as shall be required to permit the Eligible Holders to complete the offer
and sale of the Warrant Shares covered thereby. The Company shall in no event be
required to keep any such registration or qualification in effect for a period
in excess of nine (9) months from the date on which the Eligible Holders are
first free to sell such Warrant Shares; provided, however, that, if the Company
is required to keep any such registration or qualification in effect with
respect to securities other than the Warrant Shares beyond such period, the
Company shall keep such registration or qualification in effect as it relates to
the Warrant Shares for so long as such registration or qualification remains or
is required to remain in effect in respect of such other securities.
(e) In the event of a registration pursuant to the provisions
of this Section 9, the Company shall furnish to each Eligible Holder such number
of copies of the registration statement and of each amendment and supplement
thereto (in each case, including all exhibits), such reasonable number of copies
of each prospectus contained in such registration statement and each supplement
or amendment thereto (including each preliminary prospectus), all of which shall
conform to the requirements of the Securities Act and the rules and regulations
thereunder, and such other documents, as any Eligible Holder may reasonably
request to facilitate the disposition of the Warrant Shares included in such
registration.
(f) In the event of a registration pursuant to the provisions
of this Section 9, the Company shall furnish each Eligible Holder of any Warrant
Shares so registered with an opinion of its counsel (reasonably acceptable to
the Eligible Holders) to the effect that (i) the registration statement has
become effective under the Securities Act of 1933, as amended (the "Securities
Act"), and no order suspending the effectiveness of the registration statement,
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preventing or suspending the use of the registration statement, any preliminary
prospectus, any final prospectus or any amendment or supplement thereto has been
issued, nor has the Commission or any securities or blue sky authority of any
jurisdiction instituted or threatened to institute any proceedings with respect
to such an order, (ii) the registration statement and each prospectus forming a
part thereof (including each preliminary prospectus), and any amendment or
supplement thereto, complies as to form with the Securities Act, and (iii) such
counsel has no knowledge of any material misstatement or omission in such
registration statement or any prospectus, as amended or supplemented. Such
opinion shall also state the jurisdictions in which the Warrant Shares have been
registered or qualified for sale pursuant to the provisions of Section 9(c).
(g) In the event of a registration pursuant to the provisions
of this Section 9, the Company shall enter into a cross-indemnity agreement and
a contribution agreement, each in customary form, with each underwriter, if any,
and, if requested, enter into an underwriting agreement containing conventional
representations, warranties, allocation of expenses and customary closing
conditions, including, without limitation, opinions of counsel and accountants'
cold comfort letters, with any underwriter who acquires any Warrant Shares.
(h) The Company agrees that until the later of (i) the period
when all of the Warrants Shares have been sold under a registration statement or
pursuant to Rule 144 under the Securities Act or (ii) June __, 2003, it shall
keep current in filing all reports, statements and other materials required to
be filed with the Commission to permit holders of the Warrant Shares to sell
such securities under Rule 144.
(i) The Company will not, without the prior written consent of
the Majority Holders, grant to any person the right to request the Company to
register any securities of the Company.
(j) Notwithstanding the forgoing, if the Company shall not
have filed a registration statement for the Warrant Shares within the time
period specified in Section 9(b) hereof or the Company shall be in material
breach of any other provision specified in this Section 9 or Section 5 hereof,
the Company shall, upon written notice of the Holder, repurchase the Warrant at
a price equal to the Current Market Price less the Exercise Price. Such
repurchase shall be in immediately available funds and shall close within three
(3) business days after the Holder has provided the Company with a notice of
election provided pursuant hereto.
10. (a) Indemnification and Contribution. Subject to the conditions set
forth below, the Company agrees to indemnify and hold harmless each Eligible
Holder, its officers, directors, partners, employees, agents and counsel, and
each person, if any, who controls any such person within the meaning of Section
15 of the Securities Act or Section 20(a) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), from and against any and all loss,
liability, charge, claim, damage and expense whatsoever (which shall include,
for all purposes of this Section 10, without limitation, attorneys' fees and any
and all expenses whatsoever incurred in investigating, preparing or defending
against any litigation, commenced
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or threatened, or any claim whatsoever, and any and all amounts paid in
settlement of any claim or litigation), as and when incurred, arising out of,
based upon, or in connection with (i) any untrue statement or alleged untrue
statement of a material fact or any omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading contained in (A) any registration statement, preliminary
prospectus or final prospectus (as from time to time amended and supplemented),
or any amendment or supplement thereto, relating to the sale of any of the
Warrant Shares, or (B) any application or other document or communication (in
this Section 10 collectively called an "application") executed by or on behalf
of the Company or based upon written information furnished by or on behalf of
the Company filed in any jurisdiction in order to register or qualify any of the
Warrant Shares under the securities or blue sky laws thereof or filed with the
Commission or any securities exchange, unless such statement or omission was
made in reliance upon and in conformity with written information furnished to
the Company with respect to such Eligible Holder by or on behalf of such person
expressly for inclusion in any registration statement, preliminary prospectus,
or final prospectus, or any amendment or supplement thereto, or in any
application, as the case may be, or (ii) any breach of any representation,
warranty, covenant or agreement of the Company contained in this Warrant. The
foregoing agreement to indemnify shall be in addition to any liability the
Company may otherwise have, including liabilities arising under this Warrant.
If any action is brought against any Eligible Holder or any of its
officers, directors, partners, employees, agents or counsel, or any controlling
persons of such person (an "indemnified party") in respect of which indemnity
may be sought against the Company pursuant to the foregoing paragraph, such
indemnified party or parties shall promptly notify the Company of the
institution of such action (but the failure so to notify shall not relieve the
Company from any liability other than pursuant to this Section 10(a)) and the
Company shall promptly assume the defense of such action, including the
employment of counsel (reasonably satisfactory to such indemnified party or
parties) and the payment of expenses. Such indemnified party or parties shall
have the right to employ its or their own counsel in any such case, but the fees
and expenses of such counsel shall be at the expense of such indemnified party
or parties unless (I) the employment of such counsel shall have been authorized
in writing by the Company in connection with the defense of such action, (II)
the Company shall not have promptly employed counsel reasonably satisfactory to
such indemnified party or (III) the parties to have charge of the defense of
such action or such indemnified party or parties shall have reasonably concluded
that there may be one or more legal defenses available to it or them or to other
indemnified parties which are different from or additional to those available to
the Company, in any of which events such fees and expenses shall be borne by the
Company, and the Company shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties. The Company shall not,
without the prior written consent of each indemnified party that is not released
as described in this sentence, settle or compromise any action, or permit a
default or consent to the entry of judgment in or otherwise seek to terminate
any pending or threatened action, in respect of which indemnity may be sought
hereunder (whether or not any indemnified party is a party thereto), unless such
settlement, compromise, consent or termination includes an unconditional release
of each indemnified party from all liability in respect of such action.
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The Company agrees promptly to notify the Eligible Holders of the commencement
of any litigation or proceedings against the Company or any of its officers or
directors in connection with the sale of any Warrant Shares or any preliminary
prospectus, prospectus, registration statement or amendment or supplement
thereto, or any application relating to any sale of any Warrant Shares.
(b) The Holder agrees to indemnify and hold harmless the
Company, each director and officer of the Company who signs any registration
statement covering Warrant Shares held by the Holder, each other person, if any,
who controls the Company within the meaning of Section 15 of the Securities Act
or Section 20(a) of the Exchange Act, and its or their respective counsel, to
the same extent as the foregoing indemnity from the Company to the Holder in
Section 10(a), but only with respect to statements or omissions, if any, made in
any registration statement, preliminary prospectus or final prospectus, or any
amendment or supplement thereto, or in any application, in reliance upon and in
conformity with written information furnished to the Company with respect to the
Holder by or on behalf of the Holder expressly for inclusion in any such
registration statement, preliminary prospectus or final prospectus, or any
amendment or supplement thereto, or in any application, as the case may be. If
any action shall be brought against the Company or any other person so
indemnified based on any such registration statement, preliminary prospectus or
final prospectus, or any amendment or supplement thereto, or in any application,
and in respect of which indemnity may be sought against the Holder pursuant to
this Section 10(b), the Holder shall have the rights and duties given to the
Company and the Company and each other person so indemnified shall have the
rights and duties given to the indemnified parties, by the provisions of Section
10(a).
(c) To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to Section 10(a) or
10(b) (subject to the limitations thereof) but it is found in a final judicial
determination, not subject to further appeal, that such indemnification may not
be enforced in such case, even though this Agreement expressly provides for
indemnification in such case, or (ii) any indemnified or indemnifying party
seeks contribution under the Securities Act, the Exchange Act or otherwise, then
the Company (including for this purpose any contribution made by or on behalf of
any director of the Company, any officer of the Company who signed any such
registration statement, any controlling person of the Company, and its or their
respective counsel), as one entity, and the Eligible Holders of the Warrant
Shares included in such registration in the aggregate (including for this
purpose any contribution by or on behalf of an indemnified party), as a second
entity, shall contribute to the losses, liabilities, claims, damages and
expenses whatsoever to which any of them may be subject, on the basis of
relevant equitable considerations such as the relative fault of the Company and
such Eligible Holders in connection with the facts which resulted in such
losses, liabilities, claims, damages and expenses. The relative fault, in the
case of an untrue statement, alleged untrue statement, omission or alleged
omission, shall be determined by, among other things, whether such statement,
alleged statement, omission or alleged omission relates to information supplied
by the Company or by such Eligible Holders, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement, alleged statement, omission or alleged omission. The Company and the
Holder agree
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that it would be unjust and inequitable if the respective obligations of the
Company and the Eligible Holders for contribution were determined by pro rata or
per capita allocation of the aggregate losses, liabilities, claims, damages and
expenses (even if the Holder and the other indemnified parties were treated as
one entity for such purpose) or by any other method of allocation that does not
reflect the equitable considerations referred to in this Section 10(c). In no
case shall any Eligible Holder be responsible for a portion of the contribution
obligation imposed on all Eligible Holders in excess of its pro rata share based
on the number of shares of Common Stock owned (or which would be owned upon
exercise of all Warrant Shares) by it and included in such registration as
compared to the number of shares of Common Stock owned (or which would be owned
upon exercise of all Warrant Shares) by all Eligible Holders and included in
such registration. No person guilty of a fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation. For purposes of this Section 10(c), each person, if any, who
controls any Eligible Holder within the meaning of Section 15 of the Securities
Act or Section 20(a) of the Exchange Act and each officer, director, partner,
employee, agent and counsel of each such Eligible Holder or control person shall
have the same rights to contribution as such Eligible Holder or control person
and each person, if any, who controls the Company within the meaning of Section
15 of the Securities Act or Section 20(a) of the Exchange Act, each officer of
the Company who shall have signed any such registration statement, each director
of the Company and its or their respective counsel shall have the same rights to
contribution as the Company, subject in each case to the provisions of this
Section 10(c). Anything in this Section 10(c) to the contrary notwithstanding,
no party shall be liable for contribution with respect to the settlement of any
claim or action effected without its written consent. This Section 10(c) is
intended to supersede any right to contribution under the Securities Act, the
Exchange Act or otherwise.
11. Legend. Unless a current registration statement covering the
Warrant Shares is in effect under the Securities Act, the Warrant Shares issued
upon exercise of the Warrant shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). SUCH SHARES MAY NOT BE
OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, OR AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT."
12. Replacement of Warrants. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Warrant (and upon surrender of any Warrant if mutilated), the Company shall
promptly execute and deliver to the Holder thereof a new Warrant of like date,
tenor and denomination.
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13. No Rights as Shareholder. The Holder of any Warrant shall not have,
solely on account of such status, any rights of a shareholder of the Company,
either at law or in equity, or to any notice of meetings of stockholders or of
any other proceedings of the Company, except as provided in this Warrant.
14. Governing Law. This Warrant shall be construed in accordance with
the laws of the State of New York applicable to contracts made and performed
within such State, without regard to principles of conflicts of law.
15. Modification of Agreement. This Warrant shall not otherwise be
modified, supplemented or amended in any respect unless such modification,
supplement or amendment is in writing and signed by the party against which
enforcement of the same is sought.
16. Consent to Jurisdiction. The Company irrevocably consents to the
jurisdiction of the courts of the State of New York and of any Federal court
located in such state in connection with any action or proceeding arising out of
or relating to this Warrant, any document or instrument delivered pursuant to,
in connection with or simultaneously with this Warrant, or a breach of this
Warrant or any such document or instrument. In any such action or proceeding,
the Company waives personal service of any summons, complaint or other process
and agrees that service thereof may be made in accordance with Section 12 of the
Underwriting Agreement.
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IN WITNESS WHEREOF, the undersigned has executed this instrument as of
the date set forth below.
Dated: June __, 1996 BIGMAR, INC.
[Seal] By:______________________________________
Name:
Title:
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FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer the attached Warrant.)
FOR VALUE RECEIVED, _____________________ hereby sells, assigns, and
transfers unto ________________________ a warrant (the "Warrant") to purchase
__________ shares of common stock, par value $0.001 per share, of Bigmar, Inc.
(the "Company"), together with all right, title, and interest therein, and does
hereby irrevocably constitute and appoint ________ as attorney to transfer such
Warrant on the books of the Company, with full power of substitution.
Dated:___________________
Signature _______________________________
NOTICE
The signature on the foregoing Assignment must correspond to the name
as written upon the face of this Warrant in every particular, without alteration
or enlargement or any change whatsoever.
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<PAGE>
To: Bigmar, Inc.
6660 Doubletree Avenue
Columbus, Ohio 43229
The undersigned hereby exercises his or its rights to purchase ____
Warrant Shares covered by the within Warrant and (i) tenders payment herewith in
the amount of $_____________ or (ii) surrender the Warrant in the amount of
_________, in each case in accordance with the terms thereof, and requests that
certificates for such securities be issued in the name of, and delivered to:
(Print Name, Address and Social Security
or Tax Identification Number)
and, if such number of Warrant Shares shall not be all the Warrant Shares
covered by the within Warrant, that a new Warrant for the balance of the Warrant
Shares be registered in the name of, and delivered to, the undersigned at the
address stated below.
Dated:__________________
_________________________________________
(Signature)
Name:
___________________________________
(Print)
Address:
_________________________________
_________________________________
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<PAGE>
[LETTERHEAD OF RUBIN BAUM LEVIN CONSTANT & FRIEDMAN
June 14, 1996
Bigmar, Inc.
6660 Doubletree Avenue
Columbus, Ohio 43229
Ladies and Gentlemen:
We refer to the Registration Statement on Form S-1, File No. 333-3830 (the
"Registration Statement"), filed by Bigmar, Inc. (the "Company") with the
Securities and Exchange Commission for the purpose of registering under the
Securities Act of 1933, as amended:
(i) 1,437,500 shares of the Company's common
stock, par value $0.001 per share ("Common
Stock"), for the sale by the Company in an
underwritten public offering, which includes
amounts to be sold to cover over-allotments;
(ii) warrants ("Representative's Warrants") to be
issued to LT Lawrence & Co., Inc. (the
"Representative"), the representative of the
several Underwriters set forth in the
Registration Statement (the "Underwriters")
to purchase 125,000 shares of Common Stock
at an exercise price per share equal to 130%
of the initial public offering price; and
(iii) 125,000 shares of Common Stock representing
shares to be issued upon exercise of the
Representative's Warrants.
As counsel to the Company, we have examined such corporate records,
documents, agreements and such matters of law as we have considered necessary or
appropriate for the purpose of this opin-
<PAGE>
<PAGE>
RUBIN BAUM LEVIN CONSTANT & FRIEDMAN
Bigmar, Inc.
June 14, 1996
Page 2
ion. Upon the basis of such examination, we advise you that in our opinion:
(i) the Common Stock to be sold by the Company to
the Underwriters, if and when paid for and issued in accordance with the terms
of the underwriting agreement between the Company and the Representative in the
form of Exhibit 1.1 to the Registration Statement (the "Underwriting
Agreement"), will be validly issued, fully paid and nonassessable;
(ii) the Representative's Warrants to be sold by the
Company to the Representative, if and when paid for and issued in accordance
with the terms thereof and the terms of the Underwriting Agreement, will be
valid and binding obligations of the Company; and
(iii) the Common Stock issuable upon exercise of the
Representative's Warrants, if and when paid for and issued in accordance with
the terms of the Representative's Warrant in the form of Exhibit 4.2 to the
Registration Statement, will be validly issued, fully paid and nonassessable.
The opinion expressed in paragraph (ii) with regard to the validity and
binding nature of the obligations referred to therein are limited to the extent
that the validity and binding nature of such obligations may be limited by
bankruptcy, insolvency, moratorium or other similar laws or equitable principles
relating to or limiting creditors' rights generally.
We are members of the New York Bar, and the opinions expressed herein
are limited to questions arising under the laws of the State of New York and the
Federal law of the United States, and we disclaim any opinion whatsoever with
respect to matters governed by the laws of any other jurisdiction.
We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to this firm under the caption
"Legal Matters" in the Prospectus which is a part of the Registration Statement.
Reference is made to the section of the Registration Statement entitled "Legal
Matters" for a description of ownership of certain securities by certain
attorneys of this firm and other matters regarding representation by this firm.
Very truly yours,
/s/ RUBIN BAUM LEVIN CONSTANT & FRIEDMAN
RUBIN BAUM LEVIN CONSTANT & FRIEDMAN
<PAGE>
<PAGE>
PARTNERSHIP AGREEMENT
BETWEEN
PROTYDE ONCOLOGY THERAPEUTICS, INC.
AND
BIGMAR THERAPEUTICS, INC.
October __, 1995
Certain confidential information has been omitted and filed separately with the
Commission pursuant to a Request for Confidential Treatment.
Such material has been replaced with a legend indicating such omission and is
marked with brackets "[" "]".
<PAGE>
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
<S> <C>
1. Defined Terms and Accounting Matters............................................... 2
1.1 Definitions................................................................ 2
Affiliate.................................................................. 2
ANDA .................................................................. 2
BigMar .................................................................. 2
FDA .................................................................. 2
Manufacturing Agreement.................................................... 2
Marketing Agreement........................................................ 2
Marketing Information...................................................... 3
Partner .................................................................. 3
Partnership................................................................ 3
Product .................................................................. 3
Proprietary Information.................................................... 3
Protyde .................................................................. 3
Territory.................................................................. 3
1.2 Additional Definitions..................................................... 3
1.3 Accounting................................................................. 4
1.4 Representatives............................................................ 4
2. Formation Of Partnership........................................................... 6
2.1 Formation.................................................................. 6
2.2 Name....................................................................... 7
2.3 Principal Office........................................................... 7
2.4 Business................................................................... 7
2.5 Fiscal Year................................................................ 7
3. Related Transactions............................................................... 8
3.1 PSub Deliveries............................................................ 8
3.2 BSub Deliveries............................................................ 8
3.3 Further Assurances......................................................... 9
3.4 Protyde Packaging.......................................................... 9
4. Initial Capital Contributions...................................................... 10
4.1 Capital Contributions of PSub.............................................. 10
4.2 Capital Contributions of BSub.............................................. 10
5. Additional Capital Contributions and Loans......................................... 10
5.1 Determination of Requirements; Funding..................................... 10
5.2 Failure to Contribute Requested Capital.................................... 12
6. Management of Partnership.......................................................... 12
6.1 Management................................................................. 12
6.2 Action Against Partner..................................................... 14
6.3 General Manager............................................................ 14
6.4 Administrative Services.................................................... 15
6.5 Annual Partnership Budget.................................................. 15
6.6 Financial Statements....................................................... 15
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<PAGE>
<TABLE>
<CAPTION>
SECTION PAGE
<S> <C>
6.7 Books of Account........................................................... 16
7. Accounts; Inspection............................................................... 16
7.1 Capital Accounts........................................................... 16
7.2 No Interest or Withdrawal.................................................. 17
7.3 Inspection................................................................. 17
8. Allocation of Income and Losses; Distributions..................................... 17
8.1 Income and Losses.......................................................... 17
8.2 Distributions.............................................................. 18
9. Representations and Warranties..................................................... 18
9.1 Due Organization........................................................... 18
9.2 Power and Authority........................................................ 18
9.3 Litigation................................................................. 18
9.4 No Conflict................................................................ 19
9.5 Authorization.............................................................. 19
9.6 Binding Effect............................................................. 19
10. Indemnity and Insurance............................................................ 20
10.1 Indemnity.................................................................. 20
10.2 Insurance.................................................................. 21
11. Transfer of Interest; Assignment................................................... 21
12. Ownership and Use of ANDAs, Proprietary Information and Marketing Information.... 22
12.1 ANDAs...................................................................... 22
12.2 New Developments........................................................... 22
12.3 Confidentiality............................................................ 23
12.4 The names "BigMar" and "Protyde"........................................... 23
13. Term; Dissolution.................................................................. 24
13.1 Term; Dissolution by Agreement............................................. 24
13.2 Dissolution by Election of Partner......................................... 24
14. Winding Up; Distribution of Assets................................................. 24
14.1 Distribution of Proprietary and ANDA Rights upon Termination under
Section 13.1............................................................... 25
14.2 Distribution of Other Assets upon Termination under Section 13.1 .......... 25
14.3 Distribution of Assets upon Termination under Section 13.2................. 27
15. Miscellaneous...................................................................... 27
15.1 Counterparts............................................................... 27
15.2 Notices.................................................................... 27
15.3 Governing Law.............................................................. 28
15.4 Severability............................................................... 28
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<PAGE>
<TABLE>
<CAPTION>
SECTION PAGE
<S> <C>
15.5 Amendments................................................................. 28
15.6 Waiver..................................................................... 29
15.7 Headings................................................................... 29
15.8 Successors and Assigns..................................................... 29
15.9 Legal Fees; Costs of Enforcement........................................... 29
15.10 Entire Agreement........................................................... 29
</TABLE>
EXHIBITS
1.1 The Products
5.1 Form of Promissory Note
6.6 Reimbursement for Administrative Services
7.1 Initial Capital Account Balances
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PARTNERSHIP AGREEMENT, dated as of October__, 1995, by and
between PROTYDE ONCOLOGY THERAPEUTICS, INC., a Delaware corporation ("PSub"),
and BIGMAR THERAPEUTICS, INC., a Delaware corporation ("BSub").
W I T N E S S E T H:
WHEREAS, the parties wish to establish a partnership, on the
terms and conditions set forth in this Agreement, for the purpose of
coordinating the manufacture and marketing of products incorporating the drug
compounds specified on Exhibit 1.1 to this Agreement for use in the treatment of
human cancer;
WHEREAS, BSub or its affiliates shall be responsible for certain
premanufacturing activities relating to such products and for the manufacturing
thereof, and PSub or its affiliates shall be responsible for marketing and for
certain premanufacturing activities, in accordance with the terms and subject to
the conditions of this Agreement and the agreements contemplated hereby; and
WHEREAS, it is contemplated that the parties may jointly decide
to include certain other drug compounds, in cancer or other therapeutic areas,
in the Partnership's business if such inclusion becomes desirable.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties and covenants set forth herein, the parties hereby
agree as follows:
<PAGE>
<PAGE>
1. Defined Terms and Accounting Matters.
1.1 Definitions. As used herein, the following terms shall have
the following meanings (terms defined in the singular to have the same meaning
when used in the plural and vice versa):
"Affiliate" means any corporation or other entity which, at the
relevant time, controls, is controlled by, or is under common control with a
party to this Agreement. For purposes of this definition, "control" means
ownership of 50 percent or more of the voting stock of any corporation or the
right to receive 50 percent or more of the net profits of any other entity. The
Partnership shall not be deemed to be an Affiliate of either Partner.
"ANDA" means an Abbreviated New Drug Application prepared for
submission to the FDA in order to gain FDA approval for the manufacture and
marketing of a Product, or such other application as may be appropriate for any
Product.
"BigMar" means BigMar, Inc., a Delaware corporation.
"FDA" means the United States Food and Drug Administration or any
successor agency having the authority to approve pharmaceutical products for
marketing in the United States.
"Manufacturing Agreement" means the Manufacturing Agreement,
dated as of the date of this Agreement, between BigMar and the Partnership.
"Marketing Agreement" means the Sales and Marketing Agreement,
dated the date hereof, between Protyde and the Partnership.
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<PAGE>
"Marketing Information" means all confidential information
pertaining to customers, potential customers, markets, pricing, costs and other
matters useful to selling a Product. Marketing Information does not include
ANDAs.
"Partner" means the parties to this Agreement or their permitted
successors in interest.
"Partnership" means Protyde-BigMar Therapeutics, the Delaware
general partnership formed pursuant to this Agreement.
"Product" means a human pharmaceutical product consisting
substantially of one of the drug compounds specified on Exhibit 1.1 or one of
such other drug compounds as may be added to Exhibit 1.1 from time to time by
written agreement of the Partners.
"Proprietary Information" means all trade secrets, knowhow,
technology, inventions (whether patentable or not) patent applications, patents,
processes, systems, methods and other similar information which is useful in
making or using a Product.Proprietary Information does not include ANDAs.
"Protyde" means Protyde Corporation, a Delaware corporation.
"Territory" means the entire world other than Germany,
France, Spain, Italy, the United Kingdom, Benelux, Austria,
Switzerland, Sweden, Denmark and Argentina.
1.2 Additional Definitions. The following terms defined elsewhere
in this Agreement shall have the respective meanings therein defined:
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<PAGE>
Term Definition
- ---- -----------
BigMar Representative Section 2.1
GAAP Section 1.3
General Manager Section 6.4
Loss Section 10.1
Protyde Representative Section 1.4
Representative Section 2.4
1.3 Accounting. Unless otherwise specified herein, all accounting
terms used herein shall be interpreted, all determinations with respect to
accounting matters hereunder shall be made and all financial statements and
certificates and reports as to financial matters required to be delivered
hereunder shall be prepared in conformity with United States generally accepted
accounting principles ("GAAP"), consistently applied.
1.4 Representatives.
(i) For purposes of this Agreement, the "Protyde Representative"
shall be Richard Maradie and such successor Protyde Representatives as PSub
shall designate from time to time. If the party serving as Protyde
Representative shall be unable to act as Protyde Representative, PSub shall
appoint a successor Representative to act thereafter as the Protyde
Representative. In the event that the Protyde Representative determines in his
or her sole discretion that the interests of PSub would be better served by the
appointment of a new Protyde Representative, he or she shall so notify PSub and
shall be entitled thereafter to resign. If PSub shall fail to appoint a
successor Representative or does not notify BSub of the name of such successor
within 10 days after being requested to do so by BSub, then BSub shall select a
successor Protyde Representative from among the officers of PSub and such
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<PAGE>
choice shall be binding upon PSub; provided, that any Protyde Representative
selected by BSub may at any time be replaced by PSub.
(ii) For purposes of this Agreement, the "BigMar Representative"
shall be John Tramontana and such successor BigMar Representatives as BSub shall
designate from time to time. If the party serving as BigMar Representative shall
be unable to act as BigMar Representative, BSub shall appoint a successor BigMar
Representative to act thereafter as the BigMar Representative. In the event that
the BigMar Representative determines in his or her sole discretion that the
interests of BSub would be better served by the appointment of a new BigMar
Representative, he or she shall so notify BSub and shall be entitled thereafter
to resign. If BSub shall fail to appoint a successor BigMar Representative or
does not notify PSub of the name of such successor within 10 days after being
requested to do so by PSub, then PSub shall select a successor BigMar
Representative from among the officers and such choice shall be binding upon
BSub; provided, that any BigMar Representative selected by PSub may at any time
be replaced by BSub.
(iii) The Protyde Representative and the BigMar Representative
are sometimes collectively referred to herein as the "Representatives." Each of
the parties hereby irrevocably constitutes and appoints its respective
Representative, acting alone, as such party's true and lawful attorney to
perform on its behalf all acts which by the provisions of this Agreement are to
be performed by it; to execute and give and receive on such party's behalf all
notices, requests, consents, amendments, demands and other communi-
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<PAGE>
<PAGE>
cations to them hereunder; to delegate to any Persons in writing all or any of
such Representative's power and authority hereunder in the event of the absence
or incapacity to act, and generally to act for such party and on such party's
behalf in all matters connected with this Agreement as fully and with the same
force and effect as each such party might act in person. This power of attorney
is deemed to be coupled with an interest, shall be irrevocable and shall not be
affected by the subsequent dissolution of the appointing party.
(iv) The Representatives shall act, without compensation, on
behalf of their respective appointing parties, and the Representatives shall not
be liable to their respective appointing parties for any action taken in good
faith on behalf of such party.
(v) The parties shall be entitled to rely on the full power and
authority of the Representatives to act hereunder on behalf of their respective
appointing parties until notice of resignation or removal is given by the
appointing party, and neither party shall be liable in any way whatsoever for
any action it takes or omits to take in reliance upon the power and authority of
the other party's Representative.
2. Formation Of Partnership.
2.1 Formation. BSub and PSub hereby form, as of the date hereof,
a general partnership pursuant to the provisions of the Delaware Uniform
Partnership Act. Each of the Partners shall
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<PAGE>
initially have a 50% interest in the Partnership, subject to the terms and
conditions of this Agreement.
2.2 Name. The name under which the Partnership will conduct
business shall be "Protyde-BigMar Therapeutics."
2.3 Principal Office. The principal office and place of business
of the Partnership shall be 313 Pleasant Street, Watertown, Massachusetts 02172,
or such other location as the Representatives may designate.
2.4 Business. The business of the Partnership shall be (i) to
obtain FDA approval to market such of the Products as the Protyde may require in
accordance with the procedures set forth in the Manufacturing Agreement and the
Marketing Agreement, (ii) to have such Products manufactured for the
Partnership, and (iii) to have such Products marketed on behalf of the
Partnership. The Partnership may exercise such general powers as may be
necessary to further its business, including, without limitation, the incurrence
of indebtedness and the pledging of its assets to secure its indebtedness. The
Partnership shall not engage in any business other than that described in this
Section 2.4 without the written consent of the Partners.
2.5 Fiscal Year. The Partnership's fiscal year shall end on
December 31 of each year, unless determined otherwise by the Representatives.
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<PAGE>
3. Related Transactions.
3.1 PSub Deliveries. Concurrently with the execution of this
Agreement, PSub has delivered to BSub copies of the following documents:
(i) The Marketing Agreement, duly executed by Protyde.
(ii) The Certificate of Incorporation of PSub certified by
the Secretary of State of Delaware.
(iii) The By-laws of PSub, together with copies of all
corporate action of PSub, including the resolutions of its Board of Directors,
approving the execution, delivery and performance by PSub of this Agreement and
the consummation of the transactions contemplated hereby, certified by the
Secretary or any Assistant Secretary of PSub.
(iv) A good standing certificate with respect to the PSub,
dated no earlier than seven days prior to the date hereof, issued by the
Secretary of State of Delaware.
3.2 BSub Deliveries. Concurrently with the execution and delivery
of this Agreement, BSub has delivered to PSub copies of the following documents:
(i) The Manufacturing Agreement, duly executed by BigMar.
(ii) The Certificate of Incorporation of BSub certified by
the Secretary of State of Delaware.
(iii) The By-laws of BSub, together with copies of all
corporate action of BSub, including the resolutions of its
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<PAGE>
Board of Directors, approving the execution, delivery and performance by BSub of
this Agreement and the consummation of the transactions contemplated hereby,
certified by the Secretary or any Assistant Secretary of BSub.
(iv) A good standing certificate with respect to the BSub,
dated no earlier than seven days prior to the date hereof, issued by the
Secretary of State of Delaware.
3.3 Further Assurances. Subject to the terms and conditions of
this Agreement, each of the parties hereto shall use all reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
without further consideration.
3.4 Protyde Packaging. Protyde Packaging Corporation, a
wholly-owned subsidiary of PSub shall construct and operate a facility which
will provide quality control, quality assurance and outer packaging services to
the Partnership (at prices to be negotiated). BSub shall have the option
exercisable by written notice given within three years of the date such facility
becomes operational, to purchase from PSub 50% of the outstanding capital stock
of such subsidiary for a purchase price equal to [certain confidential
information has been omitted and filed separately with the Commission pursuant
to a Request for Confidential Treatment.]
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<PAGE>
4. Initial Capital Contributions.
4.1 Capital Contributions of PSub. As its initial capital
contribution to the Partnership, PSub hereby agrees to contribute to the
Partnership, up to $3,075,000 in cash, the first $750,000 of which shall be
contributed by March 31, 1996, with the balance to be contributed at such times
and in such amounts so as to enable the Partnership to timely satisfy its
obligations under, and to make payments contemplated by, Sections 2 and 3.2 of
the Manufacturing Agreement (and, for the period commencing on the date hereof
and ending one year thereafter, Section 5 of the Manufacturing Agreement).
4.2 Capital Contributions of BSub. As BSub's capital contribution
to the Partnership, BSub shall cause BigMar to make its manufacturing capacity
available to the Partnership under the terms of the Manufacturing Agreement.
5. Additional Capital Contributions and Loans.
5.1 Determination of Requirements; Funding. The General Manager,
in consultation with the Representatives, shall project revenues and
expenditures (based on expenses provided for in the Partnership's budget) on an
annual and a quarterly basis. The Partnership's working capital requirements
shall be determined from time to time pursuant to the terms of this Section 5 on
the basis of such annual and quarterly projections. If the Partnership's cash
flow is not sufficient to meet the Partnership's working capital requirements
after PSub's contributions described in Section 4.1 have been exhausted, the
Partnership shall attempt to obtain
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<PAGE>
from BigMar such extensions of credit in respect of the payments for Products
under the Manufacturing Agreement as BigMar shall determine to be commercially
reasonable, and thereafter, if and to the extent necessary, additional loans and
capital contributions shall be made as follows:
(i) PSub shall make loans to the Partnership of the Partnership's
working capital requirements as determined by PSub and consistent with the
Partnership's budget and not already contributed under Section 4.1, up to a
total of $500,000 in the aggregate. All such loans shall be evidenced by a
promissory note of the Partnership, substantially in the form of Exhibit 5.1,
bearing interest at a rate per annum equal to the prime commercial lending rate
for short-term loans announced from time to time by Chase Manhattan Bank, N.A.,
at its offices in New York City, plus 2%, and be entitled to priority in
repayment pursuant to the terms of Section 7.3 hereof.
(ii) If PSub has made loans to the Partnership under clause (i)
above of $500,000 in the aggregate, the Partners shall make additional capital
contributions, in equal amounts and at such times and in such manner as either
Partner may request in writing, in amounts equal to all of the Partnership's
working capital requirements necessary to meet expenses provided for in the
Partnership's then current budget. Each such capital contribution shall be
credited to the capital account of the Partner making the contribution.
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<PAGE>
In either case, the Partners shall be entitled to at least 15 days' prior
written notice before any loans or additional capital contributions are
required, and all requests for loans under clause (i) must equal or exceed
$25,000 and all requests for additional capital contributions under clause (ii)
must equal or exceed $50,000 in the aggregate.
5.2 Failure to Contribute Requested Capital. If a Partner fails
to fund its proportionate share of a request for a capital contribution made by
the other Partner pursuant to Section 5.1(ii) within 30 days after notice of
such request under Section 5.l(ii), the requesting Partner may at its option
fund the entire capital contribution. In such event, all amounts so contributed
shall be credited to the capital account of the contributing Partner. If a
Partner fails to meet a request for capital under Section 5.1(ii) and the other
Partner funds the contribution, the non-contributing Partner's interest in
Partnership income, losses, and distributions shall be adjusted as set forth in
Section 5.1.
6. Management of Partnership.
6.1 Management. The business and affairs of the Partnership,
except as otherwise provided in this Agreement, shall be managed by the
Representatives acting jointly. Except as otherwise provided in this Agreement,
the Representatives, acting jointly, shall have the power and authority to
exercise on behalf of the Partnership the powers set forth in this Section 6.1
so as to conduct and operate the business of the Partnership. Action taken by
the Representatives within the scope of their authority as herein provided shall
con-
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<PAGE>
stitute approval of, or action by, the Partnership and shall be binding on the
Partners. The Representatives, acting jointly, shall have the sole and exclusive
power and authority to take the following actions, on behalf of the Partnership
in order to conduct and operate the Partnership's business:
(i) controlling and directing the day-to-day business operations
for and on behalf of the Partnership including submitting orders for Products;
(ii) establishing and implementing operating policy decisions,
for and on behalf of the Partnership;
(iii) preparing and filing tax returns and other regulatory
applications and other filings for and on behalf of the Partnership;
(iv) maintaining books and records for and on behalf of the
Partnership;
(v) hiring accountants, for and on behalf of the Partnership;
(vi) hiring lawyers for and on behalf of the Partnership;
(vii) being responsible for personnel matters including the
hiring, firing and supervision of employees for and on behalf of the
Partnership;
(viii) paying all other expenses of operation directly for and on
behalf of the Partnership;
(ix) collecting all revenues for and on behalf of the
Partnership; and
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<PAGE>
(x) making distributions to the Partners in conformance with this
Agreement.
6.2 Action Against Partner. Any notice, demand, claim or proceeding
given, made, instituted or prosecuted on behalf of the Partnership to or against
any Partner, or any of its Affiliates, shall be deemed to have been duly given,
made, instituted or prosecuted by the Partnership if given, made, instituted or
prosecuted by the other Partner, acting in its own name or in the name of the
Partnership. Nothing in this Section 6.2 shall be construed to require approval
of the Representative for enforcement by the Partnership of any specific right
of the Partnership against a Partner or its Affiliates under circumstances where
such Partner or its Representative would have voting power to block such
approval.
6.3 General Manager. The Partnership shall have a general manager (the
"General Manager") who shall be responsible for the day-to-day operations of the
Partnership. During the first year of the Partnership, unless the parties
otherwise agree, the General Manager shall be Richard F. Maradie. Thereafter,
the Representatives shall have the right to appoint the General Manager. The
General Manager may be, but need not be, an employee of either Partner or any of
their Affiliates. The Representatives may make provisions for a staff to conduct
the business of the Partnership with the General Manager and may from time to
time delegate to the General Manager and the staff authority, in a manner not
inconsistent with this Agreement, to conduct that business. Any delegation of
authority may be modified or
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<PAGE>
terminated at any time by the Representatives or by joint action of the
Partners.
6.4 Administrative Services. Partnership accounting shall be performed
by PSub and all other required administrative services shall be performed by
either Partner (or their Affiliates) according to the allocation of such tasks
as specified by the Representatives and agreed to by the performing Partner or
Affiliate. The Partners shall be reimbursed for their costs of providing such
services in accordance with Exhibit 6.4.
6.5 Annual Partnership Budget. The General Manager shall prepare an
annual budget for the Partnership for each calendar year providing for the
payment of all of the Partnership's premanufacturing, manufacturing, marketing
and administrative expenses (including those to be incurred under the Agreement
and the Manufacturing Agreement), and shall submit the budget to the
Representatives for approval no later than December 1 of the preceding year. The
Representatives shall approve an annual budget no later than 30 days after it is
submitted for approval and each budget shall contain provisions consistent with
the orders for Products and forecasts received by the Partnership under the
Marketing Agreement and the costs for such Products as set forth in the
Manufacturing Agreement.
6.6 Financial Statements. Within 60 days after the end of each fiscal
quarter (other than the last quarter of any fiscal year) of the Partnership, the
Partnership shall cause to be delivered to each Partner a report containing an
unaudited balance
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<PAGE>
sheet and statement of income and expenses of the Partnership, prepared in
accordance with generally accepted accounting principles consistently applied
(but not including all of the footnotes required by generally accepted
accounting principles). Within 120 days after the end of each fiscal year, the
Partnership shall cause to be furnished to each Partner (i) the audited
financial statements of the Partnership for such year, prepared in accordance
with generally accepted accounting principles consistently applied, and
certified by such accounting firm nationally recognized in the United States as
may be designated by the Representatives and (ii) all information concerning the
Partnership necessary for the preparation of the Partners' federal and state
income tax returns.
6.7 Books of Account. The General Manager shall cause complete and
proper books of account and records to be kept for the Partnership. The
Partnership books shall be kept in accordance with GAAP.
7. Accounts; Inspection.
7.1 Capital Accounts. A separate capital account for each of the
Partners shall be maintained on the books and records of the Partnership. Each
Partner's initial capital account balance shall be deemed equal to the amount
set forth opposite such Partner's name on Exhibit 7.1, which the parties have
agreed is the value of such Partner's capital contributions pursuant to Section
4 hereof. There shall be credited to each Partner's capital account such
Partner's respective additional capital contributions pursuant to Section 5
hereof. There shall be charged to each Partner's
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capital account all losses of the Partnership allocated to it pursuant to
Section 8.1 and all distributions made to it by the Partnership pursuant to
Section 8.2. Each Partner shall be required prior to the dissolution of the
Partnership to restore any deficits in its capital account balance.
7.2 No Interest or Withdrawal. No Partner shall be entitled to
interest on its capital account. No Partner shall have the right to withdraw all
or any portion of its capital contribution.
7.3 Inspection. All accounting and other books and records of, or
relating to, the Partnership shall be made available to the Partners for
inspection and copying at all reasonable times and shall be retained for so long
as is deemed necessary by the Partnership.
8. Allocation of Income and Losses; Distributions.
8.1 Income and Losses. All income and losses of the Partnership shall
be allocated as follows:
(i) Net income of the Partnership shall be allocated to the
Partners first, in proportion to their respective negative capital account
balance, if any, until each Partner's capital account balance is zero, and
thereafter equally unless and until such time as one Partner makes a capital
contribution under Section 5.1(ii) not matched by the other Partner, after which
net income shall be allocated to the Partners in the proportions which their
respective aggregate capital contributions bear to the aggregate capital
contributions to the Partnership.
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(ii) Net losses of the Partnership shall be allocated to the
Partners in such manner as will most quickly cause their respective capital
account balances to be equal.
8.2 Distributions. Distributions shall be made by the Partnership
at such times and in such amounts as the Representatives may determine, but only
after payment in full of all amounts loaned to the Partnership by PSub pursuant
to clause (i) of Section 5.1 together with all accrued and unpaid interest
thereon. Any distributions by the Partnership shall be divided between the
Partners in proportion to their then current capital account balances. The
Partnership shall endeavor, subject to the establishment of reasonable reserves
and its working capital requirements, to distribute to each Partner during a
calendar year an amount equal to the income allocated to such Partner during
that calendar year.
9. Representations and Warranties.
Each Partner hereby represents and warrants to the other Partner
as follows:
9.1 Due Organization. It is a corporation duly organized, validly
existing and in good standing under the laws of its state of incorporation.
9.2 Power and Authority. It has the power and authority to
execute and deliver this Agreement, and to perform its obligations hereunder.
9.3 Litigation. There are no actions, suits or proceedings
pending or, to its knowledge, threatened against it or any
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of its Affiliates at law or in equity before any court or administrative office
or agency which may adversely affect its ability to carry out its obligations
under this Agreement, and neither it nor any of its Affiliates is in violation
of any order, writ, injunction or decree of any court or governmental authority
entered against it or any of its Affiliates or by which its or any of its
Affiliates' property is bound so as to affect adversely such Partner's ability
to carry out its obligations under this Agreement.
9.4 No Conflict. The execution, delivery and performance by it of
this Agreement and its compliance with the terms and provisions hereof does not
and will not conflict with or result in a breach of any of the terms and
provisions of or constitute a default under (i) any indenture, mortgage, deed of
trust, loan agreement, guaranty, financing agreement, agreement affecting a
Product or other agreement or instrument binding or affecting it or any of its
Affiliates or its or any of its Affiliates' property; (ii) the provisions of its
or any of its Affiliates' charter documents or By-Laws; or (iii) any order,
writ, injunction or decree of any court or governmental authority entered
against it or any of its Affiliates or by which any of its or any of its
Affiliates' property is bound.
9.5 Authorization. No authorization, consent or approval of any
governmental authority or third party is required for the execution, delivery or
performance by it of this Agreement.
9.6 Binding Effect. This Agreement has been duly authorized,
executed and delivered and constitutes its legal, valid
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and binding obligation enforceable against it in accordance with its terms
subject, as to enforcement, to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting creditors' rights and to
the availability of particular remedies under general equity principles.
10. Indemnity and Insurance.
10.1 Indemnity. Each Partner agrees to indemnify and hold the
other Partner harmless against any and all losses, liabilities, damages, claims,
judgments, demands, and expenses (including reasonable attorneys' fees) and
costs (together or individually, a "Loss") arising out of or in connection with
(i) the breach by the indemnifying party of any of its representations or
warranties contained in this Agreement, (ii) the nonperformance, partial or
total, of any covenants of the indemnifying party contained in this Agreement or
(iii) the binding of the Partnership to any undertaking or liability not
expressly authorized or provided in this Agreement or in accordance with Section
6 hereof. It is expressly agreed that any diminution in the value of the
business of the Partnership or either Partner or any of its Affiliates by reason
of any of the foregoing shall be deemed a Loss for purposes of this
indemnification. As a condition to the indemnified party's right to
indemnification under this Section 10.1, the indemnified party shall give prompt
notice to the indemnifying party of any suits, claims or demands by third
parties or the indemnified Partner which may give rise to any Loss for which
indemnification may be required under this Section 10.1. The indemnifying party
shall be entitled
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to assume the defense and control of any suit, claim or demand of any third
party at its own cost and expense; provided, however, that the indemnifying
party shall not be entitled to assume the defense and control of any such suit,
claim or demand if in the opinion of counsel reasonably satisfactory to the
indemnifying party, the indemnified party has one or more legal defenses
available to it which are in conflict with those available to the indemnifying
party. The indemnifying party shall be free to settle any claim or action in
respect to which indemnity may be sought against it pursuant to this Section;
provided, however, that the indemnifying party shall not settle any such claim
or action if such settlement would result in the imposition against the
indemnified party of a judgment, decree or order in the nature of equitable
relief without the consent of the indemnified party, which consent shall not be
unreasonably withheld.
10.2 Insurance. If available at rates reasonably satisfactory to
the Partnership, the Partners shall maintain insurance for its business, in its
own name or in the name of a Partner or its Affiliate, with responsible
insurance companies satisfactory to the Partnership, insuring the risks
associated with the Partnership's business, in such amounts as is customarily
maintained by similar businesses.
11. Transfer of Interest; Assignment.
Except for a transfer to any Affiliate of Protyde or BigMar, no
portion of either Partner's interest in the Partnership, or rights in this
Agreement, shall be sold, assigned, exchanged,
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pledged, encumbered or otherwise transferred without the prior written consent
of the other Partner. Any purported transfer not in compliance with this
Agreement shall be void at the option of the other Partner. For purposes of this
Agreement: (a) the transfer after the execution and delivery of this Agreement
of 50% or more of the common equity or 50% or more of the voting rights in
BigMar (whether in a single transaction or a series of transactions) shall be
deemed a transfer of BSub's interest in the Partnership; and (b) the transfer
after the execution and delivery of this Agreement of 50% or more of the common
equity or 50% or more of the voting rights in Protyde (whether in a single
transaction or in a series of transactions) shall be deemed a transfer of PSub's
interest in the Partnership.
12. Ownership and Use of ANDAs, Proprietary Information and Marketing
Information.
12.1 ANDAs. Subject to the provisions of Sections 12.3, 14.2 and
14.3, the Partnership shall own all right, title and interest in all
FDA-approved ANDAs for any Product and shall have an exclusive, royalty-free
right and license to use, for any purpose and reference in any filing, all ANDAs
in progress for any Product.
12.2 New Developments. Subject to the provisions of Sections
12.3, 14.2 and 14.3, the Partnership shall own all right, title and interest in
and to Proprietary Information and Marketing Information which is developed or
acquired by a Partner or its Affiliate using Partnership funds, or while
performing activities
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subject to reimbursement by the Partnership; provided, however, that during the
term of the Partnership each of the Partners shall have a royalty-free,
worldwide right (with no right to assign, except to its Affiliates, but with the
rights to have goods made to its order and to permit purchasers of its goods to
use and sell goods so purchased) to use and practice any such Proprietary
Information and Marketing Information for any purpose outside the scope of the
Partnership's business, as specified in Section 2.4.
12.3 Confidentiality. Unless otherwise determined by the
Management Committee, all ANDAs, and all Proprietary Information and Marketing
Information under Section 12.2, shall be maintained in confidence by the
Partners, except to the extent necessary to comply with applicable laws or
regulations or to allow a Partner to exercise any right granted to it in Section
12.2. Unless otherwise determined by the owner, all ANDAs, and all Proprietary
Information and Marketing Information shall be maintained in confidence by the
other Partner and the Partnership.
12.4 The names "BigMar" and "Protyde". The Partners recognize
that no permission is given in this Agreement to the Partnership to use "BigMar"
and "Protyde" as trademarks, tradenames, service marks or the like (other than
in connection with the labelling of Products) and that such permission can only
be obtained from BigMar and Protyde, respectively; provided, however, that the
words "Protyde" and "BigMar" may be included in the name of the Partnership and
may be used in combination in connection with the Partnership's business.
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13. Term; Dissolution.
13.1 Term; Dissolution by Agreement. The Partnership shall come
into existence upon the date hereof and, unless extended or dissolved by mutual
agreement between the Partners in writing, shall continue until December 31,
2005, unless earlier dissolved in accordance with Section 13.2.
13.2 Dissolution by Election of Partner. The Partnership may be
terminated (i) by either Partner upon the material breach of this Agreement by
the other Partner if such breach is not cured within 30 days after written
notice from the nonbreaching Partner; provided, however, that termination of
this Agreement is not intended to be the sole remedy of either Partner in the
event of a breach of this Agreement by the other Partner, and in the event of a
breach of this Agreement by one Partner, the other Partner shall be entitled, in
addition, to all remedies available at law or in equity; (ii) by either Partner
upon the bankruptcy, insolvency, assignment for the benefit of creditors or
other act of insolvency by, of or against the other Partner or its parent, if
any; or (iii) by BSub upon the termination of the Marketing Agreement or by PSub
upon termination of the Manufacturing Agreement. The transfer by a Partner of
its interest in the Partnership on the terms permitted by this Agreement, or on
terms specifically agreed to by the Partners, shall not be deemed a dissolution
of the Partnership.
14. Winding Up; Distribution of Assets. Upon the termination of
the Partnership for any reason, the affairs of the Partnership
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shall be wound up and the Partnership dissolved as rapidly as circumstances and
orderly practice permit, but in any event within a period of time not exceeding
six months, and the assets of the Partnership shall be applied as provided in
this Section 14.
14.1 Distribution of Proprietary and ANDA Rights upon Termination
under Section 13.1. Subject to the provisions of Section 14.4, upon termination
of the Partnership pursuant to Section 13.1, all FDA approved ANDA's shall be
assigned to BSub; provided, however, that PSub shall have (i) a worldwide,
royalty-free right, with full right of assignment and partial assignment, to
make use of all Proprietary Information owned or controlled by BSub or the
Partnership which relates to the manufacture of the Products, (ii) the right to
use and reference any and all FDA-approved ANDAs and ANDAs in progress relating
to the Products, and (iii) the right to make, use and sell each Product. Each
Partner shall execute such agreements and documents as may be reasonably
requested by the other Partner, and shall assist in obtaining all FDA and other
approvals necessary to give each Partner the full use of its rights under this
Section 14.1. Automatically upon the effectiveness of such assignment to BSub,
BSub's Partnership capital account shall be reduced by an amount equal to the
value attributed, in Section 7.1, to its initial capital contribution made in
accordance with Section 4.2. The provisions of this Section 14.1 shall survive
the termination of this Agreement for any reason.
14.2 Distribution of Other Assets upon Termination under Section
13.1. Subject to the provisions of Section 14.4,
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upon the termination of the Partnership pursuant to Section 13.1, the assets of
the Partnership other than those described in Section 14.1 shall be applied as
follows:
(i) first to the payment of liabilities and discharge of
obligations of the Partnership to persons other than the Partners and Affiliates
of Protyde and BigMar;
(ii) next to the repayment of all loans to the Partnership by
PSub pursuant to Section 5.1 hereof together with all accrued and unpaid
interest thereon;
(iii) next to the payment of liabilities and discharge of any
obligations of the Partnership to the Partners, and if the Partnership's assets
are insufficient to pay all such liabilities, the Partner to which the greatest
amount is then owed shall be paid until the Partners are owed equal amounts and,
thereafter, the Partners shall be paid any remaining amounts equally;
(iv) next to the payment to each Partner of an amount equal to
its respective capital account balance, or if such assets or proceeds are less
than the aggregate capital account balances, in proportion to their respective
capital accounts; provided, however, in any case, that BSub's capital account
shall first have been reduced in accordance with Section 14.1 prior to any
distribution of Partnership assets pursuant to this Section 14; and
(v) the remainder, if any, to the Partners in accordance with
their respective interests in Partnership net income under Section 8.1(i) at the
time of dissolution.
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14.3 Distribution of Assets upon Termination under Section 13.2.
If the Partnership is terminated pursuant to the provisions of Section 13.2,
then the Partner electing to dissolve the Partnership shall have exclusive
possession of all the assets of the Partnership (other than the ANDA's) if such
Partner pays the other Partner the book value of its interest in the Partnership
at the time of dissolution, less the damages for any breach of this Agreement
recoverable by the Partner electing to dissolve the Partnership. For purposes of
this Section 14.3, the "book value" of a Partner's interest shall be the amount
such Partner would be entitled to receive under Section 14.2 pursuant to a
termination of the Partnership under Section 13.1, excluding any amount
attributable to goodwill. If requested by the Partner electing to dissolve the
Partnership, the other Partner shall take all actions reasonably requested by
the dissolving Partner in order to give the dissolving Partner full possession
and use of the assets of the Partnership remaining after payment of the book
value of the other Partner's interest in the Partnership under this Section
14.3.
15. Miscellaneous.
15.1 Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be deemed an original, and all of which, taken
together, shall be one instrument.
15.2 Notices. Any notice or other communication required or
permitted to be given by either party under this Agreement shall be effective
when delivered, if delivered by hand, or five days after mailing, if mailed by
registered or certified mail,
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postage prepaid and return receipt requested, addressed to each party at the
following addresses or such other address as may be designated by notice
pursuant to this Section:
If to BSub:
6660 Doubletree Avenue, Suite 20
Columbus, Ohio 43229
Attention: President
Telephone: (614) 842-4288
Facsimile: (614) 842-4290
If to PSub:
313 Pleasant Street
Watertown, Massachusetts 02171
Telephone: (617) 926-2314
Facsimile: (617) 926-2769
Attention: President
15.3 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
contracts entered into and wholly to be performed within such State.
15.4 Severability. If any provision of this Agreement is held to
be invalid, void or unenforceable for any reason, it shall be adjusted, if
possible, rather than voided in order to achieve the intent of the parties to
the maximum extent possible. In any event, all other provisions of this
Agreement shall be deemed valid and enforceable to the fullest extent possible.
15.5 Amendments. No amendment, modification or addition hereto
shall be effective or binding on either party unless set forth in writing and
executed by a duly authorized representative of the party to be charged.
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15.6 Waiver. No waiver of any rights under this Agreement shall
be deemed effective unless contained in a writing signed by the party charged
with such waiver, and no waiver of any breach or failure to perform shall be
deemed to be a waiver of any future breach or failure to perform or of any other
right arising under this Agreement.
15.7 Headings. The section headings contained in this Agreement
are included for convenience only and form no part of the Agreement between the
parties.
15.8 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the permitted successors and assigns of the
Partners; provided, however, this shall not be construed and is not intended to
waive restrictions on the sale, assignment, exchange, pledge, encumbrance, or
other transfer by the Partners contained in Section 11.
15.9 Legal Fees; Costs of Enforcement. Each party will bear its
own legal fees incurred in connection with this transaction.
15.10 Entire Agreement. This Agreement, including the Exhibits
hereto, the Marketing Agreement, the Manufacturing Agreement and the letter
agreement between the parties dated the date hereof constitute the entire
agreement of the parties with respect to the subject matter hereof, and
supersede any and all prior agreements and understanding, whether oral or in
writing, between the parties and their Affiliates concerning the subject matter
hereof.
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IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date which appears in the first paragraph of this Agreement.
BIGMAR THERAPEUTICS, INC.
By:
____________________________________
Title:
PROTYDE ONCOLOGY THERAPEUTICS, INC.
By:
____________________________________
Title:
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1 Page Omitted
[Certain confidential information has been omitted and filed separately with the
Commission pursuant to a Request for Confidential Treatment.]
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EXHIBIT 6.4 to the
Partnership Agreement
Administrative services which may be requested by the Partnership
to be performed by either Partner (or its Affiliate) and reimbursed by the
Partnership may include, but not be limited to, the following: accounting,
finance, tax, credit and collection, legal, patent, data processing, personnel,
travel, telecommunications and general services.
The provider's costs of such administrative services will be
charged to the Partnership. Such costs will include direct labor, employee
benefits, actual costs for third party goods or services and a surcharge to
cover indirect costs.
Direct labor will be based on actual hours worked by and rates of
individuals providing the requested services. Other direct costs will be
supported by third party invoices. Employee benefits shall be charged as a
percentage of direct labor, such rate to be established on an annual basis based
on actual benefit rates. The surcharge for indirect costs will be a percentage
of direct labor established by mutual agreement on an annual basis.
The surcharge for indirect costs shall be sufficient to cover the
costs of services provided to the Partnership, which costs are not practical to
charge directly to the Partnership.
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EXHIBIT 7.1 to the
Partnership Agreement
The initial capital account balance of each Partner shall be
deemed equal to $3,075,000.
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PROTYDE-BIGMAR THERAPEUTICS
$__________
PROMISSORY NOTE
PROTYDE-BIGMAR THERAPEUTICS, a Delaware general partnership
(the "Borrower"), for value received, hereby promises to pay to Protyde Oncology
Therapeutics, Inc. or registered assigns (the "Payee") on demand (the "Maturity
Date") at the offices of the Payee located at 313 Pleasant Street, Watertown,
Massachusetts 02172 or at such other location as the Payee shall request, the
principal amount of __________ Dollars ($______), including interest at a rate
per annum equal to the prime commercial lending rate for short-term loans
announced from time to time by Chase Manhattan Bank, N.A., at its offices in New
York City, plus 2% accrued through the Maturity Date, in such coin or currency
of the United States of America as at the time of payment shall be legal tender
for the payment of public and private debts.
This Note is issued pursuant to a Partnership Agreement, dated
as of __________, 1995 (the "Partnership Agreement"), between Protyde Oncology
Therapeutics, Inc. and BigMar Therapeutics, Inc.
1. Prepayment
The principal amount of this Note may be prepaid
by the Borrower, in whole or in part, without penalty, at any time.
2. Failure to Pay Amounts When Due
If all or a portion of the principal amount hereof
shall not be paid when due, any such overdue principal amount shall bear
interest at a rate per annum which is 4% above the rate set forth in the first
paragraph hereof from the date of such nonpayment until paid in full (both
before and after judgment). The Borrower hereby agrees to pay the costs of
collection and reasonable attorneys' fees and expenses in case default occurs in
the payment of this Note.
3. Miscellaneous
A. The registered owner of this Note shall have the
right to transfer it by assignment and the transferee thereof shall, upon his
registration as owner of this Note, become vested with all the powers and rights
of the transferor. Registration of any new owner shall take place upon
presentation of this Note to the Borrower at the location of its offices
referred to in the first paragraph hereof, together with a duly authenticated
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assignment. In case of transfer by operation of law, the transferee agrees to
notify the Borrower of such transfer and of his address, and to submit
appropriate evidence regarding the transfer so that this Note may be
registered in the name of the transferee. This Note is transferable only on
the books of the Borrower by the holder hereof, in person or by attorney, on the
surrender hereof, duly endorsed.
B. Borrower hereby waives presentment and demand for
payment, notice of dishonor, protest and notice of protest of this Note.
C. This Note shall be construed and enforced in
accordance with the laws of the State of Delaware, (without reference to its
rules as to conflicts of law).
IN WITNESS WHEREOF, the Borrower has caused this Note
to be signed in its name by its authorized representative.
Dated: __________________
PROTYDE-BIGMAR THERAPEUTICS
By:_______________________________
Name:
Title:
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EMPLOYMENT AGREEMENT
This AGREEMENT made as of the 15th day of April, 1996, by and between
Bigmar, Inc., a Delaware corporation (hereinafter, "the Employer" or
"Employer"), and John G. Tramontana (hereinafter, "the Executive" or
"Executive").
1. Commencing on the Effective Date, as hereinafter defined, of this
Agreement, Employer shall employ Executive as President and Chief Executive
Officer to perform the duties normally incident to such positions.
2. Executive agrees to devote all of Executive's business time, efforts,
skills and attention to fulfill Executive's duties and responsibilities
hereunder faithfully, diligently and competently.
3. The term of this Agreement shall commence upon the consummation of
the presently contemplated initial public offering of common stock of Employer
(the "Effective Date") and shall terminate five years thereafter, unless sooner
terminated as hereinafter provided, and shall be subject to automatic annual
renewal thereafter unless at least sixty days prior to the end of the term of
this Agreement or any annual renewal period Executive or Employer shall give
written notice to the other that this Agreement shall not be renewed.
4. Employer will pay to Executive as compensation for all services to be
rendered by Executive hereunder a salary at the rate of Two Hundred Thousand and
00/100 ($200,000.00) Dollars ("Base Salary") for the twelve-month period
commencing on the Effective Date and for each twelve-month period thereafter
(each a "Twelve-Month Period") subject to annual cost of living increases as may
be approved by and in the discretion of the Board of Directors of Employer. The
Base Salary shall be payable twice monthly.
5. Employer may pay to Executive bonuses (in cash or stock options) as
may be approved by and in the discretion of the Board of Directors of Employer;
provided, however, that, such bonus shall be equal to at least 25% of the Base
Salary annually. The performance of Executive shall be reviewed by the Board of
Directors on or about each anniversary of the Effective Date.
6. Employer will reimburse Executive for all reasonable travel and
business expenses incurred by Executive in connection with performance of
Executive's services hereunder in accordance with the usual practices and
policies of Employer in effect from time to time, upon presentation of vouchers.
7. Executive will be eligible for and will be afforded an opportunity to
participate in all benefit plans and programs
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which are currently afforded or which may be afforded during the term of this
Agreement to other executive officers of Employer, including, without
limitation, group insurance, health, hospital, dental, major medical, life and
disability insurance and stock option plans or other similar fringe benefits.
8. Executive will be entitled to four weeks vacation during each
Twelve-Month Period. To the extent not taken in any Twelve-Month Period,
Executive, at his option, shall be entitled to receive payment for any unused
vacation or accrue such vacation time.
9. Employer will provide either directly to Executive or on Executive's
behalf, an automobile allowance in the amount of $6,000 for each Twelve-Month
Period.
10. (a) Employer will obtain life insurance coverage, (assuming
Executive is insurable) on the life of and for the benefit of Executive in an
amount equal to $500,000.
(b) Executive agrees that Employer in Employer's discretion, may
apply for and procure in the name of Executive and for its own benefit life
insurance in any amount or amounts considered advisable but not less than Two
Million 00/100 ($2,000,000) Dollars and that Executive shall have no right,
title or interest therein.
(c) Executive represents and warrants that, to the best of
Executive's knowledge, Executive is in good health and that, to the best of
Executive's knowledge, Executive will qualify and be acceptable for life
insurance coverage in an amount of at least Two Million 00/100 ($2,000,000)
Dollars.
(d) Executive agrees to submit to any medical or other examination
and to execute and deliver any application or other instrument necessary to
effectuate such life insurance.
11. In the event of Executive's death during the term of this Agreement,
this Agreement shall terminate immediately, provided, however, that Executive's
legal representatives shall be entitled to receive the Base Salary which would
otherwise have been due Executive had Executive worked through the end of the
month of Executive's death plus three additional months of the Base Salary for
the Twelve-Month Period in which Executive died.
12. If during the term of this Agreement, Executive is unable to perform
Executive's duties hereunder on account of illness or other incapacity, and such
illness or other incapacity shall continue for a period of more than three
consecutive months during any Twelve Month Period, Employer shall have the
right, on thirty days' notice to Executive, given after such three month period,
to terminate this Agreement. In the event of any such
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termination Employer shall be obligated to pay to Executive the Base Salary
which would otherwise be due Executive until the end of the month during which
the termination occurred plus six additional months of the Base Salary for the
Twelve-Month Period in which such termination occurred. If, prior to the date
specified on such notice, Executive's illness or incapacity shall have ceased
and Executive shall have resumed the performance of Executive's duties
hereunder, Executive shall be entitled to resume Executive's employment
hereunder as though such notice had not been given. Employer's Board of
Directors shall determine in good faith, upon consideration of medical evidence
satisfactory to it, whether Executive by reason of physical or mental disability
shall be unable to perform the services required of Executive hereunder.
13. If Employer shall terminate Executive's employment hereunder for
Cause, as hereinafter defined, or if Executive shall voluntarily leave
Executive's employment hereunder, Employer will pay to Executive within ten days
after the termination of such Agreement an amount equal to the amount which
Executive would have earned as the Base Salary hereunder through the end of the
then current month in which such termination or departure occurred. Cause shall
mean any gross malfeasance directly and materially affecting Employer or
conviction of a felony directly and materially affecting Employer, each of
determined in the sole discretion of Employer.
14. If Executive's employment is terminated by Employer without Cause,
this Agreement shall terminate immediately, provided, however, that Employer
shall be obligated to pay Executive the Base Salary had Executive worked through
the last day of the month in which Executive was terminated and four months of
the Base Salary for the Twelve-Month Period in which Executive was terminated.
15. Executive covenants and agrees that any work or research, or the
result thereof, including without limitation, inventions, processes or formulae
made, conceived or developed by Executive, alone or in connection with others,
during Executive's employment with Employer, whether within or without the usual
hours of employment, which are directly related to the business, research,
development work or field of operation of Employer, or any of its subsidiaries
or affiliates, shall, at the option of Employer, to the extent of Executive's
interest therein, be the sole and exclusive property of Employer. Executive
further agrees to disclose all such inventions, processes and formulae
completely and in writing to the Board of Directors of Employer and to no other
persons unless so directed in writing by the Board of Directors of Employer. To
the extent of Executive's interest therein, at the option of Employer, all
papers and records of every kind, relating to any invention,
process, formula, improvement or patent included within the terms of this
Agreement, which shall at any time come into the possession of Executive shall
be the
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<PAGE>
<PAGE>
sole and exclusive property of Employer and shall be surrendered to Employer
upon termination of Executive's employment by Employer or upon Employer's
request at any other time either during or after the termination of such
employment.
16. Executive covenants and agrees with Employer that Executive has
not, and will not, during Executive's employment with Employer and thereafter,
directly or indirectly, use, communicate, disclose or disseminate to anyone
(except to the extent reasonably necessary for Executive to perform his duties
hereunder, except as required by law or except if generally available to the
public otherwise than through use, communication, disclosure or dissemination
by the Executive) any materials, documents or records containing confidential
information concerning the businesses or affairs of Employer or of any of its
affiliates or subsidiaries which Executive may have acquired in the course of or
as incident to Executive's employment or prior dealings with Employer or with
any of its affiliates or subsidiaries, including, without limitation, customer
lists, business or trade secrets of, or methods or techniques used by Employer
of any of its affiliates or subsidiaries in or about their respective busi-
nesses, or any information whatsoever concerning the customers or suppliers of
any of them.
17. Executive acknowledges that Executive's services and
responsibilities are of particular significance to Employer and that Executive's
position with Employer has given and will give Executive a close knowledge of
its policies and trade secrets.
Executive covenants and agrees with Employer that Executive
will not during Executive's employment with Employer and for a period
of two years after the termination of Executive's employment with Employer, in
any manner, directly or indirectly, (i) induce or attempt to influence any
present or future officer, employee, lessor, lessee, licensor, licensee or agent
of Employers or its subsidiaries or its affiliates to leave its respective
employ or solicit or divert or service any customers or clients of Employer or
its subsidiaries or its affiliates or (ii) alone or as a partner, officer,
director, employee, consultant or stockholder (except for ownership of no more
than 5% of the capital stock) of any corporation, partnership or other entity be
directly competitive with the business of Employer or its subsidiaries or
affiliates. For purposes of subdivision (ii) above of this paragraph 17, (a) a
business shall be presumed to be directly competitive if it conducts in whole or
in part anywhere in Switzerland, Germany and the United States any business in
which Employer, its subsidiaries or affiliates engages in during the term of
Executive's employment with Employer,
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<PAGE>
<PAGE>
and the burden of proving otherwise shall be on Executive, and (b) the
business activities of a subsidiary or division of a publicly held corporation
shall not be deemed to include the business activities of other subsidiaries
or divisions of such publicly held corporation.
Nothing herein shall restrict or otherwise limit Executive from managing
Executive's private investments which are not directly competitive with the
businesses of Employer. Executive shall be permitted to serve as a director of
companies which are not directly competitive with the businesses of Employer,
so long as such services do not interfere with the performance of Executive's
duties under this Agreement.
18. Executive acknowledges that the remedy at law for any breach or
threatened breach by Executive of the covenants contained in paragraphs 15, 16,
and 17 would be wholly inadequate, and therefore Employer or its subsidiaries
or its affiliates shall be entitled to preliminary and permanent injunctive
relief and specific performance thereof. Paragraphs 15, 16, and 17 constitute
independent and separable covenants that shall be enforceable notwithstanding
rights or remedies that Employer or its subsidiaries or it affiliates may have
under any other provision of this Agreement, or otherwise. If any or all of the
foregoing provisions of paragraphs 15, 16, and 17 are held to be unenforceable
for any reason whatsoever, it shall not in any way invalidate or affect the
remainder or this Agreement which shall remain in full force and effect. If the
period of time or geographical areas specified in paragraphs 15, 16, or 17 are
determined to be unreasonable in any judicial proceeding, the period of time or
areas of restriction shall be reduced so that this Agreement may be enforced in
such areas and during such period of time as shall be determined to be
reasonable.
19. Executive represents and warrants to Employer that since
commencement of Executive's employment with Employer, Executive was not, is not
now and, in the future will not without the approval of the Board of Directors
of Employer become, under any obligation of a contractual or other nature to any
person, firm or corporation which is inconsistent or in conflict with this
Agreement, or which would prevent, limit or impair in any way the execution of
this Agreement or the performance by Executive of Executive's obligations
hereunder and Executive will indemnify and hold harmless Employer, its
Directors, officers and employees against and in respect of all liability, loss,
damage, expense or deficiency resulting from any misrepresentation, or breach of
any warranty or agreement made by Executive in connection with
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<PAGE>
Executive's employment hereunder.
20. The waiver by either party of a breach of any provision of this
Agreement shall not operate as or be construed as a waiver of any subsequent
breach thereof.
21. Any and all notices referred to herein shall be sufficient if
furnished in writing and sent by certified mail, return receipt requested, to
the respective parties at the addresses set forth below, or such other address
as either party may from time to time designate in writing.
To Executive: To Employer:
John G. Tramontana Bigmar, Inc.
10890 Camp Ohio Road 6660 Doubletree Avenue
Utica, OH 43080 Columbus, OH 43229
With copies in each case to: Rubin Baum Levin Constant
& Friedman
30 Rockefeller Plaza
New York, New York 10112
Attention: Edward Klimerman, Esq.
22. This Agreement shall be binding upon, and shall inure to the benefit
of, Employer and its successors and assigns, and Executive and Executive's legal
representatives, heirs, legatees and distributees, but neither this Agreement
nor any rights hereunder shall be assignable, encumbered or pledged by
Executive.
23. This Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof and supersedes any and all
prior written or oral agreements between Employer and Executive with respect to
the subject matter hereof. No modification, amendment or waiver of any of the
provisions of this Agreement shall be effective unless in writing and signed by
both parties hereto.
24. This Agreement shall be construed and enforced in accordance with
the laws and decisions of the State of Delaware.
25. This Agreement may be executed in any number of counterparts, each
of which shall be an original, but all of which together shall constitute one
and the same Agreement. Delivery of an executed counterpart of a signature page
to this Agreement by telecopier shall be effective as delivery of a manually
executed counterpart of this Agreement.
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<PAGE>
<PAGE>
26. If any provision or part of any provision of this Agreement is held
for any reason to be unenforceable, the remainder of this Agreement shall
nevertheless remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the 15th day of April, 1996.
BIGMAR, INC.
By: /s/ Michael K. Medors
---------------------------------
Name: Michael K. Medors
Title: Treasurer, Secretary
/s/ John G. Tramontana
------------------------------------
John G. Tramontana
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<PAGE>
<PAGE>
Certain confidential information has been omitted and filed separately with
the Commission pursuant to a Request for Confidential Treatment.
Such material has been replaced with a legend indicating such omission and is
marked with brackets "[" "]".
EXCLUSIVE DISTRIBUTION AND SUPPLY AGREEMENT
This agreement is made this 5th day of November 1995 between BIGMAR
PHARMACEUTICALS SA with a principal place of business located at Via
Pian Scairolo 6, CH-6917 Barbengo, CH (hereinafter referred to as
"BIGMAR"), and CERNELLE, a corporation organized under the laws of
Sweden, with a principal place of business located at Vegeholm 4320,
S-262 94 Engelholm, Sweden (hereinafter referred to "CERNELLE").
WHEREAS, CERNELLE is a manufacturer of pharmaceutical products for
commercial distribution, and
WHEREAS, BIGMAR is interested in entering into an exclusive
distribution and supply agreement with CERNELLE with respect to certain
CERNELLE products,
NOW, THEREFORE, the parties agree as follows:
1. APPOINTMENT AS EXCLUSIVE DISTRIBUTOR
a) CERNELLE hereby appoints BIGMAR and BIGMAR hereby accepts
appointment by CERNELLE as CERNELLE's exclusive worldwide
distributor of the products, in oral dosage forms, listed in Exhibit
A hereto, as amended and revised from time to time ("PRODUCT").
CERNELLE agrees not to appoint any other person or entity to act as
a distributor of the PRODUCT during the term of this Agreement and
any renewal thereof.
<PAGE>
<PAGE>
b) CERNELLE shall cooperate fully and promptly with BIGMAR in
providing information and assistance necessary for BIGMAR to obtain
Abbreviated New Drug Application ("ANDA") approval for PRODUCT as
well as any other private or public regulatory or licensing
approval, necessary for BIGMAR, or its designee, to distribute and
sell the PRODUCT in any country in the world.
2. EXCLUSIVE DISTRIBUTION FEES
BIGMAR shall pay CERNELLE a fee for the grant of the exclusive
rights and licenses under this Agreement, which fee consist of a
one time payment in the amount of One Hundred Thousand U.S. Dollars
($100,000), payable by wire transfer upon notification by CERNELLE
that PRODUCT is ready for initial shipment to BIGMAR.
3. PRICING, PAYMENT, DELIVERY AND SHIPPING
a) The pricing for PRODUCT will be determined in accordance with the
following formula: [Certain confidential information has been
omitted and filed separately with the Commission pursuant to a
Request for Confidential Treatment.], payable 60 days from the
later of date of invoice or delivery of PRODUCT to BIGMAR. At
BlGMAR's request, CERNELLE shall provide all applicable
documentation to support PRODUCT pricing cost data.
b) CERNELLE shall give BIGMAR 180 days notice of any price increases
[Certain confidential information has been omitted and filed
separately with the Commission pursuant to a Request for
Confidential Treatment.]
<PAGE>
<PAGE>
c) Delivery shall be F.O.B. CERNELLE's Engelholm Sweden facility or
such other location upon notification to and acceptance by BIGMAR.
CERNELLE shall use commercially suitable bulk packaging for
PRODUCT. Individual PRODUCT packaging shall be BlGMAR's
responsibility, although BIGMAR may make arrangements with CERNELLE
for CERNELLE to provide finished packaging for individual PRODUCT
units on request by BIGMAR.
4. REPRESENTATIONS AND WARRANTIES
a) CERNELLE and BIGMAR represent and warrant that each has full power
and authority to enter into this Agreement, that Clas Tufvesson and
John Tramontana respectively are authorized to sign this Agreement
on their behalf and that the execution and performance of this
Agreement will not breach or terminate any third party obligations,
rights or licenses.
b) CERNELLE represents and warrants that PRODUCT is produced, tested
and delivered to BIGMAR or its designee, in accordance with good
manufacturing practices ("GMP") as determined by the United States
Food and Drug Administration and the specifications and standards
set forth in United States Pharmacopoeia 23rd Edition ("USP 23") as
amended and revised. CERNELLE represents and warrants that PRODUCT
may be lawfully distributed and sold by BIGMAR or its designee, in
every country throughout the world and that CERNELLE has obtained
and shall continue to obtain, as necessary and as requested by
BIGMAR, all licensing and regulatory approvals required to permit
the distribution and sale of PRODUCT throughout the world.
<PAGE>
<PAGE>
c) Each party (the "indemnifying party") agrees to indemnify and hold
the other harmless from and against any and all losses, claims
damages or liabilities (including, but not limited to attorney's
fees) arising from any breach of the representations and warranties
of the indemnifying party set forth in this Agreement. If any claim
arises for which one party may seek indemnification from the other,
the party seeking indemnification shall inform the other party of
such claim, as soon as reasonably practical.
5. PATENTS
Without limiting the provisions of Section 4, the Parties agree to
use their best efforts to avoid any potential action against the
importation of PRODUCT or sale of PRODUCT arising from any claim
that the manufacture, sale or use of PRODUCT infringes a United
State Patent, including but not limited to claims which may result
from future changes in U.S. Laws relating to U.S. process patents.
BIGMAR and CERNELLE shall cooperate promptly to attempt to identify
any such patents, and BIGMAR shall obtain the opinion of an
independent outside counsel reasonably acceptable to CERNELLE as to
the validity of such patents and their potential coverage of
CERNELLE manufacturing processes. If such opinion indicates that it
is likely that such patent will be found valid and that it is likely
to cover CERNELLE's manufacture or sale of PRODUCT, then CERNELLE
shall use its best efforts to design around such patent. CERNELLE
agrees to indemnify BIGMAR, for all costs, settlements awards and
damages (including attorney fees) and shall defend, at its own
expense, all infringement suits that may be brought against BIGMAR
or CERNELLE on account of the manufacture, use, or sale of the
PRODUCT. If CERNELLE or BIGMAR learn that others are unlawfully
infringing on patents owned or licensed by CERNELLE which cover the
PRODUCT, CERNELLE shall diligently prosecute any such potential
infringer at CERNELLE's own cost and expense. In connection with
such suits, BIGMAR, at CERNELLE's cost and expense and at CERNELLE's
request, shall cooperate in the prosecution or defense of such
action and execute such documents as CERNELLE may reasonably
require.
<PAGE>
<PAGE>
6. FORCE MAJEURE
Except with respect to the payment of any monies due hereunder,
neither party shall be liable or be in breach of any provision of
this Agreement if and to the extent that any failure or delay on
its part to perform any obligation hereunder is because of force
majeure or any other cause beyond the reasonable control of such
party and which could not be avoided by the exercise of due care,
including, without limitation, acts of God, earthquake, fire,
flood, riots, war, or legal restraints or actions imposed by
governmental or other authorities, provided that such party shall
promptly give notice to the other party of such occurrence, and
shall promptly move to eliminate the effect thereof to the extent
possible and with all reasonable dispatch.
7. TERM AND TERMINATION
a) This Agreement shall become effective as of November 5, 1995.
b) This Agreement shall continue for a term of fifteen (15) years from
the date of first commercial sale by BIGMAR of PRODUCT purchased
from CERNELLE pursuant to this Agreement. At least six (6) months
prior to the expiration of the term of this Agreement the parties
shall discuss on a good faith basis the extension of this Agreement
on terms to be mutually agreed upon; provided, however, that
failing agreement on an extension of the original term of this
Agreement or any renewal thereof, BIGMAR shall at a minimum, have a
nonexclusive, worldwide right to distribute the PRODUCT for three
additional years after the expiration of the initial term, or any
renewal term, of this Agreement, as the case may be, at prices and
on terms, for PRODUCT, no less favorable to BIGMAR than the prices
and terms for PRODUCT extended by CERNELLE to any other person or
entity.
<PAGE>
<PAGE>
8. TERMINATION
Notwithstanding the provisions of Section 7 above, either party
shall be entitled to terminate this Agreement, subject to the sixty
(60) day cure provisions set forth therein, by written notice to
the other on the happening of any one of the following events:
I. A breach or failure to observe or perform any of the material
obligations by either party to this Agreement, and the failure to
cure such breach within sixty (60) days after receipt of written
notice thereof from the other party; or
II. The adjudication of either party as bankrupt, a judicial finding of
insolvency, the appointment of a receiver of a party's assets, the
making of an assignment for the benefit of a party's creditors, the
entering into of a composition by a party with such party's
creditors, or the liquidation, dissolution or winding up of either
party, provided that such party shall have sixty (60) days from the
date of such event to reverse such determination or to regain its
status as a corporation in good standing.
9. COMPENSATION
No compensation shall be payable in consequence of a termination of
this Agreement pursuant to Section 7. However, should this
Agreement be terminated by reason of the events set forth in
Section 8 above, the party terminating this Agreement shall be
entitled to seek recovery of the damages suffered by it as a result
of such event.
<PAGE>
<PAGE>
10. NOTICES
All notices, communications, demands and payments under this
Agreement shall be in writing and shall be conclusively presumed to
be given or made at the time they are personally given or made, or
at the time of sending if sent by telex or telefaxsimile, or the
day after mailing, if sent by registered or certified air mail
(return receipt requested), as evidenced by the postmark at point of
mailing, or three days after they are placed in an envelope and
deposited with a reputable international courier service for express
delivery, addressed to:
BIGMAR PHARMACEUTICALS SA
Attn.: Mr. John Tramontana
Via Pian Scairolo 6
CH-6917 Barbengo-Switzerland
with a copy to:
BIGMAR INC.
Attn.: Mr. John Tramontana
6660 Doubletree Avenue No. 20
Columbus, Ohio 43229
and to:
AB CERNELLE
Attn.: Mr. Clas Tufvesson
Vegeholm 4320
S-262 94 Engelholm-Sweden
or to such other person or address as either party may, by notice,
specify to the other.
<PAGE>
<PAGE>
11. AMENDMENTS AND ADDITIONS
No amendment or addition to this Agreement shall be valid unless
the same shall be in writing, signed by BIGMAR and CERNELLE and
acknowledged by them to expressly have become a part of this
Agreement. This Agreement sets forth the entire understanding and
agreement of the parties and supersedes and replaces any and all
prior oral and written negotiations, discussions, or agreements of
the parties.
12. WAIVER
No failure or delay of any party to exercise any right, power or
privilege hereunder, shall operate as a waiver, nor shall the
waiver of any right or default hereunder be a waiver of any right
on a continuing default or a subsequent default of a similar
nature.
13. ASSIGNMENT
Without the mutual written agreement of the parties hereto, this
Agreement shall not be assignable, except that BIGMAR may assign its
rights under this Agreement to (i) any person or entity to which it
seeks to transfer PRODUCT, (ii) any person or entity which acquires
all or substantially all of BlGMAR's assets or capital stock, and
(iii) any person or entity to which BIGMAR seeks to assign its
inventory to secure financing for its operations.
<PAGE>
<PAGE>
14. CAPTIONS
The captions of the respective clauses of this Agreement are for
convenience only and do not constitute a part of this Agreement and
shall be disregarded in construing this Agreement.
15. PARTIAL INVALIDITY
Should any part of this Agreement be rendered invalid or
unenforceable, such rendering shall not affect the validity or
enforceability of the remainder, unless the part so rendered
invalid or unenforceable impairs the value of the whole Agreement
to either party. Subject to the foregoing, such part shall be
renegotiated between the parties in such a way as to render the
same valid and to achieve its purposes to the extent valid and
enforceable.
16. GOVERNING LAW AND DISPUTE RESOLUTION
a) This Agreement shall be governed by and construed in accordance
with the substantive laws of State of Ohio, U.S.A., without regard
to Ohio's choice of law rules.
b) Any dispute or differences between the parties arising out of, or
in connection with this Agreement which the parties cannot resolve
amicably shall be finally resolved by arbitration in New York in
the English language in accordance with the rules and regulations
of the International Chamber of Commerce by three arbitrators
appointed in accordance with such rules and judgement on the award
may be entered by any court having jurisdiction thereof.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, both parties have caused this Agreement to be
signed by their respective duly authorized officers or representatives
on the dates indicated below.
BIGMAR PHARMACEUTICALS SA
John Tramontana
By: /s/ JOHN TRAMONTANA
____________________________ Witness:__________________________
Title: Chief Operating Officer
AB CERNELLE
Clas Tufvesson
By: /s/ CLAS TUFVESSON
____________________________ Witness:_________________________
Title: Managing Director
<PAGE>
<PAGE>
EXHIBIT A
PRODUCTS
Tablets
[Certain confidential information has been omitted and filed separately
with the Commission pursuant to a Request for Confidential Treatment.]
Mercaptopurine
Methotrexate
[Certain confidential information has been omitted and filed separately
with the Commission pursuant to a Request for Confidential Treatment.]
Calcium Leucovorin
[Certain confidential information has been omitted and filed separately
with the Commission pursuant to a Request for Confidential Treatment.]
Capsules
[Certain confidential information has been omitted and filed separately
with the Commission pursuant to a Request for Confidential Treatment.]
<PAGE>
<PAGE>
[LETTERHEAD]
May 31, 1996
Gentlemen,
as requested with your letter dated May 29, 1996, we are glad to confirm you the
following information regarding the indebtedness of your society by our bank.
INFORMATION REQUESTED AS AT MARCH 31, 1996
<TABLE>
<S> <C> <C>
1. Unpaid principal balance. SFR 3'000'000. -
2. Requirements for amortization of principal. SFR 60'000. - p.a.;
first time in 1999
3. Annual interest rate. 5.75% p.a. floating
5% p.a. fixed for 3 years from
May 17, 1996 up to May 17, 1999
4. Date to which interest has been paid. December 31, 1995
5. Names of obligors -- please note, if any. Bioren SA, Couvet
6. Names of endorsers or guarantors -- please note, if any. NONE
7. All documents regarding this loan are attached. TRUE
No other documents exist.
8. Description and amount of any collateral for the debt (including SFR 3'000'000 - mortgage notes
details of security agreements, financing statements, mortgages on real property and building
and other liens). located at '4, Rue de Iles, 2108
Couvet (NE), Switzerland'.
For details SEE ATTACHED.
9. The terms of the debt and loan agreement, as presently TRUE
constituted, have been fully complied with.
10. This debt is not subordinate to any other debt of the Company. TRUE
11. The bank cannot demand payment of this loan unless the Company is SEE ATTACHED
in default. (point 4 of conditions stated
on the reverse of the Fixed-Rate
Mortgage Agreement).
12. Maturity date. To agree after maturity of fixed-
rate (normally 50 years).
13. The repayment terms for interest are . . . At the requested date they were
semi-annually (June and December
of each year).
Since May 17, 1996, quarterly
(March, June, September and
December of each year).
</TABLE>
The foregoing is in conformity with our understanding.
We are pleased to have been helpful in this circumstance and remain at your
disposal for further banking needs.
With kind regards
United Bank of Switzerland
<TABLE>
<S> <C>
/s/ G. AMBROSETTI /s/ R. BURKHARD
.......................... ...........................
FVP G. Ambrosetti AVP R. Burkhard
</TABLE>
Attached
<PAGE>
<PAGE>
This document is a fair and accurate English translation of the foreign
language document from which it was translated.
BIGMAR, INC.
By: /s/ John G. Tramontana
----------------------
John G. Tramontana
President and Chief
Executive Officer
<PAGE>
<PAGE>
[Logo Union de Banque Suisses]
Mortgage-No 0247-524.427.H1 K 0000
Object: Real Property and Building, Couvet (NE)
Fixed-Rate Mortgage Agreement
between
Union Bank of Switzerland, Via Pretorio 14, 6901 Lugano
(hereinafter called UBS)
and
BIOREN SA, Couvet (NE)
(hereinafter called Borrower)
UBS hereby grants the Borrower a fixed-rate mortgage in the amount of
Sfr. 3'000'000.--(Swiss francs three million 00/100)
<TABLE>
<S> <C>
Fixed interest period 3 years, calculated from the time of disbursement.
Disbursement Two business days after UBS is in receipt of the
fixed-rate mortgage agreement countersigned by the
Borrower.
Interest rate UBS interest rate for fixed-rate mortgages on the
same types of objects and for the same fixed
interest period applicable at the time
UBS receives the fixed-rate mortgage agreement
countersigned by the Borrower (effective interest
rate), currently 5% p.a. net (indicative interest
rate).
If the effective interest rate differs from the
indicative rate, the former will be established
in a Supplementary Agreement to the present
Agreement.
Interest due dates March 31 / June 30 / September 30 / December 31
Interest to be debited to current account no. 0247 - 524,427.01 A c/o UBS
Lugano.
Collateral (UBS shall acquire ownership of mortgage notes and
bearer bonds with mortgage assignment)
Sfr. 500'000.--mortgage notes at bearer from 06.09.1995,
dg. 45 in first and equal parts,
Sfr. 500'000.--mortgage notes at bearer from 06.09.1995,
dg. 46 in first and equal parts,
Sfr. 500'000.--mortgage notes at bearer from 06.09.1995,
dg. 47 in first and equal parts,
Sfr. 500'000.--mortgage notes at bearer from 06.09.1995,
dg. 48 in first and equal parts,
Sfr. 500'000.--mortgage notes at bearer from 06.09.1995,
dg. 49 in first and equal parts,
Sfr. 500'000.--mortgage notes at bearer from 06.09.1995,
dg. 50 in first and equal parts,
part. 3208 RFD Couvet (NE),
transfer of security title according to separate
agreement
Moreover, if any divergent conditions in the mortgage note(s) and/or bearer
bond(s) with mortgage assignment assigned to UBS as collateral are revised, the
aforementioned mortgage shall be subject solely to the conditions stated on the
reverse of this Agreement, said conditions having been read and accepted by the
Borrower.
Couvet, 10.05.1996 Lugano, 09.05.1996
The Borrower Union Bank of Switzerland
Bioren SA G. Ambrosetti pp. R. Burkhard
<PAGE>
<PAGE>
1. Disbursement / Interest Rate / Fixed Interest Commitment
Disbursement is made at the aforementioned time on the condition that UBS
is in possession of the collateral agreed upon at that time.
If the fixed-rate mortgage is not disbursed or not disbursed in full at the
agreed time, the interest rate shall be applied which UBS charges for
fixed-rate mortgages on the same types of objects and for the same term two
business days before disbursement of the unpaid portion.
The interest rate applied at the time of disbursement shall not change for
the duration of the fixed interest period (fixed interest commitment)
excepting Section 1, para 4, and Section 4, para 1 and Section 4, para 3.
Upon payment of compensation to be calculated in accordance with Section 5,
the Borrower may cancel the fixed-interest commitment agreed upon according
to para 3 at any time and by submitting written notification to UBS,
Cancellation of the agreed fixed interest commitment shall take effect on
the day the corresponding notification is received by UBS, Compensation
according to Section 6 becomes due and payable at the time.
2. Interest on Arrears
If the mortgage interest is not paid on the aforementioned due dates, then
the Borrower shall be liable for the payment of interest on arrears for the
entire period of default at a rate determined by UBS. The rate of interest
on arrears shall not be more than 2% above the interest rate charged at the
time by UBS for new first-ranking adjustable-rate mortgages on the same
types of object.
3. Conditions after Expiry of the Fixed-Interest Period and upon Early
Cancellation of the Fixed-Income Commitment
After expiry of the fixed-interest period agreed upon of after the early
cancellation of the fixed interest commitment agreed upon in accordance
with Section 1, Para 4; Section 4, Para 1, or Section 4, Para 3, this
fixed-interest mortgage shall be maintained at the same conditions for
adjustable-rate mortgages then applied by UBS to new mortgages on the same
types of object, provided no agreement stipulating otherwise has been
concluded between the Borrower and UBS.
With regard to the interest rate to be applied after expiry of the fixed-
interest period or after the early cancellation of the fixed-interest
commitment agreed upon, UBS reserves the right to change this interest
rate at any time subject to the advance notice, interest rate changes shall
go into effect on the dates cited in the respective notices.
4. Notice
Upon observance of a six-month period of notice, the Borrower may give
notice of this mortgage at any time against payment of a compensation to be
calculated in accordance with Section 5. The fixed-interest commitment
shall also be considered canceled upon receipt of the notice at UBS.
Upon observance of a six-month period of notice, UBS may give notice of the
mortgage only at the end of the fixed-interest period agreed upon, subject
to the conditions in Section 4, Para 3.
Upon observance of a six-month period of notice, UBS shall be entitled to
give notice of the fixed-rate mortgage if the Borrower violates the terms
of the Mortgage Agreement; in particular, if the Borrower is more than 30
(thirty) days in arrears with an interest payment; or if, in the opinion of
UBS, the property/properties pledged as collateral for this fixed-interest
mortgage declines/decline in value or does/do not otherwise provide
adequate cover. Cancellation of the agreed fixed commitment shall take
effect on the second day after dispatch of notice in writing by UBS to the
last-known address of the Borrower.
If notice becomes effective prior to the expiry of the fixed-interest
period agreed upon, the Borrower shall pay compensation to be calculated
in accordance with Section 6 and becomes due and payable at the time the
interest rate commitment agreed upon is canceled.
5. Repayment in the event of Transfer of Ownership or Sale in connection with
Foreclosure Proceedings
If the object(s) pledged is/are sold privately or in connection with
foreclosure proceedings, the entire fixed-rate mortgage, including accrued
interest, shall become due for immediate repayment on the day of the
transfer of ownership or on the day of the public auction. In the event
repayment becomes due during the fixed interest period agreed upon, the
Borrower must pay the Bank compensation to be calculated according to
Section 6 payable as of the same date.
6. Compensation
The amount of the compensation payable by the Borrower to UBS as per
Section 1, para 4, Section 4, para 4 and Section 5 shall be equivalent to
the difference between the interest rate contractually agreed upon for the
fixed-interest mortgage and the rate at the time the compensation becomes
due for money or capital market investments (reference rate: Euro money
market rate) with a maturity corresponding to the (remaining) time of the
fixed-interest period; this rate is calculated as a percentage of the
borrowed principal pro rata temporis for the duration of the fixed-interest
period agreed upon or for the remaining time of the fixed-interest period.
Upon request, UBS will provide the Borrower with a corresponding offer.
7. Joint and Several Liability / Cumulative Debt Assumption
If there are several borrowers, they shall share joint liability. The
borrower(s) not mentioned in the mortgage note(s) and/or bearer bond(s)
shall hereby assume cumulatively and jointly the debt(s) arising from the
aforementioned mortgage note(s) and/or bearer bond(s), whose ownership has
been assigned to UBS as security.
8. Fire Insurance and Insurance for Damages by Natural Forces
The Borrower is obliged to insure the property and all appurtenances on the
mortgaged land against fire and damage by natural forces, either with a
state-controlled insurance company or an insurance company domiciled in
Switzerland, for an insurance sum deemed by UBS to be sufficient. The
policy and premium receipts are to be submitted to UBS should the latter so
request.
9. General Conditions
In addition, the General Conditions of UBS shall apply. A copy of these
General Conditions has been received by the Borrower, who confirms that
he/she has read them and accepts them without reservation.
<PAGE>
<PAGE>
This document is a fair and accurate English translation of the foreign
language document from which it was translated.
BIGMAR, INC.
By: /s/ John G. Tramontana
----------------------
John G. Tramontana
President and Chief
Executive Officer
<PAGE>
<PAGE>
[Logo]
Agreement
Between
Union Bank of Switerland, Via Pretorio 14, 69O1 Lugano
(UBS/Pledgee)
and
BIOREN SA, Couvet (NE)
(Borrowed/Pledger)
</TABLE>
<TABLE>
<S> <C>
1. UBS owns/shall acquire ownership of the following mortgage note(s):
Sfr. 500'000. -- from 06.09.1995, dg. 45 in first and equal parts.
Sfr. 500'000. -- from 06.09.1995, dg. 46 in first and equal parts.
Sfr. 500'000. -- from 06.09.1995, dg. 47 in first and equal parts.
Sfr. 500'000. -- from 06.09.1995, dg. 48 in first and equal parts.
Sfr. 500'000. -- from 06.09.1995, dg. 49 in first and equal parts.
Sfr. 500'000. -- from 06.09.1995, dg. 50 in first and equal parts.
part. 3208 RFD Couvet (NE)
2. The mortgage note(s) as cited in Paragraph 1 above and whose ownership is to be transferred/has been
transferred to UBS shall provide UBS with security for all claims against the Borrower/Pledger arising from
agreements already concluded with UBS or from agreements to be concluded in the future with UBS within the
framework of existing business relations, including all interest due and accrued and commissions as well as
the related court or out-of-court fees and expenses.
The mortgage note(s) whose ownership has been transferred to one office of UBS shall also serve as security
for the claims of other UBS offices. In the event of several claims, UBS shall determine to which of the
claims the mortgage note(s) whose ownership has been transferred to UBS or the proceeds from its/their sale
shall be charged.
3. The parties agree that, in place of the secured claims as cited in Paragraph 2 above, UBS may enforce the
mortgage note claim(s) arising from the mortgage note(s) as cited in Paragraph 1 above in addition to the
annual interest due for three years and the accrued interest at 10% p.a. in each case (interest payment dates:
June 30/December 31), for which the Borrower/Pledger expressly acknowledges herewith his personal
indebtedness.
Contrary to any agreement regarding the period(s) and date(s) of notice in the mortgage note(s) as cited in
Paragraph 1 above, UBS may enforce the mortgage note claim(s) under the same conditions as those applying to
the secured claim(s) as cited in Paragraph 2 above. No special notice of the mortgage note claim(s) is
necessary. UBS may freely or by legal enforcement sell the mortgage note(s) whose ownership has been
transferred to UBS as cited in Paragraph 1 without observing the formalities stated in the Federal Law on Debt
Collection and Bankruptcy.
On the other hand, UBS shall also be authorized to enforce the secured claims as cited in Paragraph 2 above
prior to the sale of the mortgage note(s) whose ownership has been transferred to UBS. The Borrower/Pledger
hereby expressly waive the right to protest the advance sale of the mortgage note(s) whose ownership has been
transferred to UBS as security as cited in Paragraph 1 above.
</TABLE>
<PAGE>
<PAGE>
-2-
<TABLE>
<S> <C>
4. In the event of mortgage note increases, this Agreement shall also apply to the increased mortgage note
claim(s).
5. If, in the case of a change of ownership in the mortgaged property/properties, the new owner assumes the debt
secured by this property/these properties as cited in Paragraph 2 in addition to the mortgage note debt(s) as
cited in Paragraph 1 above, UBS shall be entitled to transfer this Agreement with all rights and obligations
to the new owner.
6. When UBS no longer possesses any claims whatsoever against the Borrower/Pledge, UBS shall be obliged to
transfer the ownership of the mortgage note(s) as cited in Paragraph 1 above back to the Borrower/Pledger, if
UBS is satisfied in respect of its claims by a guarantor or any other third party (e.g. an assignee). UBS
shall be entitled but not obliged to transfer the mortgage note(s) to the guarantor or other third party.
7. In addition, the General Conditions of UBS shall also apply, whereby the Borrower/Pledger declare that he has
received said Conditions, is cognizant of their contents and expressly state his acceptance of them by signing
this Agreement.
</TABLE>
<TABLE>
<S> <C>
Couvet, 10.05.1998 The Borrower/Pledger
BIOREN SA
Lugano, 09.05.1996 The Pledgee
Union Bank of Switzerland
G. Ambrosetti pp R. Burkhard
</TABLE>
<PAGE>
<PAGE>
This document is a fair and accurate English translation of the foreign
language document from which it was translated.
BIGMAR, INC.
By: /s/ John G. Tramontana
----------------------
John G. Tramontana
President and Chief
Executive Officer
<PAGE>
<PAGE>
[UNION DE BANQUES SUISSES LOGO]
GENERAL CONDITIONS
<TABLE>
<S> <C>
The following conditions are intended to clearly regulate the relations between the bank and its customers.
1 POWER OF DISPOSITION The signatures and signing powers given in writing to the bank are alone valid insofar
as the bank is concerned until cancelled in writing, notwithstanding entries to the contrary in the Register
of Commerce or other media of public notice.
2 OBJECTIONS OF THE CUSTOMER Any objection by the customer relating to the execution or non-execution of any
order of any kind as well as any objection to any statement of account or of deposit, or to any other
communication, must be made promptly upon receipt of the respective communication, but at the latest within
the time specified by the bank; otherwise the execution or non-execution of the order as well as the
pertinent statements and communications are deemed to have been approved. In case of non-receipt of any
communication the customer must make his complaint at the time when he should have received the communication
in the ordinary course of business.
3 COMMUNICATIONS OF THE BANK Communications of the bank are deemed to have been made if dispatched to the last
address notified by the customer. The date indicated on the copy or on the mailing records in the possession
of the bank is presumed to be the mailing date. Mail which is to be kept on deposit at the bank is, in case
of doubt, considered to have been delivered on the date it bears.
4 VERIFICATION OF THE SIGNATURES AND THE LEGITIMATION Any damage resulting from reliance by the bank upon any
false, forged, altered or otherwise legally insufficient instructions, documentation or other legitimation
shall be borne by the customer, unless the bank is guilty of gross negligence.
5 LEGAL INCAPACITY Any damage resulting from legal incapacity of the customer or of a third party must be
borne by the customer, unless such incapacity has been published in an official journal in Switzerland in the
case of the customer himself or has been communicated to the bank in writing in the case of a third party.
6 ERRORS IN TRANSMISSION Any damage resulting from the use of the mails, telegraph, telephone, telex, of any
other system of communication or means of transportation, especially from losses, delays, misunderstandings,
mutilations or duplicates, must be borne by the customer, unless the bank is guilty of gross negligence.
7 NON-EXECUTION OR BELATED EXECUTION OF ORDERS In case of damage due to non-execution or belated execution of
orders (stock exchange orders excluded), the bank is liable only for the loss of interest, unless in the
particular case it has been warned of the imminent risk of more extensive damages.
8 RIGHT OF PLEDGE AND RIGHT OF COMPENSATION With respect to all aspects which it holds in custody for account
of the customer, either at its own offices or elsewhere, the bank has a lien for all its unliquidated claims
originating in the banking relationship irrespective of maturity or currency and a right to immediate
compensation for all liquidated claims. However, the lien becomes effective only at the time the claim
arises. This rule applies equally to credits and to loans with or without guarantees or securities. Upon
default of performance on the part of the customer, the bank may, in its discretion, realize upon the pledges
by formal proceedings or by private arrangements.
9 CURRENT ACCOUNT RELATIONS The bank credits and debts interest, commissions and fees agreed upon or
customary, as well as taxes, at its choice, quarterly, semi-annually or annually. The bank reserves the right
to modify its rates of commissions and interest at any time, in particular if the conditions of the money
market have changed, and to inform the customer of any modification by circular letter, by posters in the
lobby or in any other appropriate way. In the absence of presented objection within one month, the statements
of account issued by the bank are deemed to have been approved, even if the confirmation statement to be
signed by the customer has not been received back by the bank. The express or tacit approval of the statement
of account includes the approval of all items, as well as possible reservations of the bank, contained in
this statement.
If the customer has given several different orders the total amount of which exceeds the credit balance
available of the credit granted to him, the bank is entitled to decide in its discretion and without
consideration to the dates of the times of reception, which of the dispositions it wants to execute entirely
or partly.
10 ACCOUNTS IN FOREIGN CURRENCIES The bank's assets corresponding to the customer's credits in foreign currency
are held in the same currency in or outside of the country whose currency is involved. The customer bears
proportionately to his share all the economic and legal consequences which, as a result of measures taken by
the country concerned, affect all the bank's assets in the country of the currency or in the country where
the funds are invested.
The obligations of the bank arising from accounts in foreign currencies shall be discharged exclusively at
the business office of the bank holding the accounts and solely through the establishment of a credit entry
in the country of the currency at the bank's own branch, a correspondent bank or a bank named by the
customer.
In the case of current accounts in foreign currencies, the counterpart is placed in the country of the
respective currency.
11 CREDITING AND DEBITING PAYMENTS IN FOREIGN CURRENCIES Amounts in foreign currencies are credited and debited
in Swiss francs, unless the customer has given proper instructions to the contrary or is a holder of an
account in the foreign currency in question. If the customer maintains accounts in other currencies only, the
bank is free to credit or debit the customer's accounts in one of these currencies.
12 BILLS OF EXCHANGE, CHECKS AND OTHER INSTRUMENTS The bank is entitled to redebit unpaid bills of exchange,
checks and other papers which had been discounted or credited. Nevertheless, until the settlement of any
debit balance credited by any such redebit, the bank retains against the world the right to claims arising
out of the Law of Bills of Exchange or the Check Law or otherwise for payment of the full amount of the
bills of exchange of the checks and of all other instruments as well as accessory claims against everybody
liable on the paper.
13 TERMINATION OF THE BUSINESS RELATIONSHIP The bank reserves the right to cancel any business relationships,
in particular credits which have been promised or used, with immediate effect, in which case any possible
claims of the bank will fall immediately due for repayment. Agreements in writing to the contrary remain
reserved.
14 SATURDAYS AS LEGAL HOLIDAYS For all business relations with the bank, Saturdays are equivalent to legal
holidays.
15 LAW GOVERNING THE LEGAL RELATIONSHIP BETWEEN THE BANK AND ITS CUSTOMERS AND PLACE TO SUE All legal aspects
of the relationship between the client and bank shall be governed exclusively by Swiss law. Place of
performance of all obligations of both parties, as well as the exclusive jurisdiction of lawsuits and any
other kinds of legal proceedings shall be the domicile of the business office of the bank with which the
contractual relationship exists. Excepting only that the bank may sue the client in any competent court at
the domicile of the client or any other court having jurisdiction.
16 RESERVATION OF SPECIAL REGULATIONS Certain kinds of transactions are, besides these General Conditions,
subject to special regulations issued by the bank. In particular, the deposit of securities and other
valuables for safe custody (custodianship), savings books and savings accounts, deposit books and deposit
accounts, checkbooks, safe deposit boxes and night depositories. Moreover, stock exchange transactions are
subject to the local rules, documentary transactions to the Uniform Customs and Practice for Commercial
Documentary Credits issued by the International Chamber of Commerce, and collecting and discounting
transactions to the general terms issued by the Association of Swiss Bankers.
17 MODIFICATIONS OF THE GENERAL CONDITIONS The bank reserves the right to modify the General Conditions at any
time. The customer will be informed of these modifications by circular letter or in any other appropriate
way, and in the absence of objection within a month the modifications are deemed to have been approved.
Union de Banques Suisses/Schweizerische Bankgessellschaft
Unione di Banche Svizzere/Union Bank of Switzerland
</TABLE>
<PAGE>
<PAGE>
This document is a fair and accurate English translation of the
foreign language document from which it was translated.
BIGMAR, INC.
By: John G. Tramontana
-----------------------------------
John G. Tramontana
President and Chief
Executive Officer
<PAGE>
<PAGE>
/logo/
Union Bank of Switzerland
SURETY INSTRUMENT
The undersigned CHEMHOLDING S.A. Barbengo
declares that it institutes itself as sole co-surety towards the Union Bank of
Switzerland for the reimbursement of any credit extended by the bank now, or in
the future, to
Bigmar Pharmaceuticals SA, Barbengo
whether such credits arise from business or legal relationships, or from
contractual and legal interests, concerning annuities, commissions, etc., as
well as for reimbursement of the amounts and expenses referred to in Art. 499 of
the Code of Obligations, even if the latter are added to the principal at the
time of the regular closing of the current accounts, up to the amount of SF
1,700,000 (in letters: Swiss Francs one million seven hundred thousand).
[Deleted paragraph]
The reduction of the amount of the surety set forth in the law, whether caused
by an annual reduction, or as a consequence of the reduction of the principal
debt, is expressly excluded for the entire term of the business relationship
between the bank and the customer, even if the credit granted by the bank to the
main debtor is temporarily reimbursed, or if it needs to remain unused for a
certain period of time, or if it is used only in part.
Whenever the bank enjoys other guaranties not expressly instituted to cover the
debt guaranteed by the surety, the bank is entitled to use them first for the
reimbursement of other credits.
[Deleted paragraph]
At the maturity of the principal debt, the bank may take action against the
co-surety before selling off existing chattels, if any.
If, due to the fact that it is domiciled abroad or that it transferred its
domicile abroad, the principal debtor cannot cover its obligations, or can
cover them only partially, due to foreign legal provisions, such as for example
in matters of compensation movements, or prohibition of transfers, the
undersigned surety still guarantees the original total commitment of the
principal debtor, and waives raising exceptions by invoking such prohibitions
and payment restrictions.
The surety declares as of now that it agrees that the bank may increase the
interest rate to the limits of the current conditions.
<PAGE>
<PAGE>
The authorizations signed by the principal debtor concerning statements of
account issued by the bank have value of acknowledgement of the debt by the
surety, pursuant to the law on execution and bankruptcy.
The surety pledges to immediately inform the bank of its changes of address. All
communications from the bank shall be considered legally valid if sent to the
latest address indicated by the surety for this purpose.
By signing this contract, the undersigned declares to have received, and to know
and expressly accept the general conditions of the Union Bank of Switzerland.
All legal relationships concerning this surety are governed by Swiss law. The
exclusive venue and court of jurisdiction for procedures of any nature, as well
as the place of execution, the latter being valid only for sureties domiciled
abroad, is LUGANO.
The bank has also communicated its right to file lawsuits against the surety
with the competent court of its domicile, or any other competent court.
**
Place/Date The co-surety
Barbengo, [illegible], 1995 [Signature]
[Deleted paragraph]
* This paragraph must be deleted if inapplicable.
** If the maximum amount of the surety does not exceed SF 2000, the calendar
year shall be replaced by the following phrase, which the surety shall
apply in his hand, and sign: Good for co-surety for the amount of SF......
In letters Swiss Francs .........
Legalization is necessary if the signature is not apposed in the presence
of a representative of the bank.
<PAGE>
<PAGE>
This document is a fair and accurate English translation of the
foreign language document from which it was translated.
BIGMAR, INC.
By: John G. Tramontana
-----------------------------------
John G. Tramontana
President and Chief
Executive Officer
<PAGE>
<PAGE>
/logo, Union Bank of Switzerland/
Agreement
between
Union Bank of Switzerland, Via Pretoria 14, 5900 Lugano
(UBS/transferee)
and
BIGMAR PHARMACEUTICALS SA, 6917 Barbengo
(debtor/transferror)
1. UBS owns/acquires in ownership the bearer mortgage certificate(s) listed
below:
Fr. 1,000,000 - nom., of 11/30/1987, dg. 27028, 1st degree
Fr. 100,000 - nom., of 1/20/1988, dg. 1388, 2nd degree
Fr. 275,000 - nom., of 12/31/1993, dg. 33711, 5th degree
encumbering lot 174 recorded in the land register of the community of
Barbengo.
2. The mortgage certificate(s) to be assigned/assigned to UBS in ownership
pursuant to item 1 above provide(s) a guarantee for all credits received by
the debtor/transferror, arising from contracts already executed, or to be
executed in the future, in the framework of commercial relations with UBS,
including all interest and commissions matured or ongoing, as well as
expenses and judicial or extrajudicial costs related thereto.
The mortgage certificate(s) given in guarantee by a branch is (are) also
valid as guarantee for other branches. In the event of multiple credits,
UBS shall decide which of them is (are) to be allotted to the mortgage
certificate(s) given in guarantee, or the corresponding sale of the
chattel(s).
3. The parties agree that UBS may request, instead of the credits guaranteed
under item 2, the claims embodied in the mortgage certificate(s) listed in
item 1, in addition to annual matured interest and ongoing interest at 10%
p.a. (maturity dates: June 30/December 31), which the debtor/transferror
expressly acknowledges that it owes.
In derogation of a possible agreement set forth in the mortgage
certificate(s), pursuant to item 1, and concerning the period(s) and
deadline(s) for notice of termination, UBS may enforce the claim(s)
embodied in the mortgage certificate(s) under the same conditions as the
credits guaranteed under item 2. No particular notice of termination shall
be needed for the claim(s) embodied in the mortgage certificate(s). UBS may
sell the mortgage certificate(s) given as guarantee by private negotiations
or executory procedure,
<PAGE>
<PAGE>
-2-
Agreement between the Union Bank of Switzerland, via Pretorio 14, 6900 Lugano,
and BIGMAR PHARMACEUTICALS SA, 6917 Barbango
and without performing the formalities set forth in the federal law on
execution and bankruptcy.
In addition, UBS is authorized to claim the credits guaranteed and listed
in item 2, before the selling of the mortgage certificate(s) transferred in
ownership. The debtor/transferror explicitly waives raising the exception
of the advance sale of the mortgage certificate(s) transferred to UBS as
guarantee, pursuant to item 1.
4. In the event of appreciation of the mortgage certificate(s), this agreement
shall also be valid for such higher claims embodied in the mortgage
certificate(s).
5. Whenever, in the event of transfer of property of the real estate assets
instituted in pledge - the new owner assumes, in addition to the debt(s)
constituted by the mortgage certificate(s) pursuant to item 1, also the
debts guaranteed by them pursuant to item 2, UBS is authorized to transfer
this agreement to the new owner, with all the corresponding obligations and
rights.
6. As soon as UBS no 1onger has any rights against the debtor/transferror, it
shall be obligated to transfer back to the debtor/transferror the mortgage
certificate(s) referred to in item 1. If UBS is paid off by a surety or
third partiee (for example, the transferror), it is authorized, but not
obligated, to transmit the mortgage certificate(s) to the surety or such
third party.
7. In all other aspects, application shall be given to general conditions of
UBS, which the debtor/transferror declares to have received, and to know
and expressly accept, by signing this agreement.
Barbengo, 9/4/95 Lugano, August 24, 1995
The debtor/transferror Union Bank of Switzerland
[Signature] [Signatures]
Bigmar Pharmaceutical SA for S. Nobile for R. Burkhard
[Signature]
[Stamp:] APPROVAL SIGNATURE
O. Sala
<PAGE>
<PAGE>
This document is a fair and accurate English translation of the
foreign language document from which it was translated.
BIGMAR, INC.
By: /s/ John G. Tramontana
-----------------------------------
John G. Tramontana
President and Chief
Executive Officer
<PAGE>
<PAGE>
/logo Union Bank of Switzerland/
Agreement
between
Union Bank of Switzerland, Via Pretoria 14, 5900 Lugano
(UBS/transferee)
and
BIGMAR PHARMACEUTICALS SA, 6917 Barbengo
(debtor/transferror)
1. UBS owns/acquires in ownership the bearer mortgage certificate(s) listed
below:
Fr. 700,000 - nom., of 1/20/1888, dg. 1388, 2nd degree
Fr. 300,000 - nom., of 5/9/1988, dg. 23360, 3rd degree
Fr. 400,000 - nom., of 11/15/1988, dg. 30458, 4th degree and equivalent
Fr. 200,000 - nom., of 2/27/1988, dg. 5196, 4th degree and eguivalent
Fr. 250,000 - nom., of 8/13/1989, dg. 15034, 4th degree and equivalent
Fr. 150,000 - nom., of 6/13/1989, dg. 15036, 4th degree and equivalent
encumbering lot 174 recorded in the land register of the community of
Barbengo.
2. The mortgage certificate(s) to be assigned/assigned to UBS in ownership
pursuant to item 1 above provide(s) a guarantee for all credits received by
the debtor/transferror, arising from contracts already executed, or to be
executed in the future, in the framework of commercial relations with UBS,
including all interest and commissions matured or ongoing, as well as
expenses and judicial or extrajudicial costs related thereto.
The mortgage certificate(s) given in guarantee by a branch is (are) also
valid as guarantee for other branches. In the event of multiple credits,
UBS shall decide which of them is (are) to be allotted to the mortgage
certificates) given in guarantee, or the corresponding sale of the
chattel(s).
3. The parties agree that UBS may request, instead of the credits guaranteed
under item 2, the claims embodied in the mortgage certificate(s) listed in
item 1, in addition to annual matured interest and ongoing interest at 10%
p.a. (maturity dates: June 30/December 31), which the debtor/transferror
expressly acknowledges that it owes.
In derogation of a possible agreement set forth in the mortgage
certificate(s), pursuant to item 1, and concerning the period(s) and
deadline(s) for notice of termination, UBS may enforce the claim(s)
embodied in the mortgage certificate(s) under the same conditions of the
credits
<PAGE>
<PAGE>
-2-
Agreement between the Union Bank of Switzerland, Via Pretorio 14 6900
Lugano, and BIGMAR PHARMACEUTICALS SA, 6917 Barbango
guaranteed under item 2. No particular notice of termination shall be
needed for the claim(s) embodied in the mortgage certificate(s). UBS may
sell the mortgage certificate(s). UBS may sell the mortgage
certificate(s) given as guarantee by private negotiations or
executory procedure, and without performing the formalities set forth
in the federal law on execution and bankruptcy.
In addition, UBS is authorized to claim the credits guaranteed and listed
in item 2, before the selling of the mortgage certificate(s) transferred in
ownership. The debtor/transferror explicitly waives raising the exception
of the advance sale of the mortgage certificate(s) transferred to UBS as
guarantee, pursuant to item 1.
4. In the event of appreciation of the mortgage certificate(s), this agreement
shall also be valid for such higher claims embodied in the mortgage
certificate(s).
5. Whenever, in the event of transfer of property of the real estate assets
instituted in pledge - the new owner assumes, in addition to the debt(s)
constituted by the mortgage certificate(s) pursuant to item 1, also the
debts guaranteed by them pursuant to item 2, UBS is authorized to transfer
this agreement to the new owner, with all the corresponding obligations and
rights.
6. As soon as UBS no longer has any rights against the debtor/transferror, it
shall be obligated to transfer back to the debtor/transferror the mortgage
certificate(s) referred to in item 1. If UBS is paid off by a surety or
third parties (for example, the transferror), it is authorized, but not
obligated, to transmit the mortgage certificate(s) to the surety or such
third party.
7. In all other aspects, application shall be given to general conditions of
UBS, which the debtor/transferror declares to have received, and to know
and expressly accept, by signing this agreement.
Barbengo, November 24, 1994 Lugano, November 24, 1994
The debtor/transferror Union Bank of Switzerland
[Signature] [Signatures]
BIGMAR PHARMACEUTICAL SA G. Ambrosetti for R. Burkhard
[Stamp:] APPROVAL SIGNATURE
O. Sala
<PAGE>
<PAGE>
- --------------------------------------
[logo] Union de Banques Suisses 1985 Edition
Schweizeriache Bankgesellschaft
Unione di Banche Svizzere
Union Bank of Switzerland
- --------------------------------------
- ------------------
General Conditions
- ------------------
The following conditions are intended to clearly regulate the relations between
the bank and its customers.
1. Power of Disposition. The signatures and signing powers given in writing to
the bank are alone valid insofar as the bank is concerned until cancelled in
writing, notwithstanding entries to the contrary in the Register of Commerce or
other media of public notice.
2. Objections of the Customer. Any objection by the customer relating to the
execution or non-execution of any order of any kind as well as any objection to
any statement of account or of deposit, or to any other communication, must be
made promptly upon receipt of the respective communication, but at the latest
within the time specified by the bank, otherwise the execution or non-execution
of the order as well as the pertinent statements and communications are deemed
to have been approved. In case of non-receipt of any communication the customer
must make his complaint as the time when he should have received the
communication in the ordinary course of business.
3. Communications of the Bank. Communications of the bank are deemed to have
been made if dispatched to the last address notified by the customer. The date
indicated on the copy or on the mailing records in the possession of the bank is
presumed to be the mailing date. Mail which is to be kept on deposit at the
bank is, in case of doubt, considered to have been delivered on the date it
bears.
4. Verification of the Signatures and the Legitimation. Any damage resulting
from reliance by the bank upon any false, forged, altered or otherwise legally
insufficient instructions, documentation or other legitimation shall be borne by
the customer, unless the bank is guilty of gross negligence.
5. Legal Incapacity. Any damage resulting from legal incapacity of the customer
or of a third party must be borne by the customer, unless such incapacity has
been published in an official journal in Switzerland in the case of the customer
himself or has been communicated to the bank in writing in the case of a third
party.
6. Errors in Transmission. Any damage resulting from the use of the mails,
telegraph, telephone, telex, or any other system of communication or means of
transportation, especially from losses, delays, misunderstandings, mutilations
or duplication, must be borne by the customer unless the bank is guilty of gross
negligence.
7. Non-execution or Delayed Execution of Orders. In case of damage due to
non-execution or delayed execution of orders (stock exchange orders excluded),
the bank is liable only for the loss of interest, unless in the particular case
it has been warned of the imminent risk of more extensive damages.
8. Right of Pledge and Right of Compensation. With respect to all assets which
it holds in custody for account of the customer either at its own offices or
elsewhere, the bank has a lien for all its unliquidated claims originating in
the banking relationship irrespective of maturity or currency and a right to
immediate compensation for all liquidated claims. However, the lien becomes
effective only at the time the claim arises. This rule applies equally to
credits and to loans with or without guarantees or securities. Upon default of
performance on the part of the customer, the bank may, in its discretion,
realize upon the pledges by formal proceedings or by private arrangements.
9. Current Account Relations. The bank credits and debits interest, commissions
and fees agreed upon or customary, as well as taxes, at its choice, quarterly,
semi-annually or annually. The bank reserves the right to modify its rates or
commissions and interest at any time, in particular if the conditions of the
money market have changed, and to inform the customer of any modification by
circular letter, by posters in the lobby or in any other appropriate way. In the
absence of presented objection within one month, the statements of account
issued by the bank are deemed to have been approved, even if the confirmation
statement to be signed by the customer has not been received back by the bank.
The express or tacit approval of the statement of account includes the approval
of all items, as well as of possible reservations of the bank contained in this
statement.
If the customer has given several different orders the total amount of which
exceeds the credit balance available or the credit granted to him, the bank is
entitled to decide in its discretion and without consideration to the dates or
the times of reception, which of the dispositions it wants to execute entirely
or partly.
10. Accounts in Foreign Currencies. The bank's assets corresponding to the
customer's credits in foreign currency are held in the same currency in or
outside of the country whose currency is involved. The customer bears
proportionately to his share all the economic and legal consequences which, as a
result of measures taken by the country concerned, effect all the bank's assets
in the country of the currency or in the country where the funds are invested.
The obligations of the bank arising from accounts in foreign currencies shall be
discharged exclusively at the business office of the bank holding the accounts
and solely through the establishment of a credit entry in the country of the
currency at the bank's own branch, a correspondent bank or a bank named by the
customer.
In the case of current accounts in foreign currencies, the counterpart is placed
in the country of the respective currency.
11. Crediting and Debiting Payments in Foreign Currencies. Amounts in foreign
currencies are credited and debited in Swiss francs, unless the customer has
given proper instructions to the contrary or is a holder of an account in the
foreign currency in question. If the customer maintains accounts in other
currencies only, the bank is free to credit or debit the customer's accounts in
one of these currencies.
12. Bills of Exchange, Checks and Other Instruments. The bank is entitled to
redebit unpaid bills of exchange, checks and other papers which had been
disecured or credited. Nevertheless, until the settlement of any debit balance
created by any such redebit, the bank retains against the world the right to
claims arising out of the law of Bills of Exchange or the Check Law or otherwise
for payment of the full amount of the bills of exchange of the checks and of all
other instruments as well as accessory claims against everybody liable on the
paper.
13. Termination of the Business Relationship. The bank reserves the right to
cancel any business relationships, in particular credits which have been
promised or used, with immediate effect, in which case any possible claims of
the bank will fall immediately due for repayment. Agreements in writing to the
contrary remain reserved.
14. Saturdays or Legal Holidays. For all business relations with the bank,
Saturdays are equivalent to legal holidays.
15. Law Governing the Legal Relationship between the Bank and its Customers and
Place to Save. All legal aspects of the relationship between client and bank
shall be governed exclusively by Swiss law. Place of performance of all
obligations of both parties, as well as the exclusive jurisdiction of lawsuits
and any other kinds of legal proceedings shall be the domicile of the business
office of the bank with which the contractual relationship exists. Excepting
only that the bank may sue the client in any competent court at the domicile of
the client or any other court having jurisdiction.
16. Reservation of Special Regulations. Certain kinds of transactions are,
besides these General Conditions, subject to special regulations issued by the
bank. In particular, the deposit of securities and other valuables for safe
custody (custodianship), savings books and savings accounts, deposit books and
deposit accounts, checkbooks, safe deposit boxes and night depositories.
Moreover, stock exchange transactions are subject to the local rules,
documentary transactions to the Uniform Customs and Practice for Commercial
Documentary Credits issued by the International Chamber of Commerce, and
collecting and discounting transactions to the general terms issued by the
Association of Swiss Bankers.
17. Modifications of the General Conditions. The bank reserves the right to
modify the General Conditions at any time. The customer will be informed of
these modifications by circular letter or in any other appropriate way, and in
the absence of objection within a month the modifications are deemed to have
been approved.
Union de Banques Swisses/Schweizeriache Bankgesellschaft/Unione di Banche
Svizzere/Union Bank of Switzerland
<PAGE>
<PAGE>
This document is a fair and accurate English translation of the
foreign language document from which it was translated.
BIGMAR, INC.
By: /s/ John G. Tramontana
-----------------------------------
John G. Tramontana
President and Chief
Executive Officer
/emblem/
Union Bank of Switzerland
Corporate Affairs Department
/address information/
Bigmar Pharmaceuticals S.A.
Via Pian Scairolo 6
6917 Barbengo
Our ref: FK11/R. Burkhard/PDU Date
0247-507.944 June 14, 1996
Dear Sirs,
We refer to your request that we delay the demand for reimbursement of the
following facilities until 12/31/97:
Facility: Limit: Balance as of 3/31/96:
- --Operating credit SFr. 300,000.00 SFr. 292,059.26
- --Investment credit SFr. 2,200,000.00 SFr. 1,847,752.29
- --Construct. credit SFr. 1,400,000.00 SFr. 475,709.80
- --Fixed date adv. SFr. 1,875,000.00 SFr. 1,875,000
After reviewing the position, we confirm our agreement, subject to the following
conditions:
1) that you not be late in payments to our bank (with regard to interest,
amortization, fees or commissions owed to us);
2) that you not be late in payments to your other creditors for more than a
total amount of SFr. 50,000;
3) that the overdraft (amount in excess of our existing credits) in the cost
of the investment now being completed in your Barbengo facility be paid
entirely with your own funds;
4) that the laws of Switzerland and other countries where your company
operates be observed, in other words that no legal action be taken against
your company except for civil cases;
5) that the majority shareholder not be changed without our consent; we note
that Bigmar Pharmaceuticals is held 100% by Bigmar Inc.;
6) that the "President and Chief Executive Officer" (J.G. Tramontana) not be
replaced without our consent.
<PAGE>
<PAGE>
As a result of this undertaking by us, we are obliged to ask you for a
supplementary remuneration for the banking risk, namely 0.75% of your credits.
It is understood that any provisions not covered by this confirmation remain in
effect under the conditions stipulated in the above mentioned credit contracts.
We are glad to be able to accede to your request in this matter and remain at
your service for any other banking needs.
Sincerely,
Union Bank of Switzerland
/s/ G. Ambrosetti /s/ R. Burkhard
G. Ambrosetti R. Burkhard
<PAGE>
<PAGE>
BIGMAR, INC.
DIRECTOR OPTION PLAN
1. PURPOSE
The purpose of the Director Option Plan (the "Plan") of Bigmar, Inc., a
Delaware corporation (the "Company"), is to encourage ownership in the Company
by outside directors of the Company whose continued services are considered
essential to the Company's future progress and to provide them with a further
incentive to remain as directors of the Company.
2. ADMINISTRATION
The Compensation and Stock Option Committee of the Company's Board of
Directors (the "Committee") shall supervise and administer the Plan. Grants of
stock options under the Plan and the amount and nature of the awards to be
granted shall be automatic and non-discretionary in accordance with Section 5.
However, all questions of interpretation of the Plan or of any options issued
under it shall be determined by the Committee and such determination shall be
final and binding upon all persons having an interest in the Plan.
3. DIRECTORS ELIGIBLE FOR PARTICIPATION
Each director of the Company who is not an employee of, or consultant
to, the Company or any subsidiary or affiliate of the Company shall be
eligible to participate in the Plan.
4. STOCK SUBJECT TO THE PLAN
(a) The maximum number of common shares which may be issued under
the Plan shall be fifty thousand (50,000) shares of common
stock, par value $.001 of the Company ("Common Stock").
(b) If any outstanding option under the Plan for any reason
expires or is terminated without having been exercised in
full, the Common Stock allocable to the unexercised portion of
such option shall again become available for grant pursuant to
the plan.
5. TERMS, CONDITIONS AND FORM OF OPTIONS
Each option granted under the Plan shall be evidenced by a written
agreement in such form as the Committee shall from time to time approve, which
agreements shall comply with and be subject to the following terms and
conditions:
(a) Option Grant Dates. Each eligible director, including a
director serving in that capacity on the effective date of the
Plan, will automatically receive an option
<PAGE>
<PAGE>
to purchase three thousand (3,000) shares of Common Stock on
the effective date of the Plan. Thereafter, an option to
purchase one thousand five hundred (1,500) shares of Common
Stock shall be granted on the date of each regular annual
meeting of the stockholders of the Company to each eligible
director who either is continuing as a director subsequent to
the meeting or who is elected at such meeting to serve as a
director. All options granted under the Plan will be
immediately exercisable.
(b) Option Exercise Price. The option exercise price per share of
Common Stock for each option granted under the Plan shall be
determined by the Committee provided that such price shall not
be less than the fair market value of the Common Stock on the
date of the grant. For the purposes hereof, the term "fair
market value" shall mean the fair market value as determined
in good faith by the Committee.
(c) Options Non-Transferable. Each option granted under the Plan
by its terms shall not be transferable by the optionee
otherwise than by will, or by the laws of descent and
distribution, or pursuant to a qualified domestic relations
order (as defined in Section 414(p) of the United States
Internal Revenue Code (the "Code")), and shall be exercised
during the lifetime of the optionee only by him. No option or
interest therein may be transferred, assigned, pledged or
hypothecated by the optionee during his lifetime, whether by
operation of law or otherwise, or be made subject to
execution, attachment or similar process.
(d) Exercise Period. Except as otherwise provided in the plan,
each option may be exercised fully on the date of grant of
such option, provided that, subject to the provisions of
Section 5(e), no option may be exercised more than ninety (90)
days after the optionee ceases to serve as a director of the
Company. No option shall be exercisable after the expiration
of ten (10) years from the date of grant or prior to approval
of the Plan by the stockholders of the Company, whichever is
earlier.
(e) Exercise Period Upon Disability or Death. Notwithstanding the
provisions of Section 5(d), any option granted under the Plan:
(i) may be exercised in full by an optionee who becomes
disabled (within the meaning of Section 22(e)(3) of
the Code or any successor provision thereof) while
serving as a director of the Company; or
(ii) may be exercised
(A) in full upon the death of an optionee while
serving as a director of the Company, or
-2-
<PAGE>
<PAGE>
(B) to the extent when exercisable upon the
death of an optionee within ninety (90) days
of ceasing to serve as a director of the
Company,
by the person to whom it is transferred by will, by
the laws of descent and distribution or by written
notice filed pursuant to Section 5(h);
in each such case within the period of one year after the date
the optionee ceases to be such a director; provided, that no
option shall be exercisable after the expiration of ten (10)
years from the date of grant.
(f) Exercise Procedure. Options may be exercised only by written
notice to the Company at its principal office accompanied by
payment of the full consideration for the Common Stock as to
which they are exercised.
(g) Payment of Purchase Price. Options granted under the Plan may
provide for the payment of the exercise price (i) by delivery
of cash or a check to the order of the Company in an amount
equal to the exercise price of such options or, (ii) to the
extent provided in the applicable option agreement, by
delivery to the Company of Common Stock then owned by the
optionee having a fair market value equal in amount to the
exercise price of the Options being exercised, or (iii) by
any combination of such methods of payment. The fair market
value of any Common Stock or other non-cash consideration
which may be delivered upon exercise of an option shall be
determined by the Committee.
(h) Exercise of Representative Following Death of Director. A
director, by written notice to the Company, may designate
one or more persons (and from time to time change such
designation) including his legal representative, who, by
reason of his death, shall acquire the right to exercise all
or a portion of the option. If the person or persons so
designated wish to exercise any portion of the option, they
must do so within the term of the option as provided herein.
Any exercise by a representative shall be subject to the
provisions of the Plan.
6. ASSIGNMENTS
The rights and benefits under the Plan may not be assigned except for
the designation of a beneficiary as provided in Section 5.
7. LIMITATION OF RIGHTS
(a) No Right to Continue as a Director. Neither the Plan nor the
granting of an option nor any other action taken pursuant to
the Plan, shall constitute or be evidence of any agreement or
understanding, express or implied, that the Company will
retain a director for any period of time.
-3-
<PAGE>
<PAGE>
(b) No Stockholders' Rights for Options. An optionee shall have no
rights as a stockholder with respect to the Common Stock
covered by his options until the date of the issuance to him
of a share certificate therefor, and no adjustment will be
made for dividends or other rights for which the record date
is prior to the date such certificate is issued.
8. CHANGES IN CAPITAL STOCK
(a) If (x) the outstanding shares of Common Stock are increased,
decreased or exchanged for a different number or kind of share
or other security of Company, or (y) additional shares of
Common Stock or new or different shares of Common Stock or
other securities of the Company or other non-cash assets are
distributed with respect to such shares or other securities,
through or as a result of any merger, consolidation, sale of
all or substantially all of the assets of the Company,
reorganization, recapitalization, reclassification, stock
dividend, stock split, reverse stock split or other similar
transaction with respect to such shares or other securities,
an appropriate and proportionate adjustment shall be made in
(i) the maximum number and kind of shares reserved for
issuance under the Plan, and (ii) the number and kind of
shares or other securities subject to then outstanding
options under the Plan and (iii) the price for each share
subject to any then outstanding options under the Plan,
without changing the aggregate purchase price as to which such
options remain exercisable. No fractional shares will be
issued under the Plan on account of any such adjustments.
Notwithstanding the foregoing, no adjustment shall be made
pursuant to this Section 8 if such adjustment would cause the
Plan to fail to comply with Rule 16b-3 or any successor rule
promulgated pursuant to Section 16 of the Securities Exchange
Act of 1934, as amended.
(b) In the event that the Company is merged or consolidated into
or with another corporation (in which consolidation or merger,
the stockholders of the Company receive distributions of cash
or securities of another issuer as a result thereof), or in
the event that all or substantially all of the assets of the
Company are acquired by any other person or entity, or in the
event of a reorganization or liquidation of the Company, the
Board of Directors of the Company, or the board of directors
of any corporation assuming the obligations of the Company,
shall, as to outstanding options take one or more of the
following actions: (i) provide that such options shall be
assumed, or equivalent options shall be substituted, by the
acquiring or succeeding corporation (or an affiliate thereof),
(ii) upon written notice to the optionee, provide that all
unexercised options will terminate immediately prior to the
consummation of such transaction unless exercised by the
optionee within a specified period following the date of such
notice, or (iii) if, under the terms of a merger transaction,
holders of the Common Stock will receive upon consummation
thereof a cash payment for each share surrendered in the
merger (the "Merger Price"), make or pro-
-4-
<PAGE>
<PAGE>
vide for a cash payment to the optionees equal to the
difference between (A) the Merger Price times the number of
shares of Common Stock subject to such outstanding options (to
the extent then exercisable at prices not in excess of the
Merger Price) and (B) the aggregate exercise price of all such
outstanding options in exchange for the termination of such
options.
9. AMENDMENT OF THE PLAN
The Committee may suspend or discontinue the Plan or review or amend it
in any respect whatsoever; provided, however, that without approval of the
stockholders of the Company no revision or amendment shall change the number of
shares subject to the Plan or the number of shares issuable to any director of
the Company under the Plan (except as provided in Section 8), change the
designation of the class of directors eligible to receive options, or materially
increase the benefits accruing to participants under the Plan, and further
provided, that no amendment to the number of shares of Common Stock issuable to
any director shall be effected more than once in any six month period.
10. WITHHOLDING
The Company shall have the right to deduct from payments of any kind
otherwise due to the optionee, any federal, state or local taxes of any kind
required by law to be withheld with respect to any shares issued upon exercise
of options under the Plan.
11. EFFECTIVE DATE AND DURATION OF THE PLAN
(a) Effective Date. The Plan shall become effective when adopted
by the Board of Directors of the Company and approved by the
Company's stockholders. Amendments to the plan not requiring
stockholder approval shall become effective when adopted by
the Committee; amendments requiring stockholder approval shall
become effective when adopted by the Committee, but no option
granted after the date of such amendment shall become
exercisable (to the extent that such amendment to the Plan was
required to enable the Company to grant such option to a
particular optionee) unless and until such amendment shall
have been approved by the Company's stockholders. If such
stockholder approval is not obtained within six months of the
Committee's adoption of such amendment, any options granted on
or after the date of such amendment shall terminate to the
extent that such amendment to the Plan was required to enable
the Company to grant such option to a particular optionee.
(b) Termination. Unless sooner terminated by the Committee, the
Plan shall terminate upon the date on which all shares
available for issuance under the Plan shall have been issued
pursuant to the exercise or cancellation of options granted
under the Plan.
-5-
<PAGE>
<PAGE>
12. NOTICE:
Any written notice to the Company required by any of the provisions of
the Plan shall be addressed to the Secretary of the Company and shall become
effective when it is received.
13. GOVERNMENTAL REGULATION
The Company's obligation to sell and deliver shares of Common Stock
under the plan is subject to the approval of or requirements of any governmental
authority applicable in connection with the authorization issuance or sale of
such shares.
14. COMPLIANCE WITH RULE 16b-3
Transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successor promulgated pursuant to Section 16 of
the Securities Exchange Act of 1934, as amended. To the extent any provision of
the Plan or action by the Committee in administering the plan fails to so
comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Committee.
15. GOVERNING LAW
The Plan and all determinations made and actions taken pursuant hereto
shall be governed by the laws of the State of Delaware and the laws of the
United States applicable therein.
16. SUCCESSORS AND ASSIGNS
This Plan shall inure to the benefit of and be binding upon each
successor and assign of the Company. All obligations imposed upon an optionee,
and all rights granted to the Company hereunder, shall be binding upon the
optionee's heirs, legal representatives and successors.
17. ENTIRE AGREEMENT
This Plan and the written agreement with respect to each option granted
under this Plan constitute the entire agreement with respect to the subject
matter hereof and thereof, provided that in the event of any inconsistency
between the Plan and such written agreement, the terms and conditions of this
Plan shall control.
-6-
<PAGE>
<PAGE>
[BIGMAR logo]
Via Pian Scairolo 6
CH 6917 Barbengo
Switzerland
Phone -41 (91) 985 67 11
Telefax -41 (91) 985 63 25
May 29, 1996
Unione Farmaceutica S.A.
Gentlemen:
In connection with a registration statement of Bigmar, Inc. on Form S-1
filed with the U.S. Securities and Exchange Commission, we would appreciate your
furnishing and confirming the following information regarding our indebtedness
to you under a loan described below. If the answer is "None," please so state.
Please send your reply directly to our accountants, first by fax
(212-355-2414) and also in the enclosed stamped, addressed envelope.
We appreciate your attention to this matter.
Very truly yours,
BIGMAR, INC.
By JOHN G. TRAMONTANA
------------------------------
(Authorized Signature)
<TABLE>
<CAPTION>
INFORMATION REQUESTED AS AT MARCH 31, 1996 YOUR REPLY
- ------------------------------------------ ----------
(USE A SECOND PAGE
IF NECESSARY)
<S> <C>
1. Unpaid principal balance............................ 2,137,025 SFR
2. Requirements for amortization of principal.......... 200,000 SFR per
annum -- the first
installment due
June 30, 1997
3. Annual interest rate................................ 9% per annum
4. Accrued interest.................................... 137,025 SFR
@ March 31, 1996
5. Names of obligors-please note, if any............... None
6. Names of endorsers or guarantors--please note, if
any................................................. None
7. All documents regarding this loan are attached. No
other documents exist............................... None
8. Description and amount of any collateral for the
debt (including details of security agreements,
financing statements, mortgages and other liens).... None
9. The terms of the debt and loan agreement, as
presently constituted, have been fully complied
with................................................ Yes
10. This debt is not subordinate to any other debt of
the Company......................................... No, see note 1)
11. Minimum payment of $100,000 on the attached document
means $100,000 is the required payment. However, the
Company can pay more than this amount at its option.
Unione Farmaceutica S.A. cannot demand payment of
this loan........................................... Yes
12. Maturity Date of loan is December 31, 2007.......... Yes
13. Interest is payable semi-annually on June 30 and
December 31......................................... Yes
</TABLE>
The foregoing is in conformity with our understanding:
Unione Farmaceutica S.A.
By /s/ P.A. GHIRLANDA
------------------------------------------
Title CEO
---------------------------------------
Date 29-5-1996
---------------------------------------
Note 1) This loan is subordinated to all other debt of Bigmar S.A.
<PAGE>
<PAGE>
[UNIONE FARMACEUTICA S.A. 6903 LUGANO letterhead]
BIGMAR S.A.
SEDE SOCIALE: BARBENGO
TELEFONO 091 985 61 11-985 61 61
TELEFAX 091 994 47 62 6917 Barbengo
CONTO CORRENTE POSTALE 09-32-9
BANCHE:
BDL BANCO DI LUGANO
UNIONE DI BANCHE SVIZZERE
6903 LUGANO
NS. KIR. PAG/hb VS. RIF CASIELLA POSTALE Aprile 30, 1996
Re.: our loan of 2'000'000.- Sfr. granted on January 6, 1995
Dear Sirs,
according to our recent conversations the above mentioned loan will have to be
refunded by means of half-yearly instalments of a minimum of 100'000.- Sfr.
each, the first instalment being due on June 30, 1997.
Sincerely yours,
UNIONE FARMACEUTICA S.A.
P. A. Ghirlanda
P. A. Ghirlanda, CEO
<PAGE>
<PAGE>
[BIGMAR logo]
Via Pian Scairolo 6 To
CH-6917 Barbengo UNIONE FARMACEUTICA S.A.
Switzerland Via Pian Scairolo 6
Phone +41 (91) 985 67 11 CH-6917 BARBENGO
Telefax -41 (91) 985 63 25
VAT No. 350 163
Your ref. Our ref. JT/hb Barbengo, March 21, 1996.
As per your request, we herewith certify that on December 31 1995, our Company
owed UNIONE FARMACEUTICA S.A., Barbengo, the sum of Sfr, 2'000'000.- (two
millions Sfr.) granted by the latter as a loan to us during the course of the
1995 financial year.
The loan is for an indetermined duration. It carries an interest rate of 9%
p.a. to be paid half-yearly on June 30 and December 31, resp. of each year.
At the end of the 1995 financial year, 90'000.- Sfr. of overdrawn interest have
accumulated: they will be added to the principal. BIGMAR S.A. herewith confirms
to owe said additional amount to Unione Farmaceutica. S.A.
Sincerely yours,
BIGMAR S.A.
J. TRAMONTANA ATTILIO MELERA
J. Tramontana Attilio Melera
<PAGE>
<PAGE>
This document is a fair and accurate English translation of the foreign
language document from which it was translated.
BIGMAR, INC.
By: /s/ John G. Tramontana
----------------------
John G. Tramontana
President and Chief
Executive Officer
<PAGE>
<PAGE>
[Letterhead of Unione di Banche Svizzere]
Phone No. 091/801 81 61
<TABLE>
<S> <C> <C> <C>
Our reference Your letter dated Your reference Date
FK11/R. Burkhard/PDU May 31, 1996
0247-524.427
</TABLE>
Gentlemen,
as requested with your letter dated May 29, 1996, we are glad to confirm you the
following information regarding the indebtedness of your society by our bank.
Information Requested as at March 31, 1996
<TABLE>
<S> <C> <C>
1. Unpaid principal balance. SFR 3'000'000. -
2. Requirements for amortization of principal. SFR 60'000. - p.a.;
first time in 1999
3. Annual interest rate. 5.75% p.a. floating
5% p.a. fixed for 3 years from
May 17, 1996 up to May 17, 1999
4. Date to which interest had been paid. December 31, 1995
5. Names of obligors -- please note, if any. Bioren SA, Couvet
6. Names of endorsers or guarantors -- please note, if any. NONE
7. All documents regarding this loan are attached. TRUE
No other documents exist.
8. Description and amount of any collateral for the debt SFR 3'000'000. - mortgage notes on
(including details of security agreements, financing real property and building located
statements, mortgages and other liens). at '4, Rue de Iles, 2108 Couvet
(NE), Switzerland'.
For details SEE ATTACHED.
9. The terms of the debt and loan agreement, as presently TRUE
constituted, have been fully complied with.
</TABLE>
<PAGE>
<PAGE>
31 May, 1996
2
BIOREN SA. Couvet
<TABLE>
<S> <C> <C>
10. This debt is not subordinate to any other debt of the TRUE
Company.
11. The bank cannot demand payment of this loan unless the SEE ATTACHED
Company is in default. (point 4 of conditions stated on the
reverse of the Fixed-Rate Mortgage
Agreement).
12. Maturity date. To agree after maturity of fixed-
rate (normally 50 years).
13. The repayment terms for interest are. . . At the requested date they were
semi-annually (June and December of
each year).
Since May 17, 1996, quarterly
(March, June, September and December
of each year).
</TABLE>
The foregoing is in conformity with our understanding.
We are pleased to have been helpful in this circumstance and remain at your
disposal for further banking needs.
With kind regards
Union Bank of Switzerland
G. AMBROSETTI R. BURKHARD
FVP G. Ambrosetti AVP R. Burkhard
Attached
<PAGE>
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the use in the Prospectus constituting a part of this
Registration Statement of our report dated March 25, 1996 (with respect to Note
1 April 16, 1996 and with respect to Note 11D March 29, 1996) relating to the
consolidated financial statements of Bigmar, Inc. and Subsidiaries and our
report dated March 25, 1996 relating to the financial statements of Bioren SA,
which are contained in that Prospectus.
We also consent to the references to us under the caption 'Experts' in the
Prospectus and in the paragraph above the selected financial and operating data.
RICHARD A. EISNER & COMPANY, LLP
New York, New York
June 14, 1996
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> YEAR 3-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1996
<PERIOD-START> JAN-01-1995 JAN-01-1996
<PERIOD-END> DEC-31-1995 MAR-31-1996
<CASH> 1,425,603 1,257,555
<SECURITIES> 0 0
<RECEIVABLES> 1,640,293 2,022,161
<ALLOWANCES> 51,948 50,378
<INVENTORY> 1,051,948 1,132,620
<CURRENT-ASSETS> 4,349,212 4,477,523
<PP&E> 10,848,507 12,600,077
<DEPRECIATION> 130,673 174,138
<TOTAL-ASSETS> 15,493,126 19,300,275
<CURRENT-LIABILITIES> 3,144,751 4,614,956
<BONDS> 8,436,971 10,839,442
<COMMON> 2,375 2,375
0 0
0 0
<OTHER-SE> 3,909,029 3,843,502
<TOTAL-LIABILITY-AND-EQUITY> 15,493,126 19,300,275
<SALES> 5,600,362 1,898,002
<TOTAL-REVENUES> 5,600,362 1,898,002
<CGS> 4,001,891 1,151,099
<TOTAL-COSTS> 4,001,891 1,151,099
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