<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 12, 1999
REGISTRATION NO. 333-81939
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
CORIXA CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 2836 91-1654387
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
1124 COLUMBIA STREET, SUITE 200
SEATTLE, WA 98104-2040
(206) 754-5711
STEVEN GILLIS, PH.D.
CHIEF EXECUTIVE OFFICER
CORIXA CORPORATION
1124 COLUMBIA STREET, SUITE 200
SEATTLE, WA 98104-2040
(206) 754-5711
COPIES TO:
WILLIAM W. ERICSON, ESQ. WILLIAM D. SHERMAN, ESQ.
KARA DIANE PALMER, ESQ. DAVID P. VALENTI, ESQ.
ERIC L. DOBMEIER, ESQ. AMIE PETERS, ESQ.
VENTURE LAW GROUP MORRISON & FOERSTER, LLP
A PROFESSIONAL CORPORATION 755 PAGE MILL ROAD
4750 CARILLON POINT PALO ALTO, CALIFORNIA 94304
KIRKLAND, WASHINGTON 98033
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As promptly as practicable after this Registration Statement becomes
effective and the effective time of the proposed merger of Ribi ImmunoChem
Research, Inc., with and into Registrant as described in the Agreement and Plan
of Merger dated as of June 9, 1999, attached as Appendix A to the proxy
statement/prospectus forming a part of this registration statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding Company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) 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 this Form is a post-effective amendment filed pursuant to Rule 462(d)
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. [ ]
CALCULATION OF REGISTRATION FEE
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AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE REGISTRATION FEE(3)
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Common Stock, $0.001 par
value per share........... 4,716,860 Not Applicable $57,299,350 $15,930
- ----------------------------------------------------------------------------------------------------------------------------
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</TABLE>
(1) Represents the maximum number of shares of the Registrant's common stock
which may be issued to the former stockholders of Ribi ImmunoChem Research,
Inc. pursuant to the merger described herein.
(2) Each share of Ribi common stock will be converted into the right to receive
0.1685 of a share of the Registrant's common stock pursuant to the merger
described herein. Pursuant to Rule 457(f)(1) under the Securities Act, the
registration fee has been calculated based on the average of the high and
low prices per share of the Ribi common stock to be canceled in the exchange
as reported on the Nasdaq National Market on August 5, 1999.
(3) Pursuant to Rule 457(b) under the Securities Act, $12,444 of the
registration fee is offset by the filing fee previously paid by the
Registrant in connection with the filing of a Registration Statement on Form
S-4 on June 30, 1999. Accordingly, a registration fee of $3,486 is being
paid herewith.
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 THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- --------------------------------------------------------------------------------
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<PAGE> 2
[CORIXA LOGO]
Dear Stockholder:
You are cordially invited to attend a special meeting of the stockholders
of Corixa Corporation, a Delaware corporation, to be held at 9:00 a.m. local
time, on September 24, 1999, in the Cedar Room at our headquarters, 1124
Columbia Street, Seattle, Washington 98104-2040.
At the special meeting, you will be asked to consider and vote upon the
proposed merger of Ribi ImmunoChem Research, Inc. with and into Corixa. Corixa
expects to issue up to 4,330,701 shares of its common stock in connection with
the merger, which includes 720,000 shares of Corixa common stock that may be
issued as a result of the redemption or conversion of Ribi Series A preferred
stock into Ribi common stock prior to the effective date of the merger. You will
also be asked to approve two other matters as more fully described in the
attached notice of special meeting of stockholders and proxy
statement/prospectus, which you are urged to read carefully. The complete text
of the merger agreement is attached as Appendix A to the proxy
statement/prospectus.
AFTER CAREFUL CONSIDERATION, CORIXA'S BOARD OF DIRECTORS HAS UNANIMOUSLY
APPROVED THE TERMS OF THE MERGER AND HAS DETERMINED THAT THE MERGER IS IN THE
BEST INTERESTS OF CORIXA AND ITS STOCKHOLDERS. THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF THE MERGER AND THE TWO
ADDITIONAL MATTERS THAT ARE MORE FULLY DESCRIBED IN THE ATTACHED NOTICE OF
SPECIAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT/PROSPECTUS.
All Corixa stockholders are cordially invited to attend the special meeting
in person. If you attend the special meeting, you may vote in person even though
you have previously returned your completed proxy card.
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, IT IS IMPORTANT THAT
YOUR SHARES BE REPRESENTED AND VOTED. APPROVAL OF THE MERGER REQUIRES THE
AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE OUTSTANDING SHARES OF
CORIXA'S COMMON STOCK AND SERIES A PREFERRED STOCK, VOTING TOGETHER AS A CLASS
ON AN AS-CONVERTED BASIS. THEREFORE, PLEASE SIGN, DATE AND RETURN YOUR PROXY
CARD IN THE ENCLOSED ENVELOPE.
On Behalf of the Board of Directors,
/s/ STEVEN GILLIS
Steven Gillis, Ph.D
Chairman and Chief Executive Officer
THIS PROXY STATEMENT/PROSPECTUS IS DATED AUGUST 12, 1999 AND WAS FIRST MAILED TO
STOCKHOLDERS ON OR ABOUT AUGUST 23, 1999.
<PAGE> 3
CORIXA CORPORATION
1124 COLUMBIA STREET, SUITE 200
SEATTLE, WA 98104-2040
-------------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 24, 1999
To the Stockholders of Corixa:
NOTICE IS HEREBY GIVEN that a special meeting of the stockholders of Corixa
Corporation, a Delaware corporation, will be held at 9:00 a.m. local time, on
September 24, 1999, in the Cedar Room at our headquarters, 1124 Columbia Street,
Seattle, Washington 98104-2040 to consider and vote upon:
1. A proposal to approve the merger of Ribi ImmunoChem Research, Inc.
with and into Corixa whereby, among other things:
- each outstanding share of Ribi common stock will be converted into the
right to receive 0.1685 of one share of Corixa common stock;
- each share of Ribi Series A preferred stock that is not converted
into Ribi common stock prior to the merger will be redeemed by Ribi;
- Ribi's stock option plans and option agreements granted to employees
and directors will be amended, as more fully described in this proxy
statement/prospectus; and
- each outstanding option and warrant to purchase shares of Ribi
common stock that is not terminated as a result of the merger will
be assumed by Corixa and converted into an option or warrant to
purchase shares of Corixa common stock, both as more fully described
in this proxy statement/prospectus.
2. A proposal to approve the terms of Corixa's equity line of credit
with Castle Gate, L.L.C. to allow Corixa at its option to conduct
additional draw-downs of funds that could trigger the issuance of a total
of 20% or more of Corixa's capital stock at a price less than the greater
of book or market value of such stock to Castle Gate in the form of Series
A preferred stock and warrants to purchase common stock.
3. A proposal to amend Corixa's Amended and Restated 1994 Stock Option
Plan to increase the shares available for issuance thereunder by 2,500,000
shares to an aggregate of 5,266,234 shares and to increase the maximum
annual automatic increase in the number of shares reserved for issuance
under the 1994 plan from 500,000 to 750,000.
4. Such other business as may properly come before the special meeting
or any postponements or adjournments thereof.
CORIXA'S BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER, THE TERMS
ALLOWING POTENTIAL ADDITIONAL DRAWS UNDER THE CASTLE GATE EQUITY LINE OF CREDIT
AND THE AMENDMENT TO THE 1994 PLAN, AND RECOMMENDS THAT YOU VOTE "FOR" EACH
PROPOSAL.
Stockholders of record at the close of business on August 9, 1999 are
entitled to notice of and to vote at the special meeting and any postponement or
adjournment thereof.
- Approval of the merger requires the affirmative vote of the holders of
a majority of the outstanding shares of Corixa's common stock and
Series A preferred stock, voting together as a class on an
as-converted basis.
<PAGE> 4
- Approval of potential additional draws under the Castle Gate equity
line of credit requires the affirmative vote of the holders of a
majority of Corixa's common stock represented in person or by proxy at
the special meeting and entitled to vote thereon voting together as a
single class. Pursuant to the rules of the Nasdaq National Market, the
vote of the holders of Series A preferred stock will not be counted
for purposes of obtaining the approval of the potential additional
Castle Gate draws.
- Approval of the amendment to the 1994 plan requires the affirmative
vote of the holders of a majority of Corixa's common stock and Series
A preferred stock represented in person or by proxy at the special
meeting and entitled to vote thereon, voting together as a class on an
as-converted basis.
In considering whether to approve the merger, you should carefully read
this proxy statement/ prospectus in its entirety. In particular, you should
review the matters referred to under "Risk Factors" starting on page 32.
YOU ARE CORDIALLY INVITED TO ATTEND THE SPECIAL MEETING. TO ENSURE YOUR
REPRESENTATION AT THE SPECIAL MEETING, HOWEVER, YOU ARE URGED TO COMPLETE, DATE,
SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE. A POSTAGE-PAID
ENVELOPE IS ENCLOSED FOR THAT PURPOSE. IF YOU ATTEND THE SPECIAL MEETING, YOU
MAY VOTE IN PERSON EVEN IF YOU HAVE RETURNED A PROXY.
By Order of the Board of Directors,
/s/ KATHLEEN MCKEREGHAN
Kathleen McKereghan
Secretary
Seattle, Washington
August 12, 1999
<PAGE> 5
[RIBI LOGO]
Dear Stockholder:
You are cordially invited to attend a special meeting of the stockholders
of Ribi ImmunoChem Research, Inc., a Delaware corporation, to be held at 10:00
a.m. local time, on September 23, 1999, at Hamilton City Hall/Community Center,
223 S. 2nd Street, Hamilton, Montana 59840.
At the special meeting, you will be asked to consider and vote upon the
proposed merger of Ribi with and into Corixa Corporation. As a condition to the
merger, Ribi is required to amend its option plans and the option agreements
granted under those plans. If you vote for the merger, your vote will also
constitute a vote to approve the amendments to those option plans and option
agreements as more fully described in the attached notice of special meeting of
stockholders and proxy statement/ prospectus. Corixa expects to issue up to
4,330,701 shares of its common stock in connection with the merger, which
includes 720,000 shares of Corixa common stock that may be issued as a result of
the redemption or conversion of Ribi Series A preferred stock into Ribi common
stock prior to the effective date of the merger. The accompanying proxy
statement/prospectus provides detailed information concerning the proposed
merger and additional information concerning Ribi and Corixa, which you are
urged to read carefully. The complete text of the merger agreement is attached
as Appendix A to the proxy statement/prospectus.
AFTER CAREFUL CONSIDERATION, RIBI'S BOARD OF DIRECTORS HAS UNANIMOUSLY
APPROVED THE TERMS OF THE MERGER AND HAS DETERMINED THAT THE MERGER IS IN THE
BEST INTERESTS OF RIBI AND ITS STOCKHOLDERS. THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS A VOTE "FOR" APPROVAL OF THE MERGER.
All Ribi stockholders are cordially invited to attend the special meeting
in person. If you attend the special meeting, you may vote in person even though
you have previously returned your completed proxy card.
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, IT IS IMPORTANT THAT
YOUR SHARES BE REPRESENTED AND VOTED. APPROVAL OF THE MERGER REQUIRES THE
AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE OUTSTANDING SHARES OF RIBI
COMMON STOCK. THEREFORE, PLEASE SIGN, DATE AND RETURN YOUR PROXY CARD IN THE
ENCLOSED ENVELOPE.
On Behalf of the Board of Directors,
/s/ ROBERT E. IVY
Robert E. Ivy
President and Chief Executive Officer
This proxy statement/prospectus is dated August 12, 1999
and was first mailed to stockholders on or about August 23, 1999.
<PAGE> 6
RIBI IMMUNOCHEM RESEARCH, INC.
553 OLD CORVALLIS ROAD
HAMILTON, MT 59840-3131
-------------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 23, 1999
To the Stockholders of Ribi:
NOTICE IS HEREBY GIVEN that a special meeting of the stockholders of Ribi
ImmunoChem Research, Inc., a Delaware corporation, will be held at 10:00 a.m.
local time, on September 23, 1999, at Hamilton City Hall/Community Center, 223
S. 2(nd) Street, Hamilton, Montana 59840 to consider and vote upon the following
proposals:
1. To consider and vote upon a proposal to approve the merger of Ribi
with and into Corixa Corporation whereby, among other things:
- each outstanding share of Ribi common stock will be converted into the
right to receive 0.1685 of one share of Corixa common stock;
- each share of Ribi Series A preferred stock that is not converted into
Ribi common stock prior to the merger will be redeemed by Ribi;
- Ribi's stock option plans and option agreements granted to employees
and directors will be amended, as more fully described in this proxy
statement/prospectus; and
- each outstanding option and warrant to purchase shares of Ribi common
stock that is not terminated as a result of the merger will be assumed
by Corixa and converted into an option or warrant to purchase shares
of Corixa common stock, both as more fully described in this proxy
statement/prospectus.
2. To transact such other business as may properly come before the
special meeting or any postponements or adjournments thereof.
Stockholders of record at the close of business on August 9, 1999 are
entitled to notice of and to vote at the special meeting and any adjournment
thereof. Approval of the merger will require the affirmative vote of the holders
of a majority of the outstanding shares of Ribi common stock.
In considering whether to approve the merger, you should carefully read
this proxy statement/prospectus in its entirety. In particular, you should
review the matters referred to under "Risk Factors" starting on page 32.
YOU ARE CORDIALLY INVITED TO ATTEND THE SPECIAL MEETING. TO ENSURE YOUR
REPRESENTATION AT THE SPECIAL MEETING, HOWEVER, YOU ARE URGED TO COMPLETE, DATE,
SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE. A POSTAGE-PAID
ENVELOPE IS ENCLOSED FOR THAT PURPOSE. IF YOU ATTEND THE SPECIAL MEETING YOU MAY
VOTE IN PERSON EVEN IF YOU HAVE RETURNED A PROXY.
By Order of the Board of Directors,
/s/ RONALD H. KULLICK
Ronald H. Kullick
Secretary
Hamilton, Montana
August 12, 1999
<PAGE> 7
TABLE OF CONTENTS FOR
PROXY STATEMENT/PROSPECTUS
<TABLE>
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PAGE
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QUESTIONS AND ANSWERS ABOUT THE MERGER...................... 1
WHO CAN HELP ANSWER YOUR QUESTIONS?......................... 3
Documents Incorporated by Reference in this Proxy
Statement/Prospectus...................................... 3
Where You Can Find More Information......................... 4
Forward-Looking Statements.................................. 4
Trademarks.................................................. 5
SUMMARY..................................................... 6
The Companies............................................. 6
Corixa Special Meeting.................................... 6
Corixa Record Date; Voting Power.......................... 7
Ribi Special Meeting...................................... 7
Ribi Record Date; Voting Power............................ 7
THE MERGER.................................................. 7
What Will Happen to Ribi?................................. 7
Management After the Merger............................... 7
What Ribi Stockholders Will Receive....................... 7
Other Interests of Officers and Directors in the Merger... 7
Conditions to the Merger.................................. 8
Termination of the Merger Agreement; Termination Fee...... 9
Vote Required............................................. 10
Ownership of Corixa Following the Merger.................. 10
When the Merger will Occur................................ 10
Securities Laws Compliance................................ 10
Accounting Treatment...................................... 10
Opinions of Financial Advisors............................ 10
Important Federal Income Tax Consequences................. 11
Rights of Dissenting Stockholders......................... 11
Voting Agreements......................................... 11
Listing of Corixa Common Stock............................ 11
Comparative Per Share Market Price Information............ 11
OTHER CORIXA MATTERS........................................ 12
Approval of Additional Castle Gate Draws.................. 12
Amendment of Amended and Restated 1994 Stock Option
Plan................................................... 12
OTHER RIBI MATTERS.......................................... 13
SELECTED HISTORICAL FINANCIAL INFORMATION OF CORIXA......... 14
SELECTED HISTORICAL FINANCIAL INFORMATION OF RIBI........... 15
SUMMARY SELECTED UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
INFORMATION............................................... 16
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS....... 18
COMPARATIVE PER SHARE DATA.................................. 30
MARKET PRICE AND DIVIDEND POLICY............................ 31
RISK FACTORS................................................ 32
Risks Related to the Merger............................... 32
Risks Related to Corixa................................... 34
Risks Related to Ribi..................................... 44
</TABLE>
i
<PAGE> 8
<TABLE>
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PAGE
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THE CORIXA SPECIAL MEETING.................................. 53
Date, Time and Place of Special Meeting................... 53
Purpose of the Special Meeting............................ 53
Record Date; Voting Rights; Proxies....................... 53
Quorum; Broker Non-Votes; Abstentions..................... 54
Expenses of Proxy Solicitation............................ 54
Appraisal Rights.......................................... 55
THE RIBI SPECIAL MEETING.................................... 56
Date, Time and Place of Ribi Special Meeting.............. 56
Purpose of the Special Meeting............................ 56
Record Date; Voting Rights; Proxies....................... 56
Quorum; Broker Non-Votes; Abstentions..................... 57
Expenses of Proxy Solicitation............................ 57
No Appraisal Rights....................................... 57
THE MERGER.................................................. 58
General Description....................................... 58
Joint Reasons for the Merger.............................. 58
Recommendation of Corixa Board; Corixa's Reasons for the
Merger................................................. 59
Recommendation of Ribi Board; Ribi's Reasons for the
Merger................................................. 61
Opinion of Corixa's Financial Advisor..................... 63
Opinion of Ribi's Financial Advisor....................... 68
History of the Transaction................................ 71
Management and Operations Following the Merger............ 73
Interests of Certain Persons in the Merger................ 73
Certain Federal Income Tax Consequences................... 74
Accounting Treatment...................................... 76
Regulatory Filings and Approvals Required to Complete the
Merger................................................. 77
Resale Restrictions; Voting Agreements.................... 77
Listing on Nasdaq of Corixa Common Stock to be Issued in
the Merger............................................. 77
Delisting and Deregistration of Ribi Common Stock After
the Merger............................................. 77
Operations After the Merger............................... 77
TERMS OF THE MERGER......................................... 78
The Merger................................................ 78
Effective Time of the Merger.............................. 78
Conversion of Securities.................................. 78
Warrants.................................................. 79
Stock Options............................................. 79
Amendments to the Ribi 1986 and 1996 Stock Option Plans... 80
Amendments to the Ribi 1996 Directors' Stock Option
Plan................................................... 91
Terms and Conditions of the 1996 Directors' Plan.......... 92
Amendments and Termination................................ 93
Federal Income Tax Consequences........................... 94
Amendments to Robert Ivy's Option......................... 94
Exchange Of Shares........................................ 94
Representations and Warranties............................ 96
Conduct of Ribi's Business Prior to Completion of the
Merger................................................. 97
Conduct of Corixa's Business Prior to Completion of the
Merger................................................. 99
Certain Covenants......................................... 99
No Other Negotiations Involving Ribi...................... 101
</TABLE>
ii
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Indemnification........................................... 103
Conditions................................................ 103
Termination of the Merger Agreement....................... 105
Expenses; Termination Fees................................ 106
Amendment; Extension; Waiver.............................. 107
ADDITIONAL MATTERS BEING SUBMITTED TO A VOTE OF ONLY CORIXA
STOCKHOLDERS.............................................. 108
PROPOSAL NO. 1, APPROVAL OF POTENTIAL ADDITIONAL CASTLE GATE
DRAWS..................................................... 108
PROPOSAL NO. 2, APPROVAL OF AMENDMENT TO THE 1994 PLAN...... 110
RIBI MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS....................... 111
Results of Operations..................................... 111
Liquidity And Capital Resources........................... 114
Year 2000 Readiness Disclosure............................ 115
INFORMATION CONCERNING CORIXA............................... 116
Scientific Background..................................... 117
Corixa's Strategy......................................... 118
Corixa's Core Technology Platforms........................ 120
Corixa's Products in Development.......................... 123
Other Products in Development............................. 130
Corporate Partnerships.................................... 131
Certain Business Relationships............................ 135
Certain License Agreements................................ 135
Patents and Proprietary Technology........................ 137
Government Regulation..................................... 139
Competition............................................... 142
Employees................................................. 143
Facilities................................................ 143
Legal Proceedings......................................... 143
Scientific Collaborators.................................. 143
INFORMATION CONCERNING RIBI................................. 146
General................................................... 146
Ribi's Technology......................................... 146
Ribi's Products........................................... 148
Cancer Theraccines........................................ 149
Competition............................................... 155
Marketing................................................. 156
Research and Development.................................. 157
Government Regulation..................................... 157
Patents and Proprietary Protection........................ 158
Employees, Consultants And Collaborators.................. 159
Properties................................................ 159
Legal Proceedings......................................... 159
MANAGEMENT OF CORIXA........................................ 163
Board of Directors Committees, Compensation of Directors
and Other Information.................................. 165
Compensation Committee Interlocks and Insider
Participation.......................................... 166
Limitation of Liability and Indemnification Matters....... 166
Stock Option and Incentive Plans.......................... 167
</TABLE>
iii
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401(k) Plan............................................... 173
COMPENSATION OF CORIXA EXECUTIVE OFFICERS................... 174
Summary Compensation Table................................ 174
Option/SAR Grants in Last Fiscal Year..................... 175
Aggregated Option Exercises in Last Fiscal Year and Fiscal
Year-End Option Values................................. 176
CORIXA COMPENSATION COMMITTEE REPORT ON EXECUTIVE
COMPENSATION.............................................. 177
General Compensation Policy............................... 177
Deductibility of Executive Compensation................... 178
CORIXA STOCKHOLDER RETURN PERFORMANCE PRESENTATION.......... 179
COMPENSATION OF RIBI EXECUTIVE OFFICERS..................... 180
Summary Compensation Table................................ 180
RIBI STOCK OPTION GRANTS.................................... 181
AGGREGATED STOCK OPTION EXERCISES AND YEAR END STOCK OPTION
VALUES.................................................... 181
RIBI COMPENSATION REPORT ON EXECUTIVE COMPENSATION.......... 182
RIBI STOCKHOLDER RETURN PERFORMANCE PRESENTATION............ 184
RIBI DIRECTORS' COMPENSATION................................ 184
OWNERSHIP OF CORIXA CAPITAL STOCK........................... 186
OWNERSHIP OF RIBI CAPITAL STOCK............................. 189
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS OF CORIXA.... 191
IDRI...................................................... 191
Genesis................................................... 191
ImmGenics Pharmaceuticals, Inc............................ 191
Indemnification Agreements................................ 192
COMPARISON OF RIGHTS OF HOLDERS OF CORIXA CAPITAL STOCK AND
HOLDERS OF RIBI CAPITAL STOCK............................. 193
Description of Corixa Capital Stock....................... 193
Description of Ribi Capital Stock......................... 195
Comparison of Certificates of Incorporation, Bylaws and
Governing Law.......................................... 196
STOCKHOLDERS' APPRAISAL RIGHTS.............................. 197
EXPERTS..................................................... 200
LEGAL MATTERS............................................... 201
OTHER MATTERS............................................... 201
STOCKHOLDER PROPOSALS....................................... 202
INDEX TO FINANCIAL STATEMENTS............................... F-1
APPENDIX A Agreement and Plan of Merger dated as of June 9,
1999
APPENDIX B Fairness Opinion of Pacific Growth Equities,
Inc.
APPENDIX C Fairness Opinion of Hambrecht & Quist LLC
APPENDIX D First Amendment to the Ribi ImmunoChem Research,
Inc. 1986 Stock Option Plan and First Amendment
to the Non-Qualified Stock Option Agreement
Without Stock Appreciation Right Granted
Pursuant to the Ribi ImmunoChem Research, Inc.
1986 Stock Option Plan
APPENDIX E First Amendment to the Ribi ImmunoChem Research,
Inc. 1996 Stock Option Plan and First Amendment
to the Directors' Non-Qualified Stock Option
Agreement Granted Pursuant to the Ribi
ImmunoChem Research, Inc. 1996 Stock Option Plan
</TABLE>
iv
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<TABLE>
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APPENDIX F First Amendment to the Ribi ImmunoChem Research,
Inc. 1996 Directors' Stock Option Plan and First
Amendment to the Directors' Non-Qualified Stock
Option Agreement Granted Pursuant to the Ribi
ImmunoChem Research, Inc. 1996 Directors' Stock
Option Plan
APPENDIX G Sixth Amendment to Option Agreement Between Ribi
ImmunoChem Research, Inc. and Robert E. Ivy
APPENDIX H Corixa Corporation Amended and Restated 1994
Stock Option Plan
APPENDIX I Equity Line of Credit and Securities Purchase
Agreement dated as of April 8, 1999 between
Corixa and Castle Gate, L.L.C.
APPENDIX J Registration Rights Agreement dated as of April
8, 1999 between Corixa and Castle Gate, L.L.C.
APPENDIX K Standstill Agreement dated as of April 8, 1999
between Corixa and Castle Gate, L.L.C.
APPENDIX L Warrant Number CG-1 issued by Corixa to Castle
Gate, L.L.C. on April 8, 1999
APPENDIX M Warrant Number CG-2 issued by Corixa to Castle
Gate, L.L.C. on April 8, 1999
APPENDIX N Form of Warrant Number CG-3 to be issued by
Corixa to Castle Gate, L.L.C. upon the
occurrence of certain events in accordance with
the terms of the Equity Line of Credit and
Securities Purchase Agreement
APPENDIX O Form of Warrant Number CG-4 to be issued by
Corixa to Castle Gate, L.L.C. upon the
occurrence of certain events in accordance with
the terms of the Equity Line of Credit and
Securities Purchase Agreement
APPENDIX P Certificate of Designation of Corixa as filed
with the Secretary of State of the State of
Delaware on April 7, 1999
APPENDIX Q Text of Section 262 of the Delaware General
Corporation Law
</TABLE>
v
<PAGE> 12
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: WHY ARE CORIXA AND RIBI PROPOSING TO MERGE? HOW WILL STOCKHOLDERS BENEFIT?
A: THE BOARD OF DIRECTORS OF CORIXA BELIEVES, AMONG OTHER THINGS, THAT:
- The merger will strengthen the combined company's scientific expertise in
the areas of adjuvant technology and combining adjuvants with antigens.
- The merger will enable the combined company to pursue a number of potential
product opportunities that Corixa and Ribi would otherwise be unable to
pursue as stand-alone companies.
- The merger will combine Ribi's manufacturing capabilities with certain of
Corixa's clinical stage programs. The scale-up and manufacture of potential
products using Ribi's capabilities may speed development and
commercialization of Corixa's products, as well as provide the potential
for expanded manufacturing facilities at Ribi's Montana site.
- The combined company can operate more efficiently than either company on a
stand-alone basis. This efficiency may lead to more effective use of the
combined company's resources.
- The consideration offered by Corixa in connection with the merger is fair
and in the best interest of Corixa and its stockholders.
THE BOARD OF DIRECTORS OF CORIXA UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR
OF THE MERGER.
A: THE BOARD OF DIRECTORS OF RIBI BELIEVES, AMONG OTHER THINGS, THAT:
- The combination of Corixa's and Ribi's potential product portfolios will
allow the combined company to offer a more comprehensive set of
pharmaceutical products to its customers.
- The combined technological resources and scientific know-how may allow the
combined company to develop new therapies, vaccines and other products at a
more rapid pace.
- Ribi can benefit from Corixa's antigen research and discovery, antigen
vaccine delivery and adjuvant discovery and development platforms, while
Corixa can benefit from Ribi's adjuvant discovery, development and
manufacturing capabilities and the possible commercialization of Ribi's
products that are currently in advanced clinical trials and/or for which
marketing applications have been filed or are in preparation.
- The consideration offered by Corixa in connection with the merger is fair
and in the best interest of Ribi and its stockholders, especially in light
of the currently poor market conditions for companies in the biotechnology
industry.
- The merger will provide access to capital and resources to support Ribi's
research, development, clinical and manufacturing activities.
- Ribi may benefit from Corixa's network of established corporate
partnerships when trying to expand the number and scope of Ribi's business
relationships for the continued development and commercialization of its
products.
- Ribi's adjuvant expertise and Corixa's antigen expertise, when combined,
will allow more rapid discovery, development and manufacture of novel
vaccines.
- Ribi and Corixa share a major corporate partner, which means that existing
licenses of the combined company's products may be synergistic rather than
potentially competitive.
- The geographic locations of the two companies may increase the potential
synergism of the merger. Corixa's presence in Seattle allows it to benefit
from its proximity to academic institutions and world class health care
facilities, while Ribi's location in Montana allows growth of development
and manufacturing facilities.
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- The combined company may have a significantly increased market
capitalization, potentially allowing easier access to financing.
- As a condition to the merger, Ribi will retire the Series A preferred stock
held by Rose Glen Capital Management (RGC), thus eliminating the
possibility of further potential dilution associated with the RGC
investment instrument.
- The combined company will assume all of Ribi's current liabilities.
THE BOARD OF DIRECTORS OF RIBI UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR OF
THE MERGER.
Q: WHAT WILL I, AS A RIBI STOCKHOLDER, RECEIVE IN THE MERGER?
A: If the merger is completed, you will receive 0.1685 of one share of Corixa
common stock for each share of Ribi common stock that you own.
Corixa will not issue fractions of its shares to you in the merger. Instead,
you will receive cash for any fractional shares of Corixa common stock owed
to you upon the merger at the rate of $13.425 per full share of Corixa common
stock.
Q: WHAT DO I NEED TO DO NOW?
A: After carefully reading and considering the information contained in this
document, indicate on your proxy card how you want to vote, and sign and mail
the proxy card in the enclosed return envelope as soon as possible, so that
your shares may be represented at the special meeting. IF YOU SIGN AND SEND
IN YOUR PROXY CARD AND DO NOT INDICATE HOW YOU WANT TO VOTE, WE WILL COUNT
YOUR PROXY CARD AS A VOTE IN FAVOR OF THE MERGER. IF YOU DO NOT VOTE OR YOU
ABSTAIN, IT WILL HAVE THE EFFECT OF A VOTE AGAINST THE MERGER.
The Corixa special meeting will take place on September 24, 1999 and the Ribi
special meeting will take place on September 23, 1999. Stockholders of each
company may attend their respective special meeting and vote their shares in
person, rather than by signing and mailing their proxy cards. In addition,
stockholders may revoke their proxy cards up to and including the day of the
special meeting and vote in person.
Q: IF MY BROKER HOLDS MY SHARES IN A "STREET NAME," WILL MY BROKER VOTE MY
SHARES FOR ME?
A: Your broker will vote your shares only if you provide instructions on how to
vote. You should instruct your broker to vote your shares according to the
directions your broker provides. Without instructions, your broker will not
vote your shares, which will have the same effect as a vote against the
merger.
Q: SHOULD I SEND MY STOCK CERTIFICATES NOW?
A: No. After the merger is completed, Corixa will send you written instructions
for exchanging your Ribi stock certificates for Corixa stock certificates.
Q: WHEN DO YOU EXPECT TO COMPLETE THE MERGER?
A: Both companies are working toward completing the merger as quickly as
possible. In addition to several other closing conditions, prior to the
effectiveness of the merger we must obtain approval from the stockholders of
both Corixa and Ribi and all of the Series A preferred stock of Ribi must be
converted into Ribi common stock or redeemed. If all necessary approvals are
obtained and closing conditions satisfied in a timely manner, we hope to
complete the merger during September 1999.
Q: WHAT ARE THE TAX CONSEQUENCES OF THE MERGER TO ME AS A RIBI STOCKHOLDER?
A: In most cases, the exchange of shares by Ribi stockholders should be tax-free
for federal income tax purposes. However, you will have to report a taxable
gain or loss if you receive cash for fractional shares. To review the tax
consequences to you and to Ribi in more detail, see pages 74 through 76. You
should also consult your tax advisor.
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Neither the Securities and Exchange Commission (SEC) nor any state
securities commission has approved or disapproved of these securities or passed
upon the adequacy or accuracy of this prospectus. Any representation to the
contrary is a criminal offense.
WHO CAN HELP ANSWER YOUR QUESTIONS?
If you have additional questions about this proxy statement/prospectus, you
should contact:
Corixa Corporation
1124 Columbia Street
Suite 200
Seattle, WA 98104-2040
Phone Number: (206) 754-5711
Attention: Michelle Burris, Chief Financial Officer
Ribi ImmunoChem Research, Inc.
553 Old Corvallis Road
Hamilton, MT 59840
Phone Number: (406) 363-6214
Attention: Ronald Kullick, Vice President-Legal Counsel
If you have additional questions about solicitation of your proxy, you
should contact:
For Corixa stockholders:
The Harris Trust Company
601 South Figueroa St. Suite 4900
Los Angeles, CA 90017
Phone Number: (213) 239-0600
Attn: Neil Rosso
For Ribi stockholders:
Skinner and Company
225 S. Cabrillo Highway
Suite 206
Half Moon Bay, CA 94019
Attn: Mike McReynolds
DOCUMENTS INCORPORATED BY REFERENCE IN THIS
PROXY STATEMENT/PROSPECTUS
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE THAT
ARE NOT PRESENTED IN OR DELIVERED WITH THIS DOCUMENT.
All documents filed by Corixa under Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act, after the date hereof and before the date of the Corixa
special meeting and the Ribi special meeting are incorporated by reference into
and made a part of this prospectus/proxy statement from the date of filing of
those documents.
The following documents that were filed by Corixa with the SEC are
incorporated by reference into this prospectus/proxy statement:
- Corixa's annual report on Form 10-K for the fiscal year ended December
31, 1998 filed March 22, 1999;
- Corixa's current report on Form 8-K filed February 12, 1999;
- Corixa's current report on Form 8-K filed on April 23, 1999;
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- Corixa's quarterly report on Form 10-Q for the quarter ended March 31,
1999 filed May 6, 1999;
- Corixa's current report on Form 8-K filed June 3, 1999;
- Corixa's current report on Form 8-K filed June 30, 1999;
- Corixa's quarterly report on Form 10-Q for the quarter ended June 30,
1999 filed August 9, 1999;
- Corixa's two current reports on Form 8-K filed August 9, 1999; and
- Corixa's registration statement on Form S-3 filed August 9, 1999.
Any statement contained in a document incorporated or deemed to be
incorporated in this document by reference will be deemed to be modified or
superseded for purposes of this proxy statement/prospectus to the extent that a
statement contained in this document or any other subsequently filed document
that is deemed to be incorporated in this document by reference modifies or
supersedes the statement. Any statement so modified or superseded will not be
deemed, except as so modified or superseded, to constitute a part of this proxy
statement/prospectus.
WHERE YOU CAN FIND MORE INFORMATION
Corixa files annual, quarterly and current reports, proxy solicitation
statements and other information with the SEC. You may read and copy any
reports, statements or other information filed by Corixa at the SEC's public
reference rooms in Washington, D.C., New York City, and Chicago. Please call the
SEC at 1-800-SEC-0330 for further information on the public reference rooms.
Corixa's filings are also available to the public from commercial document
retrieval services and at the Internet website maintained by the SEC at
http://www.sec.gov.
Corixa filed a registration statement on Form S-4 with the SEC to register
the Corixa common stock to be issued to Ribi stockholders in the merger. This
proxy statement/prospectus is a part of that registration statement. As allowed
by the SEC's rules, this proxy statement/prospectus does not contain all of the
information you can find in the registration statement or the exhibits to the
registration statement. This proxy statement/prospectus summarizes some of the
documents that are exhibits to the registration statement, and you should refer
to the exhibits for a more complete description of the matters covered by those
documents.
Neither Corixa nor Ribi has authorized anyone to give any information
regarding the solicitation of consents or the offering of shares of Corixa
common stock that is different from the information contained in this proxy
statement/prospectus. This is not an offer to sell or a solicitation of anyone
to whom it would be unlawful to make an offer or solicitation. You should not
assume that the information contained in this proxy statement/prospectus is
accurate as of any time after the date of this proxy statement/prospectus, and
neither the mailing of this proxy statement/prospectus to stockholders nor the
issuance of Corixa common stock in the merger should create any implication to
the contrary.
FORWARD-LOOKING STATEMENTS
The proxy statement/prospectus contains forward-looking statements. These
statements relate to future events or the future financial performance of
Corixa, Ribi and the combined company. In some cases, you can identify
forward-looking statements by terminology such as "may," "will," "should,"
"expects," "plans," "anticipates," "believes," "estimates," "predicts,"
"potential," or "continue" or the negative of these terms and other comparable
terminology. These forward-looking statements only reflect management's
expectations and estimates. Actual events or results may differ materially from
such expectations for many reasons, including those set forth in "Risk Factors"
beginning on page 32.
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All forward looking statements attributable to Corixa or Ribi are expressly
qualified in full by such language. Neither Corixa nor Ribi undertakes any
obligation to update any forward-looking statements.
TRADEMARKS
Corixa has applied for trademark registration for Corixa(TM) and the
stylized Corixa logo. The terms Anergen(R), AnergiX(R), AnergiX.MG(TM),
Anergix.RA(TM), Anergix.IDDM(TM), AnervaX(TM), AnervaX.RA(TM) and AnervaX.DB(TM)
are trademarks of Corixa.
The terms MPL(R), Melacine(R), Ribigen(R), Bronchor(TM), Ovamid(TM),
Detox(TM) and Ribi's logo are trademarks of Ribi.
This proxy statement/prospectus also includes trade names and trademarks of
companies other than Corixa or Ribi. The use of any third party trade name or
trademark in this document is in an editorial fashion only, and to the benefit
of the owner thereof, with no intention of commercial use or infringement of
such trade name or trademark.
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SUMMARY
This summary highlights selected information from this document and may not
contain all of the information that is important to you. To understand the
merger fully and for a more complete description of the legal terms of the
merger, you should carefully read this entire document and the documents to
which we have referred you. Additionally, if you are a Corixa stockholder, to
understand the Castle Gate equity line of credit and the proposed amendment to
Corixa's Amended and Restated 1994 Stock Option Plan fully, you should carefully
read this document and the documents to which we have referred you in connection
with those matters.
Ribi has provided the information in this proxy statement/prospectus about
Ribi, and Corixa has provided the information in this proxy statement/prospectus
about Corixa.
THE COMPANIES
Corixa. Corixa Corporation, headquartered in Seattle, Washington, is a
biotechnology company focused on preventing disease by understanding and
directing the immune system. Corixa applies its expertise in immunology and
proprietary technology platforms to the discovery and development of vaccine and
other antigen-based products. Corixa is focused on research and development of
products to prevent or treat cancers and infectious and autoimmune diseases.
Corixa's strategy is to partner with numerous developers and marketers of
pharmaceutical and diagnostic products with the goal of making products based on
Corixa's technologies available to patients on a world-wide basis. Corixa
dedicates most of its resources to product discovery and invests its own capital
in direct funding of individual product clinical trials.
Corixa was incorporated in Delaware in September 1994. Corixa's principal
executive offices are located at 1124 Columbia Street, Suite 200, Seattle,
Washington 98104-2040, and its telephone number is (206) 754-5711.
Ribi. Ribi ImmunoChem Research, Inc., located in Hamilton, Montana, is a
biotechnology company engaged in the development of biopharmaceutical products
that stimulate the immune system to generate natural agents and signals to
prevent and treat human disease. Ribi's immunstimulants can be combined with
disease-specific antigens, which may direct the immune system to respond to a
particular cancer or infectious disease, or may be used to modulate the immune
response to prevent or ameliorate conditions such as ischemia-reperfusion
injury. Ribi is engaged in the research, development, production and marketing
of these products, some of which are under investigation by other companies for
use as adjuvants. In addition, Ribi engages in related activities such as the
custom formulation and sale of research products.
Ribi was incorporated in Delaware in January 1981. Ribi's principal
executive offices are located at 553 Old Corvallis Road, Hamilton, Montana,
59840-3131, and its telephone number is (406) 363-6214.
CORIXA SPECIAL MEETING
The Corixa special meeting of stockholders will be held in the Cedar Room
at Corixa Corporation, 1124 Columbia Street, Seattle, Washington 98104-2040 on
September 24, 1999 at 9:00 a.m., local time. At the special meeting, Corixa will
ask its stockholders to:
- approve the merger;
- approve potential additional draw-downs of funds at Corixa's option under
the Castle Gate equity line of credit and corresponding issuances of
Corixa Series A preferred stock and warrants to purchase Corixa common
stock to Castle Gate; and
- approve the amendment to the Amended and Restated 1994 Stock Option Plan
to increase the number of shares available for grant thereunder and to
increase the maximum annual automatic increase in shares reserved for
issuance under the 1994 plan.
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Corixa stockholders may also consider any vote on such other matters as may
be properly brought before the special meeting.
CORIXA RECORD DATE; VOTING POWER
Corixa stockholders can vote at the Corixa special meeting if they owned
shares of Corixa common stock or Series A preferred stock as of the close of
business on the record date of August 9, 1999.
As of this record date, approximately 14,862,053 shares of Corixa common
stock and 12,500 shares of Series A preferred stock were outstanding and
entitled to vote at the Corixa special meeting. You will have one vote for each
share of Corixa common stock you owned as of the record date and approximately
117.65 votes for each share of Corixa Series A preferred stock you owned as of
the record date.
RIBI SPECIAL MEETING
The Ribi special meeting of stockholders will be held at Hamilton City
Hall/Community Center, 223 S. 2nd Street, Hamilton, Montana 59840 on September
23, 1999 at 10:00 a.m., local time. At the special meeting, Ribi will ask its
stockholders to approve the merger.
Ribi stockholders may also consider and vote on such other matters as may
be properly brought before the Ribi special meeting.
RIBI RECORD DATE; VOTING POWER
You can vote at the Ribi special meeting if you owned shares of Ribi common
stock as of the close of business on the record date of August 9, 1999.
As of the record date, approximately 21,434,970 shares of Ribi common stock
were outstanding and entitled to vote at the Ribi special meeting. You will have
one vote for each share of Ribi common stock you owned as of the record date.
THE MERGER
WHAT WILL HAPPEN TO RIBI?
If the merger is completed, Ribi will merge with and into Corixa with
Corixa as the surviving corporation. Each stockholder that owned common stock in
Ribi before the merger will own Corixa common stock after the merger.
MANAGEMENT AFTER THE MERGER
The officers and directors of Corixa immediately prior to completion of the
merger will be the officers and directors of the combined company after
completion of the merger.
WHAT RIBI STOCKHOLDERS WILL RECEIVE
Based on the capitalization of Ribi on the Ribi record date, Ribi
stockholders will receive a maximum of 4,330,701 shares of Corixa common stock,
assuming no exercise of Ribi options or warrants. This is equal to 0.1685 of one
share of Corixa common stock for each share of Ribi common stock plus up to
720,000 shares of Corixa common stock that may be issued in connection with the
redemption or conversion of the Ribi Series A preferred stock into Ribi common
stock.
Ribi stockholders will not receive fractional shares. Instead, they will
receive a check in payment for any fractional shares at the rate of $13.425 per
full share of Corixa common stock.
DO NOT SEND IN YOUR RIBI STOCK CERTIFICATES UNTIL INSTRUCTED TO DO SO AFTER
THE MERGER IS COMPLETED.
OTHER INTERESTS OF OFFICERS AND DIRECTORS
IN THE MERGER
In considering the Ribi board of directors' recommendation that you vote
"FOR" the merger, you should be aware that some officers and directors of Ribi
have interests in the merger that are different from, or in addition to, your
interests. These interests involve consulting arrangements, accelerated vesting
of stock options and indemnification rights. As a result, directors and officers
may be more likely to vote to approve the merger than Corixa and Ribi
stockholders generally. These interests are more fully described in the section
entitled "THE MERGER -- Interests of Certain Persons in the Merger" beginning on
page 73.
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CONDITIONS TO THE MERGER
The respective obligations of Corixa and Ribi to complete the merger are
contingent on the occurrence or waiver of the following events:
- Both Corixa's and Ribi's stockholders approve the merger;
- The registration statement is filed, becomes effective and no stop order
suspending its effectiveness is issued or threatened in writing by the
SEC;
- There is no law or pending or effective injunction or other restraint
prohibiting the merger or that has the effect of making the merger
illegal;
- Corixa and Ribi each receive a written opinion from their respective tax
counsel that the merger is a tax-free reorganization; and
- The merger has received all necessary governmental approvals, and the
waiting periods under certain antitrust laws have expired or have been
terminated.
The obligations of Ribi to effect the merger are contingent on the
occurrence or waiver of, among other things, the following:
- The representations and warranties of Corixa in the merger agreement are
true and correct in all material respects as of June 9, 1999 and as of
the effective date of the merger, subject to exceptions and
qualifications specified in the merger agreement;
- No material adverse effect with respect to Corixa has occurred since June
9, 1999;
- Corixa complies in all material respects with the covenants and
obligations of Corixa as outlined in the merger agreement;
- Ribi receives a certificate of corporate good standing for Corixa;
- Ribi receives an opinion from Corixa's counsel in the form required in
the merger agreement;
- Corixa obtains all third party consents required in connection with the
merger;
- Ribi receives a fairness opinion from Hambrecht & Quist LLC with respect
to the fairness to Ribi's stockholders of the consideration to be paid to
Ribi stockholders in the merger; and
- A listing of the shares of Corixa common stock issuable in connection
with the merger on the Nasdaq National Market has been made.
The obligations of Corixa to effect the merger are contingent on the
occurrence or waiver of, among other things, the following:
- The representations and warranties of Ribi in the merger agreement are
true and correct in all material respects as of June 9, 1999 and as of
the effective date of the merger, subject to exceptions and
qualifications specified in the merger agreement;
- No material adverse effect with respect to Ribi has occurred since June
9, 1999;
- Ribi obtains all third party consents required in connection with the
merger;
- Ribi complies in all material respects with the covenants and obligations
of Ribi as outlined in the merger agreement;
- No injunctions or other restraints are pending or issued restricting
Corixa's conduct of the business of Ribi following the merger;
- Corixa receives an opinion from counsel to Ribi in the form required in
the merger agreement;
- Affiliates of Ribi enter into voting agreements with Corixa;
- All of the outstanding shares of Ribi Series A preferred stock are
redeemed or converted into Ribi common stock;
- Corixa receives a fairness opinion from Pacific Growth Equities, Inc.
with respect to the fairness to Corixa's stock-
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holders of the consideration to be paid by Corixa in the merger;
- Corixa receives a certificate of corporate good standing for Ribi;
- Ribi's board of directors has adopted a resolution terminating Ribi's
401(k) plan;
- Ribi's directors' and officers insurance is in full force and effect; and
- Ribi amends its stock option plans and option agreements granted to
Ribi's employees and directors in the manner specified in the merger
agreement.
TERMINATION OF THE MERGER AGREEMENT; TERMINATION FEE
Either Corixa or Ribi may terminate the merger agreement at any time prior
to completion of the merger, whether before or after Corixa or Ribi obtains the
required stockholder vote, if, among other things:
- The Corixa board of directors and the Ribi board of directors mutually
consent;
- The merger does not become effective on or before November 1, 1999, or
such later date as Corixa and Ribi may mutually agree;
- A governmental entity issues an order, decree or ruling or takes any
other action that permanently prevents Corixa or Ribi from going forward
with the merger; or
- Either Corixa stockholders or Ribi stockholders do not approve the
merger.
Either Corixa or Ribi may terminate the merger agreement at any time prior
to the approval of the merger by Ribi's stockholders if, among other things:
- Ribi's board of directors adversely amends or withdraws its unanimous
recommendation in favor of the merger;
- Ribi enters into a letter of intent or approves or publicly recommends a
merger with, acquisition by or sale of assets to a third party other than
Corixa, where Ribi's board of directors determines that such transaction
is financially superior to the merger; or
- A person or entity unaffiliated with Corixa or Ribi commences a tender or
exchange offer relating to securities of Ribi, and Ribi fails to send its
stockholders a statement disclosing that Ribi recommends rejection of
such offer within 10 business days after the publication of the offer.
Corixa may terminate the merger agreement at any time prior to the
effectiveness of the merger, and before Ribi obtains the required stockholder
approval, if:
- Ribi fails to use commercially reasonable efforts to hold the Ribi
special meeting to approve the merger within the later of 30 days after
the registration statement is declared effective, with certain
exceptions, or 15 days after any post-effective amendments or supplements
to this proxy statement/prospectus are mailed to stockholders of Ribi.
Ribi may terminate the merger agreement at any time prior to the
effectiveness of the merger and before Corixa obtains the required stockholder
approval, if:
- Corixa fails to use commercially reasonable efforts to hold the Corixa
special meeting to approve the merger within 15 days after any
post-effective amendments or supplements to this proxy
statement/prospectus are mailed to stockholders of Corixa.
Corixa may terminate the merger agreement at any time prior to the
effectiveness of the merger, whether before or after Ribi obtains the required
stockholder approval, if:
- Ribi breaches any representation, warranty, covenant or agreement in the
merger agreement or if such provisions become untrue, subject to certain
materiality qualifications and the ability of Ribi to correct such
breach.
Ribi may terminate the merger agreement at any time prior to the
effectiveness of the
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merger, whether before or after Corixa obtains the required stockholder
approval, if:
- Corixa breaches any representation, warranty, covenant or agreement in
the merger agreement or if such provisions become untrue, subject to
certain materiality qualifications and the ability of Corixa to correct
such breach.
For a more complete description of the manner in which the merger agreement
may be terminated, see the sections entitled "Terms of the Merger -- Termination
of the Merger Agreement" beginning on page 105 and "-- No Other Negotiations
Involving Ribi" beginning on page 101.
You should note that under certain circumstances leading to termination of
the merger agreement, which are discussed further in the section entitled "Terms
of the Merger -- Expenses; Termination Fees" beginning on page 106, Corixa may
receive a termination fee of $2.5 million.
VOTE REQUIRED
Approval of the merger requires a majority vote of all outstanding shares
of Ribi common stock at the Ribi special meeting and a majority vote of all
outstanding shares of Corixa common stock and Series A preferred stock, voting
together as a single class on an as-converted basis at the Corixa special
meeting. For Corixa stockholders, approval of the terms allowing potential
additional draws under the Castle Gate equity line of credit and the amendment
to the 1994 plan require a majority vote of the shares entitled to vote on each
proposal that are present in person or by proxy at the Corixa special meeting.
Under Nasdaq rules, holders of Corixa Series A preferred stock are not entitled
to vote on the proposal to approve the potential additional Castle Gate draws.
OWNERSHIP OF CORIXA FOLLOWING THE MERGER
Based on Ribi's capitalization on the Ribi record date, Corixa expects to
issue up to 3,610,701 shares of Corixa common stock in connection with the
merger, assuming no exercise of Ribi options or warrants and no conversion of
the Ribi Series A preferred stock into Ribi common stock. As of August 9, 1999,
the exercise prices of most of the outstanding Ribi options and the outstanding
warrants, adjusted to reflect the exchange ratio, were significantly greater
than the value of Corixa common stock into which such options and warrants will
be converted under the terms of the merger agreement. Should all of the Ribi
options and the outstanding warrants be exercised, Corixa would be obligated to
issue up to an additional aggregate of approximately 386,159 shares of Corixa
common stock. In addition, up to 720,000 shares of Corixa common stock may be
issued in connection with the redemption or conversion of the Ribi Series A
preferred stock into Ribi common stock. Based on the capitalization of Ribi on
the Ribi record date, the former holders of Ribi common stock will hold
approximately 19.5% of the total number of shares of Corixa common stock
outstanding after effectiveness of the merger.
WHEN THE MERGER WILL OCCUR
Assuming that both Ribi and Corixa satisfy or waive all of the conditions
to effectiveness in the merger agreement, we currently anticipate that the
merger will be completed during September 1999.
SECURITIES LAWS COMPLIANCE
The merger must satisfy federal securities laws and applicable securities
laws of the various states.
ACCOUNTING TREATMENT
The merger will be accounted for as a purchase.
OPINIONS OF FINANCIAL ADVISORS
In deciding whether to approve the merger, the boards of directors of both
Corixa and Ribi considered the opinion of their respective financial advisors,
Pacific Growth Equities for Corixa and Hambrecht & Quist for Ribi, that as of
June 9, 1999 and June 8, 1999, respectively, and subject to certain assumptions
and other matters described in those opinions, the
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exchange ratio in the merger was fair, from a financial point of view, to the
stockholders of Corixa and Ribi. These opinions are attached as Appendices B and
C to this proxy statement/prospectus. We encourage you to read these opinions,
although they are limited to the fairness of the exchange ratio to the Corixa
and Ribi stockholders, respectively, from a financial point of view and they do
not constitute a recommendation as to how you should vote.
IMPORTANT FEDERAL INCOME TAX CONSEQUENCES
We have structured the merger so that Ribi stockholders will not recognize
any gain or loss for federal income tax purposes in the merger, except for tax
payable because of cash received by Ribi stockholders instead of fractional
shares. We have conditioned the merger on each company's receipt of a legal
opinion of their respective counsel that such is the case.
RIGHTS OF DISSENTING STOCKHOLDERS
Both Corixa and Ribi are organized under Delaware law. Under Delaware law,
neither Ribi stockholders nor Corixa stockholders holding shares of common stock
are entitled to appraisal rights in connection with the merger. Corixa
stockholders holding shares of Series A preferred stock may be entitled to
appraisal rights in connection with the merger. This is discussed further in the
sections entitled "The Corixa Special Meeting -- Appraisal Rights" on page 55
and "The Ribi Special Meeting -- No Appraisal Rights" on page 57.
VOTING AGREEMENTS
Ribi has agreed to use reasonable best efforts to cause each of its
affiliates and SmithKline Beecham Biologicals Manufacturing, S.A. to execute a
voting agreement with respect to a total of approximately 6.2% of the
outstanding shares of Ribi common stock. Ribi also has agreed to use reasonable
efforts to cause RGC International Investors, LDC to execute a voting agreement
with respect to any shares of Ribi common stock held by it on August 9, 1999.
Under these agreements, these Ribi stockholders would agree to vote all of their
Ribi shares in favor of the merger. They would also irrevocably appoint any
board member of Corixa as a proxy to vote their Ribi shares in favor of the
merger. Additionally, these agreements would restrict these Ribi stockholders'
ability to dispose of Corixa common stock received in the merger for a period of
90 days following the merger. A form of the voting agreement is included in
Appendix A to this proxy statement/prospectus.
LISTING OF CORIXA COMMON STOCK
The shares of Corixa common stock to be issued in connection with the
merger will be listed on Nasdaq.
COMPARATIVE PER SHARE MARKET PRICE INFORMATION
Corixa common stock is quoted on Nasdaq under the symbol "CRXA." Ribi
common stock is quoted on Nasdaq under the symbol "RIBI." Following the
consummation of the merger, Ribi common stock will cease to be quoted on Nasdaq.
The following table sets forth the closing sale prices per share of Corixa
common stock and Ribi common stock on June 9, 1999, the last trading day before
Corixa and Ribi announced the signing of the merger agreement, and August 9,
1999.
The estimated equivalent per share price of Ribi common stock is calculated
by multiplying the price per share of Corixa common stock by the exchange ratio
of 0.1685.
The actual prices of shares of Corixa common stock and Ribi common stock
fluctuate continuously. Accordingly, the Corixa and Ribi prices per share prior
to or at the time Corixa and Ribi consummate the merger cannot be guaranteed or
predicted.
<TABLE>
<CAPTION>
CORIXA RIBI
PER RIBI PER EQUIVALENT
SHARE SHARE PER SHARE
DATE PRICE PRICE PRICE
---- -------- -------- ----------
<S> <C> <C> <C>
June 9, 1999 $13.5625 $1.7812 $2.2852
August 9,
1999 $14.1250 $2.1562 $2.3801
</TABLE>
11
<PAGE> 23
CORIXA'S BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE TERMS OF THE
MERGER AND HAS DETERMINED THAT THE MERGER IS IN THE BEST INTEREST OF CORIXA AND
ITS STOCKHOLDERS, AND UNANIMOUSLY RECOMMENDS YOU VOTE IN FAVOR THEREOF. RIBI'S
BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE TERMS OF THE MERGER AND HAS
DETERMINED THAT THE MERGER IS IN THE BEST INTEREST OF RIBI AND ITS STOCKHOLDERS,
AND UNANIMOUSLY RECOMMENDS YOU VOTE IN FAVOR THEREOF.
OTHER CORIXA MATTERS
In addition to the proposed merger, there are two other matters before the
Corixa stockholders at the Corixa special meeting as set forth in the notice of
the Corixa special meeting:
APPROVAL OF ADDITIONAL CASTLE GATE DRAWS
In April 1999, Corixa entered into an agreement with Castle Gate to provide
Corixa with an equity line of credit of up to $50 million for a period of two
years. Corixa may draw down funds pursuant to the equity line of credit to be
used to cover expenses associated with various technology or company
acquisitions. Upon execution of this agreement, Corixa consummated an initial
draw-down under the equity line of credit of $12.5 million and issued Castle
Gate 12,500 shares of Corixa Series A preferred stock at a price of $1,000 per
share and warrants to purchase a total of up to 1,037,137 shares of Corixa
common stock. The conversion price for the Series A preferred stock issued in
the initial draw is $8.50 per share. The exercise price of warrants to purchase
312,500 shares of Corixa common stock is $8.50 per share, and the exercise price
of warrants to purchase 724,637 shares of Corixa common stock is $8.28 per
share.
Corixa may draw down additional funds under the equity line of credit at
its sole option. The conversion price for all other shares of Series A preferred
stock that may be issued as the result of optional additional draw-downs by
Corixa under the equity line of credit will be equal to the average daily
closing price of Corixa's common stock for a designated period before and after
the consummation of such subsequent draw, provided that such conversion price
cannot exceed certain specified amounts. The exercise price of additional
warrants that may be issued pursuant to the equity line of credit either as a
result of optional subsequent draw-downs or upon specified dates will be
determined in accordance with specified formulas at the time of issuance.
A condition of Corixa's agreement with Castle Gate is that Corixa must
obtain stockholder approval before making any additional draws under the equity
line of credit. Corixa is also obligated to obtain such stockholder approval
pursuant to the rules of Nasdaq if such draws could result in Corixa issuing 20%
or more of its capital stock to Castle Gate at a price per share that is less
than the greater of book or market value of such stock.
Corixa has no present intention to make additional draws under the equity
line of credit, but Corixa is seeking stockholder approval for such potential
additional draws so that Corixa has the flexibility to make such additional
draws in the future.
CORIXA'S BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE TERMS OF THE
CASTLE GATE AGREEMENT AND THE POTENTIAL FOR CORIXA TO MAKE ADDITIONAL DRAWS
THEREUNDER, AND RECOMMENDS YOU VOTE IN FAVOR THEREOF.
AMENDMENT OF AMENDED AND RESTATED 1994 STOCK OPTION PLAN
On June 9, 1999, Corixa's board of directors approved an amendment to its
Amended and Restated 1994 Stock Option Plan to increase the shares available for
issuance thereunder by 2,500,000 shares to an aggregate of 5,266,234 shares and
to increase the annual maximum automatic increase in the number of shares
reserved for issuance thereunder from 500,000 to 750,000. If this amendment is
approved, the maximum aggregate number of shares of Corixa common stock that may
be issued under the 1994 plan as currently structured is 9,016,234. The purpose
of this increase is to allow Corixa to continue to attract and
12
<PAGE> 24
retain qualified employees through the issuance of stock options. The addition
of shares to the option plan is warranted largely due to Corixa's multiple
recent acquisitions and the necessity to attract and retain employees of the
acquired companies so that Corixa can realize the benefits of such acquisitions.
CORIXA'S BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE AMENDMENT OF THE
1994 PLAN AND RECOMMENDS YOU VOTE IN FAVOR THEREOF.
OTHER RIBI MATTERS
The Ribi board of directors does not intend to bring any matters before the
Ribi special meeting other than those specifically set forth in the notice of
the Ribi special meeting.
13
<PAGE> 25
SELECTED HISTORICAL FINANCIAL INFORMATION OF CORIXA
The following selected historical financial information of Corixa should be
read in conjunction with "Corixa Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the audited consolidated
financial statements of Corixa and related notes thereto, incorporated by
reference into this proxy statement/prospectus.
CORIXA CORPORATION
SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
INCEPTION
SIX MONTHS ENDED (SEPTEMBER 8,
JUNE 30, YEAR ENDED DECEMBER 31, 1994) TO
------------------ -------------------------------------- DECEMBER 31,
1999 1998 1998 1997 1996 1995 1994
-------- ------- -------- ------- ------- ------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
Corporate partnerships............ $ 8,411 $ 5,389 $ 17,003 $13,390 $ 4,402 $ 2,411 $ --
Government grants................. 743 485 1,267 977 1,403 304 --
-------- ------- -------- ------- ------- ------- -------
Total revenue.............. 9,154 5,874 18,270 14,367 5,805 2,715 --
Operating expenses:
Research and development.......... 18,663 12,900 27,436 16,398 9,995 7,040 439
General and administrative........ 1,745 1,169 2,672 2,033 781 532 205
In-process research and
development..................... 11,612 -- 12,021 -- -- -- 428
-------- ------- -------- ------- ------- ------- -------
Total operating expenses... 32,020 14,069 42,129 18,431 10,776 7,572 1,072
-------- ------- -------- ------- ------- ------- -------
Loss from operations................ (22,866) (8,195) (23,859) (4,064) (4,971) (4,857) (1,072)
Interest income (expense), net...... 1,004 1,289 2,249 973 476 691 83
Other income(1)..................... 471 250 294 415 348 16 --
-------- ------- -------- ------- ------- ------- -------
Net loss............................ (21,391) (6,656) (21,316) (2,676) (4,147) (4,150) (989)
Preferred stock deemed dividend..... (5,539) -- -- -- -- -- --
Preferred stock dividend............ (146) -- -- -- -- -- --
-------- ------- -------- ------- ------- ------- -------
Net loss applicable to common
stockholders...................... $(27,076) $(6,656) $(21,316) $(2,676) $(4,147) $(4,150) $ (989)
======== ======= ======== ======= ======= ======= =======
Basic and diluted net loss per
share............................. $ (1.88) $ (0.56) $ (1.75) $ (0.55) $ (1.65) $ (1.67) $ (0.41)
======== ======= ======== ======= ======= ======= =======
Shares used in computation of basic
and diluted net loss per share.... 14,398 11,785 12,172 4,891 2,521 2,487 2,403
======== ======= ======== ======= ======= ======= =======
Pro forma basic and diluted net loss
per share(2)...................... $ (0.31) $ (0.55) $ (0.58) $ (0.27)
------- ------- ------- -------
Shares used in computing pro forma
basic and diluted loss per
share(2).......................... 8,755 7,490 7,120 3,648
======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, -----------------------------------------------------------------
1999 1998 1997 1996 1995 1994
----------- -------- -------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and short-term
investments......................... $ 56,092 $ 45,141 $ 56,318 $11,933 $10,773 $11,064
Working capital....................... 42,204 42,508 53,962 10,101 9,743 10,939
Total assets.......................... 74,283 61,184 61,807 15,185 12,340 14,334
Long term obligations, less current
portion............................. 12,478 11,835 6,924 1,175 816 --
Accumulated deficit................... (54,669) (33,278) (11,962) (9,286) (5,126) (989)
Total stockholders' equity............ 43,466 42,184 51,285 11,226 10,264 14,038
</TABLE>
- ----------------
(1) Other income includes proceeds for management and administrative services
and rental income from sublet of a portion of laboratory space.
(2) Pro forma net loss per share assumes the conversion of outstanding preferred
stock into common stock. See Note 1 of Notes to Corixa Financial Statements
for additional information regarding the computation of net loss per share.
14
<PAGE> 26
SELECTED HISTORICAL FINANCIAL INFORMATION OF RIBI
The following selected historical financial information of Ribi should be
read in conjunction with "Ribi Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the audited financial statements of
Ribi and related notes thereto, included elsewhere in this proxy
statement/prospectus.
RIBI IMMUNOCHEM RESEARCH, INC.
SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
----------------- -----------------------------------------------
1999 1998 1998 1997 1996 1995 1994
------- ------- ------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Sales and other revenues...... $ 1,294 $ 1,420 $ 2,536 $ 2,754 $ 1,564 $ 959 $ 1,019
Contracts and licenses........ 1,550 1,427 2,841 2,834 2,042 1,848 2,075
Investment income, net........ 324 324 746 942 1,017 1,216 1,460
Research and development
expenses................... 3,447 4,056 7,872 8,184 6,203 5,530 4,993
Net loss...................... (3,096) (3,718) (7,633) (6,417) (5,589) (5,317) (3,790)
Net loss per common share..... (.16) (.18) (.38) (.32) (.30) (.28) (.20)
Shares used in computation of
basic and diluted net loss
per share.................. 20,507 20,315 20,318 20,072 18,890 18,877 18,657
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, -----------------------------------------------
1999 1998 1997 1996 1995 1994
------------ ------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and
investments...................... $10,725 $13,225 $13,370 $14,512 $19,824 $25,967
Total assets........................ 26,865 29,828 27,770 28,298 33,911 38,824
Stockholders' equity................ 22,468 25,600 25,415 26,847 32,427 37,338
</TABLE>
15
<PAGE> 27
SUMMARY SELECTED UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL INFORMATION
On February 10, 1999 and September 15, 1998, Corixa completed the
acquisitions of Anergen, Inc. and GenQuest, Inc., respectively. These
transactions were accounted for as purchases.
The following selected unaudited pro forma consolidated financial
information of Corixa, Ribi, Anergen and GenQuest has been derived from the pro
forma consolidated financial statements, which give effect to the merger and the
acquisitions of Anergen and GenQuest as purchases, and should be read in
conjunction with such pro forma statements and the notes thereto, which are
included in this proxy statement/prospectus under "Unaudited Pro Forma
Consolidated Financial Statements."
For pro forma purposes:
- Corixa's unaudited consolidated balance sheet as of June 30, 1999 has
been combined with the Ribi unaudited balance sheet as of June 30, 1999,
as if the merger had occurred on June 30, 1999;
- Corixa's unaudited statement of operations for the six months ended June
30, 1999 has been combined with Anergen's unaudited statement of
operations for the period from January 1, 1999 to February 10, 1999 and
Corixa's audited statement of operations for the year ended December 31,
1998 has been combined with Anergen's audited statement of operations for
the year ended December 31, 1998 and GenQuest's unaudited statement of
operations for the period from January 1, 1998 to September 15, 1998; and
- Corixa's unaudited pro forma combined statements of operations for the
six months ended June 30, 1999 and year ended December 31, 1998 have been
combined with the Ribi unaudited statement of operations for the six
months ended June 30, 1999 and the audited statement of operations for
the year ended December 31, 1998 as if the merger had occurred on January
1, 1999 and January 1, 1998, respectively.
The pro forma information is presented for illustrative purposes only and
is not necessarily indicative of the financial position or operating results
that would have occurred if the merger had been consummated on June 30, 1999,
January 1, 1999 or January 1, 1998, respectively, nor is it necessarily
indicative of future operating results or financial position.
16
<PAGE> 28
SUMMARY SELECTED UNAUDITED
PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
JUNE 30, 1999 DECEMBER 31, 1998
-------------------------- ------------------
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
Sales........................................ $ 1,306 $ 2,538
Corporate partnerships....................... 10,085 22,009
Government grants............................ 751 1,354
-------- --------
Total revenue............................. 12,142 25,901
OPERATING EXPENSES:
Purchases and production costs............... 801 1,836
Research and development..................... 22,654 44,329
General and administrative................... 4,448 10,425
Amortization of goodwill and other purchased
intangibles............................... 1,033 2,066
In-process research and development.......... 11,612 12,021
-------- --------
Total operating expenses(3)............... 40,548 70,677
Loss from operations........................... (28,406) (44,776)
Interest income (expense), net................. 1,324 3,385
Other income (expense)(1)...................... 459 88
-------- --------
Net loss....................................... $(26,623) $(41,303)
Preferred stock deemed dividend................ (5,539) --
Preferred stock dividend....................... (146) --
Net loss applicable to common stockholders..... $(32,506) $(41,303)
Basic and diluted net loss per share(2)........ $ (1.71) $ (2.26)
======== ========
Shares used in computation of pro forma basic
and diluted net loss per share(2)............ 18,969 18,259
======== ========
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1999
--------------
<S> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments... $ 66,817
Working capital..................................... 48,184
Total assets........................................ 110,501
Long term obligations less current portion.......... 12,478
Accumulated deficit................................. (82,290)
Total stockholders' equity.......................... 72,687
</TABLE>
- ---------------
(1) Other income includes proceeds received for management and administration
services, and rental income from sublet of a portion of laboratory space.
(2) See Notes 3, 5 and 6 of Notes to Unaudited Pro Forma Consolidated Financial
Statements for information regarding the computation of pro forma net loss
per share.
(3) Excludes in-process research and development charge related to the merger,
which is considered nonrecurring.
17
<PAGE> 29
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma consolidated financial statements give
effect to the merger, the Anergen acquisition and the GenQuest acquisition using
the purchase method of accounting. The unaudited pro forma consolidated balance
sheet gives effect to the merger as if it had occurred on June 30, 1999. The
unaudited pro forma consolidated statements of operations for the year ended
December 31, 1998 give effect to the merger, the Anergen acquisition and the
GenQuest acquisition as if they had occurred on January 1, 1998. The unaudited
pro forma consolidated statement of operations for the six months ended June 30,
1999 give effect to the merger and the Anergen acquisition as if they had
occurred on January 1, 1999. The Unaudited Pro Forma Consolidated Financial
Statements do not purport to represent what Corixa's financial position or
results of operations would actually have been if the merger or acquisition had
in fact occurred on such dates or to project Corixa's financial position or
results of operations as of any future date or for any future period.
For pro forma purposes:
- Corixa's unaudited consolidated balance sheet as of June 30, 1999 has
been combined with the Ribi unaudited balance sheet as of June 30, 1999
as if the merger had occurred on June 30,1999;
- Corixa's unaudited statement of operations for the six months ended June
30, 1999 has been combined with Anergen's unaudited statement of
operations for the period from January 1, 1999 to February 10, 1999.
Corixa's audited statement of operations for the year ended December 31,
1998 has been combined with Anergen's audited statement of operations for
the year ended December 31, 1998 and GenQuest's unaudited statement of
operations for the period from January 1, 1998 to September 15, 1998 to
arrive at Corixa pro forma combined results; and
- Corixa's unaudited pro forma combined statements of operations for the
six months ended June 30, 1999 and year ended December 31, 1998 have been
combined with the Ribi unaudited statement of operations for the six
months ended June 30 1999. The audited statement of operations for the
year ended December 31, 1998 as if the merger had occurred on January 1,
1999 and January 1, 1998, respectively.
The unaudited pro forma adjustments have been applied to the financial
information derived from the financial statements of Corixa, Ribi, Anergen and
GenQuest to account for the merger, the Anergen acquisition and the GenQuest
acquisition as purchases; accordingly, assets acquired and liabilities assumed
are reflected at their estimated fair values which are subject to further
refinement, including appraisals and other analyses.
The unaudited pro forma consolidated financial information has been
prepared based on the assumptions described in the notes thereto and includes
assumptions relating to the allocation of the consideration paid for the assets
and liabilities of Ribi based on preliminary estimates of their fair value. In
the opinion of Corixa, all adjustments necessary to present fairly such
unaudited pro forma consolidated financial information have been made based on
the proposed terms and structure of the merger.
As a result of the merger, Corixa expects to record acquired intangible
assets for adjuvant know-how and work force, acquired goodwill and a
nonrecurring charge to operations for acquired in-process research and
development. The pro forma consolidated financial statements reflect an
allocation to acquired in-process research and development and acquired
goodwill, adjuvant know-how and work force estimated to be $26.0 million and
$10.9 million, respectively. The charge for acquired in-process research and
development has been reflected in the unaudited pro forma consolidated
18
<PAGE> 30
balance sheet, but excluded from the unaudited pro forma consolidated statement
of operations, because the charge is nonrecurring.
The unaudited pro forma information is presented for illustrative purposes
only and is not necessarily indicative of the operating results or financial
position that would have occurred if the merger had been consummated on June 30,
1999, January 1, 1998 or January 1, 1999, respectively, nor is it necessarily
indicative of future operating results or financial position.
These unaudited pro forma consolidated financial statements and
accompanying notes should be read in conjunction with the historical
consolidated financial statements and the related notes thereto of Corixa, Ribi,
Anergen and GenQuest and other financial information pertaining to Corixa, Ribi,
Anergen and GenQuest, including "Corixa Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Ribi Management's Discussion
and Analysis of Financial Condition and Results of Operations" included
elsewhere in this proxy statement/prospectus or, in the case of Corixa,
incorporated by reference from its Form 10-K filed on March 22, 1999, its Forms
10-Q's filed on May 6, 1999 and August 9, 1999 and its two Forms 8-K's filed on
August 9, 1999.
19
<PAGE> 31
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
CORIXA RIBI ADJUSTMENTS NOTE 2 COMBINED
-------- -------- ----------- ------------------- ---------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.... $ 6,459 $ 95 $ -- $ 6,554
Securities
available-for-sale........ 49,633 10,630 60,263
Accounts receivable.......... 2,523 647 3,170
Interest receivable.......... 818 -- 818
Prepaid expenses............. 1,110 1,110
Inventory.................... -- 1,391 1,391
Other current assets......... -- 214 214
-------- -------- -------- --------
Total current
assets............ 60,543 12,977 73,520
Property and equipment, net.... 9,990 11,712 21,702
Investments.................... 3,591 -- 3,591
Goodwill and other purchased
intangibles.................. -- -- 10,950 (ii)(iii)(iv)(viii) 10,950
Other assets -- net............ -- 564 (564) --
Deferred charges and
deposits..................... 159 1,612 1,771
-------- -------- -------- --------
Total assets......... $ 74,283 $ 26,865 $ 10,386 $111,534
======== ======== ======== ========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable and accrued
liabilities............... $ 4,664 $ 1,042 $ 2,600 (v) $ 8,306
Deferred revenue............. 10,498 3,355 13,853
Current portion of
obligations and
commitments............... 3,177 -- 3,177
-------- -------- -------- --------
Total current
liabilities....... 18,339 4,397 2,600 25,336
Long-term obligations and
commitments, less current
portion...................... 12,478 -- 12,478
Stockholders' equity:
Preferred stock.............. -- 1 (1) (vi) --
Common stock................. 15 21 (17) (vi)(vii) 19
Additional paid-in capital... 99,281 75,654 (18,816) (vi)(vii) 156,119
Deferred compensation........ (726) -- (726)
Accumulated comprehensive
income.................... (435) (40) 40 (vi) (435)
Accumulated deficit.......... (54,669) (53,168) 26,580 (i)(vi)(viii)(ix) (81,257)
-------- -------- -------- --------
Total stockholders'
equity............ 43,466 22,468 7,786 73,720
-------- -------- -------- --------
Total liabilities and
stockholders'
equity............ $ 74,283 $ 26,865 $ 10,386 $110,501
======== ======== ======== ========
Book value per share........... $ 2.95 $ 1.07 $ 3.87
======== ======== ========
</TABLE>
20
<PAGE> 32
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
CORIXA
PRO FORMA
COMBINED
(INCLUDING CORIXA/RIBI PRO
ANERGEN) PRO FORMA FORMA
(NOTE 4) RIBI ADJUSTMENTS COMBINED
---------- ------- ----------- --------
<S> <C> <C> <C> <C> <C>
Revenue:
Sales................................. $ -- $ 1,306 $ -- $ 1,306
Collaborative agreements.............. 8,535 1,550 -- 10,085
Government grants..................... 751 -- -- 751
-------- ------- ------- --------
Total revenue................. 9,286 2,856 -- 12,142
Operating expenses:
Purchases and production costs........ -- 801 -- 801
Research and development.............. 19,207 3,447 -- 22,654
General and administrative............ 2,432 2,016 -- 4,448
Amortization of goodwill and other
purchased intangibles.............. -- -- 1,033(ix) 1,033
In-process research and
development(1)..................... 11,612 -- -- 11,612
-------- ------- ------- --------
Total operating expenses...... 33,251 6,264 1,033 40,548
-------- ------- ------- --------
Loss from operations.................... (23,965) (3,408) (1,033) (28,406)
Interest income......................... 1,399 324 -- 1,723
Interest expense........................ (399) -- -- (399)
Other income............................ 471 (12) -- 459
-------- ------- ------- --------
Net loss................................ (22,494) 3,096 (1,033) (26,623)
Preferred stock deemed dividend......... (5,539) -- -- (5,539)
Accretion of liquidation preference on
preferred shares...................... -- (198) -- (198)
Preferred stock dividend................ (146) -- -- (146)
-------- ------- ------- --------
Net loss applicable to common
stockholders.......................... $(28,179) $(3,294) $(1,033) $(32,506)
======== ======= ======= ========
Basic and diluted net loss per share.... $ (1.93) $ (0.16) $ (1.71)
======== ======= ========
Shares used in computation of basic and
diluted net loss per share applicable
to common stockholders................ 14,638 20,507 18,969 (Note 3)
======== ======= ========
</TABLE>
- -------------------------
(1) This amount represents the in-process research and development charge
related to the Anergen acquisition.
21
<PAGE> 33
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
CORIXA
PRO FORMA
COMBINED
(INCLUDING
ANERGEN AND CORIXA/RIBI
GENQUEST) PRO FORMA PRO FORMA
(NOTE 4) RIBI ADJUSTMENTS COMBINED
----------- ------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Revenue:
Sales........................... $ -- $ 2,538 $ -- $ 2,538
Collaborative agreements........ 19,197 2,812 -- 22,009
Government grants............... 1,325 29 -- 1,354
-------- ------- ------- --------
Total revenue........... 20,522 5,379 -- 25,901
Operating expenses:
Purchases and production
costs........................ -- 1,836 -- 1,836
Research and development........ 36,457 7,872 -- 44,329
General and administrative...... 6,377 4,048 -- 10,425
Amortization of goodwill and
other purchased
intangibles.................. 2,066(ix) 2,066
In-process research and
development(1)............... 12,021 -- -- 12,021
-------- ------- ------- --------
Total operating
expenses............. 54,855 13,756 2,066 70,677
-------- ------- ------- --------
Loss from operations.............. (34,333) (8,377) (2,066) (44,776)
Interest income................... 3,587 746 -- 4,333
Interest expense.................. (948) -- -- (948)
Other income...................... 90 (2) -- 88
-------- ------- ------- --------
Net loss.......................... $(31,604) $(7,633) $(2,066) $(41,303)
======== ======= ======= ========
Basic and diluted net loss per
share........................... $ (2.26) $ (0.38) $ (2.26)
======== ======= ========
Shares used in computation of
basic and diluted net loss per
share........................... 13,979 20,318 18,310 (Note 3)
======== ======= ========
</TABLE>
- -------------------------
(1) This amount represents the in-process research and development charge
related to the GenQuest acquisition.
22
<PAGE> 34
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The following unaudited pro forma consolidated financial statements give
effect to the merger, the Anergen acquisition and the GenQuest acquisition using
the purchase method of accounting. The unaudited pro forma consolidated balance
sheet gives effect to the merger as if it had occurred on June 30, 1999. The
Anergen acquisition occurred on February 10, 1999 and the GenQuest acquisition
occurred on September 15, 1998. Accordingly, the unaudited balance sheet of
Corixa reflects the acquisition of Anergen and GenQuest. The unaudited pro forma
consolidated statements of operations for the year ended December 31, 1998 give
effect to the merger, the Anergen acquisition and the GenQuest acquisition as if
they had occurred on January 1, 1998 and the unaudited pro forma consolidated
statement of operations for the six months ended June 30, 1999 give effect to
the merger and the Anergen acquisition as if they had occurred on January 1,
1999. The unaudited pro forma consolidated financial statements do not purport
to represent what Corixa's financial position or results of operations would
actually have been if the merger or acquisition had in fact occurred on such
dates or to project Corixa's financial position or results of operations as of
any future date or for any future period.
2. RIBI -- UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL ADJUSTMENTS
(a) The unaudited pro forma consolidated financial statements reflect the
conversion of all the outstanding shares of Ribi capital stock into 4,330,701
shares of Corixa common stock pursuant to the merger, which includes up to
720,000 shares of Corixa common stock that may be issued as a result of the
redemption or conversion of Ribi Series A preferred stock into Ribi common stock
prior to the effective date of the merger (assuming no options or warrants to
purchase Ribi common stock are exercised after August 5, 1999). The exchange
ratio of 0.1685 was calculated as a fraction, the numerator of which equals 1.16
multiplied by the average of the last reported sale price of a share of Ribi
common stock for the 10 trading days preceding June 9, 1999, which equals
$2.262, and the denominator of which equals the average of the last reported
sale price of a share of Corixa common stock for the 10 trading days immediately
preceding June 9, 1999, which equals $13.425. All outstanding options and
warrants to purchase Ribi common stock will be assumed by Corixa pursuant to the
merger and converted into options and warrants to purchase shares of Corixa
common stock. This calculation assumes that no options or warrants to purchase
Ribi common stock will be exercised after August 5, 1999.
(b) The total consideration of $59.4 million consists of Corixa common
stock and options valued at $56.8 million, (which includes $8.9 million for the
redemption of Ribi Series A preferred stock, of which approximately $7.9 million
will be paid by Corixa to Ribi or, the issuance of up to 720,000 shares of
Corixa common stock as a result of the conversion of Ribi Series A preferred
stock into Ribi common stock prior to the effective date of the merger) and
transaction costs of approximately $2.6 million. The purchase price will be
allocated based on the fair value of assets acquired and liabilities assumed,
netting to $22.5 million, acquired in-process research and development of $26.0
million and purchased goodwill adjuvant know how and work force of $10.9
million. In-process research and development charges resulting from the merger
have not been reflected in the pro forma consolidated statement of operations,
as they are considered non-recurring charges.
Acquired in-process research and development (IPR&D) for the merger was
evaluated utilizing the present value of the estimated after-tax cash flows
expected to be generated by the purchased technology, which, at the effective
time of the merger, had not reached technological feasibility. The cash flow
projections for revenues are based on estimates of growth rates and the
aggregate size of the respective market for each product; probability of
technical success given the stage of
23
<PAGE> 35
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
development at the time of acquisition; royalty rates based on prior licensing
agreements; product's sales cycles; and the estimated life of a product's
underlying technology. Estimated operating expenses and income taxes are
deducted from estimated revenue projections to arrive at estimated after-tax
cash flows. Projected operating expenses include general and administrative
expenses, and research and development costs. The rates utilized to discount
projected cash flows range from 35% to 55% depending upon the relative risk of
each in-process technology and were based primarily on venture capital rates of
return and the weighted average cost of capital for Corixa at the time of the
merger.
The unaudited pro forma consolidated financial statements reflect acquired
IPR&D of approximately $26.0 million, representing the values determined by the
Company's management to be attributable to the IPR&D assets associated with the
technology acquired in the Ribi Acquisition. Of this amount, approximately $16.1
million is related to MPL projects, approximately $7.2 million is related to
RC-529, approximately $1.3 million is related to Melacine, approximately
$880,000 is related to Detox and the remaining $570,000 is related to RC-552.
The values associated with these programs represent Corixa's management ascribed
values, based on the discounted cash flows currently expected from the
technologies acquired. If these projects are not successfully developed, the
business, operating results, and financial condition of Corixa may be adversely
affected.
The in-process research and development that Corixa will acquire from Ribi
consists of the following on-going projects: MPL; RC-529; Melacine; Detox; and
RC-552.
- MPL is an adjuvant immunostimulant that is being developed by Ribi for
potential application in vaccines. Ribi has estimated that the research
and development costs to complete individual MPL vaccine development
projects will be approximately $2.7 million. The MPL projects are in
various stages of completion, from preclinical to Phase III. The most
advanced MPL project is scheduled for completion in the year 2000.
Additional identified MPL projects in early development stages are
scheduled for completion by the year 2006. Significant risk remains in
relation to FDA approval of MPL.
- RC-529 is a next generation synthetic adjuvant. Ribi plans to jointly
develop an infectious disease vaccine utilizing RC-529 with a partner.
Ribi has estimated that RC-529 will be completed in 2004, with an
additional $2.4 million in research and development costs. As of the
acquisition date, Ribi had made progress in the areas of preclinical
work, including toxicology studies, comparative studies, and production
scale-up studies.
- Melacine is a therapeutic vaccine to treat melanoma. Ribi has estimated
costs to complete Melacine at $3.9 million, with a targeted completion
date in 2001. Although significant risks remain, Melacine has completed
one Phase III clinical trial and is currently in two other Phase III
studies.
- Detox has adjuvant properties and is currently being developed for use in
Melacine by Ribi and in Theratope by Biomira, Inc. as therapeutic
vaccines for breast, lung, gastrointestinal and colon cancers. Ribi has
estimated remaining costs to complete development of Detox at
approximately $900,000 with completion planned for the year 2002. While
significant risks remain to complete Detox, Phase III trials have been
started for its application in Theratope.
- RC-552 is a synthetic compound being developed for use in protecting
against Reperfusion Injury. Ribi has targeted completion of RC-552 for
2001 with an additional $2.4 million in costs to complete. Significant
progress related to preclinical work, including toxicology studies had
been made as of the acquisition date. The FDA has indicated that Ribi
could proceed to a Phase II/III clinical trial with appropriate
preclinical data.
24
<PAGE> 36
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
As of the date the merger agreement was signed, Corixa concluded that once
completed, the technologies under development can only be economically used for
its specific and intended purposes and that such in-process technology has no
alternative future use after taking into consideration the overall objectives of
the project, progress toward the objectives, and uniqueness of developments to
these objectives.
(c) The unaudited pro forma consolidated balance sheet includes the
adjustments necessary to give effect to the merger as if it had occurred on June
30, 1999, and to reflect the allocation of the proposed acquisition to the fair
value of tangible and intangible assets acquired, including the charge to
operations for in-process research and development acquired and the elimination
of Ribi's equity accounts. Also included are the transaction costs, inclusive of
payments to financial advisors, independent auditors, attorneys and other
related costs, and costs associated with the elimination of redundant facilities
and assets. Approximate adjustments included in the unaudited pro forma
consolidated balance sheet are summarized as follows:
(i) Write-off of in-process research and development acquired by Corixa,
$26,024,000;
(ii) Adjuvant know-how acquired by Corixa, $3,076,000, seven-year
remaining life;
(iii) Workforce acquired by Corixa, $1,033,000, four-year remaining life;
(iv) Goodwill acquired by Corixa, $6,841,000; five-year remaining life;
(v) Transaction and other costs associated with the merger of
$2,600,000;
(vi) Elimination of Ribi equity accounts, $22,468,000;
(vii) Issuance of Corixa common stock, $0.001 par value, as discussed
above. The value of Corixa common stock is equal to the product of
up to 4,330,701 shares multiplied by approximately $13.275 per share
which includes approximately 720,000 shares of Corixa common stock
that may be issued as a result of the conversion of Ribi Series A
preferred stock into Ribi common stock prior to the effective date
of the merger. If the shares are not converted, approximately $7.9
million will be paid by Corixa to Ribi to be used for the assumed
$8.9 million redemption of Ribi Series A preferred stock;
(viii) To conform accounting policies of expensing patent costs as
incurred, $564,000;
(ix) To record amortization of $1,033,000 related to acquired goodwill,
adjuvant know-how and work force.
3. RIBI -- UNAUDITED PRO FORMA CONSOLIDATED NET LOSS PER SHARE
The pro forma combined share and net loss per share data was prepared using
an exchange ratio of 0.1685 Corixa common share for each share of Ribi common
stock and the assumed issuance of a maximum of 4,330,701 shares of Corixa common
stock on January 1, 1999 and 1998 as described in Note 2 to these Notes to
Unaudited Pro Forma Consolidated Financial Statements.
4. ANERGEN AND GENQUEST -- UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
ADJUSTMENTS
Corixa's unaudited statement of operations for the six months ended June
30, 1999 has been combined with Anergen's unaudited statement of operations for
the period from January 1, 1999 to February 10, 1999. Corixa's audited statement
of operations for the year ended December 31, 1998 have been combined with
Anergen's audited statement of operations for the year ended December 31, 1998
and GenQuest's unaudited statement of operations for the period from January 1,
1998 to September 15, 1998.
25
<PAGE> 37
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
CORIXA
ANERGEN CORIXA/ANERGEN PRO FORMA
(PRIOR TO PRO FORMA COMBINED
CORIXA ACQUISITION) ADJUSTMENTS WITH ANERGEN
-------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Revenue:
Sales...................... $ -- $ -- $ -- $ --
Collaborative agreements... 8,411 124 -- 8,535
Government grants.......... 743 8 -- 751
-------- ------- -------- --------
Total revenue........... 9,154 132 -- 9,286
Operating expenses:
Purchases and production
costs................... -- -- -- --
Research and development... 18,663 544 -- 19,207
General and
administrative.......... 1,745 687 -- 2,432
In-process research and
development(1).......... 11,612 -- 11,612
-------- ------- -------- --------
Total operating
expenses.............. 32,020 1,231 -- 33,251
-------- ------- -------- --------
Loss from operations......... (22,866) (1,099) -- (23,965)
Interest income.............. 1,396 3 -- 1,399
Interest expense............. (392) (7) -- (399)
Other income................. 471 -- -- 471
-------- ------- -------- --------
Net loss..................... (21,391) (1,103) -- (22,494)
Preferred stock deemed
dividend................... (5,539) -- -- (5,539)
Preferred stock dividend..... (146) -- -- (146)
-------- ------- -------- --------
Net loss applicable to common
stockholders............... $(27,026) $(1,103) $ -- $(28,179)
======== ======= ======== ========
Basic and diluted net loss
per share.................. $ (1.88) $ (1.93)
======== ========
Shares used in computation of
basic and diluted net loss
per share applicable to
common stockholders........ 14,398 240 14,638 (Note 5)
======== ======== ========
</TABLE>
- -------------------------
(1) This amount represents the in-process research and development charge
related to the Anergen acquisition.
26
<PAGE> 38
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
ANERGEN -- UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL ADJUSTMENTS
(a) The unaudited pro forma consolidated financial statements reflect the
conversion of all the outstanding shares of Anergen capital stock into
1,058,031 shares of Corixa common stock as a result of the acquisition
by Corixa on February 10, 1999 which was accounted for as a purchase
transaction. Options and warrants to purchase shares of Anergen common
stock were assumed by Corixa pursuant to the merger and converted into
options and warrants to purchase shares of Corixa common stock.
(b) The total consideration of $9.6 million consisted of Corixa common
stock and options valued at $8.7 million, cash of $200,000 and
approximately $700,000 of transaction costs. The purchase price was
allocated to assets acquired of $1.7 million and liabilities assumed of
$3.7 million and acquired in-process research and development of $11.6
million.
27
<PAGE> 39
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
CORIXA/
GENQUEST GENQUEST GENQUEST ANERGEN ANERGEN CORIXA
(PRIOR TO PRO FORMA PRO FORMA (PRIOR TO PRO FORMA PRO FORMA
CORIXA ACQUISITION) ADJUSTMENTS COMBINED ACQUISITION) ADJUSTMENTS COMBINED
-------- ------------ ----------- --------- ------------ ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Sales................ $ -- $ -- $ -- $ -- $ -- $ -- $ --
Collaborative
agreements......... 17,003 150 (1,048)(e) 16,105 3,092 -- 19,197
Government grants.... 1,267 58 -- 1,325 -- -- 1,325
-------- ------- -------- -------- ------- ----- --------
Total revenue...... 18,270 208 (1,048) 17,430 3,092 -- 20,522
Operating expenses:
Purchases and
production costs... -- -- -- -- -- -- --
Research and
development........ 27,436 2,196 (1,700)(e) 27,932 8,525 -- 36,457
General and
administrative..... 2,672 237 (204)(e) 2,705 3,672 -- 6,377
In-process research
and
development(1)..... 12,021 -- -- 12,021 -- -- 12,021
-------- ------- -------- -------- ------- ----- --------
Total operating
expenses......... 42,129 2,433 (1,904) 42,658 12,197 -- 54,855
-------- ------- -------- -------- ------- ----- --------
Loss from operations... (23,859) (2,225) 856 (25,228) (9,105) -- (34,333)
Interest income........ 3,016 60 -- 3,076 511 -- 3,587
Interest expense....... (767) (47) -- (814) (134) -- (948)
Other income........... 294 -- (204)(e) 90 -- -- 90
-------- ------- -------- -------- ------- ----- --------
Net loss............... $(21,316) $(2,212) $ 652 $(22,876) $(8,728) $ -- $(31,604)
======== ======= ======== ======== ======= ===== ========
Basic and diluted net
loss per share....... $ (1.75) $ (1.77) $ (0.46) $ (2.26)
======== ======== ======= ========
Shares used in
computation of basic
and diluted net loss
per share............ 12,172 749 12,921(Note6) 18,890 1,058 13,979 (Note 5)
======== ======== ======== ======= ===== ========
</TABLE>
- -------------------------
(1) This amount represents the in-process research and development charge
related to the GenQuest acquisition.
28
<PAGE> 40
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
GENQUEST -- UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL ADJUSTMENTS
(c) The unaudited pro forma consolidated financial statements reflect the
conversion of all the outstanding shares of GenQuest capital stock into
1,063,695 shares of Corixa common stock as a result of the acquisition by Corixa
on September 15, 1998 which was accounted for as a purchase transaction. Options
to purchase shares of GenQuest common stock were assumed by Corixa pursuant to
the merger and converted into options to purchase shares of Corixa common stock
which have an estimated value of approximately $77,000.
(d) The total consideration of $12.4 million consisted of Corixa common
stock and options valued at $7.3 million, cash of $4.5 million and approximately
$600,000 of transaction costs. The purchase price was allocated to assets
acquired and liabilities assumed, netting to $400,000 and acquired in-process
research and development of $12.0 million.
(e) Elimination of inter-company revenue and expenses including
amortization of the warrant previously issued to GenQuest.
5. ANERGEN -- UNAUDITED PRO FORMA CONSOLIDATED NET LOSS PER SHARE
The net loss per share and shares used in computing the net loss per share
for the year ended December 31, 1998 and the six months ended June 30, 1999, are
based upon the historical weighted average common shares outstanding adjusted to
reflect the issuance, as of January 1, 1998 and 1999 of 1,058,031 shares of
Corixa common stock as described in Note 4 to these Notes to Unaudited Pro Forma
Consolidated Financial Statements. Options and warrants to purchase Anergen
common stock were assumed by Corixa pursuant to the merger and converted into
options and warrants to purchase shares of Corixa common stock. The Corixa
common stock issuable upon exercise of the stock options and warrants assumed
have been excluded as the effect would be anti-dilutive.
6. GENQUEST -- UNAUDITED PRO FORMA CONSOLIDATED NET LOSS PER SHARE
The net loss per share and shares used in computing the net loss per share
for the year ended December 31, 1998 and the six months ended June 30, 1999 are
based upon the historical weighted average common shares outstanding adjusted to
reflect the issuance, as of January 1, 1998 and 1999 of 1,063,695 shares of
Corixa common stock as described in Note 6 to these Notes to Unaudited Pro Forma
Consolidated Financial Statements. Options to purchase shares of GenQuest common
stock were assumed by Corixa pursuant to the merger and converted into options
to purchase shares of Corixa common stock. The Corixa common stock issuable upon
exercise of the stock options assumed has been excluded as the effect would be
anti-dilutive.
29
<PAGE> 41
COMPARATIVE PER SHARE DATA
The following table sets forth historical per share data of Corixa and Ribi
and combined per share data on an unaudited pro forma basis after giving effect
to the merger and Corixa's acquisitions of GenQuest and Anergen as purchases,
based on an exchange ratio of 0.1685 and resulting in 4,330,701 shares of Corixa
common stock to be issued in exchange for outstanding shares of Ribi common
stock in the merger. The historical per share data of Corixa and Ribi presented
below is presented as of and for the six months ended June 30, 1999 and for the
year ended December 31, 1998, respectively.
The pro forma consolidated per share data presented below is based upon
Corixa's unaudited pro forma per share data as of and for the six months ended
June 30, 1999 and the audited pro forma per share data for the year ended
December 31, 1998, assuming the GenQuest acquisition occurred on January 1, 1998
and the Anergen acquisition occurred on January 1, 1999 and January 1, 1998,
respectively, with Ribi's unaudited per share data as of and for the six months
ended June 30, 1999 and audited per share data for the fiscal year ended
December 31, 1998, respectively. You should read this information along with the
selected historical financial information, the unaudited pro forma consolidated
financial statements and the separate historical financial statements of Corixa
and Ribi and the notes thereto incorporated or included elsewhere in this proxy
statement/prospectus. The unaudited pro forma consolidated financial data is not
necessarily indicative of the operating results or financial position that would
have been achieved had the merger been consummated at the beginning of the
periods presented and you should not construe the data as representative of
future operating results of the combined company.
The historical book value per share of capital stock is computed by
dividing total stockholders' equity by the number of shares of capital stock
outstanding at the end of the period. The pro forma consolidated book value per
share is computed by dividing pro forma stockholders' equity by the pro forma
number of shares of capital stock as of each of the periods presented.
The basic and diluted net loss per share represents the pro forma combined
amounts multiplied by the exchange ratio.
<TABLE>
<CAPTION>
AS OF AND FOR THE
SIX MONTHS AS OF AND FOR THE
ENDED JUNE 30, YEAR ENDED
1999 DECEMBER 31, 1998
----------------- -----------------
<S> <C> <C>
Historical -- Corixa:
Basic and diluted net loss per share................... $(1.88) $(1.75)
Book value per share................................... 2.95 3.15
Pro Forma Combined -- Corixa with GenQuest and Anergen:
Basic and diluted net loss per share................... (1.93) (2.26)
Book value per share................................... 2.95 --
Historical -- Ribi:
Basic and diluted net loss per share................... (0.16) (0.38)
Book value per share................................... 1.07 1.26
Pro Forma Consolidated:
Basic and diluted net loss per share................... (1.71) (2.26)
Book value per share................................... 3.87 --
Equivalent Pro Forma Consolidated -- per Ribi share:
Basic and diluted net loss per share................... (0.29) (0.38)
Book value per share................................... 0.65 --
</TABLE>
30
<PAGE> 42
MARKET PRICE AND DIVIDEND POLICY
Corixa common stock began trading on Nasdaq under the symbol "CRXA" on
October 3, 1997. Ribi common stock began trading on Nasdaq under the symbol
"RIBI" on May 27, 1981. The table below shows the high and low sale prices of
Corixa common stock and Ribi common stock on Nasdaq for each three month period
since the beginning of 1996.
<TABLE>
<CAPTION>
CORIXA RIBI
COMMON STOCK COMMON STOCK
--------------- --------------
HIGH LOW HIGH LOW
------ ----- ----- -----
<S> <C> <C> <C> <C>
1996 CALENDAR YEAR
First Quarter....................................... N/A N/A $6.88 $4.75
Second Quarter...................................... N/A N/A 6.25 4.13
Third Quarter....................................... N/A N/A 4.88 3.50
Fourth Quarter...................................... N/A N/A 4.38 3.13
1997 CALENDAR YEAR
First Quarter....................................... N/A N/A 5.63 3.75
Second Quarter...................................... N/A N/A 4.88 3.38
Third Quarter....................................... N/A N/A 4.69 3.44
Fourth Quarter...................................... $14.13 $8.75 4.75 3.50
1998 CALENDAR YEAR
First Quarter....................................... 10.00 6.75 6.25 3.50
Second Quarter...................................... 10.50 6.13 6.19 4.75
Third Quarter....................................... 7.00 3.31 5.31 2.25
Fourth Quarter...................................... 9.50 3.50 3.19 1.81
1999 CALENDAR YEAR
First Quarter....................................... 10.88 7.38 2.63 1.38
Second Quarter...................................... 18.13 7.81 2.56 1.47
Third Quarter (through August 9, 1999).............. 18.13 13.25 2.50 1.97
</TABLE>
On the Ribi record date of August 9, 1999, there were approximately 1,501
record holders of Ribi common stock. Ribi has never paid cash dividends on its
common stock. The policy of Ribi is to retain earnings, if any, for use in its
business.
On the Corixa record date of August 9, 1999, there were approximately 481
record holders of Corixa common stock. Corixa has never paid cash dividends on
its common stock. The policy of Corixa is to retain earnings, if any, for use in
its business.
The following table sets forth the closing sale prices per share of Corixa
and Ribi common stock on Nasdaq and the estimated equivalent per share price of
Ribi common stock on June 9, 1999, the last trading day before the public
announcement of the proposed merger, and on August 9, 1999. The estimated
equivalent per share price of Ribi common stock is calculated by multiplying the
price per share of Corixa common stock by the exchange ratio of 0.1685. The
actual prices of shares of Corixa and Ribi common stock fluctuate continuously.
Accordingly, the Corixa and Ribi prices per share prior to or at the time Corixa
and Ribi consummate the merger cannot be guaranteed or predicted.
<TABLE>
<CAPTION>
ESTIMATED
EQUIVALENT
CORIXA PER RIBI PER RIBI PER
SHARE PRICE SHARE PRICE SHARE PRICE
----------- ----------- -----------
<S> <C> <C> <C>
June 9, 1999............................................ $13.5625 $ 1.7812 $2.2852
August 9, 1999.......................................... $14.1250 $ 2.1562 $2.3801
</TABLE>
31
<PAGE> 43
RISK FACTORS
The merger involves a high degree of risk. Also, by voting in favor of the
merger, Ribi stockholders will be choosing to invest in Corixa common stock. An
investment in Corixa common stock involves a high degree of risk. You should
consider the following risk factors in evaluating whether to approve the merger.
You should consider these factors in conjunction with the other information
contained in this proxy statement/prospectus, the appendices and exhibits hereto
and the documents incorporated by reference in this proxy statement/prospectus.
If any of the following risks actually occur, the business, financial condition
and results of operations of either or both of Corixa and Ribi may be seriously
harmed. In such case, the trading price of Corixa common stock may decline, and
you may lose all or part of your investment.
RISKS RELATED TO THE MERGER
INTEGRATION OF OPERATIONS MAY BE DIFFICULT AND LEAD TO ADVERSE EFFECTS.
The anticipated benefits of the merger will depend in part on whether
Corixa and Ribi can integrate their operations in an efficient and effective
manner. Integrating Corixa and Ribi will be a complex, time consuming and
expensive process. Successful integration will require combining the companies'
respective
- research, development and manufacturing efforts;
- scientific cultures;
- strategic goals;
- business development efforts; and
- geographically separate facilities.
Corixa and Ribi may not accomplish this integration smoothly or
successfully. The diversion of the attention of management to the integration
effort and any difficulties encountered in combining operations could cause the
interruption of, or a loss of momentum in, the activities of either or both of
the companies' businesses. Furthermore, employee morale may suffer, and Ribi and
Corixa may have difficulties retaining key scientific and managerial personnel.
THE FIXED EXCHANGE RATIO MAY LIMIT THE VALUE OF CORIXA COMMON STOCK BEING
RECEIVED BY RIBI STOCKHOLDERS.
Each outstanding share of Ribi common stock will convert into the right to
receive 0.1685 of one share of Corixa common stock upon completion of the
merger. This exchange ratio will not be adjusted for changes in the market price
of either Corixa common stock or Ribi common stock prior to completion of the
merger. The price of Corixa common stock may vary significantly between now and
the date of the merger. If the market price for Corixa common stock increases or
decreases before completion of the merger, the market value of the Ribi
stockholders' right to receive Corixa common stock would correspondingly
increase or decrease. Ribi stockholders will not be compensated for decreases in
the market price of Corixa common stock.
32
<PAGE> 44
THE MARKET PRICE OF CORIXA COMMON STOCK MAY DECLINE AS A RESULT OF THE MERGER.
The market price of Corixa common stock may decline significantly if, among
other things:
- the integration of Corixa's and Ribi's operations is not successful;
- the combined company does not experience business synergies as quickly or
to the extent as may be expected by financial analysts; or
- the accretive/dilutive effect of the merger is not in line with the
expectation of financial analysts.
In any such case, the trading price of Corixa common stock may decline and
you may lose all or part of your investment.
THE MERGER WILL RESULT IN COSTS OF INTEGRATION AND TRANSACTION EXPENSES THAT
COULD ADVERSELY AFFECT COMBINED FINANCIAL RESULTS.
If the benefits of the merger do not exceed the costs associated with the
merger, including the dilution to Corixa's stockholders resulting from the
issuance of shares of Corixa common stock in connection with the merger,
Corixa's financial results, including earnings per share, could be adversely
affected. Corixa and Ribi estimate that they will incur aggregate direct
transaction costs of approximately $1.8 million associated with the merger and
related severance costs of approximately $800,000. The combined company also
expects to incur costs after completion of the merger associated with
integrating the operations of Corixa and Ribi. Such costs may include:
- elimination of duplicate operations; and
- consolidation of certain administration, support and research and
development activities.
Actual costs may substantially exceed these estimates. In addition,
unanticipated expenses associated with integrating the two companies may arise.
Corixa expects to incur a charge currently estimated to be $26.0 million in the
third quarter of 1999 to reflect Corixa's write-off of Ribi's in-process
research and development efforts. Corixa may also incur additional charges in
subsequent quarters to reflect costs associated with the merger.
IF THE COMBINED COMPANY IS NOT PERMITTED TO WRITE-OFF A SIGNIFICANT AMOUNT OF
PURCHASE PRICE AS ATTRIBUTABLE TO IN-PROCESS RESEARCH AND DEVELOPMENT, THE PRICE
OF CORIXA'S COMMON STOCK COULD DECLINE.
If current accounting rules as interpreted by Corixa's auditors and the SEC
do not permit the combined company to write off immediately a significant amount
of the purchase price of the merger as attributable to in-process research and
development, the combined company would have to amortize a correspondingly
higher amount of the purchase price over several years. Such amortization would
be reflected as an expense item on the combined company's statement of
operations, and cause it to report higher losses, which may adversely affect its
stock price.
THERE MAY BE UNKNOWN RISKS INHERENT IN THE MERGER, ESPECIALLY PERTAINING TO
RIBI'S INTELLECTUAL PROPERTY.
Although Corixa has conducted scientific due diligence with respect to
Ribi, Corixa did not perform the research and development activities or control
the patent application process related to those activities itself. The combined
company may discover adverse information concerning Ribi's
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intellectual property subsequent to the completion of the merger, such as the
possible inadequacy of Ribi's current patent protection and/or potential patent
infringement by Ribi. Additionally, many other biotechnology companies currently
are filing patents in the fields of antigens, adjuvants and biopharmaceutical
compounds at a rapid pace, and Ribi may not have been the first to file patent
applications covering Ribi discoveries, or may not have obtained adequate patent
protection for its proprietary products.
THE COMBINED COMPANY MAY NOT SUCCESSFULLY MANAGE ITS GROWTH OR INTEGRATE
POTENTIAL FUTURE ACQUISITIONS.
In the future, the combined company may make additional acquisitions of
complementary companies, products or technologies. Managing these acquired
businesses will entail numerous operational and financial risks and strains,
including:
- difficulties in assimilating acquired operations and scientific cultures;
- amortization of acquired intangible assets; and
- potential loss of key employees or strategic relationships of acquired
entities.
The combined company may not be able to manage effectively its growth, and
failure to do so may adversely affect the combined company's business and stock
price.
RISKS RELATED TO CORIXA
CORIXA MAY NEVER GENERATE SUFFICIENT REVENUE TO ACHIEVE PROFITABILITY.
Corixa is at an early stage in the development of its therapeutic,
prophylactic and diagnostic products. To date, almost all of Corixa's revenue
have resulted from payments made under agreements with its corporate partners,
and Corixa expects that most of its revenue for the foreseeable future will
continue to result from corporate partnerships. Since its inception, Corixa has
generated only minimal revenue from diagnostic product sales and no revenue from
therapeutic or prophylactic product sales. Corixa does not expect
immunotherapeutic products that may result from its research and development
programs to be commercially available for a number of years, if at all. It is
uncertain when, if ever, Corixa will receive any significant revenue from
commercial sales of such products. Corixa may not receive anticipated revenue
under existing corporate partnerships or be able to enter into any additional
corporate partnerships. Thus, Corixa may not ever achieve consistent
profitability.
CORIXA'S TECHNOLOGY AND PRODUCT DEVELOPMENT ARE UNPROVEN.
Corixa's technological approach to the development of therapeutic and
prophylactic vaccines and other immunotherapeutic products for cancers and
infectious and autoimmune diseases is unproven in humans. Products based on
Corixa's technologies are currently in the discovery, preclinical or early
clinical investigation stages. To date, only one of Corixa's corporate partners
has conducted clinical trials that incorporate Corixa's proprietary microsphere
delivery systems and, other than a Phase I clinical trial in Brazil, neither
Corixa nor any of its corporate partners have conducted any clinical trials that
incorporate Corixa's proprietary adjuvants. In addition, neither Corixa nor any
other company has successfully commercialized any therapeutic vaccines for
cancer or the infectious or autoimmune diseases targeted by Corixa. Corixa may
not be able to develop effective vaccines for such diseases in a reasonable time
frame, if ever, and such vaccines may not be capable of being commercialized.
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Most of Corixa's programs are currently in the discovery stage or in
preclinical development. Only seven of Corixa's immunotherapeutic products have
advanced to clinical trials. Corixa's vaccines have not been demonstrated to be
safe and effective in clinical settings. Corixa's programs may not move beyond
their current stages of development.
CORIXA'S STOCKHOLDERS FACE POTENTIAL DILUTION.
Corixa's stockholders will experience immediate and substantial dilution as
a result of the shares of Corixa common stock issued to Ribi stockholders in the
merger. Additional dilution would also occur if:
- there is exercise of any of the outstanding options or the warrants to
purchase Ribi common stock that will be assumed by Corixa in the merger;
- Corixa elects or is required to sell shares of Corixa common stock to
SmithKline Beecham plc under the terms of the September 1998
collaboration and license agreement with SmithKline Beecham;
- Corixa issues additional shares of its Series A preferred stock and
warrants to purchase its common stock to Castle Gate in connection with
additional draw-downs of funds under the Castle Gate equity line of
credit; or
- Corixa enters into additional corporate partnerships in connection with
which Corixa agrees to sell shares of its capital stock.
CORIXA IS DEPENDENT ON EXISTING AND FUTURE CORPORATE PARTNERSHIPS.
The success of Corixa's business strategy is largely dependent on its
ability to enter into multiple corporate partnerships and to manage effectively
the numerous relationships that may exist as a result of this strategy. Corixa
has established significant relationships with various corporate partners,
including, among others, the following:
- In October 1998, Corixa entered into a strategic collaboration and
license agreement with SmithKline Beecham for the research, development
and commercialization of vaccine products aimed at the prevention and/or
treatment of tuberculosis, chlamydia trachomatis infection, chlamydia
pneumoniae infection, breast cancer, prostate cancer, ovarian cancer and
colon cancer;
- In May 1999, Corixa entered into a collaboration agreement with Inpharzam
International S.A., a wholly-owned subsidiary of Zambon Group spa, for
the research, development and commercialization, exclusively in Europe
and certain South American countries and co-exclusively in China, of
vaccine products aimed at the prevention and/or treatment of lung cancer;
and
- In June 1999, Corixa entered into a license and collaborative research
agreement with the pharmaceutical division of Japan Tobacco, Inc. for the
research, development and commercialization, exclusively in North
America, Japan and all other countries not exclusively licensed to
Zambon, and co-exclusively in China, of vaccine and antibody-based
products aimed at the prevention and/or treatment of lung cancer.
Corixa derived 92% of its revenue during the six months ended June 30, 1999
and 93% of its revenue during each of the years ended December 31, 1998 and
December 31, 1997 from research and development and other funding under its
existing corporate partnerships.
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Certain of Corixa's corporate partners have entered into agreements
granting them options to license certain aspects of Corixa's technology. Any of
these corporate partners may not exercise its option to license such technology.
Corixa has also entered into corporate partnerships with several companies for
the development, commercialization and sale of diagnostic products incorporating
Corixa's proprietary antigen technology. These diagnostic corporate partnerships
may never generate significant revenues. Furthermore, Corixa is currently
engaged in discussions with a number of pharmaceutical and diagnostic companies
with respect to potential corporate partnering arrangements covering various
aspects of Corixa's technologies. The process of establishing corporate
partnerships is difficult and time-consuming and involves significant
uncertainty. These discussions may not lead to the establishment of new
corporate partnerships on favorable terms, if at all. If established, such
corporate partnerships may never result in the successful development of
Corixa's products or the generation of significant revenues.
Because Corixa enters into research and development collaborations with
corporate partners at an early stage of product development, Corixa's success
depends upon the performance of its corporate partners. Corixa does not directly
control the amount or timing of resources to be devoted to activities by its
corporate partners. Any of Corixa's corporate partners may not commit sufficient
resources to Corixa's research and development programs or the commercialization
of its products. If any corporate partner fails to conduct its activities in a
timely manner, or at all, Corixa's preclinical or clinical development related
to such corporate partnership could be delayed or terminated. Also, Corixa's
current corporate partners or future corporate partners, if any, may pursue
existing or other development-stage products or alternative technologies in
preference to those being developed in collaboration with Corixa. Further,
disputes may arise with respect to ownership of technology developed under any
such corporate partnership. Finally, any of Corixa's current corporate
partnerships may be terminated by its corporate partner, and Corixa may not be
able to negotiate additional corporate partnerships in the future on acceptable
terms, or at all.
Management of Corixa's relationships with its corporate partners will
require:
- significant time and effort from Corixa's management team;
- coordination of Corixa's research with the research of its corporate
partners;
- effective allocation of Corixa's resources to multiple projects; and
- an ability to obtain and retain management, scientific and other
personnel.
CORIXA IS DEPENDENT ON IN-LICENSED TECHNOLOGY.
Corixa's success is also dependent on its ability to enter into licensing
arrangements with commercial or academic entities to obtain technology that is
advantageous or necessary to the development and commercialization of Corixa's
products. Corixa has various license agreements that give it rights to use
technologies owned or licensed by third parties in its and its corporate
partners' discovery, research, development and commercialization activities.
Disputes may arise regarding the inventorship and corresponding rights in
inventions and know-how resulting from the joint creation or use of intellectual
property by Corixa and its licensors or scientific collaborators. Additionally,
many of Corixa's in-licensing agreements contain milestone-based termination
provisions. Corixa's failure to meet any significant milestones in a particular
agreement could allow the licensor to terminate such agreement.
Corixa may not be able to negotiate additional license agreements in the
future on acceptable terms, if at all. In addition, Corixa's current license
agreements may be terminated, and it may not be able to maintain the exclusivity
of its exclusive licenses. If Corixa cannot obtain or maintain licenses
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to technology advantageous or necessary to Corixa's business, Corixa and its
corporate partners may be required to expend significant time and resources to
develop or in-license similar technology. If Corixa is not able to do so, it may
be prevented from commercializing certain of its products.
CORIXA'S PATENT POSITION IS UNCERTAIN AND ITS SUCCESS DEPENDS ON PROPRIETARY
RIGHTS.
Corixa's success depends in part on its ability to:
- obtain patents;
- protect trade secrets;
- operate without infringing upon the proprietary rights of others; and
- prevent others from infringing on Corixa's proprietary rights.
Corixa will only be able to protect its proprietary rights from
unauthorized use by third parties to the extent that these rights are covered by
valid and enforceable patents or are effectively maintained as trade secrets.
Corixa tries to protect its proprietary position by filing United States and
foreign patent applications related to its proprietary technology, inventions
and improvements that are important to the development of its business. As of
August 9, 1999, Corixa owned, licensed or optioned 80 issued United States
patents that expire at various times between December 2004 and August 2016, and
153 pending United States patent applications.
The patent positions of biotechnology and biopharmaceutical companies
involve complex legal and factual questions and, therefore, enforceability
cannot be predicted with certainty. Patents, if issued, may be challenged,
invalidated or circumvented. Thus, any patents that Corixa owns or licenses from
third parties may not provide any protection against competitors. Corixa's
pending patent applications, those it may file in the future, or those it may
license from third parties, may not result in patents being issued. Also, patent
rights may not provide Corixa with proprietary protection or competitive
advantages against competitors with similar technology. Furthermore, others may
independently develop similar technologies or duplicate any technology that
Corixa has developed. The laws of certain foreign countries may not protect
Corixa's intellectual property rights to the same extent as do the laws of the
United States.
In addition to patents, Corixa relies on trade secrets and proprietary
know-how. Corixa seeks protection, in part, through confidentiality and
proprietary information agreements. These agreements may not provide meaningful
protection or adequate remedies for Corixa's technology in the event of
unauthorized use or disclosure of confidential and proprietary information. The
parties may breach such agreements. Furthermore, Corixa's trade secrets may
otherwise become known to, or be independently developed by, Corixa's
competitors.
CORIXA MAY FACE CHALLENGES FROM THIRD PARTIES REGARDING THE VALIDITY OF ITS
PATENTS AND PROPRIETARY RIGHTS.
Research has been conducted for many years in the fields of molecular
biology and immunology. This has resulted in a substantial number of issued
patents and an even larger number of patent applications. Patent applications in
the United States are, in most cases, maintained in secrecy until patents issue.
The publication of discoveries in the scientific or patent literature frequently
occurs substantially later than the date on which the underlying discoveries
were made. Corixa's commercial success depends significantly on its ability to
operate without infringing the patents and other proprietary rights of third
parties. Corixa's technologies may infringe the patents or violate other
proprietary rights of third parties. In the event of infringement or violation,
Corixa and its corporate
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partners may be prevented from pursuing product development or
commercialization. Such a result will significantly harm Corixa's business.
Corixa has licensed certain patent applications from Southern Research
Institute, or SRI, related to Corixa's microsphere encapsulation technology, two
of which are currently the subject of opposition proceedings before the European
Patent Office. SRI may not prevail in these opposition proceedings and patents
may not issue in Europe related to such technology.
The biotechnology and pharmaceutical industries have been characterized by
extensive litigation regarding patents and other intellectual property rights.
The defense and prosecution of intellectual property suits, United States Patent
and Trademark Office interference proceedings and related legal and
administrative proceedings in the United States and internationally involve
complex legal and factual questions. As a result, such proceedings are costly
and time-consuming to pursue and their outcome is uncertain. Litigation may be
necessary to:
- enforce Corixa's issued and licensed patents;
- protect trade secrets or know-how that Corixa owns or licenses; or
- determine the enforceability, scope and validity of the proprietary
rights of others.
If Corixa becomes involved in any litigation, interference or other
administrative proceedings, Corixa will incur substantial expense and the
efforts of Corixa's technical and management personnel will be significantly
diverted. An adverse determination may subject Corixa to significant liabilities
or require Corixa to seek licenses that may not be available from third parties.
Corixa may be restricted or prevented from manufacturing and selling its
products, if any, in the event of an adverse determination in a judicial or
administrative proceeding or if Corixa fails to obtain necessary licenses. Costs
associated with these arrangements may be substantial and may include ongoing
royalties. Furthermore, Corixa may not be able to obtain the necessary licenses
on satisfactory terms, if at all. These outcomes would significantly harm
Corixa's business.
CORIXA HAS A HISTORY OF OPERATING LOSSES.
Corixa has experienced significant operating losses in each year since its
inception on September 8, 1994. As of June 30, 1999, Corixa's accumulated
deficit was approximately $54.7 million, of which 47% is attributable to the
write-off of in-process research and development costs associated with the
acquisitions of Anergen and GenQuest. Corixa may incur substantial additional
operating losses over at least the next several years. Such losses have been and
may continue to be principally the result of the various costs associated with
Corixa's acquisition activities, including the expenses associated with the
write-off of in-process research and development, discovery, research and
development programs and preclinical studies and clinical activities.
Substantially all of Corixa's revenue and other income to date have resulted
from corporate partnerships, other research, development and licensing
arrangements, research grants and interest income. Corixa's ability to achieve a
consistent, profitable level of operations is dependent in large part upon:
- entering into agreements with corporate partners for product discovery,
research, development and commercialization;
- obtaining regulatory approvals for its products; and
- successfully manufacturing and marketing commercial products.
Corixa may not be able to achieve consistent profitability. In addition,
payments under corporate partnerships and licensing arrangements will be subject
to significant fluctuations in both timing and amounts, resulting in quarters of
profitability and quarters of losses by Corixa. Therefore, Corixa's
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results of operations for any period may fluctuate and may not be comparable to
the results of operations for any other period.
THE COMBINED COMPANY'S NEED FOR, AND ABILITY TO SECURE, ADDITIONAL FUNDING IS
UNCERTAIN.
The combined company will require substantial capital resources in order to
conduct its operations. The combined company's future capital requirements will
depend on many factors, including, among others, the following:
- continued scientific progress in its discovery, research and development
programs;
- the magnitude and scope of its discovery, research and development
programs;
- the ability of the combined company to maintain existing, and establish
additional, corporate partnerships and licensing arrangements;
- progress with preclinical studies and clinical trials;
- the time and costs involved in obtaining regulatory approvals;
- the costs involved in preparing, filing, prosecuting, maintaining,
defending and enforcing patent claims;
- the potential need to develop, acquire or license new technologies and
products; and
- other factors not within the combined company's control.
The combined company intends to seek additional funding through corporate
partnerships, and also may seek additional funding through:
- public or private equity financings;
- public or private debt financings; and
- capital lease transactions.
However, additional financing may not be available on acceptable terms, if
at all. Additional equity financings could result in significant dilution to
stockholders. If sufficient capital is not available, the combined company may
be required to delay, reduce the scope of, eliminate or divest one or more of
its discovery, research, development, preclinical or clinical programs or
manufacturing efforts. Corixa believes that its existing capital resources,
committed payments under existing corporate partnerships and licensing
arrangements, bank credit arrangements, equity credit lines, equipment financing
and interest income will be sufficient to fund its current and planned
operations over at least the next 18 months. Such funds, however, may not be
sufficient to meet the capital needs of the combined company for the same period
of time. In addition, a substantial number of the payments to be made by
Corixa's corporate partners and other licensors are dependent upon the
achievement by Corixa of development and regulatory milestones. Failure to
achieve such milestones may significantly harm the combined company's future
capital position.
CORIXA IS DEPENDENT ON ITS KEY PERSONNEL.
Corixa is highly dependent on the principal members of its scientific and
management staff, the loss of whose services might significantly delay or
prevent Corixa's achievement of its scientific or business objectives.
Competition among biotechnology and biopharmaceutical companies for qualified
employees is intense, and the ability to retain and attract qualified
individuals is critical to Corixa's
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success. Corixa may not be able to attract and retain such individuals currently
or in the future on acceptable terms, or at all, and the failure to do so would
significantly harm Corixa's business. In addition, Corixa does not maintain "key
person" life insurance on any officer, employee or consultant of Corixa.
Corixa also has relationships with scientific collaborators at academic and
other institutions, some of whom conduct research at Corixa's request or assist
Corixa in formulating its research, development or clinical strategy. These
scientific collaborators are not employees of Corixa and may have commitments
to, or consulting or advisory contracts with, other entities that may limit
their availability to Corixa. Corixa has limited control over the activities of
these scientific collaborators and can generally expect such individuals to
devote only limited amounts of time to Corixa's activities. Failure of any such
persons to devote sufficient time and resources to Corixa's programs could harm
Corixa's business. In addition, these collaborators may have arrangements with
other companies to assist such companies in developing technologies that may
prove competitive to those of Corixa.
CORIXA FACES INTENSE COMPETITION.
The biotechnology and biopharmaceutical industries are intensely
competitive. Many companies compete with Corixa in developing alternative
therapies to treat cancer, infectious and autoimmune diseases, including:
- pharmaceutical companies;
- biotechnology companies;
- academic institutions; and
- research organizations.
Moreover, technology controlled by third parties that may be advantageous
to Corixa's business may be acquired or licensed by competitors of Corixa,
thereby preventing Corixa from obtaining such technology on favorable terms, or
at all.
Many of the companies developing competing technologies and products have
significantly greater financial resources and expertise in discovery, research
and development, manufacturing, preclinical and clinical testing, obtaining
regulatory approvals and marketing than Corixa and its corporate partners. Other
smaller companies may also prove to be significant competitors, particularly
through collaborative arrangements with large and established companies.
Academic institutions, government agencies and other public and private research
organizations may also conduct research, seek patent protection and establish
collaborative arrangements for discovery, research, preclinical and clinical
development, manufacturing and marketing of products similar to those of Corixa.
These companies and institutions compete with Corixa in recruiting and retaining
qualified scientific and management personnel as well as in acquiring
technologies complementary to Corixa's programs. Corixa and its corporate
partners will face competition with respect to:
- product efficacy and safety;
- the timing and scope of regulatory approvals;
- availability of resources;
- reimbursement coverage;
- price; and
- patent position, including potentially dominant patent positions of
others.
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Competitors may develop more effective or more affordable products, or may
achieve earlier patent protection or product commercialization than Corixa and
its corporate partners. Such competitive products may render Corixa's products
obsolete.
CORIXA LACKS MANUFACTURING EXPERIENCE AND RELIES ON CONTRACT MANUFACTURERS.
Corixa does not currently have significant manufacturing facilities and
does not have significant experience in managing a manufacturing facility.
Although Corixa currently manufactures limited quantities of some antigens and
adjuvants, Corixa intends to rely on third party contract manufacturers to
produce large quantities of such substances for clinical trials and product
commercialization until such time, if ever, that Corixa is in a position to
manufacture such substances itself. Corixa's vaccines and other products have
never been manufactured on a commercial scale. Such products may not be able to
be manufactured at a cost or in quantities necessary to make them commercially
viable. Third party manufacturers may not be able to meet Corixa's needs with
respect to timing, quantity or quality. If Corixa is unable to contract for a
sufficient supply of required products and substances on acceptable terms, or if
it should encounter delays or difficulties in its relationships with such
manufacturers, Corixa's preclinical and clinical testing would be delayed,
thereby delaying the submission of products for regulatory approval or the
market introduction and subsequent sales of such products. Moreover, contract
manufacturers that Corixa may use must continually adhere to current Good
Manufacturing Practices (GMP) regulations enforced by the United States Food and
Drug Administration (FDA) through its facilities inspection program. If the
facilities of such manufacturers cannot pass a pre-approval plant inspection,
the FDA premarket approval of Corixa's products will not be granted.
CORIXA LACKS SALES, MARKETING AND DISTRIBUTION CAPABILITY.
Corixa currently has no sales, marketing or distribution capability. Corixa
intends to rely on its corporate partners to market its products. Its corporate
partners may not have effective sales forces and distribution systems. If Corixa
is unable to maintain or establish such relationships and is required to market
any of its products directly, Corixa will need to develop a marketing and sales
force with technical expertise and with supporting distribution capabilities.
Corixa may not be able to maintain or establish such relationships with third
parties or develop in-house sales and distribution capabilities.
CORIXA FACES MUCH GOVERNMENT REGULATION.
Any products developed by Corixa or its corporate partners are subject to
regulation by federal, state and local governmental authorities in the United
States, including the FDA, and by similar agencies in other countries. Any
product developed by Corixa or its corporate partners must receive all relevant
regulatory approvals or clearances before it may be marketed in a particular
country. The regulatory process, which includes extensive preclinical studies
and clinical trials of each product in order to establish its safety and
efficacy, is uncertain, can take many years and requires the expenditure of
substantial resources. Data obtained from preclinical and clinical activities
are susceptible to varying interpretations which could delay, limit or prevent
regulatory approval or clearance. In addition, delays or rejections may be
encountered based upon changes in regulatory policy during the period of product
development and/or the period of review of any application for regulatory
approval or clearance for a product. Delays in obtaining regulatory approvals or
clearances:
- would adversely affect the marketing of any products developed by Corixa
or its corporate partners;
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- could impose significant additional costs on Corixa and its corporate
partners;
- could diminish any competitive advantages that Corixa or its corporate
partners may attain; and
- could adversely affect Corixa's ability to receive royalties and generate
revenues and profits.
Regulatory approval, if granted, may entail limitations on the indicated
uses for which the new product may be marketed that could limit the potential
market for such product. Product approvals, once granted, may be withdrawn if
problems occur after initial marketing. Furthermore, manufacturers of approved
products are subject to pervasive review, including compliance with detailed
regulations governing GMP. The FDA has recently revised the GMP regulations. The
new Quality System Regulation imposes design controls and makes other
significant changes in the requirements applicable to manufacturers. Failure to
comply with applicable regulatory requirements can result in, among other
things, warning letters, fines, injunctions, civil penalties, recall or seizure
of products, total or partial suspension of production, refusal of the
government to renew marketing applications and criminal prosecution.
Corixa is also subject to numerous federal, state and local laws,
regulations and recommendations relating to:
- safe working conditions;
- laboratory and manufacturing practices;
- the experimental use of animals;
- the environment; and
- the use and disposal of hazardous substances, including radioactive
compounds and infectious disease agents.
In addition, Corixa cannot predict the extent of government regulations or
the impact of new governmental regulations that might have an adverse effect on
the discovery, development, production and marketing of Corixa's products.
Corixa may be required to incur significant costs to comply with current or
future laws or regulations. Corixa's business may be harmed by the cost of such
compliance.
CORIXA FACES PRODUCT LIABILITY EXPOSURE AND POTENTIAL UNAVAILABILITY OF
INSURANCE.
Corixa may experience losses due to product liability claims. Corixa has
obtained limited product liability insurance coverage. Such coverage may not be
adequate or may not continue to be available in sufficient amounts or at an
acceptable cost, or at all. Corixa may not be able to obtain commercially
reasonable product liability insurance for any product approved for marketing. A
product liability claim, product recalls or other claim, as well as any claims
for uninsured liabilities or in excess of insured liabilities, may significantly
harm Corixa's business.
CORIXA'S PRODUCTS MAY NOT BE ACCEPTED BY THE MARKET.
Any products successfully developed by Corixa or its corporate partners, if
approved for marketing, may never achieve market acceptance. Such products, if
successfully developed, will compete with drugs and therapies manufactured and
marketed by major pharmaceutical and other biotechnology companies. Physicians,
patients or the medical community in general may not accept and utilize any
products that may be developed by Corixa or its corporate partners.
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The degree of market acceptance of any products developed by Corixa or its
corporate partners will depend on a number of factors, including:
- the establishment and demonstration of the clinical efficacy and safety
of the product candidates;
- their potential advantage over alternative treatment methods; and
- reimbursement policies of government and third-party payors.
CORIXA FACES UNCERTAINTY RELATED TO PRICING AND REIMBURSEMENT AND HEALTH CARE
REFORM.
In both domestic and foreign markets, sales of Corixa's or its corporate
partners' products will depend in part on the availability of reimbursement from
third-party payors such as:
- government health administration authorities;
- private health insurers;
- health maintenance organizations;
- pharmacy benefit management companies; and
- other healthcare-related organizations.
Both the federal and state governments in the United States and foreign
governments continue to propose and pass new legislation designed to contain or
reduce the cost of health care. Existing regulations affecting the pricing of
pharmaceuticals and other medical products may also change before any of
Corixa's or its corporate partners' products are approved for marketing. Cost
control initiatives could decrease the price that Corixa receives for any
product it or any of its corporate partners may develop in the future. In
addition, third-party payors are increasingly challenging the price and
cost-effectiveness of medical products and services. Significant uncertainty
exists as to the reimbursement status of newly approved health care products,
including pharmaceuticals. Corixa's or its corporate partners' products, if any,
may not be considered cost effective or adequate third-party reimbursement may
not be available to enable Corixa or its corporate partners to maintain price
levels sufficient to realize a return on their investment.
CORIXA FACES POTENTIAL VOLATILITY IN ITS STOCK PRICE.
The market prices for securities of biotechnology companies have in the
past been, and can in the future be expected to be, especially volatile. The
market price of Corixa's common stock may be subject to substantial volatility
depending upon many factors, including:
- announcements regarding the results of discovery efforts, preclinical and
clinical activities;
- announcements regarding the acquisition of technologies or companies,
including the merger;
- technological innovations or new commercial products developed by Corixa
or its competitors;
- changes in government regulations;
- changes in Corixa's patent portfolio;
- developments or disputes concerning proprietary rights;
- changes in existing corporate partnerships or licensing arrangements;
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- establishment of additional corporate partnerships or licensing
arrangements;
- progress of regulatory approvals;
- issuance of new or changed stock market analyst reports and/or
recommendations;
- economic and other external factors;
- operating losses by Corixa; and
- fluctuations in Corixa's financial results and degree of trading
liquidity in its common stock.
One or more of these factors could significantly harm Corixa's business and
decrease the price of its common stock in the public market.
CORIXA IS CONTROLLED BY A SMALL NUMBER OF EXISTING STOCKHOLDERS.
As of August 5, 1999, executive officers and directors of Corixa, together
with entities affiliated with them, beneficially owned approximately 30.8% of
the outstanding Corixa common stock together with applicable options and
warrants held by such stockholders. The voting power of these stockholders could
have the effect of delaying or preventing a change in control of Corixa.
RISKS RELATED TO RIBI
RIBI'S BUSINESS COULD SUFFER DUE TO THE ANNOUNCEMENT OF THE MERGER, THE
CONSUMMATION OF THE MERGER, OR THE FAILURE TO CONSUMMATE THE MERGER.
The announcement or the consummation of the merger may increase the
likelihood of a number of changes to Ribi's business, any of which could
significantly harm Ribi's business. Such changes include but are not limited to:
- loss of key management, scientific or other personnel of Ribi;
- inability to consummate an alternative merger or strategic collaboration;
and
- delays in product development.
If the merger is not completed, Ribi could be materially adversely affected
by such changes, and restoring Ribi's business to its pre-announcement value
could be expensive and time-consuming, and may not even be possible. As a result
of the factors described above, the failure to consummate the merger could
significantly harm Ribi's business and stock trading price.
THERE ARE UNCERTAINTIES ABOUT RIBI'S TECHNOLOGY.
Ribi's principal activities since its formation in 1981 have been the
research, development, production and marketing of biopharmaceutical products
designed to stimulate an immune response in humans and animals in order to
prevent or treat malignant, infectious and other diseases. While there is
evidence that the biological response modifiers Ribi and others produce may
provide treatment for specific cancers, infectious and other diseases, the
workings of the immune system, particularly in conjunction with biological
response modifiers, are not yet fully understood. As a result, Ribi's research
and development activities as well as those of its competitors are based on
theories and concepts which may not have been completely proven or defined. Ribi
has and will continue to test on humans its products designed for use by humans.
To date there have been no
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significant untoward effects associated with the administration of Ribi's
products, and present data indicates that some of its products for specific
applications have activity.
Ribi's technology is based on the potent capacities of microbial products
to modulate the cascade of regulatory substances produced by cells in man and
other animals. Slight modifications of these products and/or their physical and
biological delivery to the immune system profoundly influence the qualitative
and quantitative natures of the subsequent modulation and physiological
response. Ribi believes that appropriate delivery of products of this core
technology can be used to suppress an unwanted immunological or inflammatory
response and/or to enhance a protective response. However, Ribi cannot assure
you that its technology will prove successful or generate significant sales or
earnings in the future.
RIBI HAS LIMITED COMMERCIAL PRODUCTS.
Ribi's products are in various stages of development. Ribi cannot assure
you that its products under development, including its Melacine therapeutic
vaccine to treat melanoma, its synthetic cardioprotectant, or any adjuvant,
vaccine or other immunological agent that Ribi may develop will be commercially
successful. Even if clinical trial results are successful, Ribi may not:
- receive the necessary governmental approvals for its products;
- have satisfactory joint venture or licensing arrangements available to
it; or
- have any of its products accepted by the medical communities.
RIBI HAS A HISTORY OF NET LOSSES.
Ribi has recognized net losses since its inception and it expects to incur
substantial operating losses for the foreseeable future. As of June 30, 1999,
Ribi had an accumulated deficit of approximately $53.2 million. To date, Ribi
has generated only limited sales revenue. Ribi's revenue and net losses for the
six months ended June 30, 1999, were approximately $3.2 million and $3.1
million, respectively. Ribi's products may not prove successful or generate
significant sales or earnings in the future.
RIBI'S NEED FOR AND ABILITY TO SECURE ADDITIONAL FUNDING IS UNCERTAIN.
Ribi is not able to estimate with certainty the amount of cash and working
capital needed for its ongoing operations. Such requirements typically vary
depending upon:
- the results of basic research and clinical trials;
- the time and expense required for governmental approval of products; and
- competitive and technical developments, most of which are beyond
management's control.
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Absent the impact of the merger, Ribi believes that its available cash,
cash equivalents, short-term and long-term investments and funds from license
agreements and product sales should be sufficient to meet its cash requirements
into 2002. Ribi's estimate of cash requirements is based on the receipt of
projected revenues under existing agreements combined with an anticipated
reduction of expenses from current levels as existing research programs are
completed. Ribi also assumes that its outstanding Series A preferred stock will
be converted into Ribi common stock rather than redeemed for cash. Ribi's actual
revenues may not meet its projections, and expense reductions may not be as
significant as expected. In such case, Ribi's available capital would only be
sufficient for a shorter period of time.
Ribi's continued operations beyond such period will be dependent upon its
ability to generate substantial operating revenue or procure additional
financing. Ribi cannot assure you that:
- its products will prove successful or generate significant sales or
earnings in the future; or
- if needed, it will be able to obtain future funding on reasonable terms
or at the appropriate time for its planned activities.
In the event that Ribi may require but is not successful in obtaining
additional funding, Ribi might not be able to proceed as rapidly as it would
like with the development and commercialization of its products. The lack of
required funding would significantly harm Ribi's business.
THE SUCCESS OF RIBI DEPENDS ON ITS PATENTS AND PROPRIETARY PROTECTION.
Ribi has obtained and applied for patents in the United States and several
foreign countries. Currently, Ribi has 22 issued United States patents and five
pending United States applications. The expiration dates for issued United
States patents held by Ribi range from 2001 to 2015. Ribi cannot assure you
that:
- the patents Ribi has applied for will be obtained;
- the claims embodied in existing patents to which Ribi has rights will not
be challenged;
- additional patents will be obtained by Ribi in the United States or in
other jurisdictions;
- any existing or future patents will give Ribi substantial protection; or
- any existing or future patents will be commercially beneficial.
The cost of enforcing Ribi's patent rights in lawsuits, which it may bring
against infringers or which may be brought challenging its patents, may be
substantial and could interfere with Ribi's operations. The patent laws of other
countries may differ from those of the United States as to the patentability of
Ribi's products and processes. Moreover, the degree of protection afforded by
foreign patents may be different from that in the United States. On an ongoing
basis, Ribi reviews its patent portfolio and has abandoned and may in the future
abandon patents or patent applications for various reasons, including but not
limited to:
- limited protection;
- lack of commercial importance; and
- limited enforceability.
Ribi also relies substantially upon unpatented proprietary knowledge. Ribi
cannot assure you that others will not develop such knowledge independently or
otherwise obtain access to Ribi's technology.
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In addition, it may be found that the technology Ribi uses infringes upon
patents or proprietary technology of others. The occurrence of any of the risks
associated with Ribi's patents and other proprietary information discussed above
could significantly harm Ribi's business.
RIBI IS SUBJECT TO EXTENSIVE GOVERNMENTAL REGULATION.
Regulation by governmental authorities in the United States and other
countries is a significant factor in the development, production and marketing
of Ribi's human biopharmaceutical products and its ongoing research and
development activities. In order to produce and market human biopharmaceuticals,
Ribi must satisfy mandatory procedures and meet safety and efficacy standards
established by the FDA and comparable agencies in foreign countries. The process
of seeking and obtaining approval for the manufacturing and marketing of a new
human biopharmaceutical product may require a number of years and substantial
funding. Ribi may not be granted any required approvals on a timely basis, if at
all, and such approvals, once granted, may be withdrawn. In addition, Ribi is
and will be subject to various regulations relating to:
- the maintenance of safe working conditions;
- good laboratory and manufacturing practices; and
- the use and disposal of harmful or potentially harmful substances.
Ribi cannot assure you that any required approvals will be granted on a
timely basis, if at all, or that such approvals, once granted, will not be
withdrawn. Furthermore, Ribi cannot assure you that additional regulation will
not be imposed on its activities or products in the future. Ribi's inability to
obtain such approvals could significantly harm its business.
RIBI IS SUBJECT TO PRESENT AND FUTURE GOVERNMENTAL REFORMS.
In the past few years, health care reform has received considerable
attention. Reform measures currently being considered by the federal and various
state governments and related market restructuring could adversely affect the:
- pricing of therapeutic products;
- pricing of prophylactic products; and/or
- amount of reimbursement available.
Such events could detrimentally affect the profitability of companies
developing, manufacturing or marketing pharmaceutical products, including Ribi.
Ribi cannot predict the extent of possible future governmental reforms or the
effect such reforms or other measures may have its business.
RIBI FACES RAPIDLY EVOLVING TECHNOLOGY AND FIERCE COMPETITION.
The biotechnology and pharmaceutical industries are characterized by
rapidly evolving technology and intense competition. Ribi's products under
development are expected to address a broad range of markets. Ribi's competition
will be determined in part by the potential indications for which its products
are developed and ultimately approved by regulatory authorities. The first
pharmaceutical product to reach the market in a therapeutic or preventative form
often enjoys a significant competitive advantage relative to later entrants to
the market. Accordingly, competitiveness will depend on the relative speed with
which Ribi or its corporate partners can:
- develop products;
- complete clinical trials of such products;
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- receive marketing approval for such product; and
- supply commercial quantities of the products to the market.
Ribi's competitive position also will depend on, among other things, its
ability to:
- attract and retain qualified scientific and other personnel;
- develop effective proprietary products;
- develop and implement production and marketing plans;
- obtain and maintain patent protection; and
- secure adequate capital resources.
Ribi expects its products, if approved for sale, to compete primarily on
the basis of:
- product efficacy;
- safety;
- patient convenience;
- reliability;
- value; and
- patent position.
In addition to potential competition from other biopharmaceutical products,
the products Ribi is presently developing may compete with nonbiological drugs
and other therapies. Ribi's competitors include major pharmaceutical, chemical
and specialized biotechnology companies, many of which have financial, technical
and marketing resources significantly greater than Ribi's.
Ribi is aware that research is being conducted by others in areas in which
it is seeking to establish commercial products. Ribi's competitors might offer
products which by reason of price or efficacy may be superior to any products
that Ribi may develop. Ribi cannot assure you that discoveries or products
introduced by others will not render its products obsolete or that Ribi will
otherwise be able to compete effectively with such competitors. Ribi's inability
to compete effectively would significantly harm Ribi's business.
RIBI DEPENDS UPON KEY PERSONNEL AND MAY BE UNABLE TO HIRE QUALIFIED PERSONNEL.
Ribi's business is highly technical, and there are a limited number of
scientists with expertise in its area of operations. Ribi's business success,
therefore, is and will be dependent upon its ability to attract and retain
qualified research personnel. There is substantial competition for such
employees, and Ribi may not be able to recruit, hire or retain talented
scientists. Ribi's inability to attract and retain qualified personnel would
significantly harm Ribi's business.
RIBI'S STOCK PRICE HAS BEEN AND MAY CONTINUE TO BE VOLATILE.
The market price of Ribi's common stock, like that of the securities of
many other biotechnology and pharmaceutical companies, has fluctuated over a
wide range and Ribi's stock is likely to be highly volatile in the future. The
following factors may have a significant effect on the market price of Ribi's
common stock:
- fluctuations in Ribi's operating results;
- announcements of technological innovations or new commercial products by
Ribi or its competitors;
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- governmental regulation;
- developments or disputes concerning patent or other proprietary rights;
- public concern as to the safety of devices or drugs developed by Ribi or
its competitors; and
- general market conditions.
RIBI IS SUBJECT TO GROUNDWATER CONTAMINATION LEGAL ACTIONS.
In March 1991, Ribi, along with the National Institutes of Health and the
Bitterroot Valley Sanitary Landfill, were notified by the Montana Department of
Health and Environmental Sciences (now known as the Department of Environmental
Quality) as potentially responsible parties and as such are jointly and
severally liable for groundwater contamination located at and near the site of a
landfill in Ravalli County, Montana. Ribi's involvement arises out of waste
materials that it had deposited at the landfill from 1982 to 1985, which the
landfill had permits to receive. The National Institutes of Health unilaterally
and voluntarily initiated and completed work pursuant to an interim remediation
plan approved by the Department of Environmental Quality to remove and
decontaminate the believed source of contamination and treat the aquifers which
tests have shown contain contaminants. Although decontamination of the soil at
and around the landfill has been completed, treatment of the groundwater in the
proximity of the disposal site continues utilizing air sparging.
The Department of Environmental Quality conducted a risk assessment and
issued a Draft Final Feasibility Study in October 1994 that discussed possible
final remediation alternatives. In August 1995, the Department announced that it
had approved a second interim action in the vicinity of the landfill being
unilaterally and voluntarily conducted by the National Institutes of Health
which involved:
- installing individual replacement wells and new wells to provide an
alternate water supply for the area residents; and
- developing additional information on the site hydrogeology.
Information collected from these wells through a multi-year monitoring
program will be used by the Department of Environmental Quality to evaluate the
effectiveness of the remediation efforts to date. The current plan calls for the
wells to be installed in three phases. Phase I includes installing wells on
occupied properties with the highest remaining contamination levels. Phase II
includes installing wells on occupied properties with lesser degrees of
contamination. Phase III consists largely of installing wells on vacant
properties.
Preliminary studies completed in 1994 estimated the cost of the wells to be
approximately $1.4 million. Recent information indicates that a total of
nineteen alternate water supply wells have been installed at a cost of
approximately $1.0 million. The Department of Environmental Quality could
require the potentially responsible parties to implement further remediation
should these wells not provide sufficient quality or quantity of water. The
National Institutes of Health has indicated it is undertaking phase II
groundwater remediation to intercept and treat contaminated groundwater near the
eastern landfill boundary. The National Institutes of Health has projected costs
for this phase II groundwater remediation to be in excess of $1.0 million
through 1999. The National Institutes of Health, which has taken the lead and
incurred substantially all of the remediation costs, has represented publicly
that it would continue to work with the Department of Environmental Quality
toward an acceptable final remediation plan.
The Department of Environmental Quality initiated an action in 1997 in the
state district court in Lewis and Clark County, Montana against Ribi, the
landfill and the owners of the landfill seeking
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recovery of past alleged costs associated with its oversight activities in the
amount of $238,000, as well as a declaratory judgment finding the parties liable
for future oversight costs, plus civil penalties in the event the parties fail
to comply. Since the action was initiated, Ribi and the National Institutes of
Health jointly have received statements requesting payment of an additional
$30,000. In May 1998, Ribi was informed that the Department of Environmental
Quality had entered into a settlement agreement with the landfill and its
owners, whereby the landfill and its owners agreed to pay collectively the
Department approximately $35,000. Ribi believes that its has meritorious
defenses to the claim and that there are other responsible parties. Ribi has
filed a response to the action, including a counterclaim and motions for a
change in venue and to dismiss. Recently, the court granted Ribi's motion for a
change of venue to Ravalli County where Ribi is located. The court did not rule
on the motion to dismiss, which motion will now be acted upon by the court in
Ravalli County. Subsequently, the Department of Environmental Quality filed a
Motion for Stay of Proceedings pending the outcome of the action in federal
district court discussed below in which the Department is a plaintiff. The court
granted the motion which Ribi did not oppose. The federal district court
recently denied a motion of the DEQ to file an amended complaint to incorporate
the complaint filed with the state court. In view of the federal district
court's denial of the motion of the DEQ to amend its complaint, the DEQ has
indicated that it intends to petition the state court to lift the stay of
proceedings.
On April 21, 1998, Ribi received notice that the United States, acting on
behalf of the Department of Health and Human Services, which oversees the
National Institutes of Health, filed suit in United States District Court
seeking contribution from Ribi of an equitable share of past and future response
costs incurred by the National Institutes of Health in connection with the
remediation at and near the landfill. The complaint alleges that as of September
30, 1997, the United States had incurred response costs in excess of $3.4
million and that it expects to incur more than $1.0 million in additional
response costs. Ribi filed a response to the action. On or about June 4, 1998,
Ribi received notice that the United States had entered into a settlement
agreement with the landfill and the landfill owners pursuant to which the
settling parties agreed to make payment in the amount of $440,000. In view of
the settlement, the United States filed with the court a Joint Motion for Stay
of Proceedings between the United States, the landfill and landfill owners.
Assuming the settlement is completed, the action against the landfill and the
landfill owners would be dismissed. Although Ribi believes it has meritorious
defenses to the cost recovery claim and that there are other responsible
parties, Ribi cannot assure you that it will be successful in its defenses to
claims arising out of the landfill, including the claims made by the United
States.
On or about June 6, 1998, the Department of Environmental Quality filed a
complaint in the United States District Court against Ribi, the landfill and the
owners of the landfill seeking recovery of past alleged costs associated with
its oversight activities in the amount of $258,000, of which it indicated not
more than $154,000 had been reimbursed, interest, attorneys' fees and costs, and
a declaratory judgment finding the parties liable for future response costs.
This action brought under the Federal Comprehensive Environmental Response,
Compensation and Liability Act (CERCLA) is similar to that filed in the state
district court under the Montana state Comprehensive Environmental Cleanup and
Responsibility Act (CECRA) that is described above, where further action has
been deferred pending the outcome of the federal action. Ribi filed a response
to the action, including a counterclaim against the Department of Environmental
Quality. The Department has initiated discovery, and Ribi responded to a
discovery request. Ribi believes that it has meritorious defenses to the claim
and that there are other responsible parties. Ribi cannot assure you that its
defenses and counterclaim will be successful.
Depending upon the eventual outcome of this litigation and the success of
Ribi pursuing its defense and indemnity with its insurance carriers, the result
of this litigation could significantly harm
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Ribi's financial condition. As of June 30, 1999, Ribi had accrued a reserve of
approximately $300,000 to cover legal, consulting and Department of
Environmental Quality reimbursement costs associated with Ribi as a potentially
responsible party.
RIBI IS SUBJECT TO A WRONGFUL DISCHARGE LEGAL ACTION.
In June 1997, a complaint was filed in district court in Ravalli County
against Ribi by a former employee who was discharged for cause in June 1996. The
former employee alleges discharge in violation of the Montana Wrongful Discharge
from Employment Act and further, that discharge was for refusal to violate
public policy. The court granted dismissal with respect to that portion of the
complaint which alleges termination for refusal to violate public policy. The
former employee filed a motion for reconsideration asking the court to reverse
its decision with respect to the issue of termination for refusal to violate
public policy and requested permission to amend the complaint to include
additional allegations relative to the public policy issue. On April 6, 1998,
the court allowed the former employee to amend the complaint as requested. The
Company recently filed a motion for partial summary judgment on the violation of
public policy issue. The former employee has filed a motion for partial summary
judgment on the issue of discharge in violation of the Wrongful Discharge Act.
It is anticipated there will be oral arguments to the Court concerning the
respective motions. However, no date has been set for the oral arguments. If the
former employee should ultimately prevail on the issue of discharge in violation
of the Wrongful Discharge Act, Ribi's potential liability would be approximately
$320,000, exclusive of its attorneys' fees and related costs. If the former
employee prevails on the public policy issue, Ribi could be subject to:
- punitive damages of an unknown amount; and
- potential liability for violation of the Wrongful Discharge Act.
Ribi believes that it has a meritorious defense and plans to defend
vigorously the suit. However, it is not possible to assess reliably the outcome.
Depending upon the eventual outcome of this action, the result of this
litigation may significantly harm Ribi's financial condition.
STOCKHOLDERS OF RIBI FACE POTENTIAL STOCK DILUTION.
As of the close of business on August 9, 1999, options to purchase
1,791,865 shares of Ribi's common stock were outstanding pursuant to Ribi's
employee benefit plans and stock option agreements with management, directors
and employees. There are also outstanding warrants to purchase an aggregate of
500,000 shares of Ribi's common stock. The warrants expire if not exercised
prior to January 1, 2000. The effect the exercise of such options and warrants
may have on the market value of Ribi's common stock is not known. In addition,
the existence of such options and warrants may adversely affect the terms on
which Ribi can obtain additional equity financing.
As of August 9, 1999, 6,490 shares of Ribi Series A preferred stock were
issued and outstanding, convertible into approximately 3,381,963 shares of Ribi
common stock at a price of approximately $2.02. However, the exact number of
shares of Ribi common stock into which such shares of Series A preferred stock
may be converted and the conversion price are variable and cannot be determined
with certainty until the date of such conversion, if any. Purchasers of Ribi
common stock could therefore experience substantial dilution of their investment
upon conversion of Ribi Series A preferred stock.
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RIBI FACES PRODUCT LIABILITY EXPOSURE AND POTENTIAL UNAVAILABILITY OF INSURANCE.
The testing and marketing of health care products entails an inherent risk
of product liability claims. Ribi currently maintains product liability
insurance coverage covering the clinical testing of its products, as well as the
commercial sale of Melacine, a therapeutic vaccine to treat melanoma, if and
when such product receives regulatory approval. To date there have been no
product liability claims asserted against Ribi. However, Ribi cannot assure you
that product liability claims will not be asserted against it or that Ribi will
be able to maintain existing coverage or obtain reasonable insurance coverage
should it choose to do so in the future. Ribi's inability to maintain insurance
coverage would expose Ribi to the full cost of any product liability claim which
could significantly harm Ribi's business.
RIBI HAS NOT NOR IS IT PLANNING TO PAY CASH DIVIDENDS.
Ribi has never paid any cash dividends on its common stock and Ribi does
not intend to declare or pay cash dividends in the foreseeable future. Ribi is
unable to state with certainty that it will ever declare or pay cash dividends
on its common stock.
ADDITIONAL RISKS RELATED TO RIBI IF THE MERGER IS NOT CONSUMMATED
Consummation of the merger is conditioned upon Ribi and Corixa obtaining
the required votes of their stockholders approving the merger. Corixa and Ribi
must each obtain votes approving the merger from stockholders holding a majority
of the outstanding shares of their common stock, and in the case of Corixa, the
holders of their Series A preferred stock. As a result, shares held by
stockholders who do not vote or who vote to abstain will have the effect of
shares voted against the merger. Therefore, with respect to the shares of stock
of either company, if the shares voted to abstain and the shares not voted
aggregate to a majority of the outstanding shares of such company, the merger
will not be approved. Neither Corixa nor Ribi can assure you that a sufficient
number of shares of stock of either company will be voted in favor of the
merger. In the event the merger is not consummated, Ribi will continue to be
exposed to the foregoing risks, as well as to the following additional risks:
- the risk that the price of Ribi's stock will fall below its March 22,
1999 low of $1.375 per share to below $1.00 per share, increasing the
potential that Ribi's stock will be delisted from The Nasdaq National
Market and triggering redemption of Ribi's Series A preferred stock;
- a reduced ability to retain and attract necessary employees; and
- a reduced ability to consummate an alternative merger or strategic
collaboration.
Ribi's inability to take such actions would significantly harm Ribi's
business and financial condition.
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THE CORIXA SPECIAL MEETING
DATE, TIME AND PLACE OF SPECIAL MEETING
The Corixa special meeting will be held in the Cedar Room at Corixa
Corporation, 1124 Columbia Street, Seattle, Washington 98104-2040 on September
24, 1999 at 9:00 a.m., local time.
PURPOSE OF THE SPECIAL MEETING
At the Corixa special meeting, holders of shares of Corixa common stock and
Series A preferred stock will consider and vote upon:
1. A proposal to approve the merger of Ribi with and into Corixa
whereby, among other things:
- each outstanding share of Ribi common stock will be converted into the
right to receive 0.1685 of one share of Corixa common stock;
- each share of Ribi Series A preferred stock that is not converted
into Ribi common stock prior to the merger will be redeemed by Ribi;
- Ribi's stock option plans and option agreements granted to employees
and directors will be amended, as more fully described in this proxy
statement/prospectus; and
- each outstanding option and warrant to purchase shares of Ribi
common stock that is not terminated as a result of the merger will
be assumed by Corixa and converted into an option or warrant to
purchase shares of Corixa common stock, both as more fully described
in this proxy statement/prospectus.
2. A proposal to approve the terms of Corixa's equity line of credit
with Castle Gate to allow Corixa at its option to conduct additional
draw-downs of funds that could trigger the issuance of a total of 20% or
more of Corixa's capital stock at a price less than the greater of book or
market value of such stock to Castle Gate in the form of Series A preferred
stock and warrants to purchase common stock.
3. A proposal to amend Corixa's Amended and Restated 1994 Stock Option
Plan to increase the shares available for issuance thereunder by 2,500,000
shares to an aggregate of 5,266,234 shares and to increase the maximum
annual automatic increase in the number of shares reserved for issuance
under the 1994 plan from 500,000 to 750,000. If this amendment is approved,
the maximum aggregate number of shares of Corixa common stock that may be
issued under the 1994 plan as currently structured is 9,016,234.
4. Such other business as may properly come before the Corixa special
meeting or any postponements or adjournments thereof.
RECORD DATE; VOTING RIGHTS; PROXIES
Only holders of Corixa common stock and Series A preferred stock at the
close of business on the record date of August 9, 1999 are entitled to notice of
and to vote at the Corixa special meeting. As of this record date, there were
14,862,053 shares of Corixa common stock issued and outstanding, 481 holders of
record of Corixa common stock, 12,500 shares of Corixa Series A preferred stock
issued and outstanding and one holder of record of Corixa Series A preferred
stock. Each stockholder of record of Corixa common stock is entitled to cast one
vote per share and each stockholder of record of Corixa Series A preferred stock
is entitled to cast approximately 117.65 votes per share. Such votes may be made
in person or by properly executed proxy on each matter properly submitted
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for the vote of the stockholders of Corixa at the Corixa special meeting, except
that pursuant to Nasdaq rules, the vote of the holders of Corixa's Series A
preferred stock will not be counted for purposes of obtaining approval of the
potential additional Castle Gate draws.
All shares of Corixa common stock and Series A preferred stock represented
by properly executed proxies will, unless such proxies have been previously
revoked, be voted in accordance with the instructions indicated in such proxies.
IF NO INSTRUCTIONS ARE INDICATED, SUCH SHARES OF CORIXA COMMON STOCK AND SERIES
A PREFERRED STOCK REPRESENTED BY SUCH PROPERLY EXECUTED PROXIES WILL BE VOTED
"FOR" ADOPTION AND APPROVAL OF THE MERGER.
Corixa does not know of any matters other than as described in the notice
of special meeting that are to come before the Corixa special meeting. If any
other matter or matters are properly presented for action at the Corixa special
meeting, each person named in the enclosed form of proxy and acting thereunder
will have the discretion to vote on such matters in accordance with such
person's best judgment.
A stockholder who has given a proxy may revoke it at any time prior to its
exercise by giving written notice thereof to the Secretary of Corixa, by signing
and returning a later dated proxy, or by voting in person at the Corixa special
meeting. However, mere attendance at the Corixa special meeting will not in and
of itself have the effect of revoking the proxy. The inspector of election
appointed for the meeting will tabulate votes cast by proxy or in person at the
Corixa special meeting.
QUORUM; BROKER NON-VOTES; ABSTENTIONS
The presence in person or by properly executed proxy of holders of a
majority of all the issued and outstanding shares of Corixa common stock and
Series A preferred stock entitled to vote on each proposal, calculated on an
as-converted basis, is necessary to constitute a quorum at the Corixa special
meeting. For purposes of determining whether a quorum is present at the Corixa
special meeting, the inspector of elections will include shares:
- the holders of which abstain from voting on any particular matter; or
- for which executed proxies are returned by a broker that holds such
shares in street name indicating that the broker does not have
discretionary authority to vote such shares on a particular matter,
otherwise known as broker non-votes.
Abstentions and broker non-votes will be considered votes against the
merger and the merger agreement. For purposes of approving the potential
additional draws under the Castle Gate equity line of credit and the amendment
to the 1994 plan:
- abstentions will be considered votes against both proposals; and
- broker non-votes will be considered not present for the purpose of
determining whether a majority of the shares present in person or by
proxy entitled to vote have approved each proposal.
EXPENSES OF PROXY SOLICITATION
Corixa will pay the expenses of soliciting proxies to be voted at the
Corixa special meeting. Following the original mailing of the proxies and other
soliciting materials, Corixa and its agents also may solicit proxies by mail,
telephone, telegraph or in person. Following the original mailing of the proxies
and other soliciting materials, Corixa will request brokers, custodians,
nominees and other record holders of Corixa common stock and Series A preferred
stock to forward copies of the proxy
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and other soliciting materials to persons for whom they hold shares of Corixa
common stock and Series A preferred stock and to request authority for the
exercise of proxies. In such cases, upon the request of the record holders,
Corixa will reimburse such holders for their reasonable expenses.
APPRAISAL RIGHTS
Under Delaware law, holders of Corixa common stock are not entitled to
dissenters' rights or appraisal rights with respect to the merger or the other
proposals to be considered at the meeting because the Corixa common stock is
traded on Nasdaq and holders of Ribi common stock will receive in the merger
only shares of Corixa common stock and cash in lieu of fractional shares
thereof. However, under Delaware law, holders of Corixa Series A preferred stock
who continuously hold such shares through the effective date of the merger are
entitled to appraisal rights under section 262 of the Delaware General
Corporation Law. Each such stockholder has a right to dissent from the merger,
and, if the merger is consummated, to receive fair value for his or her shares
by complying with the provisions of Delaware law. A Corixa Series A preferred
stockholder exercising such rights must deliver to Corixa, prior to the vote
being taken on the merger at the special meeting, written notice of his or her
intent to demand payment for his or her shares if the merger is effected and
must not vote in favor of the merger. The full text of section 262 is attached
as Appendix Q to this proxy statement/prospectus. See "Stockholders' Appraisal
Rights" for a further discussion of such rights and the legal consequences of
voting shares of Series A preferred stock in favor of the merger.
THE MATTERS TO BE CONSIDERED AT THE CORIXA SPECIAL MEETING ARE OF GREAT
IMPORTANCE TO THE STOCKHOLDERS OF CORIXA. ACCORDINGLY, CORIXA STOCKHOLDERS ARE
URGED TO READ AND CAREFULLY CONSIDER THE INFORMATION PRESENTED IN THIS PROXY
STATEMENT/PROSPECTUS, AND TO COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE
ENCLOSED PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
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THE RIBI SPECIAL MEETING
DATE, TIME AND PLACE OF RIBI SPECIAL MEETING
The Ribi special meeting will be held at Hamilton City Hall/Community
Center, 223 S. 2nd Street, Hamilton, Montana 59840 on September 23, 1999, at
10:00 a.m. local time.
PURPOSE OF THE SPECIAL MEETING
At the Ribi special meeting, holders of shares of Ribi common stock will
consider and vote upon a proposal to approve and adopt a merger of Ribi with and
into Corixa whereby each outstanding share of Ribi common stock will convert
into the right to receive 0.1685 of one share of Corixa common stock, all shares
of Ribi Series A preferred stock that are not converted into Ribi common stock
prior to the merger will be redeemed by Ribi, and all outstanding options and
warrants to purchase Ribi common stock that are not terminated as a result of
the merger will be assumed by Corixa and will be exercisable for shares of
Corixa common stock. As a condition to the merger, the Ribi stockholders are
required to amend Ribi's stock option plans and option agreements granted to
employees and directors under those plans. The Ribi stockholders' approval of
the merger and merger agreement will also constitute their approval of those
amendments.
RECORD DATE; VOTING RIGHTS; PROXIES
Only holders of Ribi common stock at the close of business on the record
date of August 9, 1999 are entitled to notice of and to vote at the Ribi special
meeting. As of the record date, there were 21,434,970 shares of Ribi common
stock issued and outstanding, and 1,501 holders of record of Ribi common stock.
Each stockholder of record of Ribi common stock on the Ribi record date is
entitled to cast one vote per share, exercisable in person or by properly
executed proxy, on each matter properly submitted for the vote of the
stockholders of Ribi at the Ribi special meeting.
All shares of Ribi common stock represented by properly executed proxies
will, unless such proxies have been previously revoked, be voted in accordance
with the instructions indicated in such proxies. IF NO INSTRUCTIONS ARE
INDICATED, SUCH SHARES OF RIBI COMMON STOCK REPRESENTED BY SUCH PROPERLY
EXECUTED PROXIES WILL BE VOTED "FOR" ADOPTION AND APPROVAL OF THE MERGER.
Ribi does not know of any matters other than as described in the notice of
special meeting that are to come before the Ribi special meeting. If any other
matter or matters are properly presented for action at the Ribi special meeting,
the persons named in the enclosed form of proxy and acting thereunder will have
the discretion to vote on such matters in accordance with such persons' best
judgment.
A stockholder who has given a proxy may revoke it at any time prior to its
exercise by giving written notice thereof to the Secretary of Ribi, by signing
and returning a later dated proxy, or by voting in person at the Ribi special
meeting. However, mere attendance at the Ribi special meeting will not in and of
itself have the effect of revoking the proxy. The inspector of election
appointed for the meeting will tabulate votes cast by proxy or in person at the
Ribi special meeting.
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QUORUM; BROKER NON-VOTES; ABSTENTIONS
The presence in person or by properly executed proxy of holders of a
majority of all the issued and outstanding shares of Ribi common stock entitled
to vote is necessary to constitute a quorum at the Ribi special meeting. For
purposes of determining whether a quorum is present at the Ribi special meeting,
the inspector of elections will include shares:
- the holders of which abstain from voting on any particular matter; and
- for which an executed proxy is returned by a broker that holds such
shares in street name indicating that the broker does not have
discretionary authority to vote on any particular matter.
Both abstentions and broker non-votes will have the effect of votes against
the merger and the merger agreement.
EXPENSES OF PROXY SOLICITATION
Ribi will pay the expenses of soliciting proxies to be voted at the Ribi
special meeting. Following the original mailing of the proxies and other
soliciting materials, Ribi and its agents also may solicit proxies by mail,
telephone, telegraph or in person. Following the original mailing of the proxies
and other soliciting materials, Ribi will request brokers, custodians, nominees
and other record holders of Ribi common stock to forward copies of the proxy and
other soliciting materials to persons for whom they hold shares of Ribi common
stock and to request authority for the exercise of proxies. In such cases and
upon the request of the record holders, Ribi will reimburse such holders for
their reasonable expenses.
NO APPRAISAL RIGHTS
Under Delaware law, holders of Ribi common stock are not entitled to
dissenters' rights or appraisal rights with respect to the merger or any other
proposals that may be considered at the meeting because the Ribi common stock is
traded on Nasdaq and holders of Ribi common stock will receive in the merger
only shares of Corixa common stock and cash in lieu of fractional shares
thereof.
THE MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING ARE OF GREAT IMPORTANCE
TO THE STOCKHOLDERS OF RIBI. ACCORDINGLY, RIBI STOCKHOLDERS ARE URGED TO READ
AND CAREFULLY CONSIDER THE INFORMATION PRESENTED IN THIS PROXY
STATEMENT/PROSPECTUS, AND TO COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE
ENCLOSED PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE. RIBI STOCKHOLDERS SHOULD
NOT SEND ANY STOCK CERTIFICATES WITH THEIR PROXY CARDS.
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THE MERGER
The following discussion summarizes the proposed merger and related
transactions. The following is not, however, a complete statement of all
provisions of the merger agreement and related agreements. Detailed terms of and
conditions to the merger and related transactions are contained in the merger
agreement, a copy of which is attached to this proxy statement/prospectus as
Appendix A. Statements made in this proxy statement/prospectus with respect to
the terms and conditions of the merger and such related transactions are
qualified in their respective entireties by reference to, and you are urged to
read carefully the more detailed information set forth in, the merger agreement
and the other documents attached hereto.
GENERAL DESCRIPTION
Pursuant to the merger agreement:
- Ribi will merge with and into Corixa in a direct forward merger;
- Each outstanding share of Ribi common stock, other than shares owned by
Ribi, will be converted into the right to receive 0.1685 of one share of
Corixa common stock;
- Each share of Ribi Series A preferred stock that is not converted into
Ribi common stock prior to the merger will be redeemed by Ribi;
- Each outstanding option and warrant to purchase Ribi common stock that is
not terminated as a result of the merger will be assumed by Corixa and
will be deemed to constitute the right to acquire, on the same terms and
conditions, a number of shares of Corixa common stock at a price based on
the exchange ratio; and
- Upon completion of the merger, the separate corporate existence of Ribi
will cease, and Corixa will continue as the surviving corporation.
JOINT REASONS FOR THE MERGER
The boards of directors of both Corixa and Ribi based their decisions to
consummate the proposed merger on potential joint benefits that Corixa and Ribi
believe will contribute to the success of the combined company, including the
following:
- The combined company potentially will have significantly expanded product
development opportunities. As a result of the merger, the combined
company will have a clinical stage product portfolio that includes
immunotherapeutics to potentially treat and/or prevent a number of
diseases, such as hepatitis B, herpes virus infections, tuberculosis,
melanoma, breast, colorectal and ovarian cancer, allergy, arthritis,
genital herpes, psoriasis, multiple sclerosis and various additional
infectious diseases. Corixa and Ribi believe that this potential for an
enhanced and expanded product portfolio should serve to augment the
combined company's business development activities and financial results
while simultaneously allowing the combined company to bring a more
diverse set of scientific discoveries and product opportunities to its
partnering efforts.
- The combined company will have a significantly expanded number of
potential products in clinical development compared to the number of
potential products that either company had previously developed prior to
the merger. As of August 5, 1999, Corixa was providing products for or
financially supporting clinical trials of seven immunotherapeutic
products. As of August 5, 1999, Ribi was supplying its adjuvants for use
in clinical trials to test the safety
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and/or activity of various vaccines against 12 diseases. As a result of
the merger, the combined company will have in clinical trials a product
portfolio with potential application against an expanded number of
diseases. Corixa and Ribi believe this increases the opportunity for
commercial success while decreasing the potential adverse financial
impact to the stockholders of both Corixa and Ribi that could result from
failure of any of the vaccines being tested to be commercialized.
- Corixa and Ribi believe that the merger will allow both companies to
apply their scientific expertise to further the development of the
existing products as well as to the discovery and development of
additional products. For example, Ribi's MPL adjuvant may have
application with antigens for various indications currently under
development by Corixa. Also, Ribi's Detox adjuvant currently is being
utilized as a component in therapeutic vaccines in clinical trials for
the treatment of melanoma, breast, ovarian and colorectal cancer
vaccines. This adjuvant may likewise have application as a component in
cancer vaccines currently under development by Corixa. Further, Ribi has
under development a new generation of synthetic adjuvant materials which
may have synergies with products under development by Corixa.
- The merger combines Ribi's manufacturing capabilities with certain of
Corixa's clinical stage programs. The scale-up and manufacture of such
products utilizing Ribi's capabilities may speed their development and
commercialization. Furthermore, Ribi possesses know-how and expertise
with respect to the manufacture, quality assurance and quality control of
bacteria derived immunomodulators. As such, Ribi's facilities may serve
as a manufacturing facility for Corixa's potential products including its
PVAC(TM) product that is now in clinical trials.
RECOMMENDATION OF CORIXA BOARD; CORIXA'S REASONS FOR THE MERGER
The Corixa board of directors has unanimously approved the merger and the
merger agreement and has determined that the terms of the merger are fair to and
in the best interests of Corixa and its stockholders, and therefore unanimously
recommends that the holders of Corixa common stock and Series A preferred stock
vote in favor of approval of the merger and the merger agreement. In addition to
the anticipated joint benefits described above, Corixa believes that there are
additional reasons the merger will be beneficial to Corixa and its stockholders:
- The merger will combine Corixa's and Ribi's complementary scientific
expertise and product discovery opportunities, which may lead to
increased product opportunities for the combined company. For example,
Corixa believes that additional product discovery opportunities may exist
as a result of Ribi's research program focused on synthetic adjuvants.
Progress made in synthetic adjuvants identified as in-process research in
development includes preclinical work. See 'RIBI's Products' and
'Ribi -- Unaudited Pro Forma Consolidated Financial Adjustments -- 2(b).'
Application of additional Corixa technology to this product development
area also may speed the discovery and development of multiple proprietary
products;
- The combined company's enhanced product portfolio resulting from the
merger may lead to additional partnering transactions that neither Corixa
nor Ribi would have accomplished on a stand-alone basis. In-process
projects under development that may result in an enhanced portfolio
include MPL, RC-529, Melacine, Detox, and RC-552. See 'RIBI's Products'
and 'Ribi -- Unaudited Pro Forma Consolidated Financial
Adjustments -- 2(b)' for a discussion of completeness and accomplishments
at the acquisition date. Also, the combined company may be able to obtain
improved commercial terms in such partnering transactions due to its
increased size, product development portfolio and bargaining power;
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- The merger will provide Corixa with access to Ribi's manufacturing
facilities and capabilities, which may provide Corixa with an increased
ability to manufacture certain of its proprietary technologies, such as
its potential PVAC product as well as the potential for expanded
manufacturing capacity on Ribi's Montana site; and
- The financial presentations of Pacific Growth Equities, Inc., including
the oral opinion delivered at the June 9, 1999 meeting of the Corixa
board of directors, which concluded, subject to the assumptions made,
matters considered and limitations set forth in such opinion, that the
exchange ratio provided in the merger agreement was fair, from a
financial point of view, to Corixa and its stockholders on such date. A
copy of the Pacific Growth Equities fairness opinion is attached as
Appendix B to this proxy statement/prospectus.
In the course of its deliberations, Corixa's board of directors reviewed
and considered a number of other factors relevant to the merger, including,
among other things, the following:
- Information concerning Corixa's and Ribi's respective businesses,
financial position, results of operations, product development schedules,
technologies and properties;
- The reports of Corixa's management and legal counsel and Pacific Growth
Equities, including reports relating to the due diligence review that was
conducted regarding Ribi's business, operations, technology, legal
matters and possible synergistic opportunities for the two companies; and
- A review with Corixa's legal counsel of the terms of the merger
agreement, including the termination provisions and closing conditions to
the merger.
Corixa's board of directors also considered a variety of potentially
negative factors in its deliberations concerning the merger, including, among
other things, the following:
- The risk that the integration of the two companies' management and
scientific cultures might not be accomplished quickly or smoothly;
- The dilutive effect of the Corixa common stock to be issued to former
Ribi stockholders in connection with the merger;
- The risk that the market price of Corixa's common stock might be
adversely affected by announcement or consummation of the merger;
- Risks associated with Ribi's intellectual property protection, including
uncertainties related to Ribi's patent position;
- Risks associated with Ribi's environmental compliance, including pending
and potential legal and regulatory actions against Ribi;
- Risks associated with potentially negative results or announcements
relating to any of Ribi's products in clinical trials or under regulatory
review; and
- Certain other risks described under the section entitled "Risk Factors"
beginning on page 32.
The foregoing discussion of the information and factors considered by the
Corixa board of directors is not intended to be an exhaustive list of all
factors considered by the Corixa board of directors. Each member of the Corixa
board of directors may have considered different factors. In view of the variety
of factors considered in connection with its evaluation of the merger, the
Corixa board of directors did not find it practicable to and did not quantify or
otherwise assign relative
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weights to the specific factors considered in reaching its determination. In
addition, each member of the Corixa board of directors may have given different
weights to different factors.
RECOMMENDATION OF RIBI BOARD; RIBI'S REASONS FOR THE MERGER
The Ribi board of directors has unanimously approved the merger agreement
and the merger, and has determined that the terms of the merger are fair to and
in the best interest of Ribi and its stockholders and therefore unanimously
recommends that the holders of Ribi common stock vote in favor of approval of
the merger and the merger agreement.
In reaching its determination to approve the merger agreement and the
transactions contemplated thereby, the Ribi board of directors has identified
the following potential benefits of the merger that it believes may contribute
to the success of the combined company:
- The combination of Corixa's and Ribi's potential product portfolios may
allow the combined company to offer a more comprehensive set of
pharmaceutical products to its customers;
- The combined technological resources and scientific know-how may allow
the combined company to develop new therapies, vaccines and other
immunotherapeutic products at a more rapid pace;
- Ribi can benefit from Corixa's antigen research and discovery, antigen
vaccine delivery and adjuvant discovery and development platforms, while
Corixa can benefit from Ribi's adjuvant discovery, development and
manufacturing capabilities and the possible commercialization of Ribi's
products that are currently in advanced clinical trials. Corixa also may
benefit from the possible commercialization of products for which
marketing applications have been filed or are in preparation;
- The consideration Ribi stockholders will receive in the merger is fair to
Ribi stockholders and in their best interest, especially in light of the
currently poor market conditions for companies in the biotechnology
industry and the fact that, at the time the parties signed the merger
agreement, the market value of Corixa common stock to be issued in
exchange for Ribi common stock represented a premium over the recent
price range of Ribi common stock;
- The merger will provide access to additional capital and resources to
support the combined company's research and development activities; and
- Ribi may benefit from Corixa's network of established corporate
partnerships when trying to expand the number and scope of Ribi's
business relationships for the continued development and
commercialization of its products.
- Ribi's adjuvant expertise and Corixa's antigen expertise, when combined,
will allow more rapid discovery, development and manufacture of novel
vaccines.
- Ribi and Corixa share a major corporate partner, which means that
existing licenses of the combined company's products may be synergistic
rather than potentially competitive.
- The geographic locations of the two companies may increase the potential
synergism of the merger. Corixa's presence in Seattle allows it to
benefit from its proximity to academic institutions and world class
health care facilities, while Ribi's location in Montana allows growth of
development and manufacturing facilities.
- The combined company may have a significantly increased market
capitalization, potentially allowing easier access to financing.
- As a condition to the merger, Ribi will retire the Series A preferred
stock held by Rose Glen Capital Management (RGC), thus eliminating the
possibility of further potential dilution associated with the RGC
investment instrument.
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- The combined company will assume all of Ribi's current liabilities.
In the course of its deliberations, the Ribi board of directors reviewed
and considered a number of other factors relevant to the merger. In particular,
the Ribi board of directors considered, among other things, the following
factors:
- The likelihood that Ribi can continue its operations without the merger
until establishment of meaningful revenues from additional collaborations
and/or product commercialization;
- Information concerning Ribi's and Corixa's respective businesses,
financial position, results of operations, product development schedules,
technologies and properties;
- The reports of Ribi's management and Hambrecht & Quist, its financial
advisor, including reports relating to the due diligence review which had
been conducted regarding Corixa's business, operations, technology and
competitive position, and possible synergistic opportunities for the two
companies;
- With the assistance of Hambrecht & Quist, the multiples of comparable
publicly traded companies in the industry and the discounted future cash
flows of Corixa based on Corixa management's projections;
- The financial presentations of Hambrecht & Quist, including the oral
opinion delivered at the special meeting of the Ribi board of directors,
which concluded, subject to the assumptions made, matters considered and
limitations set forth in such opinion, that the exchange ratio provided
in the merger agreement was fair, from a financial point of view, to Ribi
and its stockholders on such date. A copy of the Hambrecht & Quist
fairness opinion is attached as Appendix C hereto;
- A review with Ribi's legal counsel of the terms of the merger agreement,
termination fee provisions, the circumstances under which either Ribi or
Corixa can terminate the merger agreement and the closing conditions to
the merger; and
- The fact that the issuance of Corixa common stock pursuant to the merger
agreement is conditioned upon approval by a majority of the outstanding
shares of Ribi common stock.
The Ribi board of directors also considered a variety of potentially
negative factors in its deliberations concerning the merger, including the
following factors:
- The risk that, despite the intentions and efforts of Ribi and Corixa, the
operational and competitive benefits sought to be achieved in the merger
may not be achieved;
- The risk that Corixa will not be profitable for at least several years
and possibly longer, if ever;
- The risk that the market value of Corixa common stock might be adversely
affected by announcement and/or consummation of the merger;
- The risk of volatility of Corixa's stock price due to Corixa's small
market capitalization;
- The risk that despite the intentions and efforts of Ribi and Corixa, the
key technical and management personnel of Ribi required to facilitate a
successful integration of operations and scientific and business cultures
following the merger may not be retained by the combined company;
- The concentration of a large amount of Corixa's stock among a small
number of investors; and
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- Certain other risks described above under the section entitled "Risk
Factors" beginning on page 32.
The foregoing discussion of the information and factors considered by the
Ribi board of directors is not intended to be an exhaustive list of all factors
considered by the Ribi board of directors. Each member of the Ribi board of
directors may have considered different factors. In view of the variety of
factors considered in connection with its evaluation of the merger, the Ribi
board of directors did not find it practicable to and did not quantify or
otherwise assign relative weights to the specific factors considered in reaching
its determination. In addition, each member of the Ribi board of directors may
have given different weights to different factors.
OPINION OF CORIXA'S FINANCIAL ADVISOR
Corixa retained Pacific Growth Equities to evaluate the terms of the merger
and render an opinion as to its fairness. On June 9, 1999, Pacific Growth
Equities rendered its oral opinion, subsequently confirmed in writing, to the
Board of Directors of Corixa to the effect that, as of June 9, 1999 and based on
and subject to matters stated in the opinion, the merger consideration to be
paid by Corixa to Ribi stockholders in the merger is fair from a financial point
of view to Corixa stockholders.
THE FULL TEXT OF PACIFIC GROWTH EQUITIES' WRITTEN OPINION DATED JUNE 21,
1999, WHICH SETS FORTH THE ASSUMPTIONS MADE, MATTERS CONSIDERED, AND LIMITATIONS
ON THE REVIEW UNDERTAKEN, IS ATTACHED AS APPENDIX B AND IS INCORPORATED HEREIN
BY REFERENCE. THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL
TEXT OF SUCH OPINION. HOLDERS OF CORIXA CAPITAL STOCK ARE URGED TO, AND SHOULD,
READ THIS OPINION CAREFULLY IN ITS ENTIRETY. THE ENGAGEMENT OF PACIFIC GROWTH
EQUITIES AND ITS OPINION ARE FOR THE BENEFIT OF THE CORIXA BOARD OF DIRECTORS
AND ITS OPINION WAS DELIVERED TO THE CORIXA BOARD IN CONNECTION WITH ITS
CONSIDERATION OF THE MERGER. PACIFIC GROWTH EQUITIES' OPINION ADDRESSES ONLY THE
FAIRNESS OF THE MERGER CONSIDERATION FROM A FINANCIAL POINT OF VIEW TO CORIXA,
AND IT DOES NOT ADDRESS ANY OTHER ASPECT OF THE MERGER NOR DOES IT CONSTITUTE A
RECOMMENDATION TO ANY HOLDER OF CORIXA CAPITAL STOCK AS TO HOW TO VOTE WITH
RESPECT TO THE MERGER.
In connection with the fairness opinion, Pacific Growth Equities:
- reviewed certain publicly available financial information and other
information concerning Corixa and Ribi and certain internal analyses and
other information furnished to it by Corixa and Ribi; and
- held discussions with the members of senior management of Corixa and Ribi
regarding the businesses and prospects of their respective companies and
the joint prospects of a combined company.
In addition, Pacific Growth Equities:
- reviewed the historical reported prices and trading activity for both the
Corixa common stock and Ribi common stock;
- compared certain financial information for both Corixa and Ribi with
similar information for selected companies whose securities are publicly
traded;
- compared certain stock market information and valuations for both Corixa
and Ribi with similar information for certain companies whose securities
are publicly traded;
- analyzed information about prices paid in acquisitions of other
biotechnology companies; and
- performed such other studies and analyses and considered such other
factors as it deemed appropriate.
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In conducting its review and arriving at its opinion, Pacific Growth
Equities assumed and relied upon, without independent verification, the
accuracy, completeness and fairness of the information furnished to or otherwise
reviewed by or discussed with it for the purposes of rendering its opinion.
Pacific Growth Equities assumed, with the consent of Corixa, that the merger
would qualify for purchase accounting treatment and as a tax-free transaction
for the stockholders of Corixa for federal income tax purposes and that the
merger would be consummated in accordance with the terms of the merger agreement
without any amendment thereto and without waiver by Corixa or Ribi of any of the
conditions to their respective obligations thereunder. Pacific Growth Equities,
did not make an independent evaluation or appraisal of the assets of Corixa or
Ribi nor was Pacific Growth Equities furnished with any such evaluations or
appraisals. Pacific Growth Equities' opinion is based on market, economic and
other conditions as they existed and could be evaluated as of the date of the
opinion.
The following is a summary of the analyses performed and factors considered
by Pacific Growth Equities in connection with rendering of its opinion.
Historical Financial Position. In rendering its opinion, Pacific Growth
Equities reviewed and analyzed the historical financial position of Corixa and
Ribi which included:
- an assessment of each of Corixa's and Ribi's recent financial statements;
- an analysis of each of Corixa's and Ribi's revenue, growth and operating
performance trends; and
- an assessment of Corixa's and Ribi's balance sheet information.
Historical Stock Price Performance. Pacific Growth Equities reviewed and
analyzed the daily closing per share market prices and trading volume for Corixa
common stock and Ribi common stock from May 26, 1999 through June 8, 1999.
Although Pacific Growth Equities reviewed the trading volume of Corixa common
stock and Ribi common stock, it primarily focused on the relative stock price
movements of the two companies. Pacific Growth Equities also reviewed the daily
closing prices per share of Corixa common stock and Ribi common stock and
compared the movement of such daily closing prices with the movement of the AMEX
Biotechnology Index and the Russell 2000 Index for the period June 1, 1998
through June 8, 1999.
Analysis of Selected Publicly Traded Companies. This analysis examines a
company's valuation in the public market as compared to the valuation in the
public market of other selected publicly traded companies. Pacific Growth
Equities compared certain financial information, based on the commonly used
valuation measurements described below, relating to Corixa and Ribi to certain
corresponding information for a group of selected publicly traded companies
including Corixa. Such financial information included, among other things:
- common equity market capitalization;
- cash position;
- ratios adjusted for cash;
- ratios of market capitalization to cash;
- ratios of market capitalization to ratios adjusted for cash; and
- discount of common stock market price relative to 52 week high per share
market price.
The financial information used in connection with the analysis provided
below with respect to Corixa and Ribi was based on the latest reported quarterly
period and derived from publicly available
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information. In the case of the selected publicly traded comparable companies,
the financial information used in connection with the analysis provided below
was based on the most recent publicly available balance sheet information.
Pacific Growth Equities noted that, based on the most recent publicly available
balance sheet information and common equity prices as of June 9, 1999 of both
Corixa and Ribi:
- the multiple of market capitalization to cash was 4.8x for Corixa and
3.3x for Ribi, compared to the mean multiple, excluding the high and low,
of 4.3x for companies comparable to Corixa and Ribi;
- the multiple for market capitalization to ratios adjusted for cash was
1.3x for Corixa and 1.4x for Ribi, compared to a mean multiple, excluding
the high and low, of 1.3x for companies comparable to Corixa and 1.4x for
companies comparable to Ribi; and
- The discount of Corixa's and Ribi's stock prices from their 52-week highs
was 4.2% for Corixa and 66.5% for Ribi, compared to a mean discount,
excluding the high and low, of 48.2% for companies comparable to Corixa
and 51.7% for companies comparable to Ribi.
Analysis of Selected Mergers and Acquisitions and Premiums Paid. Pacific
Growth Equities reviewed the financial terms, to the extent publicly available,
of 39 completed mergers and acquisitions since January 1995 in the biotechnology
industry. The 39 selected biotechnology transactions reviewed, in chronological
order of public announcement, were:
- Paco Pharmaceuticals Services/West Co, Inc. -- March 24, 1995;
- Circa Pharmaceuticals, Inc./Watson Pharmaceuticals, Inc. -- March 30,
1995;
- AUSA, Inc. (Apotex USA/Apotex)/GENRx Inc. -- April 13, 1995;
- MedChem Products, Inc./CR Bard, Inc. -- May 24, 1995;
- Marsam Pharmaceuticals, Inc./Schein Pharmaceutical, Inc. -- May 30, 1995;
- Aramed, Inc./Gensia -- June 16, 1995;
- Cellcor/Cytogen -- June 16, 1995;
- SciGenics/Genetics Institute, Inc. -- June 22, 1995;
- Univax Biologics, Inc./North American Biologicals, Inc. -- August 28,
1995;
- Syntro Corp./Mallinckrodt Veterinary Inc. -- September 25, 1995;
- Biocraft Laboratories, Inc./Teva Pharmaceutical Industries -- January 29,
1996;
- International Canine Genetics/Synbiotics Corp. -- July 25, 1996;
- Houston Biotechnology, Inc./Medarex, Inc. -- December 9, 1996;
- Royce Laboratories, Inc./Watson Pharmaceuticals, Inc. -- December 26,
1996;
- biosys/Thermo Trilogy Corp. -- January 2, 1997;
- Somatix Therapy Corp./Cell Genesys, Inc. -- January 13, 1997;
- BioWhittaker, Inc./Cambrex Corp. -- August 25, 1997;
- PerSeptive Biosystems, Inc./Perkin-Elmer, Corp -- August 25, 1997;
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- Allergan Ligand Retinoid/Ligand Pharmaceuticals, Inc. -- September 24,
1997;
- Sequana Therapeutics/Arris Pharmaceuticals Corp. -- November 3, 1997;
- Allergan Specialty/Stockholders -- November 19, 1997;
- Sano Corp./Elan Corp. PLC -- December 15, 1997;
- Somatogen, Inc./Baxter International, Inc. -- February 24, 1998;
- International Murex Tech Corp./Abbott Laboratories -- March 16, 1998;
- IBAH, Inc./Omnicare, Inc. -- March 31, 1998;
- Neurex Corp./Elan Corp. PLC -- April 29, 1998;
- Seragen Inc. (Boston University)/Ligand Pharmaceuticals, Inc. -- May 8,
1998;
- DeKalb Genetics Corp./Monsanto Co. -- May 11, 1998;
- Virus Research Institute, Inc./T Cell Sciences, Inc. -- May 12, 1998;
- Penederm, Inc./Mylan Laboratories, Inc. -- June 24, 1998;
- Tseng Laboratories, Inc./Cell Pathways -- June 24, 1998;
- OncorMed, Inc./Gene Logic, Inc. -- July 7, 1998;
- Gull Laboratories (Fresenius)/Meridian Diagnostics -- July 27, 1998;
- Molecular Dynamics, Inc./Amersham Pharmacia Biotech Ltd -- August 10,
1998;
- Gamma Biologicals, Inc./Immucor, Inc. -- September 21, 1998;
- DepoTech Corp/SkyePharma PLC -- October 19, 1998;
- TheraTech, Inc./Watson Pharmaceuticals, Inc. -- October 25, 1998;
- Anergen, Inc./Corixa Corporation -- December 14, 1998; and
- NeXstar Pharmaceuticals, Inc./Gilead Sciences -- March 1, 1999.
Pacific Growth Equities compared the implied premium of the offer as of
June 9, 1999 to premiums paid for relevant comparable transactions highlighted
above. Pacific Growth Equities noted that the selected biotechnology
transactions were effected at a range of premiums to the target's per share
market price as follows:
<TABLE>
<CAPTION>
MEAN RIBI
TIMEFRAME* PREMIUM RANGE (EXCLUDING HIGH AND LOW) TRANSACTION PREMIUMS
---------- ----------------- ------------------------ ----------------------
<S> <C> <C> <C>
One day prior to the
announcement.................. -7.9% to 201.9% 37.5% 16.7%
One week prior to the
announcement.................. -3.1% to 199.6% 47.7% 20.6%
Four weeks prior to the
announcement.................. -22.6% to 255.6% 49.3% -3.6%
</TABLE>
- ---------------
* Based on the per share market price one day prior, one week prior and four
weeks prior to June 9, 1999, and as of June 9, 1999.
All multiples for the selected biotechnology transactions were based on
public information available at the time of the announcement of such
transaction, without taking into account specific
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market and other conditions during the three and a half year period during which
such selected transactions occurred.
No company used in the above analysis of selected publicly traded
comparable companies nor any transaction used in the analysis of selected
biotechnology transactions summarized above is identical to Corixa, Ribi, or the
merger. Accordingly, such analyses must take into account differences in the
financial and operating characteristics of the selected companies and the
selected biotechnology transactions and other factors that would affect the
public trading value and acquisition value of the selected companies and the
selected biotechnology transactions, respectively.
While the foregoing summary describes analyses and factors that Pacific
Growth Equities deemed material in its presentation to Corixa's board of
directors, it is not a comprehensive description of all analyses and factors
considered by Pacific Growth Equities. The preparation of a fairness opinion is
a complex process involving various determinations as to the most appropriate
and relevant methods of financial analysis and the applications of these methods
to the particular circumstances and, therefore, such an opinion is not readily
susceptible to summary description. Pacific Growth Equities believes that its
analyses must be considered as a whole and that selecting portions of its
analyses and the factors considered by it, without considering all analyses and
factors, would create an incomplete view of the evaluation process underlying
Pacific Growth Equities' opinion. In performing its analyses, Pacific Growth
Equities considered general economic, market and financial conditions and other
matters, many of which are beyond the control of Corixa and Ribi. The analyses
performed by Pacific Growth Equities are not necessarily indicative of actual
values or future results, which may be significantly more or less favorable than
those suggested by such analyses. Accordingly such analyses are subject to
substantial uncertainty. Additionally, analyses relating to the value of a
business do not purport to be appraisals or to reflect the prices at which the
business actually may be sold. Furthermore, no opinion is being expressed as to
the prices at which shares of Ribi common stock may trade at any future time.
Pursuant to a letter agreement dated June 1, 1999, between Corixa and
Pacific Growth Equities, the fees to date payable to Pacific Growth Equities for
rendering the Pacific Growth Equities opinion have been $300,000, of which
$100,000 was payable upon execution of the letter agreement and $200,000 at the
time Pacific Growth Equities notified the Company of its preparedness to render
the opinion, whether in oral or written form. In addition to the fee provided
for above, Corixa agreed to reimburse Pacific Growth Equities, upon request, for
all reasonable and accountable out-of-pocket expenses, including travel
expenses, charges for public reference documents and database services,
statistical analysis data and legal fees and expenses, incurred by Pacific
Growth Equities in connection with the performance of services, up to a maximum
of $25,000. Corixa has agreed to indemnify Pacific Growth Equities and its
directors, officers, agents, employees and controlling persons for certain
costs, expenses, losses, claims, damages and liabilities related to or arising
out of its rendering of services under its engagement.
The Corixa board of directors retained Pacific Growth Equities based upon
Pacific Growth Equities' qualifications, reputation, experience and expertise.
Pacific Growth Equities, as a customary part of its investment banking business,
is engaged in the valuation of businesses and their securities in connection
with mergers and acquisitions, public equity underwritings, private placements
and valuations for corporate and other purposes. Pacific Growth Equities
maintains a market in the common stock of many publicly traded biotechnology and
other companies and regularly publishes research reports regarding the
biotechnology industry and publicly traded companies in the biotechnology
industry.
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OPINION OF RIBI'S FINANCIAL ADVISOR
Ribi engaged Hambrecht & Quist to act as its exclusive financial advisor in
connection with the merger and to render an opinion as to the fairness from a
financial point of view to Ribi of the consideration to be received by the
holders of common stock of Ribi. Hambrecht & Quist was selected by the Ribi
board of directors based on Hambrecht & Quist's qualifications, expertise and
reputation, as well as Hambrecht & Quist's historic investment banking
relationship and familiarity with Ribi. Hambrecht & Quist rendered its oral
opinion, subsequently confirmed in writing, on June 8, 1999 to Ribi's board of
directors that, as of such date, the consideration to be received in the merger
by the holders of common stock of Ribi is fair from a financial point of view.
THE FULL TEXT OF THE OPINION DELIVERED BY HAMBRECHT & QUIST TO RIBI'S BOARD
OF DIRECTORS DATED JUNE 8, 1999, WHICH SETS FORTH THE ASSUMPTIONS MADE, GENERAL
PROCEDURES FOLLOWED, MATTERS CONSIDERED, AND LIMITATIONS ON THE SCOPE OF REVIEW
UNDERTAKEN BY HAMBRECHT & QUIST IN RENDERING ITS OPINION, IS ATTACHED AS
APPENDIX C TO THIS PROXY STATEMENT/PROSPECTUS AND IS INCORPORATED HEREIN BY
REFERENCE. HAMBRECHT & QUIST'S OPINION IS DIRECTED ONLY TO THE FAIRNESS, FROM A
FINANCIAL POINT OF VIEW, OF THE CONSIDERATION TO BE RECEIVED BY THE HOLDERS OF
COMMON STOCK OF RIBI AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY RIBI
STOCKHOLDER AS TO HOW SUCH STOCKHOLDER SHOULD VOTE WITH RESPECT TO THE MERGER
AGREEMENT. THE SUMMARY OF HAMBRECHT & QUIST'S OPINION SET FORTH BELOW IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF SUCH OPINION ATTACHED
HERETO AS APPENDIX C. RIBI STOCKHOLDERS ARE URGED TO READ THE OPINION CAREFULLY
IN ITS ENTIRETY.
In its review of the merger, and in arriving at its opinion, Hambrecht &
Quist, among other things:
- Reviewed the publicly available consolidated financial statements of
Corixa for recent years and interim periods to date and certain other
relevant financial and operating data of Corixa, including its capital
structure, made available to us from published sources and from the
internal records of Corixa;
- Reviewed certain internal financial and operating information, including
certain projections, relating to Corixa prepared by the management of
Corixa;
- Discussed the business, financial condition and prospects of Corixa with
certain members of Corixa's management;
- Reviewed the publicly available consolidated financial statements of Ribi
for recent years and interim periods to date and certain other relevant
financial and operating data of Ribi made available to us from published
sources and from the internal records of Ribi;
- Reviewed certain internal financial and operating information, including
certain projections, relating to Ribi prepared by the senior management
of Ribi;
- Discussed the business, financial condition and prospects of Ribi with
certain members of Ribi's management;
- Reviewed the recent reported prices and trading activity for the common
stock of Corixa and Ribi and compared such information and certain
financial information for Corixa and Ribi with similar information for
certain other companies engaged in businesses Hambrecht & Quist considers
comparable;
- Reviewed the financial terms, to the extent publicly available, of
certain comparable merger and acquisition transactions;
- Reviewed a draft of the merger agreement dated June 4, 1999; and
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- Performed such other analyses and examinations and considered such other
information, financial studies, analyses and investigations and
financial, economic and market data as Hambrecht & Quist deemed relevant.
Hambrecht & Quist did not independently verify any of the information
concerning Ribi or Corixa considered in connection with its review of the merger
and, for purposes of its opinion, Hambrecht & Quist assumed and relied upon the
accuracy and completeness of all such information. In connection with its
opinion, Hambrecht & Quist did not prepare or obtain any independent valuation
or appraisal of any of the assets or liabilities of Ribi or Corixa, nor did it
conduct a physical inspection of the properties and facilities of Ribi or
Corixa. With respect to the financial forecasts and projections used in its
analysis, Hambrecht & Quist assumed that they reflected the best currently
available estimates and judgments of the expected future financial performance
of Corixa and Ribi. For the purposes of its opinion, Hambrecht & Quist also
assumed that neither Ribi nor Corixa was a party to any pending transactions,
including external financings, other than those contemplated that have been
disclosed to Hambrecht & Quist, recapitalizations or merger discussions, other
than the merger and those in the ordinary course of conducting their respective
businesses. For purposes of its opinion, Hambrecht & Quist assumed that the
merger will qualify as a tax-free reorganization under the Internal Revenue Code
for the stockholders of Ribi and that the merger will be accounted for as a
purchase transaction. Hambrecht & Quist's opinion is necessarily based upon
market, economic, financial and other conditions as they existed and can be
evaluated as of the date of the opinion and any subsequent change in such
conditions would require a reevaluation of such opinion.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. The summary
of the Hambrecht & Quist analyses set forth below does not purport to be a
complete description of the presentation by Hambrecht & Quist to the Ribi board
of directors. In arriving at its opinion, Hambrecht & Quist did not attribute
any particular weight to any analyses or factors considered by it, but rather
made qualitative judgments as to the significance and relevance of each analysis
and factor. Accordingly, Hambrecht & Quist believes that its analyses and the
summary set forth below must be considered as a whole and that selecting
portions of its analyses, without considering all analyses, or of the following
summary, without considering all factors and analyses, could create an
incomplete view of the processes underlying the analyses set forth in the
Hambrecht & Quist presentation to the Ribi board of directors and its opinion.
In performing its analyses, Hambrecht & Quist made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of Ribi and Corixa. The
analyses performed by Hambrecht & Quist and summarized below are not necessarily
indicative of actual values or actual future results, which may be significantly
more or less favorable than suggested by such analyses. Additionally, analyses
relating to the values of businesses do not purport to be appraisals or to
reflect the prices at which businesses actually may be acquired.
In performing its analyses, Hambrecht & Quist used selected financial and
operating data made available from the internal records of Ribi for projections
of Ribi's calendar year 1999 and 2000 financial performance. Hambrecht & Quist
used selected financial and operating data made available from the internal
records of Corixa for projections of Corixa's calendar year 1999 and 2000
financial performance.
The following is a brief summary of certain financial analyses performed by
Hambrecht & Quist in connection with providing its opinion to the Ribi board of
directors on June 8, 1999.
Contribution Analysis. Hambrecht & Quist analyzed the contribution of each
of Ribi and Corixa to calendar 1999 and 2000 revenue of the pro forma combined
company. This contribution analysis was then compared to the pro forma ownership
percentage of Ribi and Corixa stockholders
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in the pro forma post-merger combined company. Hambrecht & Quist observed that,
assuming redemption of the Ribi Series A preferred stock, at the close of the
merger Ribi stockholders are expected to own approximately 19% of the combined
company equity and Corixa stockholders are expected to own approximately 81% of
the combined company equity. It was estimated that Ribi and Corixa would
contribute approximately 22% and 78%, respectively, of the combined revenues in
calendar 1999, on a pro forma basis. It was estimated that Ribi and Corixa would
contribute approximately 17% and 83%, respectively, of the combined revenues in
calendar 2000.
Analysis of Publicly Traded Comparable Companies. Hambrecht & Quist
compared selected historical and projected financial information of Ribi to
publicly traded vaccine companies Hambrecht & Quist deemed to be comparable to
Ribi. Companies deemed comparable were Avant Immunotherapeutics, Inc., Avax
Technologies, Inc., Genelabs Technologies, Inc., Genzyme Molecular Oncology and
Targeted Genetics Corporation. Such information included the ratio of technology
value to revenue. This multiple was applied to the historical financial results
of Ribi for the latest-twelve-month period ended June 30, 1998 based on selected
financial and operating data made available from the internal records of Ribi.
Hambrecht & Quist determined an average value for the vaccine companies of
6.7 times latest-twelve-month revenue. Based on the analysis of comparable
vaccine companies, Ribi's implied equity value per share equaled $2.14. This
implied equity value compared to an offer in the proposed merger of $2.38 per
share at the time of the analysis.
Analysis of Selected Merger and Acquisition Transactions. Hambrecht & Quist
compared the proposed merger with selected merger and acquisition transactions.
This analysis included 26 transactions involving companies in the biotechnology
industry. In examining these transactions, Hambrecht & Quist analyzed revenues
of the acquired company relative to the consideration offered. The foregoing
multiple was applied to the latest-twelve-month revenue of Ribi for the
twelve-month period ended March 31, 1999. The average multiple offered in the
selected comparable transactions was 11.8 times latest-twelve-month revenues.
Based on the analysis of selected comparable transactions, Ribi's implied equity
value from applying multiples to historical results was $3.04 per share. This
implied equity value range compared to an offer in the proposed merger of $2.38
per share.
Premium Analysis. Hambrecht & Quist compared the implied premium of the
offer as of June 4, 1999 to similar premiums for relevant comparable
transactions. Hambrecht & Quist observed that the mean one-day and twenty-day
premiums paid in the selected public company transactions was 34.1% and 51.8%,
respectively. Based on the premiums paid in the selected public company
transactions, Ribi's implied equity value from applying premiums to Ribi's
historical stock prices on June 8, 1999 and May 11, 1999 was $2.51 per share and
$3.56 per share, respectively. This implied equity value range compares with the
proposed offer price of $2.38 per share.
Discounted Cash Flow Analysis. Hambrecht & Quist analyzed the cash flows
and terminal value of Ribi using financial and operating data made available
from the internal records of Ribi for projections of Ribi's calendar year 1999
and 2000. Hambrecht & Quist used terminal multiples from six to eight times
revenues, based upon an analysis of publicly traded comparable companies, and
discount rates from 30% to 35%. The implied value per share range was $0.34 to
$0.67. The implied value per share compared with the proposed offer in the
merger of $2.38 per share.
Historical Trading Range Analysis. Hambrecht & Quist analyzed the
historical closing stock price of Ribi for trailing three month and six month
periods ending June 8, 1999. The range in the trailing three month period was
$1.56 to $2.41 per share. The range in the trailing six month period
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was $1.56 to $2.75 per share. These ranges compared with the proposed offer in
the merger of $2.38 per share.
No company or transaction used in the above analyses is identical to Ribi
or the merger. Accordingly, an analysis of the results of the foregoing is not
mathematical; rather it involves complex considerations and judgments concerning
differences in financial and operating characteristics of the companies and
other factors that could affect the public trading values of the companies or
company to which they are compared.
The foregoing description of Hambrecht & Quist's opinion is qualified in
its entirety by reference to the full text of such opinion which is attached as
Appendix C to this proxy statement/prospectus.
Hambrecht & Quist, as part of its investment banking services, is regularly
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, strategic transactions, corporate restructurings,
negotiated underwritings, secondary distributions of listed and unlisted
securities, private placements and valuations for corporate and other purposes.
Hambrecht & Quist has acted as a financial advisor to the board of directors of
Ribi in connection with the merger agreement and the merger, and will receive a
fee for its services, which include the rendering of this opinion.
In the past, Hambrecht & Quist has provided investment banking and other
financial advisory services to Ribi and has received fees for rendering these
services. In particular, Hambrecht & Quist served as lead managing underwriter
in Ribi's follow-on offering in 1993. In the ordinary course of business,
Hambrecht & Quist acts as a market maker and broker in the publicly traded
securities of Ribi and receives customary compensation in connection therewith,
and also has provided research coverage for Ribi. In the ordinary course of
business, Hambrecht & Quist actively trades in the equity and derivative
securities of Ribi for its own account and for the accounts of its customers
and, accordingly, may at any time hold a long or short position in such
securities. Hambrecht & Quist may in the future provide investment banking or
other financial advisory services to Corixa.
Pursuant to an engagement letter dated May 12, 1999, Ribi has agreed to pay
Hambrecht & Quist a non-refundable retainer of $25,000 and a fee of $250,000 in
connection with the delivery of the fairness opinion rendered on June 8, 1999.
Upon consummation of the merger, Ribi has agreed to pay Hambrecht & Quist an
additional fee of $225,000. In addition, Ribi also has agreed to reimburse
Hambrecht & Quist for its reasonable out-of-pocket expenses and to indemnify
Hambrecht & Quist against certain liabilities, including liabilities under the
federal securities laws or relating to or arising out of Hambrecht & Quist's
engagement as financial advisor.
HISTORY OF THE TRANSACTION
In view of regulatory delays in reviewing clinical studies in the United
States and Europe and Ribi's reduced cash position, at the October 1998 meeting
of the Ribi board of directors, management was directed to take cost cutting
measures as well as explore the possibility of a strategic merger.
In early November 1998, Robert Ivy contacted Mark McDade of Corixa to
explore Corixa's interest in a possible business combination. This led to a
meeting between Mr. Ivy and Mr. McDade on November 5, 1998.
In November 1998, Ribi also contacted Hambrecht & Quist to discuss
retaining its services to assist in a valuation analysis of Ribi, finding
suitable candidates for a possible business combination and structuring the
financial aspects of any such business combination.
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Subsequent to the November 13, 1998 meeting with Hambrecht & Quist, there
were telephone conversations between Mr. Ivy and Mr. McDade exploring further
the possibility of a merger. On December 8, 1998, Ribi and Corixa entered into a
mutual nondisclosure agreement allowing both companies to exchange information
regarding products and technologies under development, intellectual property,
manufacturing capabilities and business and financial information.
On December 8, 1998, representatives of Corixa visited Ribi during which
there was an exchange of scientific and technical information.
At a special meeting of the board of directors of Ribi on December 14,
1998, Mr. Ivy updated the board as to the discussion he had with Hambrecht &
Quist and Corixa representatives. He further updated the board of directors as
to the status of Ribi's regulatory filings as well as the status of ongoing and
potential collaborations and operating results. A decision was made to defer
further discussion of a possible business combination until the January 1999
board meeting.
No further discussions took place regarding the merger until March 1999.
Then, as a result of the pressure on the trading price of Ribi's common stock,
Mr. Ivy was receptive when Mr. McDade contacted Mr. Ivy about restarting
discussions concerning a possible merger of Ribi and Corixa. Consequently, on
April 9, 1999, Mr. Ivy met with representatives of Corixa to discuss terms of a
possible merger. These discussions led to a draft letter of intent dated April
21, 1999.
At the regular meeting of the board of directors of Ribi held on April 26,
1999, Mr. Ivy discussed with the board the possibility of merger with Corixa,
including the proposed structure and timing. The Ribi board instructed Mr. Ivy
to proceed with negotiations leading toward a definitive agreement.
At the regular meeting of the board of directors of Corixa held on May 5,
1999, Mr. McDade discussed with the board the possibility of acquiring Ribi by
merger. The Corixa board authorized Mr. McDade to proceed with negotiations
leading toward a definitive agreement.
As the result of consultations with Hambrecht & Quist, Ribi's legal
advisors, and Corixa, a proposed revised letter of intent was received by Ribi
on or about May 5, 1999.
At a special meeting of the board of directors of Ribi on May 10, 1999, Mr.
Ivy discussed the status of negotiations of a possible merger between Ribi and
Corixa, including the terms and timing of the possible transaction and the terms
of the proposed letter of intent. At the meeting, Ribi's board directed Mr. Ivy
to continue negotiations, subject to final approval of the board at a subsequent
meeting.
Subsequently to the May 10 board meeting, Ribi determined that given the
advanced nature of the negotiations, it would be appropriate and preferable to
proceed to a definitive agreement rather than enter into a letter of intent. On
or about May 20, 1999, Corixa provided Ribi a first draft of a proposed merger
agreement.
Over the next few weeks, Ribi, Corixa and their legal counsel and financial
advisors participated in conferences regarding pricing considerations and the
negotiation of terms and conditions of the proposed agreement. Both Ribi and
Corixa began examinations of each other's business. These negotiations resulted
in tentative agreement between Ribi and Corixa as to the final terms and
conditions of the merger agreement.
At a special meeting of the board of directors of Ribi on June 8, 1999,
Ribi's legal counsel presented a summary of the key legal elements of the merger
agreement. Hambrecht & Quist's provided an analysis of the economics of the
transaction, including a review of the fairness of the transaction to Ribi's
stockholders. In addition, Ribi's officers presented a report to Ribi's board on
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Corixa's science and technology. The board also received a report on the
treatment of Ribi's personnel, including Mr. Ivy, after consummation of the
merger. Following discussion of the presentations, Ribi's board of directors
voted unanimously to approve the merger, the merger agreement and all agreements
ancillary to the merger agreement.
At a special meeting of Corixa's board of directors on the morning of June
9, 1999, Mr. McDade presented a summary of the key elements of the merger
agreement and the results of Corixa's diligence investigation of Ribi. Prior to
the meeting, each director received a copy of the merger agreement and all
exhibits thereto. Pacific Growth Equities provided an analysis of the economics
of the transaction, including a review of the fairness of the merger to Corixa's
stockholders. Following discussion of the presentations, Corixa's board of
directors voted unanimously to approve the merger, the merger agreement and all
agreements ancillary to the merger agreement.
Later on June 9, 1999, Ribi and Corixa executed the merger agreement and on
June 10, 1999, Ribi and Corixa issued a joint press release announcing the
execution of the merger agreement.
MANAGEMENT AND OPERATIONS FOLLOWING THE MERGER
The directors and officers of Corixa immediately prior to the effectiveness
of the merger will be the directors and officers of the combined company after
completion of the merger. Following the merger, Corixa plans to integrate the
operations, facilities and personnel of Corixa and Ribi.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the approvals of the Corixa board of directors and the Ribi
board of directors and the recommendations of the Corixa and Ribi boards of
directors with respect to the merger agreement and the transactions contemplated
thereby, you should be aware that certain members of Ribi management and the
Ribi board of directors have certain interests in the merger that are in
addition to the interests of Ribi stockholders generally.
In consideration for Mr. Ivy waiving his rights under his employment
agreement with Ribi, Corixa has entered into a consulting agreement with Mr. Ivy
to serve as a consultant to Corixa after completion of the merger. During the
term of the consulting agreement, Corixa will pay Mr. Ivy $275,000 per year. The
consulting agreement has a term of two years, unless earlier terminated by
either party with or without cause upon 90 days' prior written notice or
immediately upon Mr. Ivy's death or disability. In addition, as a condition of
the merger, all options to purchase Ribi common stock that Mr. Ivy holds at the
time of the merger will be assumed by Corixa and will be exercisable throughout
their current term. These changes are described further in the section entitled
"Terms of the Merger -- Amendments to Robert Ivy's Option" beginning on page 94.
A condition to closing of the merger is that all outstanding shares of Ribi
Series A preferred stock must be redeemed or converted into Ribi common stock.
RGC International Investors, LDC currently holds all 6,490 outstanding shares of
Ribi Series A preferred stock and upon such redemption or conversion may obtain
economic benefits related to the merger not received by other Ribi stockholders.
The potential redemption is described further in the section entitled "Terms of
the Merger -- Certain Covenants" beginning on page 99.
Upon completion of the merger, warrants to purchase Ribi common stock then
outstanding will be assumed by Corixa and converted into warrants to purchase
the number of shares of Corixa common stock equal to the number of shares of
Ribi common stock that were issuable upon exercise of such Ribi warrants
multiplied by the exchange ratio, rounded to the nearest whole number of shares
of Corixa common stock. The per share exercise price for the shares of Corixa
common stock
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will be equal to the former exercise price per share of such Ribi warrants
divided by the exchange ratio, rounded to the nearest whole cent. Except as
provided above, the converted Ribi warrants will be subject to the same terms
and conditions as were applicable to such warrants immediately prior to the
completion of the merger.
Any options to acquire Ribi common stock outstanding upon completion of the
merger that are not terminated as a result of the merger will be assumed by
Corixa and converted into an option to purchase the number of shares of Corixa
common stock, rounded to the nearest whole share, equal to the number of shares
of Ribi common stock subject to such option multiplied by the exchange ratio.
Such assumed options will have an exercise price per share, rounded to the
nearest whole cent, equal to the exercise price per share of the corresponding
Ribi stock option immediately prior to completion of the merger divided by the
exchange ratio. Except as provided above, the assumed Ribi stock options will be
subject to the same terms and conditions as were applicable to such option
immediately prior to completion of the merger. Nonemployee members of Ribi's
board of directors who hold options under Ribi's stock plans will have the terms
of their options amended to provide that such options shall remain exercisable
following termination of such persons' service on the Ribi board of directors
until expiration of the ten-year terms of the options and to make certain other
changes. Prior to this amendment, these options remained exercisable only for a
period of three months following termination of a nonemployee director's service
with Ribi. All options outstanding under Ribi's stock plans provide for
acceleration of vesting and exercisability upon certain change of control
transactions such as the merger. All persons holding options, except Ribi's
nonemployee directors, are being asked to waive such acceleration of vesting and
exercisability in exchange for Corixa's agreement to assume the options in the
merger, and certain other amendments. See further description of the treatment
of Ribi stock options under "Stock Options" below.
Venture Law Group, A Professional Corporation, is Corixa's counsel in
connection with the merger. William W. Ericson, a director of Venture Law Group,
has acted as Secretary of Corixa in the past.
Pursuant to the merger agreement, Corixa agreed that for three years after
the consummation of the merger, it will fulfill in all respects the obligations
of Ribi under its currently effective indemnification agreements with its
directors and officers. In addition, Corixa agreed that for three years after
the consummation of the merger, it will maintain policies of directors' and
officers' liability insurance comparable to those currently maintained by Ribi.
Corixa and Ribi have each entered into separate indemnification agreements
with each of their respective directors and officers. These agreements require
Corixa and Ribi, among other things, to indemnify each such director or officer
against expenses including attorneys' fees, judgments, fines and settlement
amounts paid by such individual in connection with any action, suit or
proceeding arising out of such individual's status or service as a director or
officer of Corixa or Ribi and to advance expenses incurred by such individual in
connection with any proceeding against such individual with respect to which he
or she may be entitled to indemnification by Corixa or Ribi. Indemnity is
subject to certain exceptions, including liabilities arising from willful
misconduct or conduct that is knowingly fraudulent or deliberately dishonest or
a violation of Section 16(b) of the Exchange Act. In addition, Corixa and Ribi
each have obtained an insurance policy providing coverage for certain
liabilities of its respective officers and directors.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a discussion of some of the federal income tax
consequences of the merger to a holder of Ribi common stock who holds shares of
Ribi common stock as a capital asset. This discussion is based on currently
existing provisions of the Internal Revenue Code, existing and
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proposed Treasury Regulations thereunder and current administrative rulings and
court decisions, all of which are subject to change. Any such change, which may
or may not be retroactive, could alter the tax consequences to Corixa, Ribi, or
the Ribi stockholders as described herein. Neither Ribi nor Corixa nor their
respective counsel undertakes to advise Ribi stockholders of any such changes in
the application or interpretation of such federal income tax law.
The following discussion does not deal with all federal income tax
considerations that may be relevant to Ribi stockholders in light of their
particular circumstances, such as Ribi stockholders who are dealers in
securities, banks, insurance companies or tax-exempt organizations, subject to
the alternative minimum tax provisions of the Internal Revenue Code, foreign
persons, persons who do not hold their shares of Ribi common stock as capital
assets, stockholders who acquired their shares of Ribi common stock in
connection with stock option or stock purchase plans or in other compensatory
transactions or who hold their shares as a hedge or as part of hedging,
straddle, conversion or other risk reduction transactions. In addition, the
following discussion does not address the tax consequences of transactions
effectuated prior or subsequent to or concurrently with the merger (whether or
not such transactions are in connection with the merger), including without
limitation, transactions in which shares of Ribi common stock are acquired or
shares of Corixa common stock are disposed of, or the tax consequences to
holders of options, warrants, or convertible securities issued by Ribi which are
assumed, exercised or converted, as the case may be, in connection with the
merger. Furthermore, no foreign, state or local tax considerations are addressed
herein. ACCORDINGLY, RIBI STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX
ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES OF THE MERGER, INCLUDING THE
APPLICABLE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES TO THEM OF THE
MERGER.
The merger is intended to constitute a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code, in which case, subject to the
limitations and qualifications referred to herein, the following U.S. federal
tax consequences will result:
- No gain or loss should be recognized by holders of shares of Ribi common
stock solely upon their receipt in the merger of shares of Corixa common
stock, except with respect to cash received in lieu of a fractional share
of Corixa common stock;
- The aggregate tax basis of the shares of Corixa common stock received in
the merger will be the same as the aggregate tax basis of shares of Ribi
common stock surrendered in exchange therefor, reduced by any amount of
tax basis allocable to a fractional share interest in Corixa common stock
for which cash is received;
- For purposes of characterizing gain on sale of Corixa common stock as
either long term or short term capital gain, the tax holding period of
the shares of Corixa common stock received in the merger, including any
fractional share interest, will include the period for which the shares
of Ribi common stock surrendered in exchange therefor were held; and
- Cash received in lieu of a fractional share of Corixa common stock will
be treated as received in disposition of such fractional interest. A Ribi
stockholder generally will recognize capital gain or loss measured by the
difference between the stockholder's basis in the fractional share and
the amount of cash received.
The parties are not requesting a ruling from the Internal Revenue Service
(IRS) in connection with the merger. It is a condition to the closing of the
merger that Corixa and Ribi have each received an opinion from their legal
counsel, Venture Law Group, A Professional Corporation, and Morrison & Foerster
LLP, respectively, to the effect that, for federal income tax purposes, the
merger will qualify as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code, and that Corixa and Ribi are each a party to a
reorganization within the meaning of Section 368(b)
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of the Internal Revenue Code, and such opinions shall not have been withdrawn.
These opinions neither bind the IRS nor preclude the IRS from adopting a
contrary position. In addition, the opinions are subject to certain assumptions
and qualifications and are based on the truth and accuracy of certain
representations made by Corixa and Ribi, including representations in
certificates delivered to counsel by the respective managements of Corixa and
Ribi.
Even if the merger qualifies as a reorganization, a recipient of shares of
Corixa common stock will recognize income to the extent that such shares are
received or considered to be received in exchange for services or property,
other than solely shares of Ribi common stock. All or a portion of such income
may be taxable as ordinary income.
A successful IRS challenge to the status of the merger as a reorganization
would result in a Ribi stockholder recognizing gain or loss with respect to each
share of Ribi common stock surrendered equal to the difference between the
stockholder's basis in such share and the fair market value, as of the time of
the merger, of the shares of Corixa common stock received in exchange therefor,
including any cash received in lieu of a fractional share. In such event, a Ribi
stockholder's aggregate basis in the shares of Corixa common stock received in
the exchange would equal such fair market value and his, her or its holding
period for such shares would begin the day after the closing date of the merger.
Certain noncorporate Ribi stockholders may be subject to backup withholding
at a rate of 31% on cash payments received in lieu of a fractional share
interest in Corixa common stock. Backup withholding will not apply, however, to
a stockholder who furnishes a correct taxpayer identification number and
certifies that he, she or it is not subject to backup withholding on a Form W-9,
who or which as applicable, provides a certificate of foreign status on Form
W-8, or who or which as applicable, is otherwise exempt from backup withholding.
A stockholder who or which, as applicable, fails to provide a correct taxpayer
ID on Form W-9 may be subject to a $50 penalty imposed by the IRS.
Each holder of Ribi common stock that receives Corixa common stock in the
merger will be required to retain records and file with such holder's U.S.
Federal income tax return a statement setting forth certain facts relating to
the merger.
THE DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY. IT
DOES NOT ADDRESS THE STATE, LOCAL OR FOREIGN TAX ASPECTS OF THE MERGER. IN
ADDITION, IT DOES NOT DISCUSS THE FEDERAL INCOME TAX CONSIDERATIONS THAT MAY BE
RELEVANT TO CERTAIN PERSONS, INCLUDING HOLDERS OF OPTIONS OR WARRANTS, AND MAY
NOT APPLY TO CERTAIN HOLDERS SUBJECT TO SPECIAL TAX RULES, INCLUDING HOLDERS WHO
ACQUIRED RIBI COMMON STOCK PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR
RIGHTS OR OTHERWISE RECEIVED SUCH STOCK AS COMPENSATION, DEALERS IN SECURITIES
AND FOREIGN HOLDERS.
EACH RIBI STOCKHOLDER SHOULD CONSULT HIS, HER OR ITS OWN TAX ADVISOR WITH
RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE MERGER TO HIM, HER OR IT,
INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND FOREIGN TAX LAWS.
ACCOUNTING TREATMENT
Corixa intends to account for the merger under the purchase method of
accounting in accordance with generally accepted accounting principles. Under
this method of accounting, the purchase price will be allocated to assets
acquired and liabilities assumed based on their estimated fair values at the
completion of the merger. Corixa's results of operations will not include the
results of Ribi prior to the completion of the merger.
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REGULATORY FILINGS AND APPROVALS REQUIRED TO COMPLETE THE MERGER
Neither Corixa nor Ribi is aware of any material governmental or regulatory
approval required for completion of the merger, other than the effectiveness of
the registration statement of which this proxy statement/prospectus is a part,
and compliance with applicable corporate law of Delaware.
RESALE RESTRICTIONS; VOTING AGREEMENTS
All shares of Corixa common stock received by Ribi stockholders in the
merger will be unrestricted and freely transferable, except that shares of
Corixa common stock received by persons who are deemed to be affiliates of Ribi,
as such term is defined under the Securities Act, may be resold by them only in
transactions permitted by the resale volume and other provisions of Rule 145
promulgated under the Securities Act or as otherwise permitted under the
Securities Act. Persons who may be deemed to be affiliates of Ribi generally
include individuals or entities that control, are controlled by, or are under
common control with, Ribi and may include certain officers and directors of Ribi
as well as its principal stockholders.
Ribi has agreed to use reasonable best efforts to cause all of the
directors and officers and SmithKline Beecham Biologicals Manufacturing, S.A.,
together holding 6.2% of the total number of outstanding shares of Ribi common
stock, to enter into voting agreements. Ribi has also agreed to use reasonable
efforts to cause RGC International Investors, LDC to execute a voting agreement
with respect to any shares of Ribi common stock held by it on August 9, 1999.
Under these agreements, the Ribi stockholders would agree to:
- Vote all shares of Ribi common stock beneficially owned by them to
approve the merger agreement and merger at the Ribi special meeting; and
- Not transfer, sell, exchange, pledge or otherwise dispose of or encumber
any shares of Ribi common stock or Corixa common stock beneficially owned
by them prior to the earlier of 90 days following the completion of the
merger or the termination of the merger agreement.
LISTING ON NASDAQ OF CORIXA COMMON STOCK TO BE ISSUED IN THE MERGER
It is a condition to the closing of the merger that Corixa shall have filed
an application for listing on Nasdaq of the Corixa common stock to be issued in
connection with the merger.
DELISTING AND DEREGISTRATION OF RIBI COMMON STOCK AFTER THE MERGER
If the merger is completed, Ribi common stock will be delisted from Nasdaq
and will be deregistered under the Exchange Act.
OPERATIONS AFTER THE MERGER
Following the merger, Ribi will merge with and into Corixa, and the
separate corporate existence of Ribi will cease. The stockholders of Ribi will
become stockholders of Corixa and their rights as stockholders will be governed
by the Corixa certificate of incorporation, the Corixa bylaws and the laws of
the State of Delaware. See "Comparison of Rights of Holders of Corixa Capital
Stock and Ribi Capital Stock" beginning on page 193.
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TERMS OF THE MERGER
The following is a brief summary of certain provisions of the merger
agreement, a copy which is attached as Appendix A to this proxy
statement/prospectus and is incorporated herein by reference. You are urged to
read it carefully. While we believe that the description covers the material
terms of the merger agreement, this summary may not contain all the information
that is important to you. This summary is qualified in its entirety by reference
to the full text of the merger agreement and other agreements annexed hereto.
THE MERGER
Pursuant to the merger agreement, and subject to the terms and conditions
thereof, at the effective time of the merger:
- Ribi will merge with and into Corixa in a direct forward merger;
- Ribi will cease to exist as a corporation;
- Corixa will remain as the surviving corporation;
- Corixa's certificate of incorporation and bylaws will become the
surviving corporation's certificate of incorporation and bylaws;
- All property, rights, debts and liabilities of Ribi will become the
property, rights, debts and liabilities of Corixa; and
- The officers and directors of Corixa immediately prior to completion of
the merger will be the officers and directors of the surviving
corporation after completion of the merger.
EFFECTIVE TIME OF THE MERGER
The closing of the transactions contemplated by the merger agreement will
take place no later than the third business day after the date on which all of
the conditions to the merger are satisfied or waived, or at such other date as
Corixa and Ribi agree.
As soon as practicable after the closing date, a certificate of merger will
be filed with the Secretary of State of Delaware in accordance with the relevant
provisions of Delaware law. The time at which the certificate of merger is filed
in Delaware is referred to as the effective time.
CONVERSION OF SECURITIES
As a result of the merger, shares of Ribi common stock issued and
outstanding immediately prior to the effective time of the merger, except for
shares held by Ribi, will be automatically converted into the right to receive
the number of fully paid and nonassessable shares of Corixa common stock equal
to the exchange ratio of 0.1685 multiplied by the number of shares of Ribi
common stock held by such stockholder as of the effective time of the merger.
The exchange ratio was calculated as a fraction, the numerator of which
equals 1.16 multiplied by the average of the last reported sale price of a share
of Ribi common stock on Nasdaq for the 10 trading days preceding June 9, 1999,
and the denominator of which equals the average of the last reported sale price
of a share of Corixa common stock on Nasdaq for the 10 trading days immediately
preceding June 9, 1999.
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Based on the capitalization of Ribi on August 9, 1999, the maximum number
of shares of Corixa common stock issued will be 4,330,701, which includes up to
720,000 shares of Corixa common stock that may be issued as a result of the
redemption or conversion of Ribi Series A preferred stock into Ribi common stock
prior to the effective date of the merger. In addition, Corixa will be obligated
to issue an additional aggregate of approximately 387,659 shares of Corixa
common stock upon exercise, if and when exercised, of all of the Ribi warrants
and options that Corixa will assume in the merger. As of August 9, 1999, the
exercise prices of most of the Ribi options and warrants were significantly
greater than the fair market value of Ribi's common stock.
Each holder of a certificate representing any such shares of Ribi common
stock will, upon consummation of the merger, cease to have any rights with
respect to such Ribi common stock, except the right to receive, without
interest, shares of Corixa common stock and cash for fractional shares upon the
surrender of such certificate. If prior to the effective time, Corixa should
split or combine the shares of Corixa common stock, or pay a stock dividend or
other stock distribution in, or in exchange of shares of Corixa common stock, or
engage in any similar transaction, then the exchange ratio will be appropriately
adjusted to reflect such split, combination, dividend, exchange or other
distribution or similar transaction.
Each share that is not exchanged in the merger will be canceled and
extinguished without any conversion thereof, and no cash, Corixa common stock or
other consideration will be delivered in exchange therefor.
WARRANTS
At the effective time of the merger, the outstanding warrants to purchase
Ribi common stock will be assumed by Corixa and converted into warrants to
purchase the number of shares of Corixa common stock equal to the number of
shares of Ribi common stock that were issuable upon exercise of such Ribi
warrants immediately prior to the effective time of the merger multiplied by the
exchange ratio, rounded to the nearest whole number of shares of Corixa common
stock. The exercise price of the warrants for the shares of Corixa common stock
will be equal to the former exercise price per share of such Ribi warrants
immediately prior to the effective time of the merger divided by the exchange
ratio, rounded to the nearest whole cent. Except as provided above, the
converted Ribi warrants will be subject to the same terms and conditions as were
applicable to such warrants immediately prior to the effective time of the
merger.
STOCK OPTIONS
At the effective time of the merger, all options to purchase Ribi common
stock then outstanding which are not terminated as a result of the merger will
be converted into options to purchase the number of shares of Corixa common
stock equal to the number of shares of Ribi common stock that were issuable upon
exercise of such Ribi stock options immediately prior to the effective time of
the merger multiplied by the exchange ratio, rounded to the nearest whole number
of shares of Corixa common stock. The exercise price of the shares of Corixa
common stock shall be equal to the former exercise price per share of such Ribi
stock option immediately prior to the effective time of the merger divided by
the exchange ratio, rounded to the nearest whole cent.
Except as described below, the assumed Ribi stock options will be subject
to the same terms and conditions that were applicable to Ribi stock options
immediately prior to the effective time of the merger.
As soon as practicable after the effective time of the merger, Corixa will
file, if necessary, one or more registration statements on Form S-8 under the
Securities Act, or amendments to its existing
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registration statements on Form S-8 or amendments to such other registration
statements as may be available, in order to register the shares of Corixa common
stock issuable upon exercise of the assumed Ribi stock options.
AMENDMENTS TO THE RIBI 1986 AND 1996 STOCK OPTION PLANS
Ribi currently has two stock option plans called the Ribi ImmunoChem
Research, Inc. 1986 Stock Option Plan and the 1996 Stock Option Plan. The 1986
stock option plan terminated in 1996 and no additional options can be granted
under this plan, although options granted prior to its termination in 1996
continue to be outstanding under this plan. Both the 1986 and the 1996 stock
option plans provide for the granting of incentive stock options, or ISOs, as
defined in Section 422 of the Internal Revenue Code, to employees and of
nonqualified stock options, or NSOs, to employees and consultants. The plans
also provide for the granting to outside directors of Ribi, in lieu of cash fees
to which such directors would otherwise be entitled, NSOs to purchase shares of
Ribi common stock at 80% of the fair market value of such stock on the date of
grant. The material terms of the two plans are essentially identical, as
described further below.
As a condition to the merger, Ribi is required to amend the 1986 and 1996
stock option plans and the option agreements outstanding under the plans, as
described below. The text of the proposed amendments to the plans appears in
Appendices D and E included in this proxy statement/ prospectus.
A total of 1,400,000 shares and 900,000 shares of Ribi's common stock,
whether authorized but unissued shares or treasury shares, were available for
issuance upon the exercise of options granted under the 1986 stock option plan
and the 1996 stock option plan, respectively, as of August 9, 1999. The number
of shares subject to outstanding options and the exercise price per share of
options will be subject to adjustment upon the occurrence of stock dividends,
re-incorporation, reorganization, recapitalization, merger, consolidation, stock
split, combination or exchange of stock, or other similar change in Ribi's, or,
following the merger, Corixa's capital structure in order to preserve but not
increase the benefits to an optionee.
As a condition to consummation of the merger, Ribi stockholders are being
asked to approve the following changes to the 1986 and 1996 stock option plans
and option agreements issued to persons other than outside directors of Ribi
holding options under the plans:
- Under the current terms of the 1986 and 1996 stock option plans, the
vesting and exercisability of outstanding options will accelerate in full
upon the Ribi stockholders' approval of the merger and the options will
terminate to the extent not exercised prior to consummation of the
merger. These plans and option agreements will be amended to provide
that, to the extent existing optionees waive the accelerated vesting and
exercisability of options in connection the merger as described above,
outstanding options held by such persons will be assumed by Corixa and
converted into an option to purchase shares of Corixa common stock in
connection with the merger;
- The 1986 and 1996 stock option plans and option agreements will be
amended to provide that, upon termination of the optionee's employment or
consulting relationship with Ribi or, following the merger with Corixa,
other than as a result of such optionee's death or disability, the
optionee shall have 90 days after the date of termination to exercise the
option with respect to all shares vested and exercisable as of such
termination date. Under the current terms of the plans, options shall
terminate upon the date of termination of an optionee's employment or
consulting relationship with Ribi, unless otherwise provided by the plan
administrator at or prior to termination of the optionee's relationship
with Ribi; and
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- The 1986 and 1996 stock option plans will be amended to provide that
following the merger, outstanding options shall be treated upon a change
of control of Corixa, as defined in Corixa's 1994 plan, in the following
manner, which is consistent with the change of control provisions
applicable under Corixa's 1994 plan:
-- If options are assumed or substituted for by any successor to Corixa,
the vesting and exercisability of 50% of the unvested portion of such
options shall accelerate prior to the change of control.
-- In the event options are not assumed or substituted, the vesting and
exercisability of such options shall accelerate in full prior to the
change of control.
-- In addition, if an optionee who is an executive officer of Corixa is
terminated without cause within six months following a change of
control, the vesting and exercisability of any options held by such
person shall accelerate in full upon the date of such termination.
As a further condition to consummation of the merger, Ribi stockholders are
being asked to approve the following changes to the 1986 and 1996 stock option
plans and option agreements issued under the plans to outside directors of Ribi:
- Under the current terms of the 1986 and 1996 stock option plans and
option agreements, the vesting and exercisability of options will
accelerate in full upon the Ribi stockholders approval of the merger and
the options will terminate to the extent not exercised prior to
consummation of the merger. These options and option agreements with
outside directors will be amended to provide that such outstanding
options will be assumed by Corixa in connection with the merger and will
not terminate upon consummation of the merger;
- The 1986 and 1996 stock option plans and these option agreements will be
amended to provide that, upon termination of the optionee's service as an
outside director of Ribi or, following the merger with Corixa, other than
as a result of such optionee's death or disability, the optionee shall
have the remainder of the ten-year term of the option as provided in the
option agreement before the option terminates to exercise the option with
respect to all shares vested and exercisable as of the date of
termination. Under the current terms of the plans and of these option
agreements, optionees shall have three months following termination of
their service as a director of Ribi to exercise options vested and
exercisable as of such termination date; and
- The 1986 and 1996 stock option plans shall provide that following the
merger, outstanding options shall be treated upon a change of control of
Corixa in the same manner as applies to options outstanding under the
Corixa 1994 plan, as described above.
In connection with the merger, Ribi will endeavor to obtain from all
persons holding options under the 1986 and 1996 stock option plans their
agreement and consent to the applicable amendments to the plans and such
persons' options. To the extent an optionee who is not an outside director of
Ribi does not agree to have the terms of his or her outstanding option(s)
amended as described above, the vesting and exercisability such options shall
accelerate in full in connection with the merger as currently provided for in
the plans and all such options shall terminate to the extent not exercised prior
to the effective time of the merger. The vesting and exercisability of options
held by outside directors of Ribi under the 1986 and 1996 stock option plans
shall accelerate in full in connection with the merger as currently provided in
the plans, as no waiver of such acceleration is being sought with respect to
outside directors.
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Amendment of Ribi's outstanding options as described above cause all ISOs
outstanding under the 1986 stock option plan and certain options outstanding
under the 1996 stock option plan to no longer qualify as ISOs following such
amendment.
Neither Ribi nor Corixa is under any obligation to continue any optionee's
employment or consulting relationship with either company for any period of time
before or after the merger and all Corixa employees and Ribi consultants are
terminable at will, meaning that Corixa may end an individual's employment or
consulting relationship for any or no reason at any time. Ribi may end a
consulting agreement for any reason at any time. Ribi employees employed in
Montana may be terminated for reasonable job-related groups based upon a failure
to perform job duties satisfactorily, disruption of the employer's operations,
or other legitimate business reasons.
The approval by the Ribi stockholders of the merger and the merger
agreement will also constitute the approval by the Ribi stockholders of the
amendments to Ribi's 1986 and 1996 stock option plans and of Ribi's seeking
optionees' consent to the amendments of their option agreements outstanding
under the plans, all as described above. Such amendments to the plans are
designed to take effect immediately prior to the time at which stockholder
approval of the merger and the merger agreement is effective.
MATERIAL TERMS OF 1986 AND 1996 STOCK OPTION PLANS
THE RIBI IMMUNOCHEM RESEARCH, INC. 1986 STOCK OPTION PLAN
Ribi has had a stock option plan called the Ribi ImmunoChem Research, Inc.
1986 Stock Option Plan. Under terms approved by stockholders in 1986, the 1986
stock option plan expired on February 10, 1996 and no further grants of options
may be made under the plan.
The plan provides for the grant of incentive awards in the form of ISOs,
NSOs and stock appreciation rights, an arrangement which Ribi's board of
directors believes may afford flexibility to Ribi. The essential features of the
plan are summarized below.
A total of 1,400,000 shares of Ribi's common stock, whether authorized but
unissued shares or treasury shares, are available for issuance upon the exercise
of options granted under the plan. The total number of shares available under
the plan, the number of shares subject to outstanding options and the exercise
price per share of options will be subject to adjustment upon the occurrence of
stock dividends in excess of two percent, reincorporation, reorganization,
recapitalization, merger, consolidation, stock split, combination or exchange of
stock, or other similar change in the capital structure of Ribi in order to
preserve but not increase the benefits to an optionee. If any option under the
plan terminates or expires, the shares allocable to the unexercised portion of
the option will again be available for purposes of the plan.
Administration of the 1986 Plan
The plan is administered by Ribi's board of directors. Ribi's board of
directors may delegate the responsibility for administering the plan to a
committee under the terms and conditions set forth by Ribi's board of directors.
Grant and Exercise of Incentive Stock Options, Nonqualified Stock Options and
Stock Appreciation Rights
All full- or part-time salaried employees of Ribi who are responsible for
the conduct and management of its business or who are involved in endeavors
significant to its success will be eligible to receive both ISOs and NSOs under
the plan. Consultants who are neither full- nor part-time
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salaried employees of Ribi but who are involved in endeavors significant to its
success and non-employee directors of Ribi are eligible to receive NSOs, but not
ISOs.
Except for below-market options, Ribi's board of directors or the
committee, if any, may from time to time in its discretion determine which of
the eligible employees of Ribi should receive options, the type of options to be
granted, the number of shares subject to such options, and the dates on which
such options are to be granted. In the case of ISOs, the aggregate fair market
value of the common stock with respect to which ISOs are exercisable for the
first time by an eligible employee in any calendar year will not exceed
$100,000. If the aggregate fair market value of stock with respect to which ISOs
are exercisable by an optionee for the first time during any calendar year
exceeds $100,000, such options will be treated as NSOs to the extent required by
Section 422 of the Internal Revenue Code. This rule will be applied by taking
options into account in the order in which they were granted.
Options will be granted in the form of an option agreement which will
contain such terms, provisions and conditions as may be determined by Ribi's
board of directors or the committee, if any, not inconsistent with the plan.
Except for below-market options, the option price for options granted under the
plan will not be less than 100% of the fair market value of the shares subject
to the option. Because Ribi's common stock is traded on the national
over-the-counter market, fair market value will be deemed to be the closing
price of the stock on the day of the grant, or if there were no trades on that
day, on the next preceding day on which there was trading. Each option will be
of a duration as specified in the option agreement; provided, however, that the
term of each option will be no more than ten years from the date on which the
option is granted. No incentive ISO will be granted to an employee who, at the
time the ISO is granted, owns stock representing more than 10% of the total
combined voting power of all classes of stock of Ribi, unless the option price
of the incentive stock option is at least 110% of the fair market value of the
stock subject to the ISO and the ISO by its terms is not exercisable more than
five years from the date it is granted.
Each non-employee director may elect to receive below-market options to
purchase common stock of Ribi in lieu of part or all of his or her director
fees. Such election must be made by June 30 of each year prior to the year
services are provided. Such options will have an exercise price of 80% of the
fair market value of the common stock on the grant date. The number of options
to be granted will be determined by dividing the amount of the director's fees
by the fair market value of a share of common stock on the date of the grant
after subtracting the option exercise price from the fair market value. These
options will be granted at the end of each calendar quarter and will be fully
vested as of the date of grant; provided, however that these may not be
exercised prior to six months after the date of grant. The term of these options
will be for ten years, and they will not be transferable otherwise than by will
or the laws of descent and distribution.
Subject to the limitations and conditions of the plan and the option
agreement, an option will be exercisable, in whole or in part, by giving written
notice of exercise to the President of Ribi or the President's designee, which
will specify the number of shares of common stock to be purchased and will be
accompanied by payment in full to Ribi of the purchase price of the shares to be
purchased. Ribi's board of directors or the committee, if any, in its sole
discretion, may permit an optionee to pay the option price in whole or in part:
- with cash, check or money order;
- with shares of common stock owned by the optionee; or
- in any combination of the foregoing.
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Any common stock used to exercise options will be valued at its fair market
value on the date of the exercise of the option. Upon exercise of an option,
Ribi may withhold from the optionee amounts required sufficient to satisfy
federal, state and local income and social security tax withholding obligations.
Prior to amendment of the 1986 plan as described above, the plan provided
that notwithstanding any vesting requirements contained in any option agreement,
all outstanding options will become immediately exercisable:
- following the first purchase of common stock pursuant to a tender offer
or exchange offer, other than an offer made by Ribi, for all or part of
the common stock;
- at such time as a third person, including a "group" as defined in Section
13(d)(3) of the Exchange Act, becomes the beneficial owner of shares of
Ribi having 25% or more of the total number of votes that may be cast for
the election of directors of Ribi;
- on the date on which the stockholders of Ribi approve any agreement for a
merger or consolidation in which Ribi will not survive as an independent,
publicly owned corporation or any sale, exchange or other disposition of
all or substantially all of Ribi's assets; or
- on any date on which the persons who were the directors of Ribi 90 days
prior to such date no longer constitute a majority of Ribi's board of
directors.
Prior to amendment of the 1996 stock option plan as described above, upon
termination of an optionee's employment with Ribi upon retirement at or after
age 65 or under circumstances for which Ribi's board of directors or the
committee, if any, has given approval, other than upon death or disability, an
optionee may exercise the option or stock appreciation rights at any time within
three months after the date of termination but not later than the date of
expiration of the option. If an optionee dies while in the employ of Ribi or
within a period of three months after termination upon retirement, the personal
representatives of the optionee's estate or the person or persons who have
acquired the option from the optionee by bequest or inheritance may exercise the
option or stock appreciation rights at any time within the year after the date
of death but not later than the expiration date of the option or stock
appreciation rights, to the extent the optionee was entitled to do so on the
date of death.
Upon termination of an optionee's employment with Ribi by reason of the
optionee's disability, the optionee may exercise the option or stock
appreciation rights at any time within one year after the date of termination
but not later than the expiration date of the option, to the extent the optionee
was entitled to do so on the date of termination. Any options not exercisable as
of the date of termination as described above under circumstances for which
Ribi's board of directors or the committee, if any, has given approval, death or
disability, and any options not exercised as provided, will terminate. Prior to
amendment of the 1986 plan as described above, the plan provided that upon
termination of an optionee's employment with Ribi under any other circumstances,
options granted to the optionee will terminate immediately. Termination of
employment will be deemed to include the termination of a director's service as
a member of Ribi's board of directors and the termination of a consulting
arrangement in the case of consultants. The effect of the termination of a
non-employee director's service as a member of Ribi's board of directors on the
exercisability of below-market options is being amended as described above.
An optionee will have no rights as a stockholder of Ribi with respect to
any shares of common stock covered by an option until the date of issuance of
the stock certificate for such shares.
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Amendments and Termination
Ribi's board of directors may at any time and from time to time alter,
amend, suspend or terminate the plan or any part thereof as it may deem proper,
except that no such action will diminish or impair the rights under an option
previously granted. Unless the stockholders of Ribi have given their approval,
the total number of shares for which options may be issued under the plan will
not be increased except as otherwise provided in the plan, and no amendment will
be made which reduces the price at which the common stock may be offered under
the plan below the minimum required elsewhere in the plan, or which materially
modifies the requirements as to eligibility for participation in the plan. The
plan terminated in February 1996.
THE RIBI IMMUNOCHEM RESEARCH, INC. 1996 STOCK OPTION PLAN
Ribi has a stock option plan called the Ribi ImmunoChem Research, Inc. 1996
Stock Option Plan. The plan provides for the grant of incentive awards in the
form of ISOs, NSOs and stock appreciation rights. The essential features of the
plan are summarized below.
A total of 900,000 shares of Ribi's common stock, whether authorized but
unissued shares or treasury shares, will be available for issuance upon the
exercise of options granted under the plan. The total number of shares available
under the plan, the number of shares subject to outstanding options and the
exercise price per share of options will be subject to adjustment upon the
occurrence of stock dividends in excess of two percent, reincorporation,
reorganization, recapitalization, merger, consolidation, stock split,
combination or exchange of stock, or other similar change in the capital
structure of Ribi in order to preserve but not increase the benefits to an
optionee. If any option under the plan terminates or expires, the shares
allocable to the unexercised portion of the option will again be available for
purposes of the plan.
The fair market value of Ribi's common stock on August 9, 1999, as
determined by the closing price reported by Nasdaq, was $2.1562 per share. The
maximum number of shares which may be offered upon exercise of options under the
plan constitutes approximately 4.3% of the common stock outstanding on the
record date.
Following the merger, no additional options will be granted under the plan.
The table under the caption "Ribi Stock Option Grants Year Ended December 31,
1998" provides information with respect to the grant of options to the named
executive officers of Ribi during 1998.
As of the date of this proxy statement/prospectus, no non-employee
directors and no associates of any director or executive officer has been
granted any options subject to stockholder approval of the proposed amendments.
The benefits to be received pursuant to the proposed amendments by Ribi's
directors, executive officers and employees are not determinable at this time.
Administration of the 1996 Plan
The plan is administered by Ribi's board of directors. Ribi's board of
directors may delegate the responsibility for administering the plan to a
committee under the terms and conditions set forth by Ribi's board of directors.
Ribi's board of directors or the committee, if any, will consist of two or more
members of Ribi's board of directors or such lesser number of members of Ribi's
board of directors as permitted by Rule 16b-3 of the Exchange Act. Except as
permitted by Rule 16b-3, none of the members of Ribi's board of directors or the
committee, if any, will receive, while serving on Ribi's board of directors or
the committee, if any, or during the one-year period preceding appointment to
Ribi's board of directors or the committee, if any, a grant or award of equity
securities under the plan or any other plan of Ribi or its affiliates under
which the participants are
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entitled to acquire common stock, options, related rights or stock appreciation
rights of Ribi or any of its subsidiaries, other than below-market, NSOs issued
to non-employee directors in lieu of part or all of his or her director fees.
Subject to the terms of the plan and with exception of below-market
options, Ribi's board of directors or the committee, if any, may determine which
directors, employees or consultants will receive options, determine the terms
and conditions of all options granted under the plan and prescribe, amend,
rescind and interpret rules and regulations for administering the plan. In
granting options, Ribi's board of directors or the committee, if any, will take
into consideration the contribution the optionee has made or may make to the
success of Ribi and such other factors as Ribi's board of directors or the
committee, if any, determines. Except for below-market options, Ribi's board of
directors or the committee, if any, may amend the terms of any outstanding
option granted under this plan, but any amendment which would adversely affect
the optionee's rights under an outstanding option will not be made without the
optionee's written consent. Ribi's board of directors or the committee, if any,
may, with the optionee's written consent, cancel any outstanding option or
accept any outstanding option in exchange for a new option.
Grant and Exercise of Incentive Stock Options, Nonqualified Stock Options and
Stock Appreciation Rights
All full- or part-time salaried employees of Ribi who are responsible for
the conduct and management of its business or who are involved in endeavors
significant to its success will be eligible to receive both ISOs and NSOs under
the plan. Consultants who are neither full- nor part-time salaried employees of
Ribi but who are involved in endeavors significant to its success will be
eligible to receive NSOs, but not ISOs. Other than below-market options granted
to non-employee directors in lieu of part or all of his or her director fees,
non-employee directors will not be eligible to receive grants under the plan.
Except for below-market options, Ribi's board of directors or the
committee, if any, may from time to time in its discretion determine which of
the eligible employees of Ribi should receive options, the type of options to be
granted, the number of shares subject to such options, and the dates on which
such options are to be granted. In the case of ISOs, the aggregate fair market
value of the common stock with respect to which ISOs are exercisable for the
first time by an eligible employee in any calendar year will not exceed
$100,000. If the aggregate fair market value of stock with respect to which ISOs
are exercisable by an optionee for the first time during any calendar year
exceeds $100,000, such options will be treated as NSOs to the extent required by
Section 422 of the Internal Revenue Code. This rule will be applied by taking
options into account in the order in which they were granted.
Options will be granted in the form of an option agreement which will
contain such terms, provisions and conditions as may be determined by Ribi's
board of directors or the committee, if any, not inconsistent with the plan.
Except for below-market options, the option price for options granted under the
plan will not be less than 100% of the fair market value of the shares subject
to the option. Because Ribi's common stock is traded on the national
over-the-counter market, fair market value will be deemed to be the closing
price of the stock on the day of the grant, or if there were no trades on that
day, on the next preceding day on which there was trading. Each option will be
of a duration as specified in the option agreement; provided, however, that the
term of each option will be no more than ten years from the date on which the
option is granted. No ISO will be granted to an employee who, at the time the
ISO is granted, owns stock representing more than 10% of the total combined
voting power of all classes of stock of Ribi, unless the option price of the ISO
is at least 110% of the
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fair market value of the stock subject to the ISO and the ISO by its terms is
not exercisable more than five years from the date it is granted.
Each non-employee director may elect to receive below-market options to
purchase common stock of Ribi in lieu of part or all of his or her director
fees. Such election must be made by June 30 of each year prior to the year
services are provided. Such options will have an exercise price of 80% of the
fair market value of the common stock on the grant date. The number of options
to be granted will be determined by dividing the amount of the director's fees
by the fair market value of a share of common stock on the date of the grant
after subtracting the option exercise price from the fair market value. These
options will be granted at the end of each calendar quarter and will be fully
vested as of the date of grant; provided, however, said options may not be
exercised prior to six months after the date of grant. The term of these options
will be for ten years, and they will not be transferable otherwise than by will
or the laws of descent and distribution.
Subject to the limitations and conditions of the plan and the option
agreement, an option will be exercisable, in whole or in part, by giving written
notice of exercise to the President of Ribi or the President's designee, which
will specify the number of shares of common stock to be purchased and will be
accompanied by payment in full to Ribi of the purchase price of the shares to be
purchased. Ribi's board of directors or the committee, if any, in its sole
discretion, may permit an optionee to pay the option price in whole or in part:
- with cash, check or money order;
- with shares of common stock owned by the optionee;
- by delivery on a form prescribed by Ribi's board of directors or the
committee, if any, of an irrevocable direction to a securities broker
approved by Ribi's board of directors or the committee, if any, to sell
shares of common stock and deliver all or a portion of the proceeds to
Ribi in payment for the common stock; or
- in any combination of the foregoing.
Any common stock used to exercise options will be valued at its fair market
value on the date of the exercise of the option. Upon exercise of an option,
Ribi may withhold from the optionee amounts required sufficient to satisfy
federal, state and local income and social security tax withholding obligations.
Prior to amendment of the 1996 stock option plan as described above, the
plan provided that notwithstanding any vesting requirements contained in any
option agreement, all outstanding options will become immediately exercisable:
- following the first purchase of common stock pursuant to a tender offer
or exchange offer, other than an offer made by Ribi, for all or part of
the common stock;
- at such time as a third person, including a "group" as defined in Section
13(d)(3) of the Exchange Act, becomes the beneficial owner of shares of
Ribi having 25% or more of the total number of votes that may be cast for
the election of directors of Ribi;
- on the date on which the stockholders of Ribi approve any agreement for a
merger or consolidation in which Ribi will not survive as an independent,
publicly owned corporation or any sale, exchange or other disposition of
all or substantially all of Ribi's assets; or
- on any date on which the persons who were the directors of Ribi 90 days
prior to such date no longer constitute a majority of Ribi's board of
directors.
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Prior to amendment of the 1996 stock option plan as described above, upon
termination of an optionee's employment with Ribi upon retirement at or after
age 65 or under circumstances for which Ribi's board of directors or the
committee, if any, has given approval, other than upon death or disability, an
optionee may exercise the option or stock appreciation rights at any time within
three months after the date of termination but not later than the date of
expiration of the option or stock appreciation rights. If an optionee dies while
in the employ of Ribi or within a period of three months after termination upon
retirement, the personal representatives of the optionee's estate or the person
or persons who have acquired the option from the optionee by bequest or
inheritance may exercise the option or stock appreciation rights at any time
within the year after the date of death but not later than the expiration date
of the option or stock appreciation rights, to the extent the optionee was
entitled to do so on the date of death.
Upon termination of an optionee's employment with Ribi by reason of the
optionee's disability, the optionee may exercise the option or stock
appreciation rights at any time within one year after the date of termination
but not later than the expiration date of the option or stock appreciation
rights, to the extent the optionee was entitled to do so on the date of
termination. Any options or stock appreciation rights not exercisable as of the
date of termination as described above under circumstances for which Ribi's
board of directors or the committee, if any, has given approval, death or
disability, and any options not exercised as provided, will terminate. Prior to
amendment of the 1996 stock option plan as described above, upon termination of
an optionee's employment with Ribi under any other circumstances, options
granted to the optionee will terminate immediately. Termination of employment
will be deemed to include the termination of a director's service as a member of
Ribi's board of directors and the termination of a consulting arrangement in the
case of consultants. The effect of the termination of a non-employee director's
service as a member of Ribi's board of directors on the exercisability of
below-market options is being amended as described above.
To the extent required by Rule 16b-3, options are not transferable except
by operation of law or by will or the laws of descent and distribution. If Rule
16b-3 is amended after the date of Ribi's board of directors's adoption of the
plan to permit broader transferability of options:
- below-market options will be transferable to the fullest extent permitted
by Rule 16b-3 as so amended; and
- any other option will be transferable to the extent provided in the
option agreement covering the option, and Ribi's board of directors or
the committee, if any, will have discretion to amend any outstanding
option to provide for broader transferability of the option within the
limits of Rule 16b-3.
An optionee will have no rights as a stockholder of Ribi with respect to
any shares of common stock covered by an option until the date of issuance of
the stock certificate for such shares.
Amendments and termination
Ribi's board of directors may at any time and from time to time alter,
amend, suspend or terminate the plan or any part thereof as it may deem proper,
except that no such action will diminish or impair the rights under an option
previously granted. Unless the stockholders of Ribi have given their approval,
the total number of shares for which options may be issued under the plan will
not be increased except as otherwise provided in the plan, and no amendment will
be made which reduces the price at which the common stock may be offered under
the plan below the minimum required elsewhere in the plan, or which materially
modifies the requirements as to eligibility for participation in the plan. The
provisions for below-market options will not be amended periodically and in no
event more than once every six months, other than to comport with changes to the
Internal
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Revenue Code, the Employee Retirement Income Security Act of 1974, as amended,
or any applicable rules and regulations thereunder.
The plan will terminate on February 11, 2006; provided, that Ribi's board
of directors may suspend or terminate the plan prior to that date.
Federal Income Tax Consequences
The following is a general discussion of the federal tax treatment for ISOs
and NSOs and does not purport to be complete. In addition, the summary does not
discuss tax consequences of an optionee's death or the income tax laws of any
municipality, state or foreign country to which the optionee may be subject.
Incentive Stock Options -- Payment of Exercise Price in Cash
An employee will in most cases realize no taxable income and Ribi will not
be entitled to a compensation deduction at either the date of the grant or
exercise of an ISO. The excess of the stock's fair market value on the exercise
date less the exercise price, however, constitutes income to the employee and
may be taxed under the alternative minimum tax provisions of Internal Revenue
Code.
If the employee sells or otherwise disposes of the stock following
expiration of the "statutory holding period," he or she will realize the
difference between the disposition proceeds and the stock's exercise price as
long-term capital gain or loss in the year of disposition. The statutory holding
period is the later of one year after the stock was transferred to the employee
upon exercise or two years after the date of grant.
If the employee sells or otherwise disposes of his or her stock acquired
upon exercise of an incentive stock option prior to meeting the statutory
holding period requirements, all or a portion of any gain will be treated as
ordinary income to the employee and Ribi will be entitled to deduct an equal
amount as compensation expense. The amount of ordinary income realized upon sale
is the lesser of the stock's fair market value on the exercise date less the
stock's exercise price or the gain on the sale (the amount realized less the
exercise price).
An employee may also realize additional gain if the sale price exceeds the
fair market value on the exercise date. The difference between the fair market
value on the sale date and the fair market value on the exercise date will be
treated as long-term capital gain if the stock was held for more than one year;
otherwise it will be short-term capital gain.
If the employee realizes an amount upon a subsequent sale of his or her
option shares that is less than the exercise price or other tax basis of the
shares, the resulting loss will be a short- or long-term capital loss depending
upon whether the stock was held for one year or less prior to sale, or more than
one year, respectively.
Incentive Stock Options -- Payment of Exercise Price with Stock
The exercise of an ISO by payment in shares of common stock previously
owned by the employee will generally have the same tax consequences as described
above (i.e., no tax upon the exercise).
However, under the "pyramiding" rules, gain will be realized upon the
exercise of an ISO if the payment shares were acquired pursuant to an earlier
exercise of an ISO and those shares have not been held for the statutory holding
period. The amount of ordinary income will be equal to the lesser
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of the payment stock's fair market value on the exercise date less its option
price or the payment stock's fair market value on the transfer date less its
option price.
A taxable pyramiding will not occur if the payment stock was acquired
pursuant to the exercise of a NSO or if the statutory holding period has expired
for payment stock acquired upon a prior exercise of an ISO.
Employees should also be aware of the following tax items even if the
payment stock has been held for the statutory holding period:
- If the stock acquired upon exercise of an ISO is sold prior to expiration
of the statutory holding periods, the capital gain or loss holding period
for this stock is considered to have commenced on the date an equal
number of payment shares were acquired.
- The tax basis of the payment stock becomes the tax basis for an equal
number of ISO shares for purposes of determining capital gain or loss on
disposition of the new stock. The tax basis of any additional stock
acquired upon exercise will be zero. If the statutory holding period is
not met, the payment stock's basis will be increased to the fair market
value on the date the option was exercised or such other amount as is
taxable to the employee as ordinary income.
- If basis is allocated between payment stock and additional stock,
proposed regulations under Section 422 of the Internal Revenue Code
provide that a disqualifying disposition of stock transferred pursuant to
the exercise will be a disqualifying disposition of stock with the lowest
basis.
Nonqualified Stock Options
There will be no federal income tax consequences to the optionee or Ribi
when an NSO is granted, provided the option does not have a readily
ascertainable fair market value at the time of grant. Ribi believes that the
options granted under the plan will not have such a value at the date of grant.
Upon the exercise of an NSO, the optionee will realize ordinary income
equal to the fair market value of the stock on the date of exercise less the
exercise price. Ribi will be entitled to a deduction equal to the optionee's
ordinary income and is required to withhold taxes from employees on this amount.
An optionee will realize capital gain or loss upon any subsequent sale or
disposition of stock equal to the amount realized less the fair market value of
the stock on the date the option is exercised. The capital gain or loss will be
long-term if the stock has been held for more than one year, or short-term gain
or loss if held less than one year.
Generally no gain or loss will be realized on previously acquired stock
used in payment upon exercise of a nonqualified option. The acquisition date of
the payment stock is substituted as the capital gain holding period commencement
date for an equal number of new shares. Any additional stock acquired upon
exercise will use the exercise date as the capital gain holding period
commencement date.
The tax basis of the payment stock will be substituted as the tax basis of
an equal number of shares acquired upon exercise of the option. The tax basis of
additional shares acquired upon exercise will be equal to the total taxable
income realized by the employee or director plus any cash paid.
If the payment shares were acquired through the exercise of ISOs and the
stock has not been held for the statutory holding period, no gain or loss is
realized on the payment shares. Instead, an
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equal number of new shares acquired upon exercise of the option assumes the
payment shares' tax characteristics. If the new shares are held for the balance
of the payment stock's statutory holding period, any gain or disposition (sale
proceeds less the payment share's original exercise price) will be long-term
capital gain.
THE RIBI 1996 DIRECTORS' STOCK OPTION PLAN
Ribi has a stock option plan called the Ribi ImmunoChem Research, Inc. 1996
Directors' Stock Option Plan. The directors' plan provides for the grant of
options to purchase common stock to directors who are not employees of Ribi. The
directors' plan provides for the grant of stock options that are not intended to
qualify as ISOs. The essential features of the directors' plan are summarized
below.
A total of 210,000 shares of Ribi's common stock, whether authorized but
unissued shares or treasury shares, are available for issuance upon the exercise
of options granted under the plan. The total number of shares available under
the plan, the number of shares subject to outstanding options and the exercise
price per share of options will be subject to adjustment upon the occurrence of
stock dividends in excess of two percent, re-incorporation, reorganization,
recapitalization, merger, consolidation, stock split, combination or exchange of
stock, or other similar change in the capital structure of Ribi in order to
preserve but not increase the benefits to an optionee. If any option under the
plan terminates or expires, the shares allocable to the unexercised portion of
the option will again be available for purposes of the plan. If stock which was
acquired upon exercise of an option is subsequently repurchased by Ribi, such
stock will not be available for future grant under the plan.
The fair market value of Ribi's common stock on August 9, 1999 as
determined by the closing price reported by Nasdaq was $2.1562 per share. The
maximum number of shares which may be offered upon exercise of options under the
plan constitutes approximately one percent of the common stock outstanding on
the record date.
Options under the plan will be granted only to directors who are not
employees. At August 9, 1999, there were five such directors. All grants are
automatic and nondiscretionary and will be made strictly in accordance with the
provisions of the plan. Under the plan, an option to purchase 30,000 shares of
stock was granted to each nonemployee director, subject to stockholder approval,
on the date the plan was approved by the board and to other nonemployee
directors when they first became or become an nonemployee director. In addition,
immediately following each annual meeting of Ribi's stockholders, each
nonemployee director who continues as an nonemployee director following the
meeting will be granted an option to purchase 500 shares of common stock. These
subsequent grants will be made as of the date of the annual stockholders'
meeting. In the event that a sufficient number of shares of stock is not
available under the plan, the remaining shares will be prorated based upon the
number of shares each nonemployee director was entitled to receive under the
plan. Any further grants of options will be deferred until such time as
additional shares become available for grant under the plan. Ribi's board of
directors will have the authority at any time to make additional shares
available for grant under the plan, subject to obtaining stockholder approval.
Any grant of an option made before Ribi has obtained stockholder approval of the
plan and any grant of an option made after amendment of the plan, which requires
stockholder approval, will be conditioned upon obtaining such approval.
Following the merger, no additional options will be granted under the plan.
As of the date of this proxy statement/prospectus, no non-employee
directors and no associates of any director or executive officer has been
granted any options subject to stockholder approval of
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the proposed amendment. The benefits to be received pursuant to the 1996
directors' plan amendment by Ribi's directors, executive officers and employees
are not determinable at this time.
AMENDMENTS TO THE RIBI 1996 DIRECTORS' STOCK OPTION PLAN
As a condition to consummation of the merger, Ribi stockholders are being
asked to approve the following changes to the 1996 directors' plan and option
agreements issued under the plan:
- Under the current terms of the 1996 directors' plan and option
agreements, the vesting and exercisability of options will accelerate in
full upon the approval of Ribi stockholders of the merger and the options
will terminate to the extent not exercised prior to consummation of the
merger. The options and option agreements with outside directors will be
amended to provide that such outstanding options will be assumed by
Corixa in connection with the merger and will not terminate upon
completion of the merger.
- The 1996 directors' plan and option agreements will be amended to provide
that, upon termination of the optionee's service as an outside director
of Ribi or, after the merger with Corixa, other than as a result of such
optionee's death or disability, the optionee shall have the remainder of
the 10-year term of the option as provided in the option agreement before
the option terminates to exercise the option with respect to all shares
vested and exercisable as of the date of termination. Under the current
terms of the plan and these option agreements, optioneeshave three months
from the date of termination of such optionee's service relationship with
Ribi to exercise outstanding options before such options terminate.
- The 1996 directors' plan will be amended to provide that following the
merger, outstanding options shall be treated upon a change of control of
Corixa in the same manner as applies to options outstanding under the
Corixa 1994 plan, as described above in connection with Ribi's 1986 and
1996 stock option plans.
The approval by the Ribi stockholders of the merger and the merger
agreement will also constitute the approval by the Ribi stockholders of the
amendments to Ribi's 1996 directors' plan, all as described above. Such
amendments to the plan are deemed to take effect immediately prior to the time
at which stockholder approval of the merger and the merger agreement is
effective.
TERMS AND CONDITIONS OF THE 1996 DIRECTORS' PLAN
Each option granted pursuant to the plan will be evidenced by a written
stock option agreement which will contain the terms and conditions of the
option. The exercise price per share will be 100% of the fair market value of
the stock on the date of grant. Fifty percent of each option granted will vest
and become exercisable on the date of grant and the balance will vest and become
exercisable at the rate of 25% of the total on each anniversary of the grant
date, such that the option will be fully vested and exercisable two years after
its date of grant. However, no portion of the option will vest on an anniversary
of the grant date if the nonemployee director does not continue as an
nonemployee director immediately following such anniversary. Each option will
expire in 10 years if not exercised. Options may be granted under the plan at
any time on or before the tenth anniversary of the date of adoption of the plan
by Ribi's board of directors.
The plan is intended to be self-executing pursuant to the terms set out in
the plan. However, any questions concerning the interpretation or execution of
the plan will be decided by Ribi's board of directors. Ribi's board of directors
will have the authority to authorize any person to execute on behalf of Ribi any
agreements or other documents in connection with grants of options under the
plan and to make all other determinations deemed necessary.
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An nonemployee director can exercise options by giving the Secretary of
Ribi written notice of exercise, specifying the number of shares to be acquired
upon exercise. The notice will be accompanied by an amount equal to the exercise
price of the shares in:
- cash or check;
- a form prescribed by Ribi's board of directors of an irrevocable
direction to a securities broker approved by Ribi's board of directors to
sell shares of stock and deliver all or a portion of the proceeds to Ribi
in payment for the stock; or
- shares of stock owned by the optionee.
Ribi may require the optionee, under certain conditions, to provide written
assurance that the shares are being purchased for investment and not with a view
to distribution. Upon delivery of the notice and appropriate payment, Ribi will
authorize the transfer agent of Ribi to issue a stock certificate to the
optionee for the number of shares of stock acquired. No stock will be sold under
the plan until the optionee has made arrangements acceptable to Ribi's board of
directors for the satisfaction of applicable federal, state and local income and
employment tax withholding obligations. Until the shares are issued, the
optionee has no right to vote or to receive dividends or to exercise any other
rights as a stockholder. In the event of a change in control of Ribi, all
outstanding options will become immediately vested and exercisable.
To the extent required by Rule 16b-3 of the Exchange Act, no option may be
sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner
other than by will or by the laws of descent or distribution. If Rule 16b-3 is
amended after the date of Ribi's board of director's adoption of the plan to
permit broader transferability of options, the options will be transferable to
the fullest extent permitted by the Rule.
The terms and conditions of options granted to persons subject to Section
16 of the Exchange Act will comply with applicable provisions of Rule 16b-3. The
plan and options granted under the plan will be deemed to contain additional
conditions and restrictions as may be required for the plan to qualify as a
"formula plan" under Rule 16b-3, as it applies to Ribi, and to qualify for the
maximum exemptions from Section 16 of the Exchange Act with respect to
transactions pursuant to the plan.
During the term of the plan, Ribi will reserve and keep available the
number of shares of stock as will be sufficient to satisfy the requirements of
the plan.
AMENDMENTS AND TERMINATION
Ribi's board of directors may amend the plan from time to time in such
respects as Ribi's board of directors deems advisable. However, Ribi will obtain
approval by Ribi's stockholders to amend the plan to the extent and in the
manner required by Rule 16b-3 or any other applicable law or regulation.
Notwithstanding the foregoing, the provisions governing the grant and terms of
the options will not be amended more than once every six months, other than to
comport with changes in the Internal Revenue Code, the Employee Retirement
Income Security Act of 1974, as amended, or any applicable rules and regulations
thereunder. Ribi's board of directors, without further approval of the
stockholders, may at any time terminate or suspend the plan. Generally, any such
termination or suspension of the plan will not affect options already granted
under the plan and such options will remain in full force and effect as if the
plan had not been terminated or suspended.
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FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of the federal tax treatment for
NSOs. The following is only a summary of the federal tax treatment and does not
purport to be complete. In addition, the summary does not discuss tax
consequences of an optionee's death or the income tax laws of any municipality,
state, or foreign country of which the optionee may be subject.
There will be no federal income tax consequences to the optionee or Ribi
when an NSO is granted, provided the option does not have a readily
ascertainable fair market value. Ribi believes that the options granted under
the plan will not have such a value at the date of grant.
Upon the exercise of an NSO, the optionee will realize ordinary income
equal to the fair market value of the stock on the date of exercise less the
exercise price. Ribi will be entitled to a deduction equal to the optionee's
ordinary income and may be required to withhold taxes on this amount.
An optionee will realize capital gain or loss upon any subsequent sale or
disposition of stock equal to the amount received less the fair market value of
the stock on the date the option is exercised. The capital gain or loss will be
long-term if the stock has been held for more than one year. Otherwise, it will
be a short-term gain or loss.
Generally no gain or loss will be realized on previously acquired stock
used in payment upon exercise of an NSO. The acquisition date of the payment
stock is substituted as the capital gain holding period commencement date for an
equal number of new shares. Any additional stock acquired upon exercise will use
the exercise date as the capital gain holding period commencement date.
The tax basis of the payment stock will be substituted as the tax basis of
an equal number of shares acquired upon exercise of the option. The tax basis of
additional shares acquired upon exercise will be equal to the total taxable
income realized by the optionee plus any cash paid.
AMENDMENTS TO ROBERT IVY'S OPTION
On July 1, 1987, Ribi issued a stock option to Robert Ivy pursuant to an
option agreement. Under this option agreement as amended, there remain 50,000
shares of Ribi common stock subject to exercise. As a condition to the merger,
Ribi is required to amend the agreement. The text of the proposed amendment to
the agreement appears as Appendix G included in this proxy statement/prospectus.
As a condition to consummation of the merger, Ribi has approved the
following changes to Mr. Ivy's option agreement:
- amending section 7(b) of the agreement, which governs the effects of
certain changes of control on options, to match the equivalent section in
Corixa's 1994 plan;
- amending the agreement to allow for continued vesting and exercisability
through the current term of the option grant; and
- interpretation of the agreement to allow for assumption by Corixa of the
option.
EXCHANGE OF SHARES
Promptly after the effective time of the merger, Corixa will cause its
exchange agent to mail to each holder of record of Ribi common stock a letter of
transmittal and instructions for use in effecting the surrender of the
certificates representing shares of Ribi common stock held by such
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holder in exchange for cash and certificates representing shares of Corixa
common stock. Upon surrender of Ribi stock certificates to the exchange agent
together with such letter of transmittal, duly executed, the holder of such
certificates will be entitled to receive in exchange therefor a certificate
representing the number of whole shares of Corixa common stock, and a check
representing the amount of cash in lieu of fractional shares, if any, and any
dividends or distributions with a record date after the effective time of the
merger, each of which such holder has the right to receive with respect to the
certificates exchanged pursuant to the merger agreement.
RIBI STOCKHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES UNTIL THEY RECEIVE
A LETTER OF TRANSMITTAL FROM THE EXCHANGE AGENT INSTRUCTING THEM TO DO SO.
No fractional shares of Corixa common stock will be issued pursuant to the
merger. In lieu thereof, cash adjustments will be paid in an amount, rounded to
the nearest whole cent, equal to the product of the fractional share and
$13.425.
No dividends on shares of Corixa common stock will be paid to persons
entitled to receive certificates representing shares of Corixa common stock
until those persons surrender their certificates representing shares of Ribi
common stock. Upon such surrender, the person in whose name the certificates
representing such shares of Corixa common stock will be issued will also receive
any dividends that have become payable with respect to such shares of Corixa
common stock between the effective time of the merger and the time of such
surrender. Any person entitled to receive dividends will not be entitled to
receive interest on such dividends.
If any certificates for shares of Corixa common stock are to be issued in a
name other than that in which the certificate representing Ribi common stock
surrendered in exchange therefor is registered, the person requesting such
exchange must pay to the exchange agent any transfer or other taxes required by
reason thereof, or establish that such tax has been paid or is not applicable.
At the effective time of the merger, the stock transfer books of Ribi will
be closed and no further transfers of shares of Ribi common stock will be made.
Neither the exchange agent nor any party to the merger agreement is liable
to a holder of shares of Ribi common stock for any shares of Corixa common stock
or dividends thereon or the cash payment for fractional interests delivered to a
public official pursuant to applicable abandoned property, escheat or similar
laws.
In the event that any certificate representing Ribi common stock has been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such certificate to be lost, stolen or destroyed, and if
required by Corixa, in its discretion, the posting by such person of a bond in
such sum as Corixa may direct as indemnity, or such other form of indemnity as
Corixa may reasonably direct, against any claim that may be made against Corixa
with respect to such certificate, the exchange agent will issue in exchange for
such certificate the applicable number of whole shares of Corixa common stock
and cash in lieu of fractional shares into which the shares of Ribi common stock
represented by such certificate are converted in the merger and any dividends or
distributions with a record date after the effective time of the merger, of
which such holder has the right to receive with respect to such certificate.
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REPRESENTATIONS AND WARRANTIES
The merger agreement contains certain representations and warranties by
Ribi relating to, among other things:
- due organization, power and good standing of Ribi;
- Ribi's qualification to do business;
- Ribi's certificate of incorporation and bylaws;
- Ribi's capital structure;
- authorization, execution, delivery and enforceability of the merger
agreement by Ribi;
- consents and approvals required to complete the merger;
- the absence of breaches or violations of Ribi's certificate of
incorporation, bylaws, agreements and instruments, and law;
- Ribi's filings with the SEC;
- Ribi's financial statements;
- absence of undisclosed liabilities of Ribi;
- changes in Ribi's business since March 31, 1999;
- litigation involving Ribi;
- restrictions on Ribi's business activities;
- permits required to conduct Ribi's business;
- Ribi's compliance with regulatory matters;
- Ribi's title to real and personal property;
- Ribi's intellectual property rights;
- environmental laws that apply to Ribi and Ribi's compliance with such
laws;
- Ribi's taxes;
- Ribi's employee benefit plans;
- Ribi's contracts and agreements that will be affected by the merger;
- Ribi's compliance with employment laws;
- Ribi's material contracts;
- indebtedness of Ribi to its directors, officers and employers and such
individuals' indebtedness to Ribi;
- Ribi's insurance policies;
- Ribi's compliance with applicable laws;
- payments to be made by Ribi for brokers' and finders' fees in connection
with the merger;
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- accuracy of information supplied by Ribi in this proxy
statement/prospectus and the related registration statement filed by
Corixa;
- Ribi board of directors' approval of the merger;
- Ribi's accounts receivable and accounts payable;
- the fairness opinion received by Ribi from Hambrecht & Quist; and
- Ribi's compliance with applicable tariff laws.
The merger agreement also contains certain representations and warranties
by Corixa relating to, among other things:
- due organization, power and good standing of Corixa;
- Corixa's qualification to do business;
- capital structure of Corixa;
- authorization, execution, delivery and enforceability of the merger
agreement by Corixa;
- consents and approvals required to complete the merger;
- the absence of breaches or violations of Corixa's certificate of
incorporation, bylaws, agreements and instruments, and law;
- Corixa's filings with the SEC;
- Corixa's financial statements;
- absence of undisclosed liabilities of Corixa;
- changes in Corixa's business since March 31, 1999;
- accuracy of information supplied by Corixa in this proxy
statement/prospectus and the related registration statement filed by
Corixa;
- valid issuance of Corixa common stock in the merger;
- litigation involving Corixa;
- Corixa board of directors' approval of the merger; and
- Corixa's compliance with applicable laws.
The representations and warranties in the merger agreement are complicated
and not easily summarized. You are urged to carefully read the sections of the
merger agreement entitled "Representations and Warranties of Ribi" and
"Representations and Warranties of Corixa."
CONDUCT OF RIBI'S BUSINESS PRIOR TO COMPLETION OF THE MERGER
Ribi has agreed that, beginning on the date of the merger agreement and
ending on the earlier of the termination of the merger agreement or the
effective time of the merger, except as provided in the merger agreement or
consented to in writing by Corixa, Ribi will carry on its business in the
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usual, regular and ordinary course in substantially the same manner as Ribi did
before the merger agreement was executed. Additionally, among other things, Ribi
has agreed:
- to conduct its business in compliance with all applicable laws and
regulations;
- to pay its debts and taxes when due, subject to good faith disputes;
- to pay or perform other obligations when due;
- to use its best efforts, consistent with its past practices and policies,
to
- preserve intact its present business organization,
- keep available the services of its present officers and employees,
and
- preserve its relationships with customers, suppliers, distributors,
licensors, licensees, and others with which it has business
dealings; and
- to promptly notify Corixa of any event involving Ribi's business or
operations that Ribi reasonably believes could have a material adverse
effect on Ribi or the surviving corporation.
In addition, Ribi has also agreed that, except as permitted under the terms
of the merger agreement or consented to in writing by Corixa, beginning on the
date of the merger agreement and ending on the earlier of the termination of the
merger agreement or the effective time of the merger, Ribi will conduct its
business in compliance with certain specific restrictions relating to the
following:
- changes to the terms of outstanding options to purchase shares of Ribi
common stock;
- the grant of any severance or termination pay;
- Ribi's intellectual property;
- the issuance of dividends or other distributions;
- the issuance, repurchase or redemption of securities;
- modification of Ribi's certificate of incorporation, certificate of
designation and bylaws;
- the acquisition of assets, equity interests or other entities;
- the sale or disposition of Ribi's assets;
- the incurrence of indebtedness;
- employees and employee benefits;
- payments outside of the ordinary course of business;
- entrance into, modification or termination of contracts;
- policies and procedures;
- actions adversely impacting the merger;
- SEC filings; and
- capital expenditures.
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The agreements related to the conduct of Ribi's business in the merger
agreement are complicated and not easily summarized. You are urged to carefully
read the sections of the merger agreement entitled "Conduct of Business of
Ribi."
CONDUCT OF CORIXA'S BUSINESS PRIOR TO COMPLETION OF THE MERGER
Corixa has agreed that, beginning on the date of the merger agreement and
ending on the earlier of the termination of the merger agreement or the
effective time of the merger, except as provided in the merger agreement or
consented to in writing by Ribi, Corixa will conduct its business in compliance
with certain specific restrictions relating to the following:
- the issuance of dividends or other distributions;
- actions adversely impacting the merger; and
- SEC filings.
The agreements related to the conduct of Corixa's business in the merger
agreement are complicated and not easily summarized. You are urged to carefully
read the sections of the merger agreement entitled "Conduct of Business of
Corixa."
CERTAIN COVENANTS
Corixa and Ribi also agreed that prior to the effective time of the merger
they will, among other things:
- use reasonable best efforts to consummate the merger;
- notify the other if any representation or warranty becomes untrue or
inaccurate in any material respect;
- use reasonable best efforts to obtain required consents to and regulatory
approvals of the merger;
- provide each other reasonable access to certain information;
- take all actions necessary to comply promptly with all legal requirements
that may be imposed on such party with respect to the merger and the
transactions contemplated by the merger agreement, subject to the
appropriate vote or consent of stockholders;
- consult with each other before issuing any press release or making any
public disclosure regarding the merger;
- prepare and file this proxy statement/prospectus as promptly as
practicable after the execution of the merger agreement; and
- use their commercially reasonable efforts to have the registration
statement filed by Corixa declared effective under the Securities Act as
promptly as practicable after such filing.
Ribi has agreed that, prior to the effectiveness of the merger, it will,
among other things:
- use its reasonable best efforts to deliver to Corixa, as promptly as
practicable, from each affiliate of Ribi and from one other stockholder
of Ribi, an executed voting agreement and an executed irrevocable proxy
in favor of the merger substantially in the forms included as part of the
merger agreement attached as Appendix A to this proxy
statement/prospectus;
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- use its reasonable efforts to deliver to Corixa, as promptly as
practicable, from RGC International Investors, LDC an executed voting
agreement substantially in the form included as a part of the merger
agreement attached as Appendix A to this proxy statement/prospectus;
- take all action necessary to convene the Ribi special meeting as promptly
as practicable and in event within 30 days after the registration
statement is declared effective by the SEC;
- use its commercially reasonable efforts to solicit from its stockholders
proxies in favor of approval of the merger;
- take all steps necessary to amend its 1986 and 1996 stock option plans
and 1996 directors' plan, each as more fully described in this proxy
statement/prospectus.
Corixa has agreed that prior to the effectiveness of the merger, it will,
among other things:
- take all action necessary to convene the Corixa special meeting as
promptly as practicable and in any event within 30 days after the
registration statement is declared effective by the SEC;
- use its commercially reasonable efforts to solicit from its stockholders
proxies in favor of approval of the merger;
- file with Nasdaq a listing notice covering the shares of Corixa common
stock to be issued in connection with the merger;
- file a registration statement on Form S-8 or amend an existing Form S-8
to register the shares of Corixa common stock issuable upon exercise of
Ribi stock options assumed by Corixa in the merger; and
- following the effectiveness of the merger, provide offer letters,
retention letters or employment agreements to employees of Ribi and make
available to individuals who become employees of Corixa after the merger
benefits that are comparable to benefits offered to Corixa employees,
consistent with the benefits currently offered by Ribi and applicable
state law.
In addition, as soon as possible following the approval of the merger by
the stockholders of Ribi and Corixa, and prior to the closing of the merger,
Ribi is required to redeem all of the then outstanding shares of Ribi Series A
preferred stock that have not been converted into Ribi common stock. This
redemption will occur pursuant to Ribi's optional redemption right under the
Certificate of Designation of Rights, Preferences and Privileges of the Ribi
Series A preferred stock. Following satisfaction of the closing criteria in the
merger agreement, Ribi will deliver to each holder of then outstanding Ribi
Series A preferred stock a notice of redemption that will provide for redemption
within 10 trading days of the date the notice is provided.
Corixa has agreed to fund a portion of the redemption of the Ribi Series A
preferred stock through Ribi's issuance of a promissory note to Corixa, or a
third party investor selected by Corixa, in the principal amount of 0.88908
multiplied by the total amount necessary to redeem all of the then outstanding
shares of Ribi Series A preferred stock. This promissory note will be, at
Corixa's option, either repayable in cash or convertible into Corixa common
stock. Ribi will pay the remaining 0.11092 of the redemption amount of the Ribi
Series A preferred stock.
The additional agreements and covenants made by the parties are complicated
and not easily summarized. You are urged to carefully read section 5 of the
merger agreement entitled "Additional Agreements."
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NO OTHER NEGOTIATIONS INVOLVING RIBI
Under the terms of the merger agreement, Ribi agreed that neither it nor
its officers, directors, employees or agents will, directly or indirectly:
- solicit, initiate, encourage or induce any Acquisition Proposal (as
defined below);
- participate in any discussions or negotiations regarding any Acquisition
Proposal;
- furnish to any person any non-public information with respect to any
Acquisition Proposal;
- take any other action to facilitate any inquiries or the making of any
proposal that constitutes or may reasonably be expected to lead to any
Acquisition Proposal;
- engage in discussions with any person with respect to any Acquisition
Proposal;
- approve, endorse or recommend any Acquisition Proposal; or
- enter into any letter of intent or similar document or any contract,
agreement or commitment contemplating or otherwise relating to any
Acquisition Transaction (as defined below).
However, after the Ribi board receives an unsolicited, written, bona fide
offer that it reasonably concludes may constitute a Superior Offer (as defined
below), Ribi may furnish nonpublic information regarding Ribi, enter into a
confidentiality agreement with or enter into discussions with, any person or
group in response to such Superior Offer if;
- neither Ribi nor any Ribi representative shall have violated any of the
restrictions set forth in the merger agreement with respect to the
solicitation of an Acquisition Proposal;
- Ribi's board of directors concludes in good faith, after consultation
with its outside legal counsel, that such action is required in order
for Ribi's board of directors to comply with its fiduciary obligations
to Ribi's stockholders under applicable law;
- prior to furnishing any such nonpublic information to, and as promptly
as reasonably practicable after having any discussions with, any person
or group who makes a Superior Offer Ribi gives Corixa written notice of
the identity of such person or group and of Ribi's intention to furnish
nonpublic information to, or enter into discussions with, such person or
group, and Ribi receives from such person or group an executed
confidentiality agreement containing customary limitations on the use
and disclosure of all nonpublic written and oral information furnished
to such person or group by or on behalf of Ribi; and
- contemporaneously with furnishing any such nonpublic information to the
same person or group, Ribi furnishes the same nonpublic information to
Corixa (to the extent it has not been previously furnished by Ribi to
Corixa).
If Ribi determines to accept a Superior Offer after complying with all
applicable restrictions, all voting agreements entered into between Corixa and
Ribi stockholders will terminate, and Ribi will be entitled to enter into an
agreement with such third party concerning such Superior Offer, provided that
Ribi has made payment in full to Corixa of the termination fee described more
fully beginning on page 106.
An ACQUISITION PROPOSAL is any offer or proposal relating to any
Acquisition Transaction, other than an offer or proposal by Corixa.
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An ACQUISITION TRANSACTION is any transaction or series of related
transactions, other than the transactions contemplated in the merger agreement,
involving any of the following:
- any acquisition or purchase of more than a 15% interest in the total
outstanding voting securities of Ribi or any of its subsidiaries;
- any tender offer or exchange offer that, if consummated, would result in
any person or group beneficially owning 15% or more of the total
outstanding voting securities of Ribi or any of its subsidiaries;
- any merger or similar transaction pursuant to which the stockholders of
Ribi immediately preceding such transaction hold less than 85% of the
equity interests in the surviving or resulting entity;
- any sale, lease outside the ordinary course of business, exchange,
transfer, license outside the ordinary course of business, acquisition or
disposition of more than 50% of the assets of Ribi; or
- any liquidation or dissolution of Ribi.
A SUPERIOR OFFER is an unsolicited, bona fide written offer made by a third
party to consummate any of the following transactions:
- a merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving Ribi pursuant
to which the stockholders of Ribi immediately preceding such transaction
hold less than 50% of the equity interest in the surviving or resulting
entity of such transaction;
- a sale or other disposition by Ribi of assets, excluding inventory and
used equipment sold in the ordinary course of business, representing more
than 50% of the fair market value of Ribi's business immediately prior to
such sale;
- the acquisition by any person or group, including by way of a tender
offer or an exchange offer or issuance by Ribi, directly or indirectly,
of beneficial ownership or a right to acquire beneficial ownership of
shares representing in excess of 50% of the voting power of the then-
outstanding shares of capital stock of Ribi; and
- any public announcement of a proposal, plan or intention to do any of the
foregoing or any agreement to engage in any of the foregoing, on terms
that Ribi's board of directors determines, in its judgment consistent
with applicable corporate law, after consultation with Hambrecht & Quist,
is reasonably likely to be financially superior to the Ribi stockholders
than the terms of the merger.
Ribi also agreed to advise, as promptly as practicable, Corixa orally and
in writing of any request for nonpublic information which Ribi reasonably
believes would lead to an Acquisition Proposal or of any Acquisition Proposal,
or any inquiry with respect to or which Ribi reasonably should believe would
lead to any Acquisition Proposal, the material terms and conditions of such
request, Acquisition Proposal or inquiry and the identity of the person or group
making the same. Ribi agreed to keep Corixa informed in all material respects of
the status and details, including material amendments or proposed amendments, of
any such request, Acquisition Proposal or inquiry.
The Ribi board may, without breaching the merger agreement, change its
recommendation in favor of the merger if a Superior Offer is made and Ribi
complies with certain other conditions in the merger agreement, including the
payment of the termination fee.
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INDEMNIFICATION
Corixa agreed to fulfill the obligations of Ribi pursuant to the
indemnification agreements between Ribi and its directors and officers in
existence as of the effectiveness of the merger and any indemnification
provisions under Ribi's certificate of incorporation or bylaws as in effect on
the date of the merger agreement. The certificate of incorporation and bylaws of
the surviving corporation will contain provisions with respect to
indemnification that are at least as favorable as those contained in the
certificate of incorporation and bylaws of Ribi as in effect on June 9, 1999,
and these provisions will not be amended, repealed or otherwise modified for a
period of three years from the completion of the merger in any manner that would
adversely affect the rights of individuals who, immediately prior to the
completion of the merger, were directors, officers, employees or agents of Ribi,
unless such modification is required by law.
Additionally, for a period of three years after completion of the merger,
Corixa will use its commercially reasonable efforts to maintain, if available,
directors' and officers' liability insurance covering those persons who are
currently covered by Ribi's directors' and officers' liability insurance policy
on terms comparable to those applicable to the current directors and officers of
Ribi. However, Corixa will not be required to pay in excess of 125% of the
annual premium currently paid by Ribi for such coverage.
CONDITIONS
The respective obligations of Corixa and Ribi to effect the merger shall be
subject to the satisfaction or waiver of certain conditions, including, among
others, the following:
- the approval of the merger by the requisite vote of the stockholders of
both Corixa and Ribi;
- Corixa's registration statement must be effective, no stop order
suspending its effectiveness will be in effect and no proceeding for
suspension of its effectiveness will have been initiated or threatened in
writing by the SEC;
- the absence of any law, governmental order, decree or injunction
prohibiting consummation of the merger or that has the effect of making
the merger illegal;
- the expiration or termination of all waiting periods under applicable
antitrust laws; and
- Corixa and Ribi each shall have received a written opinion from their
respective tax counsel to the effect that the merger will constitute a
reorganization within the meaning of Section 368(a) of the Internal
Revenue Code and such opinion shall not have been withdrawn.
The obligations of Ribi to effect the merger shall be subject to the
satisfaction of certain additional conditions, any of which may be waived by
Ribi, including, among others, the following:
- except as specified in the merger agreement, each representation and
warranty of Corixa must have been true and correct in all material
respects as of June 9, 1999 and must be true and correct in all material
respects on and as of the date the merger is to be completed, and Ribi
shall have received a certificate from Corixa with respect to the
foregoing;
- Corixa shall have performed or complied in all material respects with all
agreements and covenants required by the merger agreement to be performed
or complied with by Corixa prior to the completion of the merger, and
Ribi shall have received from Corixa a certificate to such effect;
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- Ribi shall have received a certificate of corporate good standing for
Corixa;
- Ribi shall have received an opinion from counsel to Corixa in
substantially the form agreed to in the merger agreement;
- Corixa shall have obtained all consents, waivers and approvals required
in connection with the merger;
- no material adverse effect with respect to Corixa shall have occurred
since June 9, 1999;
- the filing of an application for the listing on Nasdaq of shares of
Corixa common stock to be issued in connection with the merger shall have
been made; and
- Ribi shall have received a fairness opinion from Hambrecht & Quist
stating that the terms of the merger are fair to the Ribi stockholders
from a financial point of view.
The obligations of Corixa to effect the merger shall be subject to the
satisfaction of additional conditions, any of which may be waived by Corixa,
including, among others, the following:
- except as specified in the merger agreement, each representation and
warranty of Ribi must have been true and correct in all material respects
as of June 9, 1999 and must be true and correct in all material respects
on and as of the date the merger is to be completed, and Corixa shall
have received a certificate from Ribi with respect to the foregoing;
- Ribi shall have performed or complied in all material respects with all
agreements and covenants required by the merger agreement to be performed
or complied with by Ribi prior to the completion of the merger, and
Corixa shall have received a certificate from Ribi to that effect;
- Corixa shall have received a certificate of corporate good standing for
Ribi;
- Corixa shall have received an opinion from counsel to Ribi in
substantially the form agreed to in the merger agreement;
- no material adverse effect with respect to Ribi shall have occurred since
June 9, 1999;
- Ribi shall have obtained all consents, waivers and approvals required in
connection with the merger;
- the absence of an injunction or other order limiting or restricting
Corixa's ability to conduct or operate the business of Ribi following the
merger;
- Each affiliate of Ribi shall have executed a voting agreement;
- Ribi shall have redeemed all outstanding shares of Ribi Series A
preferred stock or these shares shall have been converted into Ribi
common stock;
- Corixa shall have received a fairness opinion from Pacific Growth
Equities stating that the terms of the merger are fair to the Corixa
stockholders from a financial point of view;
- Ribi's directors' and officers insurance is in full force and effect;
- Ribi's board of directors had adopted a resolution terminating Ribi's
401(k) plan effective as of a date prior to the closing of the merger;
and
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- Ribi's stock option plans are amended to:
-- either waive acceleration of vesting of Ribi stock options in
connection with the merger or allow full acceleration of vesting of
such options so long as such options terminate upon the effectiveness
of the merger;
-- permit outstanding Ribi stock options to be assumed by Corixa; and
-- permit holders of outstanding Ribi stock options 90 days to exercise
such options after termination of their employment.
A material adverse effect is any event, change, or effect that, when taken
individually or together with all other adverse changes and effects, is or is
reasonably likely to be materially adverse to the condition, properties, assets,
liabilities, business, operations, results of operations, or business as
proposed to be conducted, of Corixa or Ribi and their respective subsidiaries,
taken as a whole, or to prevent or materially delay consummation of the merger
or otherwise to prevent Corixa or Ribi and their respective subsidiaries from
performing their obligations under the merger agreement in any material manner.
TERMINATION OF THE MERGER AGREEMENT
At any time prior to the effectiveness of the merger, whether before or
after approval of the merger by the Corixa or Ribi stockholders, the merger
agreement may be terminated and the merger may be abandoned:
- by mutual consent of the boards of directors of each of Ribi and Corixa;
- by either Corixa or Ribi, if, without fault of the terminating party, the
merger has not been consummated on or before November 1, 1999, or such
later date as Corixa and Ribi may mutually agree;
- by either Corixa or Ribi, if there shall be any applicable law that makes
consummation of the merger illegal or otherwise prohibited or if any
court or governmental entity shall have issued a final order, decree,
ruling or taken any other final action restraining, enjoining or
otherwise prohibiting the merger;
- by either Corixa or Ribi if the required approval of the stockholders of
Corixa or Ribi shall not have been obtained at the Corixa special meeting
or Ribi special meeting, respectively;
- by either Corixa or Ribi, at any time prior to the approval of the merger
by the required vote of the stockholders of Ribi, if:
-- Ribi's board of directors shall for any reason have withdrawn or shall
have amended or modified in a manner adverse to Corixa its unanimous
recommendation in favor of the approval of the merger;
-- Ribi shall have failed to include in this proxy statement/prospectus
the unanimous recommendation of Ribi's board of directors in favor of
the approval of the merger;
-- Ribi's board of directors fails to reaffirm its unanimous
recommendation in favor of the approval of the merger within 7 calendar
days after Corixa requests in writing that such recommendation be
reaffirmed at any time following the public announcement of a Superior
Offer;
-- Ribi's board of directors shall have approved or publicly recommended
any Superior Offer;
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-- Ribi shall have entered into any letter of intent or similar document
or any agreement, contract or commitment accepting any Superior Offer;
or
-- a tender or exchange offer relating to securities of Ribi shall have
been commenced by a person or entity unaffiliated with Corixa, and Ribi
shall not have sent to its securityholders a statement disclosing that
Ribi recommends rejection of such tender or exchange offer within 10
business days after such tender or exchange offer is first published,
sent or given;
- by Corixa, at any time prior to the approval of the merger by the
stockholders of Ribi if Ribi shall not have used commercially reasonable
efforts to hold the Ribi special meeting as promptly as practicable and
in any event within the later of:
-- 30 days after the effectiveness of the registration statement
registering the shares issuable in the merger, subject to extension for
an additional seven days if Ribi receives a Superior Offer during the
last five days of such 30-day period; or
-- 15 days after any post-effective amendments to the proxy
statement/prospectus are mailed to stockholders of Ribi;
- by Ribi, at any time prior to the approval of the merger by the
stockholders of Corixa if Corixa shall not have used commercially
reasonable efforts to hold the Corixa special meeting as promptly as
practicable and in any event within 15 days after any post-effective
amendments to the proxy statement/prospectus are mailed to shareholders
of Corixa;
- by Ribi, whether before or after Corixa obtains approval of the merger by
its stockholders, upon a breach of any representation, warranty, covenant
or agreement on the part of Corixa set forth in the merger agreement, or
if any representation or warranty of Corixa shall have become untrue, in
either case resulting in a material adverse effect to Corixa and subject
to the ability of Corixa to correct such breach; or
- by Corixa, whether before or after Ribi obtains approval of the merger by
its stockholders, upon a breach of any representation, warranty, covenant
or agreement on the part of Ribi set forth in the merger agreement, or if
any representation or warranty of Ribi shall have become untrue, in
either case resulting in a material adverse effect to Ribi and subject to
the ability of Ribi to correct such breach.
The agreements of Corixa and Ribi relating to their respective ability to
terminate the merger agreement are complicated and not easily summarized. You
are urged to carefully read section 7 in the merger agreement entitled
"Termination, Amendment and Waiver."
EXPENSES; TERMINATION FEES
Subject to the following exceptions, whether or not the merger is
consummated, all costs and expenses incurred in connection with the merger
agreement, including among other things filing fees and the fees and expenses of
advisors, accountants, legal counsel and financial printers, shall be paid by
the party that incurred such expense. In addition, Corixa shall pay all fees and
expenses, other than attorneys', accountants' and fairness opinion fees and
expenses, incurred by Corixa and Ribi in relation to the printing and filing of
the proxy statement/prospectus and the registration statement, including
financial statements and exhibits and any amendments or supplements thereto.
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Ribi will be obligated to pay Corixa a fee of $2.5 million if the merger
agreement is terminated by either Corixa or Ribi, because, among other things:
-- Ribi's failure to include in this proxy statement/prospectus the
unanimous recommendation of Ribi's board of directors in favor of the
approval of the merger;
-- The failure of Ribi's board of directors to reaffirm its unanimous
recommendation in favor of the approval of the merger within 7 calendar
days after Corixa requests in writing that such recommendation be
reaffirmed at any time following the public announcement of a Superior
Offer;
-- Ribi's board of directors shall have approved or publicly recommended
any Superior Offer;
-- Ribi shall have entered into any letter of intent or similar document
or any agreement, contract or commitment accepting any Superior Offer;
or
-- a tender or exchange offer relating to securities of Ribi shall have
been commenced by a person or entity unaffiliated with Corixa, and Ribi
shall not have sent to its securityholders a statement disclosing that
Ribi recommends rejection of such tender or exchange offer within 10
business days after such tender or exchange offer is first published,
sent or given.
AMENDMENT; EXTENSION; WAIVER
Subject to applicable law, the merger agreement may be amended in writing
by Corixa and Ribi at any time before completion of the merger. Additionally, at
any time prior to the effective time of the merger, Corixa and Ribi may:
- extend the other's time for the performance of any of the obligations or
other acts under the merger agreement;
- waive any inaccuracies in the other's representations and warranties
contained in the merger agreement; and
- waive compliance by the other with any of the agreements or conditions
contained in the merger agreement.
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ADDITIONAL MATTERS BEING SUBMITTED TO A
VOTE OF ONLY CORIXA STOCKHOLDERS
PROPOSAL NO. 1
APPROVAL OF POTENTIAL ADDITIONAL CASTLE GATE DRAWS
In April 1999, Corixa entered into an agreement with Castle Gate, a
Northwest investment partnership focusing primarily on health care and
biomedical companies, to provide Corixa with an equity line of credit of up to
$50 million. Under this agreement, Castle Gate is obligated to provide the
equity line of credit for a period of two years. Corixa may draw down funds
under the equity line of credit at its sole option and may use such funds for
expenses associated with various technology or company acquisitions. When funds
are drawn down under the equity line of credit, Corixa will issue to Castle Gate
shares of Corixa's Series A preferred stock at a price of $1,000 per share and
warrants to purchase shares of Corixa's common stock as described below. The
equity line of credit and securities purchase agreement and the forms of
warrants issued by Corixa to Castle Gate are attached to this proxy
statement/prospectus as Appendices I, L, M, N and O.
The Series A preferred stock has an annual cumulative dividend of five
percent and may be paid, at Corixa's option, in cash or in shares of Corixa's
common stock. The Series A preferred stock may be converted into Corixa common
stock at the option of Castle Gate at any time following issuance thereof.
Shares of Series A preferred stock that have been outstanding for at least four
years will be converted into common stock automatically on the fourth
anniversary or any subsequent anniversary of the issuance of such shares in the
event Castle Gate would receive a specified return on its equity investment.
Additionally, any shares of Series A preferred stock that have not been
converted previously will be converted automatically on the seven-year
anniversary of the initial issuance of such shares of Series A preferred stock.
Subject to limited exceptions, shares of Series A preferred stock vote together
with the common stock as a single class on an as-converted basis.
Corixa has designated 50,000 shares of Series A preferred stock, which is
the maximum number of shares of Series A preferred stock issuable to Castle Gate
in connection with the equity line of credit. The rights and preferences of the
Series A preferred stock are described in Corixa's certificate of designation
with respect to the Series A preferred stock, which certificate of designation
is attached to this proxy statement/prospectus as Appendix P. The certificate of
designation has also been filed with the Delaware Secretary of State. The rights
and preferences of the Series A preferred stock are more fully described in the
section entitled "Comparison of Rights of Holders of Corixa Capital Stock and
Holders of Ribi Capital Stock" beginning on page 193. These rights and
preferences are complicated and not easily summarized, and you are urged to
carefully read the certificate of designation.
Upon execution of the Castle Gate agreement, Corixa completed an initial
draw-down under the equity line of credit of $12.5 million and a corresponding
issuance to Castle Gate of 12,500 shares of Series A preferred stock and
warrants to purchase a total of up to 1,037,137 shares of common stock. The
conversion price for the Series A preferred stock issued in the initial draw is
$8.50 per share. At its option, Corixa may elect to draw down additional funds
under the equity line of credit, provided that each draw is a minimum of $12.5
million. The conversion price for all other shares of Series A preferred stock
that may be issued as the result of optional additional draws under the equity
line of credit will be equal to the average daily closing price of Corixa's
common stock for a designated period before and after the completion of such
additional draw, provided that such conversion price cannot exceed certain
specified amounts.
Of the warrants that have been issued to Castle Gate, warrants to purchase
312,500 shares have an exercise price of $8.50 per share and warrants to
purchase 724,637 shares have an exercise price of
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$8.28 per share. Under the Castle Gate agreement, Corixa is obligated to issue
to Castle Gate additional warrants upon the occurrence of certain events. These
additional warrants will become exercisable either on a pro-rata basis upon the
consummation of additional draw(s), if any, and corresponding issuances of
Series A preferred stock by Corixa under the equity line of credit, or upon
certain specified dates, and will have exercise prices that are determined in
accordance with specified formulas at the time of their respective issuances. If
all additional warrants are issued, they will be exercisable for a maximum of:
- an additional 187,500 shares of common stock; and
- a number of shares of common stock worth up to $2,125,000.
Under the registration rights agreement entered into between Corixa and
Castle Gate in connection with the equity line of credit, Corixa has committed
to register the underlying shares of common stock for resale after certain
conversions of the Series A preferred stock. Additionally, Corixa and Castle
Gate entered into a standstill agreement in connection with the equity line of
credit, under which there are certain restrictions on Castle Gate's ability to
purchase shares of Corixa's capital stock other than in connection with the
equity line of credit. The registration rights agreement and the standstill
agreement are attached to this proxy statement/prospectus as Appendices J and K.
A condition of Corixa's agreement with Castle Gate is that Corixa must
obtain stockholder approval before making any additional draws under the equity
line of credit. Corixa is also obligated to obtain such stockholder approval
pursuant to the rules of Nasdaq if such draws could result in Corixa issuing 20%
or more of its capital stock to Castle Gate at a price per share that is less
than the greater of the book or market value of such stock.
Corixa has no present intention to make additional draws under the equity
line of credit. Additionally, Corixa currently is unable to determine whether
the issuance of any additional shares of Series A preferred stock or warrants to
purchase common stock will be at a price that is less than the greater of the
book or market value of such stock because the applicable price is determinable
only at the time Corixa issues such securities. The conversion and exercise
prices of the Series A preferred stock and common stock warrants, respectively,
that were issued to Castle Gate upon execution of the agreement did not meet
this criteria. Corixa is seeking stockholder approval for potential additional
draws under the Castle Gate equity line of credit to allow Corixa the
flexibility to make such additional draws in the future without the need to
obtain stockholder approval at such times.
REQUIRED VOTE
The approval of additional Caste Gate draws requires the affirmative vote
of the holders of a majority of Corixa's common stock represented in person or
by proxy at the meeting and entitled to vote on this proposal. Under Nasdaq
rules, holders of Corixa Series A preferred stock are not entitled to vote on
this proposal.
CORIXA'S BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE TERMS OF THE
CASTLE GATE EQUITY LINE OF CREDIT AND THE POTENTIAL FOR CORIXA TO MAKE
ADDITIONAL DRAWS THEREUNDER, AND RECOMMENDS A VOTE FOR THE APPROVAL OF POTENTIAL
ADDITIONAL CASTLE GATE DRAWS AS DESCRIBED ABOVE.
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PROPOSAL NO. 2
APPROVAL OF AMENDMENT TO THE 1994 PLAN
Corixa's stockholders are being asked to approve an amendment to the
Amended and Restated 1994 Stock Option Plan to increase the number of shares
available for issuance under the 1994 plan by 2,500,000 shares and to increase
the maximum number of shares that may be automatically added to the plan each
year pursuant to its "evergreen" provision from 500,000 shares to 750,000
shares. If these amendments are approved, the maximum aggregate number of shares
of Corixa common stock that may be issued under the 1994 plan as currently
structured is 9,016,234. Set forth below is a summary of the principal features
of the 1994 plan. The summary, however, does not purport to be a complete
description of all the provisions of the 1994 plan and may not contain all the
information that is important to you. The 1994 plan as proposed to be amended,
is attached as Appendix H to this proxy statement/prospectus, and you are urged
to carefully read it.
GENERAL
Corixa believes that long-term equity compensation in the form of stock
options is critical in order to attract qualified employees and to retain and
provide incentive to current employees, particularly in light of the
increasingly competitive environment for talented personnel. As of August 5,
1999, options to purchase 2,087,922 shares were outstanding under the 1994 plan,
350,190 shares had been issued pursuant to the exercise of options granted under
the 1994 plan and 329,164 shares remained available for future grants. The board
of directors believes that the number of shares currently available under the
1994 plan is likely to be insufficient in light of potential continued growth in
Corixa's operations, including increases in the number of employees due to this
merger, as well as acquisitions Corixa has completed since the previous
amendment and restatement of its 1994 plan, including the GenQuest and Anergen
acquisitions, as well as any acquisitions of other companies or businesses that
may be consummated by Corixa in the future. For this reason, the Board has
determined that it is in the best interests of Corixa to increase the number of
shares available for issuance under the 1994 plan by 2,500,000 shares to an
aggregate of 5,266,234 shares and to increase the annual maximum automatic
increase in the number of shares reserved for issuance thereunder from 500,000
to 750,000. As a result of these amendments, the maximum aggregate number of
shares of common stock that may be issued under the 1994 plan as currently
structured is 9,016,234.
DESCRIPTION OF THE STOCK OPTION PLAN
For a description of the terms of the 1994 plan, see the section entitled
"Management of Corixa -- Stock Option and Incentive Plans" beginning on page
167.
REQUIRED VOTE
The approval of the proposed amendment to the 1994 plan requires the
affirmative vote of the holders of a majority of Corixa's common stock and
Series A preferred stock represented in person or by proxy at the meeting and
entitled to vote on this proposal, voting together as a single class on an
as-converted basis.
CORIXA'S BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE AMENDMENT TO THE
1994 PLAN AS DESCRIBED ABOVE AND RECOMMENDS THAT YOU VOTE IN FAVOR THEREOF.
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RIBI MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Since its inception in 1981, Ribi has been engaged primarily in the
research and development of immunostimulants for use in preventing and treating
human diseases. To date Ribi has received limited revenues from commercial sales
and sales of clinical supplies. Ribi has incurred net losses in each year since
its inception and expects to incur additional losses for at least the next year,
and probably longer. At June 30, 1999 Ribi's accumulated deficit was
approximately $53,168,000.
Ribi's results of operations can vary significantly from quarter to quarter
and depend, among other factors, on costs related to the progress of clinical
trials conducted by Ribi and, to a lesser extent, on revenues and costs
associated with manufacturing. To date research and development expenses,
together with manufacturing costs, have exceeded product and other revenues in
all periods.
Ribi is not able to estimate with certainty the amount of cash and working
capital which may be needed for operations. Such requirements typically vary
depending upon the results of basic research and clinical trials, the time and
expense required for governmental approval of products, and competitive and
technical developments, most of which are beyond management's control. There is
no assurance that Ribi will be able to obtain the necessary funding in
sufficient amounts or at the appropriate time for its planned activities. In the
event Ribi may require additional funding, it might not be able to proceed as
rapidly as it would like, if at all, with the development and commercialization
of its products, which would have a material adverse effect on its future
financial condition and results of operations.
RESULTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
Revenues. Ribi has received limited revenues from commercial sales and
sales of clinical supplies. The balance of its revenues has been from contracts
and licenses and investment income earned on cash balances and investments. Ribi
anticipates that its revenues from operations, which increased from
approximately $4.6 million in 1996 to approximately $6.5 million in 1997 and
decreased slightly to approximately $6.1 million in 1998, will continue to be
limited for the next year, and probably longer.
Fees from licenses and contracts increased from approximately $2.0 million
in 1996 to approximately $2.8 million in 1997 and remained level at
approximately $2.8 million in 1998. In January 1997 a fifth agreement was signed
with SmithKline Beecham granting use of Ribi's adjuvants in various vaccines
being developed by SmithKline Beecham. This most recent agreement, effective as
of December 31, 1996, grants SmithKline Beecham an exclusive license to use
Ribi's adjuvants in a human papilloma virus vaccine, a co-exclusive license for
a tuberculosis vaccine and a nonexclusive license to use Ribi's adjuvants in the
development of additional infectious disease vaccines as well as other vaccines.
In addition to annual license fees, Ribi will receive transfer payments for
clinical and commercial quantities of adjuvant and royalties on any commercial
sales of vaccines incorporating Ribi's adjuvant. To date there have been no
commercial sales of adjuvants pursuant to licensing agreements.
Investment income decreased from approximately $1.0 million in 1996 to
$942,000 in 1997 and $746,000 in 1998. The year-to-year reduction in investment
income has been due substantially to reductions in the amount of funds available
for investment during those periods. The average interest rate in the investment
portfolio increased from approximately 6.03% at December 31, 1996, to 6.14% at
December 31, 1997, and decreased to 5.35% at December 31, 1998. Additionally,
losses, net of gains, realized from sales of investments were approximately
$11,000 in 1997 and $20,000 in 1998.
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Purchases and Production Expenses. Purchases and production costs increased
from $988,000 in 1996 to approximately $1.3 million in 1997 and to $1.8 million
in 1998. Such costs, as a percentage of sales, declined from 1996 to 1997 as the
volume of products manufactured in the manufacturing facility increased. The
costs increased, as a percentage of sales, from 1997 to 1998. In 1998 the
manufacturing plant underwent additional validation testing necessary as part of
the Melacine commercial licensing activities, resulting in a decrease in plant
throughput for the year.
Research and Development Expenses. Ribi incurred research and development
expenses of approximately $6.2 million, $8.2 million and $7.9 million in 1996,
1997 and 1998, respectively. The increase in 1997 principally reflects, in
addition to ongoing preclinical and clinical programs for Ribi's products under
development, costs of preparing and filing commercial license applications.
Research and development expenses consisted primarily of salaries, contract
consulting costs and laboratory supplies. Labor costs decreased from
approximately 43% of total research and development costs in 1996 to 36% in 1997
and increased to 41% in 1998. Supply costs have ranged from 21% to 23% of total
research and development expenses throughout the three-year period. Contract
consulting costs increased from approximately 27% of total research and
development expenses in 1996 to 36% in 1997 and decreased to 29% in 1998. The
year-to-year variance in expense can be attributed to the level of activity in
clinical, preclinical and commercial licensing projects. Ribi expects research
and development expenses to be lower from 1998 to 1999. While Ribi plans to
continue its preclinical development programs and complete patient accrual in
its Phase 3 clinical trial testing Melacine administered in conjunction with
interferon alfa-2b to treat patients with late-stage melanoma, much of the work
for the preparation of a commercial licensing application for Melacine in the
United States has been completed. Lower research and development expenses are
dependent, among other things, on the rate at which patients are attracted to
Ribi's clinical trials, the results experienced in trials and other research
activities, and the acceptance of regulatory filings by various regulatory
agencies.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased from approximately $3.0 million in 1996 to
$3.4 million in 1997 to $4.8 million in 1998. During this three-year period,
labor costs increased from approximately $1.6 million in 1996 to $1.7 million in
1997 and to $1.8 million in 1998. In addition to labor costs, the increase in
costs in 1997 is mainly attributable to greater investor relations efforts,
higher maintenance costs and added depreciation. In 1998 the increase in costs,
other than labor costs, is primarily attributable to costs associated with
litigation and the landfill located in Ravalli County, Montana. Additionally,
other increases pertain to Year 2000 assessment and remediation expenses,
depreciation expense and maintenance costs. Ribi allocates part of its
administrative and depreciation costs, which are directly related to
manufacturing, to the cost of producing products for sale and for use in
clinical trials. Such costs allocated in each year 1996, 1997 and 1998 were
$808,000, $837,000 and $907,000, respectively.
Net Loss. Ribi's net loss increased from approximately $5.6 million in 1996
to $6.4 million in 1997 and to $7.6 million in 1998. Its net loss per share over
the same period was $0.30 per share in 1996, $0.32 per share in 1997 and $0.38
per share in 1998. The weighted average number of shares outstanding increased
approximately 6% from 1996 to 1997. The increase reflects shares issued in a
sale of stock and warrants to SmithKline Beecham in January 1997 and the
exercise of unrelated warrants in July 1997.
SIX MONTHS ENDED JUNE 30, 1999 AND JUNE 30, 1998
Ribi incurred a smaller net loss in the second quarter and first six months
of 1999 than in the same periods in 1998. The smaller net loss resulted from
level total revenues and lower costs and expenses to date in 1999 than in the
comparable periods in 1998.
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Sales were up 11% in the second quarter of 1999 compared to the second
quarter of 1998 and down 8% in the first half of 1999 compared to the same
period in 1998. Sales vary from period to period depending upon the clinical
trial adjuvant needs of Ribi's corporate partners who are developing vaccines.
Revenues from contracts and licenses were down slightly for the second quarter
but up 9% for the first half when compared to the same periods in 1998. The
increase in the first half reflects primarily the receipt of minimum royalties
under one of Ribi's adjuvant license agreements.
Purchases and production costs decreased slightly in the second quarter of
1999 compared to the second quarter of 1998, while at the same time sales were
up 11%. The resulting improved gross profit is attributed primarily to greater
plant throughput in the second quarter of 1999. Conversely, purchases and
production costs were slightly higher in the first half of 1999 than in the
first half of 1998 on slightly lower sales. Fluctuations in the relationship of
purchases and production costs to sales has to date been primarily a function of
the level of throughput of Ribi's manufacturing plant. Plant throughput varies
with customer product requirements and validation testing of Ribi's
manufacturing plant and processes.
Research and development expenses decreased 20% in the second quarter of
1999 compared to the second quarter of 1998 and decreased 15% in the first six
months of 1999 compared to the first six months of 1998. Most of the decrease in
the second quarter and first six months of 1999 over the same periods in 1998
are outside contract costs incurred in 1998 associated with the preparation and
filing of commercial license applications for Melacine in the treatment of Stage
IV (late stage) melanoma. An application to market Melacine in Canada was filed
in the third quarter of 1997 and in Europe in the first quarter of 1998. Work
has been ongoing to satisfy FDA requirements to file an application to market
Melacine in the United States. Ribi has answered all questions from the Canadian
Health Protection Branch and is awaiting a final decision on its Canadian
application. The application filed in Europe has been withdrawn leaving open the
possibility of refiling with additional data from ongoing Phase 3 clinical
trials scheduled for completion later this year. A meeting with the FDA has been
requested to review Ribi's progress on product potency and consistency
verification tests. This FDA meeting along with an FDA review of Ribi's
independently verified clinical data may lead to the completion and filing of a
product license application in the United States. Additionally, Ribi has
continued its preclinical development of its new synthetic immune system
modulators, including its drug for protection against cardiac
ischemia-reperfusion injury. Ribi expects total research and development
expenses for the year 1999 to be lower than those expenses in 1998 as much of
the work for commercial license applications for Melacine was completed in 1997
and 1998. It is possible that completion of the commercial license application
to be filed with the FDA will require more time than expected or that the FDA
will not accept the filing for detailed review. It is also possible that neither
the Melacine commercial license application pending in Canada nor the one to be
filed with the FDA will be approved, or that planned clinical trials of
synthetic immune system modulators will not proceed as expected.
Selling, general and administrative expenses were down 5% in both the
second quarter and first six months of 1999 compared to those same periods in
1998. During the second quarter of 1999 compared to the second quarter of 1998,
the decrease relates primarily to lower costs for salaries, investor relations
and support for regulatory filings, which were offset in part by merger costs
and greater depreciation expenses. For the first six months of 1999 compared to
the first six months of 1998, the reduction is attributable primarily to lower
costs for salaries, investor relations and recruiting, offset in part by merger
costs and higher depreciation and Year 2000 expenses. In 1999 external merger
costs through June 30 total approximately $100,000. Ribi allocates part of its
administrative and depreciation costs, which are directly related to
manufacturing, to the cost of producing products for sale and for use in
clinical trials. Such costs allocated in the second quarters
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of 1999 and 1998 were $244,000 and $233,000, respectively. The amount allocated
in the first six month periods of 1999 and 1998 were $491,000 and $434,000,
respectively.
Financial Condition
During the first six months of 1999 Ribi used $1,769,000 in operations
which was 72% more than the amount used in the first six months of 1998. In 1998
Ribi received in cash more license fee revenues than in the first six months of
1999, which more than offset the decrease in net loss where license fees are
recognized on an accrual basis. These timing differences are reflected in the
caption "Changes in operating assets and liabilities." Ribi expects cash flows
used in operations for the year 1999 to be less than those in the year 1998 as
expenses will likely continue to be lower in 1999 than in 1998. Projected cash
flows are dependent upon Ribi receiving revenues that are anticipated. Projected
cash flows are also dependent upon Ribi preparing the commercial filings and
conducting the research and clinical trials that are now planned.
In June 1999 Ribi announced that it had reached a definitive agreement with
Corixa Corporation, subject to shareholder approval, whereby Corixa will acquire
all of the outstanding stock of Ribi in an exchange of stock.
LIQUIDITY AND CAPITAL RESOURCES
Ribi has financed its operations primarily from the issuance and sale of
equity securities, limited sales of products, interest earned on investments,
and payments under contract research and license agreements. The financing
sources have, to date, enabled Ribi to maintain adequate liquidity. Cash, cash
equivalents and investments totaled approximately $13.2 million at December 31,
1998, as compared to approximately $13.4 million at December 31, 1997.
The principal uses of cash during 1998 were approximately $5.0 million for
operations, approximately $1.7 million for deposits and other assets and
approximately $1.3 million for plant and equipment. Ribi used approximately 5%
less cash in operations in 1998 than in 1997, reflecting on a cash basis
increased revenues. Increased cash basis revenues include cash collected under a
marketing license agreement, which may have to be refunded if certain product
approval goals are not met. Cash requirements for operating activities in 1999
are expected to decrease below 1998 levels as work is completed for clinical
trials and commercial licensing applications. Additionally, revenues are
expected to increase slightly in 1999. Projected cash requirements are dependent
upon Ribi receiving the revenues that are anticipated and conducting the
research, particularly the clinical trials and commercial regulatory filings,
that are projected. It is possible that sales could be lower because customers
may not order as much material as expected. It is also possible that patient
accrual within planned clinical trials will be slower than anticipated or that
the results of the trials or other research will not be as expected.
In 1998, Ribi obtained additional working capital from the sale of
convertible preferred stock for net proceeds of approximately $7.7 million. In
1997, Ribi's primary sources of cash were approximately $4.0 million from the
sale of 1,103,448 shares of common stock to SmithKline Beecham and $963,000 from
the exercise of outstanding warrants and stock options. Ribi has outstanding
warrants to purchase 500,000 shares at $5.00 per share that were issued to
SmithKline Beecham in 1997 as part of its stock purchase agreement. These
warrants expire if not exercised by January 1, 2000.
Ribi will require substantial additional funds to continue its research and
development programs and to commercialize its products under development. Future
capital requirements will depend upon a number of factors, including the rate of
expenditure on and the progress of Ribi's research and
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development programs, the time and cost to obtain regulatory approvals, and
demand for products based on Ribi's technology. Absent the impact of the merger,
Ribi believes that presently its available cash, cash equivalents and
investments, together with funds from licensing agreements and product sales
should be sufficient to meet its capital requirements into 2002. Ribi's estimate
of cash requirements is based on the receipt of projected revenues under
existing agreements combined with an anticipated reduction of expenses from
current levels as current research programs are completed. Ribi also assumes
that its outstanding preferred stock will be converted into Ribi common stock
rather than redeemed for cash.
During the first six months of 1999, Ribi used $1,769,000 in operations
compared to cash used by operations during the first six months of 1998 of
$1,030,000. The variance mainly reflects changes in operating assets and
liabilities connected to differences between the timing of cash and accrual for
the recognition of license fee revenues. Ribi expects cash flows used in
operations for 1999 to be less than those in 1998 as expenses will likely
continue to be lower in 1999 than in 1998. Projected cash flows are dependent
upon Ribi receiving revenues that are anticipated and preparing the commercial
filings and conducting the research and clinical trials that are now planned.
YEAR 2000 READINESS DISCLOSURE
In computer systems and applications developed in the 1970s and 1980s,
years were often stored in a 2-digit rather than 4-digit format to save
expensive computer storage and processing space. These systems correctly assumed
the 2-digit year in data storage was preceded by the digits "19." At Year 2000 a
2-digit date of "00" may not be interpreted correctly by these systems, which
could lead to incorrect or inadequate results or equipment failure in cases
where computer chips regulate equipment operation. Ribi established a committee,
which made a preliminary assessment, and hired an outside firm, which determined
in reasonable detail Ribi's exposure to the "Year 2000" problem. Systems that
potentially required remediation and testing were prioritized. Remediation of
identified systems is complete. Ribi is surveying critical vendors to determine
their level of compliance, with a targeted completion date of September 1, 1999.
Depending upon the results of the vendor survey, appropriate contingency plans
will be developed prior to January 1, 2000. Ribi expects to continue to incur
both internal staffing costs, as well as consulting and other expenses related
to these issues. These costs will be expensed as incurred. Ribi is not yet able
to estimate with certainty the potential costs associated with the Year 2000
problem. At June 30, 1999 approximately $190,000 has been spent for assessment
and remediation. Additionally, approximately $200,000 has been spent for the
acquisition and implementation of software for tracking and managing
manufacturing and for new accounting systems that, under other circumstances,
would have been purchased at a later time. Ribi has allocated additional funds
of approximately $80,000 to complete its identification, necessary remediation
and contingency planning. Although Ribi is working to solve these issues in a
timely manner, there can be no assurance that all of the Year 2000 problems will
be resolved before the end of 1999 or that all of Ribi's vendors and customers
will be Year 2000 compliant. At the present time Ribi does not expect Year 2000
issues to have a major impact on its operation. Most of its raw materials are
fairly common and are available from several different suppliers. However, Ribi
is developing contingency plans to control the impact of an unforeseen failure.
Depending upon the nature and length of a possible Year 2000 compliance failure
by Ribi and/or its vendors, the result could be a minor delay in the production
of one or more of Ribi's products with little, if any, financial impact; or, in
a worst case scenario, for example, in the event of a long-term disruption of
electrical and/or natural gas service, the result could be partial or complete
cessation of operations of Ribi pending restoration of service. Depending upon
the event, it could impact the ability of Ribi to produce product in response to
potential orders from its customers and otherwise effect the normal day-to-day
operations of Ribi, which could have a material adverse financial effect upon
Ribi.
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INFORMATION CONCERNING CORIXA
Corixa is a biotechnology company committed to treating and preventing
diseases by understanding and directing the immune system. Corixa approaches
this goal by applying its expertise in immunology and its proprietary technology
platforms to the discovery and development of vaccine and other antigen-based
products. Corixa is currently focused on products such as:
- T cell vaccines for certain cancers and infectious diseases;
- immunotherapeutic products for the treatment of certain autoimmune
diseases; and
- monoclonal antibody-based therapeutics and diagnostics.
Corixa's strategy is to partner its technology with numerous developers and
marketers of pharmaceutical and diagnostic products with the goal of making its
potential products available to patients around the world.
Corixa's principal offices are located in Seattle, Washington. Corixa was
incorporated in Delaware in September 1994.
Corixa's approach includes discovering and developing of a new class of
therapeutic and prophylactic products known as T cell vaccines. Immunologists
and molecular biologists have recently identified previously unknown molecular
signals that enable specialized cells of the immune system known as T cells to
recognize pathogen and/or tumor-associated proteins called antigens. Corixa
designs its vaccine products to exploit these recent developments by using each
of the three components of its core technology platform:
- proprietary antigens;
- proprietary microsphere delivery systems; and
- novel proprietary adjuvants;
to force the immune system to recognize antigens in such a way that potent T
cell responses result. Most of Corixa's efforts focus on the discovery of novel
and disease-specific antigens because Corixa believes that these antigens will
be the key active component(s) of future therapeutic and prophylactic vaccine
products. Corixa or its corporate partners may encapsulate these antigens in a
delivery system of biodegradable and biocompatible microspheres and combine them
with a proprietary adjuvant capable of non-specifically enhancing, or boosting,
an immune response.
In addition to its T cell vaccine programs, Corixa is engaged in the
discovery and development of other immunotherapeutic products for the treatment
of cancer, certain infectious diseases and certain autoimmune diseases. Corixa
believes that these products may result from Corixa's core efforts in antigen
and adjuvant discovery.
Corixa believes that it may have identified potential immune system
modulators through its adjuvant research program. Corixa is developing one of
these potential immune system modulators, PVAC(TM), as a possible psoriasis
therapeutic. Through its acquisition of Anergen, Corixa acquired Anergen's
AnergiX(R) and AnervaX(R) technologies. AnergiX platform-based products are in
or have completed Phase I clinical trials for the treatment of rheumatoid
arthritis and multiple sclerosis. AnervaX for rheumatoid arthritis has completed
an initial Phase II clinical trial.
In addition, monoclonal antibodies directed against antigens discovered by
Corixa's scientists may be useful in the treatment of cancer and certain
infectious diseases. Consequently, during the
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course of 1998, Corixa added internal scientific expertise to augment its
acquisition of GenQuest and its monoclonal antibody collaboration with ImmGenics
Pharmaceuticals, Inc.
SCIENTIFIC BACKGROUND
VACCINES
Many prophylactic vaccine products are commercially available today for the
prevention of infectious diseases caused by pathogens such as bacteria, viruses
and parasites. Most current vaccines trigger protective antibody responses that
can destroy an invading pathogen if the patient is later exposed to the
pathogen. Antibodies are protein-based products of specialized immune system
cells called B lymphocytes, or B cells. Antibodies recognize and attach to a
pathogen's antigens and trigger the non-specific elimination of the pathogen.
Antigens are components of the invading pathogen that are recognized by cells of
the immune system. Today's vaccines are made of either whole organisms that
contain antigens or the antigens themselves. These antigens can be peptides,
proteins or carbohydrates. Typically these vaccines are formulated by combining
antigens with an adjuvant, an immune system booster.
The antibody responses triggered by currently available vaccines cannot
eliminate tumors or certain infectious diseases, including tuberculosis. Corixa
believes that an effective immune response against these diseases requires the
action of pathogen- or tumor-reactive T lymphocytes, or T cells. In particular,
Corixa believes that specialized T cells known as cytotoxic T lymphocytes, or
CTL, that have the ability to recognize and kill pathogen-infected tissue or
tumor cells, must be activated.
The body's immune response is a complex series of events that begins when
antigens are processed by a specialized immune system cell called an antigen
presenting cell, or APC. Antigens are processed by APCs through two different
pathways, the Class I and Class II Pathways. The antibody response produced by
today's vaccines results from antigen processing only through the Class II
Pathway. The Class II Pathway breaks down antigens into specific peptides that
are then presented on the surface of an APC by major histocompatibility, or MHC,
Class II proteins. Antigen presentation by MHC Class II proteins results in
activation of CD4 positive helper T cells. These helper cells produce immune
system hormones called cytokines that "help" generate various components of both
cellular and antibody-based immune responses. Depending on the specific
cytokines that helper T cells produce, the helper T cell response is classified
as either Th1 or Th2. Th1 responses help generate and activate CTL and lead to
antibody production by B cells. In this way, a Th1 response may lead to pathogen
elimination.
Th1-induced antibody production can be sufficient to prevent or eliminate
pathogen infection in the case of certain diseases. However, antibody responses
alone are not sufficient in other diseases, such as cancer. In these diseases, a
cellular immune response that includes generating CTL is necessary to achieve
protective immunity. Although the Class II Pathway can lead to Th1 responses
helpful in generating CTL, CTL activation cannot occur without antigen
presentation through the Class I Pathway. The Class I Pathway breaks down
antigens into specific peptides that are then presented on the surface of an APC
by MHC Class I proteins. Antigen presentation by MHC Class I proteins results in
CTL generation and activation. Corixa believes that CTL are necessary to
eliminate tumors and various pathogens that antibodies alone cannot destroy.
Corixa has shown in preclinical studies that CTL can eliminate either
tumors or certain pathogens in situations where antibody responses fail. These
CTL not only can prevent disease if they are activated before pathogen infection
but also can eliminate disease or a tumor once the infection has taken place or,
in the case of cancer, once a tumor has developed.
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Corixa believes vaccines that activate specific T cell responses can form
the basis for a new class of products that may be used to either treat or
prevent disease. Until recently, scientists lacked sufficient understanding to
design vaccines capable of promoting T cell immune reactivity against tumors or
certain pathogens. Using recent advances in understanding molecular mechanisms
that control how antigens are normally presented to T cells, Corixa is designing
vaccines that incorporate disease-specific antigens into biodegradable and
biocompatible microspheres. Corixa believes that these vaccines may give rise to
potent CTL responses. Through its antigen discovery program, Corixa has
identified antigens from many tumor types and from infectious disease pathogens
for which no vaccines currently exist. In addition, Corixa has discovered a
novel adjuvant that Corixa has shown in preclinical studies significantly
improves the ability of microsphere-formulated vaccines to stimulate and
activate Th1 helper T cells and CTL.
ADJUVANTS
Adjuvants are substances that are routinely combined with vaccines to boost
immune responses directed against the antigens in these vaccines. Because
today's vaccines are formulated to generate antibody responses to injected
antigens, commercially available adjuvants have been developed largely to
enhance these antibody responses. Today there are no adjuvants that have been
approved for use in humans that increase helper T cell and CTL responses.
Since its inception, Corixa has been studying new adjuvants for its
vaccines. Today, the only FDA-approved adjuvant for use with human vaccines is
aluminum hydroxide, or alum. Although alum is useful in boosting antibody
responses to vaccine antigens, it has no effect on the type of immune responses
that Corixa's T cell vaccines are meant to generate. As a result, Corixa has
been interested in discovering new adjuvants that could be used to boost T cell
immune responses after vaccine administration. Based on the early work of one of
its scientific founders, Corixa has been particularly interested in the products
of microorganisms that can infect APCs as a potential source for such new
adjuvants. One of Corixa's proprietary adjuvants, LeIF, is a recombinant protein
that has significant T cell stimulatory activity and is derived from an
intracellular parasite called Leishmania. Corixa is also studying the adjuvant
properties of the intracellular microorganism, Mycobacterium vaccae, or M.
vaccae.
AUTOIMMUNE DISEASE TECHNOLOGIES
Autoimmune diseases include rheumatoid arthritis, multiple sclerosis,
myasthenia gravis and diabetes. The T cells in the immune system normally
regulate the identification and destruction of foreign substances and malignant
cells. Autoimmune diseases are caused by the abnormal destruction of healthy
body tissues when T cells and antibodies react to normal tissue. In these
diseases, otherwise normal antigens, or auto-antigens, serve as triggers for an
autoimmune response. Corixa is developing technology acquired in the Anergen
acquisition that may interrupt the chain of events involved in autoimmune
disease. In contrast to today's therapies for these diseases, which often
suppress the overall immune system, Corixa believes that these technologies may
provide a means to target the disease process while leaving the normal immune
system unaffected.
CORIXA'S STRATEGY
Corixa's goal is to be a leader in the discovery and commercialization of
products useful in preventing, treating or diagnosing cancer and certain
infectious and autoimmune diseases. Corixa dedicates its resources to
discovering vaccines and other antigen-based products and establishing corporate
partnerships early in the development process for all aspects of product
development and commercialization. Corixa believes that this research and
partner-driven approach creates significant
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scientific, operational and financial advantages for Corixa. Corixa also
believes this approach accelerates the commercial development of potential new
therapeutic and prophylactic T cell vaccines and other immunotherapeutic
products.
The principal elements of Corixa's strategy are as follows:
Integrate Corixa's Core Technologies. Corixa believes that providing
effective vaccines for cancers and certain infectious and autoimmune diseases
may require integrating its core antigen, microsphere and adjuvant technologies.
Corixa believes that its three-component approach is unique among companies
currently developing vaccines. Corixa also believes that it has developed or
acquired proprietary rights in each of these technologies. Corixa further
believes that integrating one or more of its delivery systems, adjuvants or
antigens with certain other companies' proprietary technologies may improve such
companies' existing or developmental-stage vaccine products.
Establish Corporate Partnerships at an Early Stage. Corixa intends to
enter into corporate partnerships early in the development process. For those
potential products that show promise in the preclinical or clinical stage,
Corixa usually will seek a corporate partner no later than before initiating
Phase II clinical trials. Corixa believes that this active corporate partnering
strategy provides three distinct advantages:
- it permits Corixa to focus on its fundamental strength in
immunotherapeutic product discovery;
- it capitalizes on the corporate partner's strengths in product
development, manufacturing and commercialization; and
- it significantly reduces Corixa's financing requirements.
When entering into such corporate partnering relationships, Corixa seeks to
cover its research and development expenses through research funding, milestone
payments and option, technology or license fees. Corixa also seeks to retain
significant downstream participation in product sales through either
profit-sharing or product royalties paid on annual net sales.
Partner Discrete Core Technologies and Non-Vaccine Products. Because
Corixa believes that other companies' immunotherapeutic products may be enhanced
by components available from Corixa, Corixa seeks to establish corporate
partnerships with major commercial entities for each of its proprietary core
technologies. For example, Corixa may partner its proprietary antigens with
companies that have developed their own delivery and adjuvant technologies.
Similarly, Corixa believes that it can partner adjuvant products with a variety
of vaccine companies that may have vaccine antigens but lack an appropriate
adjuvant. Corixa also believes it can partner its antigen delivery technology
with companies whose vaccines currently lack optimal T cell immune stimulation.
Corixa further believes that antigens it discovers may in some cases lead to the
development of useful non-vaccine products. These products may include
antibody-based therapeutics or in-vivo imaging agents, small molecule drugs
derived from the use of novel antigens as drug targets, and diagnostics. For
some of its potential products, Corixa will seek to establish territory-specific
exclusive collaborative relationships with a number of pharmaceutical or
biopharmaceutical firms. For the use of antigens as diagnostics, Corixa intends
to establish non-exclusive collaborations with a variety of diagnostic companies
to generate near-term royalty or other revenues.
Selectively Acquire or In-License Complementary Technology. In addition to
developing technology internally, Corixa has, since its inception, in-licensed
several significant product opportunities. Corixa intends to continue to pursue
such in-licensing efforts, and also intends to continue to evaluate selected
acquisitions of companies with complementary technologies. Corixa
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believes that its existing technology and product base may be expanded by such
efforts, and that such acquisitions may lead to additional partnering
opportunities. Such partnered programs may also benefit from existing Corixa
technology, such as delivery systems and/or adjuvants.
CORIXA'S CORE TECHNOLOGY PLATFORMS
Corixa seeks to discover and develop products that consist in whole or in
part of its three proprietary core technologies:
- novel and disease-specific antigens that are essential to elicit
appropriate T cell responses;
- microsphere antigen delivery systems that specifically activate helper T
cells and CTL; and
- potent, novel adjuvants that specifically enhance helper T cell and CTL
responses.
A majority of Corixa's resources are currently focused on discovering novel
and disease-specific antigens. These antigens may then serve to drive discovery
of immunotherapeutic and diagnostic products and to provide the active component
of Corixa's T cell vaccines.
ANTIGEN DISCOVERY
Corixa's ability to discover numerous antigens allows it to select those
that will work most effectively in a given vaccine. In making this selection,
Corixa focuses on antigens that are recognized by the greatest percentage of
individuals, stimulate the strongest immune response and are expressed by the
greatest percentage of pathogen strains or tumor types. In connection with
autoimmune diseases, Corixa focuses on discovering otherwise normal antigens, or
auto-antigens, that in the disease state serve as triggers for an autoimmune
response. To capitalize on its antigen discovery ability, a majority of Corixa's
scientific personnel are devoted to antigen discovery. Corixa uses discovery
approaches and technologies that include:
- tumor tissue procurement and human tumor propagation in severe combined
immune deficient, or SCID, mice;
- analysis of differential gene expression;
- cDNA subtraction;
- expression cloning;
- pathogen protein purification;
- antigenic peptide stripping; and
- immunological characterization of candidate tumor vaccine antigens.
Corixa's discovery approach also includes correlating the antigens that
Corixa discovers with patient immune responses. In this way, Corixa focuses on
identification of proteins that are recognized by the human immune system and
are therefore antigenic.
The culmination of Corixa's antigen discovery research is the isolation of
pathogen, tumor or auto-antigen genes that encode those antigens with
significant potential to be effective components of vaccines or other
immunotherapeutic products. Such antigens may be in the form of either
recombinant proteins or biosynthetically produced peptides. Multiple pathogen
and/or tumor gene and protein sequences have been discovered by Corixa. Corixa
has filed numerous patent applications seeking both composition of matter and/or
vaccine and diagnostic method of use claims to antigens
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discovered as a result of Corixa's research in breast, prostate, colon, ovarian
and lung cancer and in tuberculosis, chlamydia, Chagas' disease and
leishmaniasis. Corixa has also filed a number of applications for the potential
use of its antigens or adjuvant-based technology for use in the diagnosis,
prevention or treatment of certain autoimmune diseases.
Corixa can not assure you that patents will issue from any of the pending
applications. Corixa also can not assure you that if any patents do issue, such
patents will not be challenged, invalidated or circumvented by third parties, or
that the rights granted under any issued patents will provide adequate
proprietary protection or competitive advantage to Corixa. Corixa's three core
technologies are at an early stage of development. Corixa can not assure you
that any of these technologies will prove to be safe or effective. Corixa does
not expect any products that may result from Corixa's research and development
programs to be commercially available for a number of years, if at all.
MICROSPHERE ANTIGEN DELIVERY SYSTEMS
Corixa has demonstrated in preclinical studies that potent antibody and CTL
responses can be generated against antigens using Corixa's proprietary
microsphere antigen delivery system. Corixa has determined that CTL generated as
a result of microsphere-mediated antigen presentation can kill antigen positive
cells either in vitro (in test tubes) or in preclinical studies of immune
function. For example, injection of microsphere-encapsulated tumor antigens in
animals generated an immune response that prevented growth of antigen-positive
tumors when such animals were later challenged with a lethal dose of tumor
cells. The immune cells responsible for this microsphere-mediated tumor
rejection were shown to be antigen specific CTL. Immunization with naked (not
encapsulated) antigens neither activated CTL responses nor resulted in
protective immunity in animals later challenged in the same manner.
Corixa believes that microsphere-mediated antigen delivery may be superior
in terms of versatility, stability, safety and cost to other approaches used to
target antigen presentation pathways. These other approaches include, for
example, the use of various gene therapies or liposome or recombinant
protein-lipid formulations. Only APCs take up microspheres of the particular
sizes used by Corixa. This is not true for formulations containing genes or
lipids, where significant amounts of the delivered product are taken up by
non-APCs or lost in the blood stream or elsewhere in the body. Microsphere
delivery of antigens may also avoid certain safety issues associated with gene
therapy. Corixa uses microspheres that are produced from synthetic co-polymers
approved by the FDA. In addition, there is no immune response to the microsphere
itself, in contrast to the immune response that can occur to non-antigen
proteins encoded by viral or bacterial vectors used in gene therapy.
Additionally, a single microsphere formulation may be useful for many vaccine
products. Such a formulation would avoid the repetitive costs associated with
constructing, manufacturing and testing different gene therapy vectors or
recombinant protein-lipid formulations for different antigens or tissue targets.
Furthermore, Corixa believes that its microsphere vaccine preparations will be
stable as freeze-dried formulations, resulting in multi-year shelf-life. Corixa
announced in February 1999 that it had initiated a Phase I clinical trial of a
Her-2/neu vaccine for breast and ovarian cancer combining a Her-2/neu antigen,
an antigen that is over-expressed on the surface of a significant percentage of
breast and ovarian carcinomas, and Corixa's microsphere formulation.
Corixa has an exclusive, worldwide license to a number of patents and
pending patent applications from the Southern Research Institute covering the
composition, use and production of microspheres for augmenting immune responses.
In addition, Corixa has an exclusive, worldwide license from the Dana-Farber
Cancer Institute to patent applications claiming the composition and use of
microspheres of a particular size range for the purpose of activating CTL.
Corixa is also internally developing additional microsphere technology.
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ADJUVANTS
Corixa is engaged in research and development related to a novel vaccine
adjuvant. Corixa has identified a protein, known as LeIF, that functions as a
potent adjuvant for enhancing immune responses directed at T cell vaccine
antigens. LeIF is a protein produced by the parasite Leishmania, which is
carried by sand flies and causes both a skin and visceral disease known as
Leishmaniasis. In cell culture studies conducted by Corixa, LeIF has been found
to have potent immune system stimulatory effects, both for cells from
individuals who have been exposed to the parasite and from individuals who have
not.
Preclinical studies conducted by Corixa indicate that LeIF is a unique
protein stimulator of the Th1 response. Additional research conducted by Corixa
has confirmed that the cell within the immune system that responds to LeIF is an
APC. APCs stimulated with LeIF produce large quantities of a certain cytokine
and a certain cell surface protein, both of which are molecular signals required
for the generation of potent CTL responses. Corixa has conducted further
research to determine whether LeIF can act as an adjuvant for T cell vaccines.
In preclinical studies, use of microsphere-encapsulated tumor antigens together
with LeIF resulted in tumor regression when administered to animals with
established tumors. In all cases in these studies, tumor regression was shown to
correlate with the in vivo (in a living organism) development of tumor-antigen
reactive CTL. This Corixa research suggests that immunity induced by the
combination of microsphere-encapsulated antigens and LeIF is both
antigen-specific and long-lived. Treated animals were still able to reject
lethal doses of antigen-positive tumors when challenged more than four months
after therapy.
Corixa believes that the use of LeIF as an adjuvant may greatly enhance the
efficacy of its T cell vaccines. Corixa also believes that LeIF, together with
microsphere-encapsulation technology, may be useful in developing therapeutic
products from current prophylactic vaccines because Corixa's technologies may be
able to promote potent Th1 and CTL responses when used in these products. Corixa
has granted licenses to or options to license its LeIF technology to several
corporate partners, including SmithKline Beecham, the pharmaceutical division of
Japan Tobacco, Zambon Group spa and Heska Corporation.
In connection with Corixa's adjuvant discovery and development program,
Corixa, in collaboration with Genesis, has been investigating immune system
modulating activities associated with another intracellular microbe, M. vaccae.
M. vaccae is a soil-borne microorganism that is not pathogenic to people. Corixa
has determined that M. vaccae, as well as protein derivatives from M. vaccae,
have considerable adjuvant activity. Corixa believes that M. vaccae and these
protein derivatives may be useful as vaccine adjuvants and may also be capable
of altering immune responses in a manner useful in the treatment of autoimmune
diseases.
ACQUIRED AND IN-LICENSED TECHNOLOGY
Through its acquisitions of GenQuest and Anergen and its collaboration with
ImmGenics, Corixa believes that it has added a number of product development
opportunities, broadly categorized as therapeutics and diagnostics, which are
summarized below:
THERAPEUTICS
Autoimmune Disease Vaccines. The AnergiX(R) and AnervaX(TM) technologies,
acquired from Anergen, offer the potential to treat a number of major autoimmune
diseases through two separate technology platforms. AnergiX technology may
enable the selective destruction or inactivation of T cells involved in
autoimmune disease. AnervaX offers a means to stimulate the immune system to
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produce antibodies which may then interfere with the presentation of
auto-antigens to destructive T cells. Corixa intends to pursue partnerships for
these technologies in a number of autoimmune diseases, including rheumatoid
arthritis, multiple sclerosis, diabetes and myasthenia gravis.
Therapeutic Monoclonal Antibodies. Corixa believes that its antibody
products may, when administered to patients, promote tumor elimination or
shrinkage, resulting in improved cancer patient response or survival rates. For
example, Corixa believes that monoclonal antibodies directed against antigens on
the surface of tumor cells may be used either directly to destroy these targets
or as carriers of other therapeutic compounds for the destruction of tumor
cells.
Gene Therapy. Corixa believes that it or its corporate partners may be
able to introduce certain of Corixa's proprietary cancer genes into tumor cells
to potentially kill such tumor cells or slow their growth.
Small Molecule Drug-Screening and Resulting Small Molecule
Therapeutics. Corixa and its corporate partners may be able to develop
techniques that use Corixa methodologies or gene products to search for low
molecular weight compounds that inhibit tumor cell growth or metastasis. These
compounds may prove useful as cancer therapeutics.
DIAGNOSTICS
Diagnostic Monoclonal Antibodies. Corixa believes that its
antigen-specific antibody products may be used to attach in vitro to proteins or
other antigens that are preferentially produced by tumor cells, thereby
providing a useful cancer diagnostic tool. These antibodies may also be used for
in vivo detection of tumor cells in patients, reducing the need for multiple
organ biopsies. By identifying tumor antigens and developing
specifically-reactive antibodies, Corixa believes it may bring valuable cancer
diagnostic reagents to its corporate partners' cancer diagnostics programs.
Nucleic Acid Probes. Corixa or its corporate partners may also use
chemically-labeled or radioactive fragments of genes that Corixa scientists have
shown to be markedly over-expressed in tumor cells as the basis for diagnostic
products. Hybridization analysis using these products may help determine whether
biopsy specimens contain tumor cells.
Peptide and Polypeptide Probes. Corixa believes that gene-product
fragments, known as peptides, or multiple peptides, known as polypeptides, can
also be used as the basis of diagnostic tests for cancer or infectious disease.
Tests that determine whether a patient's serum antibodies interact with peptides
and polypeptides corresponding to cancer or infectious disease antigens may
confirm the presence of a given malignancy or infection in the patient whose
serum is being analyzed.
CORIXA'S PRODUCTS IN DEVELOPMENT
Corixa has a number of products in various stages of development, many of
which are the subject of collaborations with corporate partners. The following
table sets forth the type of product currently in development, the potential
application(s) for the particular product, its present stage of development and
the identity of Corixa's corporate partner, if any, for such product
application.
<TABLE>
<CAPTION>
PRODUCTS DEVELOPMENT PHASE(1) PARTNER(S)
- -------- -------------------- ----------
<S> <C> <C>
PARTNERED VACCINES:
AnergiX.RA(TM) complex, for Phase I N.V. Organon
rheumatoid arthritis
Breast cancer vaccine, comprised research SmithKline Beecham
of Corixa's novel vaccine
antigens
</TABLE>
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<TABLE>
<CAPTION>
PRODUCTS DEVELOPMENT PHASE(1) PARTNER(S)
- -------- -------------------- ----------
<S> <C> <C>
Chlamydia pneumoniae vaccine, research SmithKline Beecham
comprised of Corixa's novel
vaccine antigens
Chlamydia trachomitis vaccine, research SmithKline Beecham
comprised of Corixa's novel
vaccine antigens
Colon cancer vaccine, comprised research SmithKline Beecham
of Corixa's novel vaccine
antigens
Her2/neu vaccine, for treatment Phase I SmithKline Beecham
of late stage breast and ovarian
cancer
Lung cancer vaccine, comprised research Pharmaceutical Division of Japan
of Corixa's novel vaccine Tobacco
antigens
Zambon Group spa
Mammaglobin vaccine, for research SmithKline Beecham
treatment of breast cancer
Microsphere-based antigen Phase I Zambon Group spa holds certain
delivery and LeIF adjuvant license rights under its lung
cancer vaccine collaboration with
Corixa
SmithKline Beecham holds certain
option rights under its cancer
vaccine collaborations with Corixa
Japan Tobacco holds certain option
rights under its lung cancer
vaccine collaboration with Corixa
Ovarian cancer vaccine, research SmithKline Beecham
comprised of Corixa's novel
vaccine antigens
Prostate cancer vaccine, research SmithKline Beecham
comprised of Corixa's novel
vaccine antigens
Tuberculosis vaccine, comprised preclinical SmithKline Beecham
of Corixa's novel vaccine
antigens
DIAGNOSTICS:
Diagnostic for canine commercialized Heska Corporation
leishmaniasis
Diagnostic for Chagas' disease commercialized Diamed SA(Switzerland)
Diagnostics for detection of commercialized, several companies
human visceral leishmaniasis development
Rapid test for diagnosis or commercialized ICT Diagnostics, a subsidiary of
detection of tuberculosis AMRAD, LTD (Australia)
Rapid test for diagnosis or development Abbott Laboratories, Inc. (United
detection of tuberculosis States)
Reference diagnostic for commercialized Imugen, Inc.
detection of certain tick-borne
diseases
</TABLE>
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<TABLE>
<CAPTION>
PRODUCTS DEVELOPMENT PHASE(1) PARTNER(S)
- -------- -------------------- ----------
<S> <C> <C>
OTHER:
Certain prostate cancer research IDEC Pharmaceuticals Corporation
monoclonal antibodies
Certain vaccine technologies for development Heska Corporation
companion animal health
UNPARTNERED PROGRAMS:
AnergiX.MG(TM) complex, for preclinical seeking worldwide partner(s)
myasthenia gravis
AnergiX.MS(TM) complex, for Phase I seeking worldwide partner(s)
multiple sclerosis
AnervaX.DB(TM) peptide vaccine, preclinical seeking worldwide partner(s)
for diabetes Type 1
AnervaX.RA(TM) peptide vaccine, Phase I/II seeking worldwide partner(s)
for rheumatoid arthritis
Cancer antigen- and research seeking worldwide partner(s)
antibody-based diagnostic
products
Herpes Virus vaccine, comprised research seeking worldwide partner(s)
of Corixa's novel vaccine
antigens
Leishmania vaccine, comprised of Phase I seeking worldwide partner(s)
Corixa's novel vaccine antigens
Leukemia/lymphoma vaccine, research seeking worldwide partner(s)
comprised of Corixa's novel
vaccine antigens
Muc-1 peptide vaccine, for the Phase I seeking worldwide partner(s)
treatment of epithelial tumors
PVAC(TM) compound, for treatment Phase I/II seeking worldwide partner(s)
of psoriasis
Diagnostics for detection of development seeking United States and Canadian
certain tick-borne diseases partners
ELISA-based diagnostic for research seeking worldwide partner(s)
tuberculosis
Adoptive immunotherapy for Phase I seeking worldwide partner(s)
cancer
</TABLE>
- -------------------------
(1) Notes to previous table: "research" means the discovery or creation of
prototype products and includes antigen discovery and characterization;
"development" means testing of prototype diagnostic assays in a particular
format and testing of such products; "preclinical" means product scale up,
formulation and further testing in animals, including toxicology; "Phase I"
indicates products that are currently in Phase I clinical trials, performed
to evaluate the safety of a vaccine and its ability to stimulate an immune
response; "Phase I/Phase II" indicates products that are currently in Phase
I/Phase II clinical testing, being tested to determine safety and efficacy;
and "commercialized" indicates sales to third parties for use in diagnostic
applications, which have resulted in immaterial revenues to date.
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VACCINE PRODUCTS
Cancer Vaccines. Corixa is currently engaged in discovery of antigens from
many of the world's most widespread cancers, including breast, prostate, lung,
colon and ovarian carcinoma and leukemia. According to the American Cancer
Society (ACS), the number of new cases projected for these six diseases for 1999
is just over 3.2 million patients worldwide, with just over 21%, or 677,300, of
these estimated to occur in the United States. Most of these patients undergo
chemotherapy, radiation therapy and surgery, yet the vast majority are likely to
relapse with malignant disease within ten years following surgery. Corixa
believes that its vaccines will initially be useful in those patients who have
undergone such therapies. Of the tumor antigen discovery programs at Corixa, the
breast, prostate, colon and ovarian cancer antigen discovery programs are the
subject of Corixa's expanded September 1998 collaboration and license agreement
with SmithKline Beecham. Corixa's lung cancer antigen discovery program is the
subject of Corixa's collaborations with Zambon Group spa and the pharmaceutical
division of Japan Tobacco.
Corixa has identified many gene sequences that may be either uniquely
expressed or markedly over-expressed in solid tumors. Corixa has filed patent
applications on a significant portion of these tumor gene sequences. Corixa is
continuing to analyze the immunological characteristics of these and other gene
sequences with the goal of selecting several antigens for use in vaccines for
each of breast, ovarian, colon, prostate and lung carcinoma.
In addition to its antigen discovery efforts, Corixa has been involved
since its inception with the development of a Her-2/neu vaccine, for breast and
ovarian cancer. Among breast and ovarian cancer patients, a significant
percentage markedly over-express the gene product Her-2/neu on the surface of
their breast and ovarian carcinomas. To date, results from in vitro studies with
animal and human cells indicate that peptides from the Her-2/neu protein
generate potent anti-Her-2/neu T cell immune responses. In vitro data indicate
that cells from different patients respond to different Her-2/neu peptides.
Consequently, Corixa is currently developing a "cocktail" approach to vaccine
formulation, combining multiple peptide epitopes in a single vaccine.
In July 1996, Corixa and the University of Washington filed an
investigational new drug application to begin a clinical trial of three
different Her-2/neu peptide vaccines in breast and ovarian carcinoma patients.
This Phase I clinical trial began accruing patients in September 1996 and was
conducted and completed at the University of Washington during 1997 and 1998.
Safety was the primary endpoint of this clinical trial, which consisted of 70
patients who each received monthly vaccinations for a period of six months.
Secondary endpoints of the trial focused on the ability of these vaccinations to
result in some amount of anti-Her-2/neu immune reactivity. This clinical trial
used "naked" Her-2/neu peptides together with granulocyte macrophage colony
stimulating factor as an adjuvant. Corixa believes that results to date from
these clinical trials demonstrate the safety of Her-2/neu peptides as a vaccine.
In February 1999, Corixa announced its initiation of a Phase I clinical study of
a microsphere-encapsulated Her-2/neu peptide vaccine. Corixa is continuing
preclinical studies using LeIF as an adjuvant for Her-2/neu vaccines as a
prelude to adding this component of its proprietary core technology to a Phase I
clinical trial. Corixa has an exclusive worldwide license to Her-2/neu peptide
vaccine technology from the University of Washington. The September 1998
collaboration and license agreement between Corixa and SmithKline Beecham grants
SmithKline Beecham the right to continue development of and to commercialize
Her-2/neu vaccines.
Building on Corixa's progress in cancer antigen discovery, Corixa has
initiated additional discovery programs in several other tumor types, including
lung cancer and leukemia. According to the ACS, lung cancer remains the most
common cancer in terms of both worldwide incidence (1.0 million new cases) and
mortality (920,000 deaths) based on data for 1990, the latest statistics
available. For the United States, an estimated 171,600 new cases will be
diagnosed in 1999 and an
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estimated 158,900 people will die this year from the disease. For leukemia,
30,200 new cases are projected by the ACS to arise in the United States in 1999,
with 22,100 deaths predicted in the United States in 1999. Due to the magnitude
and severity of these diseases and the absence of effective therapies, Corixa
has begun antigen discovery and vaccine development efforts for lung cancer and
leukemia using approaches similar to those it uses in other cancers. Corixa's
lung cancer antigen discovery program is the subject of its May 1999
collaboration agreement with Zambon Group spa and its June 1999 collaboration
agreement with the pharmaceutical division of Japan Tobacco. In addition to its
internal discovery efforts for leukemia, Corixa has in-licensed a novel and
patented gene from the Massachusetts Institute of Technology for potential
development in a leukemia vaccine. The gene, known as WT-1, is expressed in a
significant percentage of most leukemias and may, therefore, be useful as an
antigen to provoke an effective immune response in patients. Corixa is currently
seeking partners in the area of leukemia vaccines. Corixa can not assure you,
however, that it will establish any new corporate partnerships for its leukemia
program on favorable terms, or at all.
Infectious Disease Vaccine Programs. As part of Corixa's collaboration
with SmithKline Beecham, Corixa is pursuing antigen discovery research in
tuberculosis, Chlamydia pneumoniae and Chlamydia trachomitis. The most advanced
program is aimed at developing a vaccine to prevent or treat infection caused by
Mycobacterium tuberculosis, or Mtb. Mtb infection causes more deaths than any
other infectious disease in the world. According to the National Institute of
Allergy and Infectious Diseases, an estimated 1.7 billion people are infected
with Mtb, including approximately 15 million people in the United States. Any of
these people may develop active tuberculosis during some stage of their lives.
Each year, approximately 8 million people worldwide contract active
tuberculosis, and an estimated 3 million die each year from the disease. Once
believed to be eradicated in the United States, the latest statistics from the
Centers for Disease Control, or CDC, show 21,337 active tuberculosis cases in
1996, of which an estimated 3,000 are in HIV sero-positive patients. In
addition, the World Health Organization (WHO) estimates more than 50 million
people worldwide may be infected with drug-resistant strains of Mtb. Corixa's
goal is to develop specific vaccines for both conventional and drug-resistant
strains of Mtb.
From more than 100 novel candidate Mtb gene products, Corixa has identified
a number of antigens that specifically trigger appropriate helper T cell
responses in vitro. These gene products are the subject of several patent
applications filed by Corixa covering composition of matter and vaccine and
diagnostic methods of use. Based on the in vitro tests, Corixa selected several
candidate vaccine antigens for skin-testing in both infected-healthy and
infected-diseased individuals in South America to determine which of these
antigens are recognized by patients' immune systems. Based on results from these
tests and continued analysis of patient T cell responses in vitro, Corixa has
begun preclinical studies for both therapeutic and prophylactic vaccines. The
goal of these preclinical studies is selection of a vaccine candidate for Phase
I clinical trials.
Chlamydia pneumoniae, or C. pneumoniae, is a major cause of pneumonia,
bronchitis and sinusitis. C. pneumoniae is a human pathogen transmitted by the
respiratory route. Retrospective studies made using serum bank investigations
indicate that C. pneumoniae infection is as prevalent today as it was in 1963.
According to the CDC, more than half of the adults in the United States and many
other countries worldwide have antibodies specific to C. pneumoniae, indicating
widespread prior infection. The incidence of pneumonia in the United States is
about one in 80 persons each year, and virtually everyone is infected at some
point in life, with reinfection common. Importantly, the CDC reports that one
effect of C. pneumonaie infection is atherosclerosis. Seroepidemiological
studies have associated C. pneumoniae infection with the related conditions of
coronary artery disease, myocardial infarction and cerebrovascular disease. The
association of C. pneumoniae with atherosclerosis has been corroborated by the
presence of the organism in atherosclerotic lesions
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throughout the arterial tree, and the near absence of the organism in healthy
arterial tissue. In collaboration with SmithKline Beecham, Corixa is now
actively engaged in the discovery of C. pneumoniae antigens for use in a
preventative or therapeutic vaccine for this pathogen. Corixa's goal is to
develop a vaccine useful in reducing C. pneumoniae infection, thereby
potentially reducing development of atherosclerosis. This program is one of the
three infectious disease programs covered under the September 1998 SmithKline
Beecham collaboration.
Chlamydia trachomitis, or C. trachomitis, causes the most common
sexually-transmitted disease in the United States. Although the disease can be
transmitted during sexual contact with an infected partner, the disease is often
not diagnosed and treated until complications develop. Studies show that as many
as 85% of women and 40% of men with chlamydial infections have no symptoms
whatsoever. The CDC estimates that in the United States alone, over 4 million
new cases arise each year. The highest rates of chlamydial infections are among
15 to 19 year olds, regardless of demographics or geographic location.
Complications from the disease include Pelvic Inflammatory Disease, a serious
cause of infertility among women of childbearing age. Further, a woman may pass
the infection to her newborn during delivery, with subsequent neonatal eye
infection or pneumonia. The WHO estimates that worldwide, approximately 89
million C. trachomitis infections occurred in 1997 alone. Corixa is engaged in
the identification of C. trachomitis antigens for use in a preventative or
therapeutic vaccine for this pathogen. This program is one of the three
infectious disease programs covered under the September 1998 SmithKline Beecham
collaboration.
Corixa is also engaged in antigen discovery and vaccine development for
infections stemming from Herpes Virus (Type 1 and Type 2) and Leishmania. Corixa
believes its antigen discovery technology will be useful in identifying antigens
for use in vaccines that may either prevent or treat these widespread diseases,
which afflict over 100 million people worldwide. Corixa's efforts in Herpes
Virus are in early stage research, while a candidate leishmaniasis vaccine is
currently in preclinical development and is undergoing field tests in canine
leishmaniasis. A prototype leishmaniasis vaccine containing antigens discovered
by Corixa has been tested on a compassionate-use basis in Phase I clinical
trials in a small number of leishmaniasis patients in Brazil.
Autoimmune Disease Vaccines. As a consequence of Corixa's efforts in
adjuvant research and Corixa's acquisition of Anergen, Corixa is now actively
engaged in research related to understanding and directing the immune system to
alleviate or prevent certain autoimmune diseases.
Corixa believes that the AnergiX and AnervaX technologies may provide a
means to target autoimmune disease without causing the general immune system
suppression associated with many of today's therapies. Prior to Corixa's
acquisition of Anergen, Anergen completed a Phase I clinical trial for
AnergiX.MS complex in multiple sclerosis. Corixa intends to seek a corporate
partner for this potential product. In addition, Corixa is currently enrolling
patients in a Phase I clinical trial of AnergiX.RA complex in connection with
its collaboration with N.V. Organon. Prior to Corixa's acquisition of Anergen,
Anergen also completed a Phase II trial of AnervaX.RA peptide vaccine for
rheumatoid arthritis, and Corixa is actively engaged in seeking a corporate
partner for this program. In preclinical development, Anergen compiled data
suggesting that its programs in myasthenia gravis (AnergiX.MG complex) and
diabetes mellitus (AnervaX.DB peptide vaccine), are also targets for corporate
partner collaboration and subsequent clinical development.
Corixa's adjuvant research related to M. vaccae has led to Corixa's
development program for PVAC as a potential product to treat psoriasis.
Psoriasis is one of the world's most common skin disorders, afflicting an
estimated 100 million people worldwide. The disease is characterized by chronic,
inflammatory lesions with red, scaling plaques and is believed to be an
autoimmune disorder initiated by certain T cells. PVAC, which Corixa and
researchers at Genesis derived from M. vaccae, is currently in clinical Phase
I/II trials in the Philippines. Approximately 45 moderate to severe
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psoriatic patients have been treated to date with either heat-killed M. vaccae
or PVAC using a protocol involving two injections, an initial dose followed by a
second injection three weeks later. Preliminary data from this trial suggest
that PVAC is safe and can promote long lasting clinical benefit. More than half
of the responding patients in the current trial have exhibited significantly
reduced disease for several months following treatment and a large percentage of
patients in the current trial have to date manifested a complete clearing of
their psoriatic lesions following treatment. Corixa plans to conduct randomized,
placebo-controlled trials of PVAC on a worldwide basis. Corixa is actively
engaged in seeking pharmaceutical partners for this program.
ADJUVANTS
Corixa is developing LeIF as a potential vaccine adjuvant product. Corixa
has shown in preclinical studies that when combined with a target antigen, LeIF
induces a stronger antibody response directed against that target antigen than
was induced by vaccination with the antigen alone. In preclinical studies,
co-administration of LeIF with various T cell vaccines for both infectious
disease and tumors has also resulted in enhanced generation of anti-vaccine
reactive CTL.
Corixa currently produces LeIF as a recombinant protein in bacteria. Corixa
anticipates that it will use LeIF in proprietary vaccine formulations. Corixa
also anticipates out-licensing LeIF for incorporation as an adjuvant in other
companies' vaccines outside of Corixa's cancer, infectious disease and
autoimmune disease programs.
Corixa, in collaboration with Genesis, has been investigating immune system
modulating activities associated with M. vaccae. Corixa has determined that
protein derivatives from M. vaccae such as PVAC, may be able to alter immune
responses in a manner useful in the treatment of autoimmune disease. Based on
encouraging early-stage clinical trial results with PVAC, Corixa intends to
continue development of M. vaccae preparations for the treatment of psoriasis.
Corixa believes the same products might also be useful in treating other
autoimmune diseases such as rheumatoid arthritis, scleroderma, lupus and
diabetes.
DIAGNOSTIC PRODUCTS
Corixa believes that many cancer and infectious disease antigens it has
discovered also have applications in disease diagnosis. Antigens can be used in
diagnostic tests to determine whether an individual possesses antibodies against
the antigens. The presence of such antibodies can indicate that the individual
is infected by the pathogen from which the antigen is derived. Antigens can also
be used to generate antibodies, which antibodies can be used in diagnostic
products to detect the presence of disease antigens in an individual. Diagnostic
products for the following infectious diseases are currently under development
at Corixa:
Trypanosoma cruzi (T. cruzi). T. cruzi is an intracellular blood and
tissue parasite endemic to South America, Central America, Mexico and parts of
the United States. T. cruzi infection results in Chagas' disease, which can
develop into fatal, infectious heart disease. T. cruzi is most commonly
transmitted by blood transfusion. Current diagnostic procedures to determine T.
cruzi infection use crude extracts of the parasite to detect reactive patient
antibodies. These tests often produce false results because they can not
distinguish antibodies against T. cruzi from antibodies against other infectious
agents. Corixa has discovered and tested in vitro several peptides encoded by
genes of the T. cruzi parasite for their ability to serve as specific and
sensitive reagents for detecting T. cruzi. Corixa has licensed its T. cruzi
antigen technology to DiaMed S.A. for the development of point-of-care
diagnostic tests, one of which is commercialized.
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Tuberculosis. Corixa is currently investigating Mtb antigens that Corixa
believes could be useful in products to diagnose whether patients have been
infected with Mtb. Current diagnostic assays to determine Mtb infection are
expensive and labor intensive. Most patients exposed to Mtb receive chest
x-rays, followed by attempts to culture the bacterium in vitro from sputum
samples. Because Mtb grows poorly outside the body, these tests often produce
false negative results. In addition, standard skin tests are not ideal for
detecting infection and cannot be used in areas of the world where patients
receive childhood vaccination with bacterial strains related to Mtb. Corixa is
developing a combination of proprietary antigens that may be used in detecting
the presence and degree of Mtb infection. Corixa has granted Abbott Laboratories
and AMRAD-ICT, a division of AMRAD Corporation PTY LTD, non-exclusive licenses
to certain of its tuberculosis antigen technologies and intends to pursue
additional out-licensing opportunities for this product.
Leishmaniasis. The parasite Leishmania causes a systemic disease of the
liver, spleen and bone marrow called leishmaniasis, which can be fatal if not
treated. The disease is endemic to Southern Europe, the Middle East, Africa,
China and India, as well as Central and South America. The largest United States
population infected with Leishmania are military personnel and veterans who were
exposed to the parasite while stationed in the Middle East during the Gulf War.
Leishmania has also become a major opportunistic infection in AIDS patients in
Southern Europe. Currently, the most reliable test for this parasite infection
is an extremely costly and potentially dangerous procedure that requires
collecting bone marrow from patients and microscopically searching for evidence
of infection. Corixa has identified and patented a Leishmania antigen that is
useful in determining whether patients are infected with the parasite. Corixa
has licensed its Leishmania diagnostic technology to several diagnostic
companies on a non-exclusive basis. In addition, other diagnostic companies have
expressed interest in using, and are currently evaluating, Corixa's patented
Leishmania antigen technology.
Tick-Borne Diseases. There are several diseases, such as Lyme disease,
caused by pathogens that live in North American ticks. Infection by either of
two such pathogens, Ehrlichia and Babesia microti, can lead to Lyme disease-like
symptoms and can also cause death. No satisfactory diagnostic tests currently
exist for these pathogens. Corixa has identified several genes from these
pathogens. Corixa believes that the products of these genes may form the basis
of novel diagnostics and has begun discussions with diagnostic companies that
have expressed interest in this field. In April 1998, Corixa granted Imugen,
Inc. an exclusive license to certain of its tick-borne antigen technologies for
use in clinical reference laboratory testing. Corixa intends to pursue
additional partnerships for diagnostic products based on its discovery of
antigens from Erlichia and Babesia microti.
OTHER PRODUCTS IN DEVELOPMENT
Adoptive Immunotherapy Products. T cells, particularly CTL, are generally
believed to be essential to protective immunity against cancer. As a result, for
many years scientists and clinicians have studied the potential of growing a
patient's own CTL or APC outside the body (ex vivo) and then using those CTL or
APC in treating the patient's advanced cancer. CTL grown ex vivo have been shown
to be effective in shrinking and/or eliminating tumors, both in animal models
and in clinical trials. This therapeutic approach, called adoptive
immunotherapy, is limited by the difficulty in growing sufficient numbers of
tumor antigen reactive CTL or APC ex vivo for re-infusion into cancer patients.
Corixa believes that several of its core technologies may be useful in
developing adoptive immunotherapy procedures for cancer treatment, and Corixa
has identified several tumor antigens that Corixa or its corporate partners may
use to stimulate in vitro growth of tumor-reactive CTL. In addition, Corixa has
demonstrated that its microsphere and adjuvant technologies enhance the in vitro
generation and growth of tumor antigen reactive CTL. Corixa intends to pursue
research and corporate partnership opportunities in the field of adoptive
immunotherapy of cancer. Corixa and
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the Infectious Disease Research Institute have entered into a Research Agreement
pursuant to which IDRI will provide Corixa grant funding for three years to fund
research and development of adoptive immunotherapy products for the treatment of
cancer.
Animal Health Products. Corixa believes that certain of its vaccine and
diagnostic products also may have applications in the diagnosis and treatment of
disease in animals. One such disease is Leishmaniasis, which can infect dogs.
Europe is the primary market for products targeting this disease. Corixa is
currently collaborating with Heska, a developer and marketer of companion animal
diagnostics and therapeutics, to develop and commercialize diagnostics and
vaccines for Leishmaniasis in dogs. Corixa has also granted Heska a license to
use LeIF in combination with other types of vaccines in the companion animal
field. Corixa intends to explore further opportunities to partner its technology
for use in animal health markets.
CORPORATE PARTNERSHIPS
Part of Corixa's strategy is to establish many corporate partnerships with
pharmaceutical, biopharmaceutical and diagnostic companies. Corixa targets
companies that have the expertise and capability to develop, manufacture, obtain
regulatory approval for and commercialize Corixa's products. In its corporate
partnerships, Corixa seeks to cover its research and development expenses
through research funding, milestone payments and option, technology or license
fees. Corixa also seeks to retain significant downstream participation in
product sales through either profit-sharing or product royalties paid on annual
net sales. Corixa has focused on three discrete types of product collaborations:
- vaccine antigen discovery programs;
- novel immunotherapy development programs derived from its antigen and
adjuvant research; and
- diagnostic programs.
Corixa has also, to a lesser extent, pursued partnerships in adoptive
immunotherapy and animal health products.
VACCINES
SmithKline Beecham. In October 1998, Corixa entered into a collaboration
and license agreement effective September 1, 1998 with SmithKline Beecham. This
agreement replaced and significantly expanded the scope of Corixa's
then-existing agreements with SmithKline Beecham Manufacturing and SmithKline
Beecham Biologicals. Corixa granted SmithKline Beecham an exclusive worldwide
license to develop, manufacture and sell vaccine products and certain dendritic
cell therapy products that incorporate antigens discovered or in-licensed under
this corporate partnership, although with respect to tuberculosis, rights are
co-exclusive with Corixa in Japan.
Under this collaboration and license agreement, SmithKline Beecham agreed
to provide payment for work that is performed under:
- Corixa's existing antigen discovery programs in tuberculosis, breast
cancer and prostate cancer;
- Corixa's additional cancer antigen discovery programs in ovarian cancer
and colon cancer; and
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- Corixa's additional infectious disease antigen discovery programs in two
chronic infectious pathogens:
-- Chlamydia trachomatis, which causes sexually-transmitted disease;
and
-- Chlamydia pneumoniae, which is associated with the development of
atherosclerosis.
- The discovery phase of the agreement also allows for the selection of one
additional disease field to be agreed upon at a future date.
Corixa also granted SmithKline Beecham an exclusive worldwide license to
develop, manufacture and sell vaccine products resulting from:
- Corixa's Her-2/neu vaccines for the treatment of breast and ovarian
cancer, and
- Corixa's vaccine program based on mammaglobin, a novel gene and protein
associated with breast cancer.
For certain of these disease areas, Corixa granted SmithKline Beecham license
rights to develop, manufacture and sell passive immunotherapy products such as T
cell or antibody therapeutics as well as therapeutic drug monitoring products.
Under the agreement, SmithKline Beecham committed to fund $43.6 million for
work to be performed during the initial four year term of the agreement in the
above programs. Corixa and SmithKline Beecham may mutually agree to extend the
research and development programs beyond the initial four-year term. Pursuant to
the agreement, SmithKline Beecham also purchased 427,807 shares of Corixa common
stock at a premium to its fair market value, and Corixa has the right in the
future to require SmithKline Beecham to purchase an additional $2.5 million of
Corixa common stock at a premium to its then-current fair market value. The
initial equity investment combined with the discovery program payment results in
aggregate funding of $48.6 million during the first four years of the agreement.
Additionally, with respect to the $5.0 million previously paid to Corixa by
SmithKline Beecham under a prior option agreement, SmithKline Beecham may elect
either to have Corixa repay that amount to SmithKline Beecham on September 1,
2003 or to convert that amount into Corixa common stock at a premium to its
then-current fair market value. To the extent that clinical and commercial
milestones in the programs are achieved, Corixa is entitled to receive
additional payments, which in the aggregate could exceed $150 million. The
individual amounts of such payments vary, depending on the milestones achieved
and the types of product sold. Corixa is also entitled to receive future royalty
payments on all product sales, which royalties vary depending on the types of
products sold.
Zambon. In May 1999, Corixa entered into a collaboration agreement with
Zambon Group spa for the research, development and commercialization of vaccine
products aimed at the prevention and/or treatment of lung cancer. Corixa granted
Zambon Group spa an exclusive license to develop and sell these vaccine products
and therapeutic drug monitoring products in Europe, the countries of the former
Soviet Union, Argentina, Brazil and Columbia. Corixa granted Zambon Group spa
these rights co-exclusively in China. Corixa also granted Zambon Group spa the
non-exclusive right to formulate the vaccines in Corixa's microsphere delivery
system with Corixa's proprietary protein adjuvants. Corixa has also agreed to
supply preclinical and clinical grade materials, as well as commercial
materials, to Zambon in connection with the collaboration.
Under the agreement, Corixa may receive over $21.5 million in license fees,
research funding and clinical and commercial milestone payments. Pursuant to the
agreement, Zambon Group spa also agreed to purchase 141,576 shares of Corixa
common stock at a premium to its fair market value. The individual amounts of
the milestone payments vary, depending on the milestones achieved and
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the types of products sold. Corixa is also entitled to receive future royalty or
profit-share payments on all product sales, which royalties vary depending on
the amount and types of products sold.
Japan Tobacco. In June 1999, Corixa entered into a license and
collaborative agreement with the pharmaceutical division of Japan Tobacco for
the research, development and commercialization of vaccine and antibody-based
products aimed at the prevention and/or treatment of lung cancer. Corixa granted
Japan Tobacco an exclusive license to develop and sell the vaccine products in
North America, Japan and all other countries not exclusively licensed to Zambon
Group spa, and Japan Tobacco's rights are co-exclusive in China. Corixa also
granted Japan Tobacco an option to a non-exclusive license to formulate the
vaccines in Corixa's microsphere delivery system with Corixa's proprietary
protein adjuvants. Corixa has also agreed to supply preclinical and clinical
grade materials to Japan Tobacco in connection with the collaboration. Japan
Tobacco may also elect to require Corixa to supply commercial materials for
products licensed to Japan Tobacco under the agreement.
Under the agreement, Corixa may receive over $40 million in license fees,
research funding and clinical and commercial milestone payments. The individual
amounts of the milestone payments vary, depending on the milestones achieved and
the types of products sold. Corixa is also entitled to receive future royalties
on all product sales, which royalties vary depending on the amount and type of
products sold. The agreement with Japan Tobacco became effective in July 1999
upon the expiration of the required waiting period under applicable antitrust
laws.
N.V. Organon. As a result of the acquisition of Anergen, Corixa gained an
additional corporate partner, N.V. Organon. N.V. Organon is the pharmaceutical
division of the Dutch-based Akzo-Nobel Group. The N.V. Organon partnership
targets the development of a novel vaccine for the potential treatment of
rheumatoid arthritis. First established in June 1996, the N.V. Organon
relationship has focused on the preclinical and clinical development of
AnergiX.RA complex, a novel treatment that combines N.V. Organon's proprietary
rheumatoid arthritis peptide and Anergen's proprietary soluble MHC class II
AnergiX technology. Corixa is presently enrolling patients in a Phase I clinical
trial, which Corixa currently believes will be completed by the end of 1999.
Under the terms of the collaboration, all current clinical trials costs are
borne by N.V. Organon, and in the event of ongoing success, N.V. Organon will
pay Corixa milestone and royalty payments.
NOVEL IMMUNOTHERAPEUTIC PRODUCTS DERIVED FROM ANTIGENS
IDEC Pharmaceuticals. In February 1999, IDEC Pharmaceuticals announced its
research and option collaboration with Corixa for the potential treatment of
prostate cancer. IDEC and Corixa are pursuing the identification of monoclonal
antibodies directed to certain prostate cancer antigens discovered by Corixa.
IDEC retains certain limited option rights to license such antibodies, under
terms that will include exercise fees, research support and milestone and
royalty payment obligations.
DIAGNOSTIC PRODUCTS
Corixa has entered into and intends to continue to pursue corporate
partnerships in the fields of cancer and infectious disease diagnostics to
complement its therapeutic research efforts and to expand its scientific
platform. Corixa has established corporate partnerships for the development of
diagnostic products for infectious diseases with Abbott, DiaMed, AMRAD-ICT, and
other small diagnostic companies. Under these arrangements, Corixa generally
grants a non-exclusive license to Corixa's antigens for use in specified
infectious disease indications. In exchange, Corixa generally receives the
respective corporate partner's agreement to make certain payments upon
achievement of development milestones, a commitment to purchase a minimum number
of reagents and an agreement to pay royalties on any product sales. Corixa has
also established a corporate partnership with Imugen pursuant to which Corixa
granted Imugen an exclusive license to certain Corixa antigens related to
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infectious diseases caused by certain tick-borne pathogens for use in Imugen's
clinical reference laboratory diagnostic services. In exchange for this license,
Imugen will pay Corixa certain annual minimum payments as well as a percentage
of revenues received in connection with the clinical reference laboratory
services. In connection with the expanded September 1998 SmithKline Beecham
agreement and the Zambon Group spa collaboration agreement, Corixa granted
SmithKline Beecham and Zambon Group spa rights to diagnostic products for
monitoring patient eligibility and response to therapy in connection with the
therapeutic products that may be developed under those agreements.
ADOPTIVE IMMUNOTHERAPY PRODUCTS
In March 1999, Corixa and the Infectious Disease Research Institute, a
not-for-profit, grant-funded private research institute (IDRI), entered into a
research agreement, effective March 30, 1999, pursuant to which IDRI will
provide Corixa with $12.0 million in grant funding over the three year term of
the agreement to fund research and development of adoptive immunotherapy
products for treating cancer. The agreement provides Corixa ownership of all
intellectual property and product rights developed by Corixa. IDRI will receive
a percentage of specified Corixa proceeds related to adoptive immunotherapy
products resulting from the funded research and development. Corixa intends to
pursue additional research and corporate partnerships in this field.
ANIMAL HEALTH PRODUCTS
Heska. In March 1996, Corixa entered into a license and research agreement
with Heska. Under the license and research agreement, Corixa granted Heska an
exclusive worldwide license to Corixa's LeIF adjuvant for use in certain of
Heska's vaccines and for use as a stand-alone vaccine against canine
leishmaniasis. In addition, Corixa granted Heska a license to its diagnostic
antigen, K39, for use in detecting canine leishmaniasis. The license is
exclusive worldwide, except that it is non-exclusive in Central and South
America. Heska paid an up-front license fee and agreed to make future payments
on achieving certain development milestones, as well as royalty payments on any
product sales. In December 1996, Heska made a payment to Corixa based on
achieving a development milestone for Corixa's K39 diagnostic product. Heska has
begun commercial sales of two different diagnostic products for canine
leishmaniasis in Italy. In December 1997, Heska announced commercial
availability of the first product, a diagnostic test for use in clinical
laboratories, and paid a corresponding milestone payment to Corixa. In June
1998, Heska announced commercial availability of a second product, a
point-of-care diagnostic test.
Corixa's corporate partnership agreements generally provide recourse for
Corixa with respect to its existing product and technology rights in the event
the corporate partner leaves uncured a material breach of its agreement. In that
event, Corixa generally may terminate the licenses granted to that corporate
partner under its agreement. However, because Corixa's strategy for the
discovery, research, development, clinical testing and commercialization of its
products is to enter into many corporate partnerships, Corixa's success is
substantially dependent on:
- its ability to enter into and maintain these arrangements on terms
favorable to Corixa;
- its ability to successfully manage current or future corporate
partnerships, if any; and
- its corporate partners' ability to perform their obligations under these
arrangements.
Corixa cannot assure you that it will be able to negotiate any additional
corporate partnerships on favorable terms, or at all. Corixa also cannot assure
you that its current corporate partnerships will be successful, or that its
corporate partners will perform their obligations under these arrangements in a
timely manner or at all.
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The occurrence of any such factors would significantly harm Corixa's business.
CERTAIN BUSINESS RELATIONSHIPS
RELATIONSHIP WITH IDRI
In September 1994, Corixa entered into a research services and intellectual
property agreement with IDRI. Under this agreement, as amended and restated
effective January 1997, Corixa agreed to provide IDRI with research funding and
administrative and facilities support, including use of a limited amount of
Corixa's research laboratory space. IDRI pays a services fee for the
administrative and facilities support provided by Corixa and rent for the use of
laboratory space. Corixa's funded research performed by IDRI is in the area of
infectious disease. Under the agreement, IDRI must disclose to Corixa all
significant developments relating to information or inventions discovered at
IDRI. Corixa will own, on a royalty-free basis, all of IDRI's interest in
inventions and patent rights arising out of IDRI's research during the term of
the agreement (other than inventions and patent rights arising out of research
that is or in the future may be funded by certain governmental or not-
for-profit organizations). With respect to rights arising out of research funded
by governmental and not-for-profit organizations, Corixa has been granted a
royalty-bearing, worldwide, perpetual license, exclusive except as to rights
held by the governmental or not-for-profit organizations.
IDRI is independent of Corixa, and Corixa does not have the right to
control or direct IDRI's activities. A majority of the members of IDRI's board
of directors are not affiliated with Corixa. Corixa's Chief Scientific Officer
is co-founder of IDRI and until March 1, 1999 was a member of IDRI's board of
directors. Corixa's President and Chief Operating Officer was a member of IDRI's
board of directors until March 1, 1999 and Corixa's Vice President and Chief
Financial Officer was IDRI's treasurer until March 1, 1999. The research
services and intellectual property agreement terminates on December 31, 1999,
subject to renewal for one or more three year terms at Corixa's option. If IDRI
terminates the agreement because of Corixa's failure to make required payments,
Corixa would be obligated to pay royalties on any product sales. Corixa and IDRI
have also entered into a research agreement in the field of adoptive
immunotherapy. This agreement is more fully described above in the section
entitled "Information Concerning Corixa -- Other Products In Development" on
page 130.
CERTAIN LICENSE AGREEMENTS
Corixa seeks to obtain technologies that complement and expand its existing
technology base. Where consistent with its strategy, Corixa has licensed and
intends to continue to license product and marketing rights from selected
research and academic institutions in order to capitalize on the capabilities
and technology bases of these entities. Under these license agreements, Corixa
generally seeks to obtain unrestricted sublicense rights consistent with its
partner-driven strategy. Corixa is generally obligated under these agreements to
diligently pursue product development, make development milestone payments and
pay royalties on any product sales.
Agreements with Genesis. Corixa entered into a collaborative research and
development agreement with Genesis, effective January 1, 1998, to develop and
commercialize the M. vaccae-derived product PVAC for treating psoriasis. Under
the agreement, Corixa and Genesis will share the costs of product development
and the revenues received related to such product. In the event one party
becomes responsible for more than 50% of product development costs, that party
will also receive a pro rata increased portion of revenues related to such
products. Under the agreement, Genesis also granted Corixa the worldwide,
exclusive right to develop the M. vaccae-derived product for certain other
autoimmune diseases, including rheumatoid arthritis, multiple sclerosis and
diabetes. Corixa and Genesis also entered into a separate agreement effective
January 1, 1998 to research and
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develop M. vaccae-derived products as vaccine adjuvants. Under the agreement
Genesis granted Corixa an exclusive license to use any of these adjuvant
products in Corixa's proprietary vaccines.
Agreement with Stanford Rook, Ltd. In December 1998, Corixa entered into a
worldwide, exclusive license agreement with Stanford Rook, Ltd, known as SR
Pharma (SR) for rights to SR's M. vaccae-related intellectual property to
develop and commercialize PVAC for the treatment of psoriasis, rheumatoid
arthritis, multiple sclerosis and diabetes, with an option to certain additional
fields. Under the license agreement, Corixa agreed to pay SR license fees,
milestone payments and a percentage of revenues received by Corixa from product
sales. The agreement was amended and restated in February 1999 to reflect the
additional grant of manufacturing rights by SR to Corixa. In February 1999, SR
and Corixa also entered into a worldwide, non-exclusive license agreement for
rights under SR's M. vaccae-related intellectual property for the manufacture,
development and commercialization of specified M. vaccae-derived products for
use as adjuvants in Corixa's proprietary vaccines other than tuberculosis
vaccines.
Agreement with SRI. In May 1996, Corixa entered into a license agreement
with SRI. Under the license agreement, SRI granted Corixa an exclusive,
worldwide, sublicensable license (subject to the rights of certain United States
governmental agencies and a grant-back to SRI for non-commercial research
purposes) to use SRI polymer microsphere technology in the fields of cancer and
infectious disease, to the extent a product incorporates an antigen, cytokine or
adjuvant owned or controlled by Corixa. In addition, SRI granted Corixa options
to exclusive, worldwide, sublicensable licenses in specified autoimmune and
viral disease fields. Corixa paid up-front license fees upon execution of the
license agreement. Corixa is also obligated to make future payments on achieving
specified development milestones, and royalty payments on any product sales,
subject to an annual minimum royalty. In addition, Corixa issued SRI 15,151
shares of common stock upon execution of the license agreement and a warrant
exercisable for 7,575 shares for each grant of sublicense rights to a third
party, up to a maximum of 37,875 shares, and 7,575 shares for initiation of each
Phase III clinical trial, up to a maximum of 37,875 additional shares. On
sublicense of the SRI rights to Zambon Group spa, 7,575 of these shares vested.
In April 1997, the parties amended the license agreement to extend Corixa's
license in the field of cancer to include products that incorporate third-party
antigens or cytokines. Corixa is obligated to share revenues from such
third-party sublicense agreements with SRI. Corixa issued SRI 4,545 shares of
common stock on each of the first and second and third anniversaries of the
effective date of the license agreement. SRI may terminate the license agreement
if Corixa fails to perform certain obligations under such agreement.
Agreement With Dana-Farber Cancer Institute. In January 1995, Corixa
entered into a licensing agreement with Dana-Farber. Under the licensing
agreement, Dana-Farber granted Corixa an exclusive, worldwide, sublicensable
license (subject to the rights of certain United States governmental agencies
and a grant-back to Dana-Farber for non-commercial research purposes) to use
specified Dana-Farber microsphere technology related to the induction of a CTL
response in all fields. Corixa paid up-front license fees on execution of the
licensing agreement. Corixa is also obligated to make future payments on
achieving certain development milestones, and royalty payments on any product
sales, subject to an annual minimum royalty. In addition, Corixa issued
Dana-Farber 15,151 shares of common stock on execution of the licensing
agreement and agreed to issue an additional 15,151 shares of common stock upon
issuance of the first patent containing claims covering the licensed technology.
Corixa must continue to meet certain research-based obligations in order to
retain its rights under the licensing agreement. Dana-Farber may terminate the
licensing agreement in the event Corixa does not make required royalty payments
or fails to perform specified obligations under the agreement.
Agreements with ImmGenics Pharmaceuticals, Inc. In November 1998, Corixa
signed an exclusive agreement with ImmGenics Pharmaceuticals, Inc. to utilize
ImmGenics' proprietary
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Selected Lymphocyte Antibody Method technology to develop therapeutic and
diagnostic monoclonal antibodies specific to Corixa's proprietary antigens in
cancer and infectious disease. Under the terms of the agreement, Corixa will
make research and development payments and, if certain milestones are achieved,
additional milestone payments, as well as royalty payments on future product
sales. In addition to the collaborative agreement, in 1998 Corixa invested $1.75
million in exchange for preferred stock in ImmGenics, convertible debt and
warrants, and, based on ImmGenics having met certain milestones in accordance
with the terms and conditions of the agreement, Corixa has invested an
additional $1.25 million in 1999, for a total investment by Corixa of $3.0
million. In addition, Corixa may obtain additional ownership in ImmGenics over
time under certain terms of the agreement. The Vice President and Chief
Financial Officer of Corixa and the Executive Vice President and Chief
Scientific Officer of Corixa are members of the board of directors of ImmGenics.
Other License Agreements. Additionally, Corixa is a party to certain
exclusive license agreements with academic institutions, including among others:
- the University of Washington for the use of Her-2/neu technology in all
fields;
- Washington University in St. Louis, Missouri for the use of mammaglobin,
a breast cancer-related gene and protein, for prophylactic and
therapeutic treatment and diagnosis of adenocarcinoma;
- Health Research, Inc. for the use of a proprietary mouse model for human
cancer;
- Mayo Foundation for Medical Education and Research for use of tick-borne
disease antigens;
- Massachusetts Institute of Technology for the use of WT-1, a
leukemia-related gene and protein, in therapeutic applications; and
- University of Pittsburgh for Muc-1 peptide vaccine for use in the
diagnosis and therapy of cancer.
Certain of these agreements require Corixa or other parties to meet certain
performance obligations in order to retain their rights under such agreements or
require Corixa to make certain payments in order to obtain or maintain rights to
the subject technology.
PATENTS AND PROPRIETARY TECHNOLOGY
Corixa's success will depend in large part on its and its licensors'
abilities to:
- obtain patent and other proprietary protection for vaccine, other
immunotherapeutic and diagnostic products, antigens, antibodies,
adjuvants and delivery systems;
- defend patents once obtained;
- preserve trade secrets; and
- operate without infringing the patents and proprietary rights of third
parties.
Corixa intends to seek appropriate patent protection for its vaccine,
immunotherapy, discovery, screening, diagnostic and other proprietary
technologies by filing patent applications in the United States and certain
other countries. As of August 9, 1999, Corixa owned or had licensed 80 issued
United States patents that expire at various times between December 2004 and
August 2016, and 153 pending United States patent applications.
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Although Corixa believes its patents and patent applications provide a
competitive advantage, the patent positions of pharmaceutical and
biopharmaceutical companies are highly uncertain and involve complex legal and
factual questions. For example, there is substantial uncertainty regarding the
potential for patent protection for gene fragments or genes without known
function or correlation with specific diseases. Corixa and its corporate
partners or licensors may not be able to develop patentable products or
processes. Corixa and its corporate partners or licensors may not be able to
obtain patents from pending patent applications. Even if patent claims are
allowed, the claims may not issue, or in the event of issuance, may not be
sufficient to protect the technology owned by or licensed to Corixa or its
corporate partners.
Corixa's or its corporate partners' current patents, or patents that issue
on pending applications, may be challenged, invalidated, infringed or
circumvented, and the rights granted in those patents may not provide
proprietary protection or competitive advantages to Corixa. Corixa has licensed
patent applications from SRI related to Corixa's microsphere encapsulation
technology, two of which are currently the subject of opposition proceedings
before the European Patent Office. SRI may not prevail in these opposition
proceedings. As a result, patents may not issue in Europe for this technology.
Patent applications in the United States are maintained in secrecy until
patents issue and patent applications in certain foreign countries generally are
not published until many months or years after they are filed. Scientific and
patent publication often occurs long after the date of the scientific
developments disclosed in those publications. Accordingly, Corixa cannot be
certain that it or one of its corporate partners was the first to invent the
subject matter covered by any patent application or that it or one of its
corporate partners was the first to file a patent application for any such
invention.
Corixa's commercial success depends significantly on its ability to operate
without infringing patents and proprietary rights of third parties. A number of
pharmaceutical companies, biotechnology companies, universities and research
institutions may have filed patent applications or may have been granted patents
that cover technologies similar to the technologies owned, optioned by or
licensed to Corixa or its corporate partners. Corixa cannot determine with
certainty whether patents or patent applications of other parties may materially
affect Corixa's or its corporate partners' ability to make, use or sell any
products.
The existence of third-party patent applications and patents could
significantly reduce the coverage of the patents owned, optioned by or licensed
to Corixa or its corporate partners and limit the ability of Corixa or its
corporate partners to obtain meaningful patent protection. If patents containing
competitive or conflicting claims are issued to third parties, Corixa or its
corporate partners may be enjoined from pursuing research, development or
commercialization of products or be required to obtain licenses to these patents
or to develop or obtain alternative technology. In addition, other parties may
independently develop similar or alternative technologies to those of Corixa,
duplicate any of the technologies of Corixa, its corporate partners or its
licensors or design around the patented technologies developed by Corixa, its
corporate partners or its licensors. If another party controls patents or patent
applications covering Corixa's products, Corixa and its corporate partners may
not be able to obtain the rights it needs to those patents or patent
applications in order to commercialize its products.
Litigation may be necessary to enforce patents issued or licensed to Corixa
or its corporate partners or to determine the scope or validity of another
party's proprietary rights. United States Patent Office interference proceedings
may be necessary if Corixa and another party both claim to have invented the
same subject matter.
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Corixa could incur substantial costs if:
- litigation is required to defend itself in patent suits brought by third
parties;
- Corixa participates in patent suits brought against or initiated by its
corporate partners;
- Corixa initiates such suits; or
- Corixa participates in an interference proceeding.
In addition, Corixa or its corporate partners may not prevail in any such action
or proceeding. An adverse outcome in litigation or an interference or other
proceeding in a court or patent office could:
- subject Corixa to significant liabilities;
- require disputed rights to be licensed from other parties; or
- require Corixa or its corporate partners to cease using certain
technology.
Corixa also relies on trade secrets and proprietary know-how, especially
when Corixa does not believe that patent protection is appropriate or can be
obtained. Corixa's policy is to require each of its employees, consultants and
advisors to execute a confidentiality and inventions agreement before beginning
their employment, consulting or advisory relationship with Corixa. These
agreements generally provide that the individual must keep confidential and not
disclose to other parties any confidential information developed or learned by
the individual during the course of such relationship except in limited
circumstances. These agreements also generally provide that all inventions
conceived by the individual in the course of rendering services to Corixa shall
be owned by Corixa.
Corixa works with others in its research, development and commercialization
activities. Disputes may arise about inventorship and corresponding rights in
know-how and inventions resulting from the joint creation or use of intellectual
property by Corixa and its corporate partners, licensors, scientific
collaborators and consultants. In addition, other parties may circumvent any
proprietary protection Corixa does have. As a result, Corixa may not be able to
maintain its proprietary position.
GOVERNMENT REGULATION
Corixa's products are subject to extensive regulation by numerous
governmental authorities, principally the FDA, as well as numerous state and
foreign agencies. Corixa needs to obtain clearance of its potential products by
the FDA before it can begin marketing the products in the United States. Similar
approvals are also required in other countries.
Product development and approval within this regulatory framework is
uncertain, can take a number of years and requires the expenditure of
substantial resources. The nature and extent of the governmental premarket
review process for Corixa's products will vary, depending on the regulatory
categorization of particular products. Corixa believes that its vaccine and
other immunotherapeutic products and related pharmaceutical products will be
regulated as biologics by the FDA and comparable regulatory bodies in other
countries. The necessary steps before a new biological product may be marketed
in the United States ordinarily include:
- preclinical laboratory tests and in vivo preclinical studies;
- the submission to the FDA of an investigational new drug application,
which must become effective before clinical trials may commence;
- adequate and well-controlled clinical trials to establish the safety and
efficacy of the product;
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- the submission to the FDA of a biologics license application; and
- FDA review and approval of the biologics license application prior to any
commercial sale or shipment of the product.
The FDA's Modernization Act of 1997 eliminated the requirement that both a
product license application and an establishment license application be filed
with respect to certain categories of biotechnology products after February 19,
1998. It is impossible to predict what impact, if any, the Modernization Act
will have upon the regulatory review of Corixa's biological products.
Preclinical tests include laboratory evaluation of the product, as well as
animal studies to assess the potential safety and efficacy of the product.
Preclinical tests must be conducted by laboratories that comply with FDA
regulations regarding good laboratory practices. The results of preclinical
tests, together with manufacturing information and analytical data, are
submitted to the FDA as part of an investigational new drug application, which
must become effective before the commencement of clinical trials. The
investigational new drug application will automatically become effective 30 days
after receipt by the FDA unless the FDA indicates prior to the end of such
30-day period that the proposed protocol raises concerns that must be resolved
to the satisfaction of the FDA before the trials may proceed as outlined in the
investigational new drug application. In such case, there can be no assurance
that such resolution will be achieved in a timely fashion, if at all. In
addition, the FDA may impose a clinical hold on an ongoing clinical trial if,
for example, safety concerns are presented, in which case the study cannot
recommence without FDA authorization under terms sanctioned by the agency.
Clinical trials involve the administration of the product to healthy
volunteers or to patients under the supervision of a qualified principal
investigator. Clinical trials are conducted in accordance with good clinical
practices under protocols that detail the objectives of the trial, inclusion and
exclusion criteria, the parameters to be used to monitor safety and the efficacy
criteria to be evaluated. Each protocol must be submitted to the FDA as part of
the investigational new drug application. Further, each clinical trial must be
reviewed and approved by an independent institutional review board at the
institutions at which the trial will be conducted. The institutional review
board will consider, among other things, ethical factors and the safety of human
subjects. The institutional review board may require changes in a protocol, and
there can be no assurance that the submission of an investigational new drug
application will enable a study to be initiated or completed.
Clinical trials generally are conducted in three sequential phases, but the
phases may overlap. In Phase I, the initial introduction of the product into
human subjects or patients, the product is tested to assess safety, metabolism,
pharmacokinetics and pharmacological actions associated with increasing doses.
Phase II usually involves studies in a limited patient population to:
- determine the efficacy of the potential product for specific, targeted
indications;
- determine dosage tolerance and optimum dosage; and
- further identify possible adverse reactions and safety risks.
If a compound is found to be effective and to have an acceptable safety
profile in Phase II evaluations, Phase III trials are undertaken to evaluate
further clinical efficacy in comparison to standard therapies, within a broader
patient population, generally at geographically dispersed clinical sites. Phase
I, Phase II or Phase III testing may not be completed successfully within any
specific period of time, if at all, with respect to any of Corixa's products. In
addition, after marketing approval is granted, the FDA may require
post-marketing clinical studies, which typically entail extensive patient
monitoring and may result in restricted marketing of an approved product for an
extended period of time.
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The results of pharmaceutical development, preclinical studies and clinical
trials are submitted to the FDA in the form of a biologics license application
for approval of the manufacture, marketing and commercial shipment of the
biological product. The testing and approval process is likely to require
substantial time, effort and resources, and there can be no assurance that any
approval will be granted on a timely basis, if at all. The FDA may deny the
biologics license application if applicable regulatory criteria are not
satisfied, require additional testing or information, or require postmarket
testing and surveillance to monitor the safety or efficacy of the product.
Any diagnostic products developed by Corixa or its corporate partners are
likely to be regulated as medical devices. In the United States, medical devices
are classified into one of three classes on the basis of the controls deemed by
the FDA to be necessary to reasonably ensure their safety and effectiveness:
- Class I -- general controls -- e.g., labeling, premarket notification and
adherence to GMP;
- Class II -- general controls and special controls -- e.g., performance
standards and postmarket surveillance; and
- Class III -- premarket approval.
Before a new device can be introduced into the market, its manufacturer
generally must obtain marketing clearance through either a premarket clearance
under Section 510(k) of the Federal Food, Drug and Cosmetic Act or approval of a
premarket approval application, or PMA. Because Corixa believes that any
diagnostic device developed by it or its corporate partners would be classified
as a Class III device, such product would be subject to the PMA requirement. A
510(k) clearance typically will be granted if a company establishes that its
device is "substantially equivalent" to a legally marketed Class I or II medical
device or to a Class III device for which the FDA has not yet required the
submission of a PMA. A 510(k) clearance must contain information to support the
claim of substantial equivalence, which may include laboratory test results or
the results of clinical studies. Commercial distribution of a device subject to
the 510(k) requirement may begin only after the FDA issues an order finding the
device to be substantially equivalent to a predicate device. It generally takes
from four to 12 months from the date of submission to obtain clearance of a
510(k) submission, but it may take longer. The FDA may determine that a proposed
device is not substantially equivalent to a legally marketed device, that
additional information is needed before a substantial equivalence determination
may be made, or that the product must be approved through the PMA process. An
FDA determination of "not substantially equivalent," a request for additional
information, or the requirement of a PMA could delay market introduction of
products that fall into this category. Furthermore, for any devices cleared
through the 510(k) process, modifications or enhancements that could
significantly affect safety or effectiveness, or constitute a major change in
the intended use of the device, require new 510(k) submissions.
If a device does not qualify for the 510(k) premarket notification
procedure, a company must file a PMA. The PMA requires more extensive pre-filing
testing than required for a 510(k) premarket notification and usually involves a
significantly longer review process. A PMA must be supported by valid scientific
evidence that typically includes extensive data, including preclinical and
clinical trial data, to demonstrate that safety and efficacy of the device. If
clinical trials are required, and the device presents a "significant risk," an
investigational device exemption application must be filed with the FDA and
become effective prior to the commencement of clinical trials. If the device
presents a "nonsignificant risk" to trial subjects, clinical trials may begin on
the basis of appropriate institutional review board approval. Clinical
investigation of medical devices may involve risks similar to those involved in
the clinical investigation of pharmaceutical products.
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The PMA must contain the results of clinical trials and nonclinical tests,
a complete description of the device, and a detailed description of the methods,
facilities and controls used to manufacture the device. A PMA may be denied if
applicable regulatory criteria are not satisfied, and the FDA may impose certain
conditions upon the applicant, such as postmarket testing and surveillance. The
PMA review and approval process can be expensive, uncertain and lengthy, and
approvals may not be granted on a timely basis, if at all.
Regulatory approval, if granted for any biopharmaceutical or medical device
product, may entail limitations on the indicated uses for which it may be
marketed, and product approvals, once granted, may be withdrawn if problems
occur after initial marketing. Manufacturers of FDA-regulated products are
subject to pervasive and continuing governmental regulation, including record
keeping requirements and reporting of adverse experiences associated with
product use. Corixa and its corporate partners will be required to adhere to
applicable regulations setting forth detailed GMP requirements, which include
testing, control and documentation requirements. The FDA has recently revised
the GMP regulations. The new Quality System Regulation imposes design controls
and makes other significant changes in the requirements applicable to
manufacturers. These and future changes in regulations may significantly harm
Corixa's business. Manufacturing facilities in the United States are subject to
periodic inspection by the FDA. Failure to comply with GMP and other applicable
regulatory requirements may result in, among other things, warning letters,
fines, injunctions, civil penalties, recall or seizure of products, total or
partial suspension of production, failure of the government to review pending
marketing approval applications, withdrawal of marketing approvals and criminal
prosecution.
For clinical investigation and marketing of products outside the United
States, Corixa and its corporate partners may be subject to regulation by
regulatory authorities in other countries. The requirements governing the
conduct of clinical trials, marketing authorization and pricing and
reimbursement vary widely from country to country. The regulatory approval
process in other countries entails requirements similar to those associated with
FDA approval.
Corixa's research and development activities involve the controlled use of
hazardous materials, chemicals and various radioactive materials. Corixa is
subject to federal, state and local laws and regulations governing the use,
storage, handling and disposal of such materials and certain waste products.
Although Corixa believes that its safety procedures for using, handling, storing
and disposing of such materials comply with the standards required by state and
federal laws and regulations, the risk of accidental contamination or injury
from these materials cannot be completely eliminated.
COMPETITION
The biotechnology and biopharmaceutical industries are characterized by
rapidly advancing technologies, intense competition and a strong emphasis on
proprietary products. Many third parties compete with Corixa in developing
alternative therapies to treat cancers and infectious and autoimmune diseases,
including:
- pharmaceutical companies;
- biotechnology companies;
- academic institutions; and
- other research organizations.
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Many of these competitors have significantly greater financial resources
and expertise in research and development, manufacturing, preclinical testing,
conducting clinical trials, obtaining regulatory approvals and marketing than
Corixa. In addition, many of these competitors have become more active in
seeking patent protection and licensing arrangements in anticipation of
collecting royalties for use of technology that they have developed. Smaller or
early-stage companies may also prove to be significant competitors, particularly
through collaborative arrangements with large and established companies. These
third parties compete with Corixa in recruiting and retaining qualified
scientific and management personnel, as well as in acquiring technologies
complementary to Corixa's programs.
Corixa expects that competition among products approved for sale will be
based, among other things, on efficacy, reliability, product safety, price and
patent position. Corixa's ability to compete effectively and develop products
that can be manufactured cost-effectively and marketed successfully will depend
on its ability to:
- advance its technology platforms;
- license additional technology;
- maintain a proprietary position in its technologies and products;
- obtain required government and other public and private approvals on a
timely basis;
- attract and retain key personnel; and
- enter into corporate partnerships.
EMPLOYEES
As of August 5, 1999, Corixa had 173 employees. Of these employees, 124
were engaged in research and development and 49 in research support and
administration. Corixa has never experienced a work stoppage and none of its
employees are covered by a collective bargaining agreement. Corixa believes its
employee relations are good.
FACILITIES
Corixa's headquarters are in approximately 77,000 square feet of leased
space in Seattle, Washington. These facilities include laboratory, discovery,
research and development and general administration space. The lease for our
Seattle facility expires in January 2005, with an option to renew for two
additional periods of five years each. Corixa also has facilities in Redwood
City, California that occupy 28,000 square feet, including laboratory,
discovery, research and development and general administration space. The
principal lease at the Redwood facility expires February 2001. Corixa believes
that its existing facilities are adequate to meet its immediate needs and that
suitable additional space will be available in the future on commercially
reasonable terms as needed.
LEGAL PROCEEDINGS
Corixa is not currently a party to any material legal proceedings.
SCIENTIFIC COLLABORATORS
Corixa has established a network of medical, clinical and scientific
advisors and collaborators to consult with Corixa's scientists and to advise
Corixa on its research and development programs, the
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design of its clinical trials and on other medical and scientific matters
relating to Corixa's business. Corixa's advisors and collaborators include the
following individuals:
Roberto Badaro, M.D. is an Associate Professor and Chief of the Infectious
Disease Research Unit at the Federal University of Bahia in Salvador, Bahia,
Brazil, and a Member of the Steering Committee of Integrated Chemotherapy and
Vaccine for Leishmaniasis for the WHO in Geneva, Switzerland. Dr. Badaro
collaborates with Corixa in a tuberculosis skin testing program and a cancer-
related tissue procurement program, each of which is conducted in Brazil.
Nora Disis, M.D. is an Assistant Professor of Medicine at the University of
Washington in Seattle, Washington. Dr. Disis collaborates with Corixa in its
research and development program focusing on the use of Her-2/neu technology in
vaccines for breast cancer. Dr. Disis is the principal investigator on the Phase
I clinical trial currently being conducted by Corixa and the University of
Washington using Her-2/neu peptide vaccines for breast cancer.
Olivera Finn, Ph.D. is a Professor of Molecular Genetics and Biochemistry
at the University of Pittsburgh School of Medicine, Director of the Immunology
Program at the University of Pittsburgh Cancer Institute in Pittsburgh,
Pennsylvania and a co-founder of Corixa. Dr. Finn collaborates with Corixa in
its research and development efforts focusing on the use of the Muc-1 peptide
vaccine for the treatment of breast, pancreatic and colon cancer. Dr. Finn is
the inventor of the Muc-1 synthetic peptide vaccine that was the subject of a
Phase I clinical trial in breast, colon and pancreatic cancer recently conducted
by the University of Pittsburgh. Such vaccine is currently the subject of a
limited second dose-ranging clinical trial which is partly funded by Corixa and
conducted by the University of Pittsburgh.
H. Kim Lyerly, M.D. is Professor of Surgery, Associate Professor of
Pathology, Assistant Professor of Immunology and the clinical director of the
Duke Center for Gene and Cellular Therapy, Duke University Medical Center,
Durham, North Carolina. Dr. Lyerly and Dr. Michael Morse, Assistant Professor of
Medicine, Duke University Medical Center, collaborate with Corixa in research
and development of Her-2/neu technology for breast cancer, with emphasis of
dendritic cell loaded vaccines. Drs. Lyerly and Morse are investigators on Phase
I clinical trials using Her-2/neu peptide and proteins pulsed onto dendritic
cells at Duke University Medical Center.
Richard Ostenson, M.D. is a Director of Research at Good Samaritan Cancer
Center. Dr. Ostenson collaborates with Corixa in its vaccine development program
and supplies Corixa with cancer cell lines and other materials used in Corixa's
various research and development programs.
David Persing, Ph.D., M.D. was an Associate Professor of Microbiology at
the Mayo Clinic's Department of Laboratory Medicine and Pathology in Rochester,
Minnesota until July 30, 1999. Prior to July 30, 1999, Dr. Persing collaborated
with Corixa in its tick-borne disease programs. On July 30, 1999, Dr. Persing
joined Corixa as Vice President of Diagnostics Development.
Elizabeth Repasky, Ph.D. is a Cancer Research Scientist at the Roswell Park
Cancer Center in Buffalo, New York and Professor and Director of Graduate
Studies in the Immunology Graduate Program at Roswell Park/State University of
New York at Buffalo. Dr. Repasky collaborates with Corixa in its tumor
immunology, vaccine development and tumor procurement programs. She has
experience in cell and tumor biology, in histology and immunocytochemistry and
in the development of mouse models for the growth and passage of patients'
tumors. Her research is also focused on the use of hyperthemia and heat shock
proteins in vaccine development.
Kenneth Rock, M.D. is the Chairman of the Department of Pathology and a
Professor at the University of Massachusetts Medical Center in Worcester,
Massachusetts and a co-founder of Corixa.
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Dr. Rock collaborates with Corixa in its research and development efforts
focusing on the use of microsphere delivery technology to stimulate a T cell
response.
James Watson, Ph.D. is the Scientific Director of Genesis in Auckland, New
Zealand. Dr. Watson collaborates with Corixa in its M. vaccae discovery program
and animal and clinical testing.
Corixa has entered into consulting or sponsored or collaborative research
agreements with its principal advisors and collaborators. Each of Corixa's
advisors and collaborators has also entered into a confidentiality and
non-disclosure agreement with Corixa. These advisors and collaborators are
generally employed by employers other than Corixa and may have commitments to or
consulting or advisory contracts with other entities that may limit their
availability to Corixa. Although generally each advisor and collaborator agrees
not to perform services for another person or entity that would create a
conflict of interest with the individual's services for Corixa, Corixa cannot
assure you that such conflict will not arise.
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INFORMATION CONCERNING RIBI
GENERAL
Ribi was incorporated on January 9, 1981, under the laws of Delaware and is
engaged in the development of biopharmaceutical products that stimulate the
immune system to generate a cascade of natural agents and signals to prevent and
treat human disease. Ribi immunostimulants can be combined with disease-specific
antigens which may direct the immune system to respond to a particular cancer or
infectious disease or can be used to modulate the immune response which may
prevent or ameliorate conditions such as ischemia-reperfusion injury. Ribi is
engaged in the research, development, production and marketing of these
products, some of which are under investigation by other companies for use as
adjuvants. In addition, Ribi engages in related activities such as the custom
formulation and sale of research products.
Ribi has an active research and development program for new products and
the improvement of its existing products. Ribi manufactures all of its clinical
products and has developed and continues to develop processes for the
commercial-scale production of its compounds. Ribi protects its proprietary
products and processes through the filing of patent applications and the use of
confidentiality agreements. Ribi has 22 issued United States patents covering
its compounds, processes and certain uses of its products. The expiration dates
for United States patents held by Ribi range from 2001 to 2015. In addition,
Ribi has five pending U.S. applications, two of which have been indicated as
containing allowable claims. Patents have also been applied for or issued on a
selected basis in foreign countries.
Ribi is headquartered near Hamilton, Montana, in a modern facility housing
approximately 60,000 square feet of laboratory, administrative, marketing, pilot
plant and commercial-scale production functions. In addition to the plant and
equipment, Ribi owns approximately 35 acres of land allowing for potential
future expansion. To date most of Ribi's revenues have been from investment
income earned on cash balances and investments, product license and contract
research fees, and sales of research and animal health products. Products for
use as human biopharmaceuticals have not yet been approved for sale.
RIBI'S TECHNOLOGY
The technology of Ribi is based on the potent capacities of certain
microbial products to modulate the cascade of regulatory substances produced by
cells in man and other animals. Slight modifications of these products and/or
their physical and biological delivery to the immune system can profoundly
influence the qualitative and quantitative natures of the subsequent regulatory
substance modulation and the physiological responses.
Ribi believes that appropriate delivery of products of this core technology
can be used to enhance a protective response or to suppress an unwanted
immunological or inflammatory response. Ribi believes it has developed a
distinct approach to immune modulation. Ribi's materials activate macrophages,
lymphocytes and other cells relating to the immune system. This activation
stimulates an immunological cascade of regulatory substance production which
complements the normal, protective responses that are initiated during infection
or injury. Furthermore, this type of stimulation results in an individually
tailored response, similar to the manner in which the body would respond to
natural stimuli.
The concept of using microbial products to provide a general immune
modulation as a therapeutic approach dates back to the late 1800s. However,
little progress was made in exploiting the therapeutic potentials of these
products until the 1980s. First of all, much reliance had been placed
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on chemotherapeutics, antibiotics and radiation as panaceas for infectious and
abnormal tissue growth diseases. Secondly, there appeared to be unsolvable
toxicity problems associated with the microbial immunotherapeutic products. In
1981 the late Dr. Edgar Ribi, a cofounder of Ribi, and his colleagues discovered
a producible process which led to the detoxification of endotoxin, a bacterial
cell-wall component and one of the most potent known stimulators of the immune
system. By separating and isolating selected portions of bacterial cell walls,
Dr. Ribi and his colleagues were able to chemically define the precise structure
of the endotoxin molecule which possessed immunomodulatory activities and to
attenuate the toxicity of this molecule without destroying its beneficial
biological properties. The result was a chemical entity referred to as
monophosphoryl lipid A, trademarked by Ribi as MPL immunomodulator. In addition
to attenuating toxicity of the endotoxin molecule, Ribi's scientists have
extracted biologically active components from the cell walls of Mycobacterium
bovis or M. phlei and have formulated combinations of these components as
potential immunomodulatory agents.
Knowledge of the structures of MPL and other immunomodulators now makes it
possible to prepare these compounds and related small molecules by synthetic
methods. Comparison of the biological activities of these synthetic compounds
with their structures is allowing the development of a detailed picture of the
relationships between structures and activities. This has led to the
identification of molecules that may have unique uses as new immunomodulatory
products.
The core of Ribi's product development is the use of MPL immunomodulator by
itself or in combination with other immunomodulators and appropriate delivery
vehicles to modify selectively the immunological status of an individual. This
is accomplished primarily through precise enhancement or suppression of cellular
hormones called cytokines.
Modulation of the cascade of cytokines, both enhancement and suppression,
is an extremely complicated process. The particular roles played by the
cytokines, alone and in combination with others, have not yet been defined
completely. Furthermore, it is unlikely that it will ever be possible to assess
the immune status of a patient to such an extent that treatment with exogenous
cytokines can be tailored to the patient's exact needs. Poor distribution of
cytokines from the bloodstream to desired target tissues also limits their
utility as drug products. By studying the structure-function relationships of
natural and synthetic immunomodulators, Ribi scientists hope to discover ways to
selectively stimulate or suppress cytokine responses in various tissues
naturally. Information from these studies may provide new insights about how the
beneficial effects of cytokine modulation can be exploited in the treatment of
disease.
Ribi's products are in various stages of development. Ribi has no
commercial products other than supplying clinical materials to corporate
partners and selling certain laboratory research products which presently
generate limited sales revenue. There is no assurance that the products under
development, including Melacine melanoma theraccine, the synthetic
cardioprotectant, or any adjuvants, vaccines or other immunological agents, will
be commercially successful. While there is evidence that the immunomodulators
produced by Ribi and others may provide treatment for certain cancers,
infectious or other diseases, the workings of the immune system, particularly in
conjunction with immunomodulators, are not yet fully understood. As a result,
Ribi's research and development activities, as well as those of its competitors,
are based on theories and concepts that may not have been completely proven or
defined. Ribi has been testing certain of its compounds on humans in the United
States pursuant to investigational new drug applications filed with the FDA. To
date preclinical and clinical data indicate product activity, and there have
been no significant unexpected, untoward effects associated with the
administration of Ribi's products. However, considerable additional testing in
human subjects is required to demonstrate efficacy and confirm product safety
for most of Ribi's products. Even if results are successful, there is no
assurance that Ribi will receive the necessary governmental approvals for its
products, that additional satisfactory collaborative or
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licensing arrangements will be available to Ribi, or that any of Ribi's products
will be accepted by the medical community.
RIBI'S PRODUCTS
In the United States human biopharmaceutical products are regulated by the
FDA. The FDA requires every new drug intended for human use to be tested under
strictly regulated treatment protocols, all of which involve substantial time
and cost.
The table below summarizes the current status of Ribi's principal product
development programs, which are discussed in more detail beginning on the
following pages. Results that have been reported in Phase I and Phase II trials
involving Ribi's products do not establish product efficacy, and there can be no
assurance that any of the listed products will progress beyond their current
state of development or ultimately receive necessary regulatory approval from
the FDA or comparable agencies in foreign countries or be accepted by the
medical community.
<TABLE>
<CAPTION>
PRODUCT PROPOSED APPLICATION STATUS COLLABORATOR/LICENSEE
- ------- -------------------- ------ ---------------------
<S> <C> <C> <C>
Adjuvants-Natural Enhancement of Phase I, II & III SmithKline Beecham --
infectious disease (herpes simplex, exclusive rights for
vaccines hepatitis B, human herpes; hepatitis A, B
papilloma virus, and C; influenza A and
influenza, malaria, B; Lyme disease;
streptococcal malaria; human papilloma
infections, Epstein-Barr virus; among
respiratory syncytial others -- co-exclusive
virus and AIDS) rights for DPT;
Haemophilus influenza b;
otitis media; polio;
tuberculosis; among
others -- nonexclusive
rights for AIDS and
others
Wyeth-Lederle Vaccines
and Pediatrics -- co-
exclusive rights for
DPT; Haemophilus
influenza b; otitis
media; polio; among
others
Adjuvants-Natural Enhancement of allergy Phase II Allergy Therapeutics
vaccines Ltd -- exclusive rights
in the European
Community, Eastern
Europe and
Canada -- co-exclusive
for the rest of the
world
Adjuvants-Natural Enhancement of cancer Phase I SmithKline Beecham --
vaccines nonexclusive rights for
cancer vaccines
Adjuvants-Synthetic Enhancement of Preclinical None
infectious disease
vaccines
Melacine melanoma Stage IV (advanced) Product license Schering-Plough
theraccine malignant melanoma application filed in Corporation -- exclusive
Canada. Application worldwide rights
being prepared for the
United States
</TABLE>
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<TABLE>
<CAPTION>
PRODUCT PROPOSED APPLICATION STATUS COLLABORATOR/LICENSEE
- ------- -------------------- ------ ---------------------
<S> <C> <C> <C>
Stage II (early stage) Phase III Schering-Plough
malignant melanoma Corporation -- exclusive
(prevention of worldwide rights
recurrence after
surgery)
Melacine melanoma Stage IV (advanced) Phase III Schering-Plough
theraccine + interferon- malignant melanoma Corporation -- exclusive
alfa 2b worldwide rights
RC-552 cardio-protectant Prevention of ischemia- Preclinical, Planning None
reperfusion injury in Phase II and/or III
coronary artery bypass
graft patients
Detox adjuvant Enhancement of Phase I, II& III and Biomira (exclusive to
therapeutic vaccines pre-clinical specific antigents);
(theraccines) for National Cancer
breast, lung, Institute -- collaboration
gastrointestinal and
colon cancers
</TABLE>
CANCER THERACCINES
MELACINE MELANOMA THERACCINE
Melanoma is a cancer of the skin cells that produce the dark pigment
melanin. While early stage melanoma is limited to the skin, it spreads to the
liver, lungs and other organs in later stages. Prognosis is dire for patients
with advanced disease. Median survival for advanced-disease patients is
approximately eight months using currently available forms of treatment. In
1998, there were 41,600 new cases of melanoma diagnosed in the United States and
7,300 deaths. Over the past 15 years the incidence of malignant melanoma in the
United States has risen steadily. The rate of increase in incidence is second
only to that of lung cancer in women. Increased exposure to ultraviolet rays may
be an important factor contributing to the increase in new cases of melanoma.
Ribi is developing Melacine, a therapeutic vaccine to treat melanoma.
Melacine uses melanoma tumor-associated antigens and Detox immunostimulant to
help the melanoma patient slow or stop the natural progression of the disease.
In 1996, Ribi completed a meta-analysis of published survival data for patients
with disseminated melanoma who received various available therapies. The
meta-analysis, a recognized statistical method for combining results of several
independent studies of a particular subject, among other things, reviewed the
survival characteristics of 5,392 patients with disseminated melanoma from
clinical studies published between 1974 and 1995 by leading melanoma researchers
of various available therapies, including chemotherapy, interferon,
interleukin-2, lymphokine-activated killer cells and other melanoma vaccines.
The results of this meta-analysis were then compared with the median survival
for a similar cohort of patients treated with Melacine melanoma theraccine. A
significant difference in median survival was observed with 11 months for
evaluable patients who received Melacine compared to 7.9 months for evaluable
patients receiving other therapies included in the meta-analysis.
Survival data for late-stage patients treated with Melacine was determined
in 1996 in an analysis of final data collected from Ribi's first Melacine Phase
III study, which compared therapy with Melacine to an aggressive, experimental
four-drug chemotherapy regimen. The study found that during the treatment
period, patients receiving Melacine experienced significantly better quality of
life compared to patients receiving chemotherapy and that there was no
statistically significant difference in median survival results between the two
modalities (11 months for evaluable patients receiving Melacine vs. 12.4 months
for evaluable chemotherapy patients). Additionally, a significantly longer
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median survival of 18.2 months was observed in patients who experienced clinical
responses to therapy with Melacine (responders) as compared to the entire group
receiving Melacine. In contrast, the data suggested that while chemotherapy
caused tumor shrinkage in some patients, this shrinkage was not associated with
a significant survival advantage. Patients who experienced a clinical response
to chemotherapy only had a median survival of 15.2 months, which was not
statistically different when compared to the evaluable patients as a group who
were treated with chemotherapy. Responders to Melacine can be identified after
one course -- 14 weeks -- of therapy, giving physicians the opportunity to
switch nonresponders to alternative therapeutic modalities relatively early in
the disease management process. The only drugs currently approved by the FDA for
melanoma are dacarbazine, hydroxyurea, interferon alfa-2b, which was approved in
1995 for post-operative therapy in patients whose tumors can be surgically
removed and are at high risk of recurrence, and interleukin-2, which was
approved in early 1998 in the United States for late stage melanoma. All of
these drugs are quite toxic and have limited efficacy.
Based on the comparative information, the lack of good treatment
alternatives, plus the fact that the cost of treatment with Melacine is expected
to be less than most other forms of treatment, Ribi filed a New Drug Submission
with the Canadian Health Protection Branch in 1997. The New Drug Submission is
presently in regulatory review. Ribi has answered all questions submitted to
date by the Canadian Health Protection Branch and addressed all issues
identified during a manufacturing facility inspection by the Canadian Health
Protection Branch last summer. Ribi continues to work with the Canadian Health
Protection Branch to expedite successful conclusion of the necessary regulatory
approval process for Melacine.
Ribi filed a license application for Melacine with the European Agency for
the Evaluation of Medicinal Products in the first quarter of 1998. However, the
application was withdrawn in November 1998 after the European Agency requested
the submission of additional clinical and product data by January 1999. As these
data would not be available within that time period and following the advice of
the European Agency, Ribi withdrew the application, preserving the right to
submit the requested clinical data at a later date. Ribi has been working
closely with the FDA to define the data package required for submission of a
license application in the United States.
A second Phase III clinical trial, which is sponsored by the National
Cancer Institute and being conducted by the Southwest Oncology Group, is
designed to determine the ability of Melacine to prevent recurrence of melanoma
in early stage patients. These patients had their melanoma lesions surgically
removed. In this study, Melacine was given to half of the patients, and they are
being compared to the other half of the patients in the study who did not
receive vaccine treatment but were only observed. This study of 689 patients
reached full accrual in late 1996 with final analysis of disease recurrence
expected between late 1999 and late 2000, depending on the actual number of
recurrences.
In 1995, the FDA allowed Ribi to begin a third Phase III clinical trial.
This study compares patients with late stage melanoma receiving the combined
therapy of Melacine and a low-dose regimen of interferon alfa-2b with a control
arm of patients receiving only interferon alfa-2b. Results of this study are
expected in late 1999 or early 2000. In a pilot study of treatment with Melacine
followed by interferon alfa-2b, seven patients who responded to interferon
alfa-2b A had previously had an increase in a certain type of white blood cells
as a result of previous immunotherapy with Melacine. White blood cell response
data was not available for the eighth responding patient. The data suggested
there may be synergy between the two drugs as indicated by a 44% overall
clinical response rate (tumor regression) and extended survival in the
responding melanoma patients in comparison to nonresponders. The 44% response
rate, eight of 18 patients, was higher than that obtained previously with either
agent alone.
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In 1998, Ribi granted worldwide marketing rights for Melacine to
Schering-Plough Corporation. In addition to license fees, Ribi will receive
transfer payments for supplies of Melacine and will be entitled to royalties
upon commercial sale of Melacine. Ribi had in 1992 licensed the rights to market
Melacine in Canada to Biomira, Inc. of Edmonton, Alberta, Canada. During 1998
Ribi reacquired those rights from Biomira and granted them to Schering-Plough
Corporation.
Melacine was given Orphan Drug status by the FDA in 1989, which provides
seven years of marketing exclusivity from the date of marketing approval.
Ribi has exclusive marketing rights for Melacine through an agreement with
the University of Southern California where the melanoma tumor associated
antigens were developed through the work of Dr. Malcolm S. Mitchell. The
University is entitled to royalty payments from Ribi upon commercial sale of
Melacine melanoma theraccine.
OTHER THERACCINES
In addition to Melacine, Ribi has participated in research programs and has
established relationships to evaluate therapies that incorporate Ribi's
immunostimulants with tumor-associated antigens for the treatment of other types
of cancers. In 1990, Ribi entered into a collaboration with Biomira. Biomira
produces synthetic carbohydrate antigens, which can be combined with Ribi's
adjuvants to produce theraccines with potential application against breast, lung
and gastrointestinal cancers. Human clinical data have been published which
demonstrate that Ribi's Detox B-SE adjuvant plays a key role in generating a
significant immune response with Biomira's line of Theratope cancer theraccines.
Biomira has licensed Detox B-SE adjuvant from Ribi for the clinical development
and potential commercialization of Theratope theraccines. In 1996 Biomira
announced final Phase II clinical data showing that its Theratope theraccine for
metastatic breast cancer provides a median survival of more than 26 months as
compared to less than 10 months achieved historically with chemotherapy.
Biomira, in collaboration with Chiron Corporation, announced in November 1998
the start of a pivotal Phase III trial to evaluate the effectiveness of
Theratope theraccine in treating metastatic breast cancer. The study, believed
to be the largest of its kind in this patient cohort, will include 75 to 80
centers worldwide studying approximately 900 evaluable patients. Primary
endpoints for the study are time to disease progression and survival. The study
is expected to reach full accrual after 18 months, with submission for
regulatory approval to follow at some time in the future, assuming favorable
study results.
During 1995 Ribi completed a license and supply agreement with SmithKline
Beecham covering the use of Ribi's adjuvants in cancer theraccines under
development by SmithKline Beecham. Under the license and supply agreement, Ribi
granted SmithKline Beecham a nonexclusive, worldwide license to use its
adjuvants commercially upon regulatory approval of SmithKline Beecham's cancer
vaccines. Ribi will receive an annual license fee and milestone payments for
each SmithKline Beecham vaccine incorporating Ribi's adjuvants that is submitted
for regulatory review and subsequent milestone payments upon regulatory approval
of each vaccine incorporating a Ribi adjuvant. In addition to transfer payments
for commercial quantities of adjuvant, Ribi will also receive royalties on any
commercial sales of approved vaccines incorporating its adjuvants. In late 1997,
SmithKline Beecham began a Phase I trial with a cancer vaccine that utilized
Ribi's adjuvants.
INFECTIOUS DISEASE VACCINES
Ribi's immunostimulant technology appears to have beneficial application in
the creation of vaccines for the prevention of viral and bacterial infections.
Ribi believes that current emphasis on preventive healthcare, the recent
resurgence of certain previously controlled infectious diseases and the
continued emergence of new diseases, such as AIDS and Lyme disease, will lead to
greater use of
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prophylactic vaccines. Ribi believes that the immunostimulating characteristics
of MPL make it well suited for use as an adjuvant with various specific antigens
for the creation of vaccines. Alum, the adjuvant historically used in approved
vaccines, is proving to be inadequate for many new vaccine antigens,
particularly those created with advanced DNA and subunit technology.
Ribi has licensed certain of its adjuvants to SmithKline Beecham in three
separate agreements for use in vaccines for infectious diseases that SmithKline
Beecham is developing. The first agreement, signed in 1991, provides for
exclusive, worldwide use in defined SmithKline Beecham vaccines for a number of
primarily adult viral vaccines. Ribi receives transfer payments for supplies of
adjuvant and will receive royalties upon commercialization. SmithKline Beecham
is conducting human clinical testing with Ribi's adjuvants for vaccines against
herpes, hepatitis B, malaria, human papilloma virus and respiratory syncytial
virus. During 1998 SmithKline Beecham continued to advance the development of
several vaccines covered by this agreement. In December 1998 SmithKline Beecham
announced Phase III safety and efficacy results of a new, more powerful
hepatitis B vaccine containing Ribi's MPL immunomodulator. This new vaccine was
developed to address low or nonresponding patients to SmithKline Beecham's
current hepatitis B vaccine, ENGERIX-B. ENGERIX-B is the world's leading
hepatitis B vaccine with over 450 million doses distributed worldwide. While the
three-dose ENGERIX-B regimen is effective in most people, certain segments of
the population, including the elderly with decreased immune function and
hemodialysis patients, do not receive adequate protection. In addition, some
healthy young individuals require additional doses to achieve sufficient buildup
of antibody levels. The new vaccine combines the antigen in ENGERIX-B with
SmithKline Beecham's novel adjuvant, SBAS4, which contains Ribi's MPL. In the
clinical trial in nonresponders comparing ENGERIX-B with the new vaccine,
seroconversion rates (protective antibody levels) were measured one month after
each of three vaccine doses; at zero, one and six months. After the first dose,
78% of the group given the new vaccine seroconverted versus 59% of the ENGERIX-B
group. After two doses, 96% versus 76% seroconverted. After the third and final
treatment, 98% of patients receiving the vaccine containing MPL seroconverted
compared to only 81% of the patients given ENGERIX-B. SmithKline Beecham has
indicated that it plans to file for registration of the new hepatitis B vaccine
for use in low and nonresponders by the end of 2000.
SmithKline Beecham is also conducting a clinical trial using MPL, which is
designed to test the efficacy of a novel herpes vaccine in a study using a
selected consort design. In the trial one partner in a couple has herpes and the
other does not. The vaccine is being tested for its ability to prevent the
spread of herpes between partners.
The second license agreement with SmithKline Beecham was signed in 1992 for
a group of bacterial infectious disease vaccines, including some pediatric
vaccines. Under this agreement SmithKline Beecham has rights to develop a new
generation of combination vaccines containing diphtheria, pertussis, tetanus,
Haemophilus influenza b and polio antigens and is in early research with several
other bacterial vaccines that include Ribi's adjuvants. Pursuant to this
agreement, Ribi granted SmithKline Beecham a co-exclusive, worldwide license to
use certain of Ribi's adjuvants commercially upon regulatory approval. In
addition to an annual license fee, Ribi receives transfer payments for supplies
of the adjuvants and will be entitled to royalties from SmithKline Beecham upon
commercial sale of the vaccines.
Effective December 31, 1996, Ribi entered into a third infectious disease
vaccine license agreement granting SmithKline Beecham an exclusive license to
use certain of Ribi's adjuvants in a human papilloma virus vaccine, a
co-exclusive license for a tuberculosis vaccine, and a nonexclusive license to
use Ribi's adjuvants in the development of additional infectious disease as well
as other vaccines. In addition to annual license fees, Ribi will receive
transfer payments for clinical and
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commercial quantities of adjuvant and royalties on any commercial sales of
vaccines incorporating Ribi's adjuvants. Vaccines under this agreement are in
early stages of development.
Effective in 1993, Ribi entered into license and supply agreements with
Wyeth-Lederle Vaccines and Pediatrics, a business unit of Wyeth-Ayerst
Laboratories, which is a division of American Home Products Corporation, for the
co-exclusive use of certain of Ribi's adjuvants in the development of
prophylactic vaccines, including pertussis, Haemophilus influenza b and
Streptococcus pneumoniae and for supply by Ribi of commercial quantities of
adjuvants. The agreements with Wyeth-Lederle provide for an annual license fee,
transfer payments for supplies of adjuvants and for royalty payments upon
commercial sale of vaccines. During 1999 Wyeth-Lederle continued clinical
development of a pediatric combination vaccine containing MPL immunomodulator as
an adjuvant.
Additionally, Merck & Co., Inc. has entered into an option agreement with
Ribi to use MPL in AIDS vaccines it is developing. Ribi also has entered into an
option agreement with CEL SCI Corporation to use MPL adjuvant in an AIDS
vaccine. However CEL SCI recently informed Ribi that it did not wish to extend
the option term which has now expired.
In the course of product development, Ribi has extensively studied the
structure/function relationships of its complex immunostimulant molecules
derived from bacterial sources. With this information, Ribi scientists designed
synthetic small molecules with a broad spectrum of properties. These compounds
should result in an expanding product pipeline that will include the next
generation of novel adjuvants for broad use in therapeutic and prophylactic
vaccine applications. Ribi's second-generation adjuvant technology platform is
based on novel AGP -- aminoalkyl glucosamine phosphate -- adjuvants. In animal
models these new synthetic compounds display potent bioactivity, possess an
excellent safety profile and are amenable to alternative methods for vaccine
delivery, such as intranasal delivery. Synthetic AGP compounds may also provide
advantages in ease of formulation, manufacturing scale-up and simplified quality
assurance. It has been shown in animal models that mucosal immunity is
stimulated using intranasal delivery of vaccines containing Ribi's synthetic
adjuvants. The ability to stimulate mucosal immunity, considered an important
early defense mechanism against respiratory, gastrointestinal and sexually
transmitted diseases, presents the opportunity to develop a new line of
prophylactic and therapeutic vaccines. Ribi scientists have successfully used
AGPs in preclinical testing of tetanus, hepatitis B and influenza vaccines.
Plans are underway to initiate human clinical trials of an AGP compound to
generate safety data which will be important in attracting future collaborators.
In 1998 Ribi announced it acquired exclusive worldwide rights to a novel
molecular adjuvant technology developed at the Eppley Institute for Cancer
Research at the University of Nebraska. This molecular adjuvant technology
includes a class of synthetic molecules that have the unique, dual ability to
both target and stimulate specific immune system cells. The broad-based
technology has potential application in vaccines against certain cancers and
chronic infectious diseases, including hepatitis B and Chlamydia trachomatis, a
highly prevalent sexually transmitted disease which can lead to pelvic
inflammatory disease, sterility and blindness. Ribi scientists are evaluating
the molecular adjuvant technology in cancer vaccine models as well.
Additional business opportunities are represented by the AGP and molecular
adjuvant technologies. Since both are unencumbered by licensing arrangements,
Ribi has the potential to realize new revenue streams by establishing corporate
collaborations based on these developments.
OTHER VACCINES
Another significant opportunity was added in 1996 to Ribi's vaccine
adjuvant franchise with the signing of a license/supply agreement covering the
use of its adjuvants in allergy vaccines under
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development by SmithKline BeechamPharma, a subsidiary of SmithKline Beecham.
This agreement provided SmithKline Beecham Pharma with the right to use certain
of Ribi's adjuvants commercially upon regulatory approval of SmithKline Beecham
Pharma's allergy vaccines. In 1998 development of SmithKline Beecham Pharma's
allergy vaccines was assumed by Allergy Therapeutics Ltd. Under the agreement
between Allergy Therapeutics and Ribi, Allergy Therapeutics has rights to MPL
immunomodulator for use in a generation of allergy desensitization products.
Current allergy desensitization involves a series of injections of allergen
extracts administered by a healthcare professional initially weekly, later
monthly, for up to three years. Early Phase II clinical studies have shown that
with the addition of MPL, Allergy Therapeutics new generation of allergy
vaccines may provide desensitization with fewer immunizations. In addition, a
new sublingual delivery system under development at Allergy Therapeutics may
increase patient compliance by allowing self-administration of these novel
vaccines. Allergy Therapeutics has an aggressive clinical trial program
underway. Should trials go as planned, MPL may be included in a new allergy
desensitization product, initially on a named-patient basis in the second half
of 1999.
Under the agreement with Allergy Therapeutics, Ribi will receive an annual
license fee prior to, and minimum annual royalties subsequent to, regulatory
approval of any Allergy Therapeutics allergy vaccines incorporating a Ribi
adjuvant. Ribi will also receive supply payments for clinical and commercial
quantities of its adjuvants and royalties on any commercial sales of approved
allergy vaccines incorporating Ribi's adjuvants.
CARDIOPROTECTANT
Ischemia-reperfusion injury is damage that can occur in tissue during the
oxygen deprivation of ischemia and when blood flow is restored after such events
as a heart attack or a planned event such as cardiovascular surgery, angioplasty
or organ transplantation. Paradoxically, restoring blood flow to ischemic tissue
may induce a complex series of events leading to both reversible and
irreversible cardiac tissue damage beyond any damage that may have occurred
during the ischemic period. It is believed that a significant factor in
reperfusion injury is the generation of free radical molecules, which attack and
damage cardiac tissue. The injury can result in a number of complications,
including tissue death, depression of heart function, irregular heart beats and
in some cases, death.
It is well established in animal models that a phenomenon termed ischemic
preconditioning can protect heart tissue from ischemia-reperfusion injury. Short
periods of ischemia followed by reperfusion can protect a heart which is
subsequently subjected to prolonged ischemia. This activity elicits both a
window of immediate protection that lasts for up to two hours as well as a
second window of protection that begins approximately 12 hours later. Most
physicians do not consider it desirable to mechanically induce short periods of
ischemia in patients prior to a surgical procedure to precondition and protect
the heart. Ribi had previously pursued development of a natural compound, MPL-C
cardioprotectant, that was found to pharmaceutically mimic certain aspects of
ischemic preconditioning. Subsequently, Ribi's synthetic chemistry program
discovered a novel cardioprotectant that is fast acting, with high potency and
an improved therapeutic index, as compared to MPL-C.
In 1997 Ribi prioritized its cardiology program on development of the new
synthetic compound, RC-552 cardioprotectant. Since then, preclinical studies of
RC-552 have been conducted in several animal heart models by Ribi and
collaborating scientists in leading research institutions. Results indicate the
drug possesses a unique profile in that it reduces infarct size, reduces
stunning and lowers the incidence of arrhythmias caused by ischemia-reperfusion
injury. Dr. Dipak Das of the University of Connecticut College of Medicine
studied RC-552 in a canine cardiopulmonary bypass model. In this model RC-552
was administered in a single dose prior to surgery, followed by continuous
infusion of a smaller dose throughout a one-hour and forty-minute ischemic
period and a subsequent three
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hour reperfusion period. The results showed that RC-552 reduced damage to the
heart by 65% to 70%.
The findings of Dr. Das and other investigators that RC-552 provides
protection in a model of severe cardiac ischemia during cardiopulmonary bypass,
and that it provides rapid and continuous protection with drug infusion, have
important implications for its clinical use. It may now be possible to protect
surgery patients immediately after giving drug, during the entire operation and
through the post-surgical periods, when they are still at risk for complications
of ischemia-reperfusion injury. There currently is no drug approved to prevent
this condition, which occurs in approximately 25% of coronary artery bypass
graft surgeries based upon a composite end point of infarction, severe stunning
and death. Because of Ribi's experience with MPL-C, the FDA has determined that
RC-552 can proceed directly into advanced clinical studies in open heart bypass
and aortic valve replacement surgery patients following filing of an
investigational new drug application.
Potential clinical applications for RC-552 cardioprotectant may include
coronary artery bypass graft surgery, aortic valve replacement, angioplasty,
non-cardiac surgery in high risk patients, unstable angina, acute MI
thrombolytic therapy and organ transplantation.
RESEARCH PRODUCTS
Ribi currently produces approximately 20 research products. These products,
which include adjuvants, are used in various research projects by industrial,
academic and government research laboratories and clinics. Additionally,
physicians and veterinarians use the products in the development of treatments
for a variety of diseases and to study the body's immune responses. Ribi also
uses some of the research products it produces in its efforts to develop
immunotherapeutic agents capable of treating infectious diseases, malignant
tumors and other diseases.
CONTRACT SERVICES
Ribi from time to time engages in contract services, whereby it conducts
specialized projects on behalf of others utilizing the expertise of its research
and production teams.
SOURCES AND AVAILABILITY OF RAW MATERIALS
Materials for producing Ribi's pharmaceutical products come from a number
of sources. Most of its products are derived from biological organisms, which
are grown and maintained within Ribi's facilities. Critical organisms, not
readily available from other sources, are stored in secure locations outside of
Ribi's facilities. Chemicals and agents used in the manufacturing process are
generally fairly common and are readily available from several different
vendors.
COMPETITION
The biotechnology and pharmaceutical industries are characterized by
rapidly evolving technology and intense competition. Ribi's products under
development are expected to address a broad range of markets. Ribi's competition
will be determined in part by the potential indications for which Ribi's
products are developed and ultimately approved by regulatory authorities. The
first pharmaceutical product to reach the market in a therapeutic or preventive
area is often at a significant competitive advantage relative to later entrants
to the market. Accordingly, the relative speed with which Ribi or its corporate
partners can develop products, complete the clinical trials and approval
processes and supply commercial quantities of the products to the market are
expected to be important competitive factors. Ribi's competitive position will
also depend on, among other things, its
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ability to attract and retain qualified scientific and other personnel, develop
effective proprietary products, develop and implement production and marketing
plans, obtain and maintain patent protection, and secure adequate capital
resources. Ribi expects its products, if approved for sale, to compete primarily
on the basis of product efficacy, safety, patient convenience, reliability,
value and patent position. In addition to potential competition from other
biopharmaceutical products, the products presently under development by Ribi may
compete with nonbiologic drugs and other therapies. Ribi's competitors include
major pharmaceutical, chemical and specialized biotechnology companies, many of
which have financial, technical and marketing resources significantly greater
than those of Ribi.
Ribi is aware that research is being conducted by others in areas in which
Ribi is seeking to establish commercial products. Ribi's competitors might offer
products which, by reason of price or efficacy, may be superior to any products
that may be developed by Ribi. Ribi cannot assure that the discovery and
introduction of products by others will not render Ribi's current or future
products obsolete, or that Ribi will otherwise be able to effectively compete
with such competitors.
MARKETING
Ribi's revenues were derived from the following sources:
<TABLE>
<CAPTION>
1998 1997 1996
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Sales:
Research products.................................. $ 481 $ 484 $ 502
Custom adjuvants and research products............. 2,057 2,259 1,046
Other.............................................. -- -- 11
------ ------ ------
Total sales..................................... 2,538 2,743 1,559
Investment income, net............................. 746 942 1,017
Fees from licenses and contracts................... 2,841 2,834 2,042
Other.............................................. (2) 11 5
------ ------ ------
Total revenues.................................. $6,123 $6,530 $4,623
====== ====== ======
Export sales....................................... $2,099 $2,262 $1,205
====== ====== ======
</TABLE>
Ribi plans to license its products to marketing partners for all
applications. It filed for marketing approval of Melacine in Canada in 1997 and
currently plans to file in the United States later based in part on the outcome
of current clinical trials. Ribi has granted worldwide marketing rights for
Melacine to Schering-Plough in exchange for license fees, milestone payments,
transfer payments and royalties. Ribi will manufacture Melacine and transfer the
finished product to its partner. In the area of vaccine adjuvants, Ribi has
several license agreements in place. In the areas of synthetic adjuvants and
cardio protection, if preclinical and clinical trial data are favorable, Ribi
intends to grant additional licenses to marketing partners in exchange for
license fees, transfer payments and royalties on commercial sales, or a
combination thereof. For vaccine adjuvant applications, Ribi would manufacture
its products as bulk intermediates for transfer to marketing partners for
finishing and distribution. Ribi is currently planning to conduct a Phase II or
III human clinical trial with its synthetic cardioprotectant, RC-552, in the
prevention of heart damage associated with heart surgery. Ribi will seek a
corporate partner to assist with the clinical trial to share the substantial
financial risk of final development of the cardioprotectant.
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In the United States, Ribi markets its research products through direct
mail, scientific journal and trade show advertising and markets them worldwide,
generally to nonexclusive distributors. Export sales, consisting mainly of
custom adjuvants for Ribi's corporate partners' premarketing needs and research
products, were shipped primarily to Europe, Japan and Canada.
RESEARCH AND DEVELOPMENT
Ribi's primary source of new product candidates is internal research.
Additionally, cell lines for the Melacine melanoma theraccine antigens have been
licensed from the University of Southern California for a royalty fee from
commercial sales of Melacine, and certain molecular adjuvant technology has been
licensed from the University of Nebraska in consideration for the payment of
royalties upon commercialization. Costs and expenses for research and
development activities were approximately $7.9 million in 1998, $8.2 million in
1997 and $6.2 million in 1996.
GOVERNMENT REGULATION
Regulation by governmental authorities in the United States and other
countries is a significant factor in the research, preclinical development,
clinical trials, production and marketing of Ribi's human biopharmaceutical
products.
FDA APPROVALS
In order to produce and market human biopharmaceuticals, Ribi must satisfy
mandatory procedures and meet safety and efficacy standards established by the
FDA and equivalent foreign regulatory authorities. The process of seeking and
obtaining FDA approval for the manufacturing and marketing of a new human
biopharmaceutical product may require a number of years and substantial funding.
The steps required before a human biopharmaceutical can be produced and marketed
include preclinical studies, the filing of an Investigational New Drug
application, or IND, human clinical trials and approval of a Biologic License
Application, or BLA, or a Product License Application, or PLA, and an
Establishment License Application. For synthetic drugs that might be developed,
Ribi would request approval of a New Drug Application, or NDA rather than a BLA.
Preclinical studies are conducted in the laboratory and in animal mode
systems to gain preliminary information on a product's activity and to identify
major safety problems. The results of these studies are submitted to the FDA as
part of the IND before allowance can be obtained to begin testing in humans.
Protocols for the human trials, outlines for production of the materials and
statements describing the testing facilities are also included in the IND.
The clinical testing program required for a new biopharmaceutical product
principally involves three phases. However, in conducting actual clinical
trials, the demarcation between phases at times becomes indistinct. Phase I
studies are usually conducted with human volunteer patients to determine the
maximum tolerated dose and to discover the possible side effects of the
substance. Phase II studies are usually conducted with groups of patients having
a specific disease in order to determine the most effective dose and schedule of
administration. Phase III involves wide-scale studies that are adequately
controlled in order to provide statistically valid data on response rates which
can be compared with current therapies, including drugs or biologics.
In the United States, data from Phase I, II and III trials are submitted in
a BLA to the FDA. The BL involves considerable data collection, verification and
analysis. It also includes the preparation of summaries of the manufacturing and
testing processes, preclinical studies and clinical trials. BL approval by the
FDA is necessary before the product may be marketed in the United States.
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During the BL review period, in addition to consideration of the safety and
efficacy data, the FDA also determines what labeling it will require and permit
for marketing of the product. The agency may also require post-marketing testing
and surveillance for possible adverse reactions as a condition of its approval.
Ribi obtained Orphan Drug designation for Melacine in 1989 and, if
appropriate, may request Orphan Drug designation for other products. Under the
Orphan Drug Act the FDA may grant Orphan Drug status to drugs intended to treat
a disease or condition that affects less than 200,000 individuals in the United
States or more than 200,000 persons in the United States if there is no
reasonable expectation that sales will be sufficient to recover the costs of
developing and making available the drug. If a product is designated an Orphan
Drug, then the sponsor is entitled to receive certain incentives to undertake
the development and marketing of the product, including limited tax credits,
where applicable. In addition, the sponsor that obtains the first marketing
approval for a designated Orphan Drug for a given indication is eligible to
receive marketing exclusivity for a period of seven years. There may be multiple
designations of Orphan Drug status for a given biologic or drug and indication;
however, only the sponsor of the first approved BLA or NDA for a given biologic
or drug for its use in treating a given rare disease may receive marketing
exclusivity. There is no assurance that any additional products of Ribi will
receive Orphan Drug status. While it may be advantageous to obtain Orphan Drug
status of eligible products, there can be no assurance that the scope of
protection that is currently afforded by Orphan Drug status or the current level
of economic benefits and incentives will remain in effect in the future.
GOVERNMENTAL REFORMS
In the past few years health care reform has received considerable
attention. While it appears that federal governmental intervention is not
imminent at this time, certain reform measures currently being considered by
various state governments and certain related market restructuring could
adversely affect the pricing of therapeutic or prophylactic products or the
amount of reimbursement available. Such events could harm the profitability of
companies developing, manufacturing or marketing pharmaceutical products. Ribi
cannot predict the extent of possible future governmental reforms or the effect
such reforms or other measures may have on its business.
OTHER GOVERNMENTAL REGULATIONS
In addition to the foregoing, Ribi is and will be subject to various
regulations relating to the maintenance of safe working conditions, good
laboratory and manufacturing practices and the use and disposal of harmful or
potentially harmful substances.
There can be no assurance that any required approvals will be granted on a
timely basis, if at all, or that such approvals, once granted, will not be
withdrawn. Furthermore, there is no assurance that additional regulation will
not be imposed on Ribi's activities or products in the future.
PATENTS AND PROPRIETARY PROTECTION
Ribi has obtained and applied for patents in the United States and several
foreign countries. Ribi has 22 issued United States patents with expiration
dates ranging from 2001 to 2015. In addition, Ribi has five pending United
States patent applications, two of which have been indicated as containing
allowable claims. There is no assurance that patents applied for by Ribi will be
obtained, and there can be no assurance that the claims embodied in existing
patents to which Ribi has rights will not be challenged. The issuance of a
patent to Ribi or to a licensor of Ribi is not conclusive as to validity or as
to the enforceable scope of claims therein. The validity and enforceability of a
patent
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can be challenged by a request for re-examination or litigation after its
issuance and, if the outcome of such litigation is adverse to the owner of the
patent, other parties may be free to use the subject matter covered by the
patent.
There can be no assurance that additional patents will be obtained by Ribi
in the United States or in other jurisdictions, or that any patents will provide
substantial protection, or be of commercial benefit to Ribi. The cost of
enforcing Ribi's patent rights in lawsuits which Ribi may bring against
infringers or which may be brought challenging Ribi's patents may be high and
could interfere with Ribi's operations. The patent laws of other countries may
differ from those of the United States as to the patentability of Ribi's
products and processes. Moreover, the degree of protection afforded by foreign
patents may be different from that in the United States. On an ongoing basis,
Ribi reviews its patent portfolio and has abandoned, and may in the future
abandon, patents or patent applications for various reasons including limited
protection, lack of commercial importance and limited enforceability.
Although Ribi attempts to protect its products and processes by seeking
patent protection when deemed appropriate, it also relies upon trade secrets,
proprietary know-how and continuing technological innovation to develop and
maintain its competitive position. Product development contracts and
relationships between Ribi, its consultants and other pharmaceutical companies
may provide access to Ribi's know-how. Ribi requires such parties to execute
confidentiality agreements. Insofar as Ribi relies on confidentiality
arrangements, there can be no assurance that others may not independently
develop similar technology or that secrecy will not be breached.
All employees are required to sign a confidential information agreement
that contains terms assigning patent rights to Ribi as well as obligations not
to use or disclose any such information during and for a period of two years
following termination of their employment.
Ribi maintains an active trademark protection program in the United States
and in those foreign countries where it expects to market its products. Melacine
melanoma theraccine, MPL immunomodulator and Ribi's logo are registered
trademarks in the United States. INTRON-A is a registered trademark of
Schering-Plough and THERATOPE is a registered trademark of Biomira. Detox
adjuvant is a trademark of Ribi.
EMPLOYEES, CONSULTANTS AND COLLABORATORS
As of August 9, 1999 Ribi had 96 full-time and 5 part-time employees. Ribi
also uses outside consultants and collaborators to support and complement the
activities of its scientific staff. Ribi utilizes such persons to aid in
specific research and development projects, rather than to act as a general
scientific advisory board.
PROPERTIES
Ribi's facilities are located near Hamilton, Montana in a 35-acre complex
owned by Ribi. Its buildings contain approximately 60,000 square feet of
laboratory, pilot plant, commercial-scale manufacturing, marketing and
administrative facilities. The manufacturing facility was built to FDA standards
for GMP.
LEGAL PROCEEDINGS
GROUNDWATER CONTAMINATION
Ribi, the NIH and the Bitterroot Valley Sanitary Landfill were notified by
the Montana Department of Health and Environmental Sciences, now known as the
Department of Environmental
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Quality, in March 1991 that they had been identified as potentially responsible
parties and as such are jointly and severally liable for groundwater
contamination located at and near the site of the landfill in Ravalli County,
Montana. Ribi's involvement arises out of waste materials which it generated and
were subsequently deposited at the landfill from 1982 to 1985 which the landfill
had permits to receive. The NIH unilaterally and voluntarily initiated and
completed work pursuant to an interim remediation plan approved by the
Department of Environmental Quality to remove and decontaminate the believed
source of contamination and treat the aquifers, which tests have shown contain
contaminants. Although decontamination of the soil at and around the landfill
has been completed, treatment of the groundwater in the proximity of the
disposal site continues utilizing carbon filtering and air sparging, and it is
anticipated such treatment will continue through 1999 and possibly longer. The
Department of Environmental Quality conducted a risk assessment and issued a
Draft Final Feasibility Study in October 1994 that discussed possible final
remediation alternatives. In August 1995, the Department of Environmental
Quality announced that it had approved a second interim action in the vicinity
of the landfill being unilaterally and voluntarily conducted by the NIH which
involved installing individual replacement and new wells to provide both an
alternate water supply for the affected residents and to develop additional
information on the site hydrogeology. Information collected from these wells
through a multi-year monitoring program are being used by the Department of
Environmental Quality to evaluate the effectiveness of the remediation efforts
to date. The second interim action plan calls for the wells to be installed in
three phases. Phase I included occupied properties with the highest remaining
contamination levels. Phase II included occupied properties with lesser degrees
of contamination. Phase III consisted largely of vacant properties. Preliminary
studies completed in 1994 estimated the cost of the wells to be approximately
$1.4 million. Information indicates that a total of 19 alternate water supply
wells have been installed at a cost of approximately $1.0 million. The
Department of Environmental Quality could require the potentially responsible
parties to implement further remediation should these wells not provide
sufficient quality or quantity of water. Additionally, the NIH has indicated it
is undertaking Phase II groundwater remediation to intercept and treat
contaminated groundwater near the eastern landfill boundary. The NIH has
projected costs for this Phase II groundwater remediation to be in excess of
$1.0 million through 1999. The NIH, which has taken the lead and incurred
substantially all of the remediation costs, has represented publicly that it
would continue to work with the Department of Environmental Quality toward an
acceptable final remediation plan.
The Department of Environmental Quality initiated an action in 1997 in the
state district court in Lewis and Clark County, Montana against Ribi, the
landfill and the owners of the landfill seeking recovery of past alleged costs
associated with its oversight activities in the amount of $238,000, as well as a
declaratory judgment finding the parties liable for future oversight costs, plus
civil penalties in the event the parties fail to comply. Since the action was
initiated, Ribi and the NIH jointly have received statements requesting payment
of an additional $30,000. In May 1998, Ribi was informed that the Department of
Environmental Quality had entered into a settlement agreement with the landfill
and its owners, whereby the landfill and its owners agreed to collectively pay
the Department approximately $35,000. Ribi believes that it has meritorious
defenses to the claim, including the amount thereof, and that there are other
responsible parties. Ribi has filed a response to the action, including a
counter claim and motions for a change in venue and to dismiss. The court
granted Ribi's motion for a change of venue to Ravalli County where Ribi is
located. The court did not rule on the motion to dismiss, which motion will now
be acted upon by the court in Ravalli County. The Department of Environmental
Quality filed a Motion for Stay of Proceedings pending the outcome of the action
in federal district court discussed below in which the Department is a
plaintiff. The court granted the motion which Ribi did not oppose. The federal
district court recently denied a motion of the DEQ to file an amended complaint
to incorporate the complaint filed with the state court. In view of the federal
district court's denial of the motion of the DEQ to amend its complaint, the DEQ
has indicated that it intends to petition the state court to lift the stay of
proceedings.
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On April 21, 1998, Ribi received notice that the United States, acting on
behalf of the Department of Health and Human Services, which oversees the NIH,
filed suit in United States District Court seeking contribution from Ribi of an
equitable share of past and future response costs incurred by the NIH in
connection with the remediation at and near the landfill. The complaint alleges
that as of September 30, 1997, the United States had incurred response costs in
excess of $3.4 million and that it expects to incur more than $1.0 million in
additional response costs. Ribi filed a response to the action. On or about June
4, 1998, Ribi received notice that the United States had entered into a
settlement agreement with the landfill and the landfill owners pursuant to which
the settling parties agreed to make payment in the amount of $440,000. In view
of the settlement, the United States filed with the court a Joint Motion for
Stay of Proceedings between the United States, the landfill and landfill owners.
Assuming the settlement is completed, the action against the landfill and the
landfill owners would be dismissed. Although Ribi believes it has meritorious
defenses to the cost recovery claim, including the amount thereof, and that
there are other responsible parties, Ribi cannot assure you that it will be
successful in its defenses to claims arising out of the landfill, including the
claims made by the United States.
On or about June 6, 1998, the Department of Environmental Quality filed a
complaint in the United States District Court against Ribi, the landfill and the
owners of the landfill seeking recovery of past alleged costs associated with
its oversight activities in the amount of $258,000, of which it indicated not
more than $154,000 had been reimbursed, plus interest and attorneys' fees and
costs as well as a declaratory judgment finding the parties liable for future
response costs. This action brought under the Federal Comprehensive
Environmental Response, Compensation and Liability Act (CERCLA) is similar to
that filed in the state district court under the Montana State Comprehensive
Environmental Cleanup and Responsibility Act (CECRA) that is described above,
where further action has been deferred pending the outcome of the federal
action. Ribi has filed a response to the action, including a counter claim
against the Department of Environmental Quality. The Department has initiated
discovery, and Ribi responded to a discovery request. Ribi believes that is has
meritorious defenses to the claim, including the amount thereof, and that there
are other responsible parties. Ribi cannot assure you that defenses and counter
claim will be successful.
Depending upon the eventual outcome of the litigation discussed above, when
the litigation is concluded and the success of Ribi in pursuing defense and
indemnity with insurance carriers, the outcome may significantly harm Ribi's
financial condition. Recently, an insurance carrier agreed to assume reasonable
defense costs in the cases discussed above but has reserved its rights to
challenge its responsibility. The insurance carrier has also agreed to reimburse
Ribi's defense costs incurred to date. Accordingly, it is not possible at
present to accurately predict whether an adverse outcome will significantly harm
Ribi's financial condition. Ribi is unable to determine its overall potential
liability with respect to the landfill at this time. As of June 30, 1999, Ribi
had accrued a reserve of approximately $300,000 to cover legal, consulting and
Department of Environmental Quality reimbursement costs associated with Ribi as
a potentially responsible party. Net costs charged against operations during the
first six months of 1999 and 1998 were $54,000 and $47,000, respectively.
WRONGFUL DISCHARGE
In June 1997, a complaint was filed in District Court in Ravalli County
against Ribi by a former employee who was discharged for cause in June 1996. The
former employee alleges discharge in violation of the Montana Wrongful Discharge
from Employment Act and further, that discharge was for refusal to violate
public policy. The court granted dismissal with respect to that portion of the
complaint which alleges termination for refusal to violate public policy. The
former employee filed a motion for reconsideration asking the court to reverse
its decision with respect to the issue of termination for refusal to violate
public policy and requested permission to amend the complaint to
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include additional allegations relative to the public policy issue. On April 6,
1998 the court allowed the former employee to amend the complaint as requested.
The Company recently filed a motion for partial summary judgement on the
violation of public policy issue. Plaintiff has filed a motion for partial
summary judgment on the issue of discharge in violation of the Wrongful
Discharge Act. It is anticipated there will be oral arguments to the court
concerning the respective motions. However, no date has been set for the oral
arguments. If the former employee should ultimately prevail on the issue of
discharge in violation of the Wrongful Discharge Act, the potential liability of
Ribi would be approximately $320,000, exclusive of Ribi's attorneys' fees and
related costs. If the plaintiff prevails on the public policy issue, Ribi could
be subject to punitive damages of an unknown amount in addition to the potential
liability for violation of the Wrongful Discharge Act. Ribi believes that it has
a meritorious defense and plans to vigorously defend the suit. However, it is
not possible to reliably assess the outcome. Depending upon the eventual outcome
of this litigation and the timing of its conclusion, the result of this
litigation may significantly harm Ribi's financial condition. It is possible the
case may go to trial during the first half of 2000.
The former employee also filed a petition for Judicial Review in District
Court in Missoula County naming Ribi and the State of Montana Department of
Labor and Industry respondents and asking the court to review and overturn the
Department of Labor's decision finding the former employee was terminated for
misconduct under Montana law and is therefore not allowed to collect
unemployment benefits. Ribi filed a response arguing the correctness of the
Department of Labor's decision. The court remanded the matter to the Department
of Labor for further testimony, which was taken. The Department of Labor
recently confirmed its previous findings that the former employee willfully and
purposefully failed to follow the reasonable instructions of Ribi and,
therefore, was discharged for misconduct connected with his work and directly
affecting his employment. Accordingly, the Department of Labor confirmed its
previous findings that the former employee is not eligible to receive
unemployment insurance benefits. The former employee has filed a petition for
judicial review of the most recent decision of the Department of Labor in
district court in Missoula County.
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MANAGEMENT OF CORIXA
Upon completion of the merger, Ribi will merge with and into Corixa, with
Corixa remaining as the surviving corporation. The existing officers and
directors of Corixa shall remain in such positions for Corixa following
consummation of the merger. The officers, directors and key employees of Corixa,
and their ages as of August 5, 1999, are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Steven Gillis, Ph.D.................. 46 Chairman of the Board and Chief Executive Officer
Mark McDade.......................... 44 President, Chief Operating Officer and Director
Steven Reed, Ph.D.................... 49 Executive Vice President and Chief Scientific
Officer
Kenneth Grabstein, Ph.D.............. 48 Executive Vice President and Director of Immunology
Michelle Burris...................... 33 Vice President and Chief Financial Officer
Martin Cheever, M.D.................. 55 Vice President and Director of Medical Affairs
Maureen Howard, Ph.D................. 46 Vice President and Director of Research and
Development -- Redwood City
Cindy Jacobs, M.D., Ph.D............. 42 Vice President and Director of Clinical Research
Joseph S. Lacob(2)................... 43 Director
Arnold L. Oronsky, Ph.D.(1)(2)....... 58 Director
Andrew E. Senyei, M.D.(1)(2)......... 49 Director
</TABLE>
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(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
Steven Gillis, Ph.D. has served as Chairman of the Board of Corixa since
March 1999 and Chief Executive Officer and director of Corixa since 1994. From
1994 to February 1999, Dr. Gillis served as President of Corixa. Dr. Gillis was
a founder of Immunex Corporation, a biotechnology company. From 1981 to 1994,
Dr. Gillis served as Executive Vice President and Director of Research and
Development of Immunex, and from 1993 to 1994, served as Acting Chief Executive
Officer and Chairman of the Board of Immunex. From 1990 to 1994, Dr. Gillis also
served as President and Chief Executive Officer of Immunex Research and
Development Corporation, a wholly-owned subsidiary of Immunex, and Chief
Scientific Officer of Immunex. In addition, Dr. Gillis is a director of both
Micrologix Biotech, Inc. and Genesis Research and Development Corporation
Limited. Dr. Gillis serves on the Scientific Advisory Board of Medarex
Corporation. Dr. Gillis graduated from Williams College with a B.A. in Biology
and English in 1975 and received his Ph.D. in Biological Sciences from Dartmouth
College in 1978.
Mark McDade has served as President of Corixa since March 1999 and Chief
Operating Officer and director since 1994. From 1994 to February 1999, Mr.
McDade served as an Executive Vice President of Corixa. From 1993 to 1994, Mr.
McDade served as Chief Operating Officer of Boehringer Mannheim Therapeutics, a
pharmaceutical company, heading its worldwide pharmaceutical operations. From
1991 to 1992, Mr. McDade was an independent consultant providing business
development and strategic consulting to a number of biopharmaceutical and
pharmaceutical companies. From 1983 to 1991, Mr. McDade held various positions
with Sandoz, Ltd., a pharmaceutical company. Mr. McDade graduated from Dartmouth
College with a B.A. in History in 1977 and received his M.B.A. from Harvard
University in 1984.
Steven Reed, Ph.D. has served as Executive Vice President and Chief
Scientific Officer of Corixa since 1994. From 1993 to the present, Dr. Reed has
served as an Associate Professor of Pathobiology at the University of
Washington. From 1993 to February 1999, he served as a director of IDRI,
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which he co-founded. From 1984 to the present, Dr. Reed has served as a
Professor (Adjunct) of Medicine at the Cornell University Medical College. From
1984 to 1993, Dr. Reed served as a Senior Scientist at the Seattle Biomedical
Research Institute. Dr. Reed graduated from Whitman College with a B.A. in
Biology in 1973 and received his Ph.D. in Microbiology from the University of
Montana in 1979. In addition, Dr. Reed is a director of ImmGenics
Pharmaceuticals, Inc.
Kenneth Grabstein, Ph.D. has served as Executive Vice President since March
1999 and Director of Immunology of Corixa since 1994. From 1994 to February
1999, Dr. Grabstein served as Vice President of Corixa. From 1992 to 1994, Dr.
Grabstein was Director of Cellular Immunology and Director of the Flow Cytometry
Facility at Immunex Research and Development Corporation. From 1995 to the
present, he has served as Affiliate Investigator of the Clinical Research
Division of the Fred Hutchinson Cancer Research Center. Dr. Grabstein graduated
from the University of California, Berkeley with a B.A. in Zoology in 1973 and
received his Ph.D. in Immunology from the University of California, Berkeley in
1982.
Michelle Burris has served as Vice President and Chief Financial Officer of
Corixa since January 1998. From February 1997 to January 1998, she was Vice
President of Finance and Administration of Corixa. From 1996 to February 1997,
she was Director of Finance and Administration of Corixa. From 1995 to 1996, she
was Controller at Corixa. Ms. Burris held several finance and planning positions
at The Boeing Company, an aerospace company, most recently serving as Manager of
Planning and Performance for the Commercial Airplane Group. Ms. Burris is a
Certified Public Accountant, and she graduated from George Mason University with
a B.S. in Marketing and Statistics in 1987 and received her M.B.A. from Seattle
University in 1991. In addition, Ms. Burris is a director of ImmGenics
Pharmaceuticals, Inc.
Martin Cheever, M.D. has served as Vice President and Director of Medical
Affairs of Corixa since December 1997. During that time he also served as an
Affiliate Investigator for the Clinical Research Division for Fred Hutchinson
Cancer Research Center and as Clinical Professor of Medicine, Division of
Oncology for the University of Washington. From 1987 to December 1997, Dr.
Cheever was a Professor of Medicine and a Member of the Division of Oncology,
University of Washington School of Medicine. From 1981 to 1987, Dr. Cheever
served as an Associate Professor of Medicine, Division of Oncology, University
of Washington and as Assistant Member, Fred Hutchinson Cancer Research Center.
Dr. Cheever graduated from the University of Michigan, Ann Arbor in 1966, and
received his M.D. from the University of Michigan School of Medicine, Ann Arbor,
Michigan in 1970.
Maureen Howard, Ph.D. has served as Vice President and Director of Research
and Development at Corixa's Redwood City facility since 1999. From 1997 to 1999,
Dr. Howard served as Vice President of Research at Anergen. From 1986 to 1997,
Dr. Howard served as the founding Director of the Department of Immunology at
DNAX Research Institute of Molecular and Cellular Biology. Prior to that time,
she was a Fulbright and Fogarty fellow in the Laboratory of Immunology at the
National Institutes of Health. Dr. Howard received a B.S. in Biochemistry from
the University of Melbourne, Australia in 1973, and a Ph.D. in Immunology from
the Walter and Eliza Hall Institute in Australia in 1977.
Cindy Jacobs, Ph.D., M.D. has served as Vice President and Director of
Clinical Research at Corixa since 1999. From 1998 to 1999, Dr. Jacobs held the
position of Vice President of Clinical Research at Cytran, Inc., where she
oversaw planning and execution of clinical trials for an anti-angiogenic peptide
in various cancer indications. From 1996 to 1998, Dr. Jacobs served as the Vice
President of Clinical Research at CellPro, Incorporated. From 1994 to 1996, Dr.
Jacobs served as the Director of Worldwide Clinical Research at CellPro. From
1993 to 1994, Dr. Jacobs served as the Director of Clinical Research at CellPro.
Dr. Jacobs graduated from Montana State University with a B.S. in Microbiology
in 1979. She received her M.S. in Veterinary Pathology/Microbiology from
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Washington State University in 1982, a Ph.D. in Veterinary
Pathology/Microbiology from Washington State University in 1984 and a M.D. from
the University of Washington in 1989.
Joseph S. Lacob has served as a director of Corixa since 1994. From 1994 to
December 1998, Mr. Lacob served as Chairman of the Board of Corixa. Mr. Lacob
has been a partner of Kleiner Perkins Caufield & Byers, a venture capital firm,
since May 1987. Mr. Lacob is currently the Chairman of the Board of Microcide
Pharmaceuticals, Inc. and Cardima, Inc. He also serves on the Board of Directors
of Heartport, Inc., IsoStent and several other privately-held biotechnology,
medical device and health care service companies. Mr. Lacob is also Chairman of
the Board of CellPro. Mr. Lacob graduated from the University of California,
Irvine in 1978 with a B.S. in Biological Sciences and received his M.P.H. from
the University of California, Los Angeles in 1979. Mr. Lacob also received his
M.B.A. from the Stanford Graduate School of Business in 1983.
Arnold L. Oronsky, Ph.D. has served as a director of Corixa since 1994. He
is currently Chairman of the Board of Directors of Coulter Pharmaceuticals Inc.,
a biopharmaceutical company and a director of Signal Pharmaceutical Inc. From
1995 to 1996, Dr. Oronsky served as President and Chief Executive Officer of
Coulter. From 1994 to the present, Dr. Oronsky has been a general partner at
InterWest Partners, a venture capital firm. From 1984 to 1994, Dr. Oronsky
served as Vice President for Discovery Research at Lederle Laboratories, a
pharmaceutical division of American Cyanamid, Inc., where he was responsible for
the research of new drugs. Since 1988, Dr. Oronsky has served as a senior
lecturer in the Department of Medicine at Johns Hopkins Medical School. Dr.
Oronsky graduated from University College, New York University with a B.A. in
History in 1962 and received his Ph.D. in Biochemistry from Columbia University
in 1968.
Andrew E. Senyei, M.D. has served as a director of Corixa since 1994. Dr.
Senyei has served as managing partner of Enterprise Partners, a venture capital
firm, since 1999 and a general partner of Enterprise Partners since 1988. Dr.
Senyei was a founder of Molecular Biosystems, Inc. and serves on the board of
directors of several private technology companies. Prior to joining Enterprise
Partners, Dr. Senyei was a practicing clinician and Adjunct Associate Professor
of Obstetrics, Gynecology and Pediatrics at the University of California,
Irvine. Dr. Senyei graduated from Occidental College with a B.A. in Biology in
1972 and received his M.D. from Northwestern University in 1979.
BOARD OF DIRECTORS COMMITTEES, COMPENSATION OF DIRECTORS AND OTHER INFORMATION
All directors hold office until the next annual meeting of stockholders of
Corixa and until their successors have been elected and qualified. The officers
of Corixa are appointed annually and serve at the discretion of the Corixa board
of directors.
The Corixa board of directors has held a total of two regular meetings
during the current year, as well as two special meetings, including one in
connection with the merger. Corixa has an audit committee and a compensation
committee of the board of directors. Each incumbent director attended 100% of
the aggregate number of meetings of the Corixa board of directors and meetings
of the committees of the Corixa board of directors on which he serves. There are
no family relationships among any of the directors or executive officers of
Corixa.
The compensation committee currently consists of Mr. Lacob, Dr. Senyei and
Dr. Oronsky, who are all of Corixa's non-employee directors. The compensation
committee is chaired by Dr. Senyei and has acted one time by written consent in
January 1999. Its functions are to:
- review and approve the compensation and benefits for Corixa's executive
officers;
- administer Corixa's stock purchase and stock option plans; and
- make recommendations to the Corixa board of directors regarding such
matters.
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The audit committee currently consists of Dr. Oronsky and Dr. Senyei, two
of Corixa's non-employee directors. The audit committee met most recently on
September 16, 1998. Its functions are to review the scope and results of
financial audits and other services performed by Corixa's independent
accountants and to make recommendations to Corixa's board of directors regarding
such matters.
Non-employee directors currently receive no cash fees for serving on
Corixa's board of directors. Current and future non-employee directors are
eligible to receive stock options in consideration of their services under
Corixa's 1997 Director's Stock Option Plan. See the section entitled "Stock
Option and Incentive Plans -- 1997 Directors' Stock Option Plan", beginning on
page 171.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Except as set forth in the section entitled "Certain Relationships and
Related Party Transactions" beginning on page 191, no interlocking relationship
exists between Corixa's board of directors or compensation committee and the
board of directors or compensation committee of any other company, nor has any
such interlocking relationship existed in the past.
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
Corixa's certificate of incorporation limits the liability of directors to
the maximum extent permitted by Delaware law. Delaware law provides that a
director of a corporation will not be personally liable for monetary damages for
breach of such individual's fiduciary duties as a director, except for liability
for:
- any breach of the director's duty of loyalty to the corporation or its
stockholders;
- acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;
- for unlawful payments of dividends or unlawful stock repurchases or
redemptions as provided in Section 174 of the Delaware General
Corporation Law; and
- for any transaction from which a director derives an improper personal
benefit.
Delaware law does not eliminate a director's duty of care and this
provision has no effect on the availability of equitable remedies such as an
injunction or rescission based upon a director's breach of the duty of care. In
addition, Corixa has obtained an insurance policy providing coverage for certain
liabilities of its officers and directors.
Corixa's bylaws provide that Corixa shall indemnify its directors and may
indemnify its officers, employees and other agents to the fullest extent
permitted by law. Corixa believes that indemnification under its bylaws covers
at least negligence and gross negligence on the part of an indemnified party and
permits Corixa to advance expenses incurred by an indemnified party in
connection with the defense of any action or proceeding arising out of such
party's status or service as a director, officer, employee or other agent of
Corixa upon an undertaking by such party to repay such advances if it is
ultimately determined that such party is not entitled to indemnification.
Corixa has entered into separate indemnification agreements with each of
its directors and officers. These agreements require Corixa, among other things,
to:
- indemnify such director or officer against certain expenses, including
attorney's fees, judgments, fines and settlement amounts paid by such
individual in connection with any action, suit or proceeding arising out
of such individual's status or service as a director or
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officer of Corixa, subject to certain exceptions including liabilities
arising from willful misconduct or conduct that is knowingly fraudulent
or deliberately dishonest or a violation of Section 16(b) of the Exchange
Act; and
- advance expenses incurred by such individual in connection with any
proceeding against such individual with respect to which such individual
may be entitled to indemnification by Corixa.
Corixa believes that its certificate of incorporation, bylaw provisions and
indemnification agreements are necessary to attract and retain qualified persons
as directors and officers.
Corixa is not aware of any pending litigation or proceeding involving any
director, officer, employee or agent of Corixa where indemnification will be
required or permitted. Corixa is not aware of any threatened litigation or
proceeding that might result in a claim for such indemnification.
STOCK OPTION AND INCENTIVE PLANS
AMENDED AND RESTATED 1994 STOCK OPTION PLAN
Corixa's 1994 plan was originally adopted by Corixa's board of directors in
October 1994 and was approved by the stockholders in October 1995. The 1994 plan
was amended and restated in August 1996, which amendment and restatement was
approved by the stockholders in July 1997, and amended and restated again in
July 1997, which amendment and restatement was approved by the stockholders in
September 1997. The 1994 plan provides for the grant to employees of Corixa and
to subsidiaries of Corixa, including officers and employee directors, of ISOs
and for the grant to employees, directors and consultants of Corixa and
affiliates of Corixa of NSOs. The 1994 plan may be administered by Corixa's
board of directors or the compensation committee. The maximum number of shares
that may be subject to options granted to any one employee under the 1994 plan
for any fiscal year is 500,000.
The administrator of the 1994 plan has the authority to grant ISOs to
employees of Corixa and to grant NSOs to employees, directors and consultants of
Corixa. The administrator determines which individuals will be granted options
under the 1994 plan and the terms of such options, including:
- the exercise price and the number of shares subject to such options;
- the maximum term for which such options are to remain outstanding;
- the date upon which such options are to become exercisable; and
- the vesting schedule, if any, applicable to such options.
The exercise price of each ISO granted under the 1994 plan must be at least
equal to the fair market value of Corixa common stock on the date of grant. The
exercise price of each NSO granted under the 1994 plan must equal at least 85%
of the fair market value of Corixa common stock on the date of grant. The
exercise price of any ISO granted to an optionee who owns stock representing
more than 10% of the voting power of Corixa's outstanding capital stock must
equal at least 110% of the fair market value of Corixa common stock on the date
of grant. Payment of the exercise price may be made in any of the following
ways:
- in cash;
- by check;
- in the administrator's discretion, by promissory note;
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- in shares of properly registered Corixa common stock valued at the fair
market value as of the exercise date of the option that meet certain
holding requirements; or
- to the extent the option is exercised for vested shares, through a
special sale and remittance procedure conducted by a Corixa-designated
brokerage firm whereby Corixa is paid sufficient funds to cover the
aggregate exercise price of the purchased shares as well as all taxes
that Corixa would be required to withhold as a result of such exercise.
The term of a stock option granted under the 1994 plan may not exceed 10
years, except that the term of an ISO granted to an optionee who owns stock
representing more than 10% of the voting power of Corixa's outstanding capital
stock may not exceed five years. No option may be transferred by an optionee
other than by will or the laws of descent and distribution, and provided that
the administrator may, in its discretion, grant transferable NSOs pursuant to
stock option grants specifying:
- the manner in which such NSOs are transferable; and
- that any such transfer shall be subject to applicable laws.
Except as set forth in the foregoing sentence, each option may be exercised
during the lifetime of the optionee only by such optionee. To the extent an
optionee would have the right in any calendar year to exercise for the first
time one or more ISOs for shares having an aggregate fair market value under all
Corixa plans and determined for each share as of the date the option to purchase
the share was granted in excess of $100,000, any such excess options shall be
treated as NSOs.
In the event of a proposed dissolution or liquidation of Corixa, the 1994
plan requires that each outstanding option terminate and cease to be
outstanding, except to the extent assumed by the successor corporation or parent
thereof in connection with the change in control. In the event of a proposed
sale of all or substantially all of the assets of Corixa or the merger of Corixa
with or into another corporation:
- if the options are assumed or an equivalent option is substituted, 50% of
the unvested portions of option grants shall be deemed to have vested
immediately prior to such sale or merger;
- if the options are not assumed or an equivalent option is not
substituted, all of the unvested portions of option grants shall be
deemed to have vested immediately prior to such sale or merger; and
- if an executive officer of Corixa is terminated without cause within six
months following the consummation of such sale or merger, all of the
entire unvested portion of option grants to such executive officer shall
be deemed to have vested and become fully exercisable immediately prior
to such termination.
Upon the termination of an optionee's employment or other relationship with
Corixa, such optionee will have a limited time within which to exercise any
outstanding options, which time period will vary depending on the reason for
termination. The administrator has the discretion to grant options that are
exercisable for unvested shares of Corixa common stock and, to the extent that
an optionee holds options for such unvested shares of Corixa common stock upon
termination, Corixa will have the right to repurchase any or all of the unvested
shares at the per-share exercise price paid by the optionee for the unvested
shares. Under Corixa's standard vesting schedule, awards under the 1994 plan
vest as to 25% of the shares underlying the award one year after the date of
grant and as to approximately 2.08% of the shares each month thereafter.
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Prior to amendments of the 1994 plan for which Corixa stockholder approval
is now being sought, 2,766,234 shares of common stock were reserved for issuance
under the 1994 plan, plus an automatic annual increase equal to 3% of Corixa's
outstanding common stock up to a maximum of 500,000 shares per year. Stockholder
approval of the 1994 plan is being sought to increase the number of shares
reserved for issuance under the 1994 plan by 2,500,000 shares, plus an automatic
annual increase equal to 3% of Corixa's outstanding common stock up to a maximum
of 750,000 shares per year. As a result of these amendments, the maximum
aggregate number of shares of common stock that may be issued under the 1994
plan as currently structured is 9,016,234.
Corixa's board of directors has the authority to amend the 1994 plan as
long as such action does not adversely affect the rights and obligations with
respect to options or unvested stock issuances then outstanding under the 1994
plan, and provided further that stockholder approval is required to:
- increase the number of shares subject to the 1994 plan;
- to materially modify the eligibility requirements for 1994 plan
participation; or
- to materially increase the benefits accruing to participants under the
1994 plan. If not terminated earlier, the 1994 plan will terminate in
2004.
As of August 5, 1999, options to purchase a total of 350,190 shares of
Corixa common stock had been exercised, options to purchase a total of 2,087,922
shares at a weighted average exercise price of $5.21 per share were outstanding
and an aggregate of 329,164 shares remained available for future option grants
under the 1994 plan. As of August 5, 1999, the aggregate fair market value of
shares subject to outstanding options under the 1994 plan was approximately
$29.4 million, based upon the closing price of the common stock on Nasdaq as of
such date. The actual benefits, if any, to the holders of stock options issued
under the 1994 plan are not determinable prior to exercise as the value, if any,
of such stock options to their holders is represented by the difference between
the market price of a share on the date of exercise and the exercise price of
the option. As of August 5, 1999, the following Corixa named executive officers
and its directors have received option grants under the 1994 plan:
- Steven Gillis (179,935 shares);
- Mark McDade (234,633 shares);
- Steve Reed (80,996 shares);
- Kenneth Grabstein (78,421 shares);
- Martin Cheever (109,582 shares);
- Maureen Howard (48,946 shares);
- Cindy Jacobs (45,000 shares);
- Michelle Burris (113,117 shares);
- Joseph Lacob (25,000 shares);
- Andrew Senyei (25,000 shares); and
- Arnold Oronsky (25,000 shares).
In addition, as of such date, options to purchase 1,122,292 shares of common
stock are held by all current employees and consultants, including Corixa
officers but excluding executive officers.
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OPTIONS ASSUMED UNDER ANERGEN AND GENQUEST STOCK OPTION PLANS
As of August 5, 1999, 85,786 options were assumed by Corixa under the
Anergen and GenQuest acquisitions. Of these, options to purchase a total of
11,421 shares of Corixa common stock had been exercised and options to purchase
a total of approximately 9,112 shares at a weighted average exercise price of
$66.10 per share were outstanding.
UNITED STATES FEDERAL INCOME TAX INFORMATION
The following is a brief summary of the United States federal income tax
consequences of transactions under the 1994 plan based on federal income tax
laws in effect on the date of this proxy statement/prospectus and expressly does
not discuss the income tax laws of any state, municipality, non-United States
taxing jurisdiction or gift, estate or other tax laws. This summary is not
intended to be exhaustive and does not address all matters that may be relevant
to a particular optionee based on his or her specific circumstances, other than
federal income tax law. Corixa advises all optionees to consult their own tax
advisor concerning the tax implications of option grants and exercises and the
disposition of stock acquired upon such exercises.
If an option granted under the 1994 plan is an ISO, the optionee will
recognize no income upon grant of the ISO and will incur no tax liability due to
the exercise, except to the extent that such exercise causes the optionee to
incur alternative minimum tax, which is discussed below. Corixa will not be
allowed a deduction for federal income tax purposes as a result of the exercise
of an ISO regardless of the applicability of the alternative minimum tax. Upon
the sale or exchange of the shares more than two years after grant of the option
and one year after exercise of the option by the optionee, any gain will be
treated as a long-term capital gain. If both of these holding periods are not
satisfied, the optionee will recognize ordinary income equal to the difference
between the exercise price and the lower of the fair market value of the common
stock on the date of the option exercise or the sale price of the Corixa common
stock. Corixa will be entitled to a deduction in the same amount as the ordinary
income recognized by the optionee. Any gain or loss recognized on a disposition
of the shares prior to completion of both of the above holding periods in excess
of the amount treated as ordinary income will be characterized as long-term
capital gain if the sale occurs more than one year after exercise of the option
or as short-term capital gain if the sale is made earlier.
All other options which do not qualify as ISOs are referred to as NSOs. An
optionee will not recognize any taxable income at the time he or she is granted
a NSO. However, upon its exercise, the optionee will recognize ordinary income
for tax purposes measured by the excess of the fair market value of the shares
over the exercise price. The income recognized by an optionee who is also an
employee of Corixa will be subject to income and employment tax withholding by
Corixa by payment in cash by the optionee or out of the optionee's current
earnings. Upon the sale of such shares by the optionee, any difference between
the sale price and the fair market value of the shares as of the date of
exercise of the option will be treated as capital gain or loss, and will qualify
for long-term capital gain or loss treatment if the shares have been held for
more than one year from date of exercise.
ALTERNATIVE MINIMUM TAX
The exercise of an ISO may subject the optionee to the alternative minimum
tax under Section 55 of the Internal Revenue Code. The alternative minimum tax
is calculated by applying a tax rate of 26% to alternative minimum taxable
income of joint filers up to $175,000 ($87,500 for married taxpayers filing
separately) and 28% to alternative minimum taxable income above that amount.
Alternative minimum taxable income is equal to taxable income adjusted for
certain items,
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plus items of tax preference less, exemption amounts that vary depending upon an
individual's tax status. Alternative minimum tax will be due if the tax
determined under the foregoing formula exceeds the regular tax of the taxpayer
for the year.
In computing alternative minimum taxable income, shares purchased upon
exercise of an ISO are treated as if they had been acquired by the optionee
pursuant to exercise of an NSO. As a result, the optionee recognizes alternative
minimum taxable income equal to the excess of the fair market value of the
common stock on the date of exercise over the option exercise price. Because the
alternative minimum tax calculation may be complex, optionees should consult
their own tax advisors prior to exercising ISOs.
1997 DIRECTORS' STOCK OPTION PLAN
The directors' plan was adopted by the Corixa board of directors in July
1997. As of August 5, 1999, a total of 300,000 shares of Corixa common stock has
been reserved for issuance under the directors' plan. The number of authorized
shares is subject to automatic increase on the first trading day of each of the
five calendar years beginning in 1998 and ending in 2002 in an amount equal to
50,000 shares of Corixa common stock or such lesser amount as the Corixa board
of directors may establish. The directors' plan provides for the grant of NSOs
to non-employee directors of Corixa. The directors' plan is designed to work
automatically without administration; however, to the extent administration is
necessary, it will be performed by the Corixa board of directors. The directors'
plan provides that each person who becomes a non-employee director of Corixa
after October 2, 1997, the date of Corixa's initial public offering, shall be
granted NSOs to purchase 15,000 shares of Corixa common stock. Thereafter, on
the first day of each subsequent fiscal year of Corixa, each non-employee
director shall be automatically granted an additional option to purchase 5,000
shares of Corixa common stock, provided that, on such date, he or she shall have
served on the Corixa board of directors for at least six months. The directors'
plan provides that the first option granted shall become exercisable in
installments as to 1/36th of the total number of shares subject to the first
option each month after the date of grant, and each subsequent option shall
become exercisable in installments as to 1/12th of the total number of shares
subject to the subsequent option each month after of the date of grant. The
exercise price of all options granted under the directors' plan shall be equal
to the fair market value of Corixa common stock on the date of grant of the
option. Options granted under the directors' plan have a term of 10 years.
In the event of the dissolution or liquidation of Corixa, a sale of all or
substantially all of the assets of Corixa, the merger of Corixa with or into
another corporation in which Corixa is not the surviving corporation or any
other capital reorganization in which more than 50% of the shares of Corixa
entitled to vote are exchanged, each non-employee director shall have either:
- a reasonable time within which to exercise the option, including any part
of the option that would not otherwise be exercisable, prior to the
effectiveness of such transaction, at the end of which time the option
shall terminate; or
- the right to exercise the option, including any part of the option that
would not otherwise be exercisable, or receive a substitute option with
comparable terms as to an equivalent number of shares of stock of the
corporation succeeding Corixa or acquiring its business by reason of such
transaction.
The Corixa board of directors may amend or terminate the directors' plan
provided that no such action may adversely affect any outstanding options. The
provisions regarding the grant of options under the directors' plan may be
amended only once in any six-month period, other than to comply
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with changes in the Employee Retirement Income Security Act of 1974, as amended,
or the Internal Revenue Code. If not terminated earlier, the directors' plan
will terminate on October 2, 2007.
As of August 5, 1999, options to purchase a total of 75,000 shares at a
weighted average exercise price of $11.74 per share were outstanding and an
aggregate of 225,000 shares remained available for future option grants under
the directors' plan.
1997 EMPLOYEE STOCK PURCHASE PLAN
The 1997 Corixa Employee Stock Purchase Plan was adopted by the Corixa
board of directors in July 1997. A total of 125,000 shares of Corixa common
stock has been reserved for issuance under the purchase plan.
The number of authorized shares is subject to automatic increase, on the
first trading day of each of the 20 calendar years beginning in 1998 and ending
in 2017. If the number of shares reserved for issuance at such time is less than
one percent of the outstanding common stock, then the number of shares reserved
for issuance shall be increased until it equals one percent of the outstanding
common stock, up to a maximum of 125,000 in any calendar year or such lower
amount as determined by the Corixa board of directors.
The purchase plan, which is intended to qualify under Section 423 of the
Internal Revenue Code, will be implemented by a series of offering periods of 12
months duration, with new offering periods, other than the first offering
period, commencing on or about February 1 and August 1 of each year. Each
offering period will consist of two consecutive purchase periods of six months
duration, with the last day of a period being designated a purchase date. The
initial offering period began on October 2, 1997, the date of Corixa's initial
public offering, and continued through July 31, 1998, with the first purchase
date occurring on January 31, 1998 and subsequent purchase dates to occur every
six months thereafter. The purchase plan permits eligible employees to purchase
Corixa common stock through payroll deductions, which may not exceed 15% of an
employee's compensation, at a price equal to the lower of 85% of the fair market
value of the Corixa common stock at the beginning of the offering period or on
the purchase date. If the fair market value of the Corixa common stock on a
purchase date is less than the fair market value at the beginning of the
offering period, a new twelve month offering period will automatically begin on
the first business day following the purchase date with a new fair market value.
The maximum number of shares an employee may purchase during each offering
period will be determined on the offering date by dividing $25,000 by the fair
market value of a share of Corixa common stock on the offering date, subject to
certain limitations imposed by the Internal Revenue Code.
Employees may end their participation in an offering at any time during the
offering period prior to the purchase date, and participation ends automatically
on termination of employment with Corixa. The purchase plan provides that in the
event of a merger of Corixa with or into another corporation or a sale of
substantially all of Corixa's assets, each right to purchase stock under the
purchase plan will be assumed or an equivalent right substituted by the
successor corporation unless the Corixa board of directors shortens the offering
period so that employees' rights to purchase stock under the purchase plan are
exercised prior to the merger or sale of assets. Corixa's board of directors has
the power to amend or terminate the purchase plan as long as such action does
not adversely affect any outstanding rights to purchase stock thereunder. If not
terminated earlier, the purchase plan will terminate in 2017.
As of August 5, 1999, 31,692 shares of Corixa common stock had been
purchased and 99,105 shares remained available for future purchase under the
purchase plan.
172
<PAGE> 184
401(k) PLAN
Corixa has a tax-qualified employee savings and retirement 401(k) plan
covering all of Corixa's employees. Pursuant to the 401(k) plan, employees may
elect to reduce their current compensation by up to the statutorily prescribed
annual limit allowable under IRS regulations, which was $10,000 in 1999, and to
have the amount of such reduction contributed to the 401(k) plan. Corixa did not
match contributions before the fiscal year 1998. Effective January 1, 1998,
Corixa implemented a 401(k) matching program whereby Corixa contributes 25 cents
for each dollar a participant contributes, with a maximum contribution of 25% of
the first 8% of a participant's earnings, not to exceed 25% of the prescribed
annual limit. The 401(k) plan is intended to qualify under Section 401 of the
Internal Revenue Code so that contributions by employees or by Corixa to the
401(k) plan, and income earned on 401(k) plan contributions, are not taxable to
employees until withdrawn from the 401(k) plan, and so that contributions by
Corixa, if any, will be deductible by Corixa when made. At the direction of each
participant, Corixa invests the assets of the 401(k) plan in any of eleven
investment options.
173
<PAGE> 185
COMPENSATION OF CORIXA EXECUTIVE OFFICERS
The following table shows the compensation received by:
- the individual who served as Corixa's Chief Executive Officer during the
fiscal year ended December 31, 1998;
- the four other most highly compensated individuals who served as
executive officers of Corixa during the year ended December 31, 1998; and
- the compensation received by these individuals for Corixa's two preceding
fiscal years if they were employed by Corixa during such period.
Through this proxy statement/prospectus, the following officers are
referred to as Corixa's named executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------------ ------------
OTHER SECURITIES
ANNUAL UNDERLYING
FISCAL SALARY BONUS COMPENSATION OPTIONS
NAME AND PRINCIPAL POSITION YEAR ($)(1) ($)(2) ($)(3) (#)
- --------------------------- ------ -------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Steven Gillis......................... 1998 $305,000 $61,850 $9,200 37,750
Chairman and Chief Executive Officer 1997 289,000 47,000 6,700 17,171
1996 250,000 20,000 6,800 --
Mark McDade........................... 1998 $266,712 $52,400 $8,300 12,750
President and Chief 1997 254,000 40,500 6,700 17,171
Operating Officer 1996 200,000 14,000 6,800 --
Steven Reed........................... 1998 $192,178 $38,200 $8,800 12,750
Executive Vice President 1997 181,300 28,700 6,500 17,171
and Chief Scientific Officer 1996 147,000 7,000 6,700 --
Kenneth Grabstein..................... 1998 $150,000 $31,100 $9,000 12,750
Executive Vice President 1997 142,000 16,100 6,500 17,171
and Director of Immunology 1996 126,000 8,400 6,700 --
Martin Cheever........................ 1998 $150,000 $19,125 $6,600 12,750
Vice President and
Director of Medical Affairs
</TABLE>
- -------------------------
(1) Includes amounts deferred under the Corixa's 401(k) plan.
(2) Include bonuses paid in the indicated year and earned in the preceding year.
(3) Amounts reported for fiscal years 1998, 1997 and 1996 consist of:
- amounts Corixa contributed to Corixa's 401(k) plan with respect to each
named executive officer; and
- premiums paid on life and accidental death and dismemberment and health
insurance policies for the officer's benefit.
Dr. Gillis, Mr. McDade, Dr. Reed and Dr. Grabstein each entered into an
agreement with Corixa dated September 30, 1994, which provides that their
employment is terminable at any time
174
<PAGE> 186
for any reason, with or without cause, by either themselves or Corixa. In the
event that Corixa involuntarily terminates their employment, other than for
"good cause," then they will immediately resign from all positions with Corixa
and enter into a consulting arrangement for one year commencing immediately
after their termination date. In consideration for such consulting arrangement,
they will continue to be paid their salary and benefits for one year and will
become vested over such one year in an additional one year of shares covered by
their respective stock option agreement and the remaining unvested shares
pursuant to such stock option agreement. However, if they obtain new employment
during the one year period, any salary paid pursuant to this arrangement will be
offset from amounts due under the agreement and vesting of shares covered by
their respective stock option agreement will cease as of the date they accept
the new employment. For purposes of such agreement, "good cause" means gross
misconduct or acts or omission that involve fraud or embezzlement or
misappropriation of any property or proprietary information of Corixa.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table provides information concerning stock options granted
to Corixa's named executive officers in the last fiscal year. In addition, as
required by SEC rules, the table sets forth the hypothetical gains that would
exist for the options based on assumed rates of annual compound stock price
appreciation during the option term.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS (1)
-------------------------------------------------- POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
TOTAL ANNUAL
OPTIONS RATES OF STOCK PRICE
NUMBER OF GRANTED TO APPRECIATION FOR
SECURITIES EMPLOYEES OPTION
UNDERLYING IN FISCAL EXERCISE OF TERM (2)
OPTIONS YEAR BASE PRICE EXPIRATION ---------------------
NAME GRANTED(#) (%)(#) ($/SH)(4) DATE 5%($) 10%($)
- ---- ---------- ---------- ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Steven Gillis.............. 37,750 9.9% $9.50 1/08 $225,500 $571,500
Mark McDade................ 12,750 3.3 9.50 1/08 76,100 193,000
Steven Reed................ 12,750 3.3 9.50 1/08 76,100 193,000
Kenneth Grabstein.......... 12,750 3.3 9.50 1/08 76,100 193,000
Martin Cheever............. 12,750 3.3 9.50 1/08 76,100 193,000
</TABLE>
- -------------------------
(1) No stock appreciation rights were granted to Corixa's named executive
officers in the last fiscal year. Options vest over a four-year period on a
monthly basis after the first year.
(2) The 5% and 10% assumed annual rates of compounded stock price appreciation
are mandated by the SEC. There is no assurance provided to any executive
officer or any other holder of Corixa's securities that the actual stock
price appreciation over the 10-year option term will be at the assumed 5%
and 10% levels or at any other defined level.
(3) Corixa granted stock options to employees representing 380,245 shares during
fiscal year 1998.
(4) The exercise price may be paid in cash, in shares of Corixa common stock
valued at fair market value on the exercise date or through a cashless
exercise procedure involving a same-day sale of the purchased shares. Corixa
may also finance the option exercise by loaning the optionee sufficient
funds to pay the exercise price for the purchased shares.
175
<PAGE> 187
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth information for Corixa's named executive
officers with respect to exercises of options to purchase common stock in the
fiscal year ended December 31, 1998.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF IN-THE-MONEY
SHARES UNEXERCISED OPTIONS AT OPTIONS AT FISCAL
ACQUIRED ON VALUE FISCAL YEAR END(#) YEAR END($)
NAME EXERCISE(#) REALIZED($) VESTED/UNVESTED(1) VESTED/UNVESTED(2)
- ---- ----------- ----------- ---------------------- --------------------
<S> <C> <C> <C> <C>
Steven Gillis.............. -0- n/a 59,302/47,133 $ 446,400/$155,000
Mark McDade................ -0- n/a 124,785/26,348 1,081,600/ 141,500
Steven Reed................ -0- n/a 16,830/20,666 118,600/ 90,800
Kenneth Grabstein.......... -0- n/a 11,149/18,772 68,000/ 73,900
Martin Cheever............. -0- n/a 13,654/59,702 88,700/ 412,000
</TABLE>
- --
- -------------------------
(1) No stock appreciation rights were outstanding during fiscal year 1998.
(2) Based on the $9.25 per share closing price of Corixa's common stock on
Nasdaq on December 31, 1998, less the exercise price of the options.
176
<PAGE> 188
CORIXA COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The compensation committee of Corixa's board of directors has general
responsibility for establishing the compensation payable to Corixa's executive
officers and has the sole and exclusive authority to administer Corixa's 1994
plan under which grants may be made to executive officers.
GENERAL COMPENSATION POLICY
Under the supervision of the compensation committee, Corixa's compensation
policy is designed to attract and retain qualified key executives critical to
Corixa's growth and long-term success. It is the objective of Corixa's board of
directors to have a portion of each executive's compensation contingent upon
Corixa's performance as well as upon the individual's personal performance.
Accordingly, each executive officer's compensation package is comprised of three
elements:
- base salary which reflects individual performance and expertise;
- variable bonus awards payable in cash and tied to the achievement of
certain performance goals which the compensation committee establishes
from time to time for Corixa or the individual; and
- long-term stock-based incentive awards which are designed to strengthen
the mutuality of interests between the executive officers and Corixa's
stockholders.
The summary below describes in more detail the factors which the
compensation committee considers in establishing each of the three primary
components of the executive compensation package.
Base Salary. The level of base salary is established primarily on:
- the basis of the individual's qualifications and relevant experience;
- the strategic goals for which he or she has responsibility;
- the compensation levels at companies that compete with Corixa for
business and executive talent; and
- the incentives necessary to attract and retain qualified management.
Base salary is adjusted in January of each year to take into account the
individual's performance and to maintain a competitive salary structure.
Corixa's performance does not play a significant role in the determination of
base salary.
Cash-Based Incentive Compensation. Cash bonuses are awarded to executive
officers based on their success in achieving designated individual goals and
Corixa's success in achieving specific company-wide goals, such as product
development milestones and stock price appreciation.
Long-Term Incentive Compensation. Corixa has utilized its stock option
plans to provide executives and other key employees with incentives to maximize
long-term stockholder values. Awards under this plan by the compensation
committee take the form of stock options designed to give the recipient a
significant equity stake in Corixa and thereby closely align his or her
interests with those of Corixa's stockholders. Factors considered in making
these awards include the individual's position in Corixa, his or her performance
and responsibilities, and internal comparability considerations. In addition,
the compensation committee has established general guidelines in making option
grants to the executive officers in an attempt to target a fixed number of
unvested option shares based upon each individual's position with Corixa and his
or her existing holdings of unvested
177
<PAGE> 189
options. However, the compensation committee does not adhere strictly to these
guidelines and will vary the size of the option grant made to each executive
officer as it believes the circumstances warrant.
Each option grant allows the officer to acquire shares of common stock at a
fixed price per share, which is equivalent to the fair market value on the date
of grant. The options may be held for a specified period of time, up to 10
years. The options typically vest in periodic installments over a four-year
period, contingent upon the executive officer's continued employment with
Corixa. Accordingly, the option will provide a return to the executive officer
only if he or she remains in Corixa's service, and then only if the market price
of the common stock appreciates over the option term.
CEO Compensation. In setting the compensation payable during fiscal 1998
to Corixa's Chief Executive Officer, Steven Gillis, Ph.D., the committee used
the same factors as described above for the executive officers. The compensation
committee reviewed Dr. Gillis' compensation relative to industry comparables and
his performance over the last twelve months in achieving Corixa goals. Dr.
Gillis' annual base salary for 1998 was set in February 1998 at $305,000. The
compensation committee awarded Dr. Gillis a cash bonus of $61,850 in February
1998 for the achievement of Corixa's corporate goals for 1997.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
The committee has considered the impact of Section 162(m) of the Internal
Revenue Code adopted under the Omnibus Budget Reconciliation Act of 1993, which
section disallows a deduction for any publicly held corporation for individual
compensation exceeding $1 million in any taxable year for the chief executive
officer and four other most highly compensated executive officers, respectively,
unless such compensation meets the requirements for the "performance-based"
exception to Section 162(m). As the cash compensation paid by Corixa to each of
its executive officers is expected to be below $1 million and the committee
believes that options granted under Corixa's 1994 plan to such officers will
meet the requirements for qualifying as performance-based, the committee
believes that Section 162(m) will not affect the tax deductions available to
Corixa with respect to the compensation of its executive officers. It is the
committee's policy to qualify, to the extent reasonable, its executive officers'
compensation for deductibility under applicable tax law. However, Corixa may
from time to time pay compensation to its executive officers that may not be
deductible.
The Compensation Committee
Joseph Lacob
Arnold Oronsky
Andrew Senyei
178
<PAGE> 190
CORIXA STOCKHOLDER RETURN PERFORMANCE PRESENTATION
<TABLE>
<CAPTION>
NASDAQ STOCK NASDAQ
CORIXA CORPORATION MARKET (U.S.) PHARMACEUTICAL
------------------ ------------- --------------
<S> <C> <C> <C>
10/2/97 100.00 100.00 100.00
12/97 66.20 92.57 89.72
3/98 54.63 108.47 98.62
6/98 50.93 111.28 91.27
9/98 45.37 100.53 86.10
12/98 68.52 130.44 114.13
3/99 59.26 145.79 125.22
6/99 131.95 158.55 127.39
</TABLE>
The preceding graph shows a comparison of cumulative total stockholder
returns for Corixa's common stock, the Nasdaq Stock Market index for United
States companies, and the Nasdaq Pharmaceutical Company (Biotechnology) index.
The graph assumes the investment of $100 on October 2, 1997, the date of
Corixa's initial public offering and reinvestment of the full amount of all
dividends. The performance shown is not necessarily indicative of future
performance.
The information presented in the performance graph indicates that $100
invested in Corixa's common stock on October 2, 1997, the effective date of
Corixa's completed initial public offering, would be worth $131.95 on June 30,
1999, which represents an annual rate of return of -2.57%. The same amount
hypothetically invested in the Nasdaq Stock Market index for United States
companies, and the Nasdaq Pharmaceutical Company Index would be worth $146.39 or
$122.72, respectively, which represent an annual rate of return of 37.11% and
18.17%, respectively.
Notwithstanding anything to the contrary set forth in any of Corixa's
previous filings under the Securities Act or the Exchange Act which might
incorporate future filings made by Corixa under those statutes, the preceding
Compensation Committee Report on Executive Compensation and performance graph
are not to be incorporated by reference into any of those previous filings; nor
is such report or graph to be incorporated by reference into any future filings
which Corixa may make under those statutes.
179
<PAGE> 191
COMPENSATION OF RIBI EXECUTIVE OFFICERS
The following tables set forth information regarding executive compensation
for Ribi's Chief Executive Officer, President and Chairman and its four most
highly compensated executive officers who earned more than $100,000 in salary
and bonus in 1998. The compensation is for services performed in all capacities
for Ribi.
SUMMARY COMPENSATION TABLE
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(#) COMPENSATION
- --------------------------- ---- -------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Robert E. Ivy.......................... 1998 $266,500 $40,000 15,000 $9,559
Chief Executive Officer, 1997 258,777 25,000 -- 9,341
President and Chairman 1996 251,500 25,000 65,000 9,424
Gary T. Elliott, Pharm.D., Ph.D. ...... 1998 127,965 -- 25,000 1,996
Vice President -- Pharmaceutical 1997 104,694 -- 15,000 932
Development 1996 103,083 -- 20,000 1,856
Ronald H. Kullick, R.Ph., J.D. ........ 1998 124,097 -- 10,000 1,861
Vice President -- Legal Counsel 1997 118,718 -- 15,000 1,781
and Secretary 1996 111,626 -- 15,000 1,674
Charles E. Richardson, Ph.D. .......... 1998 123,624 -- 25,000 2,225
Vice President -- Pharmaceutical 1997 116,005 -- 15,000 2,088
Discovery 1996 111,049 -- -- 1,999
Kenneth B. Von Eschen, Ph.D. .......... 1998 113,338 -- 20,000 2,040
Vice President -- Clinical and 1997 107,773 -- 10,000 1,940
Regulatory Affairs 1996 101,796 -- 20,000 1,832
</TABLE>
Ribi has an employment contract with Mr. Ivy which currently provides for
an annual salary of $275,000 with associated executive benefits. The agreement
may be terminated by Ribi by giving notice one year prior to the expiration of
the contract, which otherwise automatically extends for one-year periods. If the
agreement is terminated by Ribi other than for "cause," or by Mr. Ivy following
his failure to be elected as a director of Ribi or his removal as Chief
Executive Officer, President and Chairman, Mr. Ivy will continue to receive his
salary until the expiration of the agreement. The Ribi board of directors
reviews Mr. Ivy's salary annually and may adjust it.
During 1998, Ribi provided supplemental long-term disability insurance for
Mr. Ivy at a cost of $3,997 and a term life insurance policy on which Ribi is
not a beneficiary at a cost of $2,562. Ribi also contributed $3,000 for Mr.
Ivy's account in a 401(k) savings plan.
During 1998, Ribi made contributions to a 401(k) savings plan in the
amounts of $1,996 for Mr. Elliott, $1,861 for Mr. Kullick, $2,225 for Mr.
Richardson, and $2,040 for Mr. Von Eschen.
180
<PAGE> 192
RIBI STOCK OPTION GRANTS
YEAR ENDED DECEMBER 31, 1998
Of the stock options reported below, 20% are exercisable on the grant date
and an additional 20% are exercisable on each anniversary of the grant date such
that 100% are exercisable four years from the grant date. The exercise price is
equal to the market value of the stock on the grant date.
The potential realizable value is calculated based on the 10-year term of
the option at its time of grant. The potential realizable value is calculated by
assuming that the stock price on the date of grant appreciates at the indicated
annual rate, compounded annually for the entire term of the option, and that the
option is exercised and sold on the last day of its term for the appreciated
stock price. The values do not include consideration of income tax consequences.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE AT
INDIVIDUAL GRANTS ASSUMED ANNUAL
--------------------------------------------------- RATES OF STOCK PRICE
NUMBER OF % OF TOTAL APPRECIATION FOR
SECURITIES STOCK OPTIONS 10 YEAR OPTION
UNDERLYING GRANTED TO EXERCISE TERM
OPTIONS EMPLOYEES IN PRICE EXPIRATION --------------------
NAME GRANTED FISCAL YEAR PER SHARE DATE 5% ($) 10% ($)
- ---- ---------- ------------- --------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Robert E. Ivy............... 15,000 7.9% $5.75 04/24/08 $54,242 $137,460
Gary T. Elliott............. 25,000 13.1% 5.75 04/24/08 90,404 229,100
Ronald H. Kullick........... 10,000 5.3% 5.75 04/24/08 36,161 91,640
Charles E. Richardson....... 25,000 13.1% 5.75 04/24/08 90,404 229,100
Kenneth B. Von Eschen....... 20,000 10.5% 5.75 04/24/08 72,323 183,280
</TABLE>
AGGREGATED STOCK OPTION EXERCISES
AND YEAR END STOCK OPTION VALUES
YEAR ENDED DECEMBER 31, 1998
The value of unexercised in-the-money options is based on the closing price
of Ribi's common stock on December 31, 1998, which was $2.31, less the option
exercise price. The values presented do not include income tax consequences.
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF SECURITIES
SHARES UNDERLYING VALUE OF UNEXERCISED
ACQUIRED UNEXERCISED OPTIONS "IN-THE-MONEY" OPTIONS
ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert E. Ivy........... -- -- 301,000 51,000 -- --
Gary T. Elliott......... -- -- 58,900 37,000 -- --
Ronald H. Kullick....... -- -- 85,000 23,000 -- --
Charles E. Richardson... -- -- 56,000 29,000 -- --
Kenneth B. Von Eschen... -- -- 55,700 30,000 -- --
</TABLE>
181
<PAGE> 193
RIBI COMPENSATION REPORT ON EXECUTIVE COMPENSATION
Ribi's philosophy with respect to executive compensation is to offer
competitive compensation opportunities which are based upon an individual's
performance and contribution toward the attainment of Ribi's goals.
At the present time, Ribi's executive officers receive compensation in the
form of base salary and long-term incentive compensation through the grant of
stock options. Occasionally, they may receive cash bonuses for unusual or
extraordinary accomplishments. They are also eligible to participate in an
employee savings plan under Section 401(k) of the Internal Revenue Code. This
plan covers substantially all full-time employees. Ribi matches 30% of employee
contributions up to 6% of compensation. In addition, Ribi provides health, term
life and disability insurance for employees who are actively employed.
The committee of outside directors of the Ribi board of directors is
responsible for administering executive officer compensation. The committee is
comprised of non-employee directors who are not eligible to participate in any
of the compensation plans it administers. The committee reviews compensation
annually, usually during the first quarter of the fiscal year for executives
other than the Chief Executive Officer. The committee reviews with the Chief
Executive Officer a compensation proposal prepared by the Chief Executive
Officer with the assistance of Ribi's human resources staff. The compensation
proposal is based upon an objective performance evaluation measuring past
performance as well as defined expected future contributions. Other factors the
committee takes into account include compensation information of peer group
companies, national surveys and Ribi's financial condition. The proposal is then
submitted to Ribi's full board of directors for ratification. Stock option
grants, if any, are administered solely by the committee.
The committee also assesses the performance of the Chief Executive Officer,
usually in the second quarter of the fiscal year, against previously set goals
and objectives and reviews with him his future goals and objectives. Based upon
this evaluation, and further considering peer group and national survey
compensation data, as well as Ribi's financial condition, the committee
determines what it believes to be appropriate compensation and submits its
proposal for ratification by Ribi's board of directors. Stock option grants, if
any, are administered solely by the committee.
Mr. Ivy's annual base salary was set at $275,000 effective July 1, 1998.
Effective April 24, 1998, Ribi awarded Mr. Ivy a cash bonus of $40,000 and stock
options to purchase 15,000 shares in recognition of his substantial progress
toward accomplishing goals set for the period, as well as advancing Ribi toward
potential profitability. The Committee noted special achievements in completing
regulatory filings for Melacine melanoma theraccine, settlement of certain
proprietary rights matters, development of novel synthetic adjuvants and
advancement of investor relations.
In addition to his salary, Mr. Ivy received an automobile allowance of
$5,400, a term life insurance policy at a cost of $2,562 and a supplemental
long-term disability insurance policy at a cost of $3,997. Ribi is not a
beneficiary on either insurance policy.
182
<PAGE> 194
Ribi is required to disclose its policy regarding qualifying executive
compensation for deductibility under Section 162(m) of the Internal Revenue
Code, which provides that, for purposes of the regular income tax and the
alternative minimum tax, the otherwise allowable deduction for compensation paid
or accrued with respect to a covered employee of a publicly owned corporation is
limited to no more than $1 million per year. Ribi does not expect that the
compensation to be paid to its executive officers for fiscal 1999 will exceed
the $1 million limit per officer. Ribi's 1996 option plan is structured so that
any compensation deemed paid to an executive officer when he exercises an
outstanding option under the plan, with an exercise price equal to the fair
market value of the option shares on the grant date, will qualify as
performance-based compensation which will not be subject to the $1 million
limitation.
The Committee of Outside Directors
April 1998
Frederick B. Tossberg,
Chairman and Secretary
Philipp Gerhardt
Paul Goddard
Mark I. Greene
Thomas N. McGowen, Jr.
183
<PAGE> 195
RIBI STOCKHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a five-year line graph comparing the yearly percentage
change in the cumulative total stockholder return on Ribi's common stock with
the cumulative total return for the Nasdaq Stock Market United States Companies
and the Nasdaq Pharmaceutical Stocks as of December 31 of each year and June 30,
1999. The graph assumes that the value of the investment in Ribi's common stock
and each index was $100 on December 31, 1993, and all dividends, if any, were
reinvested.
[Graph of of Ribi's stock value]
<TABLE>
<CAPTION>
RIBI NASDAQ TOTAL RET (U.S.) NASDAQ PHARMA
---- ----------------------- -------------
<S> <C> <C> <C>
'1993' 100.00 100.00 100.00
'1994' 45.33 97.75 75.26
'1995' 64.67 138.26 138.04
'1996' 41.33 170.11 138.47
'1997' 39.33 208.44 142.98
'1998' 24.67 293.72 181.89
'6/30/99' 26.67 358.49 206.10
</TABLE>
RIBI DIRECTORS' COMPENSATION
In 1998, each director who was not an employee of Ribi was paid $6,000 per
year plus $500 for each day on which the director attended meetings and was
reimbursed for travel expenses incurred when attending meetings. Additionally,
directors who perform extraordinary services are entitled to compensation at the
rate of $125 per hour. Mr. Tossberg was paid $500 during 1998 for extraordinary
services.
Ribi's 1996 stock option plan provides for the issuance of discounted stock
options to directors who are not employees of Ribi and who elect to receive the
discounted stock options rather than cash for all or a portion of their director
fees. This plan allows for the issuance of NSOs with an exercise price which is
20% below the market price of Ribi's common stock on the grant date. The
directors are required to make the voluntary election at least six months prior
to the beginning of each calendar year. The number of options granted is
determined by dividing the amount of the foregone cash compensation by the
amount of the per share price discount on the grant date. Ribi grants options at
the end of each calendar quarter and the options are fully vested on the grant
date. The options, which expire if not exercised within 10 years from the grant
date, are exercisable after a six-month period following the grant date. For the
year 1998, in lieu of cash compensation, Messrs. Gerhardt and Goddard were
granted options to purchase 13,372 and 12,878 shares, respectively, at an
average price of $3.22 per share.
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Additionally, Ribi has a 1996 directors' stock option plan, which was
approved by stockholders in 1997, for directors who are not Ribi employees. This
plan provides for the grant of NSOs to purchase a maximum of 210,000 shares of
Ribi common stock. Each director who is not a Ribi employee was granted options
to purchase 30,000 shares on the later of the date the plan was adopted or on
the date they first became a director. In addition, immediately following each
annual meeting of Ribi's stockholders, each director who is not an employee who
continues as an outside director after the meeting is granted options to
purchase 500 common shares. The exercise price of the options is the market
price on the date of grant. The options vest and can be exercised at the rate of
50% on the date of grant and 25% on each anniversary of the grant date. The
options expire if not exercised within 10 years of the grant date. During 1998,
options to purchase 2,500 shares were granted under the plan with an average
exercise price of $5.75 per share.
Ribi has a consulting agreement with Dr. Mark Greene, one of its directors.
The agreement may be renewed annually and currently expires on February 28,
2000. Pursuant to the agreement, Dr. Greene consults with Ribi personnel when
requested by Ribi regarding a variety of scientific matters relating to the
development of Ribi's products. During 1998, Dr. Greene received $24,000 for
such services.
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OWNERSHIP OF CORIXA CAPITAL STOCK
The following table sets forth certain information regarding the beneficial
ownership of Corixa common stock as of August 5, 1999, by
- each person who is known by Corixa to own beneficially more than five
percent of the Corixa common stock;
- each director of Corixa;
- each of Corixa's named executive officers; and
- by all of Corixa's directors and executive officers as a group.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT OF
NAME AND ADDRESS BENEFICIAL OWNERSHIP COMMON STOCK
- ---------------- -------------------- ------------
<S> <C> <C>
Entities affiliated with Kleiner Perkins Caufield & 2,464,845 15.1%
Byers................................................
2750 Sand Hill Road
Menlo Park, CA 94025
Castle Gate............................................ 2,507,725 14.4
2365 Carillon Point
Kirkland, WA 98033
Entities affiliated with InterWest Investors........... 1,396,797 8.6
3000 Sand Hill Road Building 3,
Suite 255 Menlo Park, CA 94025
Entities affiliated with SmithKline Beecham............ 932,858 5.2
New Horizons Court Brentford,
Middlesex TWB 9EP United Kingdom
Steven Gillis.......................................... 362,922 2.2
Steven Reed............................................ 247,876 1.5
Mark McDade............................................ 241,962 1.5
Kenneth Grabstein...................................... 215,110 1.3
Martin Cheever......................................... 114,099 *
Joseph S. Lacob........................................ 2,443,217 14.9
Andrew E. Senyei....................................... 73,524 *
Arnold L. Oronsky...................................... 1,413,047 8.6
All directors and officers as a group (11 persons)..... 5,174,416 30.9
</TABLE>
- -------------------------
* Less than 1%.
The applicable percentage of beneficial ownership is based on 16,332,641
shares of Corixa common stock, which is comprised of 14,862,053 shares of Corixa
common stock outstanding as of August 5, 1999 and 12,500 shares of Series A
preferred stock which have the right to vote with the common stock on an
as-converted basis and are convertible into an aggregate of 1,407,588 shares of
Corixa common stock, together with applicable options and warrants for such
stockholder. Beneficial ownership is determined in accordance with the rules of
the SEC. The number of shares beneficially owned by a person includes shares of
Corixa common stock subject to options held by that person that are currently
exercisable or exercisable within 60 days of August 5, 1999. Shares issuable
pursuant to those options are deemed outstanding for computing the percentage
ownership of the person holding the options but are not deemed outstanding for
the purposes of computing the percentage ownership of each other person. To
Corixa's knowledge, seven persons named in this table have sole voting and
investment power with respect to all shares of Corixa common stock shown as
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<PAGE> 198
owned by them, subject to community property laws where applicable and except as
indicated. Unless otherwise indicated, the address of each of the individuals
named above is Corixa Corporation, 1124 Columbia Street, Suite 200, Seattle,
Washington 98104.
2,364,294 shares are held by Kleiner Perkins Caufield & Byers VII, 62,673
shares are held by Kleiner Perkins Caufield & Byers VI and 37,878 shares are
held by Cynthia Healy, Director Life Science Research at Kleiner Perkins
Caufield & Byers. Joseph S. Lacob, a director, is a general partner of Kleiner
Perkins Caufield & Byers VII and Kleiner Perkins Caufield & Byers VI, and, as
such, may be deemed to share voting and investment power with respect to such
shares except for the shares held by Dr. Healy. Mr. Lacob disclaims beneficial
ownership of such shares, except to the extent of his pecuniary interest in such
shares.
Castle Gate holds 12,500 shares of Series A preferred stock which are
convertible into an aggregate of 1,407,588 shares of Corixa common stock and has
warrants to purchase an additional 1,037,137 shares of Corixa common stock.
InterWest Partners V, L.P., holds 1,382,107 shares, InterWest Investors V,
L.P. holds 8,690 shares, and Dr. Oronsky holds 6,000 shares. Arnold L. Oronsky,
a director of Corixa, is a general partner of InterWest Partners V, L.P. and, as
such, may be deemed to share voting and investment power with respect to these
shares. Dr. Oronsky disclaims beneficial ownership of shares held by InterWest
Partners V, L.P., except to the extent of his pecuniary interest in the shares,
and disclaims beneficial ownership to all shares held by InterWest Investors V,
L.P.
S.R. One Ltd., a wholly-owned subsidiary of SmithKline Beecham, holds
505,051 shares and SmithKline Beecham holds 427,807 shares.
The information regarding Steven Gillis includes 90,195 shares which are
issuable upon the exercise of outstanding options held by him exercisable within
60 days of August 5, 1999.
The information regarding Steven Reed includes 31,515 shares issuable upon
the exercise of outstanding options held by him exercisable within 60 days of
August 5, 1999. 15,151 shares are held in the name of Steven James N. Reed, UGMA
WA Merrill Lynch and 15,151 shares are held in the name of Sarah Mariko Reed,
UGMA WA Merrill Lynch, both of which accounts name Dr. Reed as custodian. Dr.
Reed disclaims beneficial ownership of such shares, except to the extent of his
pecuniary interest in such shares.
The information regarding Mark McDade includes 151,053 shares issuable upon
the exercise of outstanding options held by him exercisable within 60 days of
August 5, 1999.
The information regarding Kenneth Grabstein includes 25,720 shares issuable
upon the exercise of outstanding options held by him exercisable within 60 days
of August 5, 1999.
The information regarding Martin Cheever includes 30,767 shares issuable
upon the exercise of outstanding options held by him exercisable within 60 days
of August 5, 1999.
The information regarding Joseph Lacob includes 16,250 shares issuable upon
the exercise of outstanding options held by him exercisable within 60 days of
August 5, 1999, 2,364,294 shares held by Kleiner Perkins Caufield & Byers VII
and 62,673 shares held by Kleiner Perkins Caufield & Byers VI. Mr. Lacob, a
director of Corixa, is a general partner of Kleiner Perkins Caufield & Byers VII
and Kleiner Perkins Caufield & Byers VI, and, as such, may be deemed to share
voting and investment power with respect to such shares. Mr. Lacob disclaims
beneficial ownership of such shares, except to the extent of his pecuniary
interest in such shares.
The information regarding Arnold Oronsky includes 16,250 shares issuable
upon the exercise of outstanding options held by him exercisable within 60 days
of August 5, 1999, 1,382,107 shares held by InterWest Partners V, L.P., 8,690
shares held by InterWest Investors V, L.P and 6,000 shares
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<PAGE> 199
held by Dr. Oronsky. Arnold L. Oronsky, a director of Corixa, is a general
partner of InterWest Partners V, L.P. and, as such, may be deemed to share
voting and investment power with respect to such shares. Dr. Oronsky disclaims
beneficial ownership of shares held by InterWest Partners V, L.P., except to the
extent of his pecuniary interest in such shares, and disclaims beneficial
ownership to all shares held by InterWest Investors V, L.P.
As a group, all directors and officers, totaling 10 individuals, hold
5,174,416 shares, which includes 57,538 shares issuable upon the exercise of
outstanding options held by Michelle Burris, an executive officer of Corixa,
exercisable within 60 days of August 5, 1999, 5,121 shares issuable upon the
exercise of outstanding options held by Maureen Howard, an executive officer of
Corixa, exercisable within 60 days of August 5, 1999 and 16,250 shares issuable
upon exercise of outstanding options held by Andrew Senyei, a director of
Corixa, exercised within 60 days of August 5, 1999.
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<PAGE> 200
OWNERSHIP OF RIBI CAPITAL STOCK
The following table sets forth certain information regarding the beneficial
ownership of Ribi common stock as of August 9, 1999 by:
- each person who is known by Ribi to own beneficially more than five
percent of the Ribi common stock;
- each director of Ribi;
- the chief executive officer and the four other most highly compensated
individuals who served as executive officers of Ribi during the year
ended December 31, 1998; and
- all of Ribi's directors and executive officers as a group.
Beneficial ownership is determined in accordance with the rules of the SEC.
In computing the number of shares beneficially owned by a person and the
percentage ownership of that person, shares of Ribi common stock subject to
warrants, options or convertible preferred stock held by that person that are
exercisable within 60 days of August 9, 1999 are deemed outstanding. Such
shares, however, are not deemed outstanding for purposes of computing the
percentage ownership of each other person. To Ribi's knowledge, except as set
forth in the footnote to this table and subject to applicable community property
laws, each person named in the table has sole voting and investment power with
respect to the shares set forth opposite such person's name.
<TABLE>
<CAPTION>
APPROXIMATE
NUMBER OF PERCENTAGE OF RIBI SHARES OF CORIXA
SHARES COMMON STOCK COMMON STOCK
BENEFICIALLY OUTSTANDING PRIOR BENEFICIALLY OWNED
NAME OWNED(1) TO THE MERGER AFTER THE MERGER
- ---- ------------ ------------------ ------------------
<S> <C> <C> <C>
RGC International Investors, LDC......... 3,381,963 13.6% 569,861
SmithKline Beecham plc................... 1,754,056 8.0 295,558
Robert E. Ivy............................ 330,000 1.5 55,605
Ronald H. Kullick, R.Ph., J.D............ 80,000 * 13,480
Frederick B. Tossberg, M.B.A............. 83,371 * 14,048
Gary T. Elliott, Pharm.D., Ph.D.......... 72,900 * 12,284
Thomas N. McGowen, Jr., J.D.............. 66,733 * 11,245
Charles E. Richardson, Ph.D.............. 65,600 * 11,054
John L. Cantrell, Ph.D................... 70,000 * 11,795
Kenneth B. Von Eschen, Ph.D.............. 68,400 * 11,525
Paul Goddard, Ph.D....................... 65,834 * 11,093
Philipp Gerhardt, Ph.D................... 56,423 * 9,507
Mark I. Greene, M.D., Ph.D., FRCP........ 33,125 * 5,582
All directors and executive officers as a
group (12 persons)..................... 1,042,808 4.6 175,713
</TABLE>
- -------------------------
* Less than 1%.
RGC International Investors, LDC, c/o Rose Glen Capital Management, L.P., 3
Bala Plaza East, Suite 200, 251 St. Asaphs Road, Bala Cynwyd, PA 19004, owns
6,490 shares of Series A preferred stock which were convertible into shares of
common stock of Ribi on August 9, 1999. The conversion is based on the average
closing bid prices for any three consecutive trading days during the
189
<PAGE> 201
22 trading day period prior to notice of conversion. Based on the Ribi common
stock's market price on August 9, 1999, RGC International Investors, LDC could
acquire up to 3,381,963 shares of Ribi common stock on conversion.
SmithKline Beecham Biologicals, Rue de l'Institut 89 B-1330, Rixensart,
Belgium, owns 1,103,448 shares and has warrants, which were exercisable on
August 9, 1999, to purchase 500,000 additional shares. S.R. One, Limited, Bay
Colony Executive Park, 565 E. Swedesford Road, Suite 315, Wayne, PA 19087, owns
150,608 shares. Both companies are subsidiaries of SmithKline Beecham plc.
The information regarding Mr. Ivy represents 330,000 shares for which
options were exercisable on August 9, 1999 or within 60 days thereafter and
excludes 3,000 shares owned by Mr. Ivy's wife to which Mr. Ivy disclaims
beneficial ownership.
The information regarding Mr. Kullick includes 79,000 shares for which
options were exercisable on August 9, 1999 or within 60 days thereafter.
The information regarding Mr. Tossberg includes 72,003 shares for which
options were exercisable on August 9, 1999 or within 60 days thereafter.
The information regarding Dr. Elliott includes 70,900 shares for which
options were exercisable on August 9, 1999 or within 60 days thereafter.
The information regarding Mr. McGowen includes 56,476 shares for which
options were exercisable on August 9, 1999 or within 60 days thereafter.
The information regarding Dr. Richardson includes 61,000 shares for which
options were exercisable on August 9, 1999 or within 60 days thereafter.
The information regarding Dr. Cantrell includes 60,000 shares for which
options were exercisable on August 9, 1999 or within 60 days thereafter.
The information regarding Dr. Von Eschen includes 65,400 shares for which
options were exercisable on August 9, 1999 or within 60 days thereafter and
excludes 500 shares owned by Dr. Von Eschen's wife to which Dr. Von Eschen
disclaims beneficial ownership.
The information regarding Dr. Goddard includes 63,834 shares for which
options were exercisable on August 9, 1999 or within 60 days thereafter.
The information regarding Dr. Gerhardt represents 56,423 shares for which
options were exercisable on August 9, 1999 or within 60 days thereafter and
excludes 5,982 shares owned by Dr. Gerhardt's wife of which Dr. Gerhardt
disclaims beneficial ownership.
The information regarding Dr. Greene includes 31,125 shares for which
options were exercisable on August 9, 1999 or within 60 days thereafter.
The information regarding the officers and directors of Ribi as a group
includes 996,561 shares for which options were exercisable on August 9, 1999 or
within 60 days thereafter.
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<PAGE> 202
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS OF CORIXA
IDRI
In September 1994, Corixa entered into a research services and intellectual
property agreement with IDRI. Under this agreement, as amended and restated
effective January 1997, Corixa has agreed to provide IDRI with research funding
and administrative and facilities support, including use of Corixa's research
laboratory space. IDRI pays a services fee for the administrative and facilities
support provided by Corixa. Corixa's funded research performed by IDRI is in the
area of infectious disease. Under the agreement, IDRI is obligated to disclose
to Corixa all significant developments relating to information or inventions
discovered at IDRI. Corixa will own, on a royalty-free basis, all of IDRI's
interest in inventions and patent rights arising out of IDRI's research during
the term of the agreement with the exception of inventions and patent rights
arising out of research that is or in the future may be funded by governmental
or not-for-profit organizations. With respect to such rights arising out of
research funded by governmental and not-for-profit organizations, Corixa has
been granted a royalty-bearing, worldwide, perpetual license, exclusive except
as to rights held by such governmental or not-for-profit organizations. The
research services and intellectual property agreement terminates on December 31,
1999, subject to renewal for one or more three year terms at the option of
Corixa. If IDRI terminates the agreement as a result of Corixa's failure to make
required payments, Corixa would be obligated to pay royalties on any product
sales.
In March 1999, Corixa and IDRI signed an agreement to research and develop
ex vivo therapies for the treatment of cancer. Pursuant to the terms of the
agreement, effective March 30, 1999, IDRI will commit $12 million over the three
year term of the agreement to help support Corixa's research and development of
such ex vivo therapies. The agreement provides Corixa exclusive rights to all
intellectual property and product rights while IDRI will receive a percentage of
certain Corixa proceeds related to ex vivo therapy products resulting from such
research and development.
IDRI is independent of Corixa, and Corixa does not have the right to
control or direct IDRI's activities. A majority of the members of IDRI's board
of directors are not affiliated with Corixa. However, Steven Reed, Corixa's
Chief Scientific Officer is a co-founder of IDRI and was a member of the board
of directors of IDRI until March 1, 1999. Mark McDade, President, Chief
Operating Officer and a director of Corixa was also a member of the board of
directors of IDRI until March 1, 1999 and Michelle Burris, Corixa's Vice
President and Chief Financial Officer was treasurer of IDRI until March 1, 1999.
GENESIS
Effective January 1, 1998, Corixa entered into a series of agreements with
Genesis related to the development and commercialization of Genesis' M.
vaccae-related technology in the fields of vaccine adjuvants and autoimmune
disease immunotherapeutics. Under the agreements, Genesis granted Corixa a
worldwide exclusive license to use Genesis' M. vaccae adjuvant technology in
Corixa's proprietary vaccines, subject to Corixa's payment to Genesis of a
percentage of revenues received by Corixa related to such products. In addition,
Corixa and Genesis agreed to collaborate in the development and
commercialization of an M.vaccae-derived product for the treatment of psoriasis.
Dr. Gillis, Chairman of the Board of Corixa and Chief Executive Officer, is a
member of the board of directors of Genesis.
IMMGENICS PHARMACEUTICALS, INC.
In November 1998, Corixa entered into a collaborative agreement with
ImmGenics Pharmaceuticals, Inc. to utilize ImmGenics' proprietary antibody
method technology. In addition, Corixa has invested $3 million in exchange for
ImmGenics preferred stock. In connection with the
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<PAGE> 203
ImmGenics investment, Corixa was granted two seats on ImmGenics' board of
directors, which are held by Michelle Burris, Corixa's Vice President and Chief
Financial Officer, and Steven Reed, Corixa's Executive Vice President and Chief
Scientific Officer.
INDEMNIFICATION AGREEMENTS
Corixa has entered into an indemnification agreement with each of its
officers and directors.
Corixa believes that all of the transactions set forth above were made on
terms no less favorable to Corixa than could have been obtained from
unaffiliated third parties. All future transactions, including loans, between
Corixa and its officers, directors, principal stockholders and their affiliates
will be approved by a majority of the Corixa board, including a majority of the
independent and disinterested directors and will continue to be on terms no less
favorable to Corixa than could be obtained from unaffiliated third parties and
will be made only for bona fide business purposes.
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<PAGE> 204
COMPARISON OF RIGHTS OF HOLDERS OF CORIXA CAPITAL STOCK
AND HOLDERS OF RIBI CAPITAL STOCK
The following summary of certain characteristics of capital stock of Corixa
and Ribi does not purport to be complete and is subject to, and qualified in its
entirety by, the provisions of the Delaware General Corporation Law and by the
respective bylaws and certificates of incorporation of Ribi and Corixa, as
applicable.
DESCRIPTION OF CORIXA CAPITAL STOCK
The authorized capital stock of Corixa consists of 40,000,000 shares of
common stock, $0.001 par value per share, and 10,000,000 shares of preferred
stock, $0.001 par value per share.
Corixa Common Stock. As of August 9, 1999, there were approximately
14,862,053 shares of Corixa common stock outstanding. Pursuant to Corixa's
certificate of incorporation, the holders of Corixa common stock are entitled to
one vote per share on all matters to be voted upon by the stockholders. No
Corixa common stockholder will be entitled to cumulate votes at any election of
directors. Subject to preferences that are applicable to the Series A preferred
stock and any other series of Corixa preferred stock that may come into
existence in the future, the holders of Corixa common stock are entitled to
receive such dividends, if any, as may be declared from time to time by the
Corixa board out of legally available funds. In the event of a liquidation,
dissolution or winding up of Corixa, the holders of Corixa common stock are
entitled to share ratably with the Series A preferred stock in all assets
remaining after payment of liabilities, subject to prior rights of any other
series of Corixa preferred stock that may come into existence in the future.
Holders of Corixa common stock have no preemptive or conversion rights or other
subscription rights. There are no redemption or sinking fund provisions
available to the holders of Corixa common stock.
Corixa Preferred Stock. Pursuant to Corixa's certificate of incorporation,
the Corixa board of directors has the authority, without further action by the
Corixa stockholders, to issue up to 10,000,000 shares of Corixa preferred stock
in one or more series. The Corixa board of directors has the authority to issue
such undesignated Corixa preferred stock and to determine the powers,
preferences and rights and the qualifications, limitations or restrictions
granted to or imposed upon any wholly-unissued series of undesignated Corixa
preferred stock, and to fix the number of shares constituting any series and the
designation of such series, without any further vote or action by the Corixa
stockholders. The issuance of Corixa preferred stock may have the effect of
delaying, deferring or preventing a change in control of Corixa without further
action by the Corixa stockholders and may adversely affect the voting and other
rights of the holders of Corixa common stock.
Pursuant to a certificate of designation, Corixa has designated 50,000
shares of preferred stock as Series A preferred stock, of which 12,500 shares
were issued and sold to Castle Gate in April 1999 at a purchase price of $1,000
per share. If Corixa elects to draw down all remaining available funds under the
Castle Gate equity line of credit, Corixa will issue all 50,000 shares of Series
A preferred stock to Castle Gate. The Corixa Series A preferred stock have the
following rights, privileges and preferences:
- Dividends. The holders of Corixa Series A preferred stock are entitled to
receive cumulative dividends at the rate of $50.00 per annum per share.
Such dividends are payable annually in cash or shares of Corixa common
stock at Corixa's option for a minimum of four and a maximum of seven
years from the date of issuance of such shares.
- Liquidation Preference. In the event of any liquidation, dissolution or
winding up of Corixa, the holders of Corixa Series A preferred stock are
entitled to share ratably with the holders of Corixa common stock in all
assets remaining after payment of liabilities.
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- Conversion. Each share of Corixa Series A preferred stock is convertible
at any time at the option of the holder into the number of shares of
Corixa common stock equal to $1,000 divided by the applicable conversion
price in effect at the time of the issuance of such shares, provided that
any such optional conversion must result in the issuance of the number of
shares of Corixa common stock having an aggregate value of at least $10
million, based on the applicable conversion price. The conversion price
for the currently outstanding shares of Series A preferred stock is $8.50
per share, which means that each outstanding share of Corixa Series A
preferred stock is convertible into approximately 117.65 shares of Corixa
common stock. For shares of Corixa Series A preferred stock issued
pursuant to subsequent draw downs under the Castle Gate equity line of
credit, the conversion price shall be equal to the average closing price
of Corixa common stock on Nasdaq for a designated period before and after
the consummation of such subsequent draw, subject to specified maximum
thresholds. Each outstanding share of Corixa Series A preferred stock is
also subject to automatic conversion into Corixa common stock on the
earlier of:
-- the four-year anniversary of the issuance of such share, or any
subsequent annual issuance of such share if the average trading price
of Corixa common stock on Nasdaq reaches a specified threshold that
represents a return on such holder's investment; or
-- April 8, 2006.
- Voting. The holders of Corixa Series A preferred stock are entitled to
one vote for each share of common stock into which such Series A
preferred stock could then be converted. No Corixa Series A preferred
stockholder will be entitled to cumulate votes at any election of
directors. The vote of holders of at least a majority of the outstanding
shares of Series A preferred stock is also required to:
-- alter or change the rights, preferences or privileges of the Series A
preferred stock so as to adversely affect such shares;
-- create any new class or series of Corixa preferred stock having a
liquidation preference superior to the Corixa Series A preferred stock;
or
-- increase the authorized number of shares of Corixa Series A preferred
stock.
The shares of Corixa Series A preferred stock were issued as a self-managed
private placement and are exempt from registration under Rule 506 of Regulation
D of the Securities Act. However, pursuant to a registration rights agreement
entered into between Corixa and Castle Gate in connection with the Castle Gate
equity line of credit, Corixa has committed to file an S-3 to register the
underlying shares of Corixa common stock for resale on after conversion of the
Series A preferred stock.
The rights and preferences of the Series A preferred stock are described in
Corixa's certificate of designation with respect to the Series A preferred
stock, which certificate of designation is attached to this proxy
statement/prospectus as Appendix P. The certificate of designation has also been
filed with the Delaware Secretary of State. These rights and preferences are
complicated and not easily summarized, and you are urged to carefully read the
certificate of designation.
Warrants. As of August 9, 1999, there were 31 outstanding warrants to
purchase an aggregate of up to 1,678,950 shares of Corixa common stock at a
weighted average exercise price of $8.48 per share. These warrants are currently
exercisable in full and expire between 2001 and 2008. Corixa may also be
obligated to issue additional warrants to purchase Corixa common stock in the
future if Corixa draws down additional funds under the Castle Gate equity line
of credit, as more fully described in the section entitled "Additional Matters
Being Submitted to a Vote of Only Corixa Stockholders" beginning on page 108.
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<PAGE> 206
Corixa Registration Rights of Certain Holders. Certain holders of shares
of Corixa common stock and warrants exercisable for Corixa common stock are
entitled to rights with respect to the registration of such shares under the
Securities Act. The registration rights are provided for under the terms of an
amended and restated investors' rights agreement between Corixa and the holders
of Corixa registrable securities. Pursuant to the investors' rights agreement,
and under specific conditions, holders of Corixa registrable securities have the
right to request that Corixa pay the expenses of and file for the registration
of shares of Corixa common stock under the Securities Act, as well as the right
to request secondary registrations on Form S-3 under the Securities Act and the
right to participate in Corixa-initiated registrations of Corixa common stock.
Pursuant to a common stock purchase agreement dated December 11, 1998
entered into in connection with the Anergen acquisition, Corixa committed to
register up to 170,224 shares of Corixa common stock held by Warburg Pincus
Ventures, L.P. and International Biotechnology Trust plc (IBT) through the
filing of a Registration Statement on Form S-3. Corixa filed an S-3 to register
such shares on August 9, 1999.
As described above, Corixa has committed to file an S-3 to register the
shares of Corixa common stock issuable upon conversion of the Series A preferred
stock and upon exercise of warrants to purchase common stock held by Castle
Gate.
Holders of 458,753 shares of Corixa common stock issued or issuable upon
exercise of warrants assumed by Corixa in connection with the GenQuest and
Anergen acquisitions are also entitled to rights with respect to the
registration of such shares under the Securities Act.
Transfer Agent and Registrar. The Transfer Agent and Registrar for Corixa
common stock is The Harris Trust Company. Its address is Suite 4900, 601 South
Figueroa Street, Los Angeles, California 90017 and its telephone number is (213)
239-0600.
DESCRIPTION OF RIBI CAPITAL STOCK
The authorized capital stock of Ribi consists of 30,000,000 shares of
common stock, $0.001 par value per share, and 10,000,000 shares of preferred
stock, $0.10 par value per share.
Ribi Common Stock. As of August 9, 1999, there were approximately
21,434,970 shares of Ribi common stock outstanding. Pursuant to Ribi's
certificate of incorporation, the holders of Ribi common stock are entitled to
one vote per share on all matters to be voted upon by the stockholders. No Ribi
stockholder will be entitled to cumulate votes at any election of directors.
Subject to preferences that may be applicable to any outstanding Ribi preferred
stock, the holders of Ribi common stock are entitled to receive dividends, if
any, as may be declared from time to time by the Ribi board of directors out of
legally available funds. In the event of a liquidation, dissolution or winding
up of Ribi, the holders of Ribi common stock are entitled to share ratably in
all assets remaining after payment of liabilities, subject to prior rights of
Ribi preferred stock, if any, then outstanding. Holders of Ribi common stock
have no preemptive or conversion rights or other subscription rights. There are
no redemption or sinking fund provisions available to the holders of Ribi common
stock.
Ribi Preferred Stock. Pursuant to Ribi's certificate of incorporation, the
Ribi board of directors has the authority, without further action by the Ribi
stockholders, to issue up to 9,991,760 shares of Ribi preferred stock in one or
more series. The Ribi board of directors has the authority to issue the
undesignated Ribi preferred stock and to determine the powers, preferences and
rights and the qualifications, limitations or restrictions granted to or imposed
upon any wholly unissued series of undesignated Ribi preferred stock, and to fix
the number of shares constituting any series and the designation of such series,
without any further vote or action by the Ribi stockholders. The issuance of
Ribi preferred stock may have the effect of delaying, deferring or preventing a
change in control of
195
<PAGE> 207
Ribi without further action by the Ribi stockholders and may adversely affect
the voting and other rights of the holders of Ribi common stock.
On July 17, 1998, Ribi sold 8,240 shares of Series A preferred stock to RGC
International Investors, LDC for an aggregate purchase price of $8,240,000. As
of August 9, 1999, 6,490 shares of Series A preferred stock were outstanding.
Pursuant to the Certificate of Designations, Preferences, and Rights of Series A
Convertible Preferred Stock, the Series A preferred stock shall not bear any
dividends. The holders of Series A preferred stock have a liquidation preference
of an amount equal to $1,000 per share plus an amount equal to five per cent per
annum. In addition, the holders of Series A preferred stock have an option to
convert their shares at a set formula. Such option is available to the holders
of Series A preferred stock immediately prior to any merger.
The Ribi Series A preferred stock was issued as a self-managed private
placement and are exempt from registration under Section 4(2) of the Securities
Act. However, pursuant to a registration rights agreement entered into between
Ribi and RGC International Investors, LDC, Ribi has committed to register the
underlying shares of common stock for resale after certain conversions of the
Series A preferred stock.
Transfer Agent and Registrar. The Transfer Agent and Registrar for Ribi
common stock is Continental Stock Transfer & Trust Company. Its address is 2
Broadway, 19th Floor, New York, New York 10004 and its telephone number is
(212)509-4000.
COMPARISON OF CERTIFICATES OF INCORPORATION, BYLAWS AND GOVERNING LAW
Because both Ribi and Corixa are incorporated under the laws of the State
of Delaware, the rights and privileges of stockholders of Ribi and Corixa,
respectively, which rights and privileges are governed by Delaware Law, are
identical, except:
- to the extent that their respective certificates of incorporation,
certificates of designation and bylaws differ;
- for the rights and privileges of the holders of Corixa common stock under
the Corixa's investors' rights agreement; and
- for the rights and privileges of the holders of Ribi capital stock under
the Ribi common stock purchase agreement.
Upon consummation of the merger, the holders of Ribi common stock who
receive Corixa common stock under the terms of the merger agreement will become
stockholders of Corixa. Although it is not practical to compare all the
differences among the respective certificates of incorporation, certificates of
designation and bylaws of Corixa and Ribi, the following is a summary of certain
material differences of the rights of holders of Ribi capital stock and Corixa
common stock that may significantly affect the rights of Ribi stockholders. This
summary does not purport to be complete and is subject to, and qualified in its
entirety by, the provisions of Delaware Law and by the bylaws, certificates of
designation and certificates of incorporation of Ribi and Corixa, as applicable.
Size of the Board of Directors. Ribi's certificate of incorporation and
bylaws provide that the authorized number of directors is nine, which number may
be changed by amendment to the bylaws with either the approval of the holders of
a majority of the outstanding Ribi capital stock or a majority vote of Ribi's
board of directors. The election of Ribi directors need not be by written
ballot. Corixa's certificate of incorporation and Corixa's bylaws provide that
the authorized number of directors is five, and may be fixed from time to time
by a bylaw or amendment adopted by at least 66 2/3% of the Corixa's board of
directors. The election of Corixa directors need not be by written ballot.
196
<PAGE> 208
Cumulative Voting. In an election of directors under cumulative voting,
each share of stock normally having one vote is entitled to a number of votes
equal to the number of directors to be elected. A stockholder may then cast all
such votes for a single candidate or may allocate them among as many candidates
as the stockholder may choose. Under Delaware Law, cumulative voting in the
election of directors is not available unless specifically provided for in the
certificate of incorporation. Corixa's certificate of incorporation specifically
provides that cumulative voting is not available to Corixa stockholders. Ribi's
certificate of incorporation does not specifically provide for cumulative
voting, and accordingly, under Delaware Law, cumulative voting is not available
to Ribi stockholders.
Amendment of Bylaws. Ribi's certificate of incorporation provides that
Ribi's board of directors may make, amend, supplement or repeal Ribi's bylaws;
provided that the Ribi stockholders may change or repeal any bylaw adopted by
Ribi's board of directors by the affirmative vote of the holders of a majority
of Ribi capital stock then outstanding. Corixa's certificate of incorporation
provides that the Corixa board of directors may make, amend, supplement or
repeal Corixa's bylaws, provided that the affirmative vote of the holders of
66 2/3% of Corixa capital stock then outstanding, voting together as a single
class, is required to amend, alter, repeal or adopt certain bylaw provisions,
including any bylaw provision changing the number of authorized directors of
Corixa.
Stockholder Agreements. The Corixa investors' rights agreement and the
rights thereunder are described above under the section entitled "Description of
Corixa Capital Stock."
STOCKHOLDERS' APPRAISAL RIGHTS
Holders of shares of Corixa Series A Preferred Stock who do not vote in
favor of or consent to the merger and who have properly complied with the
requirements of section 262 of the Delaware General Corporation Law will be
entitled to appraisal rights under section 262. Section 262 is reprinted in its
entirety as Appendix Q to this proxy statement/prospectus. The following
discussion is a summary of the law relating to appraisal rights and is qualified
in its entirety by reference to Appendix Q. This discussion and Appendix Q
should be reviewed carefully by any holder who wishes to exercise statutory
appraisal rights, if available, or who wishes to preserve the right to do so, as
failure to comply with the procedures set forth herein or therein will result in
the loss of appraisal rights, if available.
A holder of Corixa Series A preferred stock who makes the demand described
below with respect to its shares, who continuously is the record holder of such
shares through the effective time of the merger, who otherwise complies with the
statutory requirements of section 262 and who neither votes in favor of the
merger agreement nor consents thereto in writing may be entitled to an appraisal
by the Delaware Court of Chancery (the "Delaware Court") of the fair value of
its shares of Series A preferred stock, exclusive of any element of value
arising from the accomplishment or expectation of the merger, together with a
fair rate of interest, if any, to be paid upon the amount determined to be the
fair value. "Continuously", as used in this context refers to stock held from
the date the stockholder makes his demand for an appraisal through the effective
date of the merger. Except as set forth herein, stockholders of Corixa will not
be entitled to appraisal rights in connection with the merger.
Under section 262, where a merger is to be submitted for approval at a
meeting of stockholders, as in the special meeting, not less than 20 days prior
to the meeting, each constituent corporation must notify each of the holders of
its stock for which appraisal rights are available that such appraisal rights
are available and include in each such notice a copy of section 262. This proxy
statement/prospectus will constitute such notice to the stockholders of Corixa.
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<PAGE> 209
Stockholders of Corixa who desire to exercise their appraisal rights must
not vote in favor of the merger agreement or the merger and must deliver a
separate written demand for appraisal to Corixa prior to the vote by the
stockholders of Corixa on the merger agreement and the transactions contemplated
thereby, including the merger. A stockholder of Corixa who signs and returns a
proxy without expressly directing by checking the applicable boxes on the
reverse side of the proxy enclosed herewith that its shares of Series A
preferred stock be voted against the proposal or that an abstention be
registered with respect to its shares of Series A preferred stock in connection
with the proposal will effectively have thereby waived its appraisal rights as
to those shares of Series A preferred stock because, in the absence of express
contrary instructions, such shares of Series A preferred stock will be voted in
favor of the proposal. See "The Corixa Special Meeting -- Record Date; Voting
Rights; Proxies." Accordingly, a stockholder of Corixa who desires to perfect
appraisal rights with respect to any of its shares of Series A preferred stock
must, as one of the procedural steps involved in such perfection, either refrain
from executing and returning the enclosed proxy and from voting in person in
favor of the proposal to approve the merger agreement, or check either the
"Against" or the "Abstain" box next to the proposal on such card or
affirmatively vote in person against the proposal or register in person an
abstention with respect thereto. A demand for appraisal must be executed by or
on behalf of the stockholder of Corixa of record and must reasonably inform
Corixa of the identity of the stockholder of Corixa of record and that such
record stockholder of Corixa intends thereby to demand appraisal of the Series A
preferred stock. A person having a beneficial interest in shares of Series A
preferred stock that are held of record in the name of another person, such as a
broker, fiduciary or other nominee, must act promptly to cause the record holder
to follow the steps summarized herein properly and in a timely manner to perfect
whatever appraisal rights are available. If the shares of Series A preferred
stock are owned of record by a person other than the beneficial owner, including
a broker, fiduciary (such as a trustee, guardian or custodian) or other nominee,
such demand must be executed by or for the record owner. If the shares of Series
A preferred stock are owned of record by more than one person, as in a joint
tenancy or tenancy in common, such demand must be executed by or for all joint
owners. An authorized agent, including an agent for two or more joint owners,
may execute the demand for appraisal for a stockholder of record; however, the
agent must identify the record owner and expressly disclose the fact that, in
exercising the demand, such person is acting as agent for the record owner. If a
stockholder holds shares through a broker who in turn holds the shares through a
central securities depository nominee such as Cede & Co., a demand for appraisal
of such shares must be made by or on behalf of the depository nominee and must
identify the depository nominee as record holder.
A record owner, such as a broker, fiduciary or other nominee, who holds
shares of Series A preferred stock as a nominee for others, may exercise
appraisal rights with respect to the shares held for all or less than all
beneficial owners of shares as to which such person is the record owner. In such
case, the written demand must set forth the number of shares covered by such
demand. Where the number of shares is not expressly stated, the demand will be
presumed to cover all shares of Series A preferred stock outstanding in the name
of such record owner.
A stockholder of Corixa who elects to exercise appraisal rights, if
available, should mail or deliver his or her written demand to: Corixa
Corporation, 1124 Columbia Street, Suite 200, Seattle, WA 98104, Attention:
Michelle Burris, Vice President and Chief Financial Officer.
The written demand for appraisal should specify the name and mailing
address of the stockholder of Corixa, the number of shares of Series A preferred
stock owned, and that the stockholder of Corixa is thereby demanding appraisal
of its shares. A proxy or vote against the merger agreement will not by itself
constitute such a demand. Within ten days after the effective time of the
merger, Corixa must provide notice of the effective time to all stockholders of
Corixa who have complied with section 262.
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<PAGE> 210
Within 120 days after the effective time of the merger, either Corixa or
any stockholder of Corixa who has complied with the required conditions of
section 262 may file a petition in the Delaware Court, with a copy served on
Corixa in the case of a petition filed by a stockholder of Corixa, demanding a
determination of the fair value of the shares of all stockholders of Corixa
entitled to appraisal rights. There is no present intent on the part of Corixa
to file an appraisal petition and stockholders of Corixa seeking to exercise
appraisal rights should not assume that Corixa will file such a petition or that
Corixa will initiate any negotiations with respect to the fair value of such
shares. Accordingly, stockholders of Corixa who desire to have their shares
appraised should initiate any petitions necessary for the perfection of their
appraisal rights within the time periods and in the manner prescribed in section
262. If appraisal rights are available, within 120 days after the effective time
of the merger, any stockholder of Corixa who has theretofore complied with the
applicable provisions of section 262 will be entitled, upon written request, to
receive from Corixa a statement setting forth the aggregate number of shares of
Series A preferred stock not voting in favor of the merger agreement and with
respect to which demands for appraisal were received by Corixa and the number of
holders of such shares. Such statement must be mailed within 10 days after the
written request therefor has been received by Corixa.
If a petition for an appraisal is timely filed and assuming appraisal
rights are available, at the hearing on such petition, the Delaware Court will
determine which stockholders of Corixa, if any, are entitled to appraisal
rights. The Delaware Court may require the stockholders of Corixa who have
demanded an appraisal for their shares and who hold stock represented by
certificates to submit their certificates of stock to the Register in Chancery
for notation thereon of the pendency of the appraisal proceedings; and if any
stockholder of Corixa fails to comply with such direction, the Delaware Court
may dismiss the proceedings as to such stockholder of Corixa. Where proceedings
are not dismissed, the Delaware Court will appraise the shares of Series A
preferred stock owned by such stockholders of Corixa, determining the fair value
of such shares exclusive of any element of value arising from the accomplishment
or expectation of the merger, together with a fair rate of interest, if any, to
be paid upon the amount determined to be the fair value. In determining fair
value, the Delaware Court is to take into account all relevant factors. In
Weinberger v. UOP Inc., the Delaware Supreme Court discussed the factors that
could be considered in determining fair value in an appraisal proceeding,
stating that "proof of value by any techniques or methods which are generally
considered acceptable in the financial community and otherwise admissible in
court" should be considered, and that "fair price obviously requires
consideration of all relevant factors involving the value of a company." The
Delaware Supreme Court stated that in making this determination of fair value
the court must consider market value, asset value, dividends, earnings
prospects, the nature of the enterprise and any other facts which could be
ascertained as of the date of the merger which throw light on future prospects
of the merged corporation. In Weinberger, the Delaware Supreme Court stated that
"elements of future value, including the nature of the enterprise, which are
known or susceptible of proof as of the date of the merger and not the product
of speculation, may be considered." Section 262, however, provides that fair
value is to be "exclusive of any element of value arising from the
accomplishment or expectation of the merger."
Stockholders of Corixa considering seeking appraisal should recognize that
the fair value of their shares determined under section 262 could be more than,
the same as or less than the consideration they are entitled to receive pursuant
to the merger agreement if they do not seek appraisal of their shares. The cost
of the appraisal proceeding may be determined by the Delaware Court and taxed
against the parties as the Delaware Court deems equitable in the circumstances.
Upon application of a stockholder of Corixa entitled to appraisal rights, the
Delaware Court may order that all or a portion of the expenses incurred by any
stockholder of Corixa entitled to appraisal rights in connection with the
appraisal proceeding, including, without limitation, reasonable attorneys' fees
and
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<PAGE> 211
the fees and expenses of experts, be charged pro rata against the value of all
shares of Series A preferred stock entitled to appraisal.
Any stockholder of Corixa who has duly demanded appraisal in compliance
with section 262 will not, after the effective time of the merger, be entitled
to vote for any purpose any shares subject to such demand or to receive payment
of dividends or other distributions on such shares, except for dividends or
distributions payable to stockholders of Corixa of record at a date prior to the
effective time of the merger.
At any time within 60 days after the effective time of the merger, any
stockholder of Corixa will have the right to withdraw such demand for appraisal
and to accept the terms offered in the merger; after this period, the
stockholder of Corixa may withdraw such demand for appraisal only with the
consent of Corixa. If no petition for appraisal is filed with the Delaware Court
within 120 days after the effective time of the merger, stockholders' rights to
appraisal will cease, and stockholders of Corixa will be entitled to receive the
merger consideration. Inasmuch as Corixa has no obligation to file such a
petition, and Corixa has no present intention to do so, any stockholder of
Corixa who desires such a petition to be filed is advised to file it on a timely
basis. Any stockholder of Corixa may withdraw such demand for appraisal by
delivering to Corixa a written withdrawal of its demand for appraisal and
acceptance of the merger consideration, except that any such attempt to withdraw
made more than 60 days after the effective time of the merger will require
written approval of Corixa and that no appraisal proceeding in the Delaware
Court will be dismissed as to any stockholder of Corixa without the approval of
the Delaware Court, and such approval may be conditioned upon such terms as the
Delaware Court deems just. Any stockholder of Corixa who withdraws such demand
for appraisal or who fails to perfect such demand after the effective time will
be entitled to the merger consideration in accordance with the merger agreement
for each share of Series A preferred stock owned by such stockholder.
EXPERTS
The consolidated financial statements of Corixa Corporation appearing in
Corixa Corporation's Annual Report (Form 10-K) for the year ended December 31,
1998 have been audited by Ernst & Young LLP, independent auditors, as set forth
in their report thereon included therein and incorporated herein by reference.
Such consolidated financial statements are incorporated herein by reference in
reliance upon such report given on the authority of such firm as experts in
accounting and auditing.
The financial statements of GenQuest Inc. as of December 31, 1997 and 1996
and for the years then ended and for the period from July 14, 1995 (date of
inception) to December 31, 1997, and the financial statements of Anergen, Inc.
as of December 31, 1998 and 1997 and for each of the three years in the period
ended December 31, 1998 appearing in Corixa's current reports on Form 8-K dated
August 9, 1999 have been audited by Ernst & Young LLP, independent auditors, as
set forth in their reports thereon included therein and incorporated herein by
reference. Such financial statements are incorporated herein by reference in
reliance upon such reports given upon the authority of such firm as experts in
accounting and auditing.
The financial statements of Ribi ImmunoChem Research, Inc. as of December
31, 1998 and 1997, and for each of the three years in the period ended December
31, 1998, have been included herein and in the registration statement in
reliance upon the report of KPMG LLP, independent certified public accountants,
appearing elsewhere herein, and upon the authority of said firm as experts in
accounting and auditing.
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<PAGE> 212
LEGAL MATTERS
The validity of the Corixa common stock issuable pursuant to the merger and
other related legal matters will be passed upon for Corixa by Venture Law Group,
A Professional Corporation, Kirkland, Washington. Morrison & Foerster, LLP is
acting as counsel to Ribi.
OTHER MATTERS
Neither Corixa's nor Ribi's board of directors intends to bring any matters
before the Corixa special meeting or the Ribi special meeting other than those
specifically set forth in the notice of the Corixa special meeting and the Ribi
special meeting, respectively. Corixa's board of directors and Ribi's board of
directors do not know of any matters to be brought before the Corixa special
meeting or the Ribi special meeting by others. If any other matters come before
the Corixa special meeting or the Ribi special meeting, it is the intention of
the persons named in the accompanying proxies to vote such proxies in accordance
with the judgment of Corixa's and Ribi's board of directors.
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<PAGE> 213
STOCKHOLDER PROPOSALS
Under Rule 14a-8 of the Exchange Act, the deadline for stockholders to
submit proposals to be considered for inclusion in Corixa's proxy statement and
form of proxy for the next year's annual meeting of stockholders is expected to
be December 16, 1999. Such proposals may be included in next year's proxy
statement and form of proxy if they comply with the rules and regulations of the
SEC.
Under Rule 14a-8 of the Exchange Act and in accordance with the bylaws of
Ribi, for business to be brought by a stockholder before the annual meeting of
stockholders to be held in 2000, the stockholder must give notice thereof in
writing to the Secretary of Ribi between December 20, 1999 and January 19, 2000.
The notice must contain specified information about the proposed business the
stockholder intends to bring before the meeting, the name and record address of
the stockholder proposing such business, the class and number of shares of Ribi
that are beneficially owned by the stockholder, and any material interest of the
stockholder in such business.
202
<PAGE> 214
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
RIBI ImmunoChem Research, Inc.
Independent Auditors' Report................................ F-2
Balance Sheets.............................................. F-3
Statements of Operations.................................... F-4
Statements of Stockholders' Equity and Comprehensive
Income.................................................... F-5
Statements of Cash Flows.................................... F-7
Notes to Financial Statements............................... F-8
</TABLE>
F-1
<PAGE> 215
RIBI IMMUNOCHEM RESEARCH, INC.
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Ribi ImmunoChem Research, Inc.:
We have audited the accompanying balance sheets of Ribi ImmunoChem
Research, Inc. as of December 31, 1998 and 1997, and the related statements of
operations, stockholders' equity and comprehensive income and cash flows for
each of the years in the three-year period ended December 31, 1998. 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 audit 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 referred to above present fairly,
in all material respects, the financial position of Ribi ImmunoChem Research,
Inc. at December 31, 1998 and 1997, and the results of its operations and its
cash flows for each of the years in the three-year period ended December 31,
1998 in conformity with generally accepted accounting principles.
/s/ KPMG LLP
Billings, Montana
January 22, 1999
F-2
<PAGE> 216
RIBI IMMUNOCHEM RESEARCH, INC.
BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, --------------------
1999 1998 1997
----------- -------- --------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.......................... $ 95 $ 458 $ 1,224
Available-for-sale investment securities and
accrued interest................................ 10,630 12,767 12,146
Accounts receivable................................ 647 1,302 870
Inventories........................................ 1,391 1,185 1,250
Other current assets............................... 214 213 234
-------- -------- --------
Total current assets............................ 12,977 15,925 15,724
Property, plant and equipment, net................... 11,712 11,738 11,453
Deposits............................................. 1,612 1,568 --
Other assets, net.................................... 564 597 593
-------- -------- --------
Total assets.................................... $ 26,865 $ 29,828 $ 27,770
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable................................... $ 240 $ 275 $ 611
Accrued liabilities................................ 802 793 614
Deferred revenue................................... 3,355 3,160 1,130
-------- -------- --------
Total current liabilities....................... 4,397 4,228 2,355
-------- -------- --------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.10 par, 10,000,000 authorized
shares; Series A convertible; stated value
$7,240,000 (unaudited) and $8,240,000 in 1999
and 1998, respectively; 7,240 (unaudited) and
8,240 shares issued and outstanding in 1999 and
1998, respectively (aggregate liquidation
preference of $7,585,000 (unaudited) and
$8,429,000 in 1999 and 1998, respectively)...... 1 1 --
Common stock, $.001 par; 30,000,000 authorized
shares; 20,990,287, 20,322,873 and 20,311,623
issued and outstanding in 1999, 1998 and 1997,
respectively.................................... 21 20 20
Additional paid-in capital......................... 75,654 75,446 67,485
Accumulated other comprehensive income (loss)...... (40) 7 (37)
Accumulated deficit................................ (53,168) (49,874) (42,053)
-------- -------- --------
Total stockholders' equity...................... 22,468 25,600 25,415
-------- -------- --------
Total liabilities and stockholders' equity...... $ 26,865 $ 29,828 $ 27,770
======== ======== ========
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE> 217
RIBI IMMUNOCHEM RESEARCH, INC.
STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEARS ENDED DECEMBER 31,
----------------- ---------------------------
1999 1998 1998 1997 1996
------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues:
Sales...................................... $ 1,306 $ 1,424 $ 2,538 $ 2,743 $ 1,559
Contracts and licenses..................... 1,550 1,427 2,841 2,834 2,042
Investment income, net..................... 324 324 746 942 1,017
Other, net................................. (12) (4) (2) 11 5
------- ------- ------- ------- -------
3,168 3,171 6,123 6,530 4,623
Costs and expenses:
Purchases and production................... 801 722 1,836 1,337 988
Research and development................... 3,447 4,056 7,872 8,184 6,203
Selling, general and administrative........ 2,016 2,111 4,048 3,426 3,021
------- ------- ------- ------- -------
6,264 6,889 13,756 12,947 10,212
------- ------- ------- ------- -------
Net loss..................................... $(3,096) $(3,718) $(7,633) $(6,417) $(5,589)
======= ======= ======= ======= =======
Basic net loss per common share.............. $ (0.16) $ (0.18) $ (.38) $ (.32) $ (.30)
======= ======= ======= ======= =======
Shares used in computation of basic and
diluted net loss per share................. 20,507 20,315 20,318 20,072 18,890
======= ======= ======= ======= =======
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE> 218
RIBI IMMUNOCHEM RESEARCH, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
(IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
ACCUMULATED
OTHER
ADDITIONAL COMPREHENSIVE TOTAL
PREFERRED COMMON PAID-IN INCOME ACCUMULATED STOCKHOLDERS'
STOCK STOCK CAPITAL (LOSS) DEFICIT EQUITY
--------- ------ ---------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995..... $-- $19 $ 62,460 $ (5) $(30,047) $32,427
Comprehensive loss:
Net loss....................... -- -- -- -- (5,589) (5,589)
Other comprehensive loss:
Unrealized investment
losses.................... -- -- -- (23) -- (23)
-------
Total.......................... -- -- -- -- -- (5,612)
Issuance of 1,400 common shares
under stock grant program...... -- -- 6 -- -- 6
Issuance of 1,800 common shares
upon exercise of options....... -- -- 6 -- -- 6
Compensation relating to stock
options........................ -- -- 20 -- -- 20
--- --- ---------- ---- -------- -------
Balance at December 31, 1996..... -- 19 62,492 (28) (35,636) 26,847
Comprehensive loss:
Net loss....................... -- -- -- -- (6,417) (6,417)
Other comprehensive loss:
Realized and unrealized
investment losses......... -- -- -- (20) -- (20)
Investment losses included
in net loss............... -- -- -- 11 -- 11
---- -------
-- -- -- (9) -- (9)
---- -------
Total.......................... -- -- -- -- -- (6,426)
Issuance of 3,000 common shares
under stock grant program...... -- -- 13 -- -- 13
Issuance of 22,400 common shares
upon exercise of options....... -- -- 89 -- -- 89
Sale of 1,103,448 common shares
in a private placement, net.... -- 1 3,962 -- -- 3,963
Issuance of 291,332 common shares
upon exercise of warrants...... -- -- 874 -- -- 874
Compensation relating to stock
options........................ -- -- 55 -- -- 55
--- --- ---------- ---- -------- -------
Balance at December 31, 1997..... -- 20 67,485 (37) (42,053) 25,415
</TABLE>
F-5
<PAGE> 219
<TABLE>
<CAPTION>
ACCUMULATED
OTHER
ADDITIONAL COMPREHENSIVE TOTAL
PREFERRED COMMON PAID-IN INCOME ACCUMULATED STOCKHOLDERS'
STOCK STOCK CAPITAL (LOSS) DEFICIT EQUITY
--------- ------ ---------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Comprehensive loss:
Net loss....................... -- -- -- -- (7,633) (7,633)
Other comprehensive loss:
Realized and unrealized
investment gains.......... -- -- -- 24 -- 24
Investment losses included
in net loss............... -- -- -- 20 -- 20
---- -------
-- -- -- 44 -- 44
---- -------
Total.......................... -- -- -- -- -- (7,589)
Issuance of 1,400 common shares
under stock grant program...... -- -- 5 -- -- 5
Issuance of 9,850 common shares
upon exercise of options....... -- -- 36 -- -- 36
Sale of 8,240 preferred shares in
a private placement, net....... 1 -- 7,713 -- -- 7,714
Accretion of liquidation
preference on preferred
stock.......................... -- -- 188 -- (188) --
Compensation relating to stock
options........................ -- -- 19 -- -- 19
--- --- ---------- ---- -------- -------
Balance at December 31, 1998..... $ 1 $20 $ 75,446 $ 7 $(49,874) $25,600
=== === ========== ==== ======== =======
</TABLE>
See accompanying notes to financial statements.
F-6
<PAGE> 220
RIBI IMMUNOCHEM RESEARCH, INC.
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEARS ENDED DECEMBER 31,
------------------ ------------------------------
1999 1998 1998 1997 1996
------- ------- -------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss................................... $(3,096) $(3,718) $ (7,633) $(6,417) $(5,589)
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation and amortization.............. 583 522 1,054 1,002 935
Common stock grants........................ 3 3 5 13 6
Compensation relating to stock options..... 8 10 19 55 20
Discount accretion, accrued interest and
investment losses, net.................. 99 70 39 (17) (415)
Abandoned patents and asset sales.......... 16 23 23 18 18
Changes in operating assets and
liabilities:
Accounts receivable..................... 654 303 (432) (818) 673
Inventories............................. (205) (67) 65 18 (285)
Other current assets.................... (1) 71 21 39 (23)
Accounts payable........................ (34) (403) (336) 293 65
Accrued liabilities..................... 9 46 179 44 (31)
Deferred revenue........................ 195 2,110 2,030 567 (67)
------- ------- -------- ------- -------
Net cash used by operating
activities......................... (1,769) (1,030) (4,966) (5,203) (4,693)
------- ------- -------- ------- -------
Cash flows from investing activities:
Capital expenditures....................... (547) (600) (1,280) (796) (924)
Payments for other assets and deposits..... (49) (1,564) (1,660) (78) (93)
Proceeds from sale of assets............... 12 5 5 1 --
Proceeds from maturities of
held-to-maturity securities............. -- -- -- -- 3,121
Proceeds from maturities and sales of
available-for-sale securities........... 4,501 6,124 15,694 8,214 4,784
Purchases of available-for-sale
securities.............................. (2,511) (3,642) (16,309) (6,272) (1,956)
Purchases of held-to-maturity securities... -- -- -- -- (97)
------- ------- -------- ------- -------
Net cash provided (used) by investing
activities......................... 1,406 323 (3,550) 1,069 4,835
------- ------- -------- ------- -------
Cash flows from financing activities:
Sale of common stock, net.................. -- -- -- 3,963 --
Sale of preferred stock, net............... -- -- 7,714 -- --
Proceeds from exercise of warrants......... -- -- -- 874 --
Proceeds from exercise of options.......... -- 30 36 89 6
------- ------- -------- ------- -------
Net cash provided by financing
activities......................... -- 30 7,750 4,926 6
------- ------- -------- ------- -------
Increase (decrease) in cash and cash
equivalents................................ (363) (677) (766) 792 148
Cash and cash equivalents at beginning of
year....................................... 458 1,224 1,224 432 284
------- ------- -------- ------- -------
Cash and cash equivalents at end of year..... $ 95 $ 547 $ 458 $ 1,224 $ 432
======= ======= ======== ======= =======
Significant noncash financing activities:
Issuance of common stock on conversion of
convertible preferred stock............. $ 1,402 $ -- $ -- $ -- $ --
======= ======= ======== ======= =======
</TABLE>
See accompanying notes to financial statements.
F-7
<PAGE> 221
RIBI IMMUNOCHEM RESEARCH, INC.
NOTES TO FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Operations. Ribi ImmunoChem Research, Inc. (the "Company") was
incorporated on January 9, 1981, and is principally engaged in the development
of biopharmaceutical products that stimulate the immune system to generate a
cascade of natural agents and signals to prevent and treat human disease. The
Company also engages in related activities such as the custom formulation and
sale of research products and contract research.
Interim Financial Information. The balance sheet as of June 30, 1999, the
statements of operations and the statements of cash flows for the six-month
periods ended June 30, 1999 and 1998 have been prepared by the Company without
audit. In the opinion of management all adjustments necessary to conform to
Generally Accepted Accounting Principles and the rules and regulations of the
Securities and Exchange Commission for interim financial information have been
made, all of which are normal and recurring in nature.
Revenue Recognition. Revenues from the sale of research products are
recognized when products are shipped to customers. Revenues from contract
research are recognized as related expenses are incurred. Nonrefundable license
fees received in connection with product license agreements are recognized over
the term of the contract.
Cash Equivalents. In the statement of cash flows, the Company considers
all highly liquid debt instruments with a maturity on the date of acquisition of
three months or less to be cash equivalents.
Investment Securities. Investment securities consist of marketable debt
securities and, in 1997, mutual funds that have invested in marketable debt
securities. All investment securities are available to support current
operations and are, therefore, classified as "available-for-sale." These
available-for-sale securities are recorded at fair value, which is based on
quoted market prices.
Any gains and losses from the sale of investment securities are computed
under the specific identification method. Unrealized holding gains and losses,
net of related tax effect, on available-for-sale securities are excluded from
earnings and are reported as other comprehensive income until realized.
Unrealized losses, if any, for all investment securities that are other than
temporary are charged against earnings.
Inventories. Inventories are stated at the lower of cost or market on a
specific identification basis. Cost is based on the actual costs associated with
producing the inventories, which include direct labor and materials, quality
control and manufacturing overhead.
Property, Plant and Equipment. Property, plant and equipment are stated at
cost and depreciated on a straight-line basis over estimated useful lives of 25
to 40 years for buildings and 3 to 12 years for equipment, furniture and
fixtures. Maintenance and repairs are charged to expense as incurred.
Significant betterments are capitalized.
Basic Net Loss Per Common Share. Net loss per common share is based on the
weighted average number of shares outstanding and takes into consideration the
liquidation preference of the preferred stock. Diluted net loss per common share
is not presented, as the effect is antidilutive.
Comprehensive Income. Statement of Financial Accounting Standard No. 130
entitled "Reporting Comprehensive Income" ("FAS 130") was issued in 1997 and
adopted by the Company in 1998 on a retroactive basis as permitted by the
standard. FAS 130 requires that changes in stockholders' equity that result from
transactions and economic events other than those with stockholders be included
with net income or loss to arrive at "comprehensive income or loss." The
F-8
<PAGE> 222
RIBI IMMUNOCHEM RESEARCH, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Company has reported comprehensive loss, net of income taxes, in the Statements
of Stockholders' Equity and Comprehensive Income.
Patents and Other Assets. Other assets consist principally of the costs of
patents filed, deferred patent application costs and patent maintenance costs.
Such costs are amortized on a straight-line basis over the estimated remaining
useful lives of the patented technology ranging from less than one year to
nearly 17 years. Unsuccessful patent application costs are expensed when the
patent is denied or abandoned. Beginning in 1999 costs of maintaining issued
patents are charged to expense as incurred. Such charges are not material to the
Company's operations.
Income Taxes. The Company accounts for certain income and expense items
differently for financial reporting and income tax purposes. Deferred tax assets
and liabilities are determined based on the difference between the financial
statement and tax bases of assets and liabilities and are measured by applying
enacted tax rates to taxable years in which such differences are expected to
reverse. The current and noncurrent portions of these deferred tax assets and
liabilities are classified in the balance sheet based on the respective
classification of the assets and liabilities which give rise to such deferred
income taxes. The effect on deferred tax assets and liabilities of a change in
tax rates is recognized in tax expense in the period that includes the enactment
date.
Stock-Based Employee Compensation. From time to time the Company grants to
its employees stock and/or options to purchase stock. In the case of stock
grants, compensation expense is recognized by the Company at the time of the
grant in the amount of the market value of the stock on the grant date.
Compensation expense for the grant of stock options is recognized only when the
market value of the underlying stock exceeds the exercise price of the stock
option on the grant date. Any such compensation expense is charged to expense
over the term that the options vest to the optionee.
Fair Value of Certain Financial Instruments. The carrying amounts for
cash, cash equivalents, accounts receivable, accounts payable and accrued
expenses approximate fair value because of the short duration of those
instruments.
Estimates. Management of the Company has made certain estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities to prepare these financial
statements in conformity with generally accepted accounting principles. Actual
results could differ from those estimates.
F-9
<PAGE> 223
RIBI IMMUNOCHEM RESEARCH, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(2) INVESTMENT SECURITIES
The following is a summary of the Company's investment securities:
<TABLE>
<CAPTION>
FAIR
AMORTIZED MARKET UNREALIZED UNREALIZED
COST VALUE GAINS LOSSES
---------- ------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
DECEMBER 31, 1998
Securities of the U.S. Government and its
agencies................................. $ 4,644 $ 4,653 $13 $ 4
Corporate mid-term notes................... 7,373 7,372 8 9
Insured certificates of deposit............ 477 476 -- 1
------- ------- --- ---
12,494 12,501 21 14
Accrued interest........................... 266 266 -- --
------- ------- --- ---
$12,760 $12,767 $21 $14
======= ======= === ===
DECEMBER 31, 1997
Mutual funds investing primarily in short
to intermediate term securities of the
U.S. Government and its agencies......... $ 4,717 $ 4,661 $-- $56
Securities of the U.S. Government and its
agencies................................. 3,453 3,470 17 --
Corporate mid-term notes................... 3,367 3,369 3 1
Insured certificates of deposit............ 508 508 -- --
------- ------- --- ---
12,045 12,008 20 57
Accrued interest........................... 138 138 -- --
------- ------- --- ---
$12,183 $12,146 $20 $57
======= ======= === ===
</TABLE>
Substantially all debt securities at December 31, 1998 mature within two
years.
During 1998 the Company sold shares of two debt mutual funds and one
corporate mid-term note for $5.8 million. Book gains realized on the sales
totaled approximately $17,000, and book losses realized totaled approximately
$37,000. During 1997 the Company sold shares of a debt mutual fund for $500,000
and realized a book loss of approximately $11,000. During 1996 the Company sold
shares of debt mutual funds for $425,000. Book gains realized on the sales
totaled approximately $3,000, and book losses realized totaled approximately
$3,000.
F-10
<PAGE> 224
RIBI IMMUNOCHEM RESEARCH, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(3) INVENTORIES
Inventories are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, ----------------
1999 1998 1997
----------- ------ ------
(UNAUDITED) (IN THOUSANDS)
<S> <C> <C> <C>
Raw materials.................................... 95 $ 112 $ 132
Work in process.................................. 1,212 1,024 1,053
Finished goods................................... 84 49 65
------ ------ ------
$1,391 $1,185 $1,250
====== ====== ======
</TABLE>
(4) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1998 1997
------- -------
(IN THOUSANDS)
<S> <C> <C>
Buildings................................................... $ 9,737 $ 9,629
Equipment, furniture and fixtures........................... 8,008 7,149
------- -------
17,745 16,778
Less accumulated depreciation............................... 6,545 5,598
------- -------
11,200 11,180
Construction in progress.................................... 349 84
Land........................................................ 189 189
------- -------
$11,738 $11,453
======= =======
</TABLE>
(5) NET LOSS PER COMMON SHARE
Net loss per common share is computed as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------
1998 1997 1996
--------- --------- ---------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Net loss......................................... $(7,633) $(6,417) $(5,589)
Accretion of liquidation preference on preferred
stock.......................................... 188 -- --
------- ------- -------
Net loss applicable to common stock.............. $(7,821) $(6,417) $(5,589)
======= ======= =======
Weighted average number of common shares
outstanding.................................... 20,318 20,072 18,890
======= ======= =======
Net loss per common share........................ $ (.38) $ (.32) $ (.30)
======= ======= =======
</TABLE>
The Company has convertible preferred stock, warrants and stock options
outstanding that are described in Notes 6 and 7 of the Notes to Financial
Statements that could potentially dilute earnings per share in the future.
F-11
<PAGE> 225
RIBI IMMUNOCHEM RESEARCH, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(6) COMPREHENSIVE LOSS (UNAUDITED)
Total comprehensive loss for the Company consists of the sum of net loss
and unrealized gains and losses on available-for-sale investment securities. For
the six months ended June 30, 1999 and 1998, total comprehensive loss was
$3,143,000 and $3,694,000, respectively.
(7) STOCKHOLDERS' EQUITY
In July 1998 RGC International Investors, LDC, ("Holder") purchased 8,240
shares of convertible preferred stock of the Company for gross proceeds of $8.2
million ("stated value"). The preferred stock's liquidation preference equals
its stated value plus an amount equal to 5% per annum. Beginning the 91st day
after the July 17 closing, the preferred stock is convertible into shares of
common stock of the Company. From the 91st day until 120 days after the closing,
the conversion price was fixed at $6.04. After 120 days the conversion price
floats at the lesser of the fixed conversion price or a market price based on
average market bid prices for a defined period prior to the conversion date. The
actual number of shares of common stock that will be issued will depend upon the
preferred stock's liquidation preference and the actual conversion price when
the preferred stock is converted. Beginning with the 91st day from the closing
date, each thirty days thereafter, on a cumulative basis, a maximum amount of
15% of the preferred stock may be converted into shares of common stock if the
conversion price is less than $4.00. The Holder may not control more than 4.9%
of the Company's outstanding common stock at any given time. In addition, except
for block trades of not less than 15,000 shares of converted common stock, there
are restrictions on the number of converted common shares that may be traded on
any given trading day. Subject to certain conditions, the Company has the right
to redeem all or a portion of the preferred stock at a premium over the purchase
price paid by the Holder. In the event the Company fails to meet certain
obligations under the agreement with the Holder, the Holder can require the
Company to redeem the preferred stock at a premium over the purchase price paid
by the Holder. The Company's obligations under this provision generally include
maintaining an adequate number of authorized but not issued common shares for
conversion purposes, maintaining a current registration statement for the
converted common stock, and maintaining a listing for the Company's common stock
on the stock market. Certain liquidation or bankruptcy procedures would also
trigger the mandatory redemption provisions. Any shares not converted or
redeemed will automatically be converted into common stock in July 2001.
During the second quarter of 1999, 1,000 shares of preferred stock were
converted into 666,214 shares of common stock. At June 30, 1999 there were 7,240
shares of preferred stock outstanding which were convertible into common stock
at the lower of $6.04 per share or a per share market price based on average
market bid prices for the three consecutive trading days during the 22 trading
days prior to the date of conversion. On July 13, 1999 RGC converted an
additional 750 shares of preferred stock into 444,483 shares of common stock,
leaving a balance of 6,490 shares of preferred stock outstanding. (The
information in this paragraph is unaudited.)
In early 1997, effective December 31, 1996, SmithKline Beecham ("SB")
purchased 1,103,448 shares of common stock for $4 million. With the stock
purchase SB acquired warrants to purchase 500,000 shares of stock at $5.00 per
share. The warrants expire if not exercised by January 1, 2000.
F-12
<PAGE> 226
RIBI IMMUNOCHEM RESEARCH, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
During 1997 warrants to purchase 291,332 shares of common stock at $3.00
per share were exercised for $874,000. These warrants were issued in connection
with a sale of common stock in 1991.
(8) STOCK COMPENSATION PLANS
The Company has a stock grant program under which common stock may be
issued to key employees, consultants and other persons providing services deemed
important to the Company. The program requires the employee to assign to the
Company all know-how, patents and proprietary information developed while
employed by, or developed as a result of employment with the Company and to
agree not to engage in any activity which could be considered to be in
competition with the Company's proposed business while employed by the Company.
If the employee violates any one of these conditions, the shares issued pursuant
to the program shall revert to the Company. Nonemployees receiving grants are
not subject to the conditions imposed on employees receiving grants.
Additionally, the Company grants 100 shares of stock to each employee who is not
an officer of the Company after completion of one year of employment. Such 100
share grants are not subject to the forfeiture conditions described above.
The following table sets forth the activity in the stock grant program for
the years ended December 31, 1998, 1997 and 1996:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Shares available at beginning of year..................... 24,968 27,968 29,368
Shares granted............................................ 1,400 3,000 1,400
------- ------- -------
Shares available at end of year........................... 23,568 24,968 27,968
======= ======= =======
Weighted average grant date fair value.................... $ 3.57 $ 4.13 $ 4.57
======= ======= =======
</TABLE>
The Company has a stock option plan called the 1996 Stock Option Plan
("Plan"). Under the Plan all full- or part-time employees are eligible to
receive incentive stock options and nonqualified stock options, and certain
directors and consultants are eligible to receive nonqualified stock options.
Any option granted under the Plan may include a stock appreciation right (SAR)
to surrender to the Company all, or a portion, of the option in exchange for
cash or stock, the sum of which is equal to the value of the excess of fair
market value of the common stock over the option price. The Plan provides for
awarding options for a maximum of 900,000 shares with an exercise price not less
than fair market value at the date of grant, except for options awarded to
certain directors. Options are nontransferable and expire if not exercised
within ten years from the date of the grant. Options can be exercised in
cumulative installments over a vesting schedule set by the Company's Board of
Directors. Through December 31, 1998 all options granted from the Plan to
employees can be exercised in cumulative installments of 20% per year beginning
on the date of the grant. Vesting of discounted stock options issued to certain
directors is discussed below.
The Company also has a stock option plan that was approved by stockholders
in 1986. The 1986 Plan expired in 1996, and no new options can be granted under
it. However, options already granted (908,000 shares, net of options that have
been exercised or forfeited) can be exercised for a period of ten years from the
date of grant. The terms of the 1986 Plan were very similar to the ones
described for the 1996 Plan. All options granted under the 1986 Plan, except for
discounted stock options issued
F-13
<PAGE> 227
RIBI IMMUNOCHEM RESEARCH, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
to certain directors as discussed below, can be exercised in cumulative
installments of 20% per year beginning on the date of the grant.
Both stock option plans provide for the issuance of nonqualified stock
options with an exercise price which is 20% below the market price of the
Company's common stock on the grant date. The discounted stock options may be
awarded to directors who are not employees of the Company who elect to receive
the discounted stock options rather than cash for all or a portion of their
director fees. The directors are required to make the voluntary election at
least six months prior to the beginning of each calendar year. The number of
options to be granted is determined by dividing the amount of the foregone cash
compensation by the amount of the per share price discount on the grant date.
Such options are granted at the end of each calendar quarter and are fully
vested on the grant date. The options, which expire if not exercised within ten
years from the grant date, are exercisable after a six month period following
the grant date.
During 1996 the Company's Board of Directors adopted the 1996 Directors'
Stock Option Plan ("Directors' Plan") for directors who are not employees of the
Company. The Directors' Plan was approved by stockholders in 1997. The
Directors' Plan provides for the grant of nonqualified options to purchase a
maximum of 210,000 shares of common stock. Each director who is not an employee
was granted options to purchase 30,000 shares on the later of the date the
Directors' Plan was adopted or on the date he first became a director. In
addition, immediately following each annual meeting of the Company's
stockholders, each director who is not an employee who continues as a director
after the meeting will be granted options to purchase 500 shares. The exercise
price of the options is the market price on the date of the grant. The options
vest and can be exercised at the rate of 50% on the date of grant and 25% on
each anniversary of the grant date. The options expire if not exercised within
ten years of the grant date. During 1996 options to purchase 150,000 shares at
$4.00 per share were granted under the Directors' Plan. During each year 1997
and 1998 options were granted to purchase 2,500 shares at prices of $3.63 and
$5.75 per share, respectively.
F-14
<PAGE> 228
RIBI IMMUNOCHEM RESEARCH, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The following table sets forth the activity in the 1986 and 1996 stock
option plans and the 1996 Directors' Plan for the years ended December 31, 1996,
1997 and 1998. There were no SARs outstanding under the plans during the three
year period ended December 31, 1998.
<TABLE>
<CAPTION>
OPTIONS FOR
EMPLOYEES DISCOUNTED OPTIONS
AND DIRECTORS FOR DIRECTORS
-------------------- ------------------
AVERAGE AVERAGE TOTAL
COMMON EXERCISE COMMON EXERCISE COMMON
SHARES PRICE SHARES PRICE SHARES
--------- -------- ------- -------- ---------
<S> <C> <C> <C> <C> <C>
SHARES UNDER OPTION:
Outstanding at December 31, 1995........... 946,050 $5.90 58,396 $4.35 1,004,446
Granted.................................... 432,779 5.26 9,568 3.34 442,347
Exercised.................................. (1,800) 3.19 -- -- (1,800)
Canceled................................... (33,100) 6.24 (7,694) 4.42 (40,794)
--------- ----- ------- ----- ---------
Outstanding at December 31, 1996........... 1,343,929 5.44 60,270 4.18 1,404,199
Granted.................................... 128,500 3.65 13,864 3.32 142,364
Exercised.................................. (22,400) 3.96 -- -- (22,400)
Canceled................................... (80,400) 7.16 -- -- (80,400)
--------- ----- ------- ----- ---------
Outstanding at December 31, 1997........... 1,369,629 5.20 74,134 4.02 1,443,763
Granted.................................... 192,750 5.04 26,250 3.22 219,000
Exercised.................................. (9,850) 3.61 -- -- (9,850)
Canceled................................... (50,650) 5.38 -- -- (50,650)
--------- ----- ------- ----- ---------
Outstanding at December 31, 1998........... 1,501,879 $5.18 100,384 $3.81 1,602,263
========= ===== ======= ===== =========
OPTIONS EXERCISABLE AT:
December 31, 1996........................ 864,506 $5.71 53,369 $4.31 917,875
December 31, 1997........................ 1,032,372 5.49 65,181 4.14 1,097,553
December 31, 1998........................ 1,159,472 5.35 83,044 4.05 1,242,516
RANGES OF EXERCISE PRICES AND AVERAGE
MONTHS (MO) TO EXPIRATION OF:
Options outstanding at December 31, 1998
$1.50-$1.85 (105 mo)....................... 2,000 $1.50 10,810 $1.85 12,810
$2.95-$4.90 (41 mo)........................ 675,850 3.93 80,940 3.78 756,790
$5.75-$7.50 (61 mo)........................ 795,779 6.15 8,634 6.49 804,413
$8.00-$8.63 (50 mo)........................ 28,250 8.32 -- -- 28,250
--------- ------- ---------
1,501,879 100,384 1,602,263
========= ======= =========
</TABLE>
F-15
<PAGE> 229
RIBI IMMUNOCHEM RESEARCH, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
OPTIONS FOR
EMPLOYEES DISCOUNTED OPTIONS
AND DIRECTORS FOR DIRECTORS
-------------------- ------------------
AVERAGE AVERAGE TOTAL
COMMON EXERCISE COMMON EXERCISE COMMON
SHARES PRICE SHARES PRICE SHARES
--------- -------- ------- -------- ---------
<S> <C> <C> <C> <C> <C>
Options exercisable at December 31, 1998
$1.50 (22 mo).............................. 2,000 $1.50 -- $ -- 2,000
$2.95-$4.90 (78 mo)........................ 453,555 3.91 74,410 3.76 527,965
$5.75-$7.50 (53 mo)........................ 675,667 6.21 8,634 6.49 684,301
$8.00-$8.63 (50 mo)........................ 28,250 8.32 -- -- 28,250
--------- ------- ---------
1,159,472 83,044 1,242,516
========= ======= =========
</TABLE>
The Company has entered into a Stock Option Agreement with its Chief
Executive Officer, President and Chairman ("CEO"). Pursuant to the 1987
agreement, and later agreements, the CEO was granted options, which are
currently outstanding and exercisable, to purchase 50,000 shares of common stock
at $3.00 per share. All of the CEO's options under this agreement expire if not
exercised by June 30, 2000. The CEO did not exercise any options in 1996, 1997
or 1998. Additionally, the CEO has been granted options to purchase stock under
the Company's stock option plans described above.
The Company applies the intrinsic value-based method of accounting
prescribed by Accounting Principles Board Opinion No. 25 in accounting for stock
options. As a result, no compensation expense has been recognized relative to
its employees where the exercise price of the option equaled or exceeded the
stock's market value on the grant date. Compensation expense recognized relative
to directors who receive discounted stock options rather than cash for
directors' fees totaled $19,000, $12,000 and $8,000 in 1998, 1997 and 1996,
respectively. Compensation expense recognized from grants of stock totaled
$5,000, $13,000 and $6,000 in 1998, 1997 and 1996, respectively. Compensation
expense recognized from the extension of the expiration date of the CEO's stock
options in 1997 totaled $31,000. If compensation cost for the stock option plans
would have been determined for employees and directors, other than directors
receiving discounted options, consistent with the fair value method, the
Company's net loss and basic loss per common share would have been increased to
the pro forma amounts indicated below:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1998 1997 1996
------ ----- -----
<S> <C> <C> <C>
Net loss (In Thousands)
As reported............................................... $7,633 6,417 5,589
Pro forma................................................. 8,116 6,818 6,018
Basic loss per common share
As reported............................................... $ .38 .32 .30
Pro forma................................................. .41 .34 .32
Weighted average fair value of options granted during the
year...................................................... $ 3.17 2.13 2.93
</TABLE>
F-16
<PAGE> 230
RIBI IMMUNOCHEM RESEARCH, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The pro forma amounts in the preceding table only include the vested
portion of the fair value of stock options granted after December 31, 1994.
Because some of the options granted prior to December 31, 1994 vest during this
phase-in period and the value is not included, the pro forma amounts are not
likely to be representative of the effects on future reported net loss and net
loss per share. The fair value has been determined using the Black-Scholes
formula, which requires the Company to make several assumptions, some of which
are listed below.
<TABLE>
<CAPTION>
OPTIONS GRANTED IN
--------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Average risk-free interest rate............................. 5.5% 6.6% 6.2%
Average expected life (years)............................... 7.0 5.6 6.5
Average annualized expected volatility...................... .557 .556 .573
Expected dividends.......................................... None None None
</TABLE>
(9) COMMITMENTS AND CONTINGENCIES
The Company has an employment agreement with its CEO, which currently
provides for an annual salary of $275,000. The agreement may be terminated by
the Company by giving notice one year prior to expiration of the contract, which
otherwise automatically extends for one-year periods, unless there is
termination for "cause." The CEO will be paid his salary until the agreement
expires.
The Company carries $10 million in product liability insurance for its
products which are being used in clinical trials and for commercial sales, when
approved, of Melacine melanoma theraccine. The Company is self-insured for
product liability for research products being marketed. In addition, the Company
has agreed to indemnify its directors and officers for liabilities incurred as a
result of their positions with the Company.
The Company, the National Institutes of Health ("NIH") and the Bitterroot
Valley Sanitary Landfill ("Landfill") were notified by the Montana Department of
Health and Environmental Sciences (now known as the Department of Environmental
Quality ["DEQ"]) in March 1991 that they had been identified as potentially
responsible parties ("PRPs") and as such are jointly and severally liable for
groundwater contamination located at and near the site of the Landfill in
Ravalli County, Montana. The Company's involvement arises out of waste that it
deposited at the Landfill from 1982 to 1985, which the Landfill had permits to
receive. The NIH unilaterally and voluntarily initiated and completed work
pursuant to an interim remediation plan approved by the DEQ to remove and
decontaminate the believed source of contamination and treat the aquifers, which
tests have shown contain contaminants. Although decontamination of the soil at
and around the Landfill has been completed, treatment of the groundwater in the
proximity of the disposal site continues utilizing carbon filtering and air
sparging, and it is anticipated such treatment will continue through 1999 and
possibly longer. The DEQ conducted a "Risk Assessment" and issued a "Draft Final
Feasibility Study" in October 1994 that discussed possible final remediation
alternatives. In August 1995 the DEQ announced that it had approved a second
interim action in the vicinity of the Landfill being unilaterally and
voluntarily conducted by the NIH and which involved installing individual
replacement and new wells to provide both an alternate water supply for the area
residents and to develop additional information on the site hydrogeology.
Information collected from these wells through a multi-year monitoring program
will be used by the DEQ to evaluate the effectiveness of the remediation efforts
to date. The second interim action plan calls for the wells to be installed in
F-17
<PAGE> 231
RIBI IMMUNOCHEM RESEARCH, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
three phases. Phase I included occupied properties with the highest remaining
contamination levels. Phase II included occupied properties with lesser degrees
of contamination. Phase III consisted largely of vacant properties. Preliminary
studies completed in 1994 estimated the cost of the wells to be approximately
$1.4 million. Information indicates that a total of 19 alternate water supply
wells have been installed at a cost of approximately $1.0 million. The DEQ could
require the PRPs to implement further remediation should these wells not provide
sufficient quality or quantity of water. Additionally, the NIH has indicated it
is undertaking Phase II groundwater remediation to intercept and treat
contaminated groundwater near the eastern Landfill boundary. The NIH has
projected costs for this Phase II groundwater remediation to be in excess of
$1.0 million through 1999. The NIH, which has taken the lead and incurred
substantially all of the remediation costs, has represented publicly that it
would continue to work with the DEQ toward an acceptable final remediation plan.
The DEQ initiated an action in 1997 in the state district court in Lewis
and Clark County, Montana, against the Company, the Landfill and the owners of
the Landfill seeking recovery of past alleged costs associated with its
oversight activities in the amount of $238,000, as well as a declaratory
judgment finding the parties liable for future oversight costs, plus civil
penalties in the event the parties fail to comply. Since the action was
initiated, the Company and the NIH jointly have received statements requesting
payment of an additional $27,000. In May 1998, the Company was informed that the
DEQ had entered into a settlement agreement with the Landfill and its owners,
whereby the Landfill and its owners agreed to collectively pay the DEQ
approximately $35,000. The Company believes that it has meritorious defenses to
the claim, including the amount thereof, and that there are other responsible
parties. The Company filed a response to the action, including a counter claim
and motions for a change in venue and to dismiss. The Court granted the
Company's motion for a change of venue to Ravalli County where the Company is
located. The Court did not rule on the motion to dismiss, which motion will now
be acted upon by the Court in Ravalli County. Recently the DEQ filed a Motion
for Stay of Proceedings pending the outcome of the action in Federal District
Court discussed below in which the DEQ is a plaintiff. The Court granted the
motion which the Company did not oppose.
On April 21, 1998, the Company received notice that the United States of
America (U.S.), acting on behalf of the Department of Health and Human Services,
which oversees the NIH, filed suit in United States District Court seeking
contribution from the Company of an "equitable share" of past and future
response costs incurred by the NIH in connection with the remediation at and
near the Landfill. The complaint alleges that as of September 30, 1997, the U.S.
had incurred response costs in excess of $3.4 million and that it expects to
incur more than $1.0 million in additional response costs. The Company filed a
response to the action. On or about June 4, 1998 the Company received notice
that the U.S. had entered into a settlement agreement with the Landfill and the
Landfill owners pursuant to which the settling parties agreed to make payment in
the amount of $440,000. In view of the settlement, the U.S. filed with the Court
a Joint Motion for Stay of Proceedings between the U.S., the Landfill and
Landfill owners. Assuming the settlement is completed, the action against the
Landfill and the Landfill owners would be dismissed. Although the Company
believes it has meritorious defenses to the cost recovery claim, including the
amount thereof, and that there are other responsible parties, there can be no
assurance that the Company will be successful in its defenses to claims arising
out of the Landfill, including the claims made by the
F-18
<PAGE> 232
RIBI IMMUNOCHEM RESEARCH, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
U.S. The court issued a scheduling order. Pursuant to the order, the trial of
this matter is anticipated to begin in the fall of 2000.
On or about June 6, 1998 the DEQ filed a complaint in the United States
district court against the Company, the Landfill and the owners of the Landfill
seeking recovery of past alleged costs associated with its oversight activities
in the amount of $258,000, of which it indicated not more than $154,000 had been
reimbursed, plus interest and attorneys' fees and costs as well as a declaratory
judgment finding the parties liable for future response costs. This action
brought under the Federal Comprehensive Environmental Response Compensation and
Liability Act ("CERCLA") is similar to that filed in the state district court
under a State Comprehensive Environmental Cleanup and Responsibility Act
("CECRA") described above. The Company has filed a response to the action,
including a counterclaim against the DEQ. The DEQ has initiated discovery, and
the Company responded to a discovery request. The Company believes that is has
meritorious defenses to the claim, including the amount thereof, and that there
are other responsible parties. There can be no assurance that the Company's
defenses and counterclaim will be successful.
Depending upon the eventual outcome of the above discussed litigation and
when in time the litigation is concluded and the success of the Company in
pursuing defense and indemnity with insurance carriers, the outcome may or may
not have a material effect on the Company's financial condition. Accordingly, it
is not possible at present to accurately predict whether an adverse outcome will
have a material adverse effect on the Company's financial condition. The Company
is unable to determine its overall potential liability with respect to the
Landfill at this time. As of December 31, 1998, the Company has accrued a
reserve of approximately $290,000 to cover legal, consulting and DEQ
reimbursement costs associated with the Company as a PRP. Net costs charged
against operations in 1998, 1997 and 1996 were $104,000, $42,000 and $13,000,
respectively.
In 1999, an insurance carrier agreed to assume reasonable defense costs in
the cases discussed above but has reserved its rights to challenge its
responsibility. The insurance carrier has also agreed to reimburse the Company's
defense costs incurred to date. As of June 30, 1999 the Company has accrued a
reserve of approximately $300,000 to cover billed and potential legal,
consulting and DEQ reimbursement costs associated with the Company as a PRP. Net
costs charged against operations during the first six month periods of 1999 and
1998 were $54,000 and $47,000, respectively. (The information in this paragraph
is unaudited.)
In June 1997 a complaint was filed in district court in Ravalli County
against the Company by a former employee who was discharged for cause in June
1996. The former employee alleges discharge in violation of the Montana Wrongful
Discharge from Employment Act ("Act") and further, that discharge was for
refusal to violate public policy. The Court granted dismissal with respect to
that portion of the complaint which alleges termination for refusal to violate
public policy. The former employee filed a motion for reconsideration asking the
Court to reverse its decision with respect to the issue of termination for
refusal to violate public policy and requested the Court for permission to amend
the complaint to include additional allegations relative to the public policy
issue. On April 6, 1998 the Court allowed the former employee to amend the
complaint as requested. If the former employee should ultimately prevail on the
issue of discharge in violation of the Act, the potential liability of the
Company would be approximately $320,000, exclusive of the Company's attorneys'
fees and related costs. If the former employee prevails on the public policy
issue, the Company could be subject to punitive damages of an unknown amount in
addition to the potential liability for violation of the Act. The Company
believes that it has a meritorious defense and plans to vigorously defend the
suit. However, it is not possible to reliably assess the outcome. Depending upon
the eventual
F-19
<PAGE> 233
RIBI IMMUNOCHEM RESEARCH, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
outcome of this litigation and the timing of its conclusion, the result of this
litigation may or may not have a material adverse effect on the Company's
financial condition. It is possible the case may go to trial during the first
half of 2000.
The Company recently filed a motion for partial summary judgement on the
violation of public policy issue. Plaintiff has filed a motion for partial
summary judgment on the issue of discharge in violation of the Wrongful
Discharge Act. It is anticipated there will be oral arguments to the court
concerning the respective motions. However, no date has been set for the oral
arguments. (The information in this paragraph is unaudited.)
The former employee has also filed a petition for Judicial Review in
district court in Missoula County naming the Company and the State of Montana
Department of Labor and Industry respondents and asking the Court to review and
overturn the Department of Labor's decision finding the former employee was
terminated for misconduct under Montana law and is, therefore, not allowed to
collect unemployment benefits. The Company filed a response arguing the
correctness of the Department of Labor's decision. The Court remanded the matter
to the Department of Labor for further testimony, which was taken. In the event
the former employee is successful, it would not have a material adverse effect
on the financial condition of the Company.
The Department of Labor in 1999 confirmed its previous findings that the
former employee willfully and purposefully failed to follow the reasonable
instructions of the Company and, therefore, was discharged for misconduct
connected with his work and directly affecting his employment. Accordingly, the
Department of Labor confirmed its previous findings that the former employee is
not eligible to receive unemployment insurance benefits. The former employee has
filed a petition for judicial review of the most recent decision of the
Department of Labor in district court in Missoula County. (The information in
this paragraph is unaudited.)
F-20
<PAGE> 234
RIBI IMMUNOCHEM RESEARCH, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(10) INCOME TAXES
The net operating loss carryforwards and tax credits available to reduce
future federal taxable income or related taxes and the year of expiration are
approximately as follows:
<TABLE>
<CAPTION>
RESEARCH
AND
NET OPERATING INVESTMENT ORPHAN DRUG DEVELOPMENT
LOSS CREDIT CREDIT CREDIT
------------- ---------- ----------- -----------
(IN THOUSANDS)
---------------------------------------------------------
<S> <C> <C> <C> <C>
Expires December 31,
1998................................ $ 254 7 -- 31
1999................................ 328 3 -- 50
2000................................ 529 9 -- 58
2001................................ 251 -- -- 76
2002................................ 821 -- -- 82
2003................................ 2,272 -- -- 128
2004................................ 2,751 -- -- 106
2005................................ 2,606 -- -- 115
2006................................ 3,595 -- -- 154
2007................................ 4,488 -- -- 198
2008................................ 4,238 -- -- 243
2009................................ 4,574 -- -- 343
2010................................ 5,445 -- -- 163
2011................................ 5,391 -- 242 173
2012................................ 5,813 -- 622 406
2018................................ 7,240 -- 315 423
------- -- ----- -----
$50,596 19 1,179 2,749
======= == ===== =====
</TABLE>
F-21
<PAGE> 235
RIBI IMMUNOCHEM RESEARCH, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The tax effects of temporary differences that give rise to federal and
state deferred tax assets and liabilities consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1998 1997
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Gross deferred tax assets:
Net operating loss carryforwards.......................... $ 20,698 $ 17,929
General business credit carryforwards..................... 3,955 3,235
Loss contingency reserve.................................. 121 79
Employee benefits......................................... 123 109
Other..................................................... 35 28
-------- --------
24,932 21,380
Valuation allowance......................................... (24,381) (20,873)
-------- --------
551 507
-------- --------
Gross deferred tax liabilities:
Depreciation.............................................. 487 422
Inventories............................................... 64 85
-------- --------
551 507
-------- --------
Net......................................................... $ -- $ --
======== ========
</TABLE>
The Company has provided a valuation allowance for deferred tax assets
which management believes are not currently assured of being realized. The
ultimate realization of deferred tax assets is dependent upon the existence of,
or generation of, taxable income in the periods in which those temporary
differences are deductible.
The net increase in the valuation allowance for the years ended December
31, 1998, 1997 and 1996 was $3,508,000, $3,593,000 and $2,108,000, respectively.
Additionally, when subsequently recognized, approximately $861,000 of the
valuation allowance will be credited to additional paid-in capital.
(11) INTERNATIONAL SALES AND MAJOR CUSTOMERS
The Company markets its research products worldwide, generally to
nonexclusive distributors. During 1998, 1997 and 1996, export sales were 83%,
82% and 77% of total sales, respectively. Export sales were primarily to Europe,
Japan and Canada.
The Company has a total of four license agreements with SmithKline Beecham
("SB") for use of defined adjuvants in various vaccines being developed by SB.
SB is developing vaccines, which include these adjuvants, for indications in
infectious diseases and cancer. The agreements generally provide for payment to
the Company of license fees and supply payments, as well as royalties upon
commercialization of SB's vaccines. The agreements grant SB exclusive rights to
these adjuvants for use in vaccines for some diseases and co-exclusive or
nonexclusive rights for others. The Company also sells adjuvants and research
products to SB. Revenues from all transactions with SB were 59% of
F-22
<PAGE> 236
RIBI IMMUNOCHEM RESEARCH, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
total revenue in 1998, 63% in 1997 and 48% in 1996. At December 31, 1998 SB owed
the Company approximately $1,039,000 in trade accounts receivable, none of which
are delinquent.
As of December 31, 1998, SB and S.R. One Limited, a subsidiary of SB, held
1,254,056 shares, or 6.2% of the Company's outstanding common stock.
Additionally, SB has warrants to purchase 500,000 shares of common stock at
$5.00 per share. The warrants expire if not exercised by January 1, 2000.
The Company has granted Wyeth-Lederle Vaccines and Pediatrics ("WLV&P") (a
business unit of Wyeth-Ayerst Laboratories, which is a division of American Home
Products Corporation) a worldwide co-exclusive license to use the Company's
adjuvants commercially upon regulatory approval of certain vaccines being
developed by WLV&P. In addition to an annual license fee, the Company will
receive transfer payments for supplies of adjuvant and will be entitled to
royalties upon commercial sale of vaccines. Revenues received from WLV&P were
15% of the Company's total revenue in 1998, 12% in 1997 and 17% in 1996.
During 1998 the Company entered into a marketing agreement with
Schering-Plough ("SP"), which provides SP with worldwide marketing rights for
the Company's Melacine melanoma theraccine. At December 31, 1998, the Company
has $2,068,000 in deferred license revenues, the proceeds of which would be
returned to SP if certain product goals are not achieved by December 31, 1999.
SP has the option to extend the goal deadline. Of the total potential refund,
$500,000 would require the use of current investments and the balance would come
from noncurrent deposits, which are restricted from use in the Company's
operations.
(12) EMPLOYEE BENEFITS
The Company provides an employee savings plan under Section 401(k) of the
Internal Revenue Code. This plan covers substantially all regular employees. The
Company matches 30% of employee contributions of up to 6% of compensation. The
amount charged against income in 1998, 1997 and 1996 was $73,000, $69,000 and
$58,000, respectively.
Additionally, the Company provides other employee benefits, including
health insurance for employees who are actively employed. The Company is
self-insured for health insurance up to a predetermined amount above which third
party insurance applies. For 1998 the maximum exposure to health claims totaled
$278,000. Charges against income for health insurance, including claims and
insurance, were approximately $274,000, $207,000 and $168,000 in 1998, 1997 and
1996, respectively.
(13) FUTURE ACCOUNTING CHANGES
During 1998 the Financial Accounting Standards Board released Statement of
Financial Accounting Standards ("FAS") No. 133, which the Company will be
required to adopt in 1999. FAS No. 133 requires uniform accounting for
derivative instruments and hedging activities. While the Company is still
evaluating FAS No. 133, it does not expect the Standard to have a material
impact on the Company's financial position or results of its operations.
(14) SUBSEQUENT EVENT -- PLANNED MERGER WITH CORIXA CORPORATION (UNAUDITED)
On June 10, 1999 the Company announced that it had reached an agreement
with Corixa Corporation whereby Corixa would acquire all of the outstanding
common stock of the Company. Under terms of the proposed merger, the Company's
common shareholders will receive 0.1685 shares
F-23
<PAGE> 237
RIBI IMMUNOCHEM RESEARCH, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
of Corixa common stock for each share of Company common stock owned. Based on
the closing price of Corixa common stock on July 31, 1999, the value received
for the Company's common stock is approximately $49,210,000. In addition Corixa
will provide approximately $7,891,000 in cash attributed to the purchase of
shares currently held as preferred by RGC International Investors, LDC, stemming
from a July 1998 financing by the Company. All outstanding shares of the
Company's preferred stock will be redeemed or converted into the Company's
common stock in accordance with the terms of the agreement. The transaction is
intended to qualify as a tax-free reorganization and will be accounted for as a
purchase. Subject to shareholder approval, the merger is expected to be
completed in the fall of 1999.
F-24
<PAGE> 238
APPENDIX A
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
CORIXA CORPORATION,
A DELAWARE CORPORATION
AND
RIBI IMMUNOCHEM RESEARCH INC.,
A DELAWARE CORPORATION
DATED AS OF JUNE 9, 1999
A-1
<PAGE> 239
CORIXA CORPORATION
AGREEMENT AND PLAN OF MERGER
WITH RIBI IMMUNOCHEM RESEARCH, INC.
JUNE 9, 1999
A-2
<PAGE> 240
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION ONE................................................. A-6
1. The Merger.......................................... A-6
1.1 The Merger.................................... A-6
1.2 Closing; Effective Time....................... A-6
1.3 Effect of the Merger.......................... A-7
1.4 Certificate of Incorporation; Bylaws.......... A-7
1.5 Directors and Officers........................ A-7
1.6 Effect on Capital Stock....................... A-7
1.7 Surrender of Certificates..................... A-9
1.8 No Further Ownership Rights in Ribi Common
Stock.............................................. A-10
1.9 Tax Consequences.............................. A-11
1.10 Accounting Treatment.......................... A-11
1.11 Taking of Necessary Action; Further Action.... A-11
1.12 Withholding................................... A-11
1.13 Lost, Stolen or Destroyed Certificates........ A-11
1.14 Material Adverse Effect....................... A-11
SECTION TWO................................................. A-12
2. Representations and Warranties of Ribi.............. A-12
2.1 Organization; Subsidiaries.................... A-12
2.2 Certificate of Incorporation and Bylaws....... A-12
2.3 Capital Structure............................. A-12
2.4 Authority..................................... A-13
2.5 No Conflicts; Required Filings and Consents... A-14
2.6 SEC Filings; Ribi Financial Statements........ A-14
2.7 Absence of Undisclosed Liabilities............ A-15
2.8 Absence of Certain Changes.................... A-15
2.9 Litigation.................................... A-17
2.10 Restrictions on Business Activities........... A-17
2.11 Permits; Company Products; Regulation......... A-17
2.12 Title to Property............................. A-18
2.13 Intellectual Property......................... A-18
2.14 Environmental Matters......................... A-20
2.15 Taxes......................................... A-21
2.16 Employee Benefit Plans........................ A-23
2.17 Certain Agreements Affected by the Merger..... A-24
2.18 Employee Matters.............................. A-25
2.19 Material Contracts............................ A-25
2.20 Interested Party Transactions................. A-26
2.21 Insurance..................................... A-26
2.22 Compliance With Laws.......................... A-26
2.23 Minute Books.................................. A-26
2.24 Complete Copies of Materials.................. A-26
2.25 Brokers' and Finders' Fees.................... A-26
2.26 Statements; Proxy Statements/Prospectus....... A-26
2.27 Board Approval................................ A-27
2.28 Accounts Receivable; Account Payable.......... A-27
</TABLE>
A-3
<PAGE> 241
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
2.29 Third Party Consents.......................... A-28
2.30 Opinion of Financial Advisors................. A-28
2.31 Customs....................................... A-28
SECTION THREE............................................... A-28
3. Representations and Warranties of Corixa............ A-28
3.1 Organization of Corixa........................ A-28
3.2 Corixa Capital Structure...................... A-28
3.3 Authority..................................... A-29
3.4 No Conflicts; Required Filings and Consents... A-29
3.5 SEC Filings; Corixa Financial Statements...... A-30
3.6 Absence of Undisclosed Liabilities............ A-30
3.7 Absence of Certain Changes or Events.......... A-30
3.8 Statements; Proxy Statement/Prospectus........ A-31
3.9 Valid Issuance................................ A-31
3.10 Litigation.................................... A-31
3.11 Board Approval................................ A-31
3.12 Compliance With Laws.......................... A-31
3.13 Complete Copies of Materials.................. A-31
3.14 Third Party Consents.......................... A-32
SECTION FOUR................................................ A-32
4. Conduct Prior to the Effective Time................. A-32
4.1 Conduct of Business of Ribi................... A-32
4.2 Conduct of Business of Corixa................. A-34
SECTION FIVE................................................ A-34
5. Additional Agreements............................... A-34
5.1 Best Efforts and Further Assurances........... A-34
5.2 Consents; Cooperation......................... A-35
5.3 Access to Information......................... A-36
5.4 Confidentiality............................... A-37
5.5 Proxy Statement/Prospectus; Registration
Statement; Other Filings; Board
Recommendations............................... A-37
5.6 Meeting of Ribi Stockholders.................. A-37
5.7 No Solicitation............................... A-39
5.8 Meeting of Corixa Stockholders................ A-40
5.9 Public Disclosure............................. A-40
5.10 State Statutes................................ A-41
5.11 Listing of Additional Shares.................. A-41
5.12 Ribi Voting Agreements........................ A-41
5.13 Irrevocable Proxies........................... A-41
5.14 Indemnification............................... A-41
5.15 Filing of Form S-8............................ A-42
5.16 Redemption of Series A Stock.................. A-42
5.17 Promissory Note............................... A-42
5.18 Consulting Agreement.......................... A-43
5.19 Continued Employment.......................... A-43
5.20 Facility Maintenance.......................... A-43
</TABLE>
A-4
<PAGE> 242
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
5.21 D & O Insurance............................... A-43
5.22 1986 Plan and 1996 Plan....................... A-43
5.23 Director Plan/Ivy Options..................... A-44
SECTION SIX................................................. A-44
6. Conditions to the Merger............................ A-44
6.1 Conditions to Obligations of Each Party to
Effect the Merger.................................. A-44
6.2 Additional Conditions to Obligations of
Ribi............................................... A-45
6.3 Additional Conditions to the Obligations of
Corixa............................................. A-46
SECTION SEVEN............................................... A-48
7. Termination, Amendment and Waiver................... A-48
7.1 Termination................................... A-48
7.2 Notice of Termination Effect of Termination... A-50
7.3 Fees and Expenses............................. A-50
7.4 Amendment..................................... A-50
7.5 Extension; Waiver............................. A-50
SECTION EIGHT............................................... A-51
8. General Provisions.................................. A-51
8.1 Survival of Warranties........................ A-51
8.2 Notices....................................... A-51
8.3 Interpretation................................ A-52
8.4 Counterparts.................................. A-52
8.5 Entire Agreement; Nonassignability; Parties in
Interest........................................... A-52
8.6 Severability.................................. A-52
8.7 Remedies Cumulative........................... A-52
8.8 Governing Law................................. A-52
8.9 Rules of Construction......................... A-52
8.10 Amendments and Waivers........................ A-52
</TABLE>
A-5
<PAGE> 243
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "Agreement") is made and entered
into as of June 9, 1999, by and among Corixa Corporation, a Delaware corporation
("Corixa"), and Ribi ImmunoChem Research, Inc., a Delaware corporation ("Ribi").
RECITALS
A. Upon the terms and subject to the conditions of this Agreement and in
accordance with the Delaware General Corporation Law ("Delaware Law"), Corixa
and Ribi intend to enter into a business combination transaction.
B. The Boards of Directors of Ribi and Corixa believe it is in the best
interests of their respective companies and the stockholders of their respective
companies that Ribi and Corixa combine into a single company through the merger
of Ribi with and into Corixa in a direct merger (the "Merger") and, in
furtherance thereof, have approved the Merger. Pursuant to the Merger, among
other things, any outstanding shares of Series A Preferred Stock of Ribi (the
"Ribi Series A Stock") shall be redeemed prior to the Effective Time (as defined
in Section 1.2) in accordance with the terms set forth herein and the
outstanding shares of Common Stock of Ribi shall be converted into shares of the
Common Stock of Corixa (the "Corixa Common Stock"), at the rate set forth in
Section 1.6(a) below.
C. Corixa and Ribi have, subject to the provisions of this Agreement,
determined to recommend that the stockholders of Corixa and Ribi, respectively,
adopt and approve this Agreement and approve the Merger.
D. Ribi and Corixa each desire to make certain representations and
warranties and other agreements in connection with the Merger.
E. The parties intend, by executing this Agreement, to adopt a plan of
reorganization within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "Code"), and to cause the Merger to qualify as a
reorganization under the provisions of Section 368 of the Code.
AGREEMENT
The parties hereby agree as follows:
SECTION ONE
1. THE MERGER.
1.1 THE MERGER. At the Effective Time and subject to and upon the terms
and conditions of this Agreement, the Certificate of Merger attached hereto as
Exhibit A (the "Certificate of Merger") and the applicable provisions of
Delaware Law, Ribi shall be merged with and into Corixa, the separate corporate
existence of Ribi shall cease and Corixa shall continue as the surviving
corporation of the Merger. Corixa as the surviving corporation after the Merger
is hereinafter sometimes referred to as the "Surviving Corporation."
1.2 CLOSING; EFFECTIVE TIME. The closing of the transactions contemplated
by this Agreement (the "Closing") shall take place as soon as practicable, and
in no event later than three (3) business days after the satisfaction or waiver
of each of the conditions set forth in Section 6 below (including without
limitation Section 6.3(h)) or at such other time as the parties agree (the
"Closing Date"). In connection with the Closing, the parties shall cause the
Merger to be consummated by filing the
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Certificate of Merger, together with the required officers' certificates, with
the Secretary of State of the State of Delaware, in accordance with the relevant
provisions of Delaware Law (the time of such filing being the "Effective Time").
The Closing shall take place at the offices of Venture Law Group, 4750 Carillon
Point, Kirkland, Washington 98033-7355, or at such other location as the parties
agree.
1.3 EFFECT OF THE MERGER. At the Effective Time, the effect of the Merger
shall be as provided in this Agreement, the Certificate of Merger and the
applicable provisions of Delaware Law. At the Effective Time, all the property,
rights, privileges, powers and franchises of Ribi shall vest in the Surviving
Corporation, and all debts, liabilities and duties of Ribi shall become the
debts, liabilities and duties of the Surviving Corporation.
1.4 CERTIFICATE OF INCORPORATION; BYLAWS.
(a) At the Effective Time, the Certificate of Incorporation of Corixa
(including the Certificate of Designation (the "Corixa Certificate of
Designation") of the Rights, Preferences and Privileges of the Series A
Preferred Stock of Corixa (collectively, the "Certificate of Incorporation"), as
in effect immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter amended as provided
by Delaware Law and such Certificate of Incorporation.
(b) At the Effective Time, the Bylaws of Corixa, as in effect
immediately prior to the Effective Time, shall be the Bylaws of the Surviving
Corporation until thereafter amended as provided by Delaware Law, the
Certificate of Incorporation of the Surviving Corporation and such Bylaws.
1.5 DIRECTORS AND OFFICERS. At the Effective Time, the directors of Corixa
immediately prior to the Effective Time shall be the directors of the Surviving
Corporation, and the officers of Corixa immediately prior to the Effective Time
shall be the officers of the Surviving Corporation, in each case until their
respective successors are duly elected or appointed and qualified.
1.6 EFFECT ON CAPITAL STOCK. By virtue of the Merger and without any
action on the part of Corixa or Ribi or any of their respective stockholders,
the following shall occur at the Effective Time:
(a) CONVERSION OF RIBI COMMON STOCK. Each share of Common Stock, par
value $0.001 per share of Ribi (the "Ribi Common Stock") issued and outstanding
immediately prior to the Effective Time (other than shares to be cancelled
pursuant to Section 1.6(b)) shall be automatically converted into the right to
receive that number of shares of Corixa Common Stock, par value $0.001 per
share, as shall be determined in accordance with the calculation set forth in
the following sentence (the "Exchange Ratio"). The Exchange Ratio shall be equal
to a fraction, the numerator of which is equal to the product resulting from
multiplying (i) 1.16 by (ii) the average of the last reported sale price of a
share of Ribi Common Stock for the ten (10) trading days immediately preceding
the date of the Agreement (the "Ribi Average"), and the denominator of which is
equal to the average of the last reported sale price of a share of Corixa Common
Stock for the ten (10) trading days immediately preceding the date of the
Agreement (the "Corixa Average"). It is acknowledged and agreed by the parties
that the Ribi Common Stock shall not include any shares of Ribi Series A Stock,
which shares of Ribi Series A Stock shall be redeemed by Ribi pursuant to the
terms of Section 5.16 hereof or converted into shares of Ribi Common Stock at
the option of the holders of Ribi Series A Stock. All shares of Ribi Common
Stock, when so converted, shall no longer be outstanding and shall automatically
be cancelled and retired and shall cease to exist, and each holder of a
certificate representing any such shares of Ribi Common Stock shall cease to
have any rights with respect thereto, except the right to receive the shares of
Corixa Common Stock therefor upon the surrender of such certificate in
accordance with Section 1.7, without interest.
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(b) CANCELLATION OF RIBI COMMON STOCK OWNED BY CORIXA OR RIBI. At the
Effective Time, all shares of Ribi Common Stock and Ribi Series A Stock that are
owned by Ribi as treasury stock, each share of Ribi Common Stock and Ribi Series
A Stock owned by Corixa or any direct or indirect wholly owned subsidiary of
Corixa or of Ribi immediately prior to the Effective Time shall be cancelled and
extinguished without any conversion thereof.
(c) RIBI STOCK OPTIONS AND WARRANTS.
(i) (A) All options to purchase Ribi Common Stock issued and
outstanding immediately prior to the Effective Time under the Ribi 1986 Stock
Option Plan (the "1986 Plan"), the Ribi 1996 Stock Option Plan (the "1996
Plan"), the Ribi 1996 Director's Stock Option Plan (the "Director Plan" and,
together with the 1986 Plan and the 1996 Plan, the "Ribi Stock Option Plans"),
and the grant of an option to purchase 50,000 shares of Ribi Common Stock to
Robert Ivy pursuant a stock option agreement between Ribi and Mr. Ivy (the "Ivy
Options"), with respect to which the holders thereof have given their consent
for such options to be assumed by Corixa in connection with and as a result of
the Merger (the "Assumed Options"), shall be assumed by Corixa at the Effective
Time. All other options to purchase Ribi Common Stock issued and outstanding
immediately prior to the Effective Time shall terminate in their entirety at the
Effective Time as a result of the Merger.
(B) Schedule 1.6(c) of the Ribi Disclosure Schedule sets forth a
true and complete list as of the date of this Agreement of all holders of
outstanding options under each of the Ribi Stock Option Plans and the Ivy
Options, including the number of shares of Ribi Common Stock subject to each
such option, the exercise or vesting schedule, the exercise price per share and
the term of each such option. On the Closing Date, Ribi shall deliver to Corixa
an updated Schedule 1.6(c) of the Ribi Disclosure Schedule current as of such
date.
(C) At the Effective Time, the Assumed Options shall, by virtue
of the Merger and without any further action at such time on the part of Ribi or
the holder thereof, be assumed by Corixa in accordance with this Section 1.6(c).
Each such Assumed Option shall continue to have, and be subject to, the same
terms and conditions set forth in the respective Ribi Stock Option Plan and any
applicable stock option agreement immediately prior to the Effective Time,
except that (i) such Assumed Option will be exercisable for that number of whole
shares of Corixa Common Stock equal to the product of the number of shares of
Ribi Common Stock that were issuable upon exercise of such Assumed Option
immediately prior to the Effective Time multiplied by the Exchange Ratio and
rounded to the nearest whole number of shares of Corixa Common Stock, and (ii)
the per share exercise price for the shares of Corixa Common Stock issuable upon
exercise of such Assumed Option will be equal to the quotient determined by
dividing the exercise price per share of Ribi Common Stock at which such Assumed
Option was exercisable immediately prior to the Effective Time by the Exchange
Ratio, rounded to the nearest whole cent.
(D) Except as otherwise disclosed in Section 1.6(c) of the Ribi
Disclosure Schedule, Ribi has not taken, and shall not take, any action that
would result in the accelerated vesting, exercisability or payment of any
options to purchase Ribi Common Stock as a consequence of the execution of, or
consummation of the transactions contemplated by, this Agreement. The Merger
will not accelerate the vesting, exercisability or payment of Assumed Options or
the shares of Corixa Common Stock which will be subject to those options upon
the Corixa's assumption of the Assumed Options in the Merger.
(E) Except as otherwise disclosed in Section 1.6(c) of the Ribi
Disclosure Schedule, it is the intention of the parties that, to the extent
practicable, the Assumed Options shall qualify following the Effective Time as
incentive stock options as defined in Section 422 of the Code to the extent such
Assumed Options qualified as incentive stock options
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immediately prior to the Effective Time. As soon as practicable after the
Effective Time, Corixa will issue to each person who, immediately prior to the
Effective Time was a holder of an Assumed Option, a written document evidencing
the foregoing assumption of such Assumed Option by Corixa pursuant to this
Section 1.6(c).
(ii) Ribi Warrants. At the Effective Time, outstanding warrants to
purchase 500,000 shares of Ribi Common Stock at a price of $5.00 per share held
by SmithKline Beecham Biologicals Manufacturing, S.A. ("SmithKline Beecham")
(the "Ribi Warrants") shall, by virtue of the Merger and without any further
action on the part of Ribi or the holder thereof, be assumed by Corixa in
accordance with this Section 1.6(c); provided, however, that Corixa provides the
same rights to SmithKline Beecham, including, without limitation, registration
rights, that SmithKline Beecham had prior to such assumption. Any other
outstanding warrants to purchase shares of Ribi capital stock shall terminate
immediately prior to the Effective Time by virtue of the Merger and without any
action on the part of the holder thereof. Each such Ribi Warrant so assumed by
Corixa under this Agreement shall continue to have, and be subject to, the same
terms and conditions set forth in such Ribi Warrant immediately prior to the
Effective Time, except that (i) such Ribi Warrant will be exercisable for that
number of whole shares of Corixa Common Stock equal to the product of the number
of shares of Ribi Common Stock there were issuable upon exercise of such Ribi
Warrant immediately prior to the Effective Time multiplied by the Exchange Ratio
and rounded to the nearest whole number of shares of Corixa Common Stock, and
(ii) the per share exercise price for the shares of Corixa Common Stock issuable
upon exercise of such assumed warrant will be equal to the quotient determined
by dividing the exercise price per share of Ribi Common Stock at which such Ribi
Warrant was exercisable immediately prior to the Effective Time by the Exchange
Ratio, rounded to the nearest whole cent.
(d) ADJUSTMENTS. The Exchange Ratio shall be adjusted to reflect fully
the effect of any stock split, reverse split, stock dividend (including any
dividend or distribution of securities convertible into Corixa Common Stock or
Ribi Common Stock, except any dividend paid with respect to Corixa's Series A
Preferred Stock in accordance with the Corixa Certificate of Designation),
reorganization, recapitalization or other like change with respect to Corixa
Common Stock or Ribi Common Stock occurring after the date of this Agreement and
prior to the Effective Time.
(e) FRACTIONAL SHARES. No fraction of a share of Corixa Common Stock
will be issued, but in lieu thereof each holder of shares of Ribi Common Stock
who would otherwise be entitled to a fraction of a share of Corixa Common Stock
(after aggregating all fractional shares of Corixa Common Stock to be received
by such holder) shall receive from Corixa an amount of cash (rounded to the
nearest whole cent) equal to the product of (i) such fraction, multiplied by
(ii) the Corixa Average.
(f) UNVESTED SHARES. If any shares of Ribi Common Stock outstanding
immediately prior to the Effective Time are unvested or are subject to a
repurchase option, risk of forfeiture or other condition under any applicable
restricted stock purchase agreement or other agreement with Ribi, then the
shares of Corixa Common Stock issued in exchange for such shares of Ribi Common
Stock will also be unvested and subject to the same repurchase option, risk of
forfeiture or other condition and the certificates representing such shares of
Corixa Common Stock may accordingly be marked with appropriate legends.
1.7 SURRENDER OF CERTIFICATES.
(a) EXCHANGE AGENT. The Harris Trust Company shall act as exchange agent
(the "Exchange Agent") in the Merger.
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(b) CORIXA TO PROVIDE COMMON STOCK AND CASH. Promptly after the
Effective Time, Corixa shall make available to the Exchange Agent for exchange
in accordance with this Section 1, through such reasonable procedures as Corixa
may adopt, (i) the shares of Corixa Common Stock issuable pursuant to Section
1.6(a) and (ii) cash in an amount sufficient to permit payment of cash in lieu
of fractional shares pursuant to Section 1.6(e).
(c) EXCHANGE PROCEDURES. Promptly after the Effective Time, the
Surviving Corporation shall cause to be mailed to each holder of record of a
certificate or certificates (the "Certificates") which immediately prior to the
Effective Time represented outstanding shares of Ribi Common Stock, whose shares
were converted into the right to receive shares of Corixa Common Stock (and cash
in lieu of fractional shares) pursuant to Section 1.6, (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon receipt of the
Certificates by the Exchange Agent, and shall be in such form and have such
other provisions as Corixa may reasonably specify) and (ii) instructions for use
in effecting the surrender of the Certificates in exchange for certificates
representing shares of Corixa Common Stock (and cash in lieu of fractional
shares). Upon surrender of a Certificate for cancellation to the Exchange Agent
or to such other agent or agents as may be appointed by Corixa, together with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, the holder of such Certificate shall be entitled
to receive in exchange therefor a certificate representing the number of whole
shares of Corixa Common Stock and payment in lieu of fractional shares which
such holder has the right to receive pursuant to Section 1.6, and the
Certificate so surrendered shall forthwith be cancelled. Until so surrendered,
each Certificate will be deemed from and after the Effective Time, for all
corporate purposes, to evidence the ownership of the number of full shares of
Corixa Common Stock into which such shares of Ribi Common Stock shall have been
so converted and the right to receive an amount in cash in lieu of the issuance
of any fractional shares in accordance with Section 1.6.
(d) NO LIABILITY. Notwithstanding anything to the contrary in this
Section 1.7, none of the Exchange Agent, the Surviving Corporation or any party
hereto shall be liable to any person for any amount properly paid to a public
official pursuant to any applicable abandoned property, escheat or similar law.
(e) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends or
other distributions with respect to Corixa Common Stock with a record date on or
after the Effective Time will be paid to the holder of any unsurrendered
Certificate with respect to the shares of Corixa Common Stock represented
thereby until the holder of record of such Certificate shall surrender such
Certificate. Subject to applicable law, following surrender of any such
Certificate, there shall be paid to the record holder of the certificate
representing whole shares of Corixa Common Stock issued in exchange therefor,
without interest, at the time of such surrender, the amount of any such
dividends or other distributions with a record date on or after the Effective
Time, payable (but for the provisions of this Section 1.7(e)) with respect to
such shares of Corixa Common Stock.
(f) TRANSFERS OF OWNERSHIP. If any certificate for shares of Corixa
Common Stock is to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it will be a condition of such
issuance that the Certificate so surrendered will be properly endorsed and
otherwise in proper form for transfer and that the person requesting such
exchange will have paid to Corixa or any agent designated by it any transfer or
other taxes required by reason of the issuance of a certificate for shares of
Corixa Common Stock in any name other than that of the registered holder of the
Certificate surrendered, or established to the satisfaction of Corixa or any
agent designated by it that such tax has been paid or is not payable.
1.8 NO FURTHER OWNERSHIP RIGHTS IN RIBI COMMON STOCK. All shares of Corixa
Common Stock issued upon the surrender for exchange of shares of Ribi Common
Stock in accordance with
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the terms hereof (including any cash paid in lieu of fractional shares) shall be
deemed to have been issued in full satisfaction of all rights pertaining to such
shares of Ribi Common Stock, and there shall be no further registration of
transfers on the records of the Surviving Corporation of shares of Ribi Common
Stock which were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to the Surviving Corporation for
any reason, they shall be cancelled and exchanged as provided in this Section 1.
1.9 TAX CONSEQUENCES. It is intended by the parties that the Merger shall
constitute a reorganization within the meaning of Section 368 of the Code. The
parties hereto adopt this Agreement as a "plan of reorganization" within the
meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States Income Tax
Regulations. Each party has consulted with its own tax advisors with regard to
the tax consequences of the Merger.
1.10 ACCOUNTING TREATMENT. For accounting purposes, the Merger is intended
to be treated as a "purchase."
1.11 TAKING OF NECESSARY ACTION; FURTHER ACTION. If at any time after the
Effective Time, any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of Ribi, Ribi agrees that the officers and directors of Ribi are
fully authorized in the name of Ribi or otherwise to take, and will take, all
such lawful and necessary action, so long as such action is not inconsistent
with this Agreement.
1.12 WITHHOLDING. The Surviving Corporation shall be entitled to deduct
and withhold from the consideration otherwise payable pursuant to this Agreement
to any holder of shares of Ribi Common Stock such amounts as it is required to
deduct and withhold with respect to the making of such payment under the Code or
any provision of applicable state, local or foreign tax laws. To the extent that
amounts are so withheld by the Surviving Corporation, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to such
holder in respect of which such deduction and withholding was made by the
Surviving Corporation.
1.13 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any Certificates
shall have been lost, stolen or destroyed, the Exchange Agent shall issue in
exchange for such lost, stolen or destroyed Certificates, upon the making of an
affidavit of that fact by the holder thereof, such shares of Corixa Common Stock
(and cash in lieu of fractional shares) as may be required pursuant to Section
1.6; provided, however, that Corixa may, in its discretion and as a condition
precedent to such issuance, require the owner of such lost, stolen or destroyed
Certificates to deliver a bond in such sum as Corixa may reasonably direct as
indemnity against any claim that may be made against the Surviving Corporation
or the Exchange Agent with respect to the Certificates alleged to have been
lost, stolen or destroyed.
1.14 MATERIAL ADVERSE EFFECT. In this Agreement, any reference to a
"Material Adverse Effect" with respect to any entity or group of entities means
any event, change or effect that, when taken individually or together with all
other adverse changes and effects, is or is reasonably likely to be materially
adverse to the condition (financial or otherwise), properties, assets,
liabilities, business, operations, results of operations, or business as
proposed to be conducted, of such entity and its subsidiaries, taken as a whole,
or to prevent or materially delay consummation of the Merger or otherwise to
prevent such entity and its subsidiaries from performing their obligations under
this Agreement in any material manner.
In this Agreement, any reference to a party's "knowledge" means such
party's actual knowledge after due and diligent inquiry of officers, directors
and other employees of such party reasonably believed to have knowledge of the
matter in question.
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SECTION TWO
2. REPRESENTATIONS AND WARRANTIES OF RIBI.
Except as disclosed in a document dated as of the date of this Agreement
and delivered by Ribi to Corixa prior to the execution and delivery of this
Agreement and referring to the representations and warranties in this Agreement
(the "Ribi Disclosure Schedule"), which document is hereby made a part of this
Agreement, Ribi represents and warrants to Corixa as follows:
2.1 ORGANIZATION; SUBSIDIARIES.
(a) Ribi and each subsidiary of Ribi (each a "Subsidiary") (i) is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of organization, (ii) has the requisite corporate or other
power and authority and all necessary government approvals to own, lease and
operate its properties and to carry on its business as now being conducted, and
(iii) is duly qualified or licensed as a foreign corporation to do business, and
is in good standing, in each jurisdiction where the character of the properties
owned, leased or operated by it or the nature of its business makes such
qualification or licensing necessary.
(b) A true and complete list of all the Subsidiaries, together with the
jurisdiction of incorporation of each Subsidiary, is set forth in Section 2.1 of
the Ribi Disclosure Schedule. Ribi is the owner of all outstanding shares of
capital stock of each Subsidiary and all such shares are duly authorized,
validly issued, fully paid and nonassessable. All of the outstanding shares of
capital stock of each Subsidiary are owned by Ribi free and clear of all liens,
charges, claims, encumbrances or rights of others. There are no outstanding
subscriptions, options, warrants, puts, calls, rights, exchangeable or
convertible securities or other commitments or agreements of any character
relating to the issued or unissued capital stock or other securities of any
Subsidiary, or otherwise obligating Ribi or any Subsidiary to issue, transfer,
sell, purchase, redeem or otherwise acquire any such securities.
(c) Neither Ribi nor any Subsidiary directly or indirectly owns any
equity or similar interest in, or any interest convertible into or exchangeable
or exercisable for, any equity or similar interest in, any corporation,
partnership, limited liability company, joint venture or other business
association or entity.
2.2 CERTIFICATE OF INCORPORATION AND BYLAWS. Ribi has delivered to Corixa
a true and correct copy of the Certificate of Incorporation (including any
applicable Certificates of Designation), Bylaws and other charter documents, as
applicable, of Ribi and each Subsidiary, each as amended to date and currently
in force full and effect. Neither Ribi nor any Subsidiary is in violation of any
of the provisions of its Certificate of Incorporation, any applicable
Certificate of Designation, Bylaws or equivalent organizational documents.
2.3 CAPITAL STRUCTURE. The authorized capital stock of Ribi consists of
30,000,000 shares of Common Stock, par value $0.001 per share, of which there
were 20,989,887 shares issued and outstanding as of the close of business on May
18, 1999, (which number includes 245,232 shares that were issued as restricted
stock to employees and consultants pursuant to Ribi's stock grant program
applicable to individuals who have been employed by Ribi for at least one year),
10,000,000 shares of Preferred Stock, par value $0.10 per share, of which 8,240
have been designated Series A Stock, and 7,240 shares of such Series A Stock
were issued and outstanding as of May 18, 1999. There are no other outstanding
shares of capital stock or voting securities and no outstanding commitments to
issue any shares of capital stock or voting securities after May 18, 1999 other
than pursuant to the exercise of options outstanding as of such date under the
Ribi Stock Option Plans and the Ivy Options, grants of restricted stock pursuant
to the stock grant program, or pursuant to the exercise of Ribi Warrants
outstanding as of such date. All outstanding shares of Ribi Common Stock and
Series A Stock are
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duly authorized, validly issued, fully paid and non-assessable and are free of
any liens or encumbrances other than any liens or encumbrances created by or
imposed upon the holders thereof, and are not subject to preemptive rights or
rights of first refusal created by statute, the Certificate of Incorporation,
any applicable Certificate of Designation, or the Bylaws of Ribi or any
agreement to which Ribi is a party or by which it is bound. All outstanding
shares of Ribi Common Stock and Series A Stock were issued in compliance with
all applicable federal and state securities laws. All outstanding options to
purchase Ribi Common Stock have been duly authorized by the Ribi Board of
Directors or a committee thereof, are validly issued, and were issued in
compliance with all applicable federal and state securities laws. As of the
close of business on May 18, 1999, Ribi has reserved or otherwise has available
for issuance without restriction (i) sufficient shares of Common Stock for
issuance upon conversion of the Series A Stock, (ii) sufficient shares of Common
Stock for issuance to employees and consultants pursuant to the 1986 Plan, of
which 334,425 shares have been issued pursuant to option exercises or direct
stock purchases, 832,231 shares are subject to outstanding, unexercised options,
and no shares are subject to outstanding stock purchase rights, (iii) sufficient
shares of Common Stock for issuance to employees and consultants pursuant to the
1996 Plan, of which 1,900 shares have been issued pursuant to option issuances
or direct stock purchases, 762,534 shares are subject to outstanding,
unexercised options and no shares are subject to outstanding stock purchase
rights, (iv) sufficient shares of Common Stock for issuance to directors
pursuant to the Director Plan, of which no shares have been issued pursuant to
option exercises or direct stock purchases, 157,500 shares are subject to
outstanding, unexercised options, and no shares are subject to outstanding stock
purchase rights and (v) sufficient shares of Common Stock for issuance to Robert
Ivy pursuant to the Ivy Options, of which 50,000 shares are subject to
outstanding, unexercised options. Except as set forth on Schedule 2.3 of the
Ribi Disclosure Schedule, since March 31, 1999, Ribi has not issued or granted
additional options under the Ribi Stock Option Plans. Section 2.3 of the Ribi
Disclosure Schedule sets forth the number of outstanding options to purchase
Ribi Common Stock, the number of shares of restricted Ribi Common Stock granted
pursuant to the stock grant program, and all other rights to acquire shares of
Ribi Common Stock pursuant to the Ribi Stock Option Plans and the Ivy Options
and the applicable exercise prices, and the outstanding Ribi Warrants, the
number of shares of Ribi Common Stock issuable upon exercise of the Ribi
Warrants and the applicable exercise prices. Except (i) for the rights created
pursuant to this Agreement, (ii) for rights granted under the Ribi Stock Option
Plans and the Ivy Options, (iii) for Ribi's right to repurchase any unvested
shares under the Ribi Stock Option Plans and (iv) as set forth in this Section
2.3, there are no options, warrants, calls, rights, commitments, agreements or
arrangements of any character to which Ribi or any Subsidiary is a party or by
which Ribi or any Subsidiary is bound relating to the issued or unissued capital
stock of Ribi or any Subsidiary or obligating Ribi or any Subsidiary to issue,
deliver, sell, repurchase or redeem, or cause to be issued, delivered, sold,
repurchased or redeemed, any shares of capital stock of Ribi or any Subsidiary
or obligating Ribi or any Subsidiary to grant, extend, accelerate the vesting
of, change the price of, or otherwise amend or enter into any such option,
warrant, call, right, commitment or agreement. There are no contracts,
commitments or agreements relating to voting, purchase or sale of Ribi's capital
stock (i) between or among Ribi and any of its stockholders and (ii) to the best
of Ribi's knowledge, between or among any of Ribi's stockholders, except for the
stockholders delivering Irrevocable Proxies (as defined in Section 5.13 below).
True and complete copies of all agreements and instruments relating to or issued
under the Ribi Stock Option Plans, the Ivy Options and the restricted stock
grant program have been made available to Corixa and such agreements and
instruments have not been amended, modified or supplemented, and there are no
agreements to amend, modify or supplement such agreements or instruments in any
case from the form made available to Corixa.
2.4 AUTHORITY. Ribi has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly
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authorized by all necessary corporate action on the part of Ribi, subject only
to the approval of the Merger by Ribi's stockholders as contemplated by Section
6.1(a), and the filing of the Certificate of Merger pursuant to Delaware Law.
The affirmative vote of the holders of a majority of the shares of Ribi Common
Stock outstanding on the record date set for the Ribi Stockholders' Meeting (as
defined in Section 2.26), is the only vote of the holders of any of Ribi's
capital stock necessary to approve this Agreement and the transactions
contemplated hereby. This Agreement has been duly executed and delivered by Ribi
and, assuming due authorization, execution and delivery by Corixa, constitutes
the valid and binding obligation of Ribi enforceable against Ribi in accordance
with its terms.
2.5 NO CONFLICTS; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by Ribi does not, and
the consummation of the transactions contemplated hereby will not, conflict
with, or result in any violation of, or default under (with or without notice or
lapse of time, or both), or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of any benefit under (i) any provision of
the Certificate of Incorporation, any applicable Certificate of Designation or
Bylaws of Ribi or any Subsidiary, as amended to date and currently in full
forward effect, or (ii) any mortgage, indenture, lease, contract or other
agreement or instrument, permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to Ribi or
any Subsidiary or any of their properties or assets. Section 2.5 of the Ribi
Disclosure Schedule lists all consents, waivers and approvals under any of
Ribi's or any of its Subsidiaries' agreements, contracts, licenses, leases or
other obligations required to be obtained in connection with the consummation of
the transactions contemplated hereby.
(b) No consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission or
other governmental authority or instrumentality, foreign or domestic
("Governmental Entity") is required to be obtained or made by or with respect to
Ribi or any Subsidiary in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby, except
for (i) the filing of the Certificate of Merger, together with the required
officers' certificates, as provided in Section 1.2, (ii) such consents,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under the Exchange Act, as amended (the "Exchange Act"), the
Securities Act of 1933, as amended (the "Securities Act"), applicable state
securities laws and the securities (or related) laws of any foreign country,
including the filing of a Form S-4 (or any similar successor form thereto)
Registration Statement (the "Registration Statement") with the Securities and
Exchange Commission (the "SEC") in accordance with the Securities Act, and (iii)
such filings as may be required under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act") and the antitrust laws of
any foreign country.
2.6 SEC FILINGS; RIBI FINANCIAL STATEMENTS.
(a) Ribi has filed all forms, reports and documents required to be filed
by it with the SEC since January 1, 1994, and has previously made available to
Corixa all such forms, reports and documents in the form filed with the SEC. All
such required forms, reports and documents (including those that Ribi may file
subsequent to the date hereof) are collectively referred to herein as the "Ribi
SEC Reports." Ribi has also made available to Corixa complete (i.e., unredacted)
copies of each exhibit to the Ribi SEC Reports filed with the SEC. As of their
respective dates, the Ribi SEC Reports (i) were or will be prepared in
accordance with the requirements of the Securities Act and the Exchange Act, as
the case may be, and the rules and regulations thereunder, (ii) did not at the
time they were filed, or will not at the time they are filed, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they were made,
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not misleading, and (iii) did not at the time they were filed, or will not at
the time they are filed, omit any documents required to be filed as exhibits
thereto.
(b) No Subsidiary is required to file any form, report or other document
with the SEC.
(c) Each of the consolidated financial statements (including, in each
case, any notes thereto) contained in the Ribi SEC Reports (collectively, the
"Ribi Financials"), as well as all forms, reports and documents to be filed by
Ribi with the SEC after the date hereof and prior to the Effective Time, was or
will be prepared in accordance with the United States generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods indicated (except as may be indicated in the notes thereto) and each
fairly presented or will fairly present the consolidated financial position,
results of operations and cash flows of Ribi and its consolidated Subsidiaries
as of the respective dates thereof and for the respective periods indicated
therein in accordance with GAAP.
(d) Except as and to the extent set forth on the consolidated balance
sheet of Ribi and the consolidated Subsidiaries as of December 31, 1998,
including the notes thereto, neither Ribi nor any Subsidiary has any liability
or obligation of any nature (whether accrued, absolute, contingent or otherwise)
that would be required to be reflected on a balance sheet, or in the notes
thereto, prepared in accordance with GAAP.
(e) Ribi has previously furnished to Corixa complete and correct copies
of all amendments and modifications that have not been filed by Ribi with the
SEC to all agreements, documents and other instruments that previously had been
filed by Ribi with the SEC and are currently in effect.
2.7 ABSENCE OF UNDISCLOSED LIABILITIES. Neither Ribi nor any Subsidiary
has obligations or liabilities of any nature (matured or unmatured, fixed or
contingent) other than (i) those set forth or adequately provided for in the
Balance Sheet for the period ended March 31, 1999 (the "Ribi Balance Sheet"),
(ii) those incurred in the ordinary course of business and not required to be
set forth in the Ribi Balance Sheet under GAAP, (iii) those incurred in the
ordinary course of business and consistent with past practice since the date of
the Ribi Balance Sheet, and (iv) those incurred in connection with the execution
of this Agreement.
2.8 ABSENCE OF CERTAIN CHANGES. Except as contemplated by this Agreement,
or as set forth in the budget or salary administration information previously
provided to Corixa by Ribi and as further set forth in Section 2.8 of the Ribi
Disclosure Schedule, since March 31, 1999 ( the "Ribi Balance Sheet Date"),
there has not been, occurred or arisen any:
(a) transaction by Ribi or any Subsidiary except in the ordinary course
of business as conducted on that date and consistent with past practices;
(b) amendments or changes to the Certificate of Incorporation, any
applicable Certificate of Designation or Bylaws of Ribi or any Subsidiary;
(c) capital expenditure or commitment by Ribi or any Subsidiary in any
individual amount exceeding $100,000, or in the aggregate, exceeding $250,000;
(d) destruction of, damage to, or loss of any assets (including, without
limitation, intangible assets), business or customer of Ribi or any Subsidiary
(whether or not covered by insurance);
(e) work stoppage or labor strike (or any pending or reasonably
anticipated work stoppage or labor strike) or claim of wrongful discharge or
other unlawful labor practice or action;
(f) change in accounting methods or practices (including any change in
depreciation or amortization policies or rates, any change in policies in making
or reversing accruals) by Ribi or any revaluation by Ribi of any of its or any
of its Subsidiaries' assets;
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(g) revaluation by Ribi or any Subsidiary of any of their respective
assets;
(h) declaration, setting aside, or payment of a dividend or other
distribution in respect to the capital stock of Ribi, or any direct or indirect
redemption, purchase or other acquisition by Ribi of any of its capital stock;
(i) increase in the salary or other compensation payable or to become
payable by Ribi or any Subsidiary to any of its respective officers, directors,
employees or, except as consistent with these increases that were approved by
Ribi's Board of Directors in April 1999 in accordance with the 1999 budget for
Ribi, a copy of which has been provided to Corixa, or the declaration, payment,
or commitment or obligation of any kind for the payment by Ribi or any
Subsidiary of a bonus or other additional salary or compensation to any such
person except as otherwise contemplated by this Agreement, or other than as set
forth in Section 2.16 below, the establishment of any bonus, insurance, deferred
compensation, pension, retirement, profit sharing, stock option (including
without limitation, the granting of stock options, stock appreciation rights,
performance awards), stock purchase or other employee benefit plan;
(j) sale, lease, license of other disposition of any of the assets or
properties of Ribi or any Subsidiary, except in the ordinary course of business
and not in excess of $100,000 in the aggregate;
(k) termination or amendment of any contract, agreement or license
(including any distribution agreement) to which Ribi or any Subsidiary is a
party or by which it is bound;
(l) loan by Ribi or any Subsidiary to any person or entity, or guaranty
by Ribi or any Subsidiary of any loan, except for (x) travel or similar advances
made to employees in connection with their employment duties in the ordinary
course of business, consistent with past practices and (y) trade payables not in
excess of $100,000 in the aggregate and in the ordinary course of business,
consistent with past practices;
(m) waiver or release of any right or claim of Ribi or any Subsidiary,
including any write-off or other compromise of any account receivable of Ribi or
any Subsidiary, in excess of $100,000 in the aggregate;
(n) the commencement or notice or threat of commencement of any lawsuit
or proceeding against or investigation of Ribi or any Subsidiary or their
respective affairs;
(o) notice of any claim of ownership by a third party of Ribi's or any
Subsidiary's Intellectual Property (as defined in Section 2.13 below) or of
infringement by Ribi or any Subsidiary of any Third Party Intellectual Property
Rights (as defined in Section 2.13 below);
(p) Issuance or sale by Ribi or any Subsidiary of any of its shares of
capital stock (or the incurrence of any obligation therefor), or securities
exchangeable, convertible or exercisable therefor, or of any other of its
securities, other than the issuance of Ribi Common Stock upon conversion of
Series A Stock;
(q) change in pricing or royalties set or charged by Ribi or any
Subsidiary to its customers or licensees or in pricing or royalties set or
charged by persons who have licensed Intellectual Property to Ribi or any
Subsidiary;
(r) event or condition of any character that has or could reasonably be
expected by Ribi to have a Material Adverse Effect on Ribi or the Surviving
Corporation; or
(s) agreement by Ribi, any Subsidiary or any officer or employee of
either on behalf of such entity to do any of the things described in the
preceding clauses (a) through (r) (other than negotiations with Corixa and its
representatives regarding the transactions contemplated by this Agreement).
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2.9 LITIGATION. Except as set forth in Ribi's Form 10-K for the fiscal
year ended December 31, 1998 and as further set forth in Section 2.9 of the Ribi
Disclosure Schedule, there is no private or governmental action, suit,
proceeding, claim, arbitration or investigation pending before any agency, court
or tribunal, foreign or domestic, or, to the best knowledge of Ribi or any
Subsidiary, threatened, against Ribi or any Subsidiary or any of their
respective properties or any of their respective officers or directors (in their
capacities as such). There is no judgment, decree or order against Ribi or any
Subsidiary or any of their respective directors or officers (in their capacities
as such), that could prevent, enjoin, or alter or delay any of the transactions
contemplated by this Agreement. All litigation to which Ribi or any Subsidiary
is a party (or, to the knowledge of Ribi, threatened to become a party) is
disclosed in Section 2.9 of the Ribi Disclosure Schedule.
2.10 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no agreement, judgment,
injunction, order or decree binding upon Ribi or any Subsidiary which has or
could reasonably be expected to have the effect of prohibiting or materially
impairing any current or future business practice of Ribi or any Subsidiary, any
acquisition of property by Ribi or any Subsidiary or the overall conduct of
business by Ribi or any Subsidiary as currently conducted or as proposed to be
conducted by Ribi or by any Subsidiary. Neither Ribi nor any Subsidiary has
entered into any agreement under which Ribi or any Subsidiary is restricted from
selling, licensing or otherwise distributing any of its products to any class of
customers, in any geographic area, during any period of time or in any segment
of the market.
2.11 PERMITS; COMPANY PRODUCTS; REGULATION.
(a) Each of Ribi and each Subsidiary is in possession of all franchises,
grants, authorizations, licenses, permits, easements, variances, exceptions,
consents, certificates, approvals and orders necessary for Ribi or that
Subsidiary to own, lease and operate its properties or to carry on its business
as it is now being conducted (the "Ribi Authorizations") and no suspension or
cancellation of any Ribi Authorization is pending or, to the best of Ribi's
knowledge, threatened. Neither Ribi nor any Subsidiary is in conflict with, or
in default or violation of, (i) any laws applicable to Ribi or any Subsidiary or
by which any property or asset of Ribi or any Subsidiary is bound or affected,
(ii) any Ribi Authorization, or (iii) any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which Ribi or any Subsidiary is a party or by which Ribi or any
Subsidiary or any property or asset of Ribi or any Subsidiary is bound or
affected.
(b) Since the inception of Ribi there have been no written notices,
citations or decisions by any governmental or regulatory body that any product
developed, produced, manufactured, marketed or distributed at any time by Ribi
(the "Products") is defective or fails to meet any applicable standards
promulgated by any such governmental or regulatory body. Ribi and each
Subsidiary has complied with the laws, regulations, policies, procedures and
specifications with respect to the development, design, manufacture, labeling,
testing and inspection of the Products and the operation of manufacturing
facilities promulgated by the Food and Drug Administration ("FDA"). Except as
disclosed in Section 2.11(b) of the Ribi Disclosure Schedule, since January 1,
1994, there have been no recalls, field notifications or seizures ordered or, to
the best of Ribi's knowledge, threatened by any such governmental or regulatory
body with respect to any of the Products. Neither Ribi nor any Subsidiary has
received a warning letter or Section 305 notice from the FDA.
(c) Ribi has obtained, in all countries where either Ribi or a
Subsidiary or any corporate partner thereof is marketing or has marketed its
Products, all applicable licenses, registrations, approvals, clearances and
authorizations required by local, state or federal agencies (including the FDA)
in such countries regulating the safety, effectiveness and market clearance of
the Products currently or previously marketed by Ribi or any Subsidiary or any
corporate partner thereof in such countries. Ribi has identified and made
available for examination by Corixa all information relating to regulation of
the Products, including licenses, registrations, approvals, permits, device
listings, inspections, recalls and product actions, audits and ongoing clinical
studies. Section 2.11 of the Ribi
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Disclosure Schedule sets forth all international locations where Ribi keeps
regulatory information and documents.
(d) To the best of Ribi's knowledge, in the exercise of ordinary care by
Ribi in supervising its clinical trials, there have been no adverse events in
any clinical trials conducted by or on behalf of Ribi of such a nature that
would be required to be reported to any applicable regulatory authority that
have not been so reported to such authority.
2.12 TITLE TO PROPERTY.
(a) Ribi and each Subsidiary has good and marketable title to all of its
respective properties, interests in properties and assets, real and personal,
reflected in the Ribi Balance Sheet or acquired after the Ribi Balance Sheet
Date (except properties, interests in properties and assets sold or otherwise
disposed of since the Ribi Balance Sheet Date in the ordinary course of
business), or with respect to leased properties and assets, valid leasehold
interests in, free and clear of all mortgages, liens, pledges, charges or
encumbrances of any kind or character, except (i) the lien of current taxes not
yet due and payable, (ii) such imperfections of title, liens and easements as do
not and will not detract from or interfere with the use of the properties
subject thereto or affected thereby, or otherwise impair business operations
involving such properties, and (iii) liens securing debt which is reflected on
the Ribi Balance Sheet. The plants, property and equipment of Ribi and its
Subsidiaries that are used in the operations of their businesses are in good
operating condition and repair. All properties used in the operations of Ribi
and its Subsidiaries are reflected in the Ribi Balance Sheet to the extent GAAP
require the same to be reflected. Section 2.12(a) of the Ribi Disclosure
Schedule sets forth a true, correct and complete list of all real property owned
or leased by Ribi and by each Subsidiary, the name of the lessor, the date of
the lease and each amendment thereto and the aggregate annual rental and other
fees payable under such lease. Such leases are in good standing, are valid and
effective in accordance with their respective terms, and there is not under any
such leases any existing default or event of default (or event which with notice
or lapse of time, or both, would constitute a default).
(b) Section 2.12(b) of the Ribi Disclosure Schedule also sets forth a
true, correct and complete list of all equipment (the "Equipment") owned or
leased by Ribi and its Subsidiaries, and such Equipment is, taken as a whole,
(i) adequate for the conduct of Ribi's business, consistent with its past
practice, and (ii) in good operating condition (except for ordinary wear and
tear).
2.13 INTELLECTUAL PROPERTY.
(a) Ribi and each of its Subsidiaries own, or are licensed or otherwise
possess, legally enforceable rights to use all patents, patent rights,
trademarks, trademark rights, trade names, trade name rights, service marks,
copyrights, and any applications for any of the foregoing, maskworks, net lists,
schematics, industrial models, inventions, technology, know-how, trade secrets,
inventory, ideas, algorithms, processes, computer software programs or
applications (in both source code and object code form), and tangible or
intangible proprietary information or material ("Intellectual Property") that
are used or proposed to be used in the business of Ribi or any Subsidiary as
currently conducted or as proposed to be conducted by Ribi or any Subsidiary,
except where the failure to own such Intellectual Property would interfere with
Ribi's ability to conduct its business as presently conducted or as anticipated
to be conducted.
(b) Section 2.13 of the Ribi Disclosure Schedule lists (i) all patents
and patent applications and all registered and unregistered trademarks, trade
names and service marks, registered copyrights, and maskworks included in the
Intellectual Property, including the jurisdictions in which each such
Intellectual Property right has been issued or registered or in which any
application for such issuance and registration has been filed, (ii) all
licenses, sublicenses and other agreements as to which Ribi or any Subsidiary is
a party and pursuant to which any person is authorized to use any
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Intellectual Property, and (iii) all licenses, sublicenses and other agreements
as to which Ribi or any Subsidiary is a party and pursuant to which Ribi or any
Subsidiary is authorized to use any third party patents, trademarks or
copyrights, including software ("Third Party Intellectual Property Rights").
Neither Ribi nor any Subsidiary nor, to the best of Ribi's knowledge, any third
party is in violation of any license, sublicense or agreement described in
Section 2.13 of the Ribi Disclosure Schedule. Except as disclosed in Section 2.5
of the Ribi Disclosure Schedule with respect to required third party consents,
the execution and delivery of this Agreement by Ribi and the consummation of the
transactions contemplated hereby will neither cause Ribi or any Subsidiary to be
in violation or default under any such license, sublicense or agreement, nor
entitle any other party to any such license, sublicense or agreement to
terminate or modify such license, sublicense or agreement. Except as set forth
in Section 2.13 of the Ribi Disclosure Schedule, Ribi is the sole and exclusive
owner or licensee of, with all right, title and interest in and to (free and
clear of any liens), the Intellectual Property, and has sole and exclusive
rights (and is not contractually obligated to pay any compensation to any third
party in respect thereof) to the use thereof or the material covered thereby in
connection with the services or products in respect of which Intellectual
Property is being used.
(c) To the best of Ribi's knowledge, there is no unauthorized use,
disclosure, infringement or misappropriation of any Intellectual Property rights
of Ribi or any Subsidiary, any trade secret material to Ribi or any Subsidiary
or any Intellectual Property right of any third party to the extent licensed by
or through Ribi or any Subsidiary, by any third party, including any employee or
former employee of Ribi or any Subsidiary. Neither Ribi nor any Subsidiary has
entered into any agreement to indemnify any other person against any charge of
infringement of any Intellectual Property, other than indemnification provisions
contained in purchase orders arising in the ordinary course of business and in
license, distribution, and supply agreements Ribi has with third parties.
(d) Except as disclosed in Section 2.5 of the Ribi Disclosure Schedule
with respect to required third party consents, neither Ribi nor any Subsidiary
is or will be as a result of the execution and delivery of this Agreement or the
performance of its obligations under this Agreement, in breach of any license,
sublicense or other agreement relating to the Intellectual Property or Third
Party Intellectual Property Rights.
(e) All patents, registered trademarks, service marks and copyrights
held by Ribi or any Subsidiary are, to the best of Ribi's knowledge, valid and
are existing and there is no assertion or claim (or basis therefor) challenging
the validity of any Intellectual Property of Ribi or any Subsidiary. Ribi has
not been sued in any suit, action or proceeding which involves a claim of
infringement of any patents, trademarks, service marks, copyrights or violation
of any trade secret or other proprietary right of any third party, nor has any
such suit been threatened. Neither the conduct of the business of Ribi and each
Subsidiary as currently conducted or contemplated nor the development,
manufacture, sale, licensing or use of any of the products of Ribi or any
Subsidiary as now developed, manufactured, sold or licensed or used, nor the use
in any way of the Intellectual Property in the manufacture, use, sale or
licensing by Ribi or any Subsidiary of any products currently proposed,
infringes on or will infringe or conflict with, in any way, any license,
trademark, trademark right, trade name, trade name right, patent, patent right,
industrial model, invention, service mark or copyright of any third party that,
individually or in the aggregate, is reasonably likely to have a Material
Adverse Effect on Ribi or the Surviving Corporation. To the best of Ribi's
knowledge, no third party is challenging or has challenged the ownership by Ribi
or any Subsidiary, or the validity or effectiveness of, any of the Intellectual
Property. Neither Ribi nor any Subsidiary has brought or has contemplated
bringing any action, suit or proceeding for infringement of Intellectual
Property or breach of any license or agreement involving Intellectual Property
against any third party. There are no pending, or to the best of Ribi's
knowledge, threatened, interference, re-examinations, oppositions or nullities
involving any patents, patent rights or applications therefor of Ribi or any
Subsidiary, except such as may have been commenced by Ribi or any Subsidiary.
There
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is no breach or violation of or, to the best of Ribi's knowledge, threatened, or
actual loss of rights under any license agreement to which Ribi or a Subsidiary
is a party.
(f) Ribi and each Subsidiary have secured valid written assignments from
all of its employees, and valid written agreements to assign from all of its
consultants, who contributed and/or are contributing to the creation or
development of Intellectual Property of the rights to such past, current and
future contributions that Ribi or such Subsidiary does not already own by
operation of law.
(g) Ribi has taken all commercially reasonable and appropriate steps to
protect and preserve the confidentiality of all Intellectual Property not
otherwise protected by patents, patent applications or copyright ("Confidential
Information"). Each of Ribi and its Subsidiaries has a policy requiring each
employee, consultant and independent contractor to execute proprietary
information and confidentiality agreements substantially in Ribi's standard
forms, which forms have been provided to Corixa, and all current, and to the
best of Ribi's knowledge, former, employees, consultants and independent
contractors of Ribi and each Subsidiary have executed such an agreement. All
use, disclosure or appropriation of Confidential Information owned by Ribi or a
Subsidiary by or to a third party has been pursuant to the terms of a
commercially reasonable written confidentiality agreement(s) between Ribi or the
applicable Subsidiary and such third party. All use, disclosure or appropriation
of Confidential Information not owned by Ribi or a Subsidiary has been pursuant
to the terms of a written confidentiality agreement(s) between Ribi or a
Subsidiary and the owner of such Confidential Information, or is otherwise
lawful.
2.14 ENVIRONMENTAL MATTERS.
(a) The following terms shall be defined as follows:
(i) "Environmental and Safety Laws" shall mean any federal, state or
local laws, ordinances, codes, regulations, rules, policies and orders, as each
may be amended from time to time, that are intended to assure the protection of
the environment, or that classify, regulate, call for the remediation of,
require reporting with respect to, or list or define air, water, groundwater,
solid waste, hazardous or toxic substances, materials, wastes, pollutants or
contaminants; which regulate the manufacture, handling, transport, use,
treatment, storage or disposal of Hazardous Materials or materials containing
Hazardous Materials; or which are intended to assure the protection, safety and
good health of employees, workers or other persons, including the public; or
which call for the assessment of or compensation for damages to material.
(ii) "Hazardous Materials" shall mean any toxic or hazardous
substance, material or waste or any pollutant or contaminant, or infectious or
radioactive substance or material, including without limitation, those
substances, materials and wastes defined in or regulated under any Environmental
and Safety Laws; petroleum and petroleum products including crude oil and any
fractions thereof; natural gas, synthetic gas, and any mixtures thereof; radon;
and asbestos.
(iii) "Property" shall mean all real property leased or owned by Ribi
or its Subsidiaries either currently or in the past.
(iv) "Facilities" shall mean all buildings and improvements on the
Property of Ribi or its Subsidiaries.
(b) Except as set forth in Section 2.14(b) of the Ribi Disclosure
Schedule, Ribi represents and warrants as follows: (i) no methylene chloride or
asbestos is contained in or has been used at or released from the Facilities;
(ii) all Hazardous Materials and wastes used or generated at the Facilities have
been disposed of in accordance with all Environmental and Safety Laws; (iii)
Ribi and its Subsidiaries have received no notice (verbal or written) of any
noncompliance of the Facilities or of its past or present operations with
Environmental and Safety Laws; (iv) no notices, administrative
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actions or suits are pending or threatened relating to Hazardous Materials or a
violation of any Environmental and Safety Laws; (v) neither Ribi nor its
Subsidiaries are a potentially responsible party within the meaning of the
federal Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), or any state analog statute, (including without limitation the
Comprehensive Environmental Clean-up and Responsibility Act Section 75-10-701
through 752 MCA) arising out of events occurring prior to the Closing Date; (vi)
for so long as Ribi has owned the Facilities there has not been in the past, and
are not now, any contamination, disposal, spilling, dumping, incineration,
discharge, storage, treatment or handling of Hazardous Materials on, under or
migrating to or from the Facilities or Property (including without limitation,
soils and surface and ground waters that reasonably is expected to give rise to
liability under Environmental and Safety Laws); (vii) there have not been in the
past, and are not now, any underground treatment or storage tanks, sumps, or
water, gas or oil wells at, on or under the Property; (viii) there are no
polychlorinated biphenyls ("PCBs") deposited, stored, disposed of or located on
the Property or Facilities or any equipment on the Property containing PCBs at
levels in excess of 50 parts per million; (ix) there is no formaldehyde on the
Property or in the Facilities, nor any insulating material containing urea
formaldehyde in the Facilities; (x) the Facilities and Ribi's and its
Subsidiaries uses and activities therein have at all times been in material
compliance with all Environmental and Safety Laws; (xi) Ribi and its
Subsidiaries have all the permits and licenses required to be issued and are in
material compliance with the terms and conditions of those permits; and (xii)
neither Ribi nor any of its Subsidiaries is liable for any off-site
contamination nor under any Environmental and Safety Laws.
2.15 TAXES.
(a) For purposes of this Section 2.15 and other provisions of this
Agreement relating to Taxes, the following definitions shall apply:
(i) The term "Taxes" shall mean all taxes, however denominated,
including any interest, penalties or other additions to tax that may become
payable in respect thereof, (A) imposed by any federal, territorial, state,
local or foreign government or any agency or political subdivision of any such
government, which taxes shall include, without limiting the generality of the
foregoing, all income or profits taxes (including but not limited to, federal,
state and foreign income taxes), payroll and employee withholding taxes,
unemployment insurance contributions, social security taxes, sales and use
taxes, ad valorem taxes, excise taxes, franchise taxes, gross receipts taxes,
withholding taxes, business license taxes, occupation taxes, real and personal
property taxes, stamp taxes, environmental taxes, transfer taxes, workers'
compensation, Pension Benefit Guaranty Corporation premiums and other
governmental charges, and other obligations of the same or of a similar nature
to any of the foregoing, which are required to be paid, withheld or collected,
(B) any liability for the payment of amounts referred to in (A) as a result of
being a member of any affiliated, consolidated, combined or unitary group, or
(C) any liability for amounts referred to in (A) or (B) as a result of any
obligations to indemnify another person.
(ii) The term "Returns" shall mean all reports, estimates,
declarations of estimated tax, information statements and returns required to be
filed in connection with any Taxes, including information returns with respect
to backup withholding and other payments to third parties.
(b) All Returns required to be filed by or on behalf of Ribi or any
Subsidiary have been duly filed on a timely basis and such Returns are true,
complete and correct. All Taxes shown to be payable on such Returns or on
subsequent assessments with respect thereto, and all payments of estimated Taxes
required to be made by or on behalf of Ribi or any Subsidiary under Section 6655
of the Code or comparable provisions of state, local or foreign law, have been
paid in full on a timely basis, and no other Taxes are payable by Ribi or any
Subsidiary with respect to items or periods covered by such Returns (whether or
not shown on or reportable on such Returns). Ribi and each Subsidiary have
withheld and paid over all Taxes required to have been withheld and paid
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over, and complied with all information reporting and backup withholding in
connection with amounts paid or owing to any employee, creditor, independent
contractor, or other third party. There are no liens on any of the assets of
Ribi or any Subsidiary with respect to Taxes, other than liens for Taxes not yet
due and payable or for Taxes that Ribi or that Subsidiary is contesting in good
faith through appropriate proceedings. Neither Ribi nor any Subsidiary has been
at any time a member of an affiliated group of corporations filing consolidated,
combined or unitary income or franchise tax returns for a period for which the
statute of limitations for any Tax potentially applicable as a result of such
membership has not expired.
(c) The amount of Ribi's and any Subsidiary's liabilities for unpaid
Taxes for all periods through the date of the Ribi Financials do not, in the
aggregate, exceed the amount of the current liability accruals for Taxes
reflected on the Ribi Financials, and the Ribi Financials properly accrue in
accordance with GAAP all liabilities for Taxes of Ribi and its Subsidiaries
payable after the date of the Ribi Financials attributable to transactions and
events occurring prior to such date. No liability for Taxes of Ribi or any
Subsidiary has been incurred (or prior to Closing will be incurred) since such
date other than in the ordinary course of business.
(d) Corixa has been furnished by Ribi true and complete copies of (i)
relevant portions of income tax audit reports, statements of deficiencies,
closing or other agreements received by or on behalf of Ribi or any Subsidiary
relating to Taxes, and (ii) all federal, state and foreign income or franchise
tax returns and state sales and use tax Returns for or including Ribi and its
Subsidiaries for all periods since January 1, 1994.
(e) No audit of the Returns of or including Ribi and its Subsidiaries by
a government or taxing authority is in process, threatened or, to the best of
Ribi's knowledge, pending. No deficiencies exist or have been asserted or are
expected to be asserted with respect to Taxes of Ribi or any of its
Subsidiaries, and Ribi has not received written notice nor does it expect to
receive such notice that it or any Subsidiary has not filed a Return or paid
Taxes required to be filed or paid. Neither Ribi nor any Subsidiary is a party
to any action or proceeding for assessment or collection of Taxes against Ribi,
any Subsidiary or any of their respective assets. No waiver or extension of any
statute of limitations is in effect with respect to Taxes or Returns of Ribi or
any Subsidiary.
(f) Ribi and its Subsidiaries are not (nor have they ever been) parties
to any tax sharing agreement.
(g) Ribi is not, nor has it been, a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code. Ribi is not
a "consenting corporation" under Section 341(f) of the Code. Neither Ribi nor
any Subsidiary has entered into any compensatory agreements with respect to the
performance of services which payment thereunder would result in a nondeductible
expense to Ribi or to such Subsidiary pursuant to Section 280G of the Code or an
excise tax to the recipient of such payment pursuant to Section 4999 of the
Code. Neither Ribi nor any Subsidiary has agreed to, nor is it required to make,
other than by reason of the Merger, any adjustment under Code Section 481(a) by
reason of, a change in accounting method, and Ribi and each Subsidiary will not
otherwise have any income reportable for a period ending after the Closing Date
attributable to a transaction or other event (e.g., an installment sale)
occurring prior to the Closing Date with respect to which Ribi or such
Subsidiary received the economic benefit prior to the Closing Date. Neither Ribi
nor any Subsidiary is, nor has it been, a "reporting corporation" subject to the
information reporting and record maintenance requirements of Section 6038A and
the regulations thereunder.
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2.16 EMPLOYEE BENEFIT PLANS.
(a) Section 2.16(a) of the Ribi Disclosure Schedule lists, with respect
to Ribi, each Subsidiary and any trade or business (whether or not incorporated)
which is treated as a single employer with Ribi (an "ERISA Affiliate") within
the meaning of Section 414(b), (c), (m) or (o) of the Code, (i) all employee
benefit plans (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), (ii) each loan to a non-officer
employee in excess of $10,000, loans to officers and directors and any stock
option, stock purchase, phantom stock, stock appreciation right, supplemental
retirement, severance, sabbatical, medical, dental, vision care, disability,
employee relocation, cafeteria benefit (Code Section 125) or dependent care
(Code Section 129), life insurance or accident insurance plans, programs or
arrangements, (iii) all contracts and agreements relating to employment that
provide for annual compensation in excess of $100,000 and all severance
agreements, with any of the directors, officers or employees of Ribi or its
Subsidiaries (other than, in each case, any such contract or agreement that is
terminable by the Company or its Subsidiary at will or without penalty or other
adverse consequence), (iv) all bonus, pension, profit sharing, savings, deferred
compensation or incentive plans, programs or arrangements, (v) other fringe or
employee benefit plans, programs or arrangements that apply to senior management
of Ribi or any Subsidiary and that do not generally apply to all employees, and
(vi) any current or former employment or executive compensation or severance
agreements, written or otherwise, as to which unsatisfied obligations of Ribi or
any Subsidiary of greater than $10,000 remain for the benefit of, or relating
to, any present or former employee, consultant or director of Ribi or any
Subsidiary (together, the "Ribi Employee Plans").
(b) Ribi has furnished to Corixa a copy of each of the Ribi Employee
Plans and related plan documents (including trust documents, insurance policies
or contracts, employee booklets, summary plan descriptions and other authorizing
documents, and, to the extent still in its possession, any material employee
communications relating thereto) and has, with respect to each Ribi Employee
Plan which is subject to ERISA reporting requirements, provided copies of the
Form 5500 reports filed for the last three plan years with respect to which the
applicable filing deadline has occurred. Any Ribi Employee Plan intended to be
qualified under Section 401(a) of the Code has either obtained from the Internal
Revenue Service a favorable determination letter as to its qualified status
under the Code, including all amendments to the Code effected by the Tax Reform
Act of 1986 and subsequent legislation, or has applied to the Internal Revenue
Service for such a determination letter with respect to which the requisite
period under applicable Treasury Regulations or Internal Revenue Service
pronouncements in which to apply for such determination letter and to make any
amendments necessary to obtain a favorable determination has expired. Ribi has
also furnished Corixa with the most recent Internal Revenue Service
determination letter issued with respect to each such Ribi Employee Plan, and
nothing has occurred since the issuance of each such letter which could
reasonably be expected to cause the loss of the tax-qualified status of any Ribi
Employee Plan subject to Code Section 401(a).
(c) Except as set forth in Section 2.16(c) of the Ribi Disclosure
Schedule, (i) none of the Ribi Employee Plans promises or provides retiree
medical or other retiree welfare or life insurance benefits to any person; (ii)
there has been no "prohibited transaction," as such term is defined in Section
406 of ERISA and Section 4975 of the Code, with respect to any Ribi Employee
Plan; (iii) each Ribi Employee Plan has been administered in accordance with its
terms and in compliance with the requirements prescribed by any and all
statutes, rules and regulations (including ERISA and the Code), and Ribi and
each Subsidiary or ERISA Affiliate have performed all obligations required to be
performed by them under, are not in any respect in default under or violation
of, and have no knowledge of any default or violation by any other party to, any
of the Ribi Employee Plans; (iv) neither Ribi nor any Subsidiary or ERISA
Affiliate is subject to any liability or penalty under Sections 4976 through
4980 of the
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Code or Title I of ERISA with respect to any of the Ribi Employee Plans; (v) all
contributions required to be made by Ribi or any Subsidiary or ERISA Affiliate
to any Ribi Employee Plan have been made on or before their due dates and a
reasonable amount has been accrued for contributions to each Ribi Employee Plan
for the current plan years; (vi) with respect to each Ribi Employee Plan, no
"reportable event" within the meaning of Section 4043 of ERISA (excluding any
such event for which the thirty (30) day notice requirement has been waived
under the regulations to Section 4043 of ERISA) nor any event described in
Section 4062, 4063 or 4041 or ERISA has occurred; (vii) no Ribi Employee Plan is
covered by, and neither Ribi nor any Subsidiary or ERISA Affiliate has incurred
or expects to incur any direct or indirect liability under, arising out of or by
operation of Title IV of ERISA in connection with the termination of, or an
employee's withdrawal from, any Ribi Employee Plan or other retirement plan or
arrangement, and no fact or event exists that could give rise to any such
liability, or under Section 412 of the Code; (viii) Ribi and the Subsidiaries
have not incurred any liability under, and have complied in all respects with,
the Worker Adjustment Retraining Notification Act, (the "WARN Act") and no fact
or event exists that could give rise to liability under such act; and (ix) no
compensation paid or payable to any employee of Ribi or any Subsidiary has been,
or will be, non-deductible by reason of application of Section 162(m) of the
Code. With respect to each Ribi Employee Plan subject to ERISA as either an
employee pension plan within the meaning of Section 3(2) of ERISA or an employee
welfare benefit plan within the meaning of Section 3(1) of ERISA, Ribi has
prepared in good faith and timely filed all requisite governmental reports
(which were true and correct as of the date filed) and has properly and timely
filed and distributed or posted all notices and reports to employees required to
be filed, distributed or posted with respect to each such Ribi Employee Plan. No
suit, administrative proceeding, action or other litigation has been brought, or
to the best knowledge of Ribi is threatened, against or with respect to any such
Ribi Employee Plan, including any audit or inquiry by the IRS or United States
Department of Labor. Neither Ribi nor any Subsidiary or other ERISA Affiliate is
a party to, or has made any contribution to or otherwise incurred any obligation
under, any "multiemployer plan" as defined in Section 3(37) of ERISA.
(d) With respect to each Ribi Employee Plan, Ribi and each of its United
States Subsidiaries have complied with (i) the applicable health care
continuation and notice provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA") and the proposed regulations thereunder,
(ii) the applicable requirements of the Family Leave Act of 1993 and the
regulations thereunder and (iii) the applicable notice requirements under the
Health Insurance Portability and Accountability Act of 1996 ("HIPPA") and the
temporary regulations thereunder.
(e) The consummation of the transactions contemplated by this Agreement
will not (i) entitle any current or former employee or other service provider of
Ribi, any Subsidiary or any other ERISA Affiliate to severance benefits or any
other payment, except as expressly provided in this Agreement, or (ii) except as
set forth in Section 1.6(c) of the Ribi Disclosure Schedule, accelerate the time
of payment or vesting of any such benefits (except as required under Section
411(d)(3) of the Code), or increase the amount of compensation due any such
employee or service provider.
(f) There has been no amendment to, written interpretation or
announcement (whether or not written) by Ribi, any Subsidiary or other ERISA
Affiliate relating to, or change in participation or coverage under, any Ribi
Employee Plan which would increase the expense of maintaining such Plan above
the level of expense incurred with respect to that Plan for the most recent
fiscal year included in the Ribi Financials.
2.17 CERTAIN AGREEMENTS AFFECTED BY THE MERGER. Neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will (i) result in any
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payment (including, without limitation, severance, unemployment compensation,
golden parachute, bonus or otherwise) becoming due to any director or any
employee of Ribi or any of its Subsidiaries, except as listed on Schedule 2.17
of the Ribi Disclosure Schedule, (ii) increase any benefits otherwise payable by
Ribi, or (iii) result in the acceleration of the time of payment or, except as
set forth in Section 2.17 of the Ribi Disclosure Schedule, vesting, of any such
benefits.
2.18 EMPLOYEE MATTERS. Ribi and each of its Subsidiaries are in compliance
in all respects with all currently applicable federal, state, local and foreign
laws and regulations respecting employment, discrimination in employment, terms
and conditions of employment, wages, hours and occupational safety and health
and employment practices, and is not engaged in any unfair labor practice. There
are no pending claims against Ribi or any of its Subsidiaries under any workers
compensation plan or policy or for long term disability. Neither Ribi nor any of
its Subsidiaries has any obligations under COBRA with respect to any former
employees or qualifying beneficiaries thereunder. There are no controversies
pending or, to the best knowledge of Ribi and its Subsidiaries, threatened,
between Ribi or any of its Subsidiaries and any of their respective employees.
Neither Ribi nor any of its Subsidiaries is a party to any collective bargaining
agreement or other labor unions contract nor does Ribi or any of its
Subsidiaries know of any activities or proceedings of any labor union or other
group to organize any such employees.
2.19 MATERIAL CONTRACTS. Except as otherwise set forth in the Ribi
Disclosure Schedule, neither Ribi nor any of its Subsidiaries is a party to or
is bound by:
(a) any employment or consulting agreement, contract or commitment with
any employee or member of Ribi's Board of Directors, other than those that are
terminable by Ribi or any of its Subsidiaries on no more than thirty (30) days
notice without liability or financial obligation, except to the extent general
principles of wrongful termination law may limit Ribi's or any of its
Subsidiaries' ability to terminate employees at will, or any consulting
agreement;
(b) any agreement or plan, including, without limitation, any stock
option plan, stock appreciation right plan or stock purchase plan, any of the
benefits of which will be increased, or, except as set forth in Section 1.6(c)
of the Ribi Disclosure Schedule, the vesting of benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated in this
Agreement or the value of any of the benefits of which will be calculated on the
basis of any of the transactions contemplated in this Agreement;
(c) any agreement of indemnification or any guaranty;
(d) any agreement, contract or commitment containing any covenant
limiting in any respect the right of Ribi or any of its Subsidiaries to engage
in any line of business or to compete with any person or granting any exclusive
development, manufacturing, marketing or distribution rights;
(e) any agreement, contract or commitment relating to the disposition or
acquisition (by license or otherwise) by Ribi or any of its Subsidiaries after
the date of this Agreement of any assets not in the ordinary course of business
or pursuant to which Ribi has any ownership interest in any corporation,
partnership, joint venture or other business enterprise other than Ribi's
Subsidiaries;
(f) any joint marketing or development agreement under which Ribi or any
of its Subsidiaries have continuing obligations to jointly market any product,
technology or service and which may not be canceled without penalty upon notice
of ninety (90) days or less, or any agreement pursuant to which Ribi or any of
its Subsidiaries have continuing obligations to jointly develop any intellectual
property that will not be owned by Ribi or any of its Subsidiaries and which may
not be canceled without penalty upon notice of ninety (90) days or less;
(g) any agreement, contract or commitment to license any third party to
manufacture or reproduce any Ribi or Subsidiary product, service or technology;
or
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(h) any other agreement, contract or commitment that is material to
Ribi's or any of its Subsidiaries' respective business as presently conducted or
as proposed to be conducted.
Neither Ribi nor any of its Subsidiaries nor any other party to a Ribi
Contract (as defined below), is in breach, violation or default under, and
neither Ribi nor any of its Subsidiaries has received notice that it has
breached, violated or defaulted under, any of the terms or conditions of any of
the agreements, contracts or commitments to which Ribi or any of its
Subsidiaries is a party or by which it is bound that are required to be
disclosed in the Ribi Disclosure Schedule pursuant to clauses (a) through (h)
above or pursuant to Section 2.13 hereof (any such agreement, contract or
commitment, a "Ribi Contract") in such a manner as would permit any other party
to cancel or terminate any such Ribi Contract, or would permit any other party
to seek damages or other remedies.
2.20 INTERESTED PARTY TRANSACTIONS. Neither Ribi nor any Subsidiary is
indebted to any director, officer, employee or agent of Ribi or any Subsidiary
(except for amounts due as normal salaries and bonuses and in reimbursement of
ordinary expenses), and no such person is indebted to Ribi or any Subsidiary.
2.21 INSURANCE. Ribi and each of its Subsidiaries have policies of
insurance and bonds of the type and in amounts customarily carried by persons
conducting businesses or owning assets similar to those of Ribi and its
Subsidiaries. Except as set forth in Section 2.21 of the Ribi Disclosure
Schedule, there is no claim pending under any of such policies or bonds as to
which coverage has been questioned, denied or disputed by the underwriters of
such policies or bonds. All premiums due and payable under all such policies and
bonds have been paid and Ribi and its Subsidiaries are otherwise in compliance
with the terms of such policies and bonds. Ribi has no knowledge of any
threatened termination of, or premium increase with respect to, any of such
policies.
2.22 COMPLIANCE WITH LAWS. Except as set forth in Section 2.22 of the Ribi
Disclosure Schedule, each of Ribi and its Subsidiaries has complied with, are
not in violation of, and have not received any notices of violation with respect
to, any federal, state, local or foreign statute, law or regulation with respect
to the conduct of its business, or the ownership or operation of its business.
2.23 MINUTE BOOKS. The minute books of Ribi and its Subsidiaries made
available to Corixa contain a complete summary of all meetings of directors and
stockholders or actions by written consent since the time of incorporation of
Ribi and the respective Subsidiaries through the date of this Agreement, and
reflect all transactions referred to in such minutes accurately in all respects.
2.24 COMPLETE COPIES OF MATERIALS. Ribi has delivered or made available
true and copies of each document which has been requested by Corixa or its
counsel in connection with their legal and accounting review of Ribi and its
Subsidiaries.
2.25 BROKERS' AND FINDERS' FEES. Ribi has not incurred, nor will it incur,
directly or indirectly, any liability for brokerage or finders' fees or agents'
commissions or investment bankers' fees or any similar charges in connection
with this Agreement or any transaction contemplated hereby (other than the Ribi
Financial Advisor (as defined in Section 2.30 below)). Ribi has previously
furnished to Corixa a complete and correct copy of all agreements between Ribi
and the Ribi Financial Advisor pursuant to which such firm would be entitled to
any payment relating to the Merger.
2.26 STATEMENTS; PROXY STATEMENTS/PROSPECTUS. The information supplied by
Ribi for inclusion in the Registration Statement shall not, at the time the
Registration Statement is filed with the SEC and at the time it becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. The information supplied by Ribi for
inclusion in the proxy statement/prospectus to be
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sent to the stockholders of Ribi and Corixa in connection with the meeting of
Ribi 's stockholders to consider the approval and adoption of this Agreement and
the approval of the Merger (the "Ribi Stockholders' Meeting") and the meeting of
Corixa's stockholders to consider, among other things, approval and adoption of
this Agreement and the approval of the Merger (the "Corixa Stockholders'
Meeting") (such proxy statement/prospectus as amended or supplemented is
referred to herein as the "Proxy Statement/Prospectus") shall not, on the date
the Proxy Statement/Prospectus is first mailed to Ribi 's stockholders or
Corixa's stockholders, respectively, or at the time of the Ribi Stockholders'
Meeting or Corixa Stockholders' Meeting, respectively, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not false or misleading, or omit to
state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the Ribi
Stockholders' Meeting or the Corixa Stockholders' Meeting, respectively, which
has become false or misleading. The Proxy Statement/ Prospectus will comply as
to form in all material respects with the provisions of the Securities Act, the
Exchange Act and the rules and regulations thereunder. If at any time prior to
the Effective Time any event relating to Ribi or any of its affiliates, officers
or directors should be discovered by Ribi which is required to be set forth in
an amendment to the Registration Statement or a supplement to the Proxy
Statement/Prospectus, Ribi shall promptly so inform Corixa. Notwithstanding the
foregoing, Ribi makes no representation or warranty with respect to any
information supplied by Corixa which is contained in any of the foregoing
documents.
2.27 BOARD APPROVAL. The Board of Directors of Ribi (i) has unanimously
approved this Agreement and the Merger, (ii) has unanimously determined that the
Merger is in the best interests of the stockholders of Ribi and is on terms that
are fair to such stockholders and (iii) will unanimously recommended that the
stockholders of Ribi approve this Agreement and the Merger.
2.28 ACCOUNTS RECEIVABLE; ACCOUNTS PAYABLE.
(a) Ribi has made available to Corixa a list of all accounts receivable
of Ribi and each Subsidiary reflected on the Ribi Financials ("Accounts
Receivable") and a list of all accounts payable of Ribi and each Subsidiary
reflected on the Ribi Financials ("Accounts Payable"), along with a range of
days elapsed since invoice.
(b) All Accounts Receivable and Accounts Payable of Ribi and its
Subsidiaries arose in the ordinary course of business, are carried at values
determined in accordance with GAAP consistently applied. No person has any lien
on any of such Accounts Receivable or Accounts Payable and no request or
agreement for deduction or discount has been made with respect to any of such
Accounts Receivable or Accounts Payable.
(c) All of the inventories of Ribi and each Subsidiary reflected in the
Ribi Financials and Ribi's books and records on the date hereof were purchased,
acquired or produced in the ordinary and regular course of business and in a
manner consistent with Ribi's regular inventory practices and are set forth on
Ribi's books and records in accordance with the practices and principles of Ribi
consistent with the method of treating said items in prior periods based upon
past and normal business practices. None of the inventory of Ribi or any
Subsidiary reflected on the Ribi Financials or on Ribi's books and records as of
the date hereof (in either case net of the reserve therefor) is obsolete,
defective or in excess of the needs of the business of Ribi reasonably
anticipated for the normal operation of the business consistent with past
practices and outstanding customer contracts. The presentation of inventory on
the Ribi Financials conforms to GAAP and such inventory is stated at the lower
of cost (determined using specific identification method) or net realizable
value.
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2.29 THIRD PARTY CONSENTS. Except as set forth in Sections 2.5 and 2.29 of
the Ribi Disclosure Schedule, no consent, approval or authorization is needed
from any third party in order to effect the Merger, this Agreement or any of the
transactions contemplated hereby.
2.30 OPINION OF FINANCIAL ADVISORS. Ribi has received a written or verbal
opinion of Hambrecht & Quist Incorporated (the "Ribi Financial Advisor") on or
prior to the date of this Agreement, and the Ribi Financial Advisor will deliver
to Ribi a written opinion prior to the Closing, to the effect that, as of the
date of such opinion, the consideration to be received by the holders of Ribi
Common Stock pursuant to this Agreement is fair to the stockholders of Ribi, and
Ribi will promptly, after the date of this Agreement, deliver a copy of such
opinion to Corixa.
2.31 CUSTOMS. Ribi has acted with reasonable care to properly value and
classify, in accordance with applicable tariff laws, rules and regulations, all
goods that Ribi or any of its Subsidiaries import into the United States or into
any other country (the "Imported Goods"). There are currently no claims pending
against Ribi by the U.S. Customs Service (or other foreign customs authorities)
relating to the valuation, classification or marking of the Imported Goods.
SECTION THREE
3. REPRESENTATIONS AND WARRANTIES OF CORIXA.
Except as disclosed in a document dated as of the date of this Agreement
and delivered by Corixa to Ribi prior to the execution and delivery of this
Agreement and referring to the representations and warranties in this Agreement
(the "Corixa Disclosure Schedule"), Corixa hereby represents and warrants to
Ribi as follows:
3.1 ORGANIZATION OF CORIXA.
(a) Corixa and each of its subsidiaries (i) is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized, (ii) has the corporate or other power and
authority and all necessary governmental approvals to own, lease and operate its
assets and property and to carry on its business as now being conducted and
(iii) is duly qualified or licensed to do business in each jurisdiction where
the character of the properties owned, leased or operated by it or the nature of
its activities makes such qualification or licensing necessary.
(b) Corixa has delivered to Ribi a true and correct copy of the
Certificate of Incorporation (including any applicable Certificates of
Designation) and Bylaws of Corixa, each as amended to date and currently in full
force and effect. Neither Corixa nor any of its subsidiaries is in violation of
any of the provisions of its Certificate of Incorporation, any applicable
Certificate of Designation or Bylaws or equivalent organizational documents.
3.2 CORIXA CAPITAL STRUCTURE. The authorized capital stock of Corixa
consists of Forty Million (40,000,000) shares of Common Stock, par value $0.001
per share, of which there were Fourteen Million Seven Hundred Nine Thousand Five
Hundred and Ninety (14,709,590) shares issued and outstanding as of June 1,
1999, and Ten Million (10,000,000) shares of Preferred Stock, par value $0.001
per share, of which Fifty Thousand (50,000) shares have been designated Series A
Preferred Stock and Twelve Thousand Five Hundred (12,500) shares of such Series
A Preferred Stock were issued and outstanding as of June 1, 1999. All
outstanding shares of Corixa Common Stock and Series A Preferred Stock are duly
authorized, validly issued, fully paid and nonassessable, free of any liens or
encumbrances and are not subject to preemptive rights or rights of first refusal
created by statute, the Certificate of Incorporation, any applicable Certificate
of Designation or Bylaws of Corixa or any agreement or document to which Corixa
is a party or by which it is bound. As of June 1, 1999, Corixa had reserved an
aggregate of Three Million One Hundred Ninety Seven Thousand One Hundred and
Twenty One (3,197,121) shares of Corixa Common Stock for issuance
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under the Corixa Corporation 1994 Amended and Restated Stock Option Plan (the
"Corixa Stock Option Plan"), the Corixa Corporation Directors' Stock Option Plan
(the "Corixa Directors' Plan"), and the Corixa Corporation 1997 Employee Stock
Purchase Plan (the "Corixa ESPP", and together with the Corixa Stock Option Plan
and the Corixa Directors' Plan, the "Corixa Plans"), of which 373,752 had been
issued pursuant to option exercises and purchases. As of June 1, 1999, Corixa
had reserved Two Million Seven Hundred Sixty Six Thousand Two Hundred and Thirty
Four (2,766,234) shares of Corixa's Common Stock for issuance to employees,
directors and consultants pursuant to the Corixa Stock Option Plan, of which
Three Hundred Fifty Five Thousand Eight Hundred and Fifty Five (355,855) shares
have been issued pursuant to option exercises, and Two Million One Hundred
Seventy Six Thousand Five Hundred and Eighty Six (2,176,586) shares are subject
to outstanding, unexercised options. As of June 1, 1999, Corixa had reserved
Three Hundred Thousand (300,000) shares of Corixa's Common Stock for issuance to
directors pursuant to the Corixa Directors' Plan, of which Seventy Five Thousand
(75,000) are subject to outstanding, unexercised options. As of June 1, 1999,
Corixa had reserved One Hundred Thirty Thousand Eight Hundred and Eighty Seven
(130,887) shares of Corixa's Common Stock for issuance to employees pursuant to
the Corixa ESPP, of which Seventeen Thousand Eight Hundred and Ninety Seven
(17,897) shares have been issued to employees. Other than as set forth in the
Corixa Disclosure Schedule or as contemplated in this Agreement, there are no
other options, warrants, calls, rights, commitments or agreements of any
character to which Corixa is a party or by which either Corixa is bound or
obligating Corixa to issue, deliver, sell, repurchase or redeem, or cause to be
issued, delivered, sold, repurchased or redeemed, any shares of the capital
stock of Corixa or obligating Corixa to grant, extend or enter into any such
option, warrant, call, right, commitment or agreement.
3.3 AUTHORITY. Corixa has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Corixa, subject only to the approval of the
Merger by Corixa's stockholders as contemplated by Section 6.1(a) and the filing
of the Certificate of Merger pursuant to Delaware Law. Corixa's Board of
Directors has unanimously approved the Merger and this Agreement. The
affirmative vote of the holders of a majority of the shares of Corixa Common
Stock and Corixa's Series A Preferred Stock, each as outstanding on the record
date set for the Corixa Stockholders' Meeting and voting together as a class on
an as-converted basis, is the only vote of the holders of any of Corixa's
capital stock necessary to approve this Agreement and the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Corixa and assuming due authorization, execution and delivery by Ribi,
constitutes the valid and binding obligation of Corixa enforceable against
Corixa in accordance with its terms.
3.4 NO CONFLICTS; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by Corixa does not, and
the consummation of the transactions contemplated hereby will not, conflict
with, or result in any violation of, or default under (with or without notice or
lapse of time, or both), or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of any benefit under (i) any provision of
the Certificate of Incorporation, any applicable Certificate of Designation or
Bylaws of Corixa or any of its subsidiaries, as amended to date and currently in
full force and effect, or (ii) any mortgage, indenture, lease, contract or other
agreement or instrument, permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to Corixa
or any subsidiary or any of their properties or assets.
(b) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required to be obtained
or made by or with respect to Corixa or any subsidiary in connection with the
execution and delivery of this Agreement or the consummation of
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the transactions contemplated hereby, except for (i) the filing of the
Certificate of Merger, together with the required officers' certificates, as
provided in Section 1.2, (ii) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under the Exchange
Act, the Securities Act, applicable state securities laws and the securities (or
related) laws of any foreign country, including the filing of the Registration
Statement with the SEC in accordance with the Securities Act, and (iii) such
filings as may be required under the HSR Act and the antitrust laws of any
foreign country.
3.5 SEC FILINGS; CORIXA FINANCIAL STATEMENTS.
(a) Corixa has filed all forms, reports and documents required to be
filed by Corixa with the SEC since January 1, 1997, and has made available to
Ribi all such forms, reports and documents in the form filed with the SEC. All
such required forms, reports and documents (including those that Corixa may file
subsequent to the date hereof) are referred to herein as the "Corixa SEC
Reports." As of their respective dates, the Corixa SEC Reports (i) were or will
be prepared in accordance with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations thereunder, (ii)
did not at the time they were filed, or will not at the time they are filed,
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, and (iii) did not at the time they were filed, or will not at the
time they are filed, omit any documents required to be filed as exhibits
thereto.
(b) None of Corixa's subsidiaries is required to file any forms, reports
or other documents with the SEC.
(c) Each of the consolidated financial statements (including, in each
case, any notes thereto) contained in the Corixa SEC Reports (collectively, the
"Corixa Financials"), as well as all forms, reports and documents to be filed by
Corixa with the SEC after the date hereof and prior to the Effective Time, was
or will be prepared in accordance with the GAAP applied on a consistent basis
throughout the periods indicated (except as may be indicated in the notes
thereto) and each fairly presented or will fairly present the consolidated
financial position, results of operations and cash flows of Corixa and its
consolidated subsidiaries as of the respective dates thereof and for the
respective periods indicated therein in accordance with GAAP.
(d) Except as and to the extent set forth on the consolidated balance
sheet of Corixa and its consolidated subsidiaries as of December 31, 1998,
including the notes thereto, neither Corixa nor any subsidiary thereof has any
liability or obligation of any nature (whether accrued, absolute, contingent or
otherwise) that would be required to be reflected on a balance sheet, or in the
notes thereto, prepared in accordance with GAAP, except for liabilities and
obligations disclosed in any Corixa SEC Report filed since December 31, 1998.
3.6 ABSENCE OF UNDISCLOSED LIABILITIES. Neither Corixa nor any of its
subsidiaries has obligations or liabilities of any nature (matured or unmatured,
fixed or contingent) other than (i) those set forth or adequately provided for
in the Balance Sheet for the period ended March 31, 1999 (the "Corixa Balance
Sheet"), (ii) those incurred in the ordinary course of business and not required
to be set forth in the Corixa Balance Sheet under GAAP, (iii) those incurred in
the ordinary course of business since the date of the Corixa Balance Sheet and
consistent with past practice, and (iv) those incurred in connection with the
execution of this Agreement.
3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of the Corixa
Balance Sheet, there has not been, occurred or arisen any Material Adverse
Effect on Corixa.
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3.8 STATEMENTS; PROXY STATEMENT/PROSPECTUS. The information supplied by
Corixa for inclusion in the Registration Statement shall not at the time the
Registration Statement is filed with the SEC and at the time it becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. The information supplied by Corixa
for inclusion in the Proxy Statement/Prospectus shall not, on the date the Proxy
Statement/Prospectus is first mailed to Corixa's stockholders or Ribi's
stockholders, respectively, or at the time of the Corixa Stockholders' Meeting
or Ribi Stockholders' Meeting, respectively, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not false or misleading, or omit to
state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the Ribi
Stockholders' Meeting or Corixa Stockholders' Meeting, respectively, which has
become false or misleading. The Proxy Statement/Prospectus will comply as to
form in all material respects with the provisions of the Securities Act, the
Exchange Act and the rules and regulations thereunder. If at any time prior to
the Effective Time, any event relating to Corixa or any of its affiliates,
officers or directors should be discovered by Corixa which is required to be set
forth in an amendment to the Registration Statement or a supplement to the Proxy
Statement/Prospectus, Corixa shall promptly so inform Ribi. Notwithstanding the
foregoing, Corixa makes no representation or warranty with respect to any
information supplied by Ribi which is contained in any of the foregoing
documents.
3.9 VALID ISSUANCE. The Corixa Common Stock to be issued in the Merger,
when issued in accordance with the provisions of this Agreement: (a) will be
validly issued, fully paid and nonassessable and (b) will not be subject to any
restrictions on resale under the Securities Act other than restrictions imposed
by Rule 145 promulgated under the Securities Act or as provided in the Voting
Agreements.
3.10 LITIGATION. There is no private or governmental action, suit,
proceeding, claim, arbitration or investigation pending before any agency, court
or tribunal, foreign or domestic, or, to the best knowledge of Corixa or any
subsidiary, threatened, against Corixa or any subsidiary or any of their
respective properties or any of their respective officers or directors (in their
capacities as such). There is no judgment, decree or order against Corixa or any
subsidiary or any of their respective directors or officers (in their capacities
as such), that could prevent, enjoin, or alter or delay any of the transactions
contemplated by this Agreement. All litigation to which Corixa or any subsidiary
is a party (or, to the knowledge of Corixa, threatened to become a party) is
disclosed in Section 3.10 of the Corixa Disclosure Schedule.
3.11 BOARD APPROVAL. The Board of Directors of Corixa (i) has unanimously
approved this Agreement and the Merger, (ii) has unanimously determined that the
Merger is in the best interests of the stockholders of Corixa and is on terms
that are fair to such stockholders and (iii) will unanimously recommend that the
stockholders of Corixa approve this Agreement and the Merger.
3.12 COMPLIANCE WITH LAWS. Each of Corixa and its subsidiaries has
complied with, are not in violation of, and have not received any notices of
violation with respect to, any federal, state, local or foreign statute, law or
regulation with respect to the conduct of its business, or the ownership or
operation of its business.
3.13 COMPLETE COPIES OF MATERIALS. Corixa has delivered or made available
true and copies of each document which has been requested by Ribi or its counsel
in connection with their legal and accounting review of Corixa and its
subsidiaries.
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3.14 THIRD PARTY CONSENTS. No consent, approval or authorization is needed
from any third party in order to effect the Merger, this Agreement or any of the
transactions contemplated hereby.
SECTION FOUR
4. CONDUCT PRIOR TO THE EFFECTIVE TIME.
4.1 CONDUCT OF BUSINESS OF RIBI. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
pursuant to its terms or the Effective Time, Ribi and each of its Subsidiaries
shall, except to the extent that Corixa shall otherwise consent in writing and
except as provided in the budget and salary administration information
previously provided to Corixa by Ribi, and as further described in Section 4.1
of the Ribi Disclosure Schedule, carry on its business, in the usual, regular
and ordinary course, in substantially the same manner as heretofore conducted
and in compliance with all applicable laws and regulations, pay its debts and
Taxes when due subject to good faith disputes over such debts or Taxes (which
disputes, if any, are or will be disclosed in Section 4.1 of the Ribi Disclosure
Schedule), pay or perform other obligations when due, and use its best efforts
consistent with past practices and policies to (i) preserve intact its present
business organization, (ii) keep available the services of its present officers
and employees and (iii) preserve its relationships with customers, suppliers,
distributors, licensors, licensees, and others with which it has business
dealings. In addition, Ribi will promptly notify Corixa of any event that it
reasonably believes could have a Material Adverse Effect on Ribi or the
Surviving Corporation.
In addition, except as permitted by the terms of this Agreement and except
as provided in Section 4.1 of the Ribi Disclosure Schedule, without the prior
written consent of Corixa, during the period from the date of this Agreement and
continuing until the earlier of the termination of this Agreement pursuant to
its terms or the Effective Time, Ribi shall not do any of the following and
shall not allow, cause or permit its Subsidiaries to do, cause or permit any of
the following:
(a) Except as otherwise provided in the Ribi Disclosure Schedule, waive
any stock repurchase rights, accelerate, amend or change the period of
exercisability of options or restricted stock, or reprice options granted
pursuant to the Ivy Option or under any employee, consultant, director or other
stock plans, including the Ribi Stock Option Plans, or authorize cash payments
in exchange for any options granted under any of such plans;
(b) Grant any severance or termination pay to any officer or employee
except pursuant to written agreements outstanding, or policies existing, on the
date hereof and as previously disclosed in writing or made available to Corixa,
or adopt any new severance plan;
(c) Transfer or license to any person or entity or otherwise extend,
amend or modify in any material respect any rights to the Intellectual Property,
or enter into grants to future patent rights;
(d) Except as provided in Section 5.16, declare, set aside or pay any
dividends on or make any other distributions (whether in cash, stock, equity
securities or property) in respect of any capital stock or split, combine or
reclassify any capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for any capital stock;
(e) Except as provided in Section 5.16, purchase, redeem or otherwise
acquire, directly or indirectly, any shares of capital stock of Ribi or its
Subsidiaries, except repurchases of unvested shares at cost in connection with
the termination of the employment relationship with any employee pursuant to
stock option or purchase agreements in effect on the date hereof;
(f) Issue, deliver, sell, authorize, pledge or otherwise encumber any
shares of capital stock or any securities convertible into shares of capital
stock, or subscriptions, rights, warrants or options to
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acquire any shares of capital stock or any securities convertible into shares of
capital stock, or enter into other agreements or commitments of any character
obligating it to issue any such shares or convertible securities, other than the
issuance, delivery and/or sale of (i) shares of Ribi Common Stock pursuant to
the exercise of Ribi options outstanding under the Ribi Stock Option Plans and
the Ivy Options as of the date of this Agreement, (ii) shares of Ribi Common
Stock pursuant to the exercise of Ribi Warrants outstanding as of the date of
this Agreement and (iii) shares of Ribi Common Stock pursuant to the conversion
of Ribi Series A Stock outstanding as of the date of this Agreement;
(g) Except as provided in Section 5.16, cause, permit or propose any
amendments to its Certificate of Incorporation, any applicable Certificate of
Designation, Bylaws or similar organizational documents of Ribi or any of its
Subsidiaries;
(h) Acquire or propose or agree to acquire by merging or consolidating
with, or by purchasing any material equity interest in or a material portion of
the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof or
otherwise acquire or agree to acquire any assets or capital stock which are
material, individually or in the aggregate, to the business of Ribi or its
Subsidiaries or enter into any material joint ventures, strategic partnerships
or alliances;
(i) Sell, lease, license, encumber or otherwise dispose of any
properties or assets which are material, individually or in the aggregate, to
the business of Ribi or its Subsidiaries, except sales of inventory in the
ordinary course of business consistent with past practice;
(j) Except as provided in Section 5.17, incur any indebtedness for
borrowed money or guarantee any such indebtedness of another person, issue or
sell any debt securities or options, warrants, calls or other rights to acquire
any debt securities of Ribi or its Subsidiaries, enter into any "keep well" or
other agreement to maintain any financial statement condition or enter into any
arrangement having the economic effect of any of the foregoing other than (i) in
connection with the financing of ordinary course trade payables consistent with
past practice or (ii) pursuant to existing credit facilities in the ordinary
course of business;
(k) Except as already budgeted for 1999 and provided to Corixa in the
form of budgeted information as well as set forth in the Ribi Disclosure
Schedule, adopt or amend any employee benefit plan or employee stock purchase or
employee stock option plan, including the Ribi Stock Option Plans, or enter into
any employment contract or collective bargaining agreement (other than offer
letters and letter agreements entered into in the ordinary course of business
consistent with past practice with employees who are terminable "at will,"), pay
any special bonus or special remuneration to any director or employee, or grant
any additional stock options or other stock purchase rights to, or increase the
salaries or wage rates or fringe benefits (including rights to severance or
indemnification) of, its directors, officers, employees or consultants, or
change in any material respect any management policies or procedures;
(l) Make any payments outside of the ordinary course of business;
(m) Modify, amend or terminate any material contract or agreement to
which Ribi or any Subsidiary is a party or waive, release or assign any material
rights or claims thereunder;
(n) Other than the grant to SmithKline Beecham of a license relating to
the development of vaccines for the treatment of allergies, the terms of which
proposed license have been reviewed with and agreed to by Corixa, enter into any
contracts, agreements, or obligations relating to the distribution, sale,
license or marketing by third parties of Ribi's products or products licensed by
Ribi other than non-exclusive licenses in the ordinary course of business
consistent with past practice;
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(o) Except as set forth in Section 2.8(f) of the Ribi Disclosure
Schedule, revalue any of its assets or, except as required by GAAP, make any
change in accounting methods, principles or practices;
(p) Engage in any action with the intent to directly or indirectly
adversely impact any of the transactions contemplated in this Agreement;
(q) Fail to make in a timely matter any filings with the SEC required
under the Securities Act or the Exchange Act or the rules and regulations
promulgated thereunder;
(r) Except as otherwise disclosed in the Ribi Disclosure Schedule, enter
into any agreement not in the ordinary course of business;
(s) Except as already budgeted for 1999 and provided to Corixa in the
form of budgeted information as well as set forth on the Ribi Disclosure
Schedule, enter into any agreement which provides for payments by Ribi in excess
of $50,000 without Corixa's prior written consent; or
(t) Agree in writing or otherwise to take any of the actions described
in Section 4.1(a) through (s) above.
4.2 CONDUCT OF BUSINESS OF CORIXA. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
pursuant to its terms or the Effective Time, except as permitted by the terms of
this Agreement and except as provided in Section 4 of the Corixa Disclosure
Schedule or in accordance with the terms of the Corixa Certificate of
Designation, without the prior written consent of Ribi during the period from
the date of this Agreement and continuing until the earlier of the termination
of this Agreement pursuant to its terms or the Effective Time, Corixa shall not
(i) declare, set aside or pay any dividends on or make any other distributions
(whether in cash, stock, equity securities or property) in respect of any
capital stock or split, combine or reclassify any capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of or in
substitution for any capital stock, (ii) engage in any action directly or
indirectly adversely impact any of the transaction contemplated in this
Agreement, (iii) fail to make in any timely manner any filings with the SEC
required under the Securities Act or the Exchange Act or the rules and
regulations promulgated thereunder, or (iv) agree in writing or otherwise to
take any of the actions described in subsections (i) through (iii).
SECTION FIVE
5. ADDITIONAL AGREEMENTS.
5.1 BEST EFFORTS AND FURTHER ASSURANCES.
(a) Each of the parties to this Agreement shall use its reasonable best
efforts to effectuate the transactions contemplated hereby and to fulfill and
cause to be fulfilled the conditions to closing under this Agreement. Each party
hereto, at the reasonable request of another party hereto, shall execute and
deliver such other instruments and do and perform such other acts and things as
may be necessary or desirable for effecting completely the consummation of this
Agreement and the transactions contemplated hereby.
(b) Ribi shall give prompt notice to Corixa of any representation or
warranty made by it contained in this Agreement becoming untrue or inaccurate in
any material respect, or any failure of Ribi to comply with or satisfy in any
material respect any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement, in each case, such that the conditions set
forth in Section 6.3(a) or 6.3(b) would not be satisfied; provided, however,
that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of
the parties under this Agreement.
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(c) Corixa shall give prompt notice to Ribi of any representation or
warranty made by it or contained in this Agreement becoming untrue or inaccurate
in any material respect, or any failure of Corixa to comply with or satisfy in
any material respect any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement, in each case, such that the conditions set
forth in Section 6.2(a) or 6.2(b) would not be satisfied, provided, however,
that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of
the parties under this Agreement.
5.2 CONSENTS; COOPERATION.
(a) Each of Corixa and Ribi shall use its reasonable best efforts to
promptly (i) obtain from any Governmental Entity any consents, licenses,
permits, waivers, approvals, authorizations or orders required to be obtained or
made by Corixa or Ribi or any of their respective subsidiaries in connection
with the authorization, execution and delivery of this Agreement and the
consummation of the transactions contemplated hereunder, including those
required under the HSR Act, and (ii) make all necessary filings, and thereafter
make any other required submissions, with respect to this Agreement and the
Merger required under the Securities Act and the Exchange Act and any other
applicable federal, state or foreign securities laws.
(b) Each of Corixa and Ribi shall use all reasonable efforts to resolve
such objections, if any, as may be asserted by any Governmental Entity with
respect to the transactions contemplated by this Agreement under the HSR Act,
the Sherman Act, as amended, the Clayton Act, as amended, the Federal Trade
Commission Act, as amended, and any other federal, state or foreign statutes,
rules, regulations, orders or decrees that are designed to prohibit, restrict or
regulate actions having the purpose or effect of monopolization or restraint of
trade (collectively, "Antitrust Laws"). In connection therewith, if any
administrative or judicial action or proceeding is instituted (or threatened to
be instituted) challenging any transaction contemplated by this Agreement as
violative of any Antitrust Law, each of Corixa and Ribi shall cooperate and use
all reasonable efforts vigorously to contest and resist any such action or
proceeding and to have vacated, lifted, reversed, or overturned any decree,
judgment, injunction or other order, whether temporary, preliminary or permanent
(each an "Order"), that is in effect and that prohibits, prevents, or restricts
consummation of the Merger or any such other transactions, unless by mutual
agreement Corixa and Ribi decide that litigation is not in their respective best
interests. The parties hereto will consult and cooperate with one another, and
consider in good faith the views of one another, in connection with any
analyses, appearances, presentations, memoranda, briefs, arguments, opinions and
proposals made or submitted by or on behalf of any party hereto in connection
with proceedings under or relating to any Antitrust Laws. Notwithstanding the
provisions of the immediately preceding sentence, it is expressly understood and
agreed that neither party shall have any obligation to litigate or contest any
administrative or judicial action or proceeding or any Order beyond December 31,
1999. Each of Corixa and Ribi shall use all reasonable efforts to take such
action as may be required to cause the expiration of the notice periods under
the HSR Act or other Antitrust Laws with respect to such transactions as
promptly as possible after the execution of this Agreement.
(c) Notwithstanding anything to the contrary in Section 5.2(a) or (b),
(i) neither Corixa nor any of it subsidiaries shall be required to divest any of
their respective businesses, product lines or assets, or to take or agree to
take any other action or agree to any limitation that could reasonably be
expected to have a Material Adverse Effect on Corixa after the Effective Time
and (ii) neither Ribi nor its Subsidiaries shall be required to divest any of
their respective businesses, product lines or assets, or to take or agree to
take any other action or agree to any limitation that could reasonably be
expected to have a Material Adverse Effect on Ribi.
(d) From the date of this Agreement until the earlier of the Effective
Time or the termination of this Agreement, each party shall promptly notify the
other party in writing of any
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pending or, to the knowledge of such party, threatened, action, proceeding or
investigation by any Governmental Entity or any other person (i) challenging or
seeking material damages in connection with this Agreement or the transactions
contemplated hereunder or (ii) seeking to restrain or prohibit the consummation
of the Merger or the transactions contemplated hereunder or otherwise limit the
right of Corixa or its subsidiaries to own or operate all or any portion of the
businesses or assets of Ribi or its Subsidiaries.
(e) Each of Corixa and Ribi shall give or cause to be given any required
notices to third parties, and use its reasonable best efforts to obtain all
consents, waivers and approvals from third parties (i) necessary, proper or
advisable to consummate the transactions contemplated hereunder, (ii) disclosed
or required to be disclosed in the Ribi Disclosure Schedule or the Corixa
Disclosure Schedule, or (iii) required to prevent a Material Adverse Effect on
Ribi or Corixa from occurring prior or after the Effective Time. In the event
that Corixa or Ribi shall fail to obtain any third party consent, waiver or
approval described in this Section 5.2(e), it shall use its reasonable best
efforts, and shall take any such actions reasonably requested by the other
party, to minimize any adverse effect upon Corixa and Ribi, their respective
subsidiaries and their respective businesses resulting (or which could
reasonably be expected to result after the Effective Time) from the failure to
obtain such consent, waiver or approval.
(f) Each of Corixa and Ribi will, and will cause their respective
subsidiaries to, take all reasonable actions necessary to comply promptly with
all legal requirements which may be imposed on them with respect to the
consummation of the transactions contemplated by this Agreement and will
promptly cooperate with and furnish information to any party hereto necessary in
connection with any such requirements imposed upon such other party in
connection with the consummation of the transactions contemplated by this
Agreement and will take all reasonable actions necessary to obtain (and will
cooperate with the other parties hereto in obtaining) any consent, approval,
order or authorization of, or any registration, declaration or filing with, any
Governmental Entity or other person, required to be obtained or made in
connection with the taking of any action contemplated by this Agreement.
5.3 ACCESS TO INFORMATION.
(a) Each of Corixa and Ribi shall afford the other and its accountants,
counsel and other representatives reasonable access during normal business hours
during the period prior to the Effective Time to (i) all of the other and its
subsidiaries' properties, books, contracts, commitments and records, and (ii)
all other information concerning the business (including without limitation the
status of the product development efforts), properties, results of operation and
personnel of the other and its subsidiaries as Corixa or Ribi may reasonably
request. Each of Corixa and Ribi agrees to provide to the other and its
accountants, counsel and other representatives copies of internal financial
statements promptly upon request.
(b) Subject to compliance with applicable law, from the date hereof
until the Effective Time, Ribi shall confer with Corixa on a regular and
frequent basis to report operational matters of materiality to Ribi and the
general status of ongoing operations to Ribi and its Subsidiaries.
(c) No information or knowledge obtained by Corixa or Ribi in any
investigation pursuant to this Section 5.3 shall affect or be deemed to modify
any representation or warranty of Ribi or Corixa, respectively, contained herein
or the conditions to the obligations of the parties to consummate the Merger. In
the event Corixa or Ribi obtains any such information that makes any
representation or warranty of the other party contained herein materially
untrue, then such party shall so notify the other party.
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5.4 CONFIDENTIALITY. The parties acknowledge that Corixa and Ribi have
previously executed a non-disclosure agreement dated as of December 8, 1998 (the
"Confidentiality Agreement"), which Confidentiality Agreement shall continue in
full force and effect in accordance with its terms.
5.5 PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT; OTHER FILINGS;
BOARD RECOMMENDATIONS.
(a) As promptly as practicable after the execution of this Agreement,
Ribi and Corixa will prepare and file with the SEC the Proxy
Statement/Prospectus and the Registration Statement in which the Proxy
Statement/Prospectus will be included as a prospectus. Each of Ribi and Corixa
will respond to any comments of the SEC and will use its respective commercially
reasonable efforts to have the Registration Statement declared effective under
the Securities Act as promptly as practicable after such filing. Each of Ribi
and Corixa will cause the Proxy Statement/Prospectus to be mailed to its
respective stockholders at the earliest practicable time after the Registration
Statement is declared effective by the SEC. As promptly as practicable after the
date of this Agreement, each of Ribi and Corixa will prepare and file any other
filings required to be filed by it under the Exchange Act, the Securities Act or
any other federal, foreign or Blue Sky or related laws relating to the Merger
and the transactions contemplated in this Agreement (the "Other Filings"). Each
of Ribi and Corixa will notify the other promptly upon the receipt of any
comments from the SEC or its staff or any other government officials and of any
request by the SEC or its staff or any other government officials for amendments
or supplements to the Registration Statement, the Proxy Statement/Prospectus or
any Other Filing or for additional information and will supply the other with
copies of all correspondence between such party or any of its representatives,
on the one hand, and the SEC, or its staff or any other government officials, on
the other hand, with respect to the Registration Statement, the Proxy
Statement/Prospectus, the Merger or any Other Filing. Each of Ribi and Corixa
will cause all documents that it is responsible for filing with the SEC or other
regulatory authorities under this Section 5.5(a) to comply in all material
respects with all applicable requirements of law and the rules and regulations
promulgated thereunder. Whenever any event occurs which is required to be set
forth in an amendment or supplement to the Proxy Statement/ Prospectus, the
Registration Statement or any Other Filing, Ribi or Corixa, as the case may be,
will promptly inform the other of such occurrence and cooperate in filing with
the SEC or its staff or any other government officials, and/or mailing to
stockholders of Ribi and Corixa, such amendment or supplement.
(b) The Proxy Statement/Prospectus will include the recommendation of
the Board of Directors of each of Ribi and Corixa in favor of adoption and
approval of this Agreement and approval of the Merger.
5.6 MEETING OF RIBI STOCKHOLDERS.
(a) Promptly after the date hereof, Ribi will take all action necessary
in accordance with the Delaware Law and its Certificate of Incorporation, any
applicable Certificate of Designation and Bylaws to convene the Ribi
Stockholders' Meeting to be held as promptly as practicable, and in any event
(to the extent permissible under applicable law) within thirty (30) days after
the declaration of effectiveness of the Registration Statement; provided,
however, that in the event Ribi's Board of Directors receives a Superior Offer
(as defined in Section 5.6(c)) during the last five (5) business days of such
thirty (30) day period, such thirty (30) day period shall be extended for seven
(7) calendar days from the time Ribi's Board of Directors receives such Superior
Offer (the "Ribi Stockholders' Meeting Period"), for the purpose of voting upon
this Agreement and the Merger or the issuance of shares of Corixa Common Stock
pursuant to the Merger, respectively. Ribi will use its commercially reasonable
efforts to solicit from its stockholders proxies in favor of the adoption and
approval of this Agreement and the approval of the Merger and will take all
other action reasonably necessary or advisable to secure the vote or consent of
its stockholders required by the rules of the
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Nasdaq National Market ("Nasdaq") and Delaware Law to obtain such approvals.
Notwithstanding anything to the contrary contained in this Agreement, Ribi may
adjourn or postpone the Ribi Stockholders' Meeting to the extent necessary to
ensure that any necessary supplement or amendment to the Prospectus/Proxy
Statement is provided to Ribi's stockholders in advance of a vote on the Merger
and this Agreement or, if as of the time for which Ribi Stockholders' Meeting is
originally scheduled (as set forth in the Prospectus/Proxy Statement) there are
insufficient shares of Ribi Common Stock represented (either in person or by
proxy) to constitute a quorum necessary to conduct the business of the Ribi
Stockholders' Meeting. Ribi shall ensure that the Ribi Stockholders' Meeting is
called, noticed, convened, held and conducted, and subject to Section 5.6(c)
that all proxies solicited by Ribi in connection with the Ribi Stockholders'
Meeting are solicited, in compliance with Delaware Law, its Certificate of
Incorporation, any applicable Certificate of Designation and Bylaws, the rules
of Nasdaq and all other applicable legal requirements. Ribi's obligation to
call, give notice of, convene and hold the Ribi Stockholders' Meeting in
accordance with this Section 5.6(a) shall not be limited to or otherwise
affected by the commencement, disclosure, announcement or submission to Ribi of
any Acquisition Proposal (as defined in Section 5.7(a)), or by any withdrawal,
amendment or modification of the recommendation of Ribi's Board of Directors
with respect to the Merger.
(b) Subject to Section 5.6(c): (i) Ribi's Board of Directors shall
unanimously recommend that Ribi's stockholders vote in favor of and adopt and
approve this Agreement and the Merger at the Ribi Stockholders' Meeting; (ii)
the Prospectus/Proxy Statement shall include a statement to the effect that
Ribi's Board of Directors has unanimously recommended that Ribi's stockholders
vote in favor of and adopt and approve this Agreement and approve the Merger at
the Ribi Stockholders' Meeting and (iii) neither Ribi's Board of Directors nor
any committee thereof shall withdraw, amend or modify, or propose or resolve to
withdraw, amend or modify in a manner adverse to Corixa, the unanimous
recommendation of Ribi's Board of Directors that Ribi's stockholders vote in
favor of and adopt and approve this Agreement and the Merger.
(c) Subject to Section 7, nothing in this Agreement shall prevent Ribi's
Board of Directors from withholding, withdrawing, amending or modifying its
unanimous recommendation in favor of the Merger if (i) a Superior Offer is made
to Ribi and is not withdrawn, (ii) neither Ribi nor any of its representatives
shall have violated any of the restrictions set forth in Section 5.7, and (iii)
Ribi's Board of Directors or any committee thereof concludes in good faith,
after consultation with its outside counsel, that, in light of such Superior
Offer, the withholding, withdrawal, amendment or modification of such
recommendation is required in order for Ribi's Board of Directors or any
committee thereof to comply with its fiduciary obligations to Ribi's
stockholders under applicable law. Subject to applicable laws, nothing contained
in this Section 5.6 shall limit Ribi's obligation to hold and convene the Ribi
Stockholders' Meeting (regardless of whether the unanimous recommendation of the
Ribi's Board of Directors shall have been withdrawn, amended or modified). For
purposes of this Agreement, the term "Superior Offer" shall mean an unsolicited,
bona fide written offer made by a third party to consummate any of the following
transactions: (1) a merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving Ribi
pursuant to which the stockholders of Ribi immediately preceding such
transaction hold less than fifty percent (50%) of the equity interest in the
surviving or resulting entity of such transaction, (2) a sale or other
disposition by Ribi of assets (excluding inventory and used equipment sold in
the ordinary course of business) representing in excess of fifty percent (50%)
of the fair market value of Ribi's business immediately prior to such sale, (3)
the acquisition by any person or group (including by way of a tender offer or an
exchange offer or issuance by Ribi), directly or indirectly, of beneficial
ownership or a right to acquire beneficial ownership of shares representing in
excess of fifty percent (50%) of the voting power of the then-outstanding shares
of capital stock of the Ribi or (4) any public announcement of a proposal, plan
or intention to do any of the foregoing or any agreement to
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engage in any of the foregoing, in each case on terms that Ribi's Board of
Directors determines, in its judgment consistent with applicable corporate law,
after consultation with the Ribi Financial Advisor, is reasonably likely to be
financially superior to the Ribi stockholders than the terms of the Merger.
5.7 NO SOLICITATION.
(a) From and after the date of this Agreement until the earlier of the
Effective Time or termination of this Agreement pursuant to Section 7, Ribi and
its Subsidiaries will not, nor will they authorize or permit any of their
respective officers, directors, affiliates or employees or any investment
banker, attorney or other advisor or representative retained by any of them to,
directly or indirectly, (i) solicit, initiate, encourage or induce the making,
submission or announcement of any Acquisition Proposal, (ii) participate in any
discussions or negotiations regarding, or furnish to any person any non-public
information with respect to, or take any other action to facilitate any
inquiries or the making of any proposal that constitutes or may reasonably be
expected to lead to, any Acquisition Proposal, (iii) subject to Section 5.6(c),
engage in discussions with any person with respect to any Acquisition Proposal,
except as to the existence of these provisions, (iv) subject to Section 5.6(c),
approve, endorse or recommend any Acquisition Proposal or (v) subject to Section
5.6(c), enter into any letter of intent or similar document or any contract
agreement or commitment contemplating or otherwise relating to any Acquisition
Transaction (as hereinafter defined); provided, however, that prior to the
approval of this Agreement by the required vote of the Ribi stockholders, this
Section 5.7(a) shall not prohibit Ribi from furnishing nonpublic information
regarding Ribi and its Subsidiaries to, entering into a confidentiality
agreement with or entering into discussions with, any person or group in
response to a Superior Offer submitted by such person or group (and not
withdrawn) if (1) neither Ribi nor any representative of Ribi and its
Subsidiaries shall have violated any of the restrictions set forth in this
Section 5.7, (2) Ribi's Board of Directors concludes in good faith, after
consultation with its outside legal counsel, that such action is required in
order for Ribi's Board of Directors to comply with its fiduciary obligations to
Ribi's stockholders under applicable law, (3) prior to furnishing any such
nonpublic information to, and as promptly as reasonably practicable after having
any discussions with, such person or group, Ribi gives Corixa written notice of
the identity of such person or group and of Ribi's intention to furnish
nonpublic information to, or enter into discussions with, such person or group
and Ribi receives from such person or group an executed confidentiality
agreement containing customary limitations on the use and disclosure of all
nonpublic written and oral information furnished to such person or group by or
on behalf of Ribi, and (4) contemporaneously with furnishing any such nonpublic
information to such person or group, Ribi furnishes such nonpublic information
to Corixa (to the extent such nonpublic information has not been previously
furnished by Ribi to Corixa); and provided further, however, that upon
compliance with clauses (1) -- (4) and Ribi's Board of Directors determination
to accept a Superior Offer, all Ribi Voting Agreements (as defined in Section
5.12) shall terminate, and Ribi shall be entitled to enter into an agreement
with such third party concerning such Superior Proposal, provided that Ribi has
made payment in full to Corixa of the Termination Fee subject and pursuant to
Section 7.3(b). Ribi and its Subsidiaries will immediately cease any and all
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any Acquisition Proposal. Without limiting the
foregoing, it is understood that any violation of the restrictions set forth in
the preceding two sentences by any officer, director or employee of Ribi or any
of its Subsidiaries or any investment banker, attorney, the Ribi Financial
Advisor or other advisor or representative of Ribi or any of its Subsidiaries
shall be deemed to be a material breach of this Section 5.7 by Ribi. In addition
to the foregoing, Ribi shall provide Corixa with at least the same notice as
provided to the members of Ribi's Board of Directors of any meeting of Ribi's
Board of Directors at which Ribi's Board of Directors is reasonably expected to
consider a Superior Offer or to recommend a Superior Offer to its stockholders
and together with such notice a copy of any proposed documentation relating to
such Superior Offer.
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For purposes of this Agreement, "Acquisition Proposal" shall mean any offer
or proposal (other than an offer or proposal by Corixa) relating to any
Acquisition Transaction. For the purposes of this Agreement, "Acquisition
Transaction" shall mean any transaction or series of related transactions other
than the transactions contemplated in this Agreement involving: (A) any
acquisition or purchase from Ribi by any person or "group" (as defined under
Section 13(d) of the Exchange Act and the rules and regulations thereunder) of
more than a fifteen percent (15%) interest in the total outstanding voting
securities of Ribi or any of its Subsidiaries or any tender offer or exchange
offer that if consummated would result in any person or "group" (as defined
under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) beneficially owning fifteen percent (15%) or more of the total
outstanding voting securities of Ribi or any of its Subsidiaries or any merger,
consolidation, business combination or similar transaction involving Ribi
pursuant to which the stockholders of Ribi immediately preceding such
transaction hold less than eighty-five percent (85%) of the equity interests in
the surviving or resulting entity of such transaction, (B) any sale, lease
(other than in the ordinary course of business), exchange, transfer, license
(other than in the ordinary course of business), acquisition or disposition of
more than fifty percent (50%) of the assets of Ribi, or (C) any liquidation or
dissolution of Ribi.
(b) In addition to the obligations of Ribi set forth in paragraph (a) of
this Section 5.7, Ribi as promptly as practicable shall advise Corixa orally and
in writing of any request for nonpublic information which Ribi reasonably
believes would lead to an Acquisition Proposal or of any Acquisition Proposal,
or any inquiry with respect to or which Ribi reasonably should believe would
lead to any Acquisition Proposal, the material terms and conditions of such
request, Acquisition Proposal or inquiry and the identity of the person or group
making any such request, Acquisition Proposal or inquiry. Ribi will keep Corixa
informed in all material respects of the status and details (including material
amendments or proposed amendments) of any such request, Acquisition Proposal or
inquiry.
5.8 MEETING OF CORIXA STOCKHOLDERS. Promptly after the date hereof, Corixa
will take all actions necessary in accordance with the Delaware Law and its
Certificate of Incorporation, any applicable Certificate of Designation and
Bylaws to convene the Corixa Stockholders' Meeting to be held as promptly as
practicable, and in any event (the extent permissible under applicable law)
within thirty (30) days after the declaration of effectiveness of the
Registration Statement. Corixa will use its commercially reasonable efforts to
solicit from it stockholders proxies in favor of the adoption and approval of
this Agreement and the approval of the Merger and will take all other action
reasonably necessary or advisable or secure the vote or consent of its
stockholders required by the rules of Nasdaq and Delaware Law to obtain such
approvals. Notwithstanding anything to the contrary contained in this Agreement,
Corixa may adjourn or postpone the Corixa Stockholders' Meeting to the extent
necessary to ensure that any necessary supplement or amendment to the
Prospectus/Proxy Statement is provided to the Corixa stockholders in advance of
a vote on the Merger and this Agreement or, if as of the time for which the
Corixa Stockholders' Meeting is originally scheduled (as set forth in the
Prospectus/Proxy Statement) there are insufficient shares of Corixa Common Stock
or Series A Preferred Stock represented (either in person or by proxy) to
constitute a quorum necessary to conduct the business of the Corixa
Stockholders' Meeting. Corixa shall ensure that the Corixa Stockholders' Meeting
is called, noticed, convened, held and conducted, and subject to Section 5.6(c)
that all proxies solicited by Corixa in connection with the Corixa Stockholders'
Meeting are solicited, in compliance with Delaware Law, Certificate of
Incorporation, Certificate of Designation and Bylaws, the rules of Nasdaq and
all other applicable legal requirements.
5.9 PUBLIC DISCLOSURE. Unless otherwise permitted by this Agreement,
Corixa and Ribi shall consult with each other before issuing any press release
or otherwise making any public statement or making any other public (or
non-confidential) disclosure (whether or not in response to an inquiry)
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regarding the terms of this Agreement and the transactions contemplated hereby,
and neither shall issue any such press release or make any such statement or
disclosure without the prior written approval of the other (which approval shall
not be unreasonably withheld), except as may be required by law or by
obligations pursuant to any listing agreement with any national securities
exchange or with the NASD.
5.10 STATE STATUTES. If any state takeover law shall become applicable to
the transactions contemplated by this Agreement, Corixa and its Board of
Directors or Ribi and its Board of Directors, as the case may be, shall use
their reasonable best efforts to grant such approvals and take such actions as
are necessary so that the transactions contemplated by this Agreement may be
consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effects of such state takeover law on
the transactions contemplated by this Agreement.
5.11 LISTING OF ADDITIONAL SHARES. Prior to the Effective Time, Corixa
shall file with Nasdaq a Notification Form for Listing of Additional Shares with
respect to the shares of Corixa Common Stock issuable upon conversion of the
Ribi Common Stock in the Merger and upon exercise of the Assumed Options, the
Ivy Options and Ribi Warrants assumed by Corixa.
5.12 RIBI VOTING AGREEMENTS. Set forth in Section 5.12 of the Ribi
Disclosure Schedule is a list of those persons who may be deemed to be, in
Ribi's reasonable judgment, affiliates of Ribi within the meaning of Rule 145
promulgated under the Securities Act (each a "Ribi Affiliate"). Ribi will
provide Corixa with such information and documents as Corixa reasonably requests
for purposes of reviewing such list. Ribi will use its reasonable best efforts
to deliver or cause to be delivered to Corixa, as promptly as practicable on or
immediately following the date hereof, from each Ribi Affiliate and from
SmithKline Beecham an executed voting agreement in substantially the form
attached hereto as Exhibit B (the "Voting Agreement"), which will be in full
force and effect as of the Effective Time. Additionally, Ribi will use
reasonable efforts to deliver or cause to be delivered to Corixa, as promptly as
practicable an executed Voting Agreement from Rose Glen Capital Management LP
with respect to any shares of Ribi Common Stock as of the record date for the
Ribi Stockholders' Meeting, which will be in full force and effect until the
Ribi Stockholders Meeting. Pursuant to the Voting Agreements, all of Ribi's
Affiliates and SmithKline Beecham have also agreed not to sell shares of Corixa
Common Stock, or take other actions as set forth therein during the ninety (90)
day period following the Effective Time. Corixa will be entitled to place
appropriate legends on the certificates evidencing any Corixa Common Stock to be
received by a Ribi Affiliate or SmithKline Beecham pursuant to the terms of this
Agreement, and to issue appropriate stop transfer instructions to the transfer
agent for the Corixa Common Stock, consistent with the terms of the Voting
Agreement.
5.13 IRREVOCABLE PROXIES. Ribi shall use its reasonable best efforts, on
behalf of Corixa and pursuant to the request of Corixa, to cause each Ribi
Affiliate and SmithKline Beecham to execute and deliver to Corixa an Irrevocable
Proxy substantially in the form of Exhibit C attached hereto prior to the time
of Ribi Stockholders' Meeting.
5.14 INDEMNIFICATION. From and after the Effective Time, Corixa will
fulfill and honor in all respects the obligations of Ribi pursuant to any
indemnification agreements between Ribi and its directors and officers as of the
Effective Time (the "Indemnified Parties") and any indemnification provisions
under Ribi's Certificate of Incorporation, any applicable Certificate of
Designation or Bylaws as in effect on the date hereof. The Certificate of
Incorporation , any applicable Certificate of Designation and Bylaws of the
Surviving Corporation will contain provisions with respect to exculpation and
indemnification that are at least as favorable to the Indemnified Parties as
those contained in the Certificate of Incorporation, any applicable Certificate
of Designation and Bylaws of Ribi as in effect on the date hereof, which
provisions will not be amended, repealed or otherwise
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modified for a period of three (3) years from the Effective Time in any manner
that would adversely affect the rights thereunder of individuals who,
immediately prior to the Effective Time, were directors, officers, employees or
agents of Ribi, unless such modification is required by law.
(a) For a period of three (3) years after the Effective Time, Corixa
will use its commercially reasonable efforts to maintain in effect, if
available, directors' and officers' liability insurance covering those persons
who are covered by Ribi's directors' and officers' liability insurance policy as
of the date hereof on terms comparable to those applicable to the current
directors and officers of Ribi; provided, however, that in no event will Corixa
be required to expend in excess of one hundred twenty-five percent (125%) of the
annual premium currently paid by Ribi for such coverage (or such coverage as is
available for such one hundred twenty-five percent (125%) of such annual
premium).
5.15 FILING OF FORM S-8. As soon as practicable but in no event later than
fifteen (15) calendar days following the Effective Time, Corixa shall file a
registration statement on Form S-8 (or any successor or other appropriate form)
with respect to the shares of Corixa Common Stock subject to Assumed Options and
the Ivy Options pursuant to Section 1.6(c) and shall use its reasonable efforts
to maintain the effectiveness of such registration statement (and maintain the
current status of the prospectus or prospectuses contained therein) for so long
as such Assumed Options remain outstanding. The parties specifically contemplate
that such Form S-8 may be either a new Form S-8 or an amendment to an existing
Form S-8, at Corixa's sole discretion.
5.16 REDEMPTION OF SERIES A STOCK. Ribi agrees that prior to the Closing
and as soon as possible following (i) the adoption and approval of this
Agreement and approval of the Merger by the stockholders of Ribi and Corixa,
(ii) Corixa's affirmation to Ribi that all closing conditions set forth in
Section 6.3 (except Section 6.3 (h)) have been met or waived, and (iii) Ribi's
affirmation to Corixa that all closing conditions set forth in Section 6.2 have
been met or waived, to the extent there remain outstanding shares of Series A
Stock, Ribi shall redeem all such outstanding shares of its Series A Stock in
the manner set forth in this Section 5.16. Ribi agrees to do and take all action
necessary to effect such redemption, including without limitation effecting such
redemption under Section V.C of the Certificate of Designation of the Rights,
Preferences and Privileges of the Series A Stock of Ribi (the "Optional
Redemption"), at a price equal to the amount required under such Section V.C to
fully effect such redemption (the "Optional Redemption Amount"). As soon as
possible following the satisfaction of the criteria set forth in the first
sentence of this Section 5.16, Ribi shall deliver to each holder of Series A
Stock a notice of redemption pursuant to such Section V.C. which shall provide
that such redemption shall be effected in ten (10) trading days following the
date such redemption notice is provided. From and after the date of such
redemption, all rights of the holders of shares of Series A Stock shall cease
with respect to such shares, and such shares shall not thereafter be transferred
on the books of Ribi or be deemed outstanding for any purpose whatsoever. All
documents with respect to such redemption shall be in form and substance
reasonably acceptable to counsel to Corixa.
5.17 PROMISSORY NOTE. In the event Section 5.16 applies, Ribi agrees that
immediately prior to the date the Optional Redemption is effected, Ribi shall
issue, sell and deliver to Corixa or, in Corixa's sole discretion, a third party
investor(s) designated by Corixa (the "Investor(s)") a promissory note in an
aggregate principal amount equal to the product of (i) 0.88908 multiplied by
(ii) the Optional Redemption Amount (the "Note"). In the event such Note is
issued to the Investor(s), such Note will, at Corixa's sole option, (x) be
payable in cash or (y) be convertible into shares of Corixa Common Stock
following the Effective Time, in each case on the terms and conditions set forth
in such Note. The Note shall be in form and substance reasonably acceptable to
counsel for Corixa. The payment of the remaining amount of the Optional
Redemption Amount,
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which shall be equal to product of (A) 0.11092 multiplied by (B) the Optional
Redemption Amount, shall be made by Ribi.
5.18 CONSULTING AGREEMENT. Concurrently with the execution of this
Agreement, Corixa and Robert Ivy have entered into a consulting agreement in the
form attached hereto as Exhibit D (the "Ivy Consulting Agreement") pursuant to
which Mr. Ivy will act as a consultant to Corixa for a period of two (2) years
following the Effective Time. The Ivy Consulting Agreement will be effective
immediately following the Effective Time.
5.19 CONTINUED EMPLOYMENT. As soon as possible following the Effective
Time, Corixa will send an offer letter to each of the employees of Ribi
designated in a letter provided by Ribi to Corixa. Ribi agrees that Ribi will
use its reasonable best efforts to cause such employees of Ribi to sign the
offer letter from Corixa following the Merger. Additionally, as soon as possible
following the Effective Time, Corixa will send a retention letter to each of the
Ribi employees designated in a letter provided by Ribi to Corixa. Ribi agrees
that Ribi will use its reasonable best efforts to cause such employees of Ribi
to sign the retention letter from Corixa following the Merger. Corixa further
agrees that as soon as possible following the Effective Time, it will use its
reasonable best efforts to enter into employment agreements with the individuals
designated in a letter provided by Ribi to Corixa, and Ribi will use reasonable
best efforts to cause such individuals to enter into such employment agreements.
Corixa agrees that it will make available to all Ribi employees who become
employees of Corixa following the Merger employee benefits that are comparable
to the employee benefits then offered to Corixa employees of similar position
and responsibilities, provided that such benefits are consistent with the
benefits currently offered by Ribi to its employees and applicable state law.
5.20 FACILITY MAINTENANCE. Corixa acknowledges that Corixa currently
intends to continue to operate the manufacturing/quality assurance/quality
control and development facility after the Effective Time that is currently
operated by Ribi and located in Hamilton, Montana, and to honor the terms of
Ribi's written contractual commitments with respect to such facility, in each
case in a manner that is consistent with commercially reasonable and prudent
business practices as determined by Corixa and subject to the discretion of
Corixa's Board of Directors.
5.21 D & O INSURANCE. Ribi has directors' and officers' liability
insurance covering such persons, in such amounts and on such terms and
conditions, as have been mutually agreed upon by Ribi and Corixa, and such
insurance policy(ies) are in full force and effect.
5.22 1986 PLAN AND 1996 PLAN. Between the date of this Agreement and the
Effective Time, Ribi shall take all steps necessary to effectuate each of the
following in connection with the 1986 Plan and the 1996 Plan (collectively, the
"Employee Option Plans") (including if appropriate amending the terms of the
Employee Option Plans and any agreements issued thereunder and obtaining
stockholder and optionholder consent to any such amendments):
(a) With respect to options and other awards issued under the Employee
Option Plans to persons who are not outside directors of Ribi:
(i) Either
(A) Waive acceleration of vesting and exercisability of awards
outstanding under the Employee Option Plans so that the vesting, exercisability
and termination date of such awards do not accelerate in connection with the
Merger but continue on the terms related to continued employment set forth in
the individual option agreements, or
(B) Allow acceleration of vesting and exercisability of awards
outstanding under the Employee Option Plans so that the vesting and
exercisability of such awards accelerates in full in
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connection with the Merger as provided for in the Employee Option Plans and
provide that all such accelerated awards terminate on or before the Effective
Time;
(ii) Permit awards outstanding under the Employee Option Plans for
which subsection (a)(i)(A) above applies to be assumed by Corixa at the
Effective Time;
(iii) Permit all holders of awards outstanding under the Employee
Option Plans for which subsection (a)(i)(A) above applies ninety (90) days to
exercise such awards following termination of their employment with the Ribi or
any successor to Ribi; and
(iv) Provide that awards outstanding under the Employee Option Plans
for which subsection (a)(i)(A) above applies will be treated upon a change of
control following the Effective Time in a manner consistent with the treatment
of awards outstanding under the Corixa Stock Option Plan.
(b) With respect to options issued under Section 7.8 of the Employee
Option Plans to persons who are outside directors of Ribi:
(i) Permit such options to be assumed by Corixa at the Effective
Time;
(ii) Permit holders of such options a period of time to exercise each
such option following termination of their services as directors of Ribi equal
to the remaining term of the option immediately prior to such termination; and
(iii) Provide that such options will be treated upon a change of
control following the Effective Time in a manner consistent with the treatment
of awards outstanding under the Corixa Stock Option Plan.
5.23 DIRECTOR PLAN/IVY OPTIONS. Between the date of this Agreement and the
Effective Time, Ribi shall take all steps necessary to effectuate each of the
following in connection with the Director Plan and the Ivy Options (including if
appropriate amending the terms of the Director Plan, any agreements issued
thereunder and the Ivy Options, and obtaining stockholder and optionholder
consent to any such amendments):
(a) Permit awards outstanding under the Director Plan and the Ivy
Options to be assumed by Corixa at the Effective Time;
(b) Permit all holders of awards outstanding under the Director Plan a
period of time to exercise their options following termination of their service
as directors of Ribi equal to the remaining term of the option immediately prior
to such termination; and
(c) Provide that awards outstanding under the Director Plan and the Ivy
Options will be treated upon a change of control following the Effective Time in
a manner consistent with the treatment of awards outstanding under the Corixa
Stock Option Plan.
SECTION SIX
6. CONDITIONS TO THE MERGER.
6.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER. The
respective obligations of each party to this Agreement to consummate and effect
this Agreement and the transactions contemplated hereby shall be subject to the
satisfaction (i) prior to Ribi's issuance of a redemption notice pursuant to
Section 5.16 of this Agreement, if Ribi is required to issue such redemption
notice, or (ii) on or prior to the Effective Time if Ribi is not required to
issue such redemption notice, of
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each of the following conditions, any of which may be waived, in writing, by
agreement of all the parties hereto:
(a) STOCKHOLDER APPROVAL. This Agreement shall have been duly approved
and adopted, and the Merger shall have been duly approved, by the requisite vote
under applicable law, by the stockholders of Ribi and Corixa.
(b) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal or regulatory restraint or prohibition
preventing the consummation of the Merger shall be in effect, nor shall any
proceeding brought by an administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, seeking any of
the foregoing be pending; nor shall there be any action taken, or any statute,
rule, regulation or order enacted, entered, enforced or deemed applicable to the
Merger, which makes the consummation of the Merger illegal. In the event an
injunction or other order shall have been issued, each party agrees to use its
reasonable diligent efforts to have such injunction or other order lifted.
(c) GOVERNMENTAL APPROVAL, REGISTRATION STATEMENT EFFECTIVE. Corixa and
Ribi and their respective subsidiaries shall have timely obtained from each
Governmental Entity all approvals, waivers and consents, if any, necessary for
consummation of or in connection with the Merger and the several transactions
contemplated hereby, including, without limitation, such approvals, waivers and
consents as may be required under the HSR Act, the Securities Act and any state
securities laws. The SEC shall have declared the Registration Statement
effective. No stop order suspending the effectiveness of the Registration
Statement or any part thereof shall have been issued, and no proceeding for that
purpose, and no similar proceeding in respect to the Proxy Statement/Prospectus,
shall have been initiated or threatened in writing by the SEC.
(d) TAX OPINION. Corixa and Ribi shall have received written opinions of
Corixa's legal counsel and Ribi's legal counsel, respectively, dated on or about
the date of, and referred to in, the Proxy Statement/Prospectus as first mailed
to stockholders of Corixa and Ribi and to the effect that the Merger will
constitute a reorganization within the meaning of Section 368 of the Code, and
such opinions shall not have been withdrawn. In rendering such opinions, counsel
shall be entitled to rely upon, among other things, reasonable assumptions as
well as representations of Corixa and Ribi and certain stockholders of Ribi.
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF RIBI. The obligations of Ribi
to consummate and effect this Agreement and the transactions contemplated hereby
shall be subject to the satisfaction (i) prior to Ribi's issuance of a
redemption notice pursuant to Section 5.16 of this Agreement, if Ribi is
required to issue such redemption notice, or (ii) on or prior to the Effective
Time if Ribi is not required to issue such redemption notice, of each of the
following conditions, any of which may be waived, in writing, by Ribi:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. (i) Each of the
representations and warranties of Corixa in this Agreement, except for those set
forth in Sections 3.2, 3.3 and 3.11, shall have been true and correct in all
material respects as of the date of this Agreement, (ii) each of the
representations and warranties of Corixa set forth in Sections 3.2, 3.3 and 3.11
shall have been true and correct as of the date of this Agreement, (iii) each of
the representations and warranties of Corixa in this Agreement that is expressly
qualified by a reference to materiality shall be true in all respects as so
qualified, and each of the representations and warranties of Corixa in this
Agreement that is not so qualified shall be true and correct in all material
respects, on and as of the Effective Time as though such representation or
warranty had been made on and as of such time (except that those representations
and warranties which address matters only as of a particular date shall remain
true and correct as of such date), and (iv) Corixa shall have performed and
complied in all material
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respects with all covenants, obligations and conditions of this Agreement
required to be performed and complied with by Corixa as of the Effective Time.
(b) CERTIFICATES OF CORIXA.
(i) COMPLIANCE CERTIFICATE OF CORIXA. Ribi shall have been provided
with a certificate executed on behalf of Corixa by its President or its Chief
Financial Officer to the effect that, as of the Effective Time, each of the
conditions set forth in Section 6.1(a) with respect to Corixa and in Sections
6.2(a) and (d) has been satisfied.
(ii) CERTIFICATE OF SECRETARY OF CORIXA. Ribi shall have been
provided with a certificate executed by the Secretary or Assistant Secretary of
Corixa certifying the incumbency of the officers of Corixa executing this
Agreement and all agreements and documents contemplated hereby.
(c) LEGAL OPINION. Ribi shall have received a legal opinion from
Corixa's legal counsel substantially in the form of Exhibit E hereto.
(d) NO MATERIAL ADVERSE CHANGES. There shall not have occurred any
Material Adverse Effect with respect to Corixa and its subsidiaries since the
date of this Agreement.
(e) FAIRNESS OPINION. Ribi shall have received an opinion from Ribi's
Financial Advisor stating that in the opinion of the Ribi Financial Advisor, the
terms of the Merger are fair to the stockholders of Ribi from a financial point
of view.
(f) GOOD STANDING. Ribi shall have received a certificate or
certificates of the Secretary of State of the State of Delaware and the
applicable franchise tax authority of such state, certifying as of a date no
more than three (3) business days prior to the Effective Time, that Corixa has
filed all required reports, paid all required fees and taxes and is, as of such
date, in good standing and authorized to transact business as a domestic
corporation.
(g) LISTING OF ADDITIONAL SHARES. The filing with Nasdaq of a
Notification Form for Listing of Additional Shares with respect to the shares of
Corixa Common Stock issuable upon conversion of the Ribi Common Stock in the
Merger, upon exercise of the options under the Ribi Stock Option Plans and the
Ivy Options assumed by Corixa and upon exercise of the Ribi Warrants assumed by
Corixa shall have been made.
(h) THIRD PARTY CONSENTS. Ribi shall have been furnished with evidence
satisfactory to it that Corixa has obtained those consents, waivers, approval or
authorization of those Governmental Entities and third parties whose consent or
approval are required in connection with the Merger as set forth in Sections
5.2(a) and (e).
6.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF CORIXA. The obligations of
Corixa to consummate and effect this Agreement and the transactions contemplated
hereby shall be subject to the satisfaction (i) prior to Ribi's issuance of a
redemption notice pursuant to Section 5.16 of this Agreement if Ribi is required
to issue such redemption notice, of the following conditions except for
satisfaction of the conditions set forth in Section 6.3(h), or (ii) on or prior
to the Effective Time of Section 6.3(h) and, if Ribi is not required to issue
such redemption notice, of each of the other conditions set forth in this
Section 6.3, any of which may be waived, in writing, by Corixa:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. (i) Each of the
representations and warranties of Ribi in this Agreement, except for those set
forth in Sections 2.3, 2.4, 2.11(d), 2.13, 2.14, 2.27 and 2.30, shall have been
true and correct in all material respects as of the date of this Agreement, (ii)
each of the representations and warranties of Ribi set forth in Sections 2.3,
2.4, 2.11(d), 2.13, 2.14, 2.27 and 2.30 shall have been true and correct as of
the date of this Agreement, (iii) each of the representations and warranties of
Ribi in this Agreement that is expressly qualified
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by a reference to materiality shall be true in all respects as so qualified, and
each of the representations and warranties of Ribi in this Agreement that is not
so qualified shall be true and correct in all material respects, on and as of
the Effective Time as though such representation or warranty had been made on
and as of such time (except that those representations and warranties which
address matters only as of a particular date shall remain true and correct as of
such date), and (iv) Ribi shall have performed and complied in all material
respects with all covenants, obligations and conditions of this Agreement
required to be performed and complied with by Ribi as of the Effective Time.
(b) NO MATERIAL ADVERSE CHANGES. There shall not have occurred any
Material Adverse Effect with respect to Ribi and its Subsidiaries since the date
of this Agreement.
(c) CERTIFICATES OF RIBI.
(i) COMPLIANCE CERTIFICATE OF RIBI. Corixa shall have been provided
with a certificate executed on behalf of Ribi by its President or its Chief
Financial Officer to the effect that, as of the Effective Time, each of the
conditions set forth in Section 6.1(a) and with respect to Ribi, Sections 6.3(a)
and (b) has been satisfied.
(ii) CERTIFICATE OF SECRETARY OF RIBI. Corixa shall have been
provided with a certificate executed by the Secretary of Ribi certifying:
(A) The Certificate of Incorporation, any applicable Certificate
of Designation and Bylaws of Ribi, as in effect immediately prior to the
Effective Time, including all amendments thereto; and
(B) the incumbency of the officers of Ribi executing this
Agreement and all agreements and documents contemplated hereby.
(d) THIRD PARTY CONSENTS. Corixa shall have been furnished with evidence
satisfactory to it that Ribi has obtained those consents, waivers, approvals or
authorizations of those Governmental Entities and third parties whose consent or
approval are required in connection with the Merger as set forth in Sections
5.2(a) and (e).
(e) INJUNCTIONS OR RESTRAINTS ON MERGER AND CONDUCT OF BUSINESS. No
temporary restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal or regulatory
restraint provision limiting or restricting Corixa's conduct or operation of the
business of Ribi and its Subsidiaries following the Merger shall be in effect,
nor shall any proceeding brought by an administrative agency or commission or
other Governmental Entity, domestic or foreign, seeking the foregoing be
pending.
(f) LEGAL OPINION. Corixa shall have received a legal opinion from
Ribi's legal counsel, in substantially the form of Exhibit F.
(g) VOTING AGREEMENTS. Corixa shall have received from each of the
Affiliates of Ribi an executed Voting Agreement in substantially the form
attached hereto as Exhibit B.
(h) REDEMPTION OF SERIES A STOCK. Prior to the Effective Time, all of
Ribi's outstanding Series A Stock shall have been redeemed by Ribi in accordance
with Section 5.16, or shall have been converted into Ribi Common Stock.
(i) FAIRNESS OPINION. Corixa shall have received an opinion from its
financial advisor, Pacific Growth Equities, Inc., stating that in the opinion of
such financial advisor, the terms of the Merger are fair to the stockholders of
Corixa from a financial point of view.
(j) GOOD STANDING. Corixa shall have received a certificate or
certificates of the Secretary of State of the State of Delaware and the
applicable franchise tax authority of such state, certifying
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as of a date no more than three (3) business days prior to the Effective Time,
that Ribi has filed all required reports, paid all required fees and taxes and
is, as of such date, in good standing and authorized to transact business as a
domestic corporation.
(k) D & O INSURANCE. Ribi's directors' and officers' liability insurance
shall be in full force and effect.
(l) TERMINATION OF RIBI 401(K) PLAN. The Board of Directors of Ribi
shall have adopted a resolution terminating Ribi's 401(k) Plan effective as of a
date prior to Closing.
(m) AMENDMENT OF RIBI STOCK OPTION PLANS. Each of the Board of Directors
of Ribi and the stockholders of Ribi shall have taken all steps necessary to
effectuate the transactions contemplated by Sections 5.22 and 5.23 above.
SECTION SEVEN
7. TERMINATION, AMENDMENT AND WAIVER.
7.1 TERMINATION. This Agreement may be terminated at any time prior to the
Effective Time, whether before or after the requisite approvals of the
stockholders of Ribi or Corixa:
(a) by mutual written consent duly authorized by the Boards of Directors
of Corixa and Ribi;
(b) by either Ribi or Corixa if the Merger shall not have been
consummated by September 15, 1999 (or November 1, 1999, in the event that the
SEC has notified the parties that the Proxy Statement/Prospectus will be
reviewed by the SEC for any reason); provided, however, that the right to
terminate this Agreement under this Section 7.1(b) shall not be available to any
party whose action or failure to act has been a principal cause of or resulted
in the failure of the Merger to occur on or before such date and such action or
failure to act constitutes a breach of this Agreement;
(c) by either Ribi or Corixa if a Governmental Entity shall have issued
an order, decree or ruling or taken any other action, in any case having the
effect of permanently restraining, enjoining or otherwise prohibiting the
Merger, which order, decree, ruling or other action is final and nonappealable;
(d) by either Ribi or Corixa if the required approval of the
stockholders of Ribi or Corixa contemplated in this Agreement shall not have
been obtained by reason of the failure to obtain the required vote at a meeting
of Ribi stockholders or Corixa stockholders, respectively, duly convened
therefor or at any adjournment thereof (provided that the right to terminate
this Agreement under this Section 7.1(d) shall not be available to a party where
the failure to obtain stockholder approval of such party shall have been caused
by the action or failure to act of such party and such action or failure to act
constitutes a breach by such party of this Agreement);
(e) by Corixa or Ribi (at any time prior to the adoption and approval of
this Agreement and the approval of the Merger by the required vote of the
stockholders of Ribi) if a Triggering Event (as defined below) shall have
occurred;
(f) by Corixa (at any time prior to the adoption and approval of this
Agreement and the Merger by the required vote of the stockholders of Ribi) if a
Corixa Termination Event (as defined below) shall have occurred;
(g) by Ribi (at any time prior to the adoption and approval of this
Agreement and the Merger by the required vote of the stockholders of Corixa) if
a Ribi Termination Event (as defined below) shall have occurred;
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(h) by Ribi, upon a breach of any representation, warranty, covenant or
agreement on the part of Corixa set forth in this Agreement, or if any
representation or warranty of Corixa shall have become untrue, in either case
such that any condition set forth in Section 6.2(a) would not be satisfied as of
the time of such breach or as of the time such representation or warranty shall
have become untrue; provided, however, that if such inaccuracy in Corixa's
representations and warranties or breach by Corixa is curable by Corixa through
the exercise of its commercially reasonable efforts, then Ribi may not terminate
this Agreement under this Section 7.1(h) for fifteen (15) days after delivery of
written notice from Ribi to Corixa of such breach; and provided further,
however, Corixa continues to exercise commercially reasonable efforts to cure
such breach (it being understood that Ribi may not terminate this Agreement
pursuant to this Section 7.1(h) if it shall have materially breached this
Agreement or if such breach by Corixa is cured during such fifteen (15) day
period); or
(i) by Corixa, upon a breach of any representation, warranty, covenant
or agreement on the part of Ribi set forth in this Agreement, or if any
representation or warranty of Ribi shall have become untrue, in either case such
that any condition set forth in Section 6.3(a) would not be satisfied as of the
time of such breach or as of the time such representation or warranty shall have
become untrue; provided, however, that if such inaccuracy in Ribi's
representations and warranties or breach by Ribi is curable by Ribi through the
exercise of its commercially reasonable efforts, then Corixa may not terminate
this Agreement under this Section 7.1(i) for fifteen (15) days after delivery of
written notice from Corixa to Ribi of such breach; and provided further,
however, Ribi continues to exercise commercially reasonable efforts to cure such
breach (it being understood that Corixa may not terminate this Agreement
pursuant to this Section 7.1(i) if it shall have materially breached this
Agreement or if such breach by Ribi is cured during such fifteen (15) day
period).
For the purposes of this Agreement, (i) a "Corixa Termination Event" shall
be deemed to occur if Ribi shall not have used commercially reasonable efforts
to hold the Ribi Stockholders' Meeting as promptly as practicable and in any
event within the later of (A) the Ribi Stockholders' Meeting Period or (B)
fifteen (15) days after any amendments or supplement to the Proxy Statement/
Prospectus are mailed to stockholders of Ribi, and (ii) a "Ribi Termination
Event" shall be deemed to occur if Corixa shall not have used commercially
reasonable efforts to hold the Corixa Stockholders' Meeting as promptly as
practicable and in any event within fifteen (15) days after any amendments or
supplements to the Proxy Statement/Prospectus are mailed to stockholders of
Corixa.
For the purposes of this Agreement, a "Triggering Event" shall be deemed to
have occurred if: (i) Ribi's Board of Directors or any committee thereof shall
for any reason have withdrawn or shall have amended or modified in a manner
adverse to Corixa its unanimous recommendation in favor of the adoption and
approval of this Agreement or the approval of the Merger, (ii) Ribi shall have
failed to include in the Proxy Statement/Prospectus the unanimous recommendation
of Ribi's Board of Directors in favor of the adoption and approval of the
Agreement and the approval of the Merger, (iii) Ribi's Board of Directors fails
to reaffirm its unanimous recommendation in favor of the adoption and approval
of the Agreement and the approval of the Merger within seven (7) calendar days
after Corixa requests in writing that such recommendation be reaffirmed at any
time following the public announcement of any Superior Offer, (iv) Ribi's Board
of Directors or any committee thereof shall have approved or publicly
recommended any Superior Offer, (v) Ribi shall have entered into any letter of
intent or similar document or any agreement, contract or commitment accepting
any Superior Offer or (vi) a tender or exchange offer relating to securities of
Ribi shall have been commenced by a Person unaffiliated with Corixa and Ribi
shall not have sent to its securityholders pursuant to Rule 14e-2 promulgated
under the Securities Act, within ten (10) business days after such tender or
exchange offer is first published sent or given, a statement disclosing that
Ribi recommends rejection of such tender or exchange offer.
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7.2 NOTICE OF TERMINATION, EFFECT OF TERMINATION. Any termination of this
Agreement under Section 7.1 above will be effective immediately upon the
delivery of written notice of the terminating party to the other parties hereto.
In the event of the termination of this Agreement as provided in Section 7.1,
this Agreement shall be of no further force or effect, except (i) as set forth
in this Section 7.2, Section 7.3 and Section 8, each of which shall survive the
termination of this Agreement and (ii) nothing herein shall relieve any party
from liability for any willful breach of this Agreement. No termination of this
Agreement shall affect the obligations of the parties contained in the
Confidentiality Agreement, all of which obligations shall survive termination of
this Agreement in accordance with their terms.
7.3 FEES AND EXPENSES.
(a) GENERAL. Except as set forth in this Section 7.3, all fees and
expenses incurred in connection with this Agreement and the transactions
contemplated herein shall be paid by the party incurring such fees and expenses
whether or not the Merger is consummated; provided, however, that Corixa shall
pay all fees and expenses, other than attorneys', accountants' and fairness
opinion fees and expenses of Ribi, incurred in relation to the printing and
filing (with the SEC) of the Proxy Statement/Prospectus (including any
preliminary materials related thereto) and the Registration Statement (including
financial statements and exhibits) and any amendments or supplements thereto,
the listing of Shares of Corixa Common Stock contemplated under Section 5.11,
and the filing of a registration statement on Form S-8 (or any successor or
other appropriate form) contemplated under Section 5.15; and provided further,
however, that fees and expenses incurred by Ribi in connection with this
agreement and the transactions contemplated herein shall not exceed (i) with
respect to legal fees and expenses of Ribi, One Hundred Fifty Thousand Dollars
($150,000), (ii) with respect to accounting fees and expenses of Ribi, One
Hundred Thousand Dollars ($100,000), and (iii) with respect to investment
banking fees, including fees for Ribi's fairness opinion, Seven Hundred Fifty
Thousand Dollars ($750,000).
(b) RIBI PAYMENT. In the event that this Agreement is terminated by
Corixa or Ribi, as applicable, pursuant to Section 7.1(e), Ribi shall promptly,
but in no event later than five (5) business days after the date of such
termination, pay Corixa a fee equal to Two Million Five Hundred Thousand Dollars
($2,500,000) in immediately available funds (the "Termination Fee"). Ribi
acknowledges and agrees that the agreement contained in this Section 7.3(b) is
an integral part of the transactions contemplated in this Agreement, and that,
without this agreement, Corixa would not enter into this Agreement; accordingly,
if Ribi fails promptly to pay the amounts due pursuant to this Section 7.3(b),
and, in order to obtain such payment, Corixa commences a suit which results in a
judgment against Ribi for the amounts set forth in this Section 7.3(b), Ribi
shall pay to Corixa its reasonable costs and expenses (including reasonable
attorneys' fees and expenses) in connection with such suit, together with
interest on the amounts set forth in this Section 7.3(b) at the prime rate of
The Chase Manhattan Bank in effect on the date such payment was required to be
made.
(c) Payment of the fees described in Section 7.3(b) above shall not be
in lieu of damages incurred in the event of willful breach of this Agreement.
7.4 AMENDMENT. Subject to applicable law, this Agreement may be amended by
the parties hereto at any time by execution of an instrument in writing signed
on behalf of each of Corixa and Ribi.
7.5 EXTENSION; WAIVER. At any time prior to the Effective Time any party
hereto may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and (c)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any
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agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party. Delay in exercising any right under this Agreement shall not constitute a
waiver of such right.
SECTION EIGHT
8. GENERAL PROVISIONS.
8.1 SURVIVAL OF WARRANTIES. The representations, warranties and agreements
set forth in this Agreement or in any instrument delivered pursuant to this
Agreement shall not survive the Effective Time of the Merger and (except to the
extent that survival is necessary to effectuate the intent of such provisions)
shall terminate at the Effective Time of the Merger.
8.2 NOTICES. Any notice required or permitted by this Agreement shall be
in writing and shall be deemed sufficient upon receipt, when delivered
personally or by courier, overnight delivery service or confirmed facsimile, or
forty-eight (48) hours after being deposited in the regular mail as certified or
registered mail (airmail if sent internationally) with postage prepaid, if such
notice is addressed to the party to be notified at such party's address or
facsimile number as set forth below, or as subsequently modified by written
notice,
(a) if to Corixa, to:
1124 Columbia Street
Suite 200
Seattle, WA 98104
Attention: President
CC: Director of Legal Affairs
Facsimile No.: (206) 754-5994
Telephone No.: (206) 754-5711
with a copy to:
Venture Law Group
4750 Carillon Point
Kirkland, WA 98033
Attention: William W. Ericson
Facsimile No.: (425) 739-8750
Telephone No.: (425) 739-8700
(b) if to Ribi, to:
553 Old Corvallis Road
Hamilton, MT 59840
Attention: President
Facsimile No.: (406) 363-6129
Telephone No.: (406) 363-6214
with a copy to:
Morrison & Foerster LLP
755 Page Mill Road
Palo Alto, CA 94304
Attention: William D. Sherman
Facsimile No.: (650) 494-0792
Telephone No.: (650) 813-5602
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8.3 INTERPRETATION. When a reference is made in this Agreement to Exhibits
or Schedules, such reference shall be to an Exhibit or Schedule to this
Agreement unless otherwise indicated. The words "include," "includes" and
"including" when used herein shall be deemed in each case to be followed by the
words "without limitation." The phrase "made available" in this Agreement shall
mean that the information referred to has been made available if requested by
the party to whom such information is to be made available. The phrases "the
date of this Agreement," "the date hereof," and terms of similar import, unless
the context otherwise requires, shall be deemed to refer to June 9, 1999. The
table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
8.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
8.5 ENTIRE AGREEMENT; NONASSIGNABILITY; PARTIES IN INTEREST. This
Agreement and the documents and instruments and other agreements specifically
referred to herein or delivered pursuant hereto, including the Exhibits, the
Schedules, including the Ribi Disclosure Schedule and the Corixa Disclosure
Schedule (a) constitute the entire agreement among the parties with respect to
the subject matter hereof and supersede all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof, except for the Confidentiality Agreement, which shall continue in full
force and effect, and shall survive any termination of this Agreement or the
Closing, in accordance with its terms; (b) are not intended to confer upon any
other person any rights or remedies hereunder, except as set forth in Sections
1.6(a)-(c) and (f), 1.7. 1.8 and 1.12; and (c) shall not be assigned by
operation of law or otherwise except as otherwise specifically provided.
8.6 SEVERABILITY. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith, in order to maintain the economic position enjoyed by
each party as close as possible to that under the provision rendered
unenforceable. In the event that the parties cannot reach a mutually agreeable
and enforceable replacement for such provision, then (i) such provision shall be
excluded from this Agreement, (ii) the balance of the Agreement shall be
interpreted as if such provision were so excluded and (iii) the balance of the
Agreement shall be enforceable in accordance with its terms.
8.7 REMEDIES CUMULATIVE. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby, or by law or equity upon
such party, and the exercise by a party of any one remedy will not preclude the
exercise of any other remedy.
8.8 GOVERNING LAW. This Agreement and all acts and transactions pursuant
hereto and the rights and obligations of the parties hereto shall be governed,
construed and interpreted in accordance with the laws of the State of Delaware,
without giving effect to principles of conflicts of law. Each of the parties to
this Agreement consents to the exclusive jurisdiction and venue of the courts of
the state and federal courts of King County, Washington.
8.9 RULES OF CONSTRUCTION The parties hereto agree that they have been
represented by counsel during the negotiation, preparation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
8.10 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended or
waived only with the written consent of the parties or their respective
successors and assigns. Any amendment or waiver effected in accordance with this
Section 8.10 shall be binding upon the parties and their respective successors
and assigns.
[Signature Page Follows]
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Ribi and Corixa have executed this Agreement as of the date first written
above.
RIBI IMMUNOCHEM RESEARCH, INC.
By: /s/ ROBERT E. IVY
------------------------------------
Name: Robert E. Ivy
----------------------------------
(Print)
Title: Chairman, President and CEO
---------------------------------
Address: 553 Old Corvallis Road
Hamilton, MT 59840-3131
CORIXA CORPORATION
By: /s/ MARK MCDADE
------------------------------------
Name: Mark McDade
----------------------------------
(Print)
Title: President, COO
---------------------------------
Address: 1124 Columbia Street, Suite 200
Seattle, WA 98104
SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER
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EXHIBIT B
RIBI, INC.
VOTING AGREEMENT
This Voting Agreement (this "Voting Agreement") is made and entered into as
of , 1999, by and between Corixa Corporation, a Delaware
corporation ("Corixa"), and the undersigned stockholder ("Holder") of Ribi
ImmunoChem Research, Inc., a Delaware corporation ("Ribi").
RECITALS
Pursuant to an Agreement and Plan of Merger dated as of June 9, 1999 (the
"Merger Agreement") by and among Corixa and Ribi, Ribi will merge with and into
Corixa in a direct merger (the "Merger"), with Corixa to be the surviving
corporation of the Merger, all pursuant to the terms and conditions of the
Merger Agreement. Pursuant to Section 5.12 of the Merger Agreement, Ribi has
agreed to use reasonable best efforts to cause certain affiliates of Ribi (as
such term is defined under Rule 145 of the Securities Act of 1933, as amended
(the "Securities Act")) to execute and deliver to Corixa voting agreements
substantially in the form hereof. The Holder is the beneficial owner (as defined
in Rule 13d-3 under the Exchange Act, as amended (the "Exchange Act")) of such
number of shares of outstanding capital stock and all rights, warrants and
options to acquire shares of capital stock of Ribi as is indicated on the final
page of this Voting Agreement (the "Ribi Securities").
In consideration of the execution of the Merger Agreement by Corixa, Holder
agrees (i) not to transfer or otherwise dispose of any of the Ribi Securities,
or any other shares of capital stock of Ribi acquired by Holder hereafter and
prior to the Expiration Date (as defined in Section 1(a) below); (ii) to lock-up
certain shares held by Holder or acquired by Holder hereafter for a period of
ninety (90) days after the Effective Time (as defined in the Merger Agreement);
and (iii) to vote the Ribi Securities and any other such shares of capital stock
of Ribi in favor of and so as to facilitate consummation of the Merger.
AGREEMENT
The parties agree as follows:
1. AGREEMENT TO RETAIN RIBI SECURITIES.
(a) TRANSFER AND ENCUMBRANCE. Holder agrees not to transfer (except as
may be specifically required by court order), sell, exchange, pledge (except in
connection with a bona fide loan transaction, provided that any pledgee agrees
not to transfer, sell, exchange, pledge or otherwise dispose of or encumber the
Ribi Securities, any New Ribi Securities (as defined in Section 1(b)) or to make
any offer or agreement relating thereto, prior to the Expiration Date and also
agrees to be subject to the Proxy (as defined in Section 3)), or otherwise
dispose of or encumber the Ribi Securities or any New Ribi Securities, or to
make any offer or agreement relating thereto, at any time prior to the
Expiration Date. As used herein, the term "Expiration Date" shall mean the
earlier to occur of (i) such date and time as the Merger shall become effective
in accordance with the terms and provisions of the Merger Agreement, and (ii)
upon the termination of the Merger Agreement pursuant to its terms.
(b) NEW RIBI SECURITIES. Until the Expiration Date, Holder agrees that
any shares of capital stock of Ribi and all rights, warrants and options to
acquire shares of capital stock of Ribi that Holder purchases or with respect to
which Holder otherwise acquires beneficial ownership after the date of this
Voting Agreement and prior to the Expiration Date ("New Ribi Securities") shall
be
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subject to the terms and conditions of this Voting Agreement to the same extent
as if they constituted Ribi Securities.
(c) SUPERIOR PROPOSAL. In the event that (A) Ribi's board of directors
approves, and recommends that Ribi's stockholders approve, a Superior Proposal
(as defined in the Merger Agreement), (B) Ribi's board of directors provides
written notice of such approval and recommendation to Corixa and (C) Ribi has
paid in full to Corixa the Termination Fee (as defined in the Merger Agreement),
Holder's obligations under this Voting Agreement shall immediately terminate.
2. AGREEMENT TO VOTE RIBI SECURITIES. Until the Expiration Date, at every
meeting of the stockholders of Ribi called with respect to any of the following,
and at every adjournment thereof, and on every action or approval by written
consent of the stockholders of Ribi with respect to any of the following, Holder
shall vote the Ribi Securities and any New Ribi Securities (a) in favor of
adoption and approval of the Merger Agreement and approval of the Merger and any
matter that could reasonably be expected to facilitate the Merger, and (b)
against any proposal for any recapitalization, merger, sale of assets or other
business combination (other than the Merger) between Ribi and any person or
entity other than Corixa or any other action or agreement that would result in a
breach of any covenant, representation or warranty or any other obligation or
agreement of Ribi under the Merger Agreement or which could result in any of the
conditions to Ribi's obligations under the Merger Agreement not being fulfilled.
This Voting Agreement is intended to bind Holder as a stockholder of Ribi only
with respect to the specific matters set forth herein.
3. IRREVOCABLE PROXY. Prior to the Ribi Stockholders' Meeting (as defined
in the Merger Agreement), Holder agrees to deliver to Corixa a proxy in the form
attached hereto as Exhibit A (the "Proxy"), which shall be irrevocable (until
the Expiration Date) to the extent provided in Section 212 of the Delaware
General Corporation Law, covering the total number of Ribi Securities and New
Ribi Securities beneficially owned or as to which beneficial ownership is
acquired (as such term is defined in Rule 13d-3 under the Exchange Act) by
Holder set forth therein.
4. TAX TREATMENT. Holder understands and agrees that it is intended that
the Merger will be treated as a reorganization for federal income tax purposes.
Holder will rely on Holder's own tax advisers as to the tax effects of the
Merger to Holder and understands that neither Ribi, Ribi's counsel, Corixa nor
Corixa's counsel has guaranteed nor will guarantee to Holder that the Merger
will be a tax-free reorganization. Holder understands that counsel to Corixa
(Venture Law Group) and counsel to Ribi (Morrison & Foerster LLP) have not acted
as counsel for Holder with respect to any matter related to the Merger, and that
Holder has not relied on Ribi or its counsel, or Corixa or its counsel, with
respect to any legal matter related to the Merger or its tax consequences,
including, without limitation, any U.S. federal income tax consequences.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF HOLDER. Holder hereby
represents, warrants and covenants to Corixa and Ribi as follows:
(a) AUTHORITY AND STATUS. Holder (i) is the beneficial owner of the Ribi
Securities, which at the date of this Voting Agreement and at all times up until
the Expiration Date will be free and clear of any liens, claims, options,
charges or other encumbrances, (ii) does not beneficially own any shares of
capital stock of Ribi other than the Ribi Securities (excluding shares as to
which Holder currently disclaims beneficial ownership in accordance with
applicable law) and (iii) has full power and authority to make, enter into and
carry out the terms of this Voting Agreement and the Proxy.
(b) WAIVERS. Holder hereby waives, effective as of the Effective Time,
any liquidation, redemption, anti-dilution, registration rights, information
rights, preemptive rights, priority rights, rights of first refusal, co-sale or
other similar rights, if any, relating to the Ribi Common Stock under
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the terms of the certificate of incorporation or bylaws of Ribi or any agreement
to which Holder is a party in effect immediately prior to the Effective Time.
(c) INTENT. Holder is not aware of or participating in any plan or
intention on the part of Corixa, directly or indirectly (through one or more
related parties) to reacquire any Corixa Common Stock issued in the Merger. For
these purposes, "related parties" include corporations which are members of the
same affiliated group as defined in Section 1504 of the Internal Revenue Code of
1986 (the "Code"), determined without regard to Section 1504(b) of the Code, or
two corporations if the first corporation purchases the stock of the second
corporation in a transaction which would be treated as a distribution of the
stock of the first corporation under Section 304(a)(2) of the Code (determined
without regard to Treas. Reg. Section 1.1502-80(b)). In addition, a corporation
will be treated as related to another corporation if such relationship exists
immediately before or immediately after the acquisition of the stock involved.
Moreover, a corporation, other than Ribi or a person related to Ribi, will be
treated as related to Corixa if the relationship is created in connection with
the Merger. For purposes of this representation, it is acknowledged and agreed
that Corixa may from time to time repurchase some of its issued and outstanding
Common Stock in accordance with its preexisting share repurchase program or in
connection with repurchases of unvested stock in terminating employees or other
service providers.
(d) NO VIOLATION OF SECURITIES ACT. Holder shall not make any sale,
transfer or other disposition of Corixa Common Stock in violation of the
Securities Act or Rule 145 of the rules and regulations of the Securities Act.
(e) ACCURACY OF REPRESENTATIONS, WARRANTIES AND CERTIFICATIONS. Except
to the extent written notification to the contrary is received by Corixa and
Ribi from Holder prior to the consummation of the Merger, the representations,
warranties and certifications contained herein shall be accurate at all times
from the date hereof through the Effective Date of the Merger.
6. LOCK-UP. Holder has not and will not sell, transfer or otherwise dispose
of, or offer or agree to sell, transfer or otherwise dispose of, or in any other
way reduce the risk of Holder's ownership of or investment in, (i) any Ribi
Securities, (ii) any New Ribi Securities or (iii) any shares of Corixa Common
Stock which Holder currently owns or purchases or otherwise acquires after the
execution of this Voting Agreement, whether pursuant to the Merger or otherwise,
including any securities which may be paid as a dividend or otherwise
distributed thereon or with respect thereto or issued or delivered in exchange
or substitution therefor (all such shares and other securities being referred to
herein, collectively, as "Restricted Corixa Securities"), or any option, right
or other interest with respect to any Restricted Corixa Securities, for a period
of ninety (90) calendar days following the Effective Time (as defined in the
Merger Agreement).
7. STOP TRANSFER INSTRUCTIONS. Holder also understands and agrees that stop
transfer instructions may be given to Corixa's transfer agent with respect to
certificates evidencing the Corixa Common Stock to enforce Holder's compliance
with this Voting Agreement and that there will be placed on the certificate
evidencing the Corixa Common Stock legends stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A TRANSACTION
TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
APPLIES, AND ARE SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN VOTING
AGREEMENT BETWEEN THE HOLDER HEREOF AND CORIXA CORPORATION. BY ACCEPTING ANY
INTEREST IN SUCH SHARES THE PERSON ACCEPTING SUCH INTEREST SHALL BE DEEMED TO
AGREE TO AND SHALL BECOME BOUND BY ALL THE PROVISIONS OF SAID VOTING AGREEMENT.
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED, SOLD, PLEDGED,
EXCHANGED, TRANSFERRED OR OTHERWISE
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DISPOSED OF EXCEPT IN ACCORDANCE WITH THE REQUIREMENTS OF THE SECURITIES ACT OF
1933, AS AMENDED."
8. ADDITIONAL DOCUMENTS. Holder hereby covenants and agrees to execute and
deliver any additional documents necessary or desirable, in the reasonable
opinion of Corixa, to carry out the purpose and intent of this Voting Agreement.
9. CONSENT AND WAIVER. Holder hereby gives any consents or waivers that are
reasonably required for the consummation of the Merger under the terms of any
agreement to which Holder is a party or pursuant to any rights Holder may have.
10. TERMINATION. This Voting Agreement and the Proxy delivered in
connection herewith shall terminate and shall have no further force or effect as
of the Expiration Date; provided, however, that Sections 5, 6 and 7 shall remain
in full force and in effect unless the Merger Agreement is terminated pursuant
to its terms.
11. MISCELLANEOUS.
(a) AMENDMENTS AND WAIVERS. Any term of this Voting Agreement may be
amended or waived with the written consent of the parties or their respective
successors and assigns. Any amendment or waiver effected in accordance with this
Section 11(a) shall be binding upon the parties and their respective successors
and assigns.
(b) GOVERNING LAW. This Voting Agreement and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
Delaware, without giving effect to principles of conflicts of law.
(c) COUNTERPARTS. This Voting Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
(d) TITLES AND SUBTITLES. The titles and subtitles used in this Voting
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Voting Agreement.
(e) NOTICES. Any notice required or permitted by this Voting Agreement
shall be in writing and shall be deemed sufficient upon receipt, when delivered
personally or by courier, overnight delivery service or confirmed facsimile, or
forty-eight (48) hours after being deposited in the regular mail as certified or
registered mail (airmail if sent internationally) with postage prepaid, if such
notice is addressed to the party to be notified at such party's address or
facsimile number as set forth on the final page of this Voting Agreement, or as
subsequently modified by written notice.
(f) SEVERABILITY. If one or more provisions of this Voting Agreement are
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith, in order to maintain the economic position enjoyed
by each party as close as possible to that under the provision rendered
unenforceable. In the event that the parties cannot reach a mutually agreeable
and enforceable replacement for such provision, then (i) such provision shall be
excluded from this Voting Agreement, (ii) the balance of this Voting Agreement
shall be interpreted as if such provision were so excluded and (iii) the balance
of this Voting Agreement shall be enforceable in accordance with its terms.
(g) ATTORNEYS' FEES. Should suit be brought to enforce or interpret any
part of this Voting Agreement, the prevailing party will be entitled to recover,
as an element of the costs of suit and not as damages, reasonable attorneys'
fees to be fixed by the court (including without limitation, costs, expenses and
fees on any appeal). The prevailing party will be entitled to recover its costs
of suit proceeds to final judgment.
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(h) SPECIFIC PERFORMANCE; INJUNCTIVE RELIEF. The parties hereto
acknowledge and agree that Corixa will be irreparably harmed and that there will
be no adequate remedy at law for a violation of any of the covenants or
agreements of Holder set forth herein. Therefore, the parties acknowledge and
agree that, in addition to any other remedies that may be available to Corixa
upon any such violation, Corixa shall have the right to enforce such covenants
and agreements by specific performance, injunctive relief or by any other means
available to Corixa at law or in equity.
[SIGNATURE PAGE FOLLOWS]
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The parties have caused this Voting Agreement to be duly executed on the
date first above written.
"CORIXA"
CORIXA CORPORATION,
a Delaware corporation
By:
-----------------------------------
Name:
---------------------------------
(print)
Title:
--------------------------------
Address:
------------------------------
------------------------------
Facsimile:
----------------------------
"HOLDER"
By:
----------------------------------
Name:
--------------------------------
(print)
Title:
--------------------------------------
Holder's Address for Notice:
--------------------------------------
--------------------------------------
--------------------------------------
Facsimile:
----------------------------
<TABLE>
<S> <C>
Ribi Securities
beneficially owned:
------------------------ Shares of Common
Stock of Ribi ImmunoChem
Research, Inc.
------------------------ Shares of Common
Stock of Ribi ImmunoChem
Research, Inc.
issuable upon
exercise of
outstanding options
and warrants
</TABLE>
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EXHIBIT C
IRREVOCABLE PROXY
TO VOTE STOCK OF
RIBI IMMUNOCHEM RESEARCH, INC.
Subject to the terms of that certain Voting Agreement, dated as of
, 1999, by and between Corixa (as defined below) and Holder (as
defined below), (the "Voting Agreement") the undersigned stockholder ("Holder")
of Ribi ImmunoChem Research, Inc., a Delaware corporation ("Ribi"), hereby
irrevocably (to the full extent permitted by Section 212 of the Delaware General
Corporation Law) appoints the members of the board of directors of Corixa
Corporation, a Delaware corporation ("Corixa"), and each of them, as the sole
and exclusive attorneys and proxies of the undersigned, with full power of
substitution and resubstitution, to vote and exercise all voting and related
rights (to the full extent that the undersigned is entitled to do so) with
respect to all of the shares of capital stock of Ribi that now are or hereafter
may be beneficially owned by the undersigned, and any and all other shares or
securities of Ribi issued or issuable in respect thereof on or after the date
hereof (collectively, the "Ribi Securities") in accordance with the terms of
this Proxy. The Ribi Securities beneficially owned by the undersigned
stockholder of Ribi as of the date of this Proxy are listed on the final page of
this Proxy. Upon the undersigned's execution of this Proxy, any and all prior
proxies given by the undersigned with respect to any Ribi Securities are hereby
revoked and the undersigned agrees not to grant any subsequent proxies with
respect to the Ribi Securities until after the earlier to occur of (i) the
Expiration Date (as defined below) and (ii) subject to Section 7 of the Merger
Agreement (as defined below), the Superior Proposal Event (as defined below).
This Proxy is irrevocable (to the extent permitted by Section 212 of the
Delaware General Corporation Law) is granted pursuant to the Voting Agreement
and is granted in consideration of Corixa entering into that certain Agreement
and Plan of Merger, of even date herewith, by and among Ribi and Corixa (the
"Merger Agreement"). The Agreement provides for the merger of Ribi with and into
Corixa (the "Merger"). As used herein, the term "Expiration Date" shall mean the
earlier to occur of (i) such date and time as the Merger shall become effective
in accordance with the terms and provisions of the Merger Agreement and (ii)
upon termination of the Merger Agreement pursuant to its terms. As used herein,
the term "Superior Proposal Event" shall mean the determination of Ribi's board
of directors to accept an unsolicited, bona fide written offer made by a third
party to consummate any of the following transactions: (1) a merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving Ribi pursuant to which the stockholders of Ribi
immediately preceding such transaction hold less than fifty percent (50%) of the
equity interest in the surviving or resulting entity of such transaction, (2) a
sale or other disposition by Ribi of assets (excluding inventory and used
equipment sold in the ordinary course of business) representing in excess of
fifty percent (50%) of the fair market value of Ribi's business immediately
prior to such sale, (3) the acquisition by any person or group (including by way
of a tender offer or an exchange offer or issuance by Ribi), directly or
indirectly, of beneficial ownership or a right to acquire beneficial ownership
of shares representing in excess of fifty percent (50%) of the voting power of
the then-outstanding shares of capital stock of Ribi or (4) any public
announcement of a proposal, plan or intention to do any of the foregoing or any
agreement to engage in any of the foregoing, in each case on terms that Ribi's
board of directors determines, in its judgment consistent with applicable
corporate law, after consultation with its financial advisor, is reasonably
likely to be financially superior to the Ribi stockholders than the terms of the
Merger.
Subject to the terms of the Voting Agreement, the attorneys and proxies
named above, and each of them, are hereby authorized and empowered by the
undersigned, at any time prior to the Expiration Date, to act as the
undersigned's attorney and proxy to vote the Ribi Securities, and to
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exercise all voting and other rights of the undersigned with respect to the Ribi
Securities (including, without limitation, the power to execute and deliver
written consents pursuant to Section 228 of the Delaware General Corporation
Law), at every annual, special or adjourned meeting of the stockholders of Ribi
and in every written consent in lieu of such meeting (i) in favor of approval of
the Merger and the Merger Agreement and in favor of any matter that could
reasonably be expected to facilitate the Merger, and (ii) against any proposal
for any recapitalization, merger, sale of assets or other business combination
(other than the Merger) between Ribi and any person or entity other than Corixa
or any other action or agreement that would result in a breach of any covenant,
representation or warranty or any other obligation or agreement of Ribi under
the Merger Agreement or which could result in any of the conditions to Ribi's
obligations under the Merger Agreement not being fulfilled. The attorneys and
proxies named above may not exercise this Proxy on any other matter except as
provided above. The undersigned stockholder may vote the Ribi Securities on all
other matters.
Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned.
[Signature page follows]
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<PAGE> 299
This Proxy is irrevocable (to the extent provided in Section 212 of the
Delaware General Corporation Law) subject to the limitations set forth in the
Voting Agreement.
Dated: , 1999
-----------------------------------
(Signature of Holder)
-----------------------------------
(Print Name of Holder)
Ribi Securities beneficially owned:
_______ Shares of Common Stock of
Ribi ImmunoChem Research,
Inc. owned by Holder as of
the date of this Voting
Agreement
_______ Shares of Common Stock of
Ribi ImmunoChem Research,
Inc. issuable upon exercise
or conversion of outstanding
options, warrants or other
securities owned by Holder
as of the date of this
Voting Agreement
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<PAGE> 300
APPENDIX B
OPINION OF PACIFIC GROWTH EQUITIES, INC.
June 22, 1999
Special Committee of the Board of Directors
Corixa Corporation
1124 Columbia Street
Seattle, WA 98104
Members of the Special Committee of the Board of Directors:
You asked for our opinion as to the fairness, from a financial, point of
view, to the holders of common stock, par value $0.001 per share ("Corixa Common
Stock") of Corixa Corporation, a Delaware corporation ("Corixa Corporation" or
the "Company") of certain transactions in which Corixa is considering
participating.
Background of Transactions
Corixa Corporation entered into an Agreement and Plan of Merger (the
"Merger Agreement") with Ribi ImmunoChem Research, Inc., a Delaware corporation
("Ribi"), pursuant to which Corixa would acquire Ribi. That acquisition (the
"Merger") is to be accomplished through a merger of Ribi in which the
outstanding shares of Ribi Common Stock will be converted into a number of
shares (the "Conversion Shares") of Corixa common stock, $0.001 par value
("Corixa Common Stock"), at a conversion ratio specified in the Plan of Merger
Agreement (the "Exchange Ratio"). An Agreement and Plan of Merger dated June 9,
1999 between Corixa and Ribi (the "Merger Agreement") indicated that the
Exchange Ratio shall be equal to a fraction, the numerator of which is equal to
the product resulting from multiplying (i) 1.16 by (ii) the average of the last
reported sale price of a share of Ribi Common Stock for the ten (10) trading
days immediately preceding the date of the Agreement (the "Ribi Average"), and
the denominator of which is equal to the average of the last reported sale price
of a share of Corixa Common Stock for the ten (10) trading days immediately
preceding the date of the Agreement (the "Corixa Average"). The Merger is to be
accounted for as a purchase and is to be a tax-free reorganization under Section
368 of the Internal Revenue Code of 1986, as amended.
Investigation and Analysis
In conducting our investigation and analysis and in arriving at the opinion
set forth below, we reviewed such information and took into account such
financial and economic factors as we deemed relevant under the circumstances. In
that connection, we, among other things: (i) reviewed publicly available
information about Ribi, including but not limited to Annual Reports on Form
10-K, Quarterly Reports on Form 10-Q, proxy and other information filed with the
Securities and Exchange Commission, and equity analyst research reports prepared
by various investment banking firms; (ii) reviewed publicly available
information about Corixa, including but not limited to Annual Reports on Form
10-K, Quarterly Reports on Form 10-Q, proxy and other information filed with the
Securities and Exchange Commission, and equity analyst research reports prepared
by various investment banking firms; (iii) analyzed information regarding the
market prices of Corixa and Ribi over various periods; (iv) analyzed information
on publicly-traded comparable companies; and (v) analyzed information about
prices paid in acquisitions of other biotechnology companies in between January
1, 1995 and June 7, 1999.
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We reviewed with senior management of Corixa the state of Corixa's business
and operations prepared and furnished to us by the Company. We held discussions
with certain members of Corixa's and Ribi's senior management concerning
Corixa's and Ribi's respective historical and current business condition and
operating results. We considered such other information, financial studies,
analyses and investigations and financial, economic and market criteria that we
deemed relevant for the preparation of this opinion. We did not consider any
benefits that may inure to any stockholder of the Company as a result of the
Merger or any related transactions other than in such party's capacity as a
stockholder of the Company.
In arriving at our opinion, we assumed and relied upon the accuracy and
completeness of all of the financial and other information provided to us by or
on behalf of Corixa, and all of the publicly available financial and other
information referred to above, and did not attempt independently to verify any
such information. We also assumed, with your consent, that the Merger would be
consummated in accordance with the terms of the Merger Agreement dated June 9,
1999, without any amendment thereto and without waiver by Corixa or Ribi of any
of the conditions to their respective obligations thereunder. We relied upon
assurances of senior management of Corixa and Ribi that such management was
unaware of any fact that would make their respective information provided to us
incomplete or misleading.
Our opinion necessarily was based upon economic, monetary and market
conditions as they existed and could be evaluated on the date hereof, and did
not predict or take into account any changes that could have occurred, or
information that could have become available, after the date of our opinion,
including without limitation changes in the terms of the Merger Agreement. It
should be understood that subsequent developments may have affected this opinion
and we do not have any obligation to update, revise or reaffirm this opinion.
Except as noted above, this opinion did not address the relative merits of the
Merger and any other potential transactions or business strategies considered by
the Special Committee of the Board of Directors of Corixa (the "Special
Committee"). We did not participate in the negotiation of the terms of the
Merger, provide any legal advice or provide any advice with respect to the
Merger or any possible alternatives to the Merger.
PGE received a fee for rendering this written opinion pursuant to the terms of
an engagement letter. PGE and/or its employees may from time to time trade the
securities of the Company or Ribi for its or their own accounts or the accounts
of PGE's customers and, accordingly, may at any time hold long or short
positions in such securities.
Opinion
Based upon and subject to the foregoing, we are of the opinion that, as of
the date hereof, the Merger is fair, from a financial point of view, to the
holders of Corixa Common Stock.
Our opinion was prepared solely for the information of the Special
Committee, and may not be used for any other purpose or disclosed to or relied
upon by any other party without the prior written consent of PGE; provided,
however, that if Corixa proposes to state in any proxy statement filed under the
Exchange Act that PGE rendered this written opinion and/or describe the
conclusions reached herein, PGE's consent shall not be unreasonably withheld.
Very truly yours,
Pacific Growth Equities, Inc.
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<PAGE> 302
APPENDIX C
OPINION OF HAMBRECHT & QUIST LLC
June 8, 1999
Confidential
The Board of Directors
RIBI ImmunoChem Research, Inc.
553 Old Corvallis Rd.
Hamilton, MT 59840-3131
Gentlemen:
You have requested our opinion as to the fairness from a financial point of
view to the holders of the outstanding shares of common stock (the "Common
Stock") of RIBI ImmunoChem Research, Inc. ("RIBI" or the "Company") of the
consideration to be received by such stockholders in connection with the
proposed merger of RIBI into Corixa Corp. ("Corixa") (the "Proposed
Transaction") pursuant to the Agreement and Plan of Merger to be dated as of
June 9, 1999, among Corixa and RIBI (the "Agreement").
We understand that the terms of the Agreement provide, among other things,
that each issued and outstanding share of Common Stock shall be converted into
the right to receive 0.1685 share of common stock of Corixa, as more fully set
forth in the Agreement. For purposes of this opinion, we have assumed that the
Proposed Transaction will be accounted for as a purchase.
Hambrecht & Quist LLC ("Hambrecht & Quist"), as part of its investment
banking services, is regularly engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, strategic transactions,
corporate restructurings, negotiated underwritings, secondary distributions of
listed and unlisted securities, private placements and valuations for corporate
and other purposes. We have acted as a financial advisor to the Board of
Directors of RIBI in connection with the Proposed Transaction, and we will
receive a fee for our services, which include the rendering of this opinion.
In the past, we have provided investment banking and other financial
advisory services to RIBI and have received fees for rendering these services.
In particular, Hambrecht & Quist served as lead managing underwriter in the
Company's follow-on offering in 1993. In the ordinary course of business,
Hambrecht & Quist acts as a market maker and broker in the publicly traded
securities of RIBI and receives customary compensation in connection therewith,
and also has provided research coverage for RIBI. In the ordinary course of
business, Hambrecht & Quist actively trades in the equity and derivative
securities of RIBI for its own account and for the accounts of its customers
and, accordingly, may at any time hold a long or short position in such
securities. Hambrecht & Quist may in the future provide additional investment
banking or other financial advisory services to Corixa.
In connection with our review of the Proposed Transaction, and in arriving
at our opinion, we have, among other things:
(i) reviewed the publicly available consolidated financial statements of
Corixa for recent years and interim periods to date and certain
other relevant financial and operating data of Corixa (including its
capital structure) made available to us from published sources and
from the internal records of Corixa;
(ii) reviewed certain internal financial and operating information,
including certain projections, relating to Corixa prepared by the
management of Corixa;
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(iii) discussed the business, financial condition and prospects of Corixa
with certain members of management;
(iv) reviewed the publicly available consolidated financial statements of
RIBI for recent years and interim periods to date and certain other
relevant financial and operating data of RIBI made available to us
from published sources and from the internal records of RIBI;
(v) reviewed certain internal financial and operating information,
including certain projections, relating to RIBI prepared by the
senior management of RIBI;
(vi) discussed the business, financial condition and prospects of RIBI
with certain members of management;
(vii) reviewed the recent reported prices and trading activity for the
common stocks of Corixa and RIBI and compared such information and
certain financial information for Corixa and RIBI with similar
information for certain other companies engaged in businesses we
consider comparable;
(viii) reviewed the financial terms, to the extent publicly available, of
certain comparable merger and acquisition transactions;
(ix) reviewed a draft of the Agreement dated June 4, 1999;
(x) performed such other analyses and examinations and considered such
other information, financial studies, analyses and investigations and
financial, economic and market data as we deemed relevant.
In rendering our opinion, we have assumed and relied upon the accuracy and
completeness of all of the information concerning Corixa or RIBI considered in
connection with our review of the Proposed Transaction, and we have not assumed
any responsibility for independent verification of such information. We have not
prepared any independent valuation or appraisal of any of the assets or
liabilities of Corixa or RIBI, nor have we conducted a physical inspection of
the properties and facilities of either company. With respect to the financial
forecasts and projections made available to us and used in our analysis, we have
assumed that they reflect the best currently available estimates and judgments
of the expected future financial performance of Corixa and RIBI. For purposes of
this opinion, we have assumed that neither Corixa nor RIBI is a party to any
pending transactions, including external financings, recapitalizations or
material merger discussions, other than the Proposed Transaction and those
activities undertaken in the ordinary course of conducting their respective
businesses. Our opinion is necessarily based upon market, economic, financial
and other conditions as they exist and can be evaluated as of the date of this
letter and any change in such conditions would require a reevaluation of this
opinion. We express no opinion as to the price at which Corixa common stock will
trade subsequent to the Effective Time (as defined in the Agreement). In
rendering this opinion, we have assumed that the proposed merger will be
consummated substantially on the terms discussed in the Agreement, without any
waiver of any material terms or conditions by any party thereto. We were not
requested to, and did not, solicit indications of interest from any other
parties in connection with a possible acquisition of, or business combination
with, RIBI.
It is understood that this letter is for the information of the Board of
Directors only and may not be used for any other purpose without our prior
written consent; provided, however, that this letter may be reproduced in full
in the Proxy Statement/Prospectus. This letter does not constitute a
recommendation to any stockholder as to how such stockholder should vote on the
Proposed Transaction.
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Based upon and subject to the foregoing and after considering such other
matters as we deem relevant, we are of the opinion that as of the date hereof
the consideration to be received by the holders of the Common Stock in the
Proposed Transaction is fair to such holders from a financial point of view.
Very truly yours,
HAMBRECHT & QUIST LLC
By /s/ PAUL B. CLEVELAND
----------------------------------------
Paul B. Cleveland
Managing Director
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APPENDIX D
FIRST AMENDMENT TO THE
RIBI IMMUNOCHEM RESEARCH, INC.
1986 STOCK OPTION PLAN
WHEREAS, pursuant to the terms of Section 5.22 of that certain Agreement of
Merger by and between Corixa Corporation and Ribi ImmunoChem Research, Inc. (the
"Company") dated June 9, 1999, the Company is required to amend Sections 7.8,
8.3, 9.1 and 9.4 of the Company's 1986 Stock Option Plan (the "1986 Plan").
The Company hereby amends the 1986 Plan as follows, such amendment to
become effective immediately prior to approval by the Company's stockholders of
that certain Agreement and Plan of Merger between the Company and Corixa
Corporation:
1. Section 4.1 is hereby amended to read in its entirety as follows:
4.1 ADMINISTRATIVE COMMITTEE. The Plan shall be administered by the Board
of Directors; provided, however, that in all matters concerning or affecting
officers and directors of the Company or individuals who were at one time
officers or directors of the Company, the Plan may be administered by a
Committee appointed by and serving at the pleasure of the Board of Directors,
consisting of not less than two Directors (the "Disinterested Committee"). The
Board of Directors may from time to time remove members from or add members to
the Disinterested Committee, and vacancies on the Disinterested Committee,
howsoever caused, shall be filled by the Board of Directors. A Director may
serve as a member of the Disinterested Committee if he or she has not been
granted or awarded options pursuant to the Plan or any other plan of the
Company. All further references herein to the "Committee" shall refer to the
Board of Directors and/or the Disinterested Committee, as the context requires.
2. Section 7.8 is hereby amended to read in its entirety as follows:
7.8 DIRECTOR OPTIONS. Each Director who is not an employee of the
Company (an "Outside Director") may elect to receive below-market, non-qualified
options ("Director Options") to purchase Common Stock of the Company in lieu of
part or all of his or her Director fees. Such election must be made by June 30
of each year prior to the year services are provided.
7.8.1 GENERAL TERMS. A Director Option shall have an exercise price of
eighty percent (80%) of the market price of the Common Stock on the grant date.
The number of shares subject to a Director Option to be granted shall be
determined by dividing the amount of the Director's fees (that the Director
irrevocably elected to take in the form of below-market options instead of cash)
by the fair market value of a share of Common Stock on the date of the grant
after subtracting the discounted option exercise price from such fair market
value. These Director Options shall be granted at the end of each calendar
quarter and shall be fully vested as of the grant date. The term of these
Director Options shall be for ten years, and they shall not be transferable
otherwise than by will or the laws of descent and distribution and may only be
exercised by the Director, his or her guardian or legal representative during
the exercise period as described in Section 7.8.2 below. The Director Options
shall not be exercisable until six (6) months after the date of grant.
7.8.2 TERMINATION OF SERVICE AS A DIRECTOR. Upon termination of a
Director's service as a Director of the Company for any reason, including death
or disability, the Director (or his or her guardian or legal representative) may
exercise his or her Director Option, subject to the 6 month waiting period in
Section 7.8.1, for a period of time following termination equal to the remainder
of the 10-year term of the Director Option, as set forth in the applicable
Option Agreement. If the Director does not exercise such Director Option prior
to expiration of the 10-year term of such option, the Director Option shall
terminate.
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3. Section 8.3 is hereby amended to read in its entirety as follows:
8.3 CORPORATE TRANSACTIONS.
8.3.1 CORPORATE TRANSACTIONS OCCURRING ON OR PRIOR TO ACQUISITION BY
CORIXA. This Section 8.3.1 shall govern treatment of outstanding Options and
other awards in any transaction occurring on or prior to the closing of the
Company's acquisition by Corixa Corporation. In the event of any of the
transactions described in the following sentence, each Option and other award
outstanding under the Plan shall be assumed or an equivalent option or right
substituted by the successor corporation or a parent or Subsidiary of such
successor corporation, unless such successor corporation (or its parent or
subsidiary) does not agree to such assumption or substitution in which case
outstanding options and other awards shall terminate. Notwithstanding any
vesting requirements contained in any Option Agreement and without regard to
whether outstanding Options are assumed, substituted or terminated in the
transaction, all outstanding Options shall become immediately exercisable and
fully vested (1) following the first purchase of Common Stock pursuant to a
tender offer, or exchange offer (other than an offer made by the Company) for
all or part of the Common Stock, (2) at such time as a third person, including a
"group" as defined in Section 13(d)(3) of the Exchange Act, becomes the
beneficial owner of shares of the Company having 25% or more of the total number
of votes that may be cast for the election of Directors of the Company, (3) on
the date on which the stockholders of the company approve (i) any agreement for
a merger or consolidation in which the Company will not survive as an
independent, publicly owned corporation or (ii) any sale, exchange or other
disposition or all or substantially all of the Company's assets, or (4) on any
date on which the persons who were the Directors of the Company ninety days
prior to such date no longer constitute a majority of the Board of Directors of
the Company or any successor to the Company. The Committee's reasonable
determination as to whether such an event has occurred shall be final and
conclusive.
8.3.2 CORPORATION TRANSACTIONS OCCURRING AFTER ACQUISITION BY
CORIXA. This Section 8.3.2 shall govern treatment of outstanding awards in any
transaction occurring after the closing of the Company's acquisition by Corixa
Corporation. In the event of the proposed dissolution or liquidation of Corixa,
each Option will terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the Corixa Board of Directors. The
Corixa Board of Directors may, in the exercise of its sole discretion in such
instances, declare that any Option shall terminate as of a date fixed by the
Corixa Board of Directors and give each Optionee the right to exercise his or
her Option as to all or any part of the optioned stock, including shares as to
which the Option would not otherwise be exercisable. In the event of a proposed
sale of all or substantially all of the assets of Corixa, or the merger of
Corixa with or into another corporation, (i) if the Option is assumed or an
equivalent option is substituted by such successor corporation or a parent or
subsidiary of such successor corporation, one half of the unvested portion of
the Option shall be deemed to have vested immediately prior to the consummation
of such sale or merger, (ii) if the Option is not assumed or an equivalent
option is not substituted by such successor corporation or a parent or
subsidiary of such successor corporation, all of the unvested portion of the
Option shall be deemed to have vested immediately prior to the consummation of
such sale or merger and (iii) if an executive officer of Corixa is terminated
without cause within six months following the consummation of such sale or
merger, the entire unvested portion of the Options held by such executive
officer shall be deemed to have vested and become fully exercisable immediately
prior to any such termination. The Corixa Board of Directors may determine, in
the exercise of its sole discretion and in lieu of such assumption or
substitution, that the Optionee shall have the right to exercise the Option as
to some or all of the Optioned Stock, including Shares as to which the Option
would not otherwise be exercisable. If the vesting of the Option is accelerated
pursuant to this Section 8.3.2, the Corixa Board of Directors shall notify the
Optionee that the vesting of the Option has been accelerated and Optionee shall
have the right to exercise the Option prior to such sale or merger.
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8.3.3 DEFINITION OF ASSUMPTION. For purposes of this Section 8.3, an
Option or other award shall be considered assumed, without limitation, if, at
the time of issuance of the stock or other consideration upon a Corporation
Transaction, each holder of an Option or other award would be entitled to
receive upon exercise of the Option or other award the same number and kind of
shares of stock or the same amount of property, cash or securities as such
holder would have been entitled to receive upon the occurrence of the
transaction if the holder had been, immediately prior to such transaction, the
holder of the number of shares of Common Stock covered by the Option or the
other award at such time (after giving effect to any adjustments in the number
of shares covered by the Option or other award as provided for in Section 5.3 or
in this Section 8.3); provided however that if the consideration received in the
transaction is not solely common stock of the successor corporation (or its
parent or Subsidiary), the Board of Directors may, with the consent of the
successor corporation, provide for the consideration to be received upon
exercise of the Option or other award to be solely common stock of the successor
corporation (or its parent or Subsidiary) equal to the fair market value of the
per share consideration received by holders of Common Stock in the transaction.
4. Section 9.1 is hereby amended to read in its entirety as follows:
9.1 TERMINATION OF EMPLOYMENT OF CONSULTING RELATIONSHIP. Upon termination
of an Optionee's employment of consulting relationship with the Company or a
Subsidiary for any reason other than as a result of Optionee's death or
disability, such Optionee may, but only within ninety (90) days after the date
of such termination (but in no event later than the date of expiration of the
term of such Option as set forth in the Option Agreement), exercise his or her
Option to the extent that he or she was entitled to exercise it at the date of
such termination. To the extent Optionee was not entitled to exercise the Option
at the date of termination, or if he or she does not exercise such Option to the
extent entitled within the time specified above, the Option shall terminate.
Unless otherwise determined by the Board of Directors or the Company, no
termination of an Optionee's employment or consulting relationship shall be
deemed to occur and this Section 9.1 shall not apply in the case of (a) sick
leave which does not constitute disability as defined in Section 9.3 below, (b)
military leave, (c) any other leave of absence approved by the Board of
Directors or the Company, provided that such leave is guaranteed by contract or
statute, or unless provided otherwise pursuant to Company policy from time to
time, (d) the Optionee is a consultant who becomes an employee, (e) the Optionee
is an employee who becomes a consultant, or (f) the Optionee transfers between
locations of the Company or between the Company, its Subsidiaries or affiliates.
5. Section 9.4 is hereby deleted in its entirety.
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FIRST AMENDMENT TO THE
NON-QUALIFIED STOCK OPTION AGREEMENT
WITHOUT STOCK APPRECIATION RIGHT
GRANTED PURSUANT TO THE
RIBI IMMUNOCHEM RESEARCH, INC.
1986 STOCK OPTION PLAN
This First Amendment (the "Amendment") to the Non-Qualified Stock Option
Agreement Without Stock Appreciation Right (the "Option Agreement") dated as
, 19 by and between Ribi ImmunoChem Research, Inc.,
a Delaware corporation, located at 533 Old Corvallis Road, Hamilton, MT 59840
(the "Company"), and , whose mailing address is
(the "Optionee").
WHEREAS, pursuant to the terms of Section 5.22 of that certain Agreement of
Merger by and between Corixa Corporation and the Company dated June 9, 1999, the
Company is required to amend Section 4 of the Option Agreement as follows.
The Company and the Optionee hereby agree that Section 4 of the Option
Agreement is hereby amended to read in its entirety as follows:
"4. Notwithstanding Section 9 of the Plan, the Option shall be
exercisable through the date on which it expires and terminates, such date being
the date which is the tenth anniversary of the date of grant, and in no event
will the Option be exercisable after such date."
IN WITNESS WHEREOF, this Amendment has been executed as of the day and year
first written above.
Ribi ImmunoChem Research, Inc., Optionee
A Delaware corporation
By:
- ------------------------------------ ------------------------------------
Title:
- ------------------------------------ Address:
------------------------------------
------------------------------------
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APPENDIX E
FIRST AMENDMENT TO THE
RIBI IMMUNOCHEM RESEARCH, INC.
1996 STOCK OPTION PLAN
WHEREAS, pursuant to the terms of Section 5.22 of that certain Agreement of
Merger by and between Corixa Corporation and Ribi ImmunoChem Research, Inc. (the
"Company") dated June 9, 1999, the Company is required to amend Sections 7.8,
8.8, 9.1 and 9.4 of the Company's 1996 Stock Option Plan (the "1996 Plan").
The Company hereby amends the 1996 Plan as follows, such amendment to
become effective immediately prior to approval by the Company's stockholders of
that certain Agreement and Plan of Merger between the Company and Corixa
Corporation:
1. Section 7.8 is hereby amended to read in its entirety as follows:
7.8 DIRECTOR OPTIONS. Each Director who is not an employee of the
Company (an "Outside Director") may elect to receive below-market, non-qualified
options ("Director Options") to purchase Common Stock of the Company in lieu of
part or all of his or her Director fees. Such election must be made by June 30
of each year prior to the year services are provided.
7.8.1 GENERAL TERMS. A Director Option shall have an exercise price of
eighty percent (80%) of the market price of the Common Stock on the grant date.
The number of shares subject to a Director Option to be granted shall be
determined by dividing the amount of the Director's fees (that the Director
irrevocably elected to take in the form of below-market options instead of cash)
by the fair market value of a share of Common Stock on the date of the grant
after subtracting the discounted option exercise price from such fair market
value. These Director Options shall be granted at the end of each calendar
quarter and shall be fully vested as of the grant date. The term of these
Director Options shall be for ten years, and they shall not be transferable
otherwise than by will or the laws of descent and distribution and may only be
exercised by the Director, his or her guardian or legal representative during
the exercise period as described in Section 7.8.2 below. The Director Options
shall not be exercisable until at least six (6) months after the date of grant.
7.8.2 TERMINATION OF SERVICE AS A DIRECTOR. Upon termination of a
Director's service as a Director of the Company for any reason, including death
or disability, the Director (or his or her guardian or legal representative) may
exercise his or her Director Option, subject to the 6 month waiting period in
Section 7.8.1, for a period of time following termination equal to the remainder
of the 10-year term of the Director Option, as set forth in the applicable
Option Agreement. If the Director does not exercise such Director Option prior
to expiration of the 10-year term of such option, the Director Option shall
terminate.
The Company hereby amends the 1996 Plan as follows:
2. Section 8.3 is hereby amended to read in its entirety as follows:
8.3 CORPORATE TRANSACTIONS.
8.3.1 CORPORATE TRANSACTIONS OCCURRING ON OR PRIOR TO ACQUISITION BY
CORIXA. This Section 8.3.1 shall govern treatment of outstanding Options and
other awards in any transaction occurring on or prior to the closing of the
Company's acquisition by Corixa Corporation. In the event of any of the
transactions described in the following sentence, each Option and other award
outstanding under the Plan shall be assumed or an equivalent option or right
substituted by the successor corporation or a parent or Subsidiary of such
successor corporation, unless such successor
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corporation (or its parent or subsidiary) does not agree to such assumption or
substitution in which case outstanding Options and other awards shall terminate.
Notwithstanding any vesting requirements contained in any Option Agreement and
without regard to whether outstanding Options are assumed, substituted or
terminated in the transaction, all outstanding Options shall become immediately
exercisable and fully vested (1) following the first purchase of Common Stock
pursuant to a tender offer, or exchange offer (other than an offer made by the
Company) for all or part of the Common Stock, (2) at such time as a third
person, including a "group" as defined in Section 13(d)(3) of the Exchange Act,
becomes the beneficial owner of shares of the Company having 25% or more of the
total number of votes that may be cast for the election of Directors of the
Company, (3) on the date on which the stockholders of the company approve (i)
any agreement for a merger or consolidation in which the Company will not
survive as an independent, publicly owned corporation or (ii) any sale, exchange
or other disposition or all or substantially all of the Company's assets, or (4)
on any date on which the persons who were the Directors of the Company ninety
days prior to such date no longer constitute a majority of the Board of
Directors of the Company or any successor to the Company. The Committee's
reasonable determination as to whether such an event has occurred shall be final
and conclusive.
8.3.2 CORPORATION TRANSACTIONS OCCURRING AFTER ACQUISITION BY
CORIXA. This Section 8.3.2 shall govern treatment of outstanding awards in any
transaction occurring after the closing of the Company's acquisition by Corixa
Corporation. In the event of the proposed dissolution or liquidation of Corixa,
each Option will terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the Corixa Board of Directors. The
Corixa Board of Directors may, in the exercise of its sole discretion in such
instances, declare that any Option shall terminate as of a date fixed by the
Corixa Board of Directors and give each Optionee the right to exercise his or
her Option as to all or any part of the optioned stock, including shares as to
which the Option would not otherwise be exercisable. In the event of a proposed
sale of all or substantially all of the assets of Corixa, or the merger of
Corixa with or into another corporation, (i) if the Option is assumed or an
equivalent option is substituted by such successor corporation or a parent or
subsidiary of such successor corporation, one half of the unvested portion of
the Option shall be deemed to have vested immediately prior to the consummation
of such sale or merger, (ii) if the Option is not assumed or an equivalent
option is not substituted by such successor corporation or a parent or
subsidiary of such successor corporation, all of the unvested portion of the
Option shall be deemed to have vested immediately prior to the consummation of
such sale or merger and (iii) if an executive officer of Corixa is terminated
without cause within six months following the consummation of such sale or
merger, the entire unvested portion of the Options held by such executive
officer shall be deemed to have vested and become fully exercisable immediately
prior to any such termination. The Corixa Board of Directors may determine, in
the exercise of its sole discretion and in lieu of such assumption or
substitution, that the Optionee shall have the right to exercise the Option as
to some or all of the Optioned Stock, including Shares as to which the Option
would not otherwise be exercisable. If the vesting of the Option is accelerated
pursuant to this Section 8.3.2, the Corixa Board of Directors shall notify the
Optionee that the vesting of the Option has been accelerated and Optionee shall
have the right to exercise the Option prior to such sale or merger.
8.3.3 DEFINITION OF ASSUMPTION. For purposes of this Section 8.3, an
Option or other award shall be considered assumed, without limitation, if, at
the time of issuance of the stock or other consideration upon a Corporation
Transaction, each holder of an Option or other award would be entitled to
receive upon exercise of the Option or other award the same number and kind of
shares of stock or the same amount of property, cash or securities as such
holder would have been entitled to receive upon the occurrence of the
transaction if the holder had been, immediately prior to such transaction, the
holder of the number of shares of Common Stock covered by the Option or the
other award at such time (after giving effect to any adjustments in the number
of shares covered by the
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<PAGE> 311
Option or other award as provided for in Section 5.3 or in this Section 8.3);
provided however that if the consideration received in the transaction is not
solely common stock of the successor corporation (or its parent or Subsidiary),
the Board of Directors may, with the consent of the successor corporation,
provide for the consideration to be received upon exercise of the Option or
other award to be solely common stock of the successor corporation (or its
parent or Subsidiary) equal to the fair market value of the per share
consideration received by holders of Common Stock in the transaction.
3. Sections 9.1 is hereby amended to read in its entirety as follows:
9.1 TERMINATION OF EMPLOYMENT OF CONSULTING RELATIONSHIP. Upon termination
of an Optionee's employment of consulting relationship with the Company or a
Subsidiary for any reason other than as a result of Optionee's death or
disability, such Optionee may, but only within ninety (90) days after the date
of such termination (but in no event later than the date of expiration of the
term of such Option as set forth in the Option Agreement), exercise his or her
Option to the extent that he or she was entitled to exercise it at the date of
such termination. To the extent Optionee was not entitled to exercise the Option
at the date of termination, or if he or she does not exercise such Option to the
extent entitled within the time specified above, the Option shall terminate.
Unless otherwise determined by the Board of Directors or the Company, no
termination of an Optionee's employment or consulting relationship shall be
deemed to occur and this Section 9.1 shall not apply in the case of (a) sick
leave which does not constitute disability as defined in Section 9.3 below, (b)
military leave, (c) any other leave of absence approved by the Board of
Directors or the Company, provided that such leave is guaranteed by contract or
statute, or unless provided otherwise pursuant to Company policy from time to
time, (d) the Optionee is a consultant who becomes an employee, (e) the Optionee
is an employee who becomes a consultant, or (f) the Optionee transfers between
locations of the Company or between the Company, its Subsidiaries or affiliates.
4. Section 9.4 is hereby deleted in its entirety.
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<PAGE> 312
FIRST AMENDMENT TO THE
DIRECTORS' NON-QUALIFIED STOCK OPTION AGREEMENT
GRANTED PURSUANT TO THE
RIBI IMMUNOCHEM RESEARCH, INC.
1996 STOCK OPTION PLAN
This First Amendment (the "Amendment") to the Directors' Non-Qualified
Stock Option Agreement (the "Option Agreement") dated as , 19 by
and between Ribi ImmunoChem Research, Inc., a Delaware corporation, located at
533 Old Corvallis Road, Hamilton, MT 59840 ("the Company"), and ,
whose mailing address is (the "Optionee").
WHEREAS, pursuant to the terms of Section 5.22 of that certain Agreement of
Merger by and between Corixa Corporation and the Company dated June 9, 1999, the
Company is required to amend Section 3 of the Option Agreement as follows.
1. The Company and the Optionee hereby agree that Section 3(a) of the
Option Agreement is hereby amended to read in its entirety as follows:
"(a) If Optionee ceases to be a Director on the Company's Board of
Directors (the "Board") for any reason other than cause, disability (within the
meaning of subparagraph (c) below) or death during the Option Period, the Option
shall be exercisable, subject to the 6 month waiting period in Section 7.8.1 of
the 1996 Stock Option Plan, for the remainder of the Option Period, at the
expiration of which the Option shall terminate."
2. The Company and the Optionee hereby agree that Section 3(d) of the
option Agreement is deleted in its entirety.
IN WITNESS WHEREOF, this Amendment has been executed as of the day and year
first written above.
Ribi ImmunoChem Research, Inc., Optionee
A Delaware corporation
By:
- ------------------------------------ ------------------------------------
Title:
- ------------------------------------ Address:
------------------------------------
------------------------------------
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<PAGE> 313
APPENDIX F
FIRST AMENDMENT TO THE
RIBI IMMUNOCHEM RESEARCH, INC.
1996 DIRECTORS' STOCK OPTION PLAN
WHEREAS, pursuant to the terms of Section 5.23 of that certain Agreement of
Merger by and between Corixa Corporation and Ribi ImmunoChem Research, Inc. (the
"Company") dated June 9, 1999, the Company is required to amend Section 11(c) of
the 1996 Directors' Stock Option Plan (the "Plan").
The Company hereby amends the Plan as follows, such amendment to become
effective immediately prior to approval by the Company's stockholders of that
certain Agreement and Plan of Merger between the Company and Corixa Corporation:
1. Section 11(c) is hereby amended to read in its entirety as follows:
11(c) Corporate Transactions.
(1) CORPORATE TRANSACTIONS OCCURRING ON OR PRIOR TO ACQUISITION BY
CORIXA. This Section 11(c)(1) shall govern treatment of outstanding Options in
any transaction occurring on or prior to the closing of the Company's
acquisition by Corixa Corporation. In the event of any of the transactions
described in the following sentence, each Option and other award outstanding
under the Plan shall be assumed or an equivalent option or right substituted by
the successor corporation or a parent or Subsidiary of such successor
corporation, unless such successor corporation (or its parent or Subsidiary)
does not agree to such assumption or substitution in which case outstanding
options and other awards shall terminate. In the event of a Change in Control of
the Company, all outstanding Options shall become immediately vested and
exercisable. For purposes of this subsection, a Change in Control shall be
deemed to occur upon:
(i) The first purchase of Stock pursuant to a tender offer or
exchange offer (other than an offer made by the Company) for all or part of the
Stock;
(ii) a third person, including a "group" as defined in Section
13(d)(3) of the Exchange Act, becomes the beneficial owner of Shares of the
Company having 25% or more of the total number of votes that may be cast for the
election of Directors;
(iii) on any date on which the persons who were the Directors of the
Company ninety (90) days prior to such date no longer constitute a majority of
the Board of Directors of the Company or any successor to the Company;
(iv) approval by the Company's stockholders of a merger or
consolidation in which the Company will not survive as an independent publicly
owned corporation; or
(v) approval by the Company's stockholders of the sale or
disposition of all or substantially all of the assets of the Company
(2) CORPORATION TRANSACTIONS OCCURRING AFTER ACQUISITION BY
CORIXA. This Section 11(c)(2) shall govern treatment of outstanding awards in
any transaction occurring after the closing of the Company's acquisition by
Corixa Corporation.
In the event of the proposed dissolution or liquidation of Corixa, the
Option will terminate immediately prior to the consummation of such proposed
action, unless otherwise provided by the Corixa Board. The Corixa Board may, in
the exercise of its sole discretion in such instances, declare that any Option
shall terminate as of a date fixed by the Corixa Board and give each Optionee
the right to exercise his or her Option as to all or any part of the optioned
stock, including Shares as to which the Option would not otherwise be
exercisable. In the event of a proposed sale of all or
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<PAGE> 314
substantially all of the assets of Corixa, or the merger of Corixa with or into
another corporation, each Option outstanding under the Plan shall be assumed or
an equivalent option or right substituted by the successor corporation or a
parent or subsidiary of such successor corporation, unless such successor
corporation (or its parent or subsidiary) does not agree to such assumption or
substitution in which case outstanding awards shall terminate. If an Option is
to terminate pursuant to this Section 11(c)(2), Corixa shall notify the Optionee
as to such fact and shall notify the Optionee that he or she will have the right
to exercise the Option prior to such liquidation, dissolution, sale or merger.
(3) DEFINITION OF ASSUMPTION. For purposes of this Section 11(c), an
Option shall be considered assumed, without limitation, if, at the time of
issuance of the stock or other consideration upon a Corporate Transaction, each
holder of an Option would be entitled to receive upon exercise of the Option the
same number and kind of shares of stock or the same amount of property, cash or
securities as such holder would have been entitled to receive upon the
occurrence of the transaction if the holder had been, immediately prior to such
transaction, the holder of the number of shares of Common Stock covered by the
Option at such time (after giving effect to any adjustments in the number of
shares covered by the Option as provided for in Section this 11(c) or in Section
13); provided however that if the consideration received in the transaction is
not solely common stock of the successor corporation (or its parent or
Subsidiary), the Board of Directors may, with the consent of the successor
corporation, provide for the consideration to be received upon exercise of the
Option to be solely common stock of the successor corporation (or its parent or
Subsidiary) equal to the fair market value of the per share consideration
received by holders of Common Stock in the transaction.
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<PAGE> 315
FIRST AMENDMENT TO THE
DIRECTORS' NON-QUALIFIED STOCK OPTION AGREEMENT
GRANTED PURSUANT TO THE
RIBI IMMUNOCHEM RESEARCH, INC.
1996 DIRECTORS' STOCK OPTION PLAN
This First Amendment (the "Amendment") to the Directors' Non-Qualified
Stock Option Agreement (the "Option Agreement") dated as ,
19 by and between Ribi ImmunoChem Research, Inc., a Delaware
corporation, located at 533 Old Corvallis Road, Hamilton, MT 59840 (the
"Company"), and , whose mailing address is (the
"Optionee").
WHEREAS, pursuant to the terms of Section 5.23 of that certain Agreement of
Merger by and between Corixa Corporation and the Company dated June 9, 1999, the
Company is required to amend Section 3 of the Option Agreement as follows.
The Company and the Optionee hereby agree that Section 3(a) of the Option
Agreement is hereby amended to read in its entirety as follows:
"(a) If Optionee ceases to be a Director on the Company's Board of
Directors (the "Board") for any reason other than cause, disability (within
the meaning of subparagraph (c) below) or death during the Option Period,
the Option shall be exercisable, subject to the vesting period specified in
Section 4 of this Agreement, for the remainder of the Option Period, at the
expiration of which the Option shall terminate."
IN WITNESS WHEREOF, this Amendment has been executed as of the day and year
first written above.
Ribi ImmunoChem Research, Inc., Optionee
A Delaware corporation
By:
- ------------------------------------ ------------------------------------
Title:
- ------------------------------------ Address:
------------------------------------
------------------------------------
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<PAGE> 316
APPENDIX G
SIXTH AMENDMENT TO OPTION AGREEMENT BETWEEN
RIBI IMMUNOCHEM RESEARCH, INC. AND ROBERT E. IVY
This Sixth Amendment (the "Amendment") to the Option Agreement dated as of
, 1999 (Effective Date") is between Ribi ImmunoChem Research, Inc.,
a Delaware corporation, located at 533 Old Corvallis Road, Hamilton, MT 59840
(the "Company") and Robert E. Ivy, whose mailing address is P.O. Box 1648,
Hamilton, MT 59840 (the "Optionee").
WHEREAS, pursuant to the terms of Section 5.23 of that certain Agreement of
Merger by and between Corixa Corporation and the Company dated June 9, 1999, the
Company is required to amend the Option Agreement as set forth below.
The Company and the Optionee hereby agree that:
1. Section 2 of the Option Agreement is hereby amended to read as in its
entirety follows:
"2. This option shall expire at 5:00 P.M. mountain standard time on
December 31, 2001, and any shares not purchased on or before such date may not
thereafter be purchased hereunder."
2. Section 7(b) is hereby amended in its entirety to read as follows:
"In the event of the proposed dissolution or liquidation of the Company,
the Option will terminate immediately prior to the consummation of such proposed
action, unless otherwise provided by the Board of Directors. The Board of
Directors may, in the exercise of its sole discretion in such instances, declare
that any Option shall terminate as of a date fixed by the Board of Directors and
give each Optionee the right to exercise his or her Option as to all or any part
of the optioned stock, including shares as to which the Option would not
otherwise be exercisable. In the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, (i) if the Option is assumed or an equivalent
option is substituted by such successor corporation or a parent or subsidiary of
such successor corporation, one half of the unvested portion of the Option shall
be deemed to have vested immediately prior to the consummation of such sale or
merger, (ii) if the Option is not assumed or an equivalent option is not
substituted by such successor corporation or a parent or subsidiary of such
successor corporation, all of the unvested portion of the Option shall be deemed
to have vested immediately prior to the consummation of such sale or merger and
(iii) if an executive officer of the Company is terminated without cause within
six months following the consummation of such sale or merger, the entire
unvested portion of the Options held by such executive officer shall be deemed
to have vested and become fully exercisable immediately prior to any such
termination. The Board of Directors may determine, in the exercise of its sole
discretion and in lieu of such assumption or substitution, that the Optionee
shall have the right to exercise the Option as to some or all of the Optioned
Stock, including Shares as to which the Option would not otherwise be
exercisable. If the vesting of the Option is accelerated pursuant to this
Section 7(b), the Board of Directors shall notify the Optionee that the vesting
of the Option has been accelerated and Optionee shall have the right to exercise
the Option prior to such sale or merger."
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IN WITNESS WHEREOF, this Amendment has been executed as of the day and year
first written above.
Ribi ImmunoChem Research, Inc., Robert E. Ivy
A Delaware corporation
By:
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Title:
- ------------------------------------------------
Address:
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APPENDIX H
CORIXA CORPORATION
AMENDED AND RESTATED 1994 STOCK OPTION PLAN
1. PURPOSES OF THE PLAN. The purposes of this Stock Option Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to the Employees and Consultants
of the Company and to promote the success of the Company's business.
Options granted hereunder may be either Incentive Stock Options (as defined
under Section 422 of the Code) or Nonstatutory Stock Options, at the discretion
of the Board and as reflected in the terms of the written option agreement.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "Administrator" shall mean the Board or any of its Committees
appointed pursuant to Section 4 of the Plan.
(b) "Affiliate" shall mean an entity other than a Subsidiary (as defined
below) in which the Company owns an equity interest.
(c) "Applicable Laws" shall have the meaning set forth in Section 4(a)
below.
(d) "Board" shall mean the Board of Directors of the Company.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(f) "Committee" shall mean the Committee appointed by the Board of
Directors in accordance with Section 4(a) of the Plan, if one is appointed.
(g) "Common Stock" shall mean the Common Stock of the Company.
(h) "Company" shall mean Corixa Corporation, a Delaware corporation.
(i) "Consultant" means any person, including an advisor, who is engaged
by the Company or any Parent or Subsidiary to render services and is compensated
for such services, and any director of the Company whether compensated for such
services or not.
(j) "Continuous Status as an Employee or Consultant" shall mean the
absence of any interruption or termination of service as an Employee or
Consultant. Continuous Status as an Employee or Consultant shall not be
considered interrupted in the case of sick leave, military leave, or any other
leave of absence approved by the Administrator; provided that such leave is for
a period of not more than 90 days or reemployment upon the expiration of such
leave is guaranteed by contract or statute. For purposes of this Plan, a change
in status from an Employee to a Consultant or from a Consultant to an Employee
will not constitute a termination of employment.
(k) "Director" shall mean a member of the Board.
(l) "Employee" shall mean any person (including any Named Executive,
Officer or Director) employed by the Company or any Parent, Subsidiary or
Affiliate of the Company. The payment by the Company of a director's fee to a
Director shall not be sufficient to constitute "employment" of such Director by
the Company.
(m) "Exchange Act" shall mean the Exchange Act, as amended.
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(n) "Fair Market Value" means, as of any date, the value of Common Stock
determined as follows:
(i) If the Common Stock is listed on any established stock exchange
or a national market system including without limitation the National Market of
the National Association of Securities Dealers, Inc. Automated Quotation
("Nasdaq") System, its Fair Market Value shall be the closing sales price for
such stock as quoted on such system on the date of determination (if for a given
day no sales were reported, the closing bid on that day shall be used), as such
price is reported in The Wall Street Journal or such other source as the
Administrator deems reliable;
(ii) If the Common Stock is quoted on the Nasdaq System (but not on
the National Market thereof) or regularly quoted by a recognized securities
dealer but selling prices are not reported, its Fair Market Value shall be the
mean between the bid and asked prices for the Common Stock or;
(iii) In the absence of an established market for the Common Stock,
the Fair Market Value thereof shall be determined in good faith by the
Administrator.
(o) "Incentive Stock Option" shall mean an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code, as
designated in the applicable written option agreement.
(p) "Named Executive" shall mean any individual who, on the last day of
the Company's fiscal year, is the chief executive officer of the Company (or is
acting in such capacity) or among the four highest compensated officers of the
Company (other than the chief executive officer). Such officer status shall be
determined pursuant to the executive compensation disclosure rules under the
Exchange Act.
(q) "Nonstatutory Stock Option" shall mean an Option not intended to
qualify as an Incentive Stock Option, as designated in the applicable written
option agreement.
(r) "Officer" shall mean a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(s) "Option" shall mean a stock option granted pursuant to the Plan.
(t) "Optioned Stock" shall mean the Common Stock subject to an Option.
(u) "Optionee" shall mean an Employee or Consultant who receives an
Option.
(v) "Parent" shall mean a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(w) "Plan" shall mean this Amended and Restated 1994 Stock Option Plan.
(x) "Rule 16b-3" shall mean Rule 16b-3 promulgated under the Exchange
Act as the same may be amended from time to time, or any successor provision.
(y) "Share" shall mean a share of the Common Stock, as adjusted in
accordance with Section 14 of the Plan.
(z) "Subsidiary" shall mean a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 14 of
the Plan, the maximum aggregate number of shares that may be optioned and sold
under the Plan is 5,352,020 shares of Common Stock (the "Pool"). The Shares may
be authorized, but unissued, or reacquired Common Stock. On the first trading
day of each of the calendar years beginning in 1998 and ending in 1999, the Pool
shall be increased by an amount equal to three (3) percent of the
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outstanding Common Stock as of the last trading day of the prior fiscal year up
to a maximum of 500,000 shares in any calendar year. On the first trading day of
the calendar years beginning in 2000 and ending in 2004, the Pool shall be
increased by an amount equal to three (3) percent of the outstanding Common
Stock as of the last trading day of the prior fiscal year up to a maximum of
750,000 shares in any calendar year.
If an Option should expire or become unexercisable for any reason without
having been exercised in full, the unpurchased Shares that were subject thereto
shall, unless the Plan shall have been terminated, become available for future
grant under the Plan. Notwithstanding any other provision of the Plan, shares
issued under the Plan and later repurchased by the Company shall not become
available for future grant under the Plan.
4. ADMINISTRATION OF THE PLAN.
(a) COMPOSITION OF ADMINISTRATOR.
(i) MULTIPLE ADMINISTRATIVE BODIES. If permitted by Rule 16b-3, and
by the legal requirements relating to the administration of incentive stock
option plans, if any, of applicable securities laws and the Code (collectively,
the "Applicable Laws"), grants under the Plan may (but need not) be made by
different administrative bodies with respect to Directors, Officers who are not
directors and Employees who are neither Directors nor Officers.
(ii) ADMINISTRATION WITH RESPECT TO DIRECTORS AND OFFICERS. With
respect to grants of Options to Employees or Consultants who are also Officers
or Directors of the Company, grants under the Plan shall be made by (A) the
Board, if the Board may make grants under the Plan in compliance with Rule 16b-3
and Section 162(m) of the Code as it applies so as to qualify grants of Options
to Named Executives as performance-based compensation, or (B) a Committee
designated by the Board to make grants under the Plan, which Committee shall be
constituted in such a manner as to permit grants under the Plan to comply with
Rule 16b-3, to qualify grants of Options to Named Executives as
performance-based compensation under Section 162(m) of the Code and otherwise so
as to satisfy the Applicable Laws.
(iii) ADMINISTRATION WITH RESPECT TO OTHER PERSONS. With respect to
grants of Options to Employees or Consultants who are neither Directors nor
Officers of the Company, the Plan shall be administered by (A) the Board or (B)
a Committee designated by the Board, which Committee shall be constituted in
such a manner as to satisfy the Applicable Laws.
(iv) GENERAL. If a Committee has been appointed pursuant to
subsection (ii) or (iii) of this Section 4(a), such Committee shall continue to
serve in its designated capacity until otherwise directed by the Board. From
time to time the Board may increase the size of any Committee and appoint
additional members thereof, remove members (with or without cause) and appoint
new members in substitution therefor, fill vacancies (however caused) and remove
all members of a Committee and thereafter directly administer the Plan, all to
the extent permitted by the Applicable Laws and, in the case of a Committee
appointed under subsection (ii), to the extent permitted by Rule 16b-3, and to
the extent required under Section 162(m) of the Code to qualify grants of
Options to Named Executives as performance-based compensation.
(b) POWERS OF THE ADMINISTRATOR. Subject to the provisions of the Plan
and in the case of a Committee, the specific duties delegated by the Board to
such Committee, the Administrator shall have the authority, in its discretion:
(i) to determine the Fair Market Value of the Common Stock, in
accordance with Section 2(m) of the Plan;
(ii) to select the Employees and Consultants to whom Options may from
time to time be granted hereunder;
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(iii) to determine whether and to what extent Options are granted
hereunder;
(iv) to determine the number of shares of Common Stock to be covered
by each such award granted hereunder;
(v) to approve forms of agreement for use under the Plan;
(vi) to determine the terms and conditions, not inconsistent with the
terms of the Plan, of any award granted hereunder (including, but not limited
to, the share price and any restriction or limitation, or any vesting
acceleration or waiver of forfeiture restrictions regarding any Option and/or
the shares of Common Stock relating thereto, based in each case on such factors
as the Administrator shall determine, in its sole discretion);
(vii) to reduce the exercise price of any Option to the then current
Fair Market Value if the Fair Market Value of the Common Stock covered by such
Option shall have declined since the date the Option was granted.
(c) EFFECT OF ADMINISTRATOR'S DECISION. All decisions, determinations
and interpretations of the Administrator shall be final and binding on all
Optionees and any other holders of any Options.
5. ELIGIBILITY.
(a) RECIPIENTS OF GRANTS. Nonstatutory Stock Options may be granted to
Employees and Consultants. Incentive Stock Options may be granted only to
Employees, provided, however, that Employees of an Affiliate shall not be
eligible to receive Incentive Stock Options. An Employee or Consultant who has
been granted an Option may, if he or she is otherwise eligible, be granted an
additional Option or Options.
(b) TYPE OF OPTION. Each Option shall be designated in the written
option agreement as either an Incentive Stock Option or a Nonstatutory Stock
Option. However, notwithstanding such designations, to the extent that the
aggregate Fair Market Value of Shares with respect to which Incentive Stock
Options are exercisable for the first time by an Optionee during any calendar
year (under all plans of the Company or any Parent or Subsidiary) exceeds
$100,000, such excess Options shall be treated as Nonstatutory Stock Options.
For purposes of this Section 5(b), Incentive Stock Options shall be taken into
account in the order in which they were granted, and the Fair Market Value of
the Shares shall be determined as of the time the Option with respect to such
Shares is granted.
(c) NO EMPLOYMENT RIGHTS. The Plan shall not confer upon any Optionee
any right with respect to continuation of employment or consulting relationship
with the Company, nor shall it interfere in any way with his or her right or the
Company's right to terminate his or her employment or consulting relationship at
any time, with or without cause.
6. TERM OF PLAN. The Plan shall become effective (the "Effective Date")
upon the earlier to occur of its adoption by the Board or its approval by the
stockholders of the Company as described in Section 20 of the Plan. It shall
continue in effect for a term of ten (10) years unless sooner terminated under
Section 16 of the Plan.
7. TERM OF OPTION. The term of each Option shall be the term stated in the
Option Agreement; provided, however, that in the case of an Incentive Stock
Option, the term shall be no more than ten (10) years from the date of grant
thereof or such shorter term as may be provided in the Option Agreement.
However, in the case of an Option granted to an Optionee who, at the time the
Option is granted, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary,
the term of the Option shall be five (5) years from the date of grant thereof or
such shorter term as may be provided in the Option Agreement.
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8. LIMITATION ON GRANTS TO EMPLOYEES. Subject to adjustment as provided in
this Plan, the maximum number of Shares which may be subject to options granted
to any one Employee under this Plan for any fiscal year of the Company shall be
500,000.
9. OPTION EXERCISE PRICE AND CONSIDERATION.
(a) EXERCISE PRICE. The per Share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be such price as is determined by
the Administrator, but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time of the grant of such
Incentive Stock Option, owns stock representing more than ten percent (10%) of
the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be no less than 110% of the Fair
Market Value per Share on the date of grant; or
(B) granted to any other Employee, the per Share exercise price
shall be no less than 100% of the Fair Market Value per Share on the date of
grant.
(ii) In the case of a Nonstatutory Stock Option
(A) granted to a person who, at the time of the grant of such
Option, is a Named Executive of the Company, the per share Exercise Price shall
be no less than 100% of the Fair Market Value on the date of grant; or
(B) granted to any person other than a Named Executive, the per
Share exercise price shall be no less than 85% of the Fair Market Value per
Share on the date of grant.
(iii) Notwithstanding anything to the contrary in subsections 9(a)(i)
or 9(a)(ii) above, in the case of an Option granted on or after the effective
date of registration of any class of equity security of the Company pursuant to
Section 12 of the Exchange Act and prior to six months after the termination of
such registration, the per Share exercise price shall be no less than 100% of
the Fair Market Value per Share on the date of grant.
(b) PERMISSIBLE CONSIDERATION. The consideration to be paid for the
Shares to be issued upon exercise of an Option, including the method of payment,
shall be determined by the Administrator (and, in the case of an Incentive Stock
Option, shall be determined at the time of grant) and may consist entirely of
(1) cash, (2) check, (3) other Shares that (x) in the case of Shares acquired
upon exercise of an Option either have been owned by the Optionee for more than
six months on the date of surrender or were not acquired, directly or
indirectly, from the Company, and (y) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised, (4) authorization from the Company to retain from the
total number of Shares as to which the Option is exercised that number of Shares
having a Fair Market Value on the date of exercise equal to the exercise price
for the total number of Shares as to which the Option is exercised, (5) delivery
of a properly executed exercise notice together with irrevocable instructions to
a broker to deliver promptly to the Company the amount of sale or loan proceeds
required to pay the exercise price, (6) a combination of any of the foregoing
methods of payment, (7) in the discretion of the Administrator, a combination of
any of the foregoing methods of payment at least equal in value to the stated
capital represented by the Shares to be issued, plus a promissory note for the
balance of the exercise price on such terms as established by the Administrator,
or (8) such other consideration and method of payment for the issuance of Shares
to the extent permitted under Applicable Laws. In making its determination as to
the type of consideration to accept, the Administrator shall consider if
acceptance of such consideration may be reasonably expected to benefit the
Company.
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10. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER. Any Option granted
hereunder shall be exercisable at such times and under such conditions as
determined by the Administrator, including performance criteria with respect to
the Company and/or the Optionee, and as shall be permissible under the terms of
the Plan.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Administrator, consist of any
consideration and method of payment allowable under Section 9(b) of the Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a stockholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued) such stock certificate promptly upon exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 14 of the Plan.
Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) TERMINATION OF STATUS AS AN EMPLOYEE OR CONSULTANT. In the event of
termination of an Optionee's Continuous Status as an Employee or Consultant,
such Optionee may, but only within thirty (30) days (or such other period of
time, not exceeding three (3) months in the case of an Incentive Stock Option or
six (6) months in the case of a Nonstatutory Stock Option, as is determined by
the Administrator, with such determination in the case of an Incentive Stock
Option being made at the time of grant of the Option) after the date of such
termination (but in no event later than the date of expiration of the term of
such Option as set forth in the Option Agreement), exercise his or her Option to
the extent that he or she was entitled to exercise it at the date of such
termination. To the extent that the Optionee was not entitled to exercise the
Option at the date of such termination, or if the optionee does not exercise
such Option (which he or she was entitled to exercise) within the time specified
herein, the Option shall terminate.
(c) DISABILITY OF OPTIONEE. Notwithstanding Section 10(b) above, in the
event of termination of an Optionee's Continuous Status as an Employee or
Consultant as a result of his or her total and permanent disability (as defined
in Section 22(e)(3) of the Code), he or she may, but only within six (6) months
(or such other period of time not exceeding twelve (12) months as is determined
by the Administrator, with such determination in the case of an Incentive Stock
Option being made at the time of grant of the Option) from the date of such
termination (but in no event later than the date of expiration of the term of
such Option as set forth in the Option Agreement), exercise his or her Option to
the extent he or she was entitled to exercise it at the date of such
termination. To the extent that he or she was not entitled to exercise the
Option at the date of termination, or if he does not exercise such Option (which
he was entitled to exercise) within the time specified herein, the Option shall
terminate.
(d) DEATH OF OPTIONEE. In the event of the death of an Optionee:
(i) during the term of the Option who is at the time of his death an
Employee or Consultant of the Company and who shall have been in Continuous
Status as an Employee or
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Consultant since the date of grant of the Option, the Option may be exercised,
at any time within six (6) months (or such other period of time, not exceeding
twelve (12) months, as is determined by the Administrator, with such
determination in the case of an Incentive Stock Option being made at the time of
grant of the Option) following the date of death (but in no event later than the
date of expiration of the term of such Option as set forth in the Option
Agreement), by the Optionee's estate or by a person who acquired the right to
exercise the Option by bequest or inheritance but only to the extent of the
right to exercise that would have accrued had the Optionee continued living and
remained in Continuous Status as an Employee or Consultant three (3) months (or
such other period of time as is determined by the Administrator as provided
above) after the date of death, subject to the limitation set forth in Section
5(b); or
(ii) within thirty (30) days (or such other period of time not
exceeding three (3) months as is determined by the Administrator, with such
determination in the case of an Incentive Stock Option being made at the time of
grant of the Option) after the termination of Continuous Status as an Employee
or Consultant, the Option may be exercised, at any time within six (6) months
following the date of death (but in no event later than the date of expiration
of the term of such Option as set forth in the Option Agreement), by the
Optionee's estate or by a person who acquired the right to exercise the Option
by bequest or inheritance, but only to the extent of the right to exercise that
had accrued at the date of termination.
(e) RULE 16b-3. Options granted to persons subject to Section 16(b) of
the Exchange Act must comply with Rule 16b-3 and shall contain such additional
conditions or restrictions as may be required thereunder to qualify for the
maximum exemption from Section 16 of the Exchange Act with respect to Plan
transactions.
(f) UNVESTED SHARES. The Administrator shall have the discretion to
authorize the issuance of unvested shares of Common Stock under the Plan. Should
the optionee cease to be in Continuous Status as an Employee or Consultant while
holding such unvested shares, the Company shall have the right to repurchase, at
the exercise price paid per share, all or (at the discretion of the Company and
with the consent of the optionee) any of those unvested shares. The terms and
conditions upon which such repurchase right shall be exercisable (including the
period and procedure for exercise and the appropriate vesting schedule for the
purchased shares) shall be established by the Administrator and set forth in the
agreement evidencing such repurchase right. In no event, however, may the
Administrator impose a vesting schedule upon any option granted under the Plan
or any shares of Common Stock subject to the option which is more restrictive
than twenty percent (20%) per year vesting, beginning one (1) year after the
grant date. All outstanding repurchase rights under the Plan shall terminate
automatically upon the occurrence of a corporate transaction as discussed in
Section 14(b), except to the extent the repurchase rights are expressly assigned
to the successor corporation (or parent thereof) in connection with such
corporate transaction.
(g) FIRST REFUSAL RIGHTS. Until such time as the Company's outstanding
shares of Common Stock are first registered under Section 12(g) of the Exchange
Act, the Company shall have the right of first refusal with respect to any
proposed sale or other disposition by the optionee (or any successor in interest
by reason of purchase, gift or other transfer) of any shares of Common Stock
issued under the Plan. Such right of first refusal shall be exercisable in
accordance with the terms and conditions established by the Administrator and
set forth in the agreement evidencing such right.
11. WITHHOLDING TAXES. As a condition to the exercise of Options granted
hereunder, the Optionee shall make such arrangements as the Administrator may
require for the satisfaction of any federal, state, local or foreign withholding
tax obligations that may arise in connection with the exercise, receipt or
vesting of such Option. The Company shall not be required to issue any Shares
under the Plan until such obligations are satisfied.
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12. STOCK WITHHOLDING TO SATISFY WITHHOLDING TAX OBLIGATIONS. At the
discretion of the Administrator, Optionees may satisfy withholding obligations
as provided in this paragraph. When an Optionee incurs tax liability in
connection with an Option which tax liability is subject to tax withholding
under applicable tax laws, and the Optionee is obligated to pay the Company an
amount required to be withheld under applicable tax laws, the Optionee may
satisfy the withholding tax obligation by one or some combination of the
following methods: (a) by cash payment, or (b) out of Optionee's current
compensation, or (c) if permitted by the Administrator, in its discretion, by
surrendering to the Company Shares that (i) in the case of Shares previously
acquired from the Company, have been owned by the Optionee for more than six
months on the date of surrender, and (ii) have a fair market value on the date
of surrender equal to or less than Optionee's marginal tax rate times the
ordinary income recognized, or (d) by electing to have the Company withhold from
the Shares to be issued upon exercise of the Option that number of Shares having
a fair market value equal to the amount required to be withheld. For this
purpose, the fair market value of the Shares to be withheld shall be determined
on the date that the amount of tax to be withheld is to be determined (the "Tax
Date").
Any surrender by an Officer or Director of previously owned Shares to
satisfy tax withholding obligations arising upon exercise of this Option must
comply with the applicable provisions of Rule 16b-3.
All elections by an Optionee to have Shares withheld to satisfy tax
withholding obligations shall be made in writing in a form acceptable to the
Administrator and shall be subject to the following restrictions:
(a) the election must be made on or prior to the applicable Tax Date;
(b) once made, the election shall be irrevocable as to the particular
Shares of the Option as to which the election is made; and
(c) all elections shall be subject to the consent or disapproval of the
Administrator.
In the event the election to have Shares withheld is made by an Optionee
and the Tax Date is deferred under Section 83 of the Code because no election is
filed under Section 83(b) of the Code, the Optionee shall receive the full
number of Shares with respect to which the Option is exercised but such Optionee
shall be unconditionally obligated to tender back to the Company the proper
number of Shares on the Tax Date.
13. NON-TRANSFERABILITY OF OPTIONS. The Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution; provided that the Administrator
may in its discretion grant transferable Nonstatutory Stock Options pursuant to
option agreements specifying (i) the manner in which such Nonstatutory Stock
Options are transferable and (ii) that any such transfer shall be subject to the
Applicable Laws. The designation of a beneficiary by an Optionee will not
constitute a transfer. An Option may be exercised, during the lifetime of the
Optionee, only by the Optionee or a transferee permitted by this Section 13.
14. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION; CORPORATE TRANSACTIONS.
(a) ADJUSTMENT. Subject to any required action by the stockholders of
the Company, the number of shares of Common Stock covered by each outstanding
Option, the number of shares of Common Stock that have been authorized for
issuance under the Plan but as to which no Options have yet been granted or
which have been returned to the Plan upon cancellation or expiration of an
Option, the maximum number of shares of Common Stock for which Options may be
granted to any employee under Section 8 of the Plan, and the price per share of
Common Stock covered by each such outstanding Option, shall be proportionately
adjusted for any increase or decrease in the number
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of issued shares of Common Stock resulting from a stock split, reverse stock
split, stock dividend, combination or reclassification of the Common Stock, or
any other increase or decrease in the number of issued shares of Common Stock
effected without receipt of consideration by the Company; provided, however,
that conversion of any convertible securities of the Company shall not be deemed
to have been "effected without receipt of consideration." Such adjustment shall
be made by the Administrator, whose determination in that respect shall be
final, binding and conclusive. Except as expressly provided herein, no issuance
by the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares of Common Stock
subject to an Option.
(b) CORPORATE TRANSACTIONS. In the event of the proposed dissolution or
liquidation of the Company, the Option will terminate immediately prior to the
consummation of such proposed action, unless otherwise provided by the
Administrator. The Administrator may, in the exercise of its sole discretion in
such instances, declare that any Option shall terminate as of a date fixed by
the Administrator and give each Optionee the right to exercise his or her Option
as to all or any part of the Optioned Stock, including Shares as to which the
Option would not otherwise be exercisable. In the event of a proposed sale of
all or substantially all of the assets of the Company, or the merger of the
Company with or into another corporation, (i) if the Option is assumed or an
equivalent option is substituted by such successor corporation or a parent or
subsidiary of such successor corporation, one half of the unvested portion of
the Option shall be deemed to have vested immediately prior to such sale or
merger, (ii) if the Option is not assumed or an equivalent option is not
substituted by such successor corporation or a parent or subsidiary of such
successor corporation, all of the unvested portion of the Option shall be deemed
to have vested immediately prior to such sale or merger and (iii) if an
executive officer of the Company is terminated without cause within six-months
following the consummation of such sale or merger, the entire unvested portion
of the Options held by such executive officer shall be deemed to have vested and
become fully exercisable immediately prior to any such termination. The
Administrator may determine, in the exercise of its sole discretion and in lieu
of such assumption or substitution, that the Optionee shall have the right to
exercise the Option as to some or all of the Optioned Stock, including Shares as
to which the Option would not otherwise be exercisable. If the vesting of the
Option is accelerated pursuant to this Section 14(b), the Administrator shall
notify the Optionee that the vesting of the Option has been accelerated and
Optionee shall have the right to exercise the Option prior to such sale or
merger.
15. TIME OF GRANTING OPTIONS. The date of grant of an Option shall, for all
purposes, be the date on which the Administrator makes the determination
granting such Option or such other date as is determined by the Administrator;
provided however that in the case of any Incentive Stock Option, the grant date
shall be the later of the date on which the Administrator makes the
determination granting such Incentive Stock Option or the date of commencement
of the Optionee's employment relationship with the Company. Notice of the
determination shall be given to each Employee or Consultant to whom an Option is
so granted within a reasonable time after the date of such grant.
16. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Board may amend or terminate the Plan
from time to time in such respects as the Board may deem advisable; provided
that, the following revisions or amendments shall require approval of the
stockholders of the Company in the manner described in Section 20 of the Plan:
(i) any increase in the number of Shares subject to the Plan, other
than an adjustment under Section 14 of the Plan;
(ii) any change in the designation of the class of persons eligible
to be granted Options; or
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(iii) any change in the limitation on grants to employees as
described in Section 8 of the Plan or other changes which would require
stockholder approval to qualify options granted hereunder as performance-based
compensation under Section 162(m) of the Code.
(b) STOCKHOLDER APPROVAL. If any amendment requiring stockholder
approval under Section 16(a) of the Plan is made subsequent to the first
registration of any class of equity securities by the Company under Section 12
of the Exchange Act, such stockholder approval shall be solicited as described
in Section 20 of the Plan.
(c) EFFECT OF AMENDMENT OR TERMINATION. Any such amendment or
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee and
the Board, which agreement must be in writing and signed by the Optionee and the
Company.
17. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued pursuant
to the exercise of an Option unless the exercise of such Option and the issuance
and delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the Exchange Act, the rules and regulations promulgated thereunder, and
the requirements of any stock exchange upon which the Shares may then be listed,
and shall be further subject to the approval of counsel for the Company with
respect to such compliance.
As a condition to the exercise of an Option, the Company may require the
person exercising such Option to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without any
present intention to sell or distribute such Shares if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned relevant provisions of law.
18. RESERVATION OF SHARES. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan. The inability of the Company
to obtain authority from any regulatory body having jurisdiction, which
authority is deemed by the Company's counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.
19. OPTION AGREEMENT. Options shall be evidenced by written option
agreements in such form as the Board shall approve.
20. STOCKHOLDER APPROVAL.
(a) Continuance of the Plan shall be subject to approval by the
stockholders of the Company within twelve (12) months before or after the date
the Plan is adopted. Such stockholder approval shall be obtained in the manner
and to the degree required under applicable federal and state law and the rules
of any stock exchange upon which the Shares are listed.
(b) In the event that the Company registers any class of equity
securities pursuant to Section 12 of the Exchange Act, any required approval of
the stockholders of the Company obtained after such registration shall be
solicited substantially in accordance with Section 14(a) of the Exchange Act and
the rules and regulations promulgated thereunder.
(c) If any required approval by the stockholders of the Plan itself or
of any amendment thereto is solicited at any time otherwise than in the manner
described in Section 20(b) hereof, then the Company shall, at or prior to the
first annual meeting of stockholders held subsequent to the later of (1) the
first registration of any class of equity securities of the Company under
Section 12 of the
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Exchange Act or (2) the granting of an Option hereunder to an officer or
director after such registration, do the following:
(i) furnish in writing to the holders entitled to vote for the Plan
substantially the same information that would be required (if proxies to be
voted with respect to approval or disapproval of the Plan or amendment were then
being solicited) by the rules and regulations in effect under Section 14(a) of
the Exchange Act at the time such information is furnished; and
(ii) file with, or mail for filing to, the Securities and Exchange
Commission four copies of the written information referred to in subsection (i)
hereof not later than the date on which such information is first sent or given
to stockholders.
21. FINANCIAL REPORTS.
The Company shall deliver a balance sheet and an income statements at least
annually to each individual holding an outstanding option under the Plan, unless
such individual is a key employee whose duties in connection with the Company
assure such individual access to equivalent information.
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APPENDIX I
EQUITY LINE OF CREDIT
AND
SECURITIES PURCHASE AGREEMENT
This Equity Line of Credit and Securities Purchase Agreement (the
"Agreement") is entered into as of April 8, 1999 (the "Execution Date"), by and
among Corixa Corporation, a Delaware corporation, with a principal office
located at 1124 Columbia Street, Suite 200, Seattle, Washington 98104 (the
"Company"), and Castle Gate, L.L.C., a Washington limited liability company,
with a principal office located at 2365 Carillon Point, Kirkland, Washington
98033, (the "Investor").
WHEREAS:
A. The Company and the Investor are executing and delivering this Agreement
in reliance upon the exemption from securities registration afforded by Rule 506
under Regulation D ("Regulation D") as promulgated by the United States
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "1933 Act");
B. The Company has authorized a new series of preferred stock, $0.001 par
value, designated as Series A Preferred Stock (the "Preferred Stock"), having
the rights, preferences and privileges set forth in the Certificate of
Designation of Rights, Preferences and Privileges substantially in the form
attached hereto as Exhibit A (the "Certificate of Designation");
C. The Preferred Stock is convertible into shares of common stock, $0.001
par value per share, of the Company (the "Common Stock"), upon the terms and
subject to the limitations and conditions set forth in the Certificate of
Designation;
D. The Investor desires to provide to the Company an equity line of credit
in the aggregate amount of Fifty Million Dollars ($50,000,000) upon the terms
and conditions set forth in this Agreement, in exchange for which the Company
desires to issue and sell to the Investor and the Investor desires to purchase
(i) a maximum aggregate of Fifty Thousand (50,000) shares of Preferred Stock,
with each share having a purchase price of One Thousand Dollars ($1,000), for a
maximum aggregate purchase price of Fifty Million Dollars ($50,000,000), (ii) a
warrant to purchase up to Five Hundred Thousand (500,000) shares of Common Stock
substantially in the form attached hereto as Exhibit B (the "10 Year Warrant")
and (iii) a series of additional warrants to purchase shares of Common Stock
with an aggregate market value of Eight Million One Hundred and Twenty-Five
Thousand Dollars ($8,125,000) substantially in the forms attached hereto as
Exhibits C, D, and E (collectively, the "5 Year Warrants" and together with the
10 Year Warrant, the "Warrants"); and
E. Contemporaneous with the execution and delivery of this Agreement, the
parties hereto are executing and delivering a Registration Rights Agreement,
substantially in the form attached hereto as Exhibit F (the "Registration Rights
Agreement"), pursuant to which the Company has agreed to provide certain
registration rights under the 1933 Act and the Investor has agreed to provide
certain notices of sale, each as set forth therein.
F. Contemporaneous with the execution and delivery of this Agreement, the
parties hereto are executing and delivering a Standstill Agreement,
substantially in the form attached hereto as Exhibit G (the "Standstill
Agreement"), so as to provide limits on the Investor's ownership of capital
stock of the company other than pursuant to this Agreement.
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NOW THEREFORE, the Company and Investor hereby agree as follows:
1. Equity Line of Credit
a. Equity Line of Credit. Subject to the terms and conditions hereof,
the Investor agrees to maintain, for a period of two (2) years subsequent to the
consummation of the Initial Draw (as defined below), an equity line of credit in
the aggregate principal amount of Fifty Million Dollars ($50,000,000) (the "Line
of Credit") pursuant to which funds will be available solely to the Company
within ten (10) business days notice following the Company's request for such
funds in accordance with the terms set forth in this Agreement.
b. Initial Draw. On the Execution Date, the Investor shall provide the
Company under the Line of Credit, and the Company shall draw down under the Line
of Credit, Twelve Million Five Hundred Thousand Dollars ($12,500,000) (the
"Initial Draw"), thereby reducing to Thirty Seven Million Five Hundred Thousand
Dollars ($37,500,000) the remaining amount available to the Company under the
Line of Credit.
c. Subsequent Draws. After the Initial Draw, any further draw downs by
the Company under the Line of Credit (each individually a "Subsequent Draw" and
collectively, the "Subsequent Draws") shall take place solely at the option of,
and upon the request by, the Company, provided that (i) no less than Twelve
Million Five Hundred Thousand Dollars ($12,500,000) shall be requested by the
Company or provided by the Investor per each Subsequent Draw, unless an
aggregate of less than Twelve Million Five Hundred Thousand Dollars
($12,500,000) remains available under the Line of Credit, in which case the
Company may request the remaining amount of the Line of Credit, (ii) the Company
must request any such Subsequent Draw(s) within two (2) years of the
consummation of the Initial Draw, and (iii) subject to Section 5(d) hereof, the
Company has provided the Investor with ten (10) business days notice of its
request for any such Subsequent Draw(s). Upon such request by the Company, the
Investor shall provide the Company with the full amount of the requested funds.
2. Purchase and Sale of Securities.
a. Sale of Preferred Shares. Subject to the terms and conditions hereof,
in consideration for the Line of Credit described above, the Company shall issue
and sell to Investor, and Investor agrees to purchase from the Company, up to
Fifty Thousand (50,000) shares of Series A Preferred Stock (collectively,
together with any Preferred Stock issued in replacement thereof or as a dividend
thereon or otherwise with respect thereto in accordance with the terms thereof,
the "Preferred Shares") each with a purchase price of One Thousand Dollars
($1,000) per share (the "Purchase Price"), for a maximum aggregate purchase
price of Fifty Million Dollars ($50,000,000). One (1) Preferred Share will be
issued to the Investor for each One Thousand Dollars ($1,000) provided by the
Investor to the Company pursuant to the Line of Credit. The shares of Common
Stock issuable or issued upon conversion of the Preferred Stock are referred to
herein as the "Conversion Shares." The Preferred Stock, the Warrants and the
Conversion Shares are collectively referred to herein as the "Securities."
b. Issuance of Warrants. Also in consideration of the Line of Credit,
and subject to the terms and conditions hereof, on the Initial Closing, as
defined below, the Company will issue to Investor, and Investor will acquire
from the Company, the 10 Year Warrant and the 5 Year Warrant attached hereto as
Exhibit C (collectively, the "Initial Closing Warrants"). In addition, the 5
Year Warrants attached hereto as Exhibits D and E, respectively, will be issued
to the Investor on the first anniversary and the second anniversary of the
Execution Date, respectively. Each issuance of Warrants will be pursuant to the
terms and conditions set forth in each of the respective Warrants.
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c. Initial and Subsequent Closings. Subject to the terms set forth in
this Agreement, the issuance, sale and purchase of the Preferred Stock and
Warrants shall be consummated in one or more separate closings. The first
closing is hereinafter referred to as the "Initial Closing" and any later
closing is hereinafter referred to as a "Subsequent Closing" (the Initial
Closing and any Subsequent Closings, sometimes referred to herein as a
"Closing"). The Initial Closing shall occur, subject to the satisfaction of the
conditions set forth in Sections 7 and 8, on the Execution Date, immediately
following consummation of the Initial Draw (when the Company receives
confirmation from the applicable bank that the wire transfer of Twelve Million
Five Hundred Thousand Dollars ($12,500,000) has been deposited into the account
designated by the Company), and the issuance and sale by the Company of Twelve
Thousand Five Hundred (12,500) Preferred Shares to the Investor and the issuance
of the Initial Closing Warrant(s).
d. Subsequent Closing Notice. The Company, at its sole election, may
consummate (a) Subsequent Closing(s) by delivering, subject to Section 5(d)
hereof, a notice satisfying the conditions of this Section (the "Subsequent
Closing Notice") to the Investor at least ten (10) business days prior to the
date that the Company desires to make a Subsequent Draw. The Company may request
the Subsequent Draw(s) at any time on or prior to the date that is two years
from the date of the Initial Closing. In the Subsequent Closing Notice, the
Company shall represent to the Investor that (i) the Company elects to
consummate the transactions contemplated hereby as a Subsequent Draw and (ii)
the conditions set forth in Section 8 hereof have been satisfied, subject to an
updated Schedule of Exceptions.
e. Issuance and Sale of Securities at Subsequent Closing(s). Each
Subsequent Closing (if any) shall occur, subject to the satisfaction of the
conditions set forth in Sections 7 and 8, upon consummation of (i) the
applicable Subsequent Draw (when the Company receives confirmation that the wire
transfer of the full amount of requested funds has been deposited into the
account designated by the Company) and the corresponding issuance and sale by
the Company to the Investor of that number of Preferred Shares equal to the
amount of funds requested by the Company in such Subsequent Draw divided by One
Thousand Dollars ($1,000). The Company shall issue and sell to Investor and
Investor shall purchase from the Company a minimum of Twelve Thousand Five
Hundred (12,500) shares of Preferred Stock.
f. Payment. At each Closing, the Investor shall pay the aggregate
Purchase Price for the Preferred Stock and the Warrant(s), if applicable, being
purchased by Investor by wire transfer to the Company, in accordance with the
Company's written wiring instructions, against delivery of duly executed stock
certificates for the same, and the Company shall deliver such Preferred Stock
and Warrants, if applicable, against delivery of such aggregate Purchase Price.
g. Closing Dates. Subject to the satisfaction of the conditions set
forth in Sections 7 and 8 below, the date and time of the issuance, sale and
purchase of the Securities pursuant to this Agreement shall be (i) for the
Initial Closing, on the Execution Date and (ii) for each Subsequent Closing (if
any), subject to Section 5(d) hereof, on the day ten (10) business days
following receipt by the Investor of the Subsequent Closing Notice from the
Company. Each Closing shall occur at 12:00 p.m. Pacific Time, at the offices of
Venture Law Group, 4750 Carillon Point, Kirkland, Washington 98033.
3. Investor's Representations and Warranties. Investor represents and
warrants to the Company that, as of the date hereof:
a. Investment Purpose. The Investor is purchasing the Securities for its
own account as principal for investment only and not with a present view towards
the public sale or distribution thereof, except pursuant to sales registered or
exempted from registration under the 1933 Act.
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b. Accredited Investor Status. The Investor is an "accredited investor"
as that term is defined in Rule 501(a) of Regulation D and has such business and
financial experience as is required to give it the capacity to protect its own
interests in connection with the purchase of the Securities.
c. Reliance on Exemptions. The Investor understands that the Securities
are being offered and sold to it in reliance upon specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying upon the truth and accuracy of, and the Investor's
compliance with, the representations, warranties, agreements, covenants,
acknowledgments and understandings of the Investor set forth herein in order to
determine the availability of such exemptions and the eligibility of the
Investor to acquire the Securities.
d. Information. The Investor and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Securities
and the Line of Credit which have been requested by the Investor or its
advisors. The Investor and its advisors, if any, have been afforded the
opportunity to ask questions of the Company and have received what the Investor
believes to be satisfactory answers to any such inquiries. Neither such
inquiries nor any other due diligence investigation conducted by the Investor or
any of its advisors or representatives shall modify, amend or affect the
Investor's right to rely on the Company's representations and warranties
contained in Section 4 below. The Investor understands that its investment in
the Securities involves a significant degree of risk.
e. Governmental Review. The Investor understands that no United States
federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the Securities.
f. Transfer or Resale. The Investor understands that (i) no public
market now exists for the Securities and that the Company has made no assurances
that a public market will ever exist for the Securities, (ii) except as provided
in the Registration Rights Agreement, the Securities have not been and are not
being registered under the 1933 Act or any applicable state securities laws, and
may not be transferred unless (a) subsequently included in an effective
registration statement thereunder, (b) the Investor shall have delivered to the
Company an opinion of counsel (which opinion shall be satisfactory to the
Company) to the effect that the Securities to be sold or transferred may be sold
or transferred pursuant to an exemption from such registration or (c) sold
pursuant to Rule 144 promulgated under the 1933 Act (or a successor rule) ("Rule
144")), (iii) any sale of such Securities made in reliance on Rule 144 may be
made only in accordance with the terms of said Rule and further, if Rule 144 is
not applicable, any resale of such Securities under circumstances in which the
seller (or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the 1933 Act) may require compliance
with some other exemption under the 1933 Act or the rules and regulations of the
"SEC" thereunder, and (iv) neither the Company nor any other person is under any
obligation to register such Securities under the 1933 Act or any state
securities laws or to comply with the terms and conditions of any exemption
thereunder (in each case, other than pursuant to the Registration Rights
Agreement).
g. Legends. The Investor understands that the Preferred Shares, the
Warrants and, until such time as the Conversion Shares have been registered
under the 1933 Act as contemplated by the Registration Rights Agreement, the
Conversion Shares, may bear a restrictive legend in substantially the following
form (and a stop-transfer order may be placed against transfer of the
certificates for such Securities):
(i) The following legend under the 1933 Act:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE
OFFERED, SOLD, TRANSFERRED, ASSIGNED, PLEDGED
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OR HYPOTHECATED ABSENT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR
COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH ACT, OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL,
THAT SUCH REGISTRATION IS NOT REQUIRED"; and
(ii) Any other legend required by the laws of any state in which the
Securities will be issued.
The legend set forth above shall be removed and the Company shall issue
a certificate without such legend to the holder of any Security upon which it is
stamped, if, unless otherwise required by applicable state securities laws, (a)
such Security is registered for sale under an effective registration statement
filed under the 1933 Act, or (b) such holder provides the Company with an
opinion of counsel, satisfactory to the Company, to the effect that a public
sale or transfer of such Security may be made without registration under the
1933 Act and such sale or transfer is effected or (c) such holder provides the
Company with reasonable assurances that such Security can be sold pursuant to
Rule 144 under the 1933 Act (or a successor rule thereto) without any
restriction as to the number of Securities acquired as of a particular date that
can then be immediately sold. The Investor agrees to sell all Securities,
including those represented by a certificate(s) from which the legend has been
removed, in compliance with applicable prospectus delivery requirements, if any.
h. Authorization; Enforcement. The Investor represents and warrants to
the Company that (i) the Investor has all requisite legal and corporate or other
power and capacity and has taken all requisite corporate or other action to
execute and deliver this Agreement, to purchase the Securities to be purchased
by it and to carry out and perform all of its obligations under this Agreement,
and (ii) this Agreement constitutes the legal, valid and binding obligation of
the Investor, enforceable in accordance with its terms, except (1) as limited by
applicable bankruptcy, insolvency, reorganization, or similar laws relating to
or affecting the enforcement of creditors' rights generally and (2) as limited
by equitable principles generally and (iii) to the extent that indemnification
provisions in the Registration Rights Agreement may be limited by applicable
federal or state securities laws.
i. Transactions in Common Stock of the Company. As of the date hereof,
Investor owns no shares of the Common Stock of the Company. In addition,
Investor represents that it has not, within the ninety (90) days prior to the
date hereof, engaged in any purchases or sales of the Common Stock of the
Company or, without limitation, any puts, calls, futures contracts, short sales
or hedging or arbitrage transactions with respect thereto.
j. Residency. The Investor is a limited liability company organized
under the laws of the State of Washington and is a resident of the State of
Washington.
k. No Legal, Tax or Investment Advice. The Investor understands that
nothing in this Agreement or any other materials presented to the Investor in
connection with the purchase and sale of the Securities constitutes legal, tax
or investment advice. The Investor has consulted such legal, tax and investment
advisors as it, in its sole discretion, has deemed necessary or appropriate in
connection with this Agreement and all exhibits hereto and the transactions
contemplated herein and therein.
4. Representations and Warranties of the Company. The Company represents
and warrants to the Investor that, except as set forth in the Schedule of
Exceptions attached hereto as Exhibit H, as of the date hereof:
a. Organization and Qualification. The Company is duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is incorporated, with requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as presently
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conducted and/or proposed to be conducted. The Company is qualified to do
business as a foreign corporation in each jurisdiction in which the ownership of
its property or the nature of its business requires such qualification, except
where failure to so qualify would not have an Adverse Effect on the Company. For
purposes of this Agreement, "Adverse Effect" means with respect to the Company
and its subsidiaries, taken as a whole, any event, change or effect that, when
taken individually or together with all other adverse changes and effects, is or
is reasonably likely to be materially adverse to the condition (financial or
otherwise), properties, assets, liabilities, business, operations, or results of
operations of the Company and its subsidiaries taken as a whole.
b. Authorization; Enforcement. The Company has all requisite legal and
corporate power and has taken all requisite corporate action to execute and
deliver this Agreement, the Registration Rights Agreement, the Standstill
Agreement and the Warrants, to sell and issue the Preferred Shares and the
Warrants and to carry out and perform all of its obligations under this
Agreement, the Registration Rights Agreement, the Standstill Agreement and the
Warrants. All corporate action on the part of the Company, its directors and
stockholders necessary for the authorization, execution, delivery and
performance of this Agreement, the Registration Rights Agreement, the Standstill
Agreement and the Warrants by the Company, and the authorization, sale, issuance
and delivery of the Securities being sold hereunder by the Company and the
performance of the Company's obligations hereunder and under the Warrants, the
Standstill Agreement and the Registration Rights Agreement has been taken. This
Agreement, the Registration Rights Agreement, the Standstill Agreement and the
Warrants constitute the legal, valid and binding obligations of the Company,
enforceable in accordance with their respective terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization or similar laws relating to or
affecting the enforcement of creditors' rights generally, (ii) as limited by
equitable principles generally and (iii) to the extent that indemnification
provisions in the Registration Rights Agreement may be limited by applicable
federal or state securities laws.
c. Capitalization. The authorized capital stock of the Company consists
of Forty Million (40,000,000) shares of Common Stock, One-Tenth of One Cent
($0.001) par value per share, of which there were Fourteen Million Six Hundred
Sixty Nine Thousand Three Hundred and Eighty-Five (14,669,385) shares issued and
outstanding as of March 31, 1999, and Ten Million (10,000,000) shares of
Preferred Stock, $0.001 par value per share, none of which shares are issued and
outstanding. All outstanding shares of the Company Common Stock are duly
authorized, validly issued, fully paid and nonassessable, free of any liens or
encumbrances and are not subject to preemptive rights created by statute, the
certificate of incorporation or bylaws of the Company or any agreement or
document to which the Company is a party or by which it is bound. As of March
31, 1999, the Company had reserved an aggregate of Two Million Eight Hundred
Fifty Four Thousand Nine Hundred and Eighty-Three (2,854,983) shares of the
Company Common Stock, net of exercises, for issuance under the Corixa
Corporation 1994 Amended and Restated Stock Option Plan (the "Corixa Stock
Option Plan"), the Corixa Corporation Directors' Stock Option Plan (the "Corixa
Directors' Plan"), and the Corixa Corporation 1997 Employee Stock Purchase Plan
(the "Corixa ESPP", and together with the Corixa Stock Option Plan and the
Corixa Directors' Plan, the "Corixa Plans"). As of March 31, 1999, the Company
had reserved Two Million Four Hundred Forty One Thousand Nine Hundred and
Ninety-Three (2,441,993) shares of the Company's Common Stock for issuance to
employees, directors and consultants pursuant to the Corixa Stock Option Plan,
of which Three Hundred Twenty Five Thousand Two Hundred and Eighty-Three
(325,283) shares have been issued pursuant to option exercises, and One Million
Nine Hundred Sixty Seven Thousand Nine Hundred and Forty-Two (1,967,942) shares
are subject to outstanding, unexercised options. As of March 31, 1999, the
Company had reserved Three Hundred Thousand (300,000) shares of the Company's
Common Stock for issuance to directors pursuant to the Corixa Directors' Plan,
of which Seventy Five Thousand (75,000) are subject to outstanding, unexercised
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options. As of March 31, 1999, the Company had reserved One Hundred Thirty
Thousand Eight Hundred and Eighty-Seven (130,887) shares of the Company's Common
Stock for issuance to employees pursuant to the Corixa ESPP, of which Seventeen
Thousand Eight Hundred and Ninety-Seven (17,897) shares have been issued to
employees. Other than as set forth in the Schedule of Exceptions or as
contemplated in this Agreement, there are no other options, warrants, calls,
rights, commitments or agreements of any character to which the Company is a
party or by which either the Company is bound or obligating the Company to
issue, deliver, sell, repurchase or redeem, or cause to be issued, delivered,
sold, repurchased or redeemed, any shares of the capital stock of the Company or
obligating the Company to grant, extend or enter into any such option, warrant,
call, right, commitment or agreement.
d. Issuance of Shares. The Securities are duly authorized and, upon
issuance in accordance with the terms of this Agreement (including the issuance
of the Conversion Shares upon conversion of the Preferred Shares in accordance
with the Certificate of Designation) will be validly issued, fully paid and
non-assessable, and free from all taxes, liens and charges with respect to the
issue thereof and shall not be subject to preemptive rights or other similar
rights of stockholders of the Company. Based in part upon the representations of
the Investor in this Agreement, the offer, sale and issuance of the Preferred
Stock and Warrants will be made in compliance with all applicable federal and
state securities laws. The shares of Common Stock issuable upon conversion of
the Preferred Stock and exercise of the Warrants have been duly and validly
reserved and, upon issuance in accordance with the terms of the Certificate of
Designation and the Warrants, respectively, will be duly and validly issued,
fully-paid and nonassessable, and will be issued in compliance with all
applicable federal and state securities laws.
e. No Conflicts. The execution, delivery and performance of this
Agreement, the Registration Rights Agreement, the Standstill Agreement and the
Warrants by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the filing of
the Certificate of Designation and the issuance and reservation for issuance of
the Conversion Shares) will not (i) conflict with or result in a violation of
any provision of the Certificate of Incorporation or Bylaws or (ii) violate or
conflict with, or result in a breach of any provision of, or constitute a
default (or an event which with notice or lapse of time or both is reasonably
likely to become a default) under, or give to others any rights of termination,
acceleration or cancellation of, any indenture, mortgage, lease or other
material agreement or instrument which the Company is required to file with the
SEC as an exhibit to its Filings under the 1934 Act (as defined below)
("Material Agreements"), or result in a violation of any law, rule, regulation,
order, judgment or decree (including federal and state securities laws and
regulations) applicable to the Company or by which any property or asset of the
Company is bound or affected (in each case except for such conflicts, defaults,
terminations, accelerations, cancellations and violations that are not
reasonably likely to, individually or in the aggregate, have an Adverse Effect).
f. Accuracy of Reports; Financial Statements. All reports required to be
filed with the SEC by the Company during the twelve (12) month period preceding
the date of this Agreement under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), copies of which have been made available to the Investor
(the "SEC Documents"), have been duly and timely filed, were in substantial
compliance with the requirements of their respective forms when filed, were
complete and correct in all material respects as of the dates at which the
information was furnished, and contained (as of such dates) no untrue statement
of a material fact nor omitted to state a material fact necessary in order to
make the statements made therein in light of the circumstances in which made not
misleading. The financial statements of the Company included in the SEC
Documents (the "Financial Statements") comply as to form in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto. The Financial Statements have
been prepared in accordance with generally accepted accounting principles
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("GAAP") consistently applied and fairly present the consolidated financial
position of the Company and any subsidiaries at the dates thereof and the
consolidated results of operations and consolidated cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal, recurring
adjustments). Except as set forth in the SEC Documents, the Company does not
have any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by GAAP to be set forth on a balance sheet of
the Company or in the notes thereto which could reasonably be expected to have
an Adverse Effect on the Company.
g. Changes. Since March 22, 1999, (the date on which the Company's Form
10-K for the year ended December 31, 1998 was filed with the SEC), there has not
been (a) any incurrence by the Company of any material liability, absolute or
contingent, or (b) any event or condition of any character that has materially
and adversely affected or might materially and adversely affect the business,
properties, prospects or financial condition of the Company (as such business is
presently conducted and as it is proposed to be conducted). There is no material
liability or contingency of the Company that is not disclosed in the SEC
Documents.
h. Governmental Consents, etc. No consent, approval or authorization of
or designation, declaration or filing with any governmental authority on the
part of the Company is required in connection with the valid execution and
delivery of this Agreement, any of the Warrants, the Standstill Agreement or the
Registration Rights Agreement, or the consummation of any other transaction
contemplated hereby and thereby, except such filings as may be required to be
made with the SEC, the National Association of Securities Dealers, Inc.
("NASD"), the Nasdaq National Market, such filings as may be required under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended ("HSR") and
filings with governmental authorities for purposes of effecting compliance with
the securities and blue sky laws in the states in which Securities are offered
and/or sold, which compliance will be effected in accordance with such laws.
i. Litigation. There is no pending or, to the best of the Company's
knowledge, threatened lawsuit, administrative proceeding, arbitration, labor
dispute or governmental investigation ("Litigation") to which the Company is a
party or by which any material portion of its assets, taken as a whole, may be
bound, nor is the Company aware of any basis therefor, which Litigation, if
adversely determined, would have an Adverse Effect on the Company.
j. Patents and Trademarks. To its knowledge, and except as disclosed in
the SEC Documents, the Company owns or possesses sufficient legal rights to all
patents, trademarks, service marks, tradenames, copyrights, trade secrets,
licenses, information and proprietary rights and processes necessary for its
business as now conducted and as proposed to be conducted, without infringement
of any rights of a third party. The Company has not received any communications
alleging that the Company has violated or, by conducting its business as
proposed, would violate any of the patents, trademarks, service marks,
tradenames, copyrights, trade secrets or other proprietary rights or processes
of any other person or entity, which violation would have an Adverse Effect on
the Company. Except as disclosed in the SEC Documents, the Company has not
granted (nor has the Company licensed from a third party) any material rights to
or licenses to its patents, trademarks, service marks, tradenames, copyrights,
trade secrets or other proprietary rights or processes.
k. Registration Rights. Except for the registration rights granted in
connection with (i) that certain Amended and Restated Investors' Rights
Agreement dated May 10, 1996 between the Company and the purchasers identified
on Exhibit A thereto, (ii) that certain Agreement and Plan of Merger dated June
22, 1998, by and among the Company, GenQuest, Inc. and Chinook Corporation,
(iii) certain warrants to purchase up to 454,533 shares of Common Stock issued
to former GenQuest, Inc. warrant holders, (iv) that certain Agreement and Plan
of Reorganization dated December 11, 1998, by and among the Company, Anergen,
Inc. and Yakima Acquisition Corporation, (v) certain warrants to purchase up to
4,220 shares of Common Stock issued to former
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Anergen, Inc. warrant holders and (vi) this Agreement, the Company has not
agreed to register the sale of any of its securities under the 1933 Act.
l. Disclosure. No representation or warranty of the Company contained in
this Agreement or the exhibits attached hereto (when read together and taken as
a whole), contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein or
therein in light of the circumstances under which they were made not misleading.
m. Solvency; No Default. The Company has sufficient funds and cash flow
to pay its debts and other liabilities as they become due, and the Company is
not in default with respect to any material debt or liability.
n. No Material Default. The Company is not in violation of or default
under any provision of (a) its Certificate of Incorporation or Bylaws or (b) any
mortgage, indenture, lease or other agreement or instrument, permit, concession,
franchise or license to which it is a party or by which it is bound or (c) any
federal or state judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to the Company, except with respect to clauses (b) and (c)
above, such violations or defaults as would not have an Adverse Effect on the
Company.
5. Covenants.
a. Line of Credit. The Investor represents and covenants that it has and
will maintain immediately available funds sufficient to provide the Line of
Credit to the Company on the terms set forth in this Agreement.
b. Standstill Agreement. In accordance with the terms and conditions of
the Standstill Agreement substantially in the form attached hereto as Exhibit G,
the Investor covenants that neither it nor any of its Affiliates (as such term
is defined in the Standstill Agreement) will purchase any shares of the
Company's capital stock except pursuant to this Agreement and the Warrants.
c. Minimum Conversion. The Investor will not request to make an optional
conversion of Preferred Shares pursuant to Section 6(A) of the Certificate of
Designation unless such conversion will result in the issuance of that number of
shares of Common Stock having an aggregate value of at least Ten Million Dollars
($10,000,000), based upon the applicable Conversion Price (as defined in Section
6(C) of the Certificate of Designation), provided that, if the date is more than
two (2) years after the Execution Date and the aggregate value based upon the
applicable Conversion Price of all of the shares of Preferred Stock held by the
Investor is less than Ten Million Dollars ($10,000,000), the Investor may
convert all, but not less than all, of the remaining Preferred Shares held by
the Investor.
d. HSR Filings. From time to time during the term hereof as may be
required, the Company and the Investor each shall execute and file, or cause the
execution and filing of, all applications and documents that may be required by
the Federal Trade Commission ("FTC") and the Antitrust Division of the
Department of Justice ("Antitrust Division") a premerger notification form and
any other supplemental information which may be requested in connection with
this Agreement and the transactions contemplated hereby pursuant to HSR, which
filings and supplemental information will comply in all material respects with
HSR. The Company and the Investor shall cooperate fully with each other in
connection with the preparation of such filings and shall each pay fifty percent
(50%) of any applicable HSR filing fee. Prior to any Subsequent Draws or the
Investor's exercise of any Warrants, and from time to time as may be
appropriate, the Company and the Investor shall consult with each other
concerning the necessity and timing of each applicable filing under HSR and
mutually agree upon an appropriate course of action. The Company and the
Investor each shall use their best commercial efforts to take such action as may
be required
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to cause the expiration or early termination the notice periods under HSR as
promptly as possible after any applicable filing date and to resolve such
objections, if any, as may be asserted with respect to the transactions
contemplated by this Agreement under HSR; provided, however, notwithstanding the
foregoing, neither party shall agree to any change or amendment to this
Agreement unless such change or amendment is agreed to by the other party in
advance. In connection therewith, if any administrative or judicial action or
proceeding is instituted (or threatened to be instituted) challenging any
transaction contemplated by this Agreement or the transactions contemplated
hereby as violative of HSR, the Company and the Investor shall cooperate and use
best commercial efforts to contest and resist any such action or proceeding and
to have vacated, lifted, reversed, or overturned any decree, judgment,
injunction or other order, whether temporary, preliminary or permanent that is
in effect and that prohibits, prevents, or restricts consummation and/or
effectiveness of the Agreement or the transactions contemplated hereby, unless
by mutual agreement the Company and the Investor decide that such action is not
in their respective best interests. The parties hereto will consult and
cooperate with one another, and consider in good faith the views of one another,
in connection with any analyses, appearances, presentations, memoranda, briefs,
arguments, opinions and proposals made or submitted by or on behalf of any party
hereto in connection with proceedings under or relating to HSR. Notwithstanding
the foregoing, neither the Company nor the Investor will have any obligation to
litigate or contest any administrative or judicial action or proceeding or any
decree, judgment, injunction or other order beyond the first anniversary of the
applicable filing date.
e. Additional Equity Capital. Subject to the exceptions described below,
the Company will not, for a period of two (2) years after the Initial Closing,
without the prior written consent of the Investor, enter into any agreement or
arrangement with any third party to obtain additional financing (including in
the form of debt or equity) unless the Company has first drawn down all funds
available under the Line of Credit and issued the maximum number of Preferred
Shares allowed hereunder to the Investor in accordance with the terms and
conditions herein (such limitation is referred to as the "Capital Raising
Limitation"). The Capital Raising Limitation shall not apply to any transaction
involving (i) issuances of securities in an underwritten public offering
provided that the prospectus public offering price per share is not less than
one hundred twenty-five percent (125%) of the then applicable Ceiling Price (as
defined in the Certificate of Designation and appropriately adjusted for any
stock split, dividend, combination or other recapitalization), unless otherwise
agreed by the Investor, (ii) issuances of securities by the Company as
consideration for a merger, consolidation or purchase of assets, (iii) issuances
of securities by the Company in connection with any corporate partnering
relationship, including but not limited to any license, strategic partnership or
joint venture or similar transaction between the Company and a biotechnology or
pharmaceutical company, or in connection with the acquisition of rights to
technology from academic institutions, (iv) issuances of capital stock, or
options or warrants to purchase capital stock, and the capital stock issued
pursuant to the exercise of such options or warrants, issued to lessors in
connection with equipment financings or similar transactions, (v) issuances of
securities upon exercise or conversion of the Company's options, warrants or
other convertible securities outstanding as of the date hereof, or (vi) the
issuances of additional securities, under any Company stock option or restricted
stock plan approved by a majority of the Company's disinterested directors.
f. Best Efforts. The parties shall use their commercially reasonable
best efforts to satisfy timely each of the conditions described in Section 7 and
Section 8 of this Agreement.
g. Form D; Blue Sky Laws. The Company agrees to file a Form D with
respect to the Securities as required under Regulation D and to provide a copy
thereof to Investor promptly after such filing. The Company shall take such
action as the Company shall reasonably determine is necessary to qualify the
Securities for sale to the Investor pursuant to this Agreement under applicable
securities or "blue sky" laws of the states of the United States (or to obtain
an exemption from such qualification), and shall provide evidence of any such
action so taken to Investor.
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h. Use of Proceeds. The Company shall use the proceeds from the Line of
Credit only for acquisition(s) of technologies, related assets and/or other
companies or entities, as well as for working capital and general corporate
expenses associated with such acquisition(s) and/or ongoing support of such
technologies, related assets and/or companies or entities.
i. Expenses. The Investor shall be responsible for all of its expenses
incurred in connection with the negotiation, preparation, execution, delivery
and performance of this Agreement, the Registration Rights Agreement, the
Standstill Agreement, the Warrants and all other agreements or documents to be
executed in connection herewith and therewith and the transactions contemplated
hereby and thereby, including, without limitation, attorneys' and consultants'
fees and expenses.
j. Reservation of Shares. The Company shall at all times have
authorized, and reserved for the purpose of issuance, a sufficient number of
shares of Common Stock to provide for the full conversion of the outstanding
Preferred Shares and issuance of the Conversion Shares in connection therewith
(based on the applicable Conversion Price of the Preferred Shares in effect from
time to time) and for the full exercise of the Warrants in accordance with the
terms thereof. If at any time the number of shares of Common Stock authorized
and reserved for issuance is below the number of Conversion Shares issued and
issuable upon conversion of the Preferred Shares (based on the Conversion Price
of the Preferred Shares then in effect), the Company will promptly take all
corporate action necessary to authorize and reserve a sufficient number of
shares, including, without limitation, calling a special meeting of shareholders
to authorize additional shares to meet the Company's obligations under this
Section 5(j), in the case of an insufficient number of authorized shares, and
using its commercially reasonable best efforts to obtain shareholder approval of
an increase in such authorized number of shares.
k. Listing. The Company shall, no later than ten (10) business days
after the Initial Draw or seventy (70) days after any Subsequent Draw, secure
the listing of the Conversion Shares and Common Stock issued or issuable upon
exercise of applicable Warrants (the "Warrant Shares") related to such draw upon
each national securities exchange or automated quotation system, if any, upon
which shares of Common Stock are then listed (subject to official notice of
issuance) and shall maintain, so long as any other shares of Common Stock shall
be so listed, such listing of all such Conversion Shares and Warrant Shares. The
Company will obtain and maintain the listing and trading of its Common Stock on
the Nasdaq National Market ("Nasdaq"), the Nasdaq SmallCap Market, the New York
Stock Exchange, or the American Stock Exchange as may then be applicable, and
will comply in all material respects with the Company's reporting, filing and
other obligations under the bylaws or rules of the NASD.
l. Nasdaq Rule 4460(i). So long as the Company's Common Stock is listed
for trading on Nasdaq or an exchange or quotation system with a rule
substantially similar to Rule 4460(i) of the Rules and Regulations of the NASD
("Rule 4460(i)"), then, notwithstanding anything to the contrary contained
herein or in the Certificate of Designation, if, at any time, the aggregate
number of Conversion Shares and Warrant Shares then issued (including any shares
of capital stock or rights to acquire shares of capital stock issued by the
Company which are aggregated or integrated with the Conversion Shares and the
Warrant Shares for purposes of such rule), equals 19.99% of the "Outstanding
Common Amount" (as defined herein), or the aggregate number of Conversion Shares
and Warrant Shares to be issued in a Subsequent Draw pursuant to this Agreement,
when added together with already issued Conversion Shares and Warrant Shares,
would equal or exceed (including any shares of capital stock or rights to
acquire shares of capital stock issued by the Company which are aggregated or
integrated with the Conversion Shares and the Warrant Shares for purposes of
such rule) 19.99% of the Outstanding Common Amount, the Preferred Shares
previously issued pursuant to this Agreement shall, from that time forward,
cease to be convertible into Conversion Shares in accordance with the terms of
the Certificate of Designation, the outstanding
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Warrants shall, from that time forward cease to be exercisable, and no
additional shares of Preferred Stock or Warrants shall be issued, until such
time as the Company (i) has obtained approval of the issuance of the Securities
pursuant to this Agreement by a majority of the total votes cast on such
proposal, in person or by proxy, by the holders of the then-outstanding Common
Stock (not including any shares of Preferred Stock or any Conversion Shares or
Warrant Shares held by present or former holders of Preferred Stock that were
issued upon conversion of Preferred Stock) (the "Stockholder Approval") or (ii)
shall have otherwise obtained permission to allow such issuances, exercises
and/or conversions from Nasdaq in accordance with Rule 4460(i). If the Company's
Common Stock is not then listed on Nasdaq or an exchange or quotation system
that has a rule substantially similar to Rule 4460(i) then the limitations set
forth herein shall be inapplicable and of no force and effect. For purposes of
this paragraph, "Outstanding Common Amount" means the number of shares of the
Common Stock outstanding immediately prior to the Initial Closing.
m. Stockholder Meeting. In compliance with SEC rules and regulations,
the Company shall, prior to providing the Investor with a Subsequent Closing
Notice for the initial Subsequent Draw (but in no event later than June 30, 2000
or such other date as the Company and the Investor may mutually agree), take all
action necessary in accordance with Delaware law and its then effective
Certificate of Incorporation and Bylaws to convene a regular or special meeting
of the Company's stockholders for the purposes of approving the issuance of
Securities pursuant to this Agreement and the transactions contemplated hereby.
n. Restriction on Short Sales. Investor covenants with the Company that
Investor will not engage in any short sales of the Company's Common Stock.
o. Transfer of Securities by Investor.
(i) As set forth in this Section 5(o), the Investor shall have
limited rights to transfer the Securities before they are registered under the
1933 Act or transferable under Rule 144. Once the Securities are registered
under the 1933 Act or transferable under Rule 144, the Investor may transfer the
Securities as permitted by federal and state securities laws. Prior to such
time, the Investor may transfer the Securities solely to (A) an Affiliate of the
Investor (as such term is defined in the Standstill Agreement), (B) an entity
solely in connection with charitable contributions by the Investor or (C) an
individual or entity solely for estate planning purposes, provided that (x)
written notice is provided to the Company five (5) business days prior to any
such assignment, (y) a minimum of 5,000 shares of Preferred Stock are assigned
in each instance, and (z) immediately following such assignment the further
disposition of such securities by the transferee or assignee is restricted under
the Securities Act and the transferee or assignee agrees in writing to be bound
by all of the provisions of this Agreement. All other transfers of the
Securities are prohibited unless the Investor has obtained the Company's prior
written consent.
(ii) At least five (5) business days prior to the date it intends to
transfer Securities, the Investor shall deliver to the Company a written notice
(the "Transfer Notice") stating: (A) the Investor's bona fide intention to sell
or otherwise transfer the Securities; (B) the name and address of each permitted
proposed purchaser or other transferee ("Proposed Transferee"); (C) the quantity
of Securities to be transferred to each Proposed Transferee; and (D) the terms
and conditions of each proposed sale or transfer, including the price. Any such
sale or other transfer shall be consummated within 30 days after the date of the
Transfer Notice. Any such sale or other transfer shall be effected in accordance
with any applicable securities laws and the Proposed Transferee shall agree in
writing that the provisions of this Section 5(o) and the remaining restrictions
and conditions contained in this Agreement shall continue to apply to the
Securities in the hands of such Proposed Transferee. If the Securities described
in the Transfer Notice are not transferred to the Proposed Transferee within
such period, a new Transfer Notice shall be given to the Company before any
Securities held by the Investor may be sold or otherwise transferred.
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p. Transactions with Affiliates. The Company agrees that to the extent
it engages in transactions with Affiliates (as such term is defined in the
Standstill Agreement), it will do so upon fair and reasonable terms, as if the
transaction were with an unaffiliated party.
q. Board Representation. At such time as the Investor acquires an
aggregate of at least Twenty Five Thousand (25,000) shares of Preferred Stock
and/or Conversion Shares issued upon conversion of such shares of Preferred
Stock, (as adjusted for stock splits, stock dividends and recapitalizations),
and for so long as the Investor continues to hold at least that amount of
Preferred Stock and/or Conversion Shares, the Investor will be allowed to
designate one (1) member of the Company's Board of Directors, provided that the
appointment of such designee to the Company's Board of Directors shall be
subject to the approval of such designee by the Company's stockholders at each
annual meeting of such stockholders, at any meeting of the Company's
stockholders at which members of the Company's Board of Directors are to be
elected and whenever members of the Company's Board of Directors are to be
elected by written consent. Notwithstanding any such election by the Company's
stockholders, the Investor hereby agrees that any such designee shall resign
from the Company's Board of Directors immediately at such time as the Investor
holds less than 25,000 shares of Preferred Stock and/or Conversion Shares issued
upon conversion of such shares of Preferred Stock (as adjusted for stock splits,
stock dividends and recapitalizations).
6. Transfer Agent Instructions. The Company shall issue irrevocable
instructions to its transfer agent to issue certificates, registered in the name
of Investor, for the Conversion Shares in such amounts as specified from time to
time by the Investor to the Company upon conversion of the Preferred Shares in
accordance with the terms hereof and of the Certificate of Designation (the
"Irrevocable Transfer Agent Instructions"). Prior to any registration of the
Conversion Shares under the 1933 Act, and Section 1.2 of the Registration Rights
Agreement, all such certificates shall bear the restrictive legend specified in
Section 3(g) of this Agreement. The Company warrants that no instruction other
than the Irrevocable Transfer Agent Instructions referred to in this Section 6,
and stop transfer instructions to give effect to Section 3(f) hereof (in the
case of the Conversion Shares, prior to registration of the Conversion Shares
under the 1933 Act), will be given by the Company to its transfer agent and that
the Securities shall otherwise be freely transferable on the books and records
of the Company as and to the extent provided in this Agreement, the Standstill
Agreement and the Registration Rights Agreement. Nothing in this Section shall
affect in any way the Investor's obligations and agreement set forth in Section
3(g) hereof to comply with all applicable prospectus delivery requirements, if
any, upon resale of the Securities.
7. Conditions to the Company's Obligations. The obligation of the Company
hereunder (i) to execute this Agreement and (ii) to issue and sell the Preferred
Stock and the Warrants to the Investor at each applicable Closing is subject to
the satisfaction, at or before the Execution Date and/or the applicable Closing
Date, respectively, of each of the following conditions thereto, provided that
these conditions are for the Company's sole benefit and may be waived by the
Company at any time in its sole discretion:
a. Representations and Warranties Correct. The representations and
warranties made by the Investor in Section 3 hereof shall be true and correct in
all material respects on and as of the Execution Date or the applicable Closing
Date, respectively, with the same effect as though such representations and
warranties had been made on and as of the Execution Date or such Closing Date,
respectively.
b. Performance. All covenants, agreements and conditions contained in
this Agreement to be performed by the Investor on or prior to the Execution Date
or the applicable Closing Date, respectively, shall have been performed or
complied with in all material respects.
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c. HSR. With respect to Subsequent Closing(s), to the extent the Company
and the Investor mutually agree that filings under HSR are necessary in
accordance with Section 5(d), then the respective obligations of the Company and
the Investor to effect such Subsequent Closing(s) pursuant to this Agreement and
the transactions contemplated hereby shall be subject to the expiration or early
termination of the waiting period applicable to such HSR filing.
d. Stockholder Approval. Prior to the initial Subsequent Draw, the
Company shall have obtained stockholder approval of the issuance of Securities
pursuant to this Agreement and the transactions contemplated hereby.
e. Execution of Documents. As of the Execution Date, the Investor shall
have executed this Agreement, the Registration Rights Agreement, the Standstill
Agreement and the Initial Closing Warrants and delivered the same to the
Company. As of any applicable Closing Date, each such agreement shall remain in
full force and effect.
f. Line of Credit. The Investor shall have made available the Line of
Credit in accordance with Section 1(a) above.
g. Certificate of Designation. As of the Execution Date, the Certificate
of Designation shall have been accepted for filing with the Secretary of State
of the State of Delaware.
h. No Order Pending. There shall not then be in effect any order
enjoining or restraining the transactions contemplated by this Agreement.
i. No Law Prohibiting or Restricting Such Sale. There shall not be in
effect any law, rule or regulation prohibiting or restricting such sale, or
requiring any consent or approval of any person which shall not have been
obtained to issue the Securities (except as otherwise provided in this
Agreement).
j. Legal Opinion. With respect to the Execution Date only, the Company
shall have received an opinion of the Investor's counsel, dated as of the
Execution Date, in substantially the form as Exhibit I attached hereto.
k. Compliance Certificate. The Investor shall have delivered to the
Company on the Execution Date and each applicable Closing Date, respectively, a
certificate executed by a duly authorized officer, dated the Closing Date, and
certifying to the fulfillment of the conditions specified in Sections 7(a) and
7(b).
8. Conditions to Investor's Obligations. The obligation of the Investor
hereunder (i) to execute this Agreement and (ii) to provide the Line of Credit
and purchase the Preferred Shares and Warrants is subject to the satisfaction,
at or before the Execution Date and/or each applicable Closing Date, of each of
the following conditions, provided that these conditions are for Investor's sole
benefit and may be waived by Investor at any time in its sole discretion:
a. Representations and Warranties Correct. The representations and
warranties made by the Company in Section 4 shall be true and correct in all
material respects on and as of the Execution Date or the applicable Closing
Date, respectively, except for changes contemplated by this Agreement and except
for those representations and warranties that address matters only as of a
particular date (which shall remain true and correct as of such particular
date), with the same effect as though such representations and warranties had
been made on and as of the Execution Date or such Closing Date, respectively,
except in all such cases where the failure of such representations and
warranties to be so true and correct would not, individually or in the
aggregate, reasonably be expected to have a substantial Adverse Effect (a
"Substantial Adverse Effect") on the Company and its subsidiaries, taken as a
whole, after the Execution Date. The termination of Steven Gillis's relationship
with the Company shall be deemed to be a Substantial Adverse Effect. Prior to
each Subsequent Closing, the Company will provide the Investor with an updated
Schedule of Exceptions,
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and in the event such updated Schedule of Exceptions reflects the occurrence of
a Substantial Adverse Effect, then the existence of such Substantial Adverse
Effect must be acceptable to the Investor as a condition of the Investor's
obligation to fund such Subsequent Draw under this Agreement.
b. Performance. All covenants, agreements and conditions contained in
this Agreement to be performed by the Company on or prior to the Execution Date
or the applicable Closing Date, respectively, shall have been performed or
complied with in all material respects.
c. Execution of Documents. As of the Execution Date, the Company shall
have executed this Agreement, the Registration Rights Agreement, the Standstill
Agreement and the Warrants, and delivered the same to the Investor. As of the
applicable Closing Date each such agreement shall remain in full force and
effect.
d. Certificate of Designation. The Certificate of Designation shall have
been accepted for filing with the Secretary of State of the State of Delaware.
e. No Order Pending. There shall not then be in effect any order
enjoining or restraining the transactions contemplated by this Agreement.
f. No Law Prohibiting or Restricting Sale. There shall not be in effect
any law, rule or regulation prohibiting or restricting such sale, or requiring
any consent or approval of any person which shall not have been obtained to
issue the Securities (except as otherwise referenced in this Agreement).
g. Legal Opinion. With respect to the Execution Date only, the Investor
shall have received an opinion of the Company's counsel, dated as of the
Execution Date, in substantially the form as Exhibit J attached hereto.
h. Compliance Certificate. The Company shall have delivered to the
Investor on the Execution Date and each applicable Closing Date, respectively, a
certificate executed by a duly authorized officer, dated the Closing Date, and
certifying to the fulfillment of the conditions specified in Sections 8(a) and
8(b).
i. HSR. With respect to Subsequent Closing(s), to the extent the Company
and the Investor mutually agree that filings under HSR are necessary in
accordance with Section 5(d), then the respective obligations of the Company and
the Investor to effect such Subsequent Closing(s) pursuant to this Agreement and
the transactions contemplated hereby shall be subject to the expiration or early
termination of the waiting period applicable to such HSR filing.
j. Stockholder Approval. Prior to the initial Subsequent Draw, the
Company shall have obtained stockholder approval of the issuance of Securities
pursuant to the Agreement and the transactions contemplated hereby.
k. Insolvency. The Company is not insolvent and no Insolvency Proceeding
has been commenced by or against the Company. As used herein, "Insolvency
Proceeding" means any proceeding commenced by or against any person or entity
under any provision of the United States Bankruptcy Code, as amended, or under
any other bankruptcy or insolvency law, including assignments for the benefit of
creditors, formal or informal moratoria, compositions, extension generally with
its creditors, or proceedings seeking reorganization, arrangement, or other
relief; provided that, with respect to any filing against the Company of a
petition in bankruptcy or under any other insolvency law, such filing shall have
been pending without dismissal for a period of sixty (60) days or more.
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l. Reporting Status. The Company shall have filed all reports required
to be filed with the SEC pursuant to the Exchange Act, and the Company's status
as an issuer required to file reports under the Exchange Act shall be effective.
9. Waiver in Connection with Substantial Adverse Effect. With respect to
any Subsequent Draw, if the Investor determines pursuant to Section 8(a) that a
Substantial Adverse Effect has occurred and as a result of that Substantial
Adverse Effect, the Investor determines that it will not fund the Subsequent
Draw requested by the Company pursuant to the Line of Credit, the Company's and
the Investor's rights, obligations and restrictions under this Agreement and the
related agreements with respect to the amount of funds requested by the Company
in the applicable Subsequent Closing Notice (the "Additional Funds"), including,
without limitation, the Capital Raising Limitation contained in Section 5(e) of
this Agreement, shall be waived and the Company shall be allowed to seek funds
in an amount equal to or greater than such Additional Funds from third parties,
provided that all rights, obligations and restrictions under this Agreement and
the related agreements not in respect of the Additional Funds shall remain in
full force and effect. The Company shall have no obligation to the Investor with
respect to any funds received from any such third party.
10. Governing Law; Miscellaneous.
a. Governing Law. This Agreement and all acts and transactions pursuant
hereto and the rights and obligations of the parties hereto shall be governed,
construed and interpreted in accordance with the laws of the State of
Washington, without giving effect to principles of conflicts of law. The parties
hereby submit to the exclusive jurisdiction and venue of the courts located in
King County Washington and the United States District Courts of the Western
District of Washington.
b. Counterparts; Signatures by Facsimile. This Agreement may be executed
in counterparts, and each such counterpart shall be deemed an original for all
purposes.
c. Captions and Headings. The captions and headings of this Agreement
are for convenience and ease of reference only and are not intended to be a part
of or to affect the meaning or interpretation of this Agreement.
d. Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
e. Entire Agreement; Amendment. This Agreement, the Warrants, the
Registration Rights Agreement, the Standstill Agreement and the other documents
delivered pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subject matter hereof and
thereof and supersede all prior agreements and understandings among the parties
relating to the subject matter hereof. Neither this Agreement nor any term
hereof may be amended, waived, discharged or terminated other than by a written
instrument signed by the party against which enforcement of any such amendment,
waiver, discharge or termination is sought.
f. No Third Party Rights. Nothing in this Agreement shall create or be
deemed to create any rights in any person or entity not a party to this
Agreement.
g. Survival. Unless otherwise set forth in this Agreement, the
warranties, representations and covenants of the Company and the Investor
contained in or made pursuant to this Agreement shall survive the execution and
delivery of this Agreement and the Closing.
h. Publicity. The Investor and the Company shall not issue any public
statement concerning the transactions contemplated by this Agreement without the
reasonable prior written consent of the parties named in such public statement;
provided, however, that the parties may
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disclose the transaction or the terms hereof or thereof from time to time
without the approval of the party whose name is disclosed if (i) such approval
has been requested and not received and such party concludes (after consulting
with counsel) that it is required by law to disclose the transaction or the
terms thereof or (ii) to the extent that similar disclosure has been previously
approved pursuant to this Section 10(h). Except to the extent required by law,
regulation or applicable exchange or Nasdaq rule, the Company shall not make any
announcement concerning, or otherwise reference in any public document or public
statement, the beneficial owners of Investor. In addition, with respect to any
press releases issued by the Company, the Company shall provide copies to the
Investor prior to public dissemination thereof and shall consider Investor's
comments to such press release, if any, in good faith.
i. No Strict Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.
j. Costs and Expenses. Each party hereto shall pay its own costs and
expenses incurred in connection herewith, including the fees of its counsel,
auditors and other representatives, whether or not the transactions contemplated
herein are consummated.
k. Brokers.
(i) The Company has not engaged, consented to or authorized any
broker, finder or intermediary to act on its behalf, directly or indirectly, as
a broker, finder or intermediary in connection with the transactions
contemplated by this Agreement. The Company hereby agrees to indemnify and hold
harmless the Investor from and against all fees, commissions or other payments
owing to any party acting on behalf of the Company hereunder.
(ii) Investor has not engaged, consented to or authorized any broker,
finder or intermediary to act on its behalf, directly or indirectly, as a
broker, finder or intermediary in connection with the transactions contemplated
by this Agreement. Investor hereby agrees to indemnify and hold harmless the
Company from and against all fees, commissions or other payments owing to any
party acting on behalf of Investor hereunder.
l. Notices. Any notices required or permitted to be given under the
terms of this Agreement shall be sent by certified or registered mail (return
receipt requested) or delivered personally or by courier (including a recognized
overnight delivery service) or by facsimile and shall be effective five days
after being placed in the mail, if mailed by regular U.S. mail, or upon receipt,
if delivered personally or by courier (including a recognized overnight delivery
service) or by facsimile, in each case addressed to a party. The addresses for
such communications shall be:
If to the Company:
Corixa Corporation
1124 Columbia Street, Suite 200
Seattle, Washington 98104
Attention: Steven Gillis, Chairman & Chief Executive Officer
Facsimile: (206) 754-5944
With copy to:
Venture Law Group
4750 Carillon Point
Kirkland, WA 98033
Attention: William W. Ericson
Facsimile: (425) 739-8750
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If to Investor:
Castle Gate, L.L.C.
2365 Carillon Point
Kirkland, WA 98033
Attn: Michael Larson, Business Manager
With copy to:
Mark R. Beatty
Preston Gates & Ellis, LLP
701 Fifth Avenue, Suite 5000
Seattle, WA 98104
Facsimile: (206) 632-7022
Each party shall provide notice to the other party of any change in
address.
m. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns. Neither
the Company nor Investor shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other.
Notwithstanding the foregoing, the Company may assign its rights hereunder in
the event of a merger or consolidation or sale of all or substantially all of
the Company's assets without the consent of the Investor. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the undersigned Investor and the Company have caused
this Agreement to be duly executed as of the date first above written.
CORIXA CORPORATION
By: /s/ STEVEN GILLIS
----------------------------------
Steven Gillis, Chairman and Chief
Executive Officer
CASTLE GATE, L.L.C.
By: /s/ MICHAEL LARSON
----------------------------------
Name: Michael Larson
--------------------------------
(print)
Title: Business Manager
-------------------------------
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APPENDIX J
CORIXA CORPORATION
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made as of the 8th
day of April, 1999, by and between Corixa Corporation, a Delaware corporation
(the "Company") and Castle Gate, L.L.C., a Washington limited liability company
(the "Investor").
RECITALS
The Company and the Investor have entered into the Equity Line of Credit
and Securities Purchase Agreement (the "Purchase Agreement") of even date
herewith pursuant to which the Investor will provide to the Company a two-year
line of credit in the aggregate amount of $50,000,000 ("Credit Line") in
exchange for which the Company will issue and sell to the Investor up to 50,000
shares of Series A convertible preferred stock of the Company ("Preferred
Stock") and certain warrants to purchase shares of Common Stock of the Company
("Warrants") on the terms and conditions set forth in the Purchase Agreement. A
condition to the Investor's obligations under the Purchase Agreement is that the
Company and the Investor enter into this Agreement in order to provide the
Investor with certain rights to register shares of the Company's Common Stock
issuable upon conversion of the Preferred Stock held by the Investor and to
provide the Company with certain rights to notices of sales by Investor each as
set forth herein, upon the terms and conditions set forth herein.
AGREEMENT
The parties hereby agree as follows:
1. REGISTRATION RIGHTS. The Company and the Investor covenant and agree as
follows:
1.1 DEFINITIONS. For purposes of this Section 1:
(a) The terms "register," "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act of 1933, as amended (the
"Securities Act"), and the declaration or ordering of effectiveness of such
registration statement or document;
(b) The term "Registrable Securities" means (i) the shares of Common
Stock issuable or issued upon conversion of the Preferred Stock, (ii) the shares
of Common Stock issuable or issued upon exercise of the Warrants, and (iii) any
other shares of Common Stock of the Company issued as (or issuable upon the
conversion or exercise of any warrant, right or other security which is issued
as) a dividend or other distribution with respect to, or in exchange for or in
replacement of, the shares listed in (i) or (ii); provided, however, that the
foregoing definition shall exclude in all cases any Registrable Securities sold
by a person in a transaction in which his or her rights under this Agreement are
not assigned. Notwithstanding the foregoing, Common Stock or other securities
shall only be treated as Registrable Securities if and so long as they have not
been (A) sold to or through a broker or dealer or underwriter in a public
distribution or a public securities transaction, or (B) sold in a transaction
exempt from the registration and prospectus delivery requirements of the
Securities Act under Section 4(1) thereof so that all transfer restrictions, and
restrictive legends with respect thereto, if any, are removed upon the
consummation of such sale;
(c) The number of shares of "Registrable Securities then outstanding"
shall be determined by the number of shares of Common Stock outstanding which
are, and the number of
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shares of Common Stock issuable pursuant to then exercisable or convertible
securities which are, Registrable Securities;
(d) The term "Holder" means any person owning or having the right to
acquire Registrable Securities or any assignee thereof in accordance with
Section 1.9 of this Agreement;
(e) The term "Form S-3" means such form under the Securities Act as
in effect on the date hereof or any successor form that permits significant
incorporation by reference of the Company's filings under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"); and
(f) The term "SEC" means the Securities and Exchange Commission.
1.2 FORM S-3 REGISTRATION. Unless otherwise instructed in writing by
the Holder, within thirty (30) days after any conversion of shares of Preferred
Stock held by Holder into shares of Common Stock in accordance with Section 6 of
the Certificate of Designation (as defined in the Purchase Agreement), the
Company will use its best efforts to effect a registration on Form S-3 and all
related qualifications and compliances as would permit or facilitate the sale
and distribution of such shares of Holder's Registrable Securities that Holder
requests; provided, however, that the Company shall not be obligated to effect
any such registration, qualification or compliance pursuant to this Section 1.2:
(a) if Form S-3 is not available for such offering by the Holder; (b) if the
Holder proposes to sell Registrable Securities having an aggregate value of less
than $10,000,000 based upon the applicable conversion or exercise price for such
shares of Registrable Securities, respectively, as determined in accordance with
Section 6(C) of the Certificate of Designation or the applicable Warrants,
respectively; (c) if the Company shall furnish to the Holder a certificate
signed by the President of the Company stating that in the good faith judgment
of the Board of Directors of the Company, it would be seriously detrimental to
the Company and its stockholders for such Form S-3 Registration to be effected
at such time, in which event the Company shall have the right to defer the
filing of the Form S-3 registration statement for a period of not more than 120
days after the applicable conversion of Holder's Preferred Stock to Common
Stock; provided, however, that the Company shall not utilize this right more
than once in any twelve-month period; (d) in any particular jurisdiction in
which the Company would be required to qualify to do business or to execute a
general consent to service of process in effecting such registration,
qualification or compliance; or (e) during the period ending ninety (90) days
after the effective date of a registration statement pursuant to which the
Company registered any of its stock under the Securities Act in connection with
the public offering of such securities solely for cash.
1.3 OBLIGATIONS OF THE COMPANY. Whenever required under Section 1.2 to
effect the registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible, use its best commercial efforts to:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and cause such registration statement to
become effective, and, upon the request of the Holder of the Registrable
Securities registered thereunder, keep such registration statement effective for
up to one hundred twenty (120) days. The Company shall not be required to file,
cause to become effective or maintain the effectiveness of any registration
statement that contemplates a distribution of securities on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act.
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all Registrable Securities
covered by such registration statement for up to one hundred twenty (120) days.
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(c) Furnish to the Holder such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as the Holder may reasonably request in
order to facilitate the disposition of Registrable Securities owned by the
Holder.
(d) Register and qualify the Registrable Securities covered by such
registration statement under such other securities or Blue Sky laws of such
jurisdictions as shall be reasonably requested by the Holder, provided that the
Company shall not be required in connection therewith or as a condition thereto
to qualify to do business or to file a general consent to service of process in
any such states or jurisdictions.
(e) Notify the Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing, such obligation to continue for one hundred twenty (120) days.
(f) Cause all such Registrable Securities registered pursuant the
Section 1.2 to be listed on each securities exchange on which similar securities
issued by the Company are then listed.
(g) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereunder and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration.
(h) Furnish, at the request of the Holder, on the date that the
registration statement with respect to such securities becomes effective, (i) an
opinion, dated such date, of the counsel representing the Company for the
purposes of such registration, in form and substance as is customarily given to
underwriters in an underwritten public offering, addressed to the Holder and
(ii) a letter dated such date, from the independent certified public accountants
of the Company, in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
addressed to the Holder.
1.4 RESTRICTIONS ON AND PROCEDURE FOR SALES PURSUANT TO A REGISTRATION
STATEMENT.
(a) Each Holder agrees to the following:
(i) Notice to Company. If Holder shall propose to sell any
Registrable Securities that have been registered in accordance with this Section
1, the Holder shall notify the Company of its intent to do so on or before three
(3) business days prior to the date of such sale (the "Notice of Sale"), and the
provision of the Notice of Sale to the Company shall conclusively be deemed to
establish an agreement by the Holder to comply with the registration provisions
herein described. The Notice of Sale shall be deemed to constitute a
representation that any information supplied by the Holder in connection with
the Notice of Sale is accurate as of the date of such Notice of Sale.
(ii) Notice of Sale. The Notice of Sale in substantially the
form attached as Attachment A shall be given in accordance with the provisions
of Section 2.3 hereof. However, the Holder may give the Notice of Sale orally by
telephoning the Chief Financial Officer at the Company at (206) 754-5711. An
oral Notice of Sale shall be deemed to have been received only at such time as
the Holder speaks directly with the Chief Financial Officer. In addition, an
oral Notice of Sale shall only be deemed effective if it is followed by a
written Notice of Sale received by the Company by personal delivery or facsimile
within twenty-four (24) hours after giving the oral Notice of Sale.
(iii) Delay of Sale. The Company may refuse to permit the Holder
to resell any Registrable Securities for a specified period of time; provided,
however, that (a) in order to exercise
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this right, the Company must deliver a certificate in writing to the Holder to
the effect that the registration statement in its then current form contains an
untrue statement of material fact or omits to state a material fact necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading, and (b) in no event shall such delay
exceed twenty-five (25) days, and (c) in no event shall this right of delay be
exercised on more than one (1) occasion in any twelve (12) month period. During
any suspension as contemplated by this Section 1.4 (a)(iii), the Company will
not allow any of its officers or directors to buy or sell shares of the
Company's securities.
1.5 FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 1 with
respect to the Registrable Securities of the Holder that the Holder shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as shall be required to effect the registration of such Holder's Registrable
Securities. The Company shall have no obligation with respect to any
registration requested pursuant to Section 1.2 of this Agreement if, as a result
of the application of the preceding sentence, the anticipated aggregate value of
the Registrable Securities to be included in the registration does not equal or
exceed the anticipated aggregate value required to originally trigger the
Company's obligation to initiate such registration as specified in subsection
1.2(b).
1.6 EXPENSES OF REGISTRATION ON FORM S-3. All expenses incurred in
connection with a registration requested pursuant to Section 1.2, including
(without limitation) all registration, filing, qualification, printers' and
accounting fees and the reasonable fees and disbursements of one counsel for the
selling Holder selected by Holder with the approval of the Company, which
approval shall not be unreasonably withheld, and counsel for the Company shall
be borne by the Company.
1.7 INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under Section 1:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless Holder and each person, if any, who controls Holder or underwriter
within the meaning of the Securities Act or the Exchange Act, against any
losses, claims, damages, or liabilities (joint or several) to which they may
become subject under the Securities Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages, or liabilities (or actions
in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively a "Violation"): (i) any untrue
statement or alleged untrue statement of a material fact contained in such
registration statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, (ii) the omission or
alleged omission to state therein a material fact required to be stated therein,
or necessary to make the statements therein not misleading, or (iii) any
violation or alleged violation by the Company of the Securities Act, the
Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law; and the
Company will pay to each such Holder or controlling person, as incurred, any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this subsection
1.7(a) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability, or action if such settlement is effected without the consent
of the Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable to any Holder or controlling person for any such loss, claim,
damage, liability, or action to the extent that it arises out of or is based
upon a Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
any such Holder or controlling person.
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(b) To the extent permitted by law, the Holder will indemnify and
hold harmless the Company, each of its directors, each of its officers who has
signed the registration statement, each person, if any, who controls the Company
within the meaning of the Securities Act and any controlling person of any
Holder, against any losses, claims, damages, or liabilities (joint or several)
to which any of the foregoing persons may become subject, under the Securities
Act, the Exchange Act or other federal or state law, insofar as such losses,
claims, damages, or liabilities (or actions in respect thereto) arise out of or
are based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by Holder expressly for use in connection with
such registration; and Holder will pay, as incurred, any legal or other expenses
reasonably incurred by any person intended to be indemnified pursuant to this
subsection 1.7(b), in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this subsection 1.7(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent shall
not be unreasonably withheld; provided, that in no event shall any indemnity
under this subsection 1.7(b) exceed the net proceeds from the offering received
by Holder, except in the case of willful fraud by Holder.
(c) Promptly after receipt by an indemnified party under this Section
1.7 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 1.7, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the reasonable fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
1.7 but the omission so to deliver written notice to the indemnifying party will
not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 1.7.
(d) If the indemnification provided for in this Section 1.7 is held
by a court of competent jurisdiction to be unavailable to an indemnified party
with respect to any loss, liability, claim, damage or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage, or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations; provided, that in no event shall any contribution by Holder
under this subsection 1.7(d) exceed the net proceeds from the offering received
by Holder, except in the case of willful fraud by Holder. The relative fault of
the indemnifying party and of the indemnified party shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party and
the parties' relative intent, knowledge, access to information, and opportunity
to correct or prevent such statement or omission.
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(e) The obligations of the Company and Holder under this Section 1.7
shall survive the completion of any offering of Registrable Securities in a
registration statement under this Section 1, and otherwise.
1.8 REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a view to
making available to the Holder the benefits of Rule 144 promulgated under the
Securities Act and any other rule or regulation of the SEC that may at any time
permit a Holder to sell securities of the Company to the public without
registration or pursuant to a registration on Form S-3, the Company agrees to
use its best commercial efforts to:
(a) make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times so long as the Company
remains subject to the periodic reporting requirements under Sections 13 or
15(d) of the Exchange Act;
(b) take such action, including the voluntary registration of its
Common Stock under Section 12 of the Exchange Act, as is necessary to enable the
Holder to utilize Form S-3 for the sale of its Registrable Securities;
(c) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
(d) furnish to Holder, so long as Holder owns any Registrable
Securities, forthwith upon request (i) a written statement by the Company that
it has complied with the reporting requirements of SEC Rule 144, the Securities
Act and the Exchange Act, or that it qualifies as a registrant whose securities
may be resold pursuant to Form S-3 (at any time when it so qualifies), (ii) a
copy of the most recent annual or quarterly report of the Company and such other
reports and documents so filed by the Company, and (iii) such other information
as may be reasonably requested in availing any Holder of any rule or regulation
of the SEC which permits the selling of any such securities without registration
or pursuant to such form.
1.9 ASSIGNMENT OF REGISTRATION RIGHTS. The right to cause the Company
to register Registrable Securities pursuant to Section 1.2 may not be assigned
without the Company's prior written consent; provided, however, such consent
shall not be required in connection with the assignment by the Investor of such
registration rights (but only with all related obligations) to (i) an Affiliate
of the Investor (as such term is defined in the Standstill Agreement), (ii) an
entity solely in connection with charitable contributions by the Investor or
(iii) an individual or entity solely for estate planning purposes, provided that
(x) written notice is provided to the Company five (5) business days prior to
any such assignment, (y) a minimum of 5,000 shares of Registrable Securities are
assigned in each instance, and (z) immediately following such assignment the
further disposition of such securities by the transferee or assignee is
restricted under the Securities Act and the transferee or assignee agrees in
writing to be bound by all of the provisions of this Agreement.
1.10 "MARKET STAND-OFF" AGREEMENT. Holder hereby agrees that, during
the period of duration (up to, but not exceeding, 90 days) specified by the
Company and an underwriter of Common Stock or other securities of the Company,
following the effective date of a registration statement of the Company filed
under the Securities Act, it shall not, to the extent requested by the Company
and such underwriter, directly or indirectly sell, offer to sell, contract to
sell (including, without limitation, any short sale), grant any option to
purchase or otherwise transfer or dispose of (other than to donees who agree to
be similarly bound) any securities of the Company held by it at any time during
such period except Common Stock included in such registration.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of the
Holder (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period, and the Holder
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agrees that, if so requested, the Holder will execute an agreement in the form
provided by the underwriter containing terms which are essentially consistent
with the provisions of this Section 1.10.
1.11 TERMINATION OF REGISTRATION RIGHTS. With respect to shares of
Registrable Securities issued to the Investor at the Initial Closing or any
particular Subsequent Closing(s) (as such terms are defined in the Purchase
Agreement), the Holder shall not be entitled to exercise any right provided for
in this Section 1 after such time as Rule 144(k) or another similar exemption
under the Securities Act is available for the sale of all of such Holder's
shares that were issued at the Initial Closing or the applicable Subsequent
Closing, respectively, during a three (3) month period without registration. For
purposes of clarity, the registration rights of a Holder provided for in this
Section 1 shall terminate in stages, which stages shall correspond to the
initial issuance date of such Registrable Securities.
2. MISCELLANEOUS.
2.1 SUCCESSORS AND ASSIGNS. Except as otherwise provided in this
Agreement, the terms and conditions of this Agreement shall inure to the benefit
of and be binding upon the respective permitted successors and assigns of the
parties (including transferees of any of the Preferred Stock or any Common Stock
issued upon conversion thereof). Nothing in this Agreement, express or implied,
is intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
2.2 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended
or waived only with the written consent of the Company and the holders of a
majority of the Registrable Securities then outstanding. Any amendment or waiver
effected in accordance with this paragraph shall be binding upon each holder of
any Registrable Securities then outstanding, each future holder of all such
Registrable Securities, and the Company.
2.3 NOTICES. Unless otherwise provided, any notice required or
permitted by this Agreement shall be in writing and shall be deemed sufficient
upon delivery, when delivered personally or by overnight courier or sent by
telegram or fax, or forty-eight (48) hours after being deposited in the U.S.
mail, as certified or registered mail, with postage prepaid, and addressed to
the party to be notified at such party's address or fax number as set forth on
the signature page hereto or as subsequently modified by written notice, and if
to Investor, with a copy to Mark Beatty, Preston Gates & Ellis, 701 Fifth
Avenue, #5000, Seattle, Washington 98104, and if to Corixa, with a copy to
William W. Ericson, Venture Law Group, 4750 Carillon Point, Kirkland, Washington
98033.
2.4 SEVERABILITY. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith. In the event that the parties cannot reach a mutually
agreeable and enforceable replacement for such provision, then (a) such
provision shall be excluded from this Agreement, (b) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (c) the
balance of the Agreement shall be enforceable in accordance with its terms.
2.5 GOVERNING LAW. This Agreement and all acts and transactions
pursuant hereto shall be governed, construed and interpreted in accordance with
the laws of the State of Washington, without giving effect to principles of
conflicts of laws.
2.6 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
2.7 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
[SIGNATURE PAGE FOLLOWS]
J-7
<PAGE> 355
The parties have executed this Registration Rights Agreement as of the date
first above written.
COMPANY:
CORIXA CORPORATION
By: /s/ STEVEN GILLIS
------------------------------------
Steven Gillis
Chairman and Chief Executive
Officer
Address: 1124 Columbia Street,
Suite 200
Seattle, Washington 98104
Fax: (206) 754-5762
INVESTOR:
CASTLE GATE, L.L.C.
By: /s/ MICHAEL LARSON
--------------------------------------
Name: Michael Larson
----------------------------------
(print)
Title: Business Manager
--------------------------------
SIGNATURE PAGE TO THE
REGISTRATION RIGHTS AGREEMENT
J-8
<PAGE> 356
ATTACHMENT A
CORIXA CORPORATION
NOTICE OF SALE
Pursuant to the Registration Rights Agreement dated as of April 8, 1999 by
and between Corixa Corporation (the "Company") and Castle Gate, L.L.C., a
Washington limited liability company, the undersigned hereby gives notice to the
Company of the undersigned's intent to sell shares of the Company's
Common Stock registered pursuant to the registration statement on
(File No. ).
Dated: , By:
-----------------------------------
(signature)
Name:
---------------------------------
(print)
Title:
--------------------------------
(if applicable)
J-9
<PAGE> 357
APPENDIX K
STANDSTILL AGREEMENT
This Standstill Agreement (the "Agreement") is made as of April 8, 1999 by
and between Corixa Corporation, a Delaware corporation, with a principal office
located at 1124 Columbia Street, Suite 200, Seattle, Washington 98104 (the
"Company") and Castle Gate, L.L.C., a Washington limited liability company, with
a principal office located at 2365 Carillon Point, Kirkland, Washington 98033
("Investor").
RECITALS
The Company and Investor are parties to that certain Equity Line of Credit
and Securities Purchase Agreement dated as of an even date herewith (the
"Purchase Agreement") pursuant to which Investor has committed to provide to the
Company a two-year line of credit in the aggregate amount of $50,000,000 and the
Company will issue and sell up to 50,000 shares of Series A Preferred Stock of
the Company and certain warrants to purchase shares of common stock of the
Company to Investor. In connection with the execution of the Purchase Agreement,
Investor desires to make certain covenants to the Company, and the Company
desires that Investor make such covenants, so as to provide limits on Investor's
ownership of capital stock of the Company other than pursuant to the Purchase
Agreement.
In consideration of the foregoing and the mutual promises contained in this
Agreement, the parties agree as follows:
AGREEMENT
1. DEFINITIONS.
For the purposes of this Agreement, the following words and phrases shall
have the following meanings:
(a) "Affiliate" of an entity means, for so long as one of the following
relationships is maintained, any individual, corporation or other business
entity owned, owning or under common ownership with a party to this Agreement to
the extent of at least fifty percent (50%) of the equity having the power to
vote on or direct the affairs of the entity and any person, firm, partnership,
corporation or other entity actually controlled by, controlling or under common
control with a party to this Agreement.
(b) "Investor Group" means Investor and its Affiliates.
(c) "13D Group" means any group of persons formed for the purpose of
acquiring, holding, voting or disposing of Voting Securities which would be
required under the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and the rules and regulations promulgated thereunder, to file a statement
on Schedule 13D with the Securities and Exchange Commission as a "person" within
the meaning of Section 13(d)(3) of the Exchange Act if such group beneficially
owned sufficient securities to require such a filing under the Exchange Act.
(d) "Purchase Agreement Securities" means all the Securities (as such
term in defined in the Purchase Agreement) to be issued and sold to Investor by
the Company pursuant to the Purchase Agreement including capital stock of the
Company that may be issued with respect to such Securities pursuant to the terms
and conditions of the Certificate of Designation (as defined in the Purchase
Agreement).
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(e) "Voting Security" means, as of the date of determination, the Common
Stock of the Company, any other security generally entitled to vote for the
election of directors and any outstanding convertible securities, options,
warrants or other rights which are convertible into or exchangeable or
exercisable for securities entitled to vote for the election of directors.
2. STANDSTILL OBLIGATIONS.
(a) LIMITATION. At any time following the date of this Agreement, except
with the prior written consent of the Company's Board of Directors (excluding
the vote of any director representing, employed by or otherwise affiliated with
any member of the Investor Group), no member of the Investor Group shall,
directly or indirectly, acquire any Voting Securities which are not also
Purchase Agreement Securities, except by way of (i) stock splits, stock
dividends or other distributions or offerings made available to holders of
Voting Securities generally, or (ii) stock options, warrants, or other rights to
purchase Voting Securities approved by the Board of Directors of the Company
(excluding the vote of any director representing, employed by or otherwise
affiliated with any member of the Investor Group).
(b) PARTICIPATION. Except with the prior written consent of the
Company's Board of Directors, the Investor Group will not (i) solicit proxies in
respect of any Voting Securities, (ii) become a "participant" or "participant in
a solicitation", as those terms are defined in Rule 14a-l1 under the Exchange
Act, in opposition to a solicitation by the Company, (iii) form or join any
group for the purpose of voting, purchasing or disposing of Voting Securities,
or (iv) deposit any Voting Securities in a voting trust or subject them to a
voting agreement or other arrangement of similar effect, except as contemplated
by this Agreement; provided, however, that the Investor Group shall not be
deemed to be a "participant" or to have become engaged in a solicitation
hereunder solely by reason of (I) the membership of an individual representing,
employed by or otherwise affiliated with any member of the Investor Group on the
Board of Directors, (II) the voting of the Investor Group's Voting Securities in
any election of such representative of the Investor Group to the Board of
Directors, or (III) the Company's solicitation of proxies in connection with any
annual meeting of the stockholders of the Company.
3. EXCEPTION FOR CERTAIN THIRD-PARTY ACQUISITIONS.
(a) EXCEPTION TO STANDSTILL OBLIGATION. Notwithstanding Section 2(a) but
subject to Section 4, the Investor Group may acquire Voting Securities without
regard to the limitations set forth above if any of the following events shall
occur:
(i) TENDER OR EXCHANGE OFFER. If a bona fide tender or exchange offer
is made by any person or 13D Group (other than an Affiliate of, or any person
acting in concert with, any member of the Investor Group) to acquire Voting
Securities which, if added to the Voting Securities (if any) already owned by
such person or 13D Group, would represent ownership of Voting Securities greater
than the total number of shares of Purchase Agreement Securities; or
(ii) NONPUBLIC TRANSACTIONS. If it is publicly disclosed or Investor
otherwise learns that Voting Securities representing more than the total number
of shares of Purchase Agreement Securities have been acquired in a nonpublic
transaction or that a bona fide offer has been made to acquire such securities
in a nonpublic transaction by any person or 13D Group (other than an Affiliate
of, or any person acting in concert with, any member of the Investor Group).
(b) COMPETING OFFERS. If any event identified in Section 3(a) occurs,
the Investor Group shall be permitted to take such action and make such offers
as may be considered to be of the same nature and type of action or offer and
directed to the same person or persons and for the same resulting number of
shares as that which is being taken by such person or 13D Group; provided that
the Investor Group may only acquire that number of shares which when added to
the number of
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<PAGE> 359
shares already owned by the Investor Group shall not exceed the number of shares
acquired or to be acquired (assuming any offers to purchase have been
consummated) by such person or 13D Group. In proceeding with any action or offer
permitted under this Section 3(b), the Investor Group shall be permitted to
offer more favorable terms such as price, cash versus securities or other such
terms as may be consistent with an offer of the same nature and type of
consideration as that which is being proposed by such person or 13D Group.
For example (but without limitation):
(i) TENDER OFFER. If a person or 13D Group makes a bona fide public
tender offer for all of the Company's outstanding shares, the Investor Group may
similarly tender for all of the outstanding shares of the Company.
(ii) NONPUBLIC TRANSACTION. If any person or 13D Group holding less
than the total number of shares of Purchase Agreement Securities proposes to the
Board of Directors of the Company to acquire directly from the Company shares
equal to a specified number of Voting Securities in excess of the total number
of shares of Purchase Agreement Securities, the Investor Group may make a
similar proposal to acquire directly from the Company an additional number of
shares that would, if accepted, increase its ownership of Voting Securities to
be equal to the specified number of Voting Securities.
4. RESTRICTIONS.
(a) HART-SCOTT-RODINO. Prior to any acquisition of any Voting Securities
pursuant to Section 3, the Company and the Investor shall consult with each
other pursuant to the terms of Section 5(d) of the Purchase Agreement as to
whether any applications and/or documents may be required to be executed and
filed under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
("HSR") in connection with such acquisition of Voting Securities and shall
mutually agree on an appropriate cause of action with respect to the foregoing.
In the event the Company and the Investor mutually agree that the filing of
applications and/or documents are required under HSR, then no acquisition of
Voting Securities pursuant to Section 3 shall take place until the expiration or
early termination of any notice periods required under HSR with respect to the
filing of such applications and/or documents.
(b) NASDAQ RULE 4460(i). So long as the Company's Common Stock is listed
for trading on the Nasdaq National Market or an exchange or quotation system
with a rule substantially similar to Rule 4460(i) of the Rules and Regulations
of the National Association of Securities Dealers, Inc., then any acquisition of
Voting Securities pursuant to Section 3 shall be subject to the conditions set
forth in Section 5(l) of the Purchase Agreement.
5. MISCELLANEOUS.
(a) EQUITABLE RELIEF. The Parties acknowledge and agree that irreparable
damage would occur in the event any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
Accordingly, it is agreed that the parties shall be entitled to an injunction or
injunctions to prevent or cure breaches of the provisions of this Agreement and
to enforce specifically the terms and provisions of this Agreement in any court
of the United States or any state thereof having jurisdiction, in addition to
any other remedy to which they may be entitled in law or in equity.
(b) WAIVER. The failure of either party to assert a right hereunder or
to insist upon compliance with any term or condition of this Agreement shall not
constitute a waiver of that right or excuse a similar subsequent failure to
perform any such term or condition by the other party. None of the terms,
covenants and conditions of this Agreement can be waived except by the written
consent of the party waiving compliance.
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<PAGE> 360
(c) AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended or
waived only with the written consent of the parties or their respective
successors and assigns. Any amendment or waiver effected in accordance with this
Section 5(c) shall be binding upon the parties and their respective successors
and assigns.
(d) ASSIGNMENT. This Agreement may not be assigned by either party
without the prior written consent of the other, except that the Company may
assign this Agreement to a party which acquires all or substantially all of the
Company's assets, whether by merger, sale of assets or otherwise. A merger or
consolidation shall be deemed to constitute an assignment. Subject to the
foregoing, the terms and conditions of this Agreement shall inure to the benefit
of and be binding upon the respective successors and assigns of the parties.
Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties hereto or their respective successors and assigns
any rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
(e) GOVERNING LAW; JURISDICTION. This Agreement and all acts and
transactions pursuant hereto and the rights and obligations of the parties
hereto shall be governed, construed and interpreted in accordance with the laws
of the State of Washington, without giving effect to principles of conflicts of
law. Each of the parties to this Agreement consents to the exclusive
jurisdiction and venue of the courts of the state and federal courts of King
County, Washington.
(f) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
(g) TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
(h) NOTICES. Any notice required or permitted by this Agreement shall be
in writing and shall be deemed sufficient upon receipt, when delivered
personally or by courier, overnight delivery service or confirmed facsimile, or
forty-eight (48) hours after being deposited in the regular mail as certified or
registered mail (airmail if sent internationally) with postage prepaid, if such
notice is addressed to the party to be notified at such party's address or
facsimile number as set forth below, or as subsequently modified by written
notice, and if to Company, to William W. Ericson, Venture Law Group, 4750
Carillon Point, Kirkland, Washington 98033, and if to the Investor, to Mark
Beatty, Preston Gates & Ellis, 701 Fifth Avenue, #5000, Seattle, Washington
98104.
(i) SEVERABILITY. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith, in order to maintain the economic position enjoyed by
each party as close as possible to that under the provision rendered
unenforceable. In the event that the parties cannot reach a mutually agreeable
and enforceable replacement for such provision, then (i) such provision shall be
excluded from this Agreement, (ii) the balance of the Agreement shall be
interpreted as if such provision were so excluded and (iii) the balance of the
Agreement shall be enforceable in accordance with its terms.
(j) ATTORNEY'S FEES. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorney's fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
(k) ENTIRE AGREEMENT. This Agreement is the product of both of the
parties hereto, and constitutes the entire agreement between such parties
pertaining to the subject matter hereof, and merges all prior negotiations and
drafts of the parties with regard to the transactions contemplated herein. Any
and all other written or oral agreements existing between the parties hereto
regarding such transactions are expressly canceled.
[Signature Page Follows]
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<PAGE> 361
The parties have caused this Standstill Agreement to be duly executed and
delivered by their proper and duly authorized officers as of the day and year
first written above.
COMPANY:
CORIXA CORPORATION
By: /s/ STEVEN GILLIS
------------------------------------
Steven Gillis, Chief Executive
Officer
Address: 1124 Columbia Street, Suite
200
Seattle, Washington 98104
Facsimile Number: (206) 754-5762
INVESTOR:
CASTLE GATE, L.L.C.
By: /s/ MICHAEL LARSON
------------------------------------
Name: Michael Larson
----------------------------------
Title: Business Manager
-----------------------------------
Address: 2365 Carillon Point
Kirkland, WA 98033
Facsimile Number: (425) 889-0288
SIGNATURE PAGE TO STANDSTILL AGREEMENT
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<PAGE> 362
APPENDIX L
THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS, AND
HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH,
THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION AND QUALIFICATION ARE
NOT REQUIRED.
WARRANT NO. CG-1 DATE OF ISSUANCE: April 8, 1999
WARRANT TO PURCHASE SHARES
OF COMMON STOCK OF
CORIXA CORPORATION
This Warrant is issued to Castle Gate, L.L.C., a Washington limited
liability company ("Purchaser") pursuant to that certain Equity Line of Credit
and Securities Purchase Agreement dated as of April 8, 1999 between Corixa
Corporation, a Delaware corporation ("Corixa" or the "Company"), and Purchaser
(the "Purchase Agreement") and is subject to the terms and conditions therein.
1. EXERCISE OF WARRANT.
(a) Method of Exercise. Subject to the terms and conditions herein set
forth, upon surrender of this Warrant at the principal office of Corixa and upon
payment of the purchase price by wire transfer to Corixa or cashiers check drawn
on a United States bank made to the order of Corixa, or exercise of the right to
credit the Warrant Price (as defined in Section 1(d)) against the fair market
value of the Warrant Stock (as defined below) at the time of exercise (the "Net
Exercise Right") pursuant to Section 1(b), Purchaser is entitled to purchase
from Corixa, at any time following the occurrence of an event set forth in
Subsections 1(c)(i)-(iii) respectively, and on or before the ten (10) year
anniversary of an event set forth in Subsections 1(c)(i)-(iii), respectively,
that number of fully paid and non-assessable shares of Corixa Common Stock, par
value $0.001 per share ("Warrant Stock") set forth in such Subsections
1(c)(i)-(iii), respectively, upon the occurrence of such event. Subject to
adjustment as hereinafter provided, the purchase price of one share of Warrant
Stock (or such securities as may be substituted for one share of Warrant Stock
pursuant to the provisions hereinafter set forth) shall be the Warrant Price.
(b) Net Exercise Right. If the Company shall receive written notice from
the holder of this Warrant at the time of exercise of this Warrant that the
holder elects to exercise Purchaser's Net Exercise Right, Corixa shall deliver
to such holder (without payment by the Purchaser of any exercise price of any
cash or other consideration ) that number of shares of fully paid and
nonassessable Common Stock equal to the quotient obtained by dividing (x) the
value of this Warrant (or the specified portion thereof) on the date of
exercise, which value shall be determined by subtracting (1) the aggregate
Warrant Price of the Warrant Stock immediately prior to the exercise of this
Warrant from (2) the aggregate fair market value of the Warrant Stock issuable
upon exercise of this Warrant (or specified portion thereof) on the date of
exercise by (y) the fair market value of one share of Common Stock on the date
of exercise. For purposes of this Section 1(b), "fair market value" of a share
of Common Stock shall mean the closing price of the Common Stock on the business
day prior to the date of exercise as reported by the Nasdaq National Market or
such other principal exchange or quotation system on which the Common Stock is
then traded. For
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<PAGE> 363
purposes of this Warrant, shares issued pursuant to the Net Exercise Right shall
be treated as if they were issued upon the exercise of this Warrant.
(c) Number of Shares Subject to Warrant. Subject to Section 1(a), this
Warrant is exercisable for:
(i) up to 250,000 shares of Common Stock at any time on or after the
date Corixa and Purchaser enter into the Purchase Agreement;
(ii) up to 62,500 shares at any time upon or after the consummation
of the Initial Draw (as that term is defined in the Purchase Agreement); and
(iii) upon each Subsequent Draw (as defined in the Purchase
Agreement) consummated by the Company in accordance with the Purchase Agreement,
up to that number of shares equal to the product obtained by multiplying (x)
250,000 by (y) a fraction, the numerator of which is the amount of such
Subsequent Draw and the denominator of which is $50,000,000, at any time
effective after such Subsequent Draw; provided, however, that in no event will
this Warrant be exercisable for greater than an aggregate of 187,500 shares of
Common Stock under this Subsection 1(c)(iii).
(d) Price of Shares Subject to Warrant. The "Warrant Price" shall be
equal to (i) in the case of Subsections 1(c)(i) and 1(c)(ii), $8.50 per share
and (ii) in the case of Subsection 1(c)(iii), the average per share closing
price of Corixa Common Stock on the Nasdaq National Market as reported in the
Wall Street Journal for the period beginning sixty (60) days before the date the
Subsequent Draw is consummated and ending sixty (60) days after the date the
Subsequent Draw is consummated (or such shorter period during which Corixa
shares are traded if Corixa shares shall for any reason cease to be publicly
traded).
2. CERTAIN ADJUSTMENTS.
(a) Mergers or Consolidations. If at any time after the date hereof
there shall be a capital reorganization (other than a combination or subdivision
of Warrant Stock otherwise provided for herein), or a merger or consolidation of
Corixa with another corporation (other than a merger with another corporation in
which Corixa is a continuing corporation and which does not result in any
reclassification or change of outstanding securities issuable upon exercise of
this Warrant), then, as a part of such reorganization, merger or consolidation,
lawful provision shall be made so that Purchaser shall thereafter be entitled to
receive upon exercise of this Warrant, during the period specified in this
Warrant and upon payment of the Warrant Price, the number of shares of stock or
other securities or property of Corixa or the successor corporation resulting
from such reorganization, merger or consolidation, to which a holder of the
Common Stock deliverable upon exercise of this Warrant would have been entitled
under the provisions of the agreement in such reorganization, merger or
consolidation if this Warrant had been exercised immediately before that
reorganization, merger or consolidation. In any such case, appropriate
adjustment (as determined in good faith by Corixa's Board of Directors) shall be
made in the application of the provisions of this Warrant with respect to the
rights and interests of Purchaser after the reorganization, merger or
consolidation to the end that the provisions of this Warrant (including
adjustment of the Warrant Price then in effect and the number of shares of
Warrant Stock) shall be applicable after that event, as near as reasonably may
be, in relation to any shares or other property deliverable after that event
upon exercise of this Warrant.
(b) Splits and Subdivisions; Dividends. In the event Corixa should at
any time or from time to time fix a record date for the effectuation of a split
or subdivision of the outstanding shares of Common Stock or the determination of
the holders of Common Stock entitled to receive a dividend or other distribution
payable in additional shares of Common Stock or other securities or rights
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<PAGE> 364
convertible into, or entitling the holder thereof to receive directly or
indirectly, additional shares of Common Stock (hereinafter referred to as the
"Common Stock Equivalents") without payment of any consideration by such holder
for the additional shares of Common Stock or Common Stock Equivalents (including
the additional shares of Common Stock issuable upon conversion or exercise
thereof), then, as of such record date (or the date of such distribution, split
or subdivision if no record date is fixed), the per share Warrant Price shall be
appropriately decreased and the number of shares of Warrant Stock shall be
appropriately increased in proportion to such increase (or potential increase)
of outstanding shares.
(c) Combination of Shares. If the number of shares of Common Stock
outstanding at any time after the date hereof is decreased by a combination of
the outstanding shares of Common Stock, the per share Warrant Price shall be
appropriately increased and the number of shares of Warrant Stock shall be
appropriately decreased in proportion to such decrease in outstanding shares.
(d) Adjustments for Other Distributions. In the event Corixa shall
declare a distribution payable in securities of other persons, evidences of
indebtedness issued by Corixa or other persons, assets (excluding cash dividends
paid out of net profits) or options or rights not referred to in Section 2(b),
then, in each such case for the purpose of this Section 2(d), upon exercise of
this Warrant the holder hereof shall be entitled to a proportionate share of any
such distribution as though such holder was the holder of the number of shares
of Common Stock of Corixa into which this Warrant may be exercised as of the
record date fixed for the determination of the holders of Common Stock of Corixa
entitled to receive such distribution.
3. NO FRACTIONAL SHARES. No fractional shares of Warrant Shares will be
issued in connection with any exercise of this Warrant. In lieu of any
fractional shares which would otherwise be issuable, Corixa shall pay cash equal
to the product of such fraction multiplied by the closing price of one Warrant
Share as reported on the Nasdaq National Market on the date of exercise.
4. NO STOCKHOLDER RIGHTS. Until the exercise of this Warrant or any portion
of this Warrant, Purchaser shall not have nor exercise any rights by virtue
hereof as a stockholder of Corixa (including without limitation the right to
notification of stockholder meetings or the right to receive any notice or other
communication concerning the business and affairs of Corixa).
5. RESERVATION OF STOCK. Corixa covenants that during the period this
Warrant is exercisable, Corixa will reserve from its authorized and unissued
Common Stock a sufficient number of shares of Common Stock (or other securities,
if applicable) to provide for the issuance of Warrant Stock (or other
securities) upon the exercise of this Warrant. Corixa agrees that its issuance
of this Warrant shall constitute full authority to its officers who are charged
with the duty of executing stock certificates to execute and issue the necessary
certificates for the Warrant Stock upon the exercise of this Warrant.
6. EXERCISE OF WARRANT.
(a) Procedural Requirements. Subject to Section 6(b), this Warrant may
be exercised by the holder hereof, in whole or in part, by the surrender of this
Warrant and the Notice of Exercise attached hereto as Exhibit A duly completed
and executed on behalf of the holder hereof, at the principal office of Corixa
together with payment in full of the Warrant Price then in effect with respect
to the number of shares of Warrant Stock as to which the Warrant is being
exercised. The Warrant Price shall be paid by wire transfer to Corixa or
cashiers check drawn on a United States bank made to the order of Corixa or by
exercise of the Net Exercise Right pursuant to Section 1(b). This Warrant shall
be deemed to have been exercised immediately prior to the close of business on
the date of its surrender for exercise as provided above, and the person
entitled to receive the Warrant Stock issuable upon such exercise shall be
treated for all purposes as the holder of such shares of record as of the close
of business on such date. As promptly as practicable on or after such
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<PAGE> 365
date and in any event within twenty (20) days thereafter, Corixa at its expense
shall cause to be issued and delivered to the person or persons entitled to
receive the same a certificate or certificates for the number of full shares of
Warrant Stock issuable upon such exercise, together with cash in lieu of any
fraction of a share as provided above. The shares of Warrant Stock issuable upon
exercise hereof shall, upon their issuance, be fully paid and nonassessable. In
the event that this Warrant is exercised in part, Corixa at its expense will
execute and deliver a new Warrant of like tenor exercisable for the number of
shares for which this Warrant may then be exercised.
(b) Hart-Scott-Rodino. Prior to any exercise of this Warrant, the
Company and the Purchaser shall consult with each other pursuant to Section 5(d)
of the Purchase Agreement as to whether any applications and/or documents may be
required to be executed and filed under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended ("HSR") in connection with such exercise
and shall mutually agree on an appropriate cause of action with respect to the
foregoing. In the event the Company and the Purchaser mutually agree that the
filing of applications and/or documents are required under HSR, then no exercise
of this Warrant shall take place until the expiration or early termination of
any notice periods required under HSR with respect to the filing of such
applications and/or documents.
7. CERTIFICATE OF ADJUSTMENT. Whenever the Warrant Price or number or type
of securities issuable upon exercise of this Warrant is adjusted, as herein
provided, Corixa shall, at its expense, promptly deliver to the record holder of
this Warrant a certificate of an officer of Corixa setting forth the nature of
such adjustment and showing in detail the facts upon which such adjustment is
based.
8. REPRESENTATIONS OF PURCHASER. As of the date hereof, Purchaser hereby
confirms the representations and warranties made by Purchaser in Section 3 of
the Purchase Agreement.
9. TRANSFER RESTRICTIONS.
(a) UNREGISTERED SECURITY. The holder of this Warrant acknowledges that
this Warrant and the Warrant Stock have not been registered under the Securities
Act of 1933, as amended (the "1933 Act") and agrees not to sell, pledge,
distribute, offer for sale, transfer or otherwise dispose of this Warrant or any
Warrant Stock issued upon its exercise in the absence of (i) an effective
registration statement under the 1933 Act as to this Warrant or such Warrant
Stock and registration or qualification of this Warrant or such Warrant Stock
under any applicable U.S. federal or state securities law then in effect or (ii)
an opinion of counsel, satisfactory to Corixa, that such registration and
qualification are not required. Each certificate or other instrument for Warrant
Stock issued upon the exercise of this Warrant shall bear a legend substantially
to the foregoing effect.
(b) NO TRANSFER. This Warrant is not transferable without the Company's
prior written consent; provided, however, such consent shall not be required in
connection with the transfer by the Purchaser of such Warrant (but only with all
related obligations) to (i) an Affiliate of the Purchaser (as such term is
defined in the Standstill Agreement dated as of April 8, 1999 between the
Company and the Purchaser), (ii) an entity solely in connection with charitable
contributions by the Purchaser or (iii) an individual or entity solely for
estate planning purposes, provided that (x) written notice (in the form of
Exhibit B as attached hereto) is provided to the Company at least five (5)
business days prior to any such transfer, (y) a minimum of 5,000 shares of
Warrant Stock are transferred in each instance, and (z) immediately following
such transfer the further disposition of such Warrant Stock by the transferee is
restricted under the 1933 Act and the transferree agrees in writing to be bound
by all of the provisions of this Warrant.
10. NOTICES OF RECORD DATE. In the event of:
(a) any taking by Corixa of a record of the holders of any class of
securities for the purpose of determining the holders thereof who are entitled
to receive any dividend (other than a cash
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dividend payable out of earned surplus of Corixa) or other distribution, or any
right to subscribe for, purchase or otherwise acquire any shares of stock of any
class or any other securities or property, or to receive any other right; or
(b) any capital reorganization of Corixa, any reclassification or
recapitalization of the capital stock of Corixa or any transfer of all or
substantially all the assets of Corixa to or consolidation or merger of Corixa
with or into any other person; or
(c) any voluntary or involuntary dissolution, liquidation or winding-up
of Corixa,
then and in each such event Corixa will mail or cause to be mailed to
the holder of this Warrant a notice specifying (i) the date on which any such
record is to be taken for the purpose of such dividend, distribution or right,
and stating the amount and character of such dividend, distribution or right,
and (ii) the date on which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation or
winding-up is to take place, and the time, if any, as of which the holders of
record of Common Stock (or other securities) shall be entitled to exchange their
shares of Common Stock (or other securities) for securities or other property
deliverable upon such reorganization, reclassification, recapitalization,
transfer, consolidation, merger, dissolution, liquidation or winding-up. Such
notice shall be mailed at least 10 days prior to the date therein specified.
11. REPLACEMENT OF WARRANTS. On receipt of evidence reasonably satisfactory
to Corixa of the loss, theft, destruction or mutilation of this Warrant and, in
the case of any such loss, theft, destruction or mutilation of this Warrant, on
delivery of an indemnity agreement or security reasonably satisfactory in form
and amount to Corixa or, in the case of any such mutilation, on surrender and
cancellation of such Warrant, Corixa at its expense will execute and deliver, in
lieu thereof, a new Warrant of like tenor.
12. MARKET STANDOFF.
(a) Purchaser hereby agrees that, during the period of duration (up to,
but not exceeding, 90 days) specified by Corixa and an underwriter of Common
Stock or other securities of Corixa, following the effective date of a
registration statement of Corixa filed under the 1933 Act, it shall not, to the
extent requested by Corixa and such underwriter, directly or indirectly sell,
offer to sell, contract to sell (including, without limitation, any short sale),
grant any option to purchase or otherwise transfer or dispose of (other than to
donees who agree to be similarly bound) any securities of Corixa held by it at
any time during such period except Common Stock included in such registration.
(b) In order to enforce the foregoing covenant, Corixa may impose
stop-transfer instructions with respect to the securities held by Purchaser
until the end of such period, and Purchaser agrees that, if so requested,
Purchaser will execute an agreement in the form provided by the underwriter
containing terms which are essentially consistent with the provisions of this
Section 12.
13. NO IMPAIRMENT. Corixa will not, by amendment of its charter or through
reorganization, consolidation, merger, dissolution, sale of assets or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the holder of this
Warrant against impairment.
14. TERMINATION. This Warrant (and the right to purchase Warrant Stock upon
exercise hereof) shall terminate as to the right to purchase that number of
Warrant Stock set forth in Subsections 1(c)(i)-(iii), respectively, upon the
date that is the ten (10) year anniversary of the occurrence of the applicable
event set forth in Subsections 1(c)(i)-(iii), respectively.
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15. SATURDAYS, SUNDAYS, HOLIDAYS, ETC. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein
shall be a Saturday or Sunday or shall be a legal holiday, then such action may
be taken or such right may be exercised on the next succeeding day not a
Saturday, Sunday or legal holiday.
16. EXCHANGE ACT FILINGS. Purchaser agrees and acknowledges that it shall
have sole responsibility for making any filings with the U.S. Securities and
Exchange Commission pursuant to Sections 13 and 16 of the Securities Exchange
Act of 1934, as amended, as a result of its acquisition of this Warrant and the
Warrant Stock (collectively, the "Securities") and any future retention or
transfer thereof.
17. NO LEGAL, TAX OR INVESTMENT ADVICE. Purchaser understands that nothing
in this Agreement or any other materials presented to Purchaser in connection
with the acquisition of the Securities constitutes legal, tax or investment
advice. Purchaser has consulted such legal, tax and investment advisors as it,
in its sole discretion, has deemed necessary or appropriate in connection with
its acquisition of the Securities.
18. MISCELLANEOUS. This Warrant shall be governed by the laws of the State
of Washington. The headings in this Warrant are for purposes of convenience and
reference only, and shall not be deemed to constitute a part hereof. Neither
this Warrant nor any term hereof may be changed, waived, discharged or
terminated orally but only by an instrument in writing signed by Corixa and the
Purchaser. All notices and other communications from Corixa to the holder of
this Warrant shall be sufficient if in writing and sent by registered or
certified mail, domestic or international courier, or facsimile, return receipt
requested, postage or courier charges prepaid, to the address furnished to
Corixa in writing by Purchaser. All such notices and communications shall be
effective if delivered (i) personally, (ii) by facsimile transmission (receipt
verified), (iii) by registered or certified mail (return receipt requested),
postage prepaid, or (iv) sent by express courier service (receipt verified), and
if to Purchaser, with a copy to Mark Beatty, Preston Gates & Ellis, 701 Fifth
Avenue, #5000, Seattle, Washington 98104, and if to Corixa, with a copy to
William W. Ericson, Venture Law Group, 4750 Carillon Point, Kirkland, Washington
98033. The invalidity or unenforceability of any provision hereof shall in no
way affect the validity or enforceability of any other provisions.
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IN WITNESS WHEREOF, this Common Stock Purchase Warrant is issued effective
as of this 8th day of April, 1999.
CORIXA CORPORATION
By: /s/ STEVEN GILLIS
----------------------------------
Steven Gillis
Chairman and Chief Executive
Officer
ACKNOWLEDGED AND AGREED:
CASTLE GATE, L.L.C.
By: /s/ MICHAEL LARSON
----------------------------------
Name: Michael Larson
--------------------------------
(print)
Title: Business Manager
------------------------------
SIGNATURE PAGE TO THE WARRANT TO
PURCHASE SHARES OF COMMON STOCK
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EXHIBIT A
NOTICE OF INTENT TO EXERCISE
(TO BE SIGNED ONLY UPON EXERCISE OF WARRANT)
To: CORIXA CORPORATION
The undersigned, the Holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, ( ) shares of
Common Stock of Corixa Corporation and (choose one)
[ ] herewith makes payment of Dollars ($ ) thereof
or
[ ] exercises Holder's Net Exercise Right pursuant to Section 1(b)
thereof.
and requests that the certificates for such shares be issued in the name of, and
delivered to , whose address is
.
DATED:
- ---------------------------
--------------------------------------
(Signature must conform in all
respects to name of Holder as
specified on the face of the Warrant)
--------------------------------------
--------------------------------------
(Address)
<PAGE> 370
EXHIBIT B
NOTICE OF ASSIGNMENT FORM
FOR VALUE RECEIVED, hereby sells, assigns and transfers all
of the rights of the undersigned under the attached Warrant with respect to the
number of shares of Common Stock covered thereby set forth below, to:
<TABLE>
<CAPTION>
NAME OF ASSIGNEE ADDRESS/FAX NUMBER NO. OF SHARES
---------------- ------------------ -------------
<S> <C> <C>
</TABLE>
Dated:
- ---------------------------------------------
Signature:
--------------------------------------
Witness:
--------------------------------------
<PAGE> 371
APPENDIX M
THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS, AND
HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH,
THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION AND QUALIFICATION ARE
NOT REQUIRED.
WARRANT NO. CG-2 DATE OF ISSUANCE: April 8, 1999
WARRANT TO PURCHASE SHARES
OF COMMON STOCK OF
CORIXA CORPORATION
This Warrant is issued to Castle Gate, L.L.C., a Washington limited
liability company ("Purchaser"), pursuant to that certain Equity Line of Credit
and Securities Purchase Agreement dated as of April 8, 1999 between Corixa
Corporation, a Delaware corporation ("Corixa" or the "Company"), and Purchaser
(the "Purchase Agreement") and is subject to the terms and conditions therein.
1. EXERCISE OF WARRANT.
(a) Number and Price of Shares Subject to Warrant; Method of
Exercise. Subject to the terms and conditions herein set forth, upon surrender
of this Warrant at the principal office of Corixa and upon payment of the
purchase price by wire transfer to Corixa or cashiers check drawn on a United
States bank made to the order of Corixa, or exercise of the right to credit the
Warrant Price (as defined below) against the fair market value of the Warrant
Stock (as defined below) at the time of exercise (the "Net Exercise Right")
pursuant to Section 1(b), Purchaser is entitled to purchase from Corixa, at any
time after the date of issuance hereof and on or before April 8, 2004, that
number of fully paid and non-assessable shares of Corixa Common Stock, par value
$0.001 per share ("Warrant Stock") equal to (A) $6,000,000.00 divided by (B) the
"Warrant Price", which shall be equal to the average per share closing price of
Corixa Common Stock on the Nasdaq National Market as reported in the Wall Street
Journal for the ten (10) day period immediately preceding but not including the
date Corixa and Purchaser enter into the Purchase Agreement. Subject to
adjustment as hereinafter provided, the purchase price of one share of Warrant
Stock (or such securities as may be substituted for one share of Warrant Stock
pursuant to the provisions hereinafter set forth) shall be the Warrant Price.
(b) Net Exercise Right. If the Company shall receive written notice from
the holder of this Warrant at the time of exercise of this Warrant that the
holder elects to exercise Purchaser's Net Exercise Right, Corixa shall deliver
to such holder (without payment by the Purchaser of any exercise price of any
cash or other consideration ) that number of shares of fully paid and
nonassessable Common Stock equal to the quotient obtained by dividing (x) the
value of this Warrant (or the specified portion thereof) on the date of
exercise, which value shall be determined by subtracting (1) the aggregate
Warrant Price of the Warrant Stock immediately prior to the exercise of this
Warrant from (2) the aggregate fair market value of the Warrant Stock issuable
upon exercise of this Warrant (or specified portion thereof) on the date of
exercise by (y) the fair market value of one share of Common Stock on the date
of exercise. For purposes of this Section 1(b), "fair market value" of a share
of Common Stock shall mean the closing price of the Common Stock on
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the business day prior to the date of exercise as reported by the Nasdaq
National Market or such other principal exchange or quotation system on which
the Common Stock is then traded. For purposes of this Warrant, shares issued
pursuant to the Net Exercise Right shall be treated as if they were issued upon
the exercise of this Warrant.
2. CERTAIN ADJUSTMENTS.
(a) Mergers or Consolidations. If at any time after the date hereof
there shall be a capital reorganization (other than a combination or subdivision
of Warrant Stock otherwise provided for herein), or a merger or consolidation of
Corixa with another corporation (other than a merger with another corporation in
which Corixa is a continuing corporation and which does not result in any
reclassification or change of outstanding securities issuable upon exercise of
this Warrant), then, as a part of such reorganization, merger or consolidation,
lawful provision shall be made so that Purchaser shall thereafter be entitled to
receive upon exercise of this Warrant, during the period specified in this
Warrant and upon payment of the Warrant Price, the number of shares of stock or
other securities or property of Corixa or the successor corporation resulting
from such reorganization, merger or consolidation, to which a holder of the
Common Stock deliverable upon exercise of this Warrant would have been entitled
under the provisions of the agreement in such reorganization, merger or
consolidation if this Warrant had been exercised immediately before that
reorganization, merger or consolidation. In any such case, appropriate
adjustment (as determined in good faith by Corixa's Board of Directors) shall be
made in the application of the provisions of this Warrant with respect to the
rights and interests of Purchaser after the reorganization, merger or
consolidation to the end that the provisions of this Warrant (including
adjustment of the Warrant Price then in effect and the number of shares of
Warrant Stock) shall be applicable after that event, as near as reasonably may
be, in relation to any shares or other property deliverable after that event
upon exercise of this Warrant.
(b) Splits and Subdivisions; Dividends. In the event Corixa should at
any time or from time to time fix a record date for the effectuation of a split
or subdivision of the outstanding shares of Common Stock or the determination of
the holders of Common Stock entitled to receive a dividend or other distribution
payable in additional shares of Common Stock or other securities or rights
convertible into, or entitling the holder thereof to receive directly or
indirectly, additional shares of Common Stock (hereinafter referred to as the
"Common Stock Equivalents") without payment of any consideration by such holder
for the additional shares of Common Stock or Common Stock Equivalents (including
the additional shares of Common Stock issuable upon conversion or exercise
thereof), then, as of such record date (or the date of such distribution, split
or subdivision if no record date is fixed), the per share Warrant Price shall be
appropriately decreased and the number of shares of Warrant Stock shall be
appropriately increased in proportion to such increase (or potential increase)
of outstanding shares.
(c) Combination of Shares. If the number of shares of Common Stock
outstanding at any time after the date hereof is decreased by a combination of
the outstanding shares of Common Stock, the per share Warrant Price shall be
appropriately increased and the number of shares of Warrant Stock shall be
appropriately decreased in proportion to such decrease in outstanding shares.
(d) Adjustments for Other Distributions. In the event Corixa shall
declare a distribution payable in securities of other persons, evidences of
indebtedness issued by Corixa or other persons, assets (excluding cash dividends
paid out of net profits) or options or rights not referred to in Section 2(b),
then, in each such case for the purpose of this Section 2(d), upon exercise of
this Warrant the holder hereof shall be entitled to a proportionate share of any
such distribution as though such holder was the holder of the number of shares
of Common Stock of Corixa into which this Warrant may be exercised as of the
record date fixed for the determination of the holders of Common Stock of Corixa
entitled to receive such distribution.
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3. NO FRACTIONAL SHARES. No fractional shares of Warrant Shares will be
issued in connection with any exercise of this Warrant. In lieu of any
fractional shares which would otherwise be issuable, Corixa shall pay cash equal
to the product of such fraction multiplied by the closing price of one Warrant
Share as reported on the Nasdaq National Market on the date of exercise.
4. NO STOCKHOLDER RIGHTS. Until the exercise of this Warrant or any portion
of this Warrant, Purchaser shall not have nor exercise any rights by virtue
hereof as a stockholder of Corixa (including without limitation the right to
notification of stockholder meetings or the right to receive any notice or other
communication concerning the business and affairs of Corixa).
5. RESERVATION OF STOCK. Corixa covenants that during the period this
Warrant is exercisable, Corixa will reserve from its authorized and unissued
Common Stock a sufficient number of shares of Common Stock (or other securities,
if applicable) to provide for the issuance of Warrant Stock (or other
securities) upon the exercise of this Warrant. Corixa agrees that its issuance
of this Warrant shall constitute full authority to its officers who are charged
with the duty of executing stock certificates to execute and issue the necessary
certificates for the Warrant Stock upon the exercise of this Warrant.
6. EXERCISE OF WARRANT.
(a) Procedural Requirements. Subject to Section 6(b), this Warrant may
be exercised by the holder hereof, in whole or in part, by the surrender of this
Warrant and the Notice of Exercise attached hereto as Exhibit A duly completed
and executed on behalf of the holder hereof, at the principal office of Corixa
together with payment in full of the Warrant Price then in effect with respect
to the number of shares of Warrant Stock as to which the Warrant is being
exercised. The Warrant Price shall be paid by wire transfer to Corixa or
cashiers check drawn on a United States bank made to the order of Corixa or by
exercise of the Net Exercise Right pursuant to Section 1(b). This Warrant shall
be deemed to have been exercised immediately prior to the close of business on
the date of its surrender for exercise as provided above, and the person
entitled to receive the Warrant Stock issuable upon such exercise shall be
treated for all purposes as the holder of such shares of record as of the close
of business on such date. As promptly as practicable on or after such date and
in any event within twenty (20) days thereafter, Corixa at its expense shall
cause to be issued and delivered to the person or persons entitled to receive
the same a certificate or certificates for the number of full shares of Warrant
Stock issuable upon such exercise, together with cash in lieu of any fraction of
a share as provided above. The shares of Warrant Stock issuable upon exercise
hereof shall, upon their issuance, be fully paid and nonassessable. In the event
that this Warrant is exercised in part, Corixa at its expense will execute and
deliver a new Warrant of like tenor exercisable for the number of shares for
which this Warrant may then be exercised.
(b) Hart-Scott-Rodino. Prior to any exercise of this Warrant, the
Company and the Purchaser shall consult with each other pursuant to Section 5(d)
of the Purchase Agreement as to whether any applications and/or documents may be
required to be executed and filed under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended ("HSR") in connection with such exercise
and shall mutually agree on an appropriate cause of action with respect to the
foregoing. In the event the Company and the Purchaser mutually agree that the
filing of applications and/or documents are required under HSR, then no exercise
of this Warrant shall take place until the expiration or early termination of
any notice periods required under HSR with respect to the filing of such
applications and/or documents.
7. CERTIFICATE OF ADJUSTMENT. Whenever the Warrant Price or number or type
of securities issuable upon exercise of this Warrant is adjusted, as herein
provided, Corixa shall, at its expense, promptly deliver to the record holder of
this Warrant a certificate of an officer of Corixa setting forth the nature of
such adjustment and showing in detail the facts upon which such adjustment is
based.
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8. REPRESENTATIONS OF PURCHASER. As of the date hereof, Purchaser hereby
confirms the representations and warranties made by Purchaser in Section 3 of
the Purchase Agreement.
9. TRANSFER RESTRICTIONS.
(a) UNREGISTERED SECURITY. The holder of this Warrant acknowledges that
this Warrant and the Warrant Stock have not been registered under the Securities
Act of 1933, as amended (the "1933 Act") and agrees not to sell, pledge,
distribute, offer for sale, transfer or otherwise dispose of this Warrant or any
Warrant Stock issued upon its exercise in the absence of (i) an effective
registration statement under the 1933 Act as to this Warrant or such Warrant
Stock and registration or qualification of this Warrant or such Warrant Stock
under any applicable U.S. federal or state securities law then in effect or (ii)
an opinion of counsel, satisfactory to Corixa, that such registration and
qualification are not required. Each certificate or other instrument for Warrant
Stock issued upon the exercise of this Warrant shall bear a legend substantially
to the foregoing effect.
(b) NO TRANSFER. This Warrant is not transferable without the Company's
prior written consent; provided, however, such consent shall not be required in
connection with the transfer by the Purchaser of such Warrant (but only with all
related obligations) to (i) an Affiliate of the Purchaser (as such term is
defined in the Standstill Agreement dated as of April 8, 1999 between the
Company and the Purchaser), (ii) an entity solely in connection with charitable
contributions by the Purchaser or (iii) an individual or entity solely for
estate planning purposes, provided that (x) written notice (in the form of
Exhibit B as attached hereto) is provided to the Company at least five (5)
business days prior to any such transfer, (y) a minimum of 5,000 shares of
Warrant Stock are transferred in each instance, and (z) immediately following
such transfer the further disposition of such Warrant Stock by the transferee is
restricted under the 1933 Act and the transferree agrees in writing to be bound
by all of the provisions of this Warrant.
10. NOTICES OF RECORD DATE. In the event of:
(a) any taking by Corixa of a record of the holders of any class of
securities for the purpose of determining the holders thereof who are entitled
to receive any dividend (other than a cash dividend payable out of earned
surplus of Corixa) or other distribution, or any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right; or
(b) any capital reorganization of Corixa, any reclassification or
recapitalization of the capital stock of Corixa or any transfer of all or
substantially all the assets of Corixa to or consolidation or merger of Corixa
with or into any other person; or
(c) any voluntary or involuntary dissolution, liquidation or winding-up
of Corixa,
then and in each such event Corixa will mail or cause to be mailed to
the holder of this Warrant a notice specifying (i) the date on which any such
record is to be taken for the purpose of such dividend, distribution or right,
and stating the amount and character of such dividend, distribution or right,
and (ii) the date on which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation or
winding-up is to take place, and the time, if any, as of which the holders of
record of Common Stock (or other securities) shall be entitled to exchange their
shares of Common Stock (or other securities) for securities or other property
deliverable upon such reorganization, reclassification, recapitalization,
transfer, consolidation, merger, dissolution, liquidation or winding-up. Such
notice shall be mailed at least 10 days prior to the date therein specified.
11. REPLACEMENT OF WARRANTS. On receipt of evidence reasonably satisfactory
to Corixa of the loss, theft, destruction or mutilation of this Warrant and, in
the case of any such loss, theft, destruction or mutilation of this Warrant, on
delivery of an indemnity agreement or security
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reasonably satisfactory in form and amount to Corixa or, in the case of any such
mutilation, on surrender and cancellation of such Warrant, Corixa at its expense
will execute and deliver, in lieu thereof, a new Warrant of like tenor.
12. MARKET STANDOFF.
(a) Purchaser hereby agrees that, during the period of duration (up to,
but not exceeding, 90 days) specified by Corixa and an underwriter of Common
Stock or other securities of Corixa, following the effective date of a
registration statement of Corixa filed under the 1933 Act, it shall not, to the
extent requested by Corixa and such underwriter, directly or indirectly sell,
offer to sell, contract to sell (including, without limitation, any short sale),
grant any option to purchase or otherwise transfer or dispose of (other than to
donees who agree to be similarly bound) any securities of Corixa held by it at
any time during such period except Common Stock included in such registration.
(b) In order to enforce the foregoing covenant, Corixa may impose
stop-transfer instructions with respect to the securities held by Purchaser
until the end of such period, and Purchaser agrees that, if so requested,
Purchaser will execute an agreement in the form provided by the underwriter
containing terms which are essentially consistent with the provisions of this
Section 12.
13. NO IMPAIRMENT. Corixa will not, by amendment of its charter or through
reorganization, consolidation, merger, dissolution, sale of assets or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the holder of this
Warrant against impairment.
14. TERMINATION. This Warrant (and the right to purchase securities upon
exercise hereof) shall terminate on April 8, 2004.
15. SATURDAYS, SUNDAYS, HOLIDAYS, ETC. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein
shall be a Saturday or Sunday or shall be a legal holiday, then such action may
be taken or such right may be exercised on the next succeeding day not a
Saturday, Sunday or legal holiday.
16. EXCHANGE ACT FILINGS. Purchaser agrees and acknowledges that it shall
have sole responsibility for making any filings with the U.S. Securities and
Exchange Commission pursuant to Sections 13 and 16 of the Securities Exchange
Act of 1934, as amended, as a result of its acquisition of this Warrant and the
Warrant Stock (collectively, the "Securities") and any future retention or
transfer thereof.
17. NO LEGAL, TAX OR INVESTMENT ADVICE. Purchaser understands that nothing
in this Agreement or any other materials presented to Purchaser in connection
with the acquisition of the Securities constitutes legal, tax or investment
advice. Purchaser has consulted such legal, tax and investment advisors as it,
in its sole discretion, has deemed necessary or appropriate in connection with
its acquisition of the Securities.
18. MISCELLANEOUS. This Warrant shall be governed by the laws of the State
of Washington. The headings in this Warrant are for purposes of convenience and
reference only, and shall not be deemed to constitute a part hereof. Neither
this Warrant nor any term hereof may be changed, waived, discharged or
terminated orally but only by an instrument in writing signed by Corixa and the
Purchaser. All notices and other communications from Corixa to the holder of
this Warrant shall be sufficient if in writing and sent by registered or
certified mail, domestic or international courier, or facsimile, return receipt
requested, postage or courier charges prepaid, to the address furnished to
Corixa in writing by Purchaser. All such notices and communications shall be
effective if delivered
M-5
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(i) personally, (ii) by facsimile transmission (receipt verified), (iii) by
registered or certified mail (return receipt requested), postage prepaid, or
(iv) sent by express courier service (receipt verified), and if to Purchaser,
with a copy to Mark Beatty, Preston Gates & Ellis, 701 Fifth Avenue, #5000,
Seattle, Washington 98104, and if to Corixa, with a copy to William W. Ericson,
Venture Law Group, 4750 Carillon Point, Kirkland, Washington 98033. The
invalidity or unenforceability of any provision hereof shall in no way affect
the validity or enforceability of any other provisions.
SIGNATURE PAGE TO FOLLOW
M-6
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IN WITNESS WHEREOF, this Common Stock Purchase Warrant is issued effective
as of this 8th day of April, 1999.
CORIXA CORPORATION
By: /s/ STEVEN GILLIS
----------------------------------
Steven Gillis
Chairman and Chief Executive Officer
ACKNOWLEDGED AND AGREED:
CASTLE GATE, L.L.C.
By: /s/ MICHAEL LARSON
----------------------------------
Name: Michael Larson
--------------------------------
(print)
Title: Business Manager
-------------------------------
SIGNATURE PAGE TO THE WARRANT TO
PURCHASE SHARES OF COMMON STOCK
M-7
<PAGE> 378
EXHIBIT A
NOTICE OF INTENT TO EXERCISE
(TO BE SIGNED ONLY UPON EXERCISE OF WARRANT)
To: CORIXA CORPORATION
The undersigned, the Holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, ( ) shares of
Common Stock of Corixa Corporation and (choose one)
[ ] herewith makes payment of Dollars ($ ) thereof
or
[ ] exercises Holder's Net Exercise Right pursuant to Section 1(b)
thereof.
and requests that the certificates for such shares be issued in the name of, and
delivered to , whose address is
.
DATED:
- ---------------------------
--------------------------------------
(Signature must conform in all
respects to name
of Holder as specified on the face of
the Warrant)
--------------------------------------
--------------------------------------
(Address)
<PAGE> 379
EXHIBIT B
NOTICE OF ASSIGNMENT FORM
FOR VALUE RECEIVED, hereby sells, assigns and
transfers all of the rights of the undersigned under the attached Warrant with
respect to the number of shares of Common Stock covered thereby set forth below,
to:
<TABLE>
<CAPTION>
NAME OF ASSIGNEE ADDRESS/FAX NUMBER NO. OF SHARES
---------------- ------------------ -------------
<S> <C> <C>
</TABLE>
Dated:
- ---------------------------
Signature:
--------------------------------------
Witness:
--------------------------------------
<PAGE> 380
APPENDIX N
THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS, AND
HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH,
THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION AND QUALIFICATION ARE
NOT REQUIRED.
WARRANT NO. CG-3 DATE OF ISSUANCE: April 8, 2000
WARRANT TO PURCHASE SHARES
OF COMMON STOCK OF
CORIXA CORPORATION
This Warrant is issued to Castle Gate, L.L.C., a Washington limited
liability company ("Purchaser") pursuant to that certain Equity Line of Credit
and Securities Purchase Agreement dated as of April 8, 1999 between Corixa
Corporation, a Delaware corporation ("Corixa" or the "Company"), and Purchaser
(the "Purchase Agreement") and is subject to the terms and conditions therein.
1. EXERCISE OF WARRANT.
(a) Number and Price of Shares Subject to Warrant; Method of
Exercise. Subject to the terms and conditions herein set forth, upon surrender
of this Warrant at the principal office of Corixa and upon payment of the
purchase price by wire transfer to Corixa or cashiers check drawn on a United
States bank made to the order of Corixa, or exercise of the right to credit the
Warrant Price (as defined below) against the fair market value of the Warrant
Stock (as defined below) at the time of exercise (the "Net Exercise Right")
pursuant to Section 1(b), Purchaser is entitled to purchase from Corixa, at any
time after the date of issuance hereof and on or before April 8, 2005, that
number of fully paid and non-assessable shares of Corixa Common Stock, par value
$0.001 per share ("Warrant Stock") equal to (A) $1,125,000.00 divided by (B) the
"Warrant Price", which shall be equal to the average per share closing price of
Corixa Common Stock on the Nasdaq National Market as reported in the Wall Street
Journal for the ten (10) day period immediately preceding but not including the
date one year after the date Corixa and Purchaser enter into the Purchase
Agreement. Subject to adjustment as hereinafter provided, the purchase price of
one share of Warrant Stock (or such securities as may be substituted for one
share of Warrant Stock pursuant to the provisions hereinafter set forth) shall
be the Warrant Price.
(b) Net Exercise Right. If the Company shall receive written notice from
the holder of this Warrant at the time of exercise of this Warrant that the
holder elects to exercise Purchaser's Net Exercise Right, Corixa shall deliver
to such holder (without payment by the Purchaser of any exercise price of any
cash or other consideration ) that number of shares of fully paid and
nonassessable Common Stock equal to the quotient obtained by dividing (x) the
value of this Warrant (or the specified portion thereof) on the date of
exercise, which value shall be determined by subtracting (1) the aggregate
Warrant Price of the Warrant Stock immediately prior to the exercise of this
Warrant from (2) the aggregate fair market value of the Warrant Stock issuable
upon exercise of this Warrant (or specified portion thereof) on the date of
exercise by (y) the fair market value of one share of Common Stock on the date
of exercise. For purposes of this Section 1(b), "fair market value" of a share
of Common Stock shall mean the closing price of the Common Stock on
N-1
<PAGE> 381
the business day prior to the date of exercise as reported by the Nasdaq
National Market or such other principal exchange or quotation system on which
the Common Stock is then traded. For purposes of this Warrant, shares issued
pursuant to the Net Exercise Right shall be treated as if they were issued upon
the exercise of this Warrant.
2. CERTAIN ADJUSTMENTS.
(a) Mergers or Consolidations. If at any time after the date hereof
there shall be a capital reorganization (other than a combination or subdivision
of Warrant Stock otherwise provided for herein), or a merger or consolidation of
Corixa with another corporation (other than a merger with another corporation in
which Corixa is a continuing corporation and which does not result in any
reclassification or change of outstanding securities issuable upon exercise of
this Warrant), then, as a part of such reorganization, merger or consolidation,
lawful provision shall be made so that Purchaser shall thereafter be entitled to
receive upon exercise of this Warrant, during the period specified in this
Warrant and upon payment of the Warrant Price, the number of shares of stock or
other securities or property of Corixa or the successor corporation resulting
from such reorganization, merger or consolidation, to which a holder of the
Common Stock deliverable upon exercise of this Warrant would have been entitled
under the provisions of the agreement in such reorganization, merger or
consolidation if this Warrant had been exercised immediately before that
reorganization, merger or consolidation. In any such case, appropriate
adjustment (as determined in good faith by Corixa's Board of Directors) shall be
made in the application of the provisions of this Warrant with respect to the
rights and interests of Purchaser after the reorganization, merger or
consolidation to the end that the provisions of this Warrant (including
adjustment of the Warrant Price then in effect and the number of shares of
Warrant Stock) shall be applicable after that event, as near as reasonably may
be, in relation to any shares or other property deliverable after that event
upon exercise of this Warrant.
(b) Splits and Subdivisions; Dividends. In the event Corixa should at
any time or from time to time fix a record date for the effectuation of a split
or subdivision of the outstanding shares of Common Stock or the determination of
the holders of Common Stock entitled to receive a dividend or other distribution
payable in additional shares of Common Stock or other securities or rights
convertible into, or entitling the holder thereof to receive directly or
indirectly, additional shares of Common Stock (hereinafter referred to as the
"Common Stock Equivalents") without payment of any consideration by such holder
for the additional shares of Common Stock or Common Stock Equivalents (including
the additional shares of Common Stock issuable upon conversion or exercise
thereof), then, as of such record date (or the date of such distribution, split
or subdivision if no record date is fixed), the per share Warrant Price shall be
appropriately decreased and the number of shares of Warrant Stock shall be
appropriately increased in proportion to such increase (or potential increase)
of outstanding shares.
(c) Combination of Shares. If the number of shares of Common Stock
outstanding at any time after the date hereof is decreased by a combination of
the outstanding shares of Common Stock, the per share Warrant Price shall be
appropriately increased and the number of shares of Warrant Stock shall be
appropriately decreased in proportion to such decrease in outstanding shares.
(d) Adjustments for Other Distributions. In the event Corixa shall
declare a distribution payable in securities of other persons, evidences of
indebtedness issued by Corixa or other persons, assets (excluding cash dividends
paid out of net profits) or options or rights not referred to in Section 2(b),
then, in each such case for the purpose of this Section 2(d), upon exercise of
this Warrant the holder hereof shall be entitled to a proportionate share of any
such distribution as though such holder was the holder of the number of shares
of Common Stock of Corixa into which this Warrant may be exercised as of the
record date fixed for the determination of the holders of Common Stock of Corixa
entitled to receive such distribution.
N-2
<PAGE> 382
3. NO FRACTIONAL SHARES. No fractional shares of Warrant Shares will be
issued in connection with any exercise of this Warrant. In lieu of any
fractional shares which would otherwise be issuable, Corixa shall pay cash equal
to the product of such fraction multiplied by the closing price of one Warrant
Share as reported on the Nasdaq National Market on the date of exercise.
4. NO STOCKHOLDER RIGHTS. Until the exercise of this Warrant or any portion
of this Warrant, Purchaser shall not have nor exercise any rights by virtue
hereof as a stockholder of Corixa (including without limitation the right to
notification of stockholder meetings or the right to receive any notice or other
communication concerning the business and affairs of Corixa).
5. RESERVATION OF STOCK. Corixa covenants that during the period this
Warrant is exercisable, Corixa will reserve from its authorized and unissued
Common Stock a sufficient number of shares of Common Stock (or other securities,
if applicable) to provide for the issuance of Warrant Stock (or other
securities) upon the exercise of this Warrant. Corixa agrees that its issuance
of this Warrant shall constitute full authority to its officers who are charged
with the duty of executing stock certificates to execute and issue the necessary
certificates for the Warrant Stock upon the exercise of this Warrant.
6. EXERCISE OF WARRANT.
(a) Procedural Requirements. Subject to Section 6(b), this Warrant may
be exercised by the holder hereof, in whole or in part, by the surrender of this
Warrant and the Notice of Exercise attached hereto as Exhibit A duly completed
and executed on behalf of the holder hereof, at the principal office of Corixa
together with payment in full of the Warrant Price then in effect with respect
to the number of shares of Warrant Stock as to which the Warrant is being
exercised. The Warrant Price shall be paid by wire transfer to Corixa or
cashiers check drawn on a United States bank made to the order of Corixa or by
exercise of the Net Exercise Right pursuant to Section 1(b). This Warrant shall
be deemed to have been exercised immediately prior to the close of business on
the date of its surrender for exercise as provided above, and the person
entitled to receive the Warrant Stock issuable upon such exercise shall be
treated for all purposes as the holder of such shares of record as of the close
of business on such date. As promptly as practicable on or after such date and
in any event within twenty (20) days thereafter, Corixa at its expense shall
cause to be issued and delivered to the person or persons entitled to receive
the same a certificate or certificates for the number of full shares of Warrant
Stock issuable upon such exercise, together with cash in lieu of any fraction of
a share as provided above. The shares of Warrant Stock issuable upon exercise
hereof shall, upon their issuance, be fully paid and nonassessable. In the event
that this Warrant is exercised in part, Corixa at its expense will execute and
deliver a new Warrant of like tenor exercisable for the number of shares for
which this Warrant may then be exercised.
(b) Hart-Scott-Rodino. Prior to any exercise of this Warrant, the
Company and the Purchaser shall consult with each other pursuant to Section 5(d)
of the Purchase Agreement as to whether any applications and/or documents may be
required to be executed and filed under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended ("HSR") in connection with such exercise
and shall mutually agree on an appropriate cause of action with respect to the
foregoing. In the event the Company and the Purchaser mutually agree that the
filing of applications and/or documents are required under HSR, then no exercise
of this Warrant shall take place until the expiration or early termination of
any notice periods required under HSR with respect to the filing of such
applications and/or documents.
7. CERTIFICATE OF ADJUSTMENT. Whenever the Warrant Price or number or type
of securities issuable upon exercise of this Warrant is adjusted, as herein
provided, Corixa shall, at its expense, promptly deliver to the record holder of
this Warrant a certificate of an officer of Corixa setting forth the nature of
such adjustment and showing in detail the facts upon which such adjustment is
based.
N-3
<PAGE> 383
8. REPRESENTATIONS OF PURCHASER. As of the date hereof, Purchaser hereby
confirms the representations and warranties made by Purchaser in Section 3 of
the Purchase Agreement.
9. TRANSFER RESTRICTIONS.
(a) UNREGISTERED SECURITY. The holder of this Warrant acknowledges that
this Warrant and the Warrant Stock have not been registered under the Securities
Act of 1933, as amended (the "1933 Act") and agrees not to sell, pledge,
distribute, offer for sale, transfer or otherwise dispose of this Warrant or any
Warrant Stock issued upon its exercise in the absence of (i) an effective
registration statement under the 1933 Act as to this Warrant or such Warrant
Stock and registration or qualification of this Warrant or such Warrant Stock
under any applicable U.S. federal or state securities law then in effect or (ii)
an opinion of counsel, satisfactory to Corixa, that such registration and
qualification are not required. Each certificate or other instrument for Warrant
Stock issued upon the exercise of this Warrant shall bear a legend substantially
to the foregoing effect.
(b) NO TRANSFER. This Warrant is not transferable without the Company's
prior written consent; provided, however, such consent shall not be required in
connection with the transfer by the Purchaser of such Warrant (but only with all
related obligations) to (i) an Affiliate of the Purchaser (as such term is
defined in the Standstill Agreement dated as of April 8, 1999 between the
Company and the Purchaser), (ii) an entity solely in connection with charitable
contributions by the Purchaser or (iii) an individual or entity solely for
estate planning purposes, provided that (x) written notice (in the form of
Exhibit B as attached hereto) is provided to the Company at least five (5)
business days prior to any such transfer, (y) a minimum of 5,000 shares of
Warrant Stock are transferred in each instance, and (z) immediately following
such transfer the further disposition of such Warrant Stock by the transferee is
restricted under the 1933 Act and the transferree agrees in writing to be bound
by all of the provisions of this Warrant.
10. NOTICES OF RECORD DATE. In the event of:
(a) any taking by Corixa of a record of the holders of any class of
securities for the purpose of determining the holders thereof who are entitled
to receive any dividend (other than a cash dividend payable out of earned
surplus of Corixa) or other distribution, or any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right; or
(b) any capital reorganization of Corixa, any reclassification or
recapitalization of the capital stock of Corixa or any transfer of all or
substantially all the assets of Corixa to or consolidation or merger of Corixa
with or into any other person; or
(c) any voluntary or involuntary dissolution, liquidation or winding-up
of Corixa,
then and in each such event Corixa will mail or cause to be mailed to
the holder of this Warrant a notice specifying (i) the date on which any such
record is to be taken for the purpose of such dividend, distribution or right,
and stating the amount and character of such dividend, distribution or right,
and (ii) the date on which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation or
winding-up is to take place, and the time, if any, as of which the holders of
record of Common Stock (or other securities) shall be entitled to exchange their
shares of Common Stock (or other securities) for securities or other property
deliverable upon such reorganization, reclassification, recapitalization,
transfer, consolidation, merger, dissolution, liquidation or winding-up. Such
notice shall be mailed at least 10 days prior to the date therein specified.
11. REPLACEMENT OF WARRANTS. On receipt of evidence reasonably satisfactory
to Corixa of the loss, theft, destruction or mutilation of this Warrant and, in
the case of any such loss, theft, destruction or mutilation of this Warrant, on
delivery of an indemnity agreement or security
N-4
<PAGE> 384
reasonably satisfactory in form and amount to Corixa or, in the case of any such
mutilation, on surrender and cancellation of such Warrant, Corixa at its expense
will execute and deliver, in lieu thereof, a new Warrant of like tenor.
12. MARKET STANDOFF.
(a) Purchaser hereby agrees that, during the period of duration (up to,
but not exceeding, 90 days) specified by Corixa and an underwriter of Common
Stock or other securities of Corixa, following the effective date of a
registration statement of Corixa filed under the 1933 Act, it shall not, to the
extent requested by Corixa and such underwriter, directly or indirectly sell,
offer to sell, contract to sell (including, without limitation, any short sale),
grant any option to purchase or otherwise transfer or dispose of (other than to
donees who agree to be similarly bound) any securities of Corixa held by it at
any time during such period except Common Stock included in such registration.
(b) In order to enforce the foregoing covenant, Corixa may impose
stop-transfer instructions with respect to the securities held by Purchaser
until the end of such period, and Purchaser agrees that, if so requested,
Purchaser will execute an agreement in the form provided by the underwriter
containing terms which are essentially consistent with the provisions of this
Section 12.
13. NO IMPAIRMENT. Corixa will not, by amendment of its charter or through
reorganization, consolidation, merger, dissolution, sale of assets or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the holder of this
Warrant against impairment.
14. TERMINATION. This Warrant (and the right to purchase securities upon
exercise hereof) shall terminate on April 8, 2005.
15. SATURDAYS, SUNDAYS, HOLIDAYS, ETC. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein
shall be a Saturday or Sunday or shall be a legal holiday, then such action may
be taken or such right may be exercised on the next succeeding day not a
Saturday, Sunday or legal holiday.
16. EXCHANGE ACT FILINGS. Purchaser agrees and acknowledges that it shall
have sole responsibility for making any filings with the U.S. Securities and
Exchange Commission pursuant to Sections 13 and 16 of the Securities Exchange
Act of 1934, as amended, as a result of its acquisition of this Warrant and the
Warrant Stock (collectively, the "Securities") and any future retention or
transfer thereof.
17. NO LEGAL, TAX OR INVESTMENT ADVICE. Purchaser understands that nothing
in this Agreement or any other materials presented to Purchaser in connection
with the acquisition of the Securities constitutes legal, tax or investment
advice. Purchaser has consulted such legal, tax and investment advisors as it,
in its sole discretion, has deemed necessary or appropriate in connection with
its acquisition of the Securities.
18. MISCELLANEOUS. This Warrant shall be governed by the laws of the State
of Washington. The headings in this Warrant are for purposes of convenience and
reference only, and shall not be deemed to constitute a part hereof. Neither
this Warrant nor any term hereof may be changed, waived, discharged or
terminated orally but only by an instrument in writing signed by Corixa and the
Purchaser. All notices and other communications from Corixa to the holder of
this Warrant shall be sufficient if in writing and sent by registered or
certified mail, domestic or international courier, or facsimile, return receipt
requested, postage or courier charges prepaid, to the address furnished to
Corixa in writing by Purchaser. All such notices and communications shall be
effective if delivered
N-5
<PAGE> 385
(i) personally, (ii) by facsimile transmission (receipt verified), (iii) by
registered or certified mail (return receipt requested), postage prepaid, or
(iv) sent by express courier service (receipt verified), and if to Purchaser,
with a copy to Mark Beatty, Preston Gates & Ellis, 701 Fifth Avenue, #5000,
Seattle, Washington 98104, and if to Corixa, with a copy to William W. Ericson,
Venture Law Group, 4750 Carillon Point, Kirkland, Washington 98033. The
invalidity or unenforceability of any provision hereof shall in no way affect
the validity or enforceability of any other provisions.
N-6
<PAGE> 386
IN WITNESS WHEREOF, this Common Stock Purchase Warrant is issued effective
as of this 8th day of April, 2000.
CORIXA CORPORATION
By:
--------------------------------------
Steven Gillis
Chairman and Chief Executive Officer
ACKNOWLEDGED AND AGREED:
CASTLE GATE, L.L.C.
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
SIGNATURE PAGE TO THE WARRANT TO
PURCHASE SHARES OF COMMON STOCK
N-7
<PAGE> 387
EXHIBIT A
NOTICE OF INTENT TO EXERCISE
(TO BE SIGNED ONLY UPON EXERCISE OF WARRANT)
To: CORIXA CORPORATION
The undersigned, the Holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, ( ) shares of Common Stock of Corixa
Corporation and (choose one)
[ ] herewith makes payment of Dollars ($ ) thereof
or
[ ] exercises Holder's Net Exercise Right pursuant to Section 1(b)
thereof.
and requests that the certificates for such shares be issued in the name of, and
delivered to , whose address is
.
DATED:
- ---------------------------
--------------------------------------
(Signature must conform in all
respects to name of Holder as
specified on the face of the Warrant)
--------------------------------------
--------------------------------------
(Address)
<PAGE> 388
EXHIBIT B
NOTICE OF ASSIGNMENT FORM
FOR VALUE RECEIVED, hereby sells, assigns and transfers all
of the rights of the undersigned under the attached Warrant with respect to the
number of shares of Common Stock covered thereby set forth below, to:
<TABLE>
<CAPTION>
NAME OF ASSIGNEE ADDRESS/FAX NUMBER NO. OF SHARES
---------------- ------------------ -------------
<S> <C> <C>
</TABLE>
Dated:
- --------------------------- Signature:
--------------------------------------
Witness:
--------------------------------------
<PAGE> 389
APPENDIX O
THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS, AND
HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH,
THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION AND QUALIFICATION ARE
NOT REQUIRED.
WARRANT NO. CG-4 DATE OF ISSUANCE: April 8, 2001
WARRANT TO PURCHASE SHARES
OF COMMON STOCK OF
CORIXA CORPORATION
This Warrant is issued to Castle Gate, L.L.C., a Washington limited
liability company ("Purchaser") pursuant to that certain Equity Line of Credit
and Securities Purchase Agreement dated as of April 8, 1999 between Corixa
Corporation, a Delaware corporation ("Corixa" or the "Company"), and Purchaser
(the "Purchase Agreement") and is subject to the terms and conditions therein.
1. EXERCISE OF WARRANT.
(a) Number and Price of Shares Subject to Warrant; Method of
Exercise. Subject to the terms and conditions herein set forth, upon surrender
of this Warrant at the principal office of Corixa and upon payment of the
purchase price by wire transfer to Corixa or cashiers check drawn on a United
States bank made to the order of Corixa, or exercise of the right to credit the
Warrant Price (as defined below) against the fair market value of the Warrant
Stock (as defined below) at the time of exercise (the "Net Exercise Right")
pursuant to Section 1(b), Purchaser is entitled to purchase from Corixa, at any
time after the date of issuance hereof and on or before April 8, 2006, that
number of fully paid and non-assessable shares of Corixa Common Stock, par value
$0.001 per share ("Warrant Stock") equal to (A) $1,000,000.00 divided by (B) the
"Warrant Price", which shall be equal to the average per share closing price of
Corixa Common Stock on the Nasdaq National Market as reported in the Wall Street
Journal for the ten (10) day period immediately preceding but not including the
date two years after the date Corixa and Purchaser enter into the Purchase
Agreement. Subject to adjustment as hereinafter provided, the purchase price of
one share of Warrant Stock (or such securities as may be substituted for one
share of Warrant Stock pursuant to the provisions hereinafter set forth) shall
be the Warrant Price.
(b) Net Exercise Right. If the Company shall receive written notice from
the holder of this Warrant at the time of exercise of this Warrant that the
holder elects to exercise Purchaser's Net Exercise Right, Corixa shall deliver
to such holder (without payment by the Purchaser of any exercise price of any
cash or other consideration ) that number of shares of fully paid and
nonassessable Common Stock equal to the quotient obtained by dividing (x) the
value of this Warrant (or the specified portion thereof) on the date of
exercise, which value shall be determined by subtracting (1) the aggregate
Warrant Price of the Warrant Stock immediately prior to the exercise of this
Warrant from (2) the aggregate fair market value of the Warrant Stock issuable
upon exercise of this Warrant (or specified portion thereof) on the date of
exercise by (y) the fair market value of one share of Common Stock on the date
of exercise. For purposes of this Section 1(b), "fair market value" of a share
of Common Stock shall mean the closing price of the Common Stock on
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<PAGE> 390
the business day prior to the date of exercise as reported by the Nasdaq
National Market or such other principal exchange or quotation system on which
the Common Stock is then traded. For purposes of this Warrant, shares issued
pursuant to the Net Exercise Right shall be treated as if they were issued upon
the exercise of this Warrant.
2. CERTAIN ADJUSTMENTS.
(a) Mergers or Consolidations. If at any time after the date hereof
there shall be a capital reorganization (other than a combination or subdivision
of Warrant Stock otherwise provided for herein), or a merger or consolidation of
Corixa with another corporation (other than a merger with another corporation in
which Corixa is a continuing corporation and which does not result in any
reclassification or change of outstanding securities issuable upon exercise of
this Warrant), then, as a part of such reorganization, merger or consolidation,
lawful provision shall be made so that Purchaser shall thereafter be entitled to
receive upon exercise of this Warrant, during the period specified in this
Warrant and upon payment of the Warrant Price, the number of shares of stock or
other securities or property of Corixa or the successor corporation resulting
from such reorganization, merger or consolidation, to which a holder of the
Common Stock deliverable upon exercise of this Warrant would have been entitled
under the provisions of the agreement in such reorganization, merger or
consolidation if this Warrant had been exercised immediately before that
reorganization, merger or consolidation. In any such case, appropriate
adjustment (as determined in good faith by Corixa's Board of Directors) shall be
made in the application of the provisions of this Warrant with respect to the
rights and interests of Purchaser after the reorganization, merger or
consolidation to the end that the provisions of this Warrant (including
adjustment of the Warrant Price then in effect and the number of shares of
Warrant Stock) shall be applicable after that event, as near as reasonably may
be, in relation to any shares or other property deliverable after that event
upon exercise of this Warrant.
(b) Splits and Subdivisions; Dividends. In the event Corixa should at
any time or from time to time fix a record date for the effectuation of a split
or subdivision of the outstanding shares of Common Stock or the determination of
the holders of Common Stock entitled to receive a dividend or other distribution
payable in additional shares of Common Stock or other securities or rights
convertible into, or entitling the holder thereof to receive directly or
indirectly, additional shares of Common Stock (hereinafter referred to as the
"Common Stock Equivalents") without payment of any consideration by such holder
for the additional shares of Common Stock or Common Stock Equivalents (including
the additional shares of Common Stock issuable upon conversion or exercise
thereof), then, as of such record date (or the date of such distribution, split
or subdivision if no record date is fixed), the per share Warrant Price shall be
appropriately decreased and the number of shares of Warrant Stock shall be
appropriately increased in proportion to such increase (or potential increase)
of outstanding shares.
(c) Combination of Shares. If the number of shares of Common Stock
outstanding at any time after the date hereof is decreased by a combination of
the outstanding shares of Common Stock, the per share Warrant Price shall be
appropriately increased and the number of shares of Warrant Stock shall be
appropriately decreased in proportion to such decrease in outstanding shares.
(d) Adjustments for Other Distributions. In the event Corixa shall
declare a distribution payable in securities of other persons, evidences of
indebtedness issued by Corixa or other persons, assets (excluding cash dividends
paid out of net profits) or options or rights not referred to in Section 2(b),
then, in each such case for the purpose of this Section 2(d), upon exercise of
this Warrant the holder hereof shall be entitled to a proportionate share of any
such distribution as though such holder was the holder of the number of shares
of Common Stock of Corixa into which this Warrant may be exercised as of the
record date fixed for the determination of the holders of Common Stock of Corixa
entitled to receive such distribution.
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3. NO FRACTIONAL SHARES. No fractional shares of Warrant Shares will be
issued in connection with any exercise of this Warrant. In lieu of any
fractional shares which would otherwise be issuable, Corixa shall pay cash equal
to the product of such fraction multiplied by the closing price of one Warrant
Share as reported on the Nasdaq National Market on the date of exercise.
4. NO STOCKHOLDER RIGHTS. Until the exercise of this Warrant or any portion
of this Warrant, Purchaser shall not have nor exercise any rights by virtue
hereof as a stockholder of Corixa (including without limitation the right to
notification of stockholder meetings or the right to receive any notice or other
communication concerning the business and affairs of Corixa).
5. RESERVATION OF STOCK. Corixa covenants that during the period this
Warrant is exercisable, Corixa will reserve from its authorized and unissued
Common Stock a sufficient number of shares of Common Stock (or other securities,
if applicable) to provide for the issuance of Warrant Stock (or other
securities) upon the exercise of this Warrant. Corixa agrees that its issuance
of this Warrant shall constitute full authority to its officers who are charged
with the duty of executing stock certificates to execute and issue the necessary
certificates for the Warrant Stock upon the exercise of this Warrant.
6. EXERCISE OF WARRANT.
(a) Procedural Requirements. Subject to Section 6(b), this Warrant may
be exercised by the holder hereof, in whole or in part, by the surrender of this
Warrant and the Notice of Exercise attached hereto as Exhibit A duly completed
and executed on behalf of the holder hereof, at the principal office of Corixa
together with payment in full of the Warrant Price then in effect with respect
to the number of shares of Warrant Stock as to which the Warrant is being
exercised. The Warrant Price shall be paid by wire transfer to Corixa or
cashiers check drawn on a United States bank made to the order of Corixa or by
exercise of the Net Exercise Right pursuant to Section 1(b). This Warrant shall
be deemed to have been exercised immediately prior to the close of business on
the date of its surrender for exercise as provided above, and the person
entitled to receive the Warrant Stock issuable upon such exercise shall be
treated for all purposes as the holder of such shares of record as of the close
of business on such date. As promptly as practicable on or after such date and
in any event within twenty (20) days thereafter, Corixa at its expense shall
cause to be issued and delivered to the person or persons entitled to receive
the same a certificate or certificates for the number of full shares of Warrant
Stock issuable upon such exercise, together with cash in lieu of any fraction of
a share as provided above. The shares of Warrant Stock issuable upon exercise
hereof shall, upon their issuance, be fully paid and nonassessable. In the event
that this Warrant is exercised in part, Corixa at its expense will execute and
deliver a new Warrant of like tenor exercisable for the number of shares for
which this Warrant may then be exercised.
(b) Hart-Scott-Rodino. Prior to any exercise of this Warrant, the
Company and the Purchaser shall consult with each other pursuant to Section 5(d)
of the Purchase Agreement as to whether any applications and/or documents may be
required to be executed and filed under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended ("HSR") in connection with such exercise
and shall mutually agree on an appropriate cause of action with respect to the
foregoing. In the event the Company and the Purchaser mutually agree that the
filing of applications and/or documents are required under HSR, then no exercise
of this Warrant shall take place until the expiration or early termination of
any notice periods required under HSR with respect to the filing of such
applications and/or documents.
7. CERTIFICATE OF ADJUSTMENT. Whenever the Warrant Price or number or type
of securities issuable upon exercise of this Warrant is adjusted, as herein
provided, Corixa shall, at its expense, promptly deliver to the record holder of
this Warrant a certificate of an officer of Corixa setting forth the nature of
such adjustment and showing in detail the facts upon which such adjustment is
based.
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8. REPRESENTATIONS OF PURCHASER. As of the date hereof, Purchaser hereby
confirms the representations and warranties made by Purchaser in Section 3 of
the Purchase Agreement.
9. TRANSFER RESTRICTIONS.
(a) UNREGISTERED SECURITY. The holder of this Warrant acknowledges that
this Warrant and the Warrant Stock have not been registered under the Securities
Act of 1933, as amended (the "1933 Act") and agrees not to sell, pledge,
distribute, offer for sale, transfer or otherwise dispose of this Warrant or any
Warrant Stock issued upon its exercise in the absence of (i) an effective
registration statement under the 1933 Act as to this Warrant or such Warrant
Stock and registration or qualification of this Warrant or such Warrant Stock
under any applicable U.S. federal or state securities law then in effect or (ii)
an opinion of counsel, satisfactory to Corixa, that such registration and
qualification are not required. Each certificate or other instrument for Warrant
Stock issued upon the exercise of this Warrant shall bear a legend substantially
to the foregoing effect.
(b) NO TRANSFER. This Warrant is not transferable without the Company's
prior written consent; provided, however, such consent shall not be required in
connection with the transfer by the Purchaser of such Warrant (but only with all
related obligations) to (i) an Affiliate of the Purchaser (as such term is
defined in the Standstill Agreement dated as of April 8, 1999 between the
Company and the Purchaser), (ii) an entity solely in connection with charitable
contributions by the Purchaser or (iii) an individual or entity solely for
estate planning purposes, provided that (x) written notice (in the form of
Exhibit B as attached hereto) is provided to the Company at least five (5)
business days prior to any such transfer, (y) a minimum of 5,000 shares of
Warrant Stock are transferred in each instance, and (z) immediately following
such transfer the further disposition of such Warrant Stock by the transferee is
restricted under the 1933 Act and the transferree agrees in writing to be bound
by all of the provisions of this Warrant.
10. NOTICES OF RECORD DATE. In the event of:
(a) any taking by Corixa of a record of the holders of any class of
securities for the purpose of determining the holders thereof who are entitled
to receive any dividend (other than a cash dividend payable out of earned
surplus of Corixa) or other distribution, or any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right; or
(b) any capital reorganization of Corixa, any reclassification or
recapitalization of the capital stock of Corixa or any transfer of all or
substantially all the assets of Corixa to or consolidation or merger of Corixa
with or into any other person; or
(c) any voluntary or involuntary dissolution, liquidation or winding-up
of Corixa,
then and in each such event Corixa will mail or cause to be mailed to
the holder of this Warrant a notice specifying (i) the date on which any such
record is to be taken for the purpose of such dividend, distribution or right,
and stating the amount and character of such dividend, distribution or right,
and (ii) the date on which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation or
winding-up is to take place, and the time, if any, as of which the holders of
record of Common Stock (or other securities) shall be entitled to exchange their
shares of Common Stock (or other securities) for securities or other property
deliverable upon such reorganization, reclassification, recapitalization,
transfer, consolidation, merger, dissolution, liquidation or winding-up. Such
notice shall be mailed at least 10 days prior to the date therein specified.
11. REPLACEMENT OF WARRANTS. On receipt of evidence reasonably satisfactory
to Corixa of the loss, theft, destruction or mutilation of this Warrant and, in
the case of any such loss, theft, destruction or mutilation of this Warrant, on
delivery of an indemnity agreement or security
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reasonably satisfactory in form and amount to Corixa or, in the case of any such
mutilation, on surrender and cancellation of such Warrant, Corixa at its expense
will execute and deliver, in lieu thereof, a new Warrant of like tenor.
12. MARKET STANDOFF.
(a) Purchaser hereby agrees that, during the period of duration (up to,
but not exceeding, 90 days) specified by Corixa and an underwriter of Common
Stock or other securities of Corixa, following the effective date of a
registration statement of Corixa filed under the 1933 Act, it shall not, to the
extent requested by Corixa and such underwriter, directly or indirectly sell,
offer to sell, contract to sell (including, without limitation, any short sale),
grant any option to purchase or otherwise transfer or dispose of (other than to
donees who agree to be similarly bound) any securities of Corixa held by it at
any time during such period except Common Stock included in such registration.
(b) In order to enforce the foregoing covenant, Corixa may impose
stop-transfer instructions with respect to the securities held by Purchaser
until the end of such period, and Purchaser agrees that, if so requested,
Purchaser will execute an agreement in the form provided by the underwriter
containing terms which are essentially consistent with the provisions of this
Section 12.
13. NO IMPAIRMENT. Corixa will not, by amendment of its charter or through
reorganization, consolidation, merger, dissolution, sale of assets or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the holder of this
Warrant against impairment.
14. TERMINATION. This Warrant (and the right to purchase securities upon
exercise hereof) shall terminate on April 8, 2006.
15. SATURDAYS, SUNDAYS, HOLIDAYS, ETC. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein
shall be a Saturday or Sunday or shall be a legal holiday, then such action may
be taken or such right may be exercised on the next succeeding day not a
Saturday, Sunday or legal holiday.
16. EXCHANGE ACT FILINGS. Purchaser agrees and acknowledges that it shall
have sole responsibility for making any filings with the U.S. Securities and
Exchange Commission pursuant to Sections 13 and 16 of the Securities Exchange
Act of 1934, as amended, as a result of its acquisition of this Warrant and the
Warrant Stock (collectively, the "Securities") and any future retention or
transfer thereof.
17. NO LEGAL, TAX OR INVESTMENT ADVICE. Purchaser understands that nothing
in this Agreement or any other materials presented to Purchaser in connection
with the acquisition of the Securities constitutes legal, tax or investment
advice. Purchaser has consulted such legal, tax and investment advisors as it,
in its sole discretion, has deemed necessary or appropriate in connection with
its acquisition of the Securities.
18. MISCELLANEOUS. This Warrant shall be governed by the laws of the State
of Washington. The headings in this Warrant are for purposes of convenience and
reference only, and shall not be deemed to constitute a part hereof. Neither
this Warrant nor any term hereof may be changed, waived, discharged or
terminated orally but only by an instrument in writing signed by Corixa and the
Purchaser. All notices and other communications from Corixa to the holder of
this Warrant shall be sufficient if in writing and sent by registered or
certified mail, domestic or international courier, or facsimile, return receipt
requested, postage or courier charges prepaid, to the address furnished to
Corixa in writing by Purchaser. All such notices and communications shall be
effective if delivered
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(i) personally, (ii) by facsimile transmission (receipt verified), (iii) by
registered or certified mail (return receipt requested), postage prepaid, or
(iv) sent by express courier service (receipt verified), and if to Purchaser,
with a copy to Mark Beatty, Preston Gates & Ellis, 701 Fifth Avenue, #5000,
Seattle, Washington 98104, and if to Corixa, with a copy to William W. Ericson,
Venture Law Group, 4750 Carillon Point, Kirkland, Washington 98033. The
invalidity or unenforceability of any provision hereof shall in no way affect
the validity or enforceability of any other provisions.
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IN WITNESS WHEREOF, this Common Stock Purchase Warrant is issued effective
as of this 8th day of April, 2001.
CORIXA CORPORATION
By:
--------------------------------------
Steven Gillis
Chairman and Chief Executive Officer
ACKNOWLEDGED AND AGREED:
CASTLE GATE, L.L.C.
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
SIGNATURE PAGE TO THE WARRANT
TO PURCHASE SHARES OF COMMON STOCK
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EXHIBIT A
NOTICE OF INTENT TO EXERCISE
(TO BE SIGNED ONLY UPON EXERCISE OF WARRANT)
To: CORIXA CORPORATION
The undersigned, the Holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, ( ) shares of Common Stock of Corixa
Corporation and (choose one)
[ ] herewith makes payment of Dollars ($ ) thereof
or
[ ] exercises Holder's Net Exercise Right pursuant to Section 1(b)
thereof.
and requests that the certificates for such shares be issued in the name of, and
delivered to , whose address is .
DATED:
- ---------------------------
--------------------------------------
(Signature must conform in all
respects to name of Holder as
specified on the face of the Warrant)
--------------------------------------
--------------------------------------
(Address)
<PAGE> 397
EXHIBIT B
NOTICE OF ASSIGNMENT FORM
FOR VALUE RECEIVED, hereby sells, assigns and transfers all
of the rights of the undersigned under the attached Warrant with respect to the
number of shares of Common Stock covered thereby set forth below, to:
<TABLE>
<CAPTION>
NAME OF ASSIGNEE ADDRESS/FAX NUMBER NO. OF SHARES
---------------- ------------------ -------------
<S> <C> <C>
</TABLE>
Dated:
- --------------------------- Signature:
--------------------------------------
Witness:
--------------------------------------
<PAGE> 398
APPENDIX P
CERTIFICATE OF DESIGNATION
OF RIGHTS, PREFERENCES AND PRIVILEGES
OF SERIES A PREFERRED STOCK OF
CORIXA CORPORATION
A DELAWARE CORPORATION
Pursuant to Section 151 and Section 103 of the General Corporation Law of
the State of Delaware, Steven Gillis and Kathleen McKereghan hereby certify
that:
(a) They are the duly elected Chief Executive Officer and Secretary,
respectively, of Corixa Corporation, a Delaware corporation (the "Corporation").
(b) Pursuant to the authority conferred upon the Board of Directors of
the Corporation by the second paragraph of Article IV of the Corporation's Fifth
Amended and Restated Certificate of Incorporation (the "Certificate"), the Board
of Directors of the Corporation on March 3, 1999 adopted the following recitals
and resolutions creating a new series of preferred stock designated as Series A
Preferred Stock:
"WHEREAS, the Certificate provides for a class of shares known as Preferred
Stock, issuable from time to time in one or more series;
WHEREAS, the Board of Directors of the Corporation is authorized by the
Certificate to determine the powers, rights, preferences, limitations and
restrictions granted to or imposed upon any wholly unissued series of Preferred
Stock, to fix the number of shares constituting any such series, and to
determine the designation thereof, or any of them;
WHEREAS, the Board of Directors of the Corporation desires, pursuant to its
authority as aforesaid, to determine and fix the powers, rights preferences,
limitations and restrictions relating to a series of Preferred Stock and the
number of shares constituting, and the designation of, such series;
NOW, THEREFORE, BE IT RESOLVED, that pursuant to the authority vested in
the Board of Directors of the Corporation in accordance with the provisions of
the Certificate, a new series of Preferred Stock to be designated "Series A
Preferred Stock," is hereby created, and the Board of Directors hereby fixes and
determines the designation of, the number of shares constituting, and the
rights, preferences, privileges and restrictions relating to, such series of
Preferred Stock as follows (all terms used herein which are not otherwise
defined shall have the meanings set forth in the Certificate):
1. Designation. The series of Preferred Stock of the Corporation (the
"Preferred Stock") shall be designated as "Series A Preferred Stock" with a par
value of $0.001 per share.
2. Authorized Number. The number of shares constituting the Series A
Preferred Stock shall be Fifty Thousand (50,000) shares. The rights,
preferences, restrictions and other matters relating to the Series A Preferred
Stock set forth below are subject to the issuance of any subsequent series of
preferred stock. The Board of Directors is also authorized to decrease the
number of shares of any series of preferred stock prior or subsequent to the
issue of that series, but not below the number of shares of such series then
outstanding. In case the number of shares of any series shall be so decreased,
the shares constituting such decrease shall resume the status which they had
prior to the adoption of the resolution originally fixing the number of shares
of such series.
3. Dividend Provisions.
(A) Subject to the prior and superior rights of the holders of any shares
of any series of Preferred Stock which may from time to time come into existence
ranking prior and superior to the
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shares of Series A Preferred Stock with respect to dividends and to the
provisions of this Section 3, the holders of the Series A Preferred Stock shall
be entitled to receive, when, as, and if declared by the Board of Directors out
of funds legally available for such purpose, dividends at the rate of $50.00 per
annum per share, and no more, which shall be cumulative, shall accrue without
interest (except as otherwise provided herein as to dividends in arrears) from
the date of original issuance of such share of Series A Preferred Stock (the
"Issuance Date" with respect to such share) and shall be payable on an annual
basis in cash or in shares of Common Stock as provided herein, on the date that
is the yearly anniversary of the Issuance Date applicable to such share of
Series A Preferred Stock (each such date being referred to herein as an "Annual
Dividend Payment Date"), commencing on the date that is the one-year anniversary
of Initial Closing (as such term is defined in the Equity Line of Credit and
Securities Purchase Agreement entered into between the Corporation and Castle
Gate, L.L.C. a Washington limited liability company, in April 1999 (the
"Purchase Agreement")), to holders of Series A Preferred Stock of record as they
appear on the stock books of the Corporation on such record dates, not more than
thirty (30) days preceding the payment dates for such dividends, as shall be
fixed by the Board.
Dividends shall begin to accrue and be cumulative on outstanding shares of
Series A Preferred Stock from the Issuance Date with respect to such shares.
Dividends on the Series A Preferred Stock shall be paid in cash or shares of
Common Stock or any combination of cash and shares of Common Stock, at the
option of the Corporation as hereinafter provided. No dividends or other
distributions, other than dividends payable solely in shares of Common Stock,
shall be paid or set apart for payment on any shares of Common Stock, and no
purchase, redemption, or other acquisition shall be made by the Corporation of
any shares of Common Stock (other than pursuant to any stock repurchase rights
in existence prior to the date of issuance of the Series A Preferred Stock and
the repurchase of shares of Common Stock from employees, officers, directors,
consultants or other persons performing services for the Corporation or any
subsidiary pursuant to agreements under which the Corporation has the option to
repurchase such shares at cost upon the occurrence of certain events, such as
the termination of employment, or through the exercise of any right of first
refusal) unless and until all accrued and unpaid dividends (and applicable
Arrearage Interest (as defined in Section 3(C) below) on dividends in arrears)
on the Series A Preferred Stock shall have been paid or declared and set apart
for payment.
Any references to "distribution" contained in this Section 3 shall not be
deemed to include any stock dividend or distributions made in connection with
any liquidation, dissolution, or winding up of the Corporation, whether
voluntary or involuntary.
(B) If the Corporation elects in the exercise of its sole discretion to
issue shares of Common Stock in payment of dividends on the Series A Preferred
Stock with respect to any Annual Dividend Payment Date, the Corporation shall
(1) give notice to the holders of the Series A Preferred Stock at least five
days prior to the applicable Annual Dividend Payment Date of the Corporation's
election to exercise such right and (2) deliver, or cause to be delivered, by
the fifth trading day after such Annual Dividend Payment Date to each holder of
such shares the number of whole shares of Common Stock arrived at by dividing
(i) the applicable per share Conversion Price of such shares of Common Stock (as
determined in accordance with Section 6(C) below) into (ii) the total amount of
cash dividends such holder would be entitled to receive if the aggregate
dividends on the Series A Preferred Stock held by such holder which are being
paid in shares of Common Stock were being paid in cash. No fractional shares of
Common Stock shall be issued in payment of dividends. In lieu thereof, the
Corporation shall pay cash in an amount equal to the product of (x) the
applicable Conversion Price multiplied by (y) the fraction of a share of Common
Stock which would otherwise be issuable by the Corporation.
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Shares of Common Stock issued in payment of dividends on Series A Preferred
Stock pursuant to this Section shall be, and for all purposes shall be deemed to
be, validly issued, fully paid and nonassessable shares of Common Stock; the
issuance and delivery thereof is hereby authorized; and the dispatch in full
thereof will be, and for all purposes shall be deemed to be, payment in full of
the cumulative dividends to which holders are entitled on the applicable Annual
Dividend Payment Date.
(C) In the event the Corporation fails to elect whether to pay dividends
with respect to a particular Annual Dividend Payment Date in cash, in shares of
Common Stock, or in any combination of cash and shares of Common Stock within
thirty (30) days following such Annual Dividend Payment Date and fails to pay
such dividends within such thirty (30) day period, then such dividends will bear
Arrearage Interest, effective beginning on the applicable Annual Dividend
Payment Date, until paid. For purposes of this Section 3(C), "Arrearage
Interest" means simple interest per annum, at the then applicable rate of
interest announced by Chase Manhattan Bank, N.A. from time to time as its prime
rate, on any dividend on shares of Series A Preferred Stock which dividend is
not paid within thirty (30) days following the applicable Annual Dividend
Payment Date.
(D) Dividends will be paid by the Corporation on each outstanding share of
Series A Preferred Stock for a minimum of four (4) years and a maximum of seven
(7) years as provided in this Section 3(D).
(i) In the event any shares of Series A Preferred Stock are converted
into Common Stock pursuant to Section 6(A) or 6(B) hereof at any time after the
Issuance Date with respect to such shares pursuant to the Purchase Agreement,
the Corporation's obligation to pay dividends pursuant to this Section 3 with
respect to such shares shall terminate on the effectiveness of such conversion
in accordance with the terms of this Certificate of Designation; provided,
however, that notwithstanding anything to the contrary in this Section 3(D) in
no event will the Corporation's obligation to pay dividends on such shares,
whether or not such shares have been converted into Common Stock, terminate
before four (4) annual dividend payments (together with any applicable Arrearage
Interest on dividends in arrears) have been made with respect to such shares.
(ii) In the event (a) any shares of Series A Preferred Stock have not
been converted into shares of Common Stock pursuant to Section 6(A) or 6(B) on
or prior to the date that is the four-year anniversary of the Issuance Date with
respect to such shares (the "4 Year Anniversary" with respect to such shares)
and (b) on the earlier of the 4 Year Anniversary or any subsequent annual
anniversary of such Issuance Date the average per share closing price of the
Common Stock on the Nasdaq National Market as reported in the Wall Street
Journal (the "Closing Price") for the sixty (60) day period prior to such 4 Year
Anniversary or subsequent annual anniversary, as applicable, is greater than the
product of C X 1.20(N) (where "C" equals the Conversion Price applicable to such
shares of Series A Preferred Stock and "N" equals the number of years from the
Issuance Date with respect to such shares of Series A Preferred Stock), then the
Corporation's obligation to issue dividends pursuant to this Section 3 with
respect to such shares shall terminate effective as of such 4 Year Anniversary
or subsequent annual anniversary, as applicable, provided that the Corporation
has made at least four (4) annual dividend payments (together with any
applicable Arrearage Interest on dividends in arrears) with respect to such
shares.
(iii) Regardless of whether any shares of Series A Preferred Stock have
been converted into shares of Common Stock in accordance with this Certificate
of Designation, the Corporation's obligation to pay dividends pursuant to this
Section 3 shall terminate fully and be no further force or effect with respect
to any shares of Series A Preferred Stock on the date that is the seven-year
anniversary of the Issuance Date with respect to such shares; provided that the
Corporation has paid all applicable accrued dividends (together with any
applicable Arrearage Interest on dividends in arrears) in accordance with the
terms of this Section 3.
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4. Liquidation.
(A) Subject to the prior and superior rights of the holders of any shares
of any series of Preferred Stock which may from time to time come into existence
ranking prior and superior to the shares of Series A Preferred Stock with
respect to liquidation, in the event of any liquidation, dissolution, or winding
up of the Corporation, whether voluntary or involuntary, all of the assets and
surplus funds of the Corporation legally available for distribution shall be
distributed among the holders of Series A Preferred Stock and Common Stock pro
rata based on the number of shares of Common Stock held by each (assuming full
conversion of all such Series A Preferred Stock in accordance with the terms of
this Certificate of Designation).
(B) For purposes of this Section 4, a liquidation, dissolution or winding
up of the Corporation shall be deemed to occur if the Corporation shall sell,
convey, or otherwise dispose of all or substantially all of its property or
business or merge into or consolidate with any other corporation (other than a
wholly-owned subsidiary corporation) or effect any other transaction or series
of related transactions in which more than fifty percent (50%) of the voting
power of the Corporation is disposed of, provided that this Section 4(b) shall
not apply to a merger effected exclusively for the purpose of changing the
domicile of the Corporation; provided further that, if such transaction or
series of transactions results in the holders of the Series A Preferred Stock
receiving securities upon conversion which may then be resold pursuant to an
effective registration statement under the Securities Act of 1933, as amended
(the "1933 Act"), then such transactions or series of transactions shall not be
as a liquidation, dissolution change of control or winding up of the Corporation
within the meaning of this Section 4.
(D) Whenever the distribution provided for in this Section 4 shall be
payable in securities or property other than cash, the value of such
distribution shall be as follows:
(i) Securities not subject to investment letter or other similar
restrictions on free marketability:
(A) If traded on a securities exchanges or The Nasdaq Stock Market,
the value shall be deemed to be average of the closing prices of the securities
on such exchange over the 30-day period ending three (3) days prior to the
closing;
(B) If actively traded over-the-counter, the value shall be deemed to
be the average of the closing bid or sale prices (whichever is applicable) over
the 30-day period ending three (3) days prior to the closing; and
(C) If there is no active public market, the value shall be the fair
market value thereof, as determined in good faith by the Board of Directors of
the Corporation.
(ii) The method of valuation of securities subject to investment letter
or other restrictions on free marketability (other than restrictions arising
solely by virtue of a stockholder's status as an affiliate or former affiliate)
shall be to make an appropriate discount from the market value determined in
good faith by the Board of Directors of the Corporation.
5. Redemption. The Series A Preferred Stock shall not be redeemable.
6. Conversion. The holders of Series A Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):
(A) Optional Conversion. Subject to the limitations on conversions
contained in Section 6(E) below, each share of Series A Preferred Stock shall be
convertible, at the option of the holder thereof, at any time following the
Issuance Date thereof at the office of the Corporation or any transfer agent for
the Preferred Stock, into such number of fully paid and nonassessable shares of
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Common Stock as is determined by dividing $1,000.00 by the applicable Conversion
Price for the Series A Preferred Stock (determined as provided in Section 6(C)).
(B) Automatic Conversion. Each share of Series A Preferred Stock shall
automatically be converted into fully paid and nonassessable shares of Common
Stock at the applicable Conversion Price for such share of Series A Preferred
Stock on the earlier of the following: (i) in the event that on the 4 Year
Anniversary or any subsequent annual anniversary of the Issuance Date for such
share the Closing Price for the sixty (60) day period prior to such 4 Year
Anniversary or subsequent annual anniversary, as applicable, is greater than the
product of C x 1.30(N) (where "C" equals the Conversion Price applicable to such
shares of Series A Preferred Stock and "N" equals the number of years from the
Issuance Date with respect to such shares of Series A Preferred Stock), and (ii)
the date that is the seven-year anniversary of the Issuance Date applicable to
the first share of Series A Preferred Stock issued pursuant to the Purchase
Agreement.
(C) Conversion Price. The Conversion Price applicable to a share of
Series A Preferred Stock shall be determined as follows: (i) with respect to
shares of Series A Preferred Stock issued at the Initial Closing (as defined in
the Purchase Agreement), the Conversion Price shall be equal to $8.50 per share;
and (ii) with respect to any shares of Series A Preferred Stock issued at (a)
Subsequent Closing(s) (as defined in the Purchase Agreement), if any, the
Conversion Price shall be equal to the Closing Price for the period beginning
sixty (60) days prior the date of the applicable Subsequent Closing and ending
sixty (60) days following the date of the applicable Subsequent Closing (or such
applicable shorter period of time in the event the Common Stock ceases to be
traded publicly); provided, however, with respect this subsection 6(C)(ii),
notwithstanding the immediately foregoing calculation, in no event will the
Conversion Price applicable to shares of Series A Preferred Stock issued at any
Subsequent Closing exceed the following ceiling prices (each a "Ceiling Price"):
(a) with respect to any shares of Series A Preferred Stock issued within the
first three (3) months beginning on the Execution Date (as defined in the
Purchase Agreement), the Ceiling Price shall be $9.35 per share; (b) with
respect to any shares of Series A Preferred Stock issued within the following
three (3) month period (such three (3) month period and each subsequent three
(3) month period thereafter referred to herein as a "Quarter"), the Ceiling
Price shall be $10.29 per share; (c) with respect to any shares of Series A
Preferred Stock issued within the third Quarter, the Ceiling Price shall be
$11.31 per share; (d) with respect to any shares of Series A Preferred Stock
issued within the fourth Quarter, the Ceiling Price shall be $12.45 per share;
(e) with respect to any shares of Series A Preferred Stock issued within the
fifth Quarter, the Ceiling Price shall be $13.69 per share; (f) with respect to
any shares of Series A Preferred Stock issued within the sixth Quarter, the
Ceiling Price shall be $15.06 per share; (g) with respect to any shares of
Series A Preferred Stock issued within the seventh Quarter, the Ceiling Price
shall be $16.56 per share; and (h) with respect to any shares of Series A
Preferred Stock issued within the eighth Quarter, the Ceiling Price shall be
$18.22 per share.
(D) Mechanics of Conversion.
(i) In order to effect an optional conversion pursuant to Section
6(A) above, a holder of Series A Preferred Stock shall fax (or otherwise
deliver) a copy of the fully executed Notice of Conversion attached hereto as
Exhibit A to the Corporation and to the Corporation's transfer agent with
respect to the Common Stock. Upon receipt by the Corporation of the fax copy of
a Notice of Conversion from a holder, the Corporation shall promptly send, via
fax, a confirmation to such holder stating that the Notice of Conversion has
been received, the date upon which the Corporation expects to deliver the Common
Stock issuable upon such conversion and the name and telephone number of a
contact person at the Corporation regarding the conversion. No later than two
(2) business days after receipt of such confirmation of receipt of Notice of
Conversion, the holder shall surrender or cause to be surrendered to a reputable
overnight courier for next business day delivery (two
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(2) business day delivery if from outside the United States) to the Corporation,
the certificates representing the shares of Series A Preferred Stock being
converted ("Preferred Stock Certificates") accompanied by duly executed stock
powers and a copy of the Notice of Conversion. The Corporation shall, as soon as
practicable thereafter, issue and deliver at such office to such holder of the
Series A Preferred Stock, or to the nominee or nominees of such holder, a
certificate or certificates for the number of shares of Common Stock to which
such holder shall be entitled as aforesaid. If such holder was a holder of
shares of Series A Preferred Stock on a record date for a dividend payment
corresponding to a particular Annual Dividend Payment Date in accordance with
Section 3(A) and such holder converts any of such shares of Series A Preferred
Stock into Common Stock on or after such Annual Dividend Payment Date, then such
holder will receive the dividend payable by the Corporation on such shares of
Series A Preferred Stock on such Annual Dividend Payment Date in accordance with
the provisions of Section 3. Upon the date of conversion stated in the Notice of
Conversion by a holder of Series A Preferred Stock, (i) the shares covered
thereby (other than the shares, if any, which cannot be issued because their
issuance would exceed the limit set forth in subsection 6(E)(i) below) shall be
deemed converted into shares of Common Stock and (ii) the holder's rights as a
holder of such converted shares of Series A Preferred Stock shall cease and
terminate, excepting only the right to receive certificates for such shares of
Common Stock and to any remedies provided herein or otherwise available at law
or in equity to such holder because of a failure by the Corporation to comply
with the terms of this Certificate of Designation.
(ii) In the event of an automatic conversion pursuant to Section 6(B)
above, the Corporation shall promptly send notification to the applicable
holders of Series A Preferred Stock stating the number of shares of Series A
Preferred Stock that have been automatically converted, the effective date of
such automatic conversion, and an explanation of events that led to such
automatic conversion. No later than two (2) business days after receipt of such
confirmation of receipt of Notice of Conversion, the holder shall surrender or
cause to be surrendered to a reputable overnight courier for next business day
delivery (two (2) business day delivery if from outside the United States) to
the Corporation, the Preferred Stock Certificates accompanied by duly executed
stock powers and a statement of the name or names in which the certificate or
certificates for shares of Common Stock are to be issued. The Corporation shall,
as soon as practicable thereafter, issue and deliver at such office to such
holder of the Series A Preferred Stock, or to the nominee or nominees of such
holder, a certificate or certificates for the number of shares of Common Stock
to which such holder shall be entitled as aforesaid. If such holder was a holder
of shares of Series A Preferred Stock on a record date for a dividend payment
corresponding to a particular Annual Dividend Payment Date in accordance with
Section 3(A) and such shares are automatically converted into shares of Common
Stock on or after such Annual Dividend Payment Date, then such holder will
receive the dividend payable by the Corporation on such shares of Series A
Preferred Stock on such Annual Dividend Payment Date in accordance with the
provisions of Section 3. Upon the effective date of an automatic conversion, (i)
the shares of Series A Preferred Stock converted thereby (other than the shares,
if any, which cannot be issued because their issuance would exceed the limit set
forth in subsection 6(E)(i) below) shall be deemed converted into shares of
Common Stock and (ii) the holder's rights as a holder of such converted shares
of Series A Preferred Stock shall cease and terminate, excepting only the right
to receive certificates for such shares of Common Stock and to any remedies
provided herein or otherwise available at law or in equity to such holder
because of a failure by the Corporation to comply with the terms of this
Certificate of Designation.
(iii) Unless otherwise provided in this Certificate of Designation,
such conversion shall be deemed to have been made immediately prior to the close
of business on the date of such surrender of the Series A Preferred Stock to be
converted, and the person or persons entitled to receive the shares of Common
Stock issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock as of such date.
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(E) Limitations on Conversions. The conversion of shares of Series A
Preferred Stock shall be subject to the following limitations (each of which
limitations shall be applied independently):
(i) NASDAQ Rule 4460(i). So long as the Common Stock is listed for
trading on The Nasdaq National Market ("Nasdaq") or an exchange or quotation
system with a rule substantially similar to Rule 4460(i) of the Rules and
Regulations of the National Association of Securities Dealers, Inc. ("Rule
4460(i)"), then notwithstanding anything to the contrary contained in this
Certificate of Designation or the Purchase Agreement, if, at any time, the
aggregate number of shares of Common Stock then issued or issuable upon
conversion of the Series A Preferred Stock (including any shares of Common Stock
then issued or issuable upon exercise of outstanding Warrants (as such term is
defined in the Purchase Agreement), and any shares of capital stock or rights to
acquire shares of capital stock issued by the Corporation which are aggregated
or integrated with the shares of Common Stock issuable upon conversion of the
Series A Preferred Stock and the shares of Common Stock issuable upon exercise
of outstanding Warrants for purposes of such rule) equals 19.99% of the
"Outstanding Common Amount" (as hereinafter defined), the Series A Preferred
Stock shall, from that time forward, cease to be convertible into shares of
Common Stock in accordance with the terms of this Section 6, until such time as
the Corporation (i) has obtained approval of the issuance of the Common Stock
upon conversion of the Series A Preferred Stock pursuant to the Purchase
Agreement by a majority of the total votes cast on such proposal, in person or
by proxy, by the holders of the then-outstanding Common Stock (not including any
shares of Series A Preferred Stock or any shares of Common Stock held by present
or former holders of Series A Preferred Stock that were issued upon conversion
of Series A Preferred Stock) (the "Stockholder Approval"), or (ii) shall have
otherwise obtained permission to allow such issuances from Nasdaq in accordance
with Rule 4460(i). If the Common Stock is not then listed on Nasdaq or an
exchange or quotation system that has a rule substantially similar to Rule
4460(i) then the limitations set forth herein shall be inapplicable and of no
force and effect. For purposes of this subsection 6(E)(i), "Outstanding Common
Amount" means (i) the number of shares of the Common Stock outstanding
immediately prior to the Initial Closing (as such term is defined in the
Purchase Agreement).
(ii) Minimum Conversion. In no event will the Corporation be required
to effect an optional conversion of any shares of Series A Preferred Stock
pursuant to Section 6(A) unless such conversion will result in the issuance of
that number of shares of Common Stock having an aggregate value of at least
$10,000,000, based upon the applicable Conversion Price for such shares of
Series A Preferred Stock, provided that if the date is more than two (2) years
after the Execution Date (as such term is defined in the Purchase Agreement) and
the aggregate value based upon the applicable Conversion Price of all the shares
of Series A Preferred Stock held by all holder(s) thereof is less than
$10,000,000, the Company will convert all, but not less than all, of such shares
of Series A Preferred Stock at the unanimous election of the holder(s) thereof
in accordance with Section 6(A).
(F) Taxes. The Corporation shall pay any and all taxes (other than
transfer taxes or income taxes, if any, payable by the holder) which may be
imposed with respect to the issuance and delivery of the shares of Common Stock
pursuant to conversion of the Series A Preferred Stock.
(G) No Fractional Shares. No fractional shares of Common Stock are to be
issued upon the conversion of the Series A Preferred Stock. In lieu thereof, the
Corporation shall pay cash in an amount equal to the product of (x) the
applicable Conversion Price multiplied by (y) the fraction of a share of Common
Stock which would otherwise be issuable by the Corporation.
(H) Adjustments To Conversion Prices for Stock Dividends and for
Combinations or Subdivisions of Common Stock. In the event that the Corporation
at any time or from time to time after the Issuance Date of shares of Series A
Preferred Stock shall declare or pay, without
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consideration, any dividend on the Common Stock payable in Common Stock or in
any right to acquire Common Stock for no consideration, or shall effect a
subdivision of the outstanding shares of Common Stock into a greater number of
shares of Common Stock (by stock split, reclassification or otherwise than by
payment of a dividend in Common Stock or in any right to acquire Common Stock),
or in the event the outstanding shares of Common Stock shall be combined or
consolidated, by reclassification or otherwise, into a lesser number of shares
of Common Stock, then the applicable Conversion Price for such shares of Series
A Preferred Stock in effect immediately prior to such event shall, concurrently
with the effectiveness of such event, be proportionately decreased or increased,
as appropriate. In the event that the Corporation shall declare or pay, without
consideration, any dividend on the Common Stock payable in any right to acquire
Common Stock for no consideration then the Corporation shall be deemed to have
made a dividend payable in Common Stock in an amount of shares equal to the
maximum number of shares issuable upon exercise of such rights to acquire Common
Stock.
(I) Adjustments for Reclassification and Reorganization. If the Common
Stock issuable upon conversion of shares of Series A Preferred Stock shall be
changed into the same or a different number of shares of any other class or
classes of stock, whether by capital reorganization, reclassification or
otherwise (other than a subdivision or combination of shares provided for in
subsection 6(H) above or a merger or other reorganization referred to in Section
4(B) above), the applicable Conversion Price then in effect for such shares
shall, concurrently with the effectiveness of such reorganization or
reclassification, be proportionately adjusted so that the Series A Preferred
Stock shall be convertible into, in lieu of the number of shares of Common Stock
which the holders would otherwise have been entitled to receive, a number of
shares of such other class or classes of stock equivalent to the number of
shares of Common Stock that would have been subject to receipt by the holders
upon conversion of the Series A Preferred Stock immediately before that change.
(J) Purchase Rights. If at any time when any Series A Preferred Stock is
issued and outstanding, the Corporation issues any convertible securities or
rights to purchase stock, warrants, securities or other property (the "Purchase
Rights") pro rata to the record holders of any class of Common Stock, then the
holders of Series A Preferred Stock will be entitled to acquire, upon the terms
applicable to such Purchase Rights, the aggregate Purchase Rights which such
holder could have acquired if such holder had held the number of shares of
Common Stock acquirable upon complete conversion of the Series A Preferred Stock
(without regard to any limitations on conversion contained herein) immediately
before the date on which a record is taken for the grant, issuance or sale of
such Purchase Rights, or, if no such record is taken, the date as of which the
record holders of Common Stock are to be determined for the grant, issue or sale
of such Purchase Rights.
(K) No Impairment. The Corporation will not, by amendment of its
Certificate or through any reorganization, recapitalization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Corporation, but will at
all times in good faith assist in the carrying out of all the provisions of this
Section 6 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Series A Preferred Stock against impairment.
(L) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price of the Series A Preferred
Stock pursuant to this Section 6, the Corporation, at its expense, shall
promptly compute such adjustment or readjustment in accordance with the terms
hereof and prepare and furnish to each holder of Series A Preferred Stock a
certificate setting forth such adjustment of readjustment and showing in detail
the facts upon which such adjustment or readjustment is based. The Corporation
shall, upon the written request at any time of any affected holder of Series A
Preferred Stock, furnish or cause to be furnished to such holder a like
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certificate setting forth (A) such adjustment and readjustment, (B) the
Conversion Price at the time in effect, and (C) the number of shares of Common
Stock and the amount, if any, of other property which at the time would be
received upon the conversion of the Series A Preferred Stock.
(M) Reservation of Stock Issuable Upon Conversion. The Corporation shall
at all times reserve and keep available out of its authorized but unissued
shares of Common Stock solely for the purpose of effecting the conversion of the
Series A Preferred Stock such number of its shares of Common Stock as shall from
time to time be sufficient to effect the conversion of all outstanding shares of
the Series A Preferred Stock; and if at any time the number of authorized but
unissued shares of Common Stock shall not be sufficient to effect the conversion
of all the then outstanding Series A Preferred Stock, in addition to such other
remedies as shall be available to the holder of such Series A Preferred Stock,
the Corporation will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purposes.
(N) Notice. Any notice required by the provisions of this Section 6 to
be given to the holder of Series A Preferred Stock shall be deemed given if
deposited in the United States mail, postage prepaid, and addressed to each
holder of record at his address appearing on the books of the Corporation.
7. Voting Rights.
(A) Subject to Section 7(D) below, the holder of each share of Series A
Preferred Stock shall have the right to one vote for each share of Common Stock
into which such Series A Preferred Stock could then be converted, and with
respect to such vote, such holder shall have full voting rights and powers equal
to the voting rights and powers of the holders of Common Stock, and shall be
entitled to notice of any stockholders' meeting in accordance with the bylaws of
the Corporation, and shall be entitled to vote, together with holders of Common
Stock, with respect to any question upon which holders of Common Stock have the
right to vote. Fractional votes shall not, however, be permitted and any
fractional voting rights resulting from the above formula (after aggregating all
shares into which shares of Series A Preferred Stock held by each holder could
be converted) shall be rounded to the nearest whole number (with one-half being
rounded upward). Each holder of Common Stock shall be entitled to one (1) vote
for each share of Common Stock held.
(B) Except as otherwise provided in Section 8 or by law, the holders of
shares of Series A Preferred Stock and the holders of shares of Common Stock
shall vote together as one class on all matters submitted to a vote of
stockholders of the Corporation.
(C) Except as required by law, holders of Series A Preferred Stock shall
have no special voting rights and their consent shall not be required (except to
the extent they are entitled to vote with holders of Common Stock as set forth
herein) for taking any corporate action.
(D) To the extent that the holders of the Series A Preferred Stock are
entitled to vote on a matter with holders of Common Stock, voting together as
one class, or as a separate class in accordance with Section 8 hereof, each
share of Series A Preferred Stock shall be entitled to a number of votes equal
to the number of shares of Common Stock into which it is then based on the
applicable Conversion Price; provided, however, (i) in the event the applicable
Conversion Price was fixed as a result of the application of the Ceiling Price
(as described in Section 6(C) hereof), then each share of Series A Preferred
Stock shall be entitled to a number of votes equal to the number of shares of
Common Stock into which it would have otherwise been convertible in accordance
with the applicable Conversion Price in accordance with the formula in
subsection 6(C)(ii) without reference to such Ceiling Price, and (ii) in the
event the applicable Conversion Price is deemed to be less than the greater of
the applicable book or market value of a share of Common Stock, as determined in
accordance with Rule 4460(i) and Nasdaq's interpretation thereof as applicable
to the Purchase
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Agreement and the transactions contemplated thereby (the "Fair Market Value" of
such share of Common Stock), then each share of Series A Preferred Stock shall
be entitled to a number of votes equal to the number of shares of Common Stock
into which it would be convertible in accordance with such Fair Market Value,
without reference to the Conversion Price or any applicable Ceiling Price.
8. Protective Provisions. So long as any shares of Series A Preferred Stock
are outstanding, the Corporation shall not without first obtaining the approval
by vote of the holders of at least a majority of the then outstanding shares of
Series A Preferred Stock:
(i) alter or change the rights, preferences or privileges of the Series
A Preferred Stock so as to affect adversely the Series A Preferred Stock;
(ii) create any new class or series of capital stock having a preference
over the Series A Preferred Stock as to distribution of assets upon liquidation,
dissolution or winding up of the Corporation; or
(iii) increase the authorized number of shares of Series A Preferred
Stock.
In the event holders of at least a majority of the then outstanding shares
of Series A Preferred Stock agree to allow the Corporation to alter or change
the rights, preferences or privileges of the shares of Series A Preferred Stock,
pursuant to subsection (i) above, so as to affect the Series A Preferred Stock,
then the Corporation will deliver notice of such approved change to the holders
of the Series A Preferred Stock that did not agree to such alteration or change
(the "Dissenting Holders") and Dissenting Holders shall have the right for a
period of thirty (30) days to convert pursuant to the terms of this Certificate
of Designation as they exist prior to such alteration or change or continue to
hold their shares of Series A Preferred Stock.
9. Status of Converted Stock. In the event any Series A Preferred Stock
shall be converted pursuant to Section 6 hereof, the shares so converted shall
be cancelled, shall return to the status of authorized but unissued preferred
stock of no designated series, and shall not be issuable by the Corporation as
Preferred Stock.
10. Status as Stockholder. Upon submission of a Notice of Conversion by a
holder of Series A Preferred Stock, the shares covered thereby shall be deemed
converted into shares of Common Stock and the holder's rights as a holder of
such converted shares of Series A Preferred Stock shall cease and terminate,
excepting only the right to receive certificates for such shares of Common Stock
and to any remedies provided herein or otherwise available at law or in equity
to such holder because of a failure by the Corporation to comply with the terms
of this Certificate of Designation.
11. Lost or Stolen Certificates. Upon receipt by the Corporation of
evidence of the loss, theft, destruction or mutilation of any Preferred Stock
Certificates representing shares of Series A Preferred Stock, and (in the case
of loss, theft or destruction) of indemnity reasonably satisfactory to the
Corporation, and upon surrender and cancellation of the Preferred Stock
Certificate(s), if mutilated, the Corporation shall execute and deliver new
Preferred Stock Certificate(s) of like tenor and date.
* * *
RESOLVED FURTHER, that the Chief Executive Officer, the President or any
Vice President, and the Secretary, the Chief Financial Officer, the Treasurer,
or any Assistant Secretary or Assistant Treasurer of the Corporation are each
authorized to execute, verify, and file a Certificate of Designation of Rights
Preferences and Privileges in accordance with Delaware law."
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IN WITNESS WHEREOF, the undersigned have executed this certificate on April
7, 1999.
/s/ STEVEN GILLIS
--------------------------------------
Steven Gillis
Chairman and Chief Executive Officer
/s/ KATHLEEN MCKEREGHAN
--------------------------------------
Kathleen McKereghan, Secretary
The undersigned certify under penalty of perjury that they have read the
foregoing Certificate of Designation of Preferences and know the contents
thereof, and that the statements therein are true.
Executed at Seattle, Washington, on April 7, 1999.
/s/ STEVEN GILLIS
--------------------------------------
Steven Gillis
Chairman and Chief Executive Officer
/s/ KATHLEEN MCKEREGHAN
--------------------------------------
Kathleen McKereghan, Secretary
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EXHIBIT A
NOTICE OF CONVERSION
The undersigned hereby irrevocably elects to convert (the "Conversion")
shares of Series A Preferred Stock (the "Preferred Stock") plus
all accrued and unpaid dividends relating thereto (if any) (each defined term
used but not defined in this notice shall have the meaning assigned to it in the
Certificate of Designation, of Rights, Preferences and Privileges of Series A
Preferred Stock of Corixa Corporation (the "Certificate of Designation")), into
shares of common stock ("Common Stock") of Corixa Corporation (the "Company")
according to the conditions of the Certificate of Designation, as of the date
written below. If securities are to be issued in the name of a person other than
the undersigned, the undersigned will pay all transfer taxes payable with
respect thereto. No fee will be charged to the holder for any conversion except
as provided herein.
The undersigned covenants that all offers and sales by the undersigned of
the securities issuable to the undersigned upon conversion of this Series A
Preferred Stock shall be made pursuant to registration of the Common Stock under
the Securities Act of 1933, as amended (the "Act"), or pursuant to an exemption
from registration under the Act.
In the event of partial exercise, please reissue an appropriate certificate
for the principal balance which shall not have been converted.
Date of Conversion: __________________
Applicable Conversion Price: _________
Amount of Dividends to be Converted,
if any: ______________________________
Number of Shares of
Common Stock to be Issued: ___________
Signature: ___________________________
Name: ________________________________
Address: _____________________________
cc: ________________ [Transfer Agent]
ACKNOWLEDGED AND AGREED:
CORIXA CORPORATION
By: ______________________________
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APPENDIX Q
SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW
SEC. 262. APPRAISAL RIGHTS
(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through
the effective date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to sec. 228 of
this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of the stockholder's shares of stock under the circumstances
described in subsections (b) and (c) of this section. As used in this section,
the word "stockholder" means a holder of record of stock in a stock corporation
and also a member of record of a nonstock corporation; the words "stock" and
"share" mean and include what is ordinarily meant by those words and also
membership or membership interest of a member of a nonstock corporation; and the
words "depository receipt" mean a receipt or other instrument issued by a
depository representing an interest in one or more shares, or fractions thereof,
solely of stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to sec. 251 (other than a merger effected pursuant to
sec. 251(g) of this title), sec. 252, sec. 254, sec. 257, sec. 258, sec. 263 or
sec. 264 of this title:
(1) Provided, however, that no appraisal rights under this section shall
be available for the shares of any class or series of stock, which stock, or
depository receipts in respect thereof, at the record date fixed to determine
the stockholders entitled to receive notice of and to vote at the meeting of
stockholders to act upon the agreement of merger or consolidation, were either
(i) listed on a national securities exchange or designated as a national market
system security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. or (ii) held of record by more than 2,000 holders;
and further provided that no appraisal rights shall be available for any shares
of stock of the constituent corporation surviving a merger if the merger did not
require for its approval the vote of the stockholders of the surviving
corporation as provided in subsection (f) of sec. 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series of
stock of a constituent corporation if the holders thereof are required by the
terms of an agreement of merger or consolidation pursuant to sec.sec. 251, 252,
254, 257, 258, 263 and 264 of this title to accept for such stock anything
except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock (or depository receipts in respect
thereof) or depository receipts at the effective date of the merger or
consolidation will be either listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or held of record
by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this paragraph;
or
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d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts described in
the foregoing subparagraphs a., b. and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under sec. 253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall be
available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting, shall
notify each of its stockholders who was such on the record date for such meeting
with respect to shares for which appraisal rights are available pursuant to
subsection (b) or (c) hereof that appraisal rights are available for any or all
of the shares of the constituent corporations, and shall include in such notice
a copy of this section. Each stockholder electing to demand the appraisal of
such stockholder's shares shall deliver to the corporation, before the taking of
the vote on the merger or consolidation, a written demand for appraisal of such
stockholder's shares. Such demand will be sufficient if it reasonably informs
the corporation of the identity of the stockholder and that the stockholder
intends thereby to demand the appraisal of such stockholder's shares. A proxy or
vote against the merger or consolidation shall not constitute such a demand. A
stockholder electing to take such action must do so by a separate written demand
as herein provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become effective;
or
(2) If the merger or consolidation was approved pursuant to sec. 228 or
sec. 253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days thereafter,
shall notify each of the holders of any class or series of stock of such
constituent corporation who are entitled to appraisal rights of the approval of
the merger or consolidation and that appraisal rights are available for any or
all shares of such class or series of stock of such constituent corporation, and
shall include in such notice a copy of this section; provided that, if the
notice is given on or after the effective date of the merger or consolidation,
such notice shall be given by the surviving or resulting corporation to all such
holders of any class or series of stock of a constituent corporation that are
entitled to appraisal rights. Such notice may, and, if given on or after the
effective date of the merger or consolidation, shall, also notify such
stockholders of the effective date of the merger or consolidation. Any
stockholder entitled to appraisal rights may, within 20 days after the date of
mailing of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the appraisal of
such holder's shares. If such notice did not notify stockholders of the
effective date of the merger or consolidation, either (i) each such constituent
corporation shall send a second notice before the effective date of the merger
or consolidation notifying each of the holders of any class or series of stock
of such constituent corporation that are entitled to appraisal rights of the
effective date of the merger or consolidation or (ii) the surviving or resulting
corporation shall send such a second
Q-2
<PAGE> 412
notice to all such holders on or within 10 days after such effective date;
provided, however, that if such second notice is sent more than 20 days
following the sending of the first notice, such second notice need only be sent
to each stockholder who is entitled to appraisal rights and who has demanded
appraisal of such holder's shares in accordance with this subsection. An
affidavit of the secretary or assistant secretary or of the transfer agent of
the corporation that is required to give either notice that such notice has been
given shall, in the absence of fraud, be prima facie evidence of the facts
stated therein. For purposes of determining the stockholders entitled to receive
either notice, each constituent corporation may fix, in advance, a record date
that shall be not more than 10 days prior to the date the notice is given,
provided, that if the notice is given on or after the effective date of the
merger or consolidation, the record date shall be such effective date. If no
record date is fixed and the notice is given prior to the effective date, the
record date shall be the close of business on the day next preceding the day on
which the notice is given.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw such stockholder's demand for appraisal and to accept the terms offered
upon the merger or consolidation. Within 120 days after the effective date of
the merger or consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) hereof, upon written request, shall be
entitled to receive from the corporation surviving the merger or resulting from
the consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with respect to which demands
for appraisal have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the stockholder within 10 days
after such stockholder's written request for such a statement is received by the
surviving or resulting corporation or within 10 days after expiration of the
period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication
shall be approved by the Court, and the costs thereof shall be borne by the
surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
Q-3
<PAGE> 413
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted
such stockholder's certificates of stock to the Register in Chancery, if such is
required, may participate fully in all proceedings until it is finally
determined that such stockholder is not entitled to appraisal rights under this
section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the effective date of the merger or consolidation); provided, however, that
if no petition for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder shall deliver to the
surviving or resulting corporation a written withdrawal of such stockholder's
demand for an appraisal and an acceptance of the merger or consolidation, either
within 60 days after the effective date of the merger or consolidation as
provided in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court
of Chancery shall be dismissed as to any stockholder without the approval of the
Court, and such approval may be conditioned upon such terms as the Court deems
just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
Q-4
<PAGE> 414
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF OFFICERS AND DIRECTORS
As permitted by Section 145 of the Delaware General Corporation Law, the
Registrant's Restated Certificate of Incorporation includes a provision that
eliminates the personal liability of its directors for monetary damages for
breach or alleged breach of their duty of care. In addition, as permitted by
Section 145 of the Delaware General Corporation Law, the Bylaws of the
Registrant provide that: (i) the Registrant is required to indemnify its
directors, to the fullest extent permitted by Delaware law, including in those
circumstances in which indemnification would otherwise be discretionary; (ii)
the Registrant may, in its discretion, indemnify officers, employees and agents
in those circumstances where indemnification is not required by law; (iii) the
Registrant is required to advance expenses, as incurred, to its directors in
connection with defending a proceeding (except that it is not required to
advance expenses to a person against whom the Registrant brings a claim for
breach of the duty of loyalty, failure to act in good faith, intentional
misconduct, knowing violation of law or deriving an improper personal benefit);
(iv) the rights conferred in the Bylaws are not exclusive, and the Registrant is
authorized to enter into indemnification agreements with its directors,
executive officers and employees; and (v) the Registrant may not retroactively
amend the Bylaw provisions in a way that it adverse to such directors, executive
officers and employees.
The Registrant's policy is to enter into indemnification agreements with
each of its directors that provide the maximum indemnity allowed to directors
and executive officers by Section 145 of the Delaware General Corporation Law
and the Bylaws, as well as certain additional procedural protections. In
addition, such indemnity agreements provide that directors will be indemnified
to the fullest possible extent not prohibited by law against all expenses
(including attorney's fees) and settlement amounts paid or incurred by them in
any action or proceeding, including any derivative action by or in the right of
the Registrant, on account of their services as directors or executive officers
of the Registrant or as directors or officers of any other company or enterprise
when they are serving in such capacities at the request of the Registrant. The
Registrant will not be obligated pursuant to the indemnity agreements to
indemnify or advance expenses to an indemnified party with respect to
proceedings or claims initiated by the indemnified party and not by way of
defense, except with respect to proceedings specifically authorized by the Board
of Directors or brought to enforce a right to indemnification under the
indemnity agreement, the Registrant's Bylaws or any statute or law. Under the
agreements, the Registrant is not obligated to indemnify the indemnified party
(i) for any expenses incurred by the indemnified party with respect to any
proceeding instituted by the indemnified party to enforce or interpret the
agreement, if a court of competent jurisdiction determines that each of the
material assertions made by the indemnified party in such proceeding was not
made in good faith or was frivolous; (ii) for any amounts paid in settlement of
a proceeding unless the Registrant consents to such settlement; (iii) with
respect to any proceeding brought by the Registrant against the indemnified
party for willful misconduct, unless a court determines that each of such claims
was not made in good faith or was frivolous; (iv) on account of any suit in
which judgment is rendered against the indemnified party for an accounting of
profits made from the purchase or sale by the indemnified party of securities of
the Registrant pursuant to the provisions of Section 16(b) of the Exchange Act
and related laws; (v) on account of the indemnified party's conduct which is
finally adjudged to have been knowingly fraudulent or deliberately dishonest, or
to constitute willful misconduct or a knowing violation of the law; (vi) an
account of any conduct from which the indemnified party derived an improper
personal benefit; (vii) on account of conduct the indemnified party believed to
be contrary to the best interests of the Registrant or its stockholders; (vii)
on account of conduct that constituted a breach of the indemnified party's duty
of loyalty to the
II-1
<PAGE> 415
Registrant or its stockholders; or (ix) if a final decision by a court having
jurisdiction in the matter shall determine that such indemnification is not
lawful.
The indemnification provision in the Bylaws and the indemnification
agreements entered into between the Registrant and its directors, may be
sufficiently broad to permit indemnification of the Registrant's directors for
liabilities arising under the Securities Act.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) EXHIBITS
The following exhibits are filed herewith or incorporated herein by
reference.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
2.01* Agreement and Plan of Merger dated June 9, 1999 by and
between the Registrant and Ribi ImmunoChem Research, Inc.
(incorporated by reference to Appendix A of the proxy
statement/prospectus included in this registration
statement). Registrant agrees to furnish supplementally to
the SEC upon request a copy of any omitted schedule.
2.02 Form of Certificate of Merger between the Registrant and
Ribi ImmunoChem Research, Inc.
3.01(A) Certificate of Incorporation of the Registrant.
3.02(A) Bylaws of the Registrant.
4.01(B) Certificate of Designation of the Registrant.
4.02 Equity Line of Credit and Securities Purchase Agreement
dated as of April 8, 1999 between Registrant and Castle Gate
L.L.C.
4.03 Registration Rights Agreement dated as of April 8, 1999
between Registrant and Castle Gate L.L.C.
4.04 Standstill Agreement dated as of April 8, 1999 between
Registrant and Castle Gate L.L.C.
4.05 Warrant Number CG-1 issued by the Registrant to Castle Gate,
L.L.C. on April 8, 1999.
4.06 Warrant Number CG-2 issued by the Registrant to Castle Gate,
L.L.C. on April 8, 1999.
4.07 Form of Warrant Number CG-3 to be issued by the Registrant
to Castle Gate, L.L.C. upon the occurrence of certain events
in accordance with the terms of the Equity Line of Credit
and Securities Purchase Agreement.
4.08 Form of Warrant Number CG-4 to be issued by the Registrant
to Castle Gate, L.L.C. upon the occurrence of certain events
in accordance with the terms of the Equity Line of Credit
and Securities Purchase Agreement.
5.01 Opinion of Venture Law Group, A Professional Corporation.
8.01 Form of Tax Opinion of Venture Law Group, A Professional
Corporation.
8.02 Form of Tax Opinion of Morrison & Foerster LLP.
10.01(A) Registrant's Amended and Restated 1994 Stock Option Plan and
forms of stock purchase and stock option agreement.
10.02(A) 1997 Directors' Stock Option Plan and form of stock option
agreement.
10.03(A) 1997 Employee Stock Purchase Plan and form of subscription
agreement.
10.04(A) Corixa Corporation 401(k) Savings & Retirement Plan.
</TABLE>
II-2
<PAGE> 416
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
10.05(A) Form of Indemnification Agreement.
10.06(A) Amended and Restated Investors' Rights Agreement dated as of
May 10, 1996 between Registrant and certain holders of its
capital stock.
10.07(A) Lease Agreement dated October 28, 1994 and amended December
29, 1995 between Registrant and Fred Hutchinson Cancer
Research Center.
10.08+(A) Licensing Agreement between Registrant and Dana-Farber
Cancer Institute, Inc. dated January 1, 1995.
10.09+(A) Amended and Restated Research Services and Intellectual
Property Agreement effective as of January 1, 1997 by and
between Registrant and the Infectious Disease Research
Institute.
10.10+(A) License Agreement dated May 22, 1996 by and among
Registrant, Southern Research Institute and University of
Alabama at Birmingham Research Foundation.
10.11+(A) Amendment No. 1 to License Agreement dated April 30, 1997 by
and among Registrant, Southern Research Institute and
University of Alabama at Birmingham Research Foundation.
10.12+(C) Amendment No. 1 dated September 29, 1997 to the Licensing
Agreement dated January 1, 1995 by and between Corixa
Corporation and Dana-Farber Cancer Institute, Inc.
10.13+(D) Multi-Field Vaccine Discovery Collaboration and License
Agreement between Corixa Corporation and SmithKline Beecham,
dated September 1, 1998.
10.14+(E) Amendment No. 2, dated September 25, 1998, to the Lease
Agreement dated May 31, 1996 between Registrant and
Alexandria Real Estate Equities.
10.15+(E) Amendment No. 2, dated July 31, 1998, to the Licensing
Agreement, dated January 1, 1995, by and between Registrant
and Dana-Farber Cancer Institute, Inc.
10.16+(E) Confirmation Letter, Purchase of $7,000,000 Loan Facility,
dated August 21, 1998 to Registrant from Banque Nationale de
Paris.
10.17+(E) Assignment and Assumption Agreement, dated August 21, 1998,
by and among Sumitomo Bank, Limited, Sumitomo Bank of New
York Trust Corporation, Registrant, Wells Fargo Bank, N.A.,
Banque Nationale de Paris, and Bank of The West Trust and
Investment Services Division.
10.18+(F) Research Agreement, dated as of March 26, 1999, between the
Registrant and the Infectious Disease Research Institute.
10.19+(G) Collaboration Agreement, dated May 21, 1999, between Corixa
Corporation and Inpharzam International, Inc.
10.20+(G) Common Stock Purchase Agreement, dated May 21, 1999, between
Corixa Corporation and Inpharzam International, S.A.
10.21+(G) License and Collaborative Research Agreement, dated June 15,
1999, between Corixa Corporation and Japan Tobacco Inc.
10.22+(G) Common Stock Purchase Agreement, dated December 11, 1998,
among Corixa Corporation, International Biotechnology Trust,
plc and Warburg, Pincus Ventures, L.P.
10.23* Corixa Corporation Amended and Restated 1994 Stock Option
Plan, as amended on June 9, 1999 (included in Appendix H).
10.24 Ribi ImmunChem Research, Inc. 1996 Stock Option Plan.
</TABLE>
II-3
<PAGE> 417
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
10.25 Ribi ImmunChem Research, Inc. 1986 Stock Option Plan.
10.26 Ribi ImmunChem Research, Inc. 1996 Director's Stock Option
Plan.
21.01 List of Subsidiaries of the Registrant.
23.01 Consent of Ernst & Young LLP, Independent Auditors, with
respect to the financial statements of Registrant.
23.02 Consent of KPMG LLP, Independent Auditors, with respect to
the financial statements of Ribi.
23.03 Consent of Ernst & Young LLP, Independent Auditors, with
respect to the financial statements of Anergen.
23.04 Consent of Ernst & Young LLP, Independent Auditors, with
respect to the financial statements of GenQuest.
23.05 Consent of Pacific Growth Equities, Inc. with respect to
opinion letter attached in Appendix B.
23.06 Consent of Hambrecht & Quist LLC with respect to opinion
letter attached in Appendix C.
23.07 Consents of Venture Law Group, A Professional Corporation
(included in Exhibits 5.01 and 8.01).
23.08 Consent of Morrison & Foerster LLP (included in Exhibit
8.02).
24.01* Power of Attorney (included on the signature page).
99.01 Form of Proxy Card for Special Meeting of Registrant's
Stockholders.
99.02 Form of Irrevocable Proxy for stockholders of Ribi
ImmunoChem Research, Inc. (included in Appendix A).
99.03 Form of Proxy Card for Special Meeting of Ribi ImmunoChem
Research, Inc. Stockholders.
</TABLE>
- -------------------------
(A) Incorporated by reference to the Registrant's Registration Statement on Form
S-1 and Amendments thereto (File No. 333-32147), declared effective by the
SEC on October 2, 1997).
(B) Incorporated by reference to the Registrant's current Report on Form 8-K
dated April 8, 1999 (File No. 0-22891).
(C) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
for the quarterly period ended June 30, 1998 (File No. 0-22891).
(D) Incorporated by reference to the Registrant's Current Report on Form 8-K
dated October 28, 1998. (File No. 0-22891)
(E) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
for the quarterly period ended September 30, 1998. (File No. 0-22891)
(F) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
for the quarterly period ended March 31, 1999 (File No. 0-22891)
(G) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
for the quarterly period ended June 30, 1999 (File No. 0-22891)
* Filed previously.
(+) Confidential treatment requested or granted.
II-4
<PAGE> 418
(b) FINANCIAL STATEMENT SCHEDULES
None.
(c) REPORT, OPINION OR APPRAISAL.
None.
II-5
<PAGE> 419
ITEM 22. UNDERTAKINGS
S-K 512(a)
A. The undersigned Registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this Registration Statement by any person or party
who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer
undertakes that such reoffering prospectus will contain the information called
for by the applicable registration form with respect to reofferings by persons
who may be deemed underwriters, in addition to the information called for by the
other items of the applicable form.
The Registrant undertakes that every prospectus: (i) that is filed pursuant
to the immediately preceding paragraph, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Act and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of an
amendment to the Registration Statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, as amended, 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.
B. Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, 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 Securities and
Exchange Commission such indemnification is against public policy as expressed
in the 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 Act and will
be governed by the final adjudication of such issue.
C. The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through the
date of responding to the request.
D. The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and Ribi
being acquired involved therein, that was not the subject of and included in the
Registration Statement when it became effective.
II-6
<PAGE> 420
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Seattle, State of Washington, on August 11, 1999.
CORIXA CORPORATION
By: /s/ STEVEN GILLIS
------------------------------------
Steven Gillis, Ph.D.
Chairman and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 1 to the Registration Statement has been signed by the
following persons in the capacities and on the dates indicated below.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ STEVEN GILLIS Chairman, August 11, 1999
- --------------------------------------------------- Chief Executive Officer
Steven Gillis and Director
(Principal Executive Officer)
* Vice President and August 11, 1999
- --------------------------------------------------- Chief Financial Officer
Michelle Burris (Principal Financial Officer)
* President, August 11, 1999
- --------------------------------------------------- Chief Operating Officer
Mark McDade and Director
* Director August 11, 1999
- ---------------------------------------------------
Joseph S. Lacob
* Director August 11, 1999
- ---------------------------------------------------
Arnold L. Oronsky
* Director August 11, 1999
- ---------------------------------------------------
Andrew E. Senyei
*By: /s/ STEVEN GILLIS
---------------------------------------------
Attorney-in-fact
</TABLE>
II-7
<PAGE> 421
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
2.01* Agreement and Plan of Merger dated June 9, 1999 by and
between the Registrant and Ribi ImmunoChem Research, Inc.
(incorporated by reference to Appendix A of the proxy
statement/prospectus included in this registration
statement). Registrant agrees to furnish supplementally to
the SEC upon request a copy of any omitted schedule.
2.02 Form of Certificate of Merger between the Registrant and
Ribi ImmunoChem Research, Inc.
3.01(A) Certificate of Incorporation of the Registrant.
3.02(A) Bylaws of the Registrant.
4.01(B) Certificate of Designation of the Registrant.
4.02 Equity Line of Credit and Securities Purchase Agreement
dated as of April 8, 1999 between Registrant and Castle Gate
L.L.C.
4.03 Registration Rights Agreement dated as of April 8, 1999
between Registrant and Castle Gate L.L.C.
4.04 Standstill Agreement dated as of April 8, 1999 between
Registrant and Castle Gate L.L.C.
4.05 Warrant Number CG-1 issued by the Registrant to Castle Gate,
L.L.C. on April 8, 1999.
4.06 Warrant Number CG-2 issued by the Registrant to Castle Gate,
L.L.C. on April 8, 1999.
4.07 Form of Warrant Number CG-3 to be issued by the Registrant
to Castle Gate, L.L.C. upon the occurrence of certain events
in accordance with the terms of the Equity Line of Credit
and Securities Purchase Agreement.
4.08 Form of Warrant Number CG-4 to be issued by the Registrant
to Castle Gate, L.L.C. upon the occurrence of certain events
in accordance with the terms of the Equity Line of Credit
and Securities Purchase Agreement.
5.01 Opinion of Venture Law Group, A Professional Corporation.
8.01 Form of Tax Opinion of Venture Law Group, A Professional
Corporation.
8.02 Form of Tax Opinion of Morrison & Foerster LLP.
10.01(A) Registrant's Amended and Restated 1994 Stock Option Plan and
forms of stock purchase and stock option agreement.
10.02(A) 1997 Directors' Stock Option Plan and form of stock option
agreement.
10.03(A) 1997 Employee Stock Purchase Plan and form of subscription
agreement.
10.04(A) Corixa Corporation 401(k) Savings & Retirement Plan.
10.05(A) Form of Indemnification Agreement.
10.06(A) Amended and Restated Investors' Rights Agreement dated as of
May 10, 1996 between Registrant and certain holders of its
capital stock.
10.07(A) Lease Agreement dated October 28, 1994 and amended December
29, 1995 between Registrant and Fred Hutchinson Cancer
Research Center.
10.08+(A) Licensing Agreement between Registrant and Dana-Farber
Cancer Institute, Inc. dated January 1, 1995.
</TABLE>
<PAGE> 422
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
10.09+(A) Amended and Restated Research Services and Intellectual
Property Agreement effective as of January 1, 1997 by and
between Registrant and the Infectious Disease Research
Institute.
10.10+(A) License Agreement dated May 22, 1996 by and among
Registrant, Southern Research Institute and University of
Alabama at Birmingham Research Foundation.
10.11+(A) Amendment No. 1 to License Agreement dated April 30, 1997 by
and among Registrant, Southern Research Institute and
University of Alabama at Birmingham Research Foundation.
10.12+(C) Amendment No. 1 dated September 29, 1997 to the Licensing
Agreement dated January 1, 1995 by and between Corixa
Corporation and Dana-Farber Cancer Institute, Inc.
10.13+(D) Multi-Field Vaccine Discovery Collaboration and License
Agreement between Corixa Corporation and SmithKline Beecham,
dated September 1, 1998.
10.14+(E) Amendment No. 2, dated September 25, 1998, to the Lease
Agreement dated May 31, 1996 between Registrant and
Alexandria Real Estate Equities.
10.15+(E) Amendment No. 2, dated July 31, 1998, to the Licensing
Agreement, dated January 1, 1995, by and between Registrant
and Dana-Farber Cancer Institute, Inc.
10.16+(E) Confirmation Letter, Purchase of $7,000,000 Loan Facility,
dated August 21, 1998 to Registrant from Banque Nationale de
Paris.
10.17+(E) Assignment and Assumption Agreement, dated August 21, 1998,
by and among Sumitomo Bank, Limited, Sumitomo Bank of New
York Trust Corporation, Registrant, Wells Fargo Bank, N.A.,
Banque Nationale de Paris, and Bank of The West Trust and
Investment Services Division.
10.18+(F) Research Agreement, dated as of March 26, 1999, between the
Registrant and the Infectious Disease Research Institute.
10.19+(G) Collaboration Agreement, dated May 21, 1999, between Corixa
Corporation and Inpharzam International, Inc.
10.20+(G) Common Stock Purchase Agreement, dated May 21, 1999, between
Corixa Corporation and Inpharzam International, S.A.
10.21+(G) License and Collaborative Research Agreement, dated June 15,
1999, between Corixa Corporation and Japan Tobacco Inc.
10.22+(G) Common Stock Purchase Agreement, dated December 11, 1998,
among Corixa Corporation, International Biotechnology Trust,
plc and Warburg, Pincus Ventures, L.P.
10.23* Corixa Corporation Amended and Restated 1994 Stock Option
Plan, as amended on June 9, 1999 (included in Appendix H).
10.24 Ribi ImmunChem Research, Inc. 1996 Stock Option Plan.
10.25 Ribi ImmunChem Research, Inc. 1986 Stock Option Plan.
10.26 Ribi ImmunChem Research, Inc. 1996 Directors' Stock Option
Plan.
21.01 List of Subsidiaries of the Registrant.
23.01 Consent of Ernst & Young LLP, Independent Auditors, with
respect to the financial statements of Registrant.
</TABLE>
<PAGE> 423
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
23.02 Consent of KPMG LLP, Independent Auditors, with respect to
the financial statements of Ribi.
23.03 Consent of Ernst & Young LLP, Independent Auditors, with
respect to the financial statements of Anergen.
23.04 Consent of Ernst & Young LLP, Independent Auditors, with
respect to the financial statements of GenQuest.
23.05 Consent of Pacific Growth Equities, Inc. with respect to
opinion letter attached in Appendix B.
23.06 Consent of Hambrecht & Quist LLC with respect to opinion
letter attached in Appendix C.
23.07 Consents of Venture Law Group, A Professional Corporation
(included in Exhibits 5.01 and 8.01).
23.08 Consent of Morrison & Foerster LLP (included in Exhibit
8.02).
24.01* Power of Attorney (included on the signature page).
99.01 Form of Proxy Card for Special Meeting of Registrant's
Stockholders.
99.02 Form of Irrevocable Proxy for stockholders of Ribi
ImmunoChem Research, Inc. (included in Appendix A).
99.03 Form of Proxy Card for Special Meeting of Ribi ImmunoChem
Research, Inc. Stockholders.
</TABLE>
- -------------------------
(A) Incorporated by reference to the Registrant's Registration Statement on Form
S-1 and Amendments thereto (File No. 333-32147), declared effective by the
SEC on October 2, 1997).
(B) Incorporated by reference to the Registrant's current Report on Form 8-K
dated April 8, 1999 (File No. 0-22891).
(C) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
for the quarterly period ended June 30, 1998 (File No. 0-22891).
(D) Incorporated by reference to the Registrant's Current Report on Form 8-K
dated October 28, 1998. (File No. 0-22891)
(E) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
for the quarterly period ended September 30, 1998. (File No. 0-22891)
(F) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
for the quarterly period ended March 31, 1999 (File No. 0-22891)
(G) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
for the quarterly period ended June 30, 1999 (File No. 0-22891)
* Filed previously.
(+) Confidential treatment requested or granted.
<PAGE> 1
EXHIBIT 2.02
FORM OF CERTIFICATE OF MERGER
The undersigned, the President of Corixa Corporation, a Delaware
corporation ("Corixa"), hereby certifies in connection with the merger of Corixa
and Ribi ImmunoChem Research, Inc., a Delaware corporation ("Ribi") that:
1. The name and state of incorporation of each of the constituent
corporations of the merger is as follows:
<TABLE>
<CAPTION>
NAME STATE OF INCORPORATION
<S> <C>
Corixa Corporation Delaware
Ribi ImmunoChem Research, Inc. Delaware
</TABLE>
2. An agreement and plan of merger has been approved, adopted,
certified, executed and acknowledged by each of the constituent corporations in
accordance with the requirements of Section 251 of the General Corporation Law
of the State of Delaware.
3. The name of the surviving corporation of the merger is Corixa
Corporation.
4. The certificate of incorporation of Corixa, the surviving
corporation, shall be the certificate of incorporation of the surviving
corporation.
5. The executed agreement and plan of merger is on file at an office of
the surviving corporation. The address of the office of the surviving
corporation at which the agreement of merger is filed is 1124 Columbia Street,
Suite 200, Seattle, Washington 98104.
6. A copy of the agreement and plan of merger will be furnished by the
surviving corporation, on request and without cost, to any stockholder of any
constituent corporation.
Corixa has caused the Certificate to be signed by Steven Gillis, Ph.D.,
its authorized officer, this _____ day of __________, 1999.
CORIXA CORPORATION
By:_____________________________________
Chairman and Chief Executive Officer
<PAGE> 1
EXHIBIT 4.02
EQUITY LINE OF CREDIT
AND
SECURITIES PURCHASE AGREEMENT
This Equity Line of Credit and Securities Purchase Agreement (the
"Agreement") is entered into as of April 8, 1999 (the "Execution Date"), by and
among Corixa Corporation, a Delaware corporation, with a principal office
located at 1124 Columbia Street, Suite 200, Seattle, Washington 98104 (the
"Company"), and Castle Gate, L.L.C., a Washington limited liability company,
with a principal office located at 2365 Carillon Point, Kirkland, Washington
98033, (the "Investor").
WHEREAS:
A. The Company and the Investor are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Rule 506 under Regulation D ("Regulation D") as promulgated by the United
States Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "1933 Act");
B. The Company has authorized a new series of preferred stock, $0.001
par value, designated as Series A Preferred Stock (the "Preferred Stock"),
having the rights, preferences and privileges set forth in the Certificate of
Designation of Rights, Preferences and Privileges substantially in the form
attached hereto as Exhibit A (the "Certificate of Designation");
C. The Preferred Stock is convertible into shares of common stock,
$0.001 par value per share, of the Company (the "Common Stock"), upon the terms
and subject to the limitations and conditions set forth in the Certificate of
Designation;
D. The Investor desires to provide to the Company an equity line of
credit in the aggregate amount of Fifty Million Dollars ($50,000,000) upon the
terms and conditions set forth in this Agreement, in exchange for which the
Company desires to issue and sell to the Investor and the Investor desires to
purchase (i) a maximum aggregate of Fifty Thousand (50,000) shares of Preferred
Stock, with each share having a purchase price of One Thousand Dollars ($1,000),
for a maximum aggregate purchase price of Fifty Million Dollars ($50,000,000),
(ii) a warrant to purchase up to Five Hundred Thousand (500,000) shares of
Common Stock substantially in the form attached hereto as Exhibit B (the "10
Year Warrant") and (iii) a series of additional warrants to purchase shares of
Common Stock with an aggregate market value of Eight Million One Hundred and
Twenty-Five Thousand Dollars ($8,125,000) substantially in the forms attached
hereto as Exhibits C, D, and E (collectively, the "5 Year Warrants" and together
with the 10 Year Warrant, the "Warrants"); and
E. Contemporaneous with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement,
substantially in the form attached hereto as Exhibit F (the "Registration Rights
Agreement"), pursuant to which the Company has agreed to provide certain
registration rights under the 1933 Act and the Investor has agreed to provide
certain notices of sale, each as set forth therein.
<PAGE> 2
F. Contemporaneous with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Standstill Agreement,
substantially in the form attached hereto as Exhibit G (the "Standstill
Agreement"), so as to provide limits on the Investor's ownership of capital
stock of the company other than pursuant to this Agreement.
NOW THEREFORE, the Company and Investor hereby agree as follows:
1. EQUITY LINE OF CREDIT
a. Equity Line of Credit. Subject to the terms and
conditions hereof, the Investor agrees to maintain, for a period of two (2)
years subsequent to the consummation of the Initial Draw (as defined below), an
equity line of credit in the aggregate principal amount of Fifty Million Dollars
($50,000,000) (the "Line of Credit") pursuant to which funds will be available
solely to the Company within ten (10) business days notice following the
Company's request for such funds in accordance with the terms set forth in this
Agreement.
b. Initial Draw. On the Execution Date, the Investor shall
provide the Company under the Line of Credit, and the Company shall draw down
under the Line of Credit, Twelve Million Five Hundred Thousand Dollars
($12,500,000) (the "Initial Draw"), thereby reducing to Thirty Seven Million
Five Hundred Thousand Dollars ($37,500,000) the remaining amount available to
the Company under the Line of Credit.
c. Subsequent Draws. After the Initial Draw, any further
draw downs by the Company under the Line of Credit (each individually a
"Subsequent Draw" and collectively, the "Subsequent Draws") shall take place
solely at the option of, and upon the request by, the Company, provided that (i)
no less than Twelve Million Five Hundred Thousand Dollars ($12,500,000) shall be
requested by the Company or provided by the Investor per each Subsequent Draw,
unless an aggregate of less than Twelve Million Five Hundred Thousand Dollars
($12,500,000) remains available under the Line of Credit, in which case the
Company may request the remaining amount of the Line of Credit, (ii) the Company
must request any such Subsequent Draw(s) within two (2) years of the
consummation of the Initial Draw, and (iii) subject to Section 5(d) hereof, the
Company has provided the Investor with ten (10) business days notice of its
request for any such Subsequent Draw(s). Upon such request by the Company, the
Investor shall provide the Company with the full amount of the requested funds.
2. PURCHASE AND SALE OF SECURITIES.
a. Sale of Preferred Shares. Subject to the terms and
conditions hereof, in consideration for the Line of Credit described above, the
Company shall issue and sell to Investor, and Investor agrees to purchase from
the Company, up to Fifty Thousand (50,000) shares of Series A Preferred Stock
(collectively, together with any Preferred Stock issued in replacement thereof
or as a dividend thereon or otherwise with respect thereto in accordance with
the terms thereof, the "Preferred Shares") each with a purchase price of One
Thousand Dollars ($1,000) per share (the "Purchase Price"), for a maximum
aggregate purchase price of Fifty
- 2 -
<PAGE> 3
Million Dollars ($50,000,000). One (1) Preferred Share will be issued to the
Investor for each One Thousand Dollars ($1,000) provided by the Investor to the
Company pursuant to the Line of Credit. The shares of Common Stock issuable or
issued upon conversion of the Preferred Stock are referred to herein as the
"Conversion Shares." The Preferred Stock, the Warrants and the Conversion Shares
are collectively referred to herein as the "Securities."
b. Issuance of Warrants. Also in consideration of the Line
of Credit, and subject to the terms and conditions hereof, on the Initial
Closing, as defined below, the Company will issue to Investor, and Investor will
acquire from the Company, the 10 Year Warrant and the 5 Year Warrant attached
hereto as Exhibit C (collectively, the "Initial Closing Warrants"). In addition,
the 5 Year Warrants attached hereto as Exhibits D and E, respectively, will be
issued to the Investor on the first anniversary and the second anniversary of
the Execution Date, respectively. Each issuance of Warrants will be pursuant to
the terms and conditions set forth in each of the respective Warrants.
c. Initial and Subsequent Closings. Subject to the terms
set forth in this Agreement, the issuance, sale and purchase of the Preferred
Stock and Warrants shall be consummated in one or more separate closings. The
first closing is hereinafter referred to as the "Initial Closing" and any later
closing is hereinafter referred to as a "Subsequent Closing" (the Initial
Closing and any Subsequent Closings, sometimes referred to herein as a
"Closing"). The Initial Closing shall occur, subject to the satisfaction of the
conditions set forth in Sections 7 and 8, on the Execution Date, immediately
following consummation of the Initial Draw (when the Company receives
confirmation from the applicable bank that the wire transfer of Twelve Million
Five Hundred Thousand Dollars ($12,500,000) has been deposited into the account
designated by the Company), and the issuance and sale by the Company of Twelve
Thousand Five Hundred (12,500) Preferred Shares to the Investor and the issuance
of the Initial Closing Warrant(s).
d. Subsequent Closing Notice. The Company, at its sole
election, may consummate (a) Subsequent Closing(s) by delivering, subject to
Section 5(d) hereof, a notice satisfying the conditions of this Section (the
"Subsequent Closing Notice") to the Investor at least ten (10) business days
prior to the date that the Company desires to make a Subsequent Draw. The
Company may request the Subsequent Draw(s) at any time on or prior to the date
that is two years from the date of the Initial Closing. In the Subsequent
Closing Notice, the Company shall represent to the Investor that (i) the Company
elects to consummate the transactions contemplated hereby as a Subsequent Draw
and (ii) the conditions set forth in Section 8 hereof have been satisfied,
subject to an updated Schedule of Exceptions.
e. Issuance and Sale of Securities at Subsequent
Closing(s). Each Subsequent Closing (if any) shall occur, subject to the
satisfaction of the conditions set forth in Sections 7 and 8, upon consummation
of (i) the applicable Subsequent Draw (when the Company receives confirmation
that the wire transfer of the full amount of requested funds has been deposited
into the account designated by the Company) and the corresponding issuance and
sale by the Company to the Investor of that number of Preferred Shares equal to
the amount of funds requested by the Company in such Subsequent Draw divided by
One Thousand Dollars ($1,000).
- 3 -
<PAGE> 4
The Company shall issue and sell to Investor and Investor shall purchase from
the Company a minimum of Twelve Thousand Five Hundred (12,500) shares of
Preferred Stock.
f. Payment. At each Closing, the Investor shall pay the
aggregate Purchase Price for the Preferred Stock and the Warrant(s), if
applicable, being purchased by Investor by wire transfer to the Company, in
accordance with the Company's written wiring instructions, against delivery of
duly executed stock certificates for the same, and the Company shall deliver
such Preferred Stock and Warrants, if applicable, against delivery of such
aggregate Purchase Price.
g. Closing Dates. Subject to the satisfaction of the
conditions set forth in Sections 7 and 8 below, the date and time of the
issuance, sale and purchase of the Securities pursuant to this Agreement shall
be (i) for the Initial Closing, on the Execution Date and (ii) for each
Subsequent Closing (if any), subject to Section 5(d) hereof, on the day ten (10)
business days following receipt by the Investor of the Subsequent Closing Notice
from the Company. Each Closing shall occur at 12:00 p.m. Pacific Time, at the
offices of Venture Law Group, 4750 Carillon Point, Kirkland, Washington 98033.
3. INVESTOR'S REPRESENTATIONS AND WARRANTIES. Investor represents
and warrants to the Company that, as of the date hereof:
a. Investment Purpose. The Investor is purchasing the
Securities for its own account as principal for investment only and not with a
present view towards the public sale or distribution thereof, except pursuant to
sales registered or exempted from registration under the 1933 Act.
b. Accredited Investor Status. The Investor is an
"accredited investor" as that term is defined in Rule 501(a) of Regulation D and
has such business and financial experience as is required to give it the
capacity to protect its own interests in connection with the purchase of the
Securities.
c. Reliance on Exemptions. The Investor understands that
the Securities are being offered and sold to it in reliance upon specific
exemptions from the registration requirements of United States federal and state
securities laws and that the Company is relying upon the truth and accuracy of,
and the Investor's compliance with, the representations, warranties, agreements,
covenants, acknowledgments and understandings of the Investor set forth herein
in order to determine the availability of such exemptions and the eligibility of
the Investor to acquire the Securities.
d. Information. The Investor and its advisors, if any,
have been furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of the
Securities and the Line of Credit which have been requested by the Investor or
its advisors. The Investor and its advisors, if any, have been afforded the
opportunity to ask questions of the Company and have received what the Investor
believes to be satisfactory answers to any such inquiries. Neither such
inquiries nor any other
- 4 -
<PAGE> 5
due diligence investigation conducted by the Investor or any of its advisors or
representatives shall modify, amend or affect the Investor's right to rely on
the Company's representations and warranties contained in Section 4 below. The
Investor understands that its investment in the Securities involves a
significant degree of risk.
e. Governmental Review. The Investor understands that no
United States federal or state agency or any other government or governmental
agency has passed upon or made any recommendation or endorsement of the
Securities.
f. Transfer or Resale. The Investor understands that (i)
no public market now exists for the Securities and that the Company has made no
assurances that a public market will ever exist for the Securities, (ii) except
as provided in the Registration Rights Agreement, the Securities have not been
and are not being registered under the 1933 Act or any applicable state
securities laws, and may not be transferred unless (a) subsequently included in
an effective registration statement thereunder, (b) the Investor shall have
delivered to the Company an opinion of counsel (which opinion shall be
satisfactory to the Company) to the effect that the Securities to be sold or
transferred may be sold or transferred pursuant to an exemption from such
registration or (c) sold pursuant to Rule 144 promulgated under the 1933 Act (or
a successor rule) ("Rule 144")), (iii) any sale of such Securities made in
reliance on Rule 144 may be made only in accordance with the terms of said Rule
and further, if Rule 144 is not applicable, any resale of such Securities under
circumstances in which the seller (or the person through whom the sale is made)
may be deemed to be an underwriter (as that term is defined in the 1933 Act) may
require compliance with some other exemption under the 1933 Act or the rules and
regulations of the "SEC" thereunder, and (iv) neither the Company nor any other
person is under any obligation to register such Securities under the 1933 Act or
any state securities laws or to comply with the terms and conditions of any
exemption thereunder (in each case, other than pursuant to the Registration
Rights Agreement).
g. Legends. The Investor understands that the Preferred
Shares, the Warrants and, until such time as the Conversion Shares have been
registered under the 1933 Act as contemplated by the Registration Rights
Agreement, the Conversion Shares, may bear a restrictive legend in substantially
the following form (and a stop-transfer order may be placed against transfer of
the certificates for such Securities):
(i) The following legend under the 1933 Act:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED, SOLD,
TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED ABSENT AN
EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR
COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH ACT, OR
UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL,
SATISFACTORY TO
- 5 -
<PAGE> 6
THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT
REQUIRED"; and
(ii) Any other legend required by the laws of any
state in which the Securities will be issued.
The legend set forth above shall be removed and the
Company shall issue a certificate without such legend to the holder of any
Security upon which it is stamped, if, unless otherwise required by applicable
state securities laws, (a) such Security is registered for sale under an
effective registration statement filed under the 1933 Act, or (b) such holder
provides the Company with an opinion of counsel, satisfactory to the Company, to
the effect that a public sale or transfer of such Security may be made without
registration under the 1933 Act and such sale or transfer is effected or (c)
such holder provides the Company with reasonable assurances that such Security
can be sold pursuant to Rule 144 under the 1933 Act (or a successor rule
thereto) without any restriction as to the number of Securities acquired as of a
particular date that can then be immediately sold. The Investor agrees to sell
all Securities, including those represented by a certificate(s) from which the
legend has been removed, in compliance with applicable prospectus delivery
requirements, if any.
h. Authorization; Enforcement. The Investor represents and
warrants to the Company that (i) the Investor has all requisite legal and
corporate or other power and capacity and has taken all requisite corporate or
other action to execute and deliver this Agreement, to purchase the Securities
to be purchased by it and to carry out and perform all of its obligations under
this Agreement, and (ii) this Agreement constitutes the legal, valid and binding
obligation of the Investor, enforceable in accordance with its terms, except (1)
as limited by applicable bankruptcy, insolvency, reorganization, or similar laws
relating to or affecting the enforcement of creditors' rights generally and (2)
as limited by equitable principles generally and (iii) to the extent that
indemnification provisions in the Registration Rights Agreement may be limited
by applicable federal or state securities laws.
i. Transactions in Common Stock of the Company. As of the
date hereof, Investor owns no shares of the Common Stock of the Company. In
addition, Investor represents that it has not, within the ninety (90) days prior
to the date hereof, engaged in any purchases or sales of the Common Stock of the
Company or, without limitation, any puts, calls, futures contracts, short sales
or hedging or arbitrage transactions with respect thereto.
j. Residency. The Investor is a limited liability company
organized under the laws of the State of Washington and is a resident of the
State of Washington.
k. No Legal, Tax or Investment Advice. The Investor
understands that nothing in this Agreement or any other materials presented to
the Investor in connection with the purchase and sale of the Securities
constitutes legal, tax or investment advice. The Investor has consulted such
legal, tax and investment advisors as it, in its sole discretion, has deemed
necessary or appropriate in connection with this Agreement and all exhibits
hereto and the transactions contemplated herein and therein.
- 6 -
<PAGE> 7
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to the Investor that, except as set forth in the
Schedule of Exceptions attached hereto as Exhibit H, as of the date hereof:
a. Organization and Qualification. The Company is duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated, with requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as presently conducted and/or proposed to be conducted. The Company is qualified
to do business as a foreign corporation in each jurisdiction in which the
ownership of its property or the nature of its business requires such
qualification, except where failure to so qualify would not have an Adverse
Effect on the Company. For purposes of this Agreement, "Adverse Effect" means
with respect to the Company and its subsidiaries, taken as a whole, any event,
change or effect that, when taken individually or together with all other
adverse changes and effects, is or is reasonably likely to be materially adverse
to the condition (financial or otherwise), properties, assets, liabilities,
business, operations, or results of operations of the Company and its
subsidiaries taken as a whole.
b. Authorization; Enforcement. The Company has all
requisite legal and corporate power and has taken all requisite corporate action
to execute and deliver this Agreement, the Registration Rights Agreement, the
Standstill Agreement and the Warrants, to sell and issue the Preferred Shares
and the Warrants and to carry out and perform all of its obligations under this
Agreement, the Registration Rights Agreement, the Standstill Agreement and the
Warrants. All corporate action on the part of the Company, its directors and
stockholders necessary for the authorization, execution, delivery and
performance of this Agreement, the Registration Rights Agreement, the Standstill
Agreement and the Warrants by the Company, and the authorization, sale, issuance
and delivery of the Securities being sold hereunder by the Company and the
performance of the Company's obligations hereunder and under the Warrants, the
Standstill Agreement and the Registration Rights Agreement has been taken. This
Agreement, the Registration Rights Agreement, the Standstill Agreement and the
Warrants constitute the legal, valid and binding obligations of the Company,
enforceable in accordance with their respective terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization or similar laws relating to or
affecting the enforcement of creditors' rights generally, (ii) as limited by
equitable principles generally and (iii) to the extent that indemnification
provisions in the Registration Rights Agreement may be limited by applicable
federal or state securities laws.
c. Capitalization. The authorized capital stock of the
Company consists of Forty Million (40,000,000) shares of Common Stock, One-Tenth
of One Cent ($0.001) par value per share, of which there were Fourteen Million
Six Hundred Sixty Nine Thousand Three Hundred and Eighty-Five (14,669,385)
shares issued and outstanding as of March 31, 1999, and Ten Million (10,000,000)
shares of Preferred Stock, $0.001 par value per share, none of which shares are
issued and outstanding. All outstanding shares of the Company Common Stock are
duly authorized, validly issued, fully paid and nonassessable, free of any liens
or encumbrances and are not subject to preemptive rights created by statute, the
certificate
- 7 -
<PAGE> 8
of incorporation or bylaws of the Company or any agreement or document to which
the Company is a party or by which it is bound. As of March 31, 1999, the
Company had reserved an aggregate of Two Million Eight Hundred Fifty Four
Thousand Nine Hundred and Eighty-Three (2,854,983) shares of the Company Common
Stock, net of exercises, for issuance under the Corixa Corporation 1994 Amended
and Restated Stock Option Plan (the "Corixa Stock Option Plan"), the Corixa
Corporation Directors' Stock Option Plan (the "Corixa Directors' Plan"), and the
Corixa Corporation 1997 Employee Stock Purchase Plan (the "Corixa ESPP", and
together with the Corixa Stock Option Plan and the Corixa Directors' Plan, the
"Corixa Plans"). As of March 31, 1999, the Company had reserved Two Million Four
Hundred Forty One Thousand Nine Hundred and Ninety-Three (2,441,993) shares of
the Company's Common Stock for issuance to employees, directors and consultants
pursuant to the Corixa Stock Option Plan, of which Three Hundred Twenty Five
Thousand Two Hundred and Eighty-Three (325,283) shares have been issued pursuant
to option exercises, and One Million Nine Hundred Sixty Seven Thousand Nine
Hundred and Forty-Two (1,967,942) shares are subject to outstanding, unexercised
options. As of March 31, 1999, the Company had reserved Three Hundred Thousand
(300,000) shares of the Company's Common Stock for issuance to directors
pursuant to the Corixa Directors' Plan, of which Seventy Five Thousand (75,000)
are subject to outstanding, unexercised options. As of March 31, 1999, the
Company had reserved One Hundred Thirty Thousand Eight Hundred and Eighty-Seven
(130,887) shares of the Company's Common Stock for issuance to employees
pursuant to the Corixa ESPP, of which Seventeen Thousand Eight Hundred and
Ninety-Seven (17,897) shares have been issued to employees. Other than as set
forth in the Schedule of Exceptions or as contemplated in this Agreement, there
are no other options, warrants, calls, rights, commitments or agreements of any
character to which the Company is a party or by which either the Company is
bound or obligating the Company to issue, deliver, sell, repurchase or redeem,
or cause to be issued, delivered, sold, repurchased or redeemed, any shares of
the capital stock of the Company or obligating the Company to grant, extend or
enter into any such option, warrant, call, right, commitment or agreement.
d. Issuance of Shares. The Securities are duly authorized
and, upon issuance in accordance with the terms of this Agreement (including the
issuance of the Conversion Shares upon conversion of the Preferred Shares in
accordance with the Certificate of Designation) will be validly issued, fully
paid and non-assessable, and free from all taxes, liens and charges with respect
to the issue thereof and shall not be subject to preemptive rights or other
similar rights of stockholders of the Company. Based in part upon the
representations of the Investor in this Agreement, the offer, sale and issuance
of the Preferred Stock and Warrants will be made in compliance with all
applicable federal and state securities laws. The shares of Common Stock
issuable upon conversion of the Preferred Stock and exercise of the Warrants
have been duly and validly reserved and, upon issuance in accordance with the
terms of the Certificate of Designation and the Warrants, respectively, will be
duly and validly issued, fully-paid and nonassessable, and will be issued in
compliance with all applicable federal and state securities laws.
e. No Conflicts. The execution, delivery and performance
of this Agreement, the Registration Rights Agreement, the Standstill Agreement
and the Warrants by
- 8 -
<PAGE> 9
the Company and the consummation by the Company of the transactions contemplated
hereby and thereby (including, without limitation, the filing of the Certificate
of Designation and the issuance and reservation for issuance of the Conversion
Shares) will not (i) conflict with or result in a violation of any provision of
the Certificate of Incorporation or Bylaws or (ii) violate or conflict with, or
result in a breach of any provision of, or constitute a default (or an event
which with notice or lapse of time or both is reasonably likely to become a
default) under, or give to others any rights of termination, acceleration or
cancellation of, any indenture, mortgage, lease or other material agreement or
instrument which the Company is required to file with the SEC as an exhibit to
its Filings under the 1934 Act (as defined below) ("Material Agreements"), or
result in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations) applicable to the
Company or by which any property or asset of the Company is bound or affected
(in each case except for such conflicts, defaults, terminations, accelerations,
cancellations and violations that are not reasonably likely to, individually or
in the aggregate, have an Adverse Effect).
f. Accuracy of Reports; Financial Statements. All reports
required to be filed with the SEC by the Company during the twelve (12) month
period preceding the date of this Agreement under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), copies of which have been made available
to the Investor (the "SEC Documents"), have been duly and timely filed, were in
substantial compliance with the requirements of their respective forms when
filed, were complete and correct in all material respects as of the dates at
which the information was furnished, and contained (as of such dates) no untrue
statement of a material fact nor omitted to state a material fact necessary in
order to make the statements made therein in light of the circumstances in which
made not misleading. The financial statements of the Company included in the SEC
Documents (the "Financial Statements") comply as to form in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto. The Financial Statements have
been prepared in accordance with generally accepted accounting principles
("GAAP") consistently applied and fairly present the consolidated financial
position of the Company and any subsidiaries at the dates thereof and the
consolidated results of operations and consolidated cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal, recurring
adjustments). Except as set forth in the SEC Documents, the Company does not
have any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by GAAP to be set forth on a balance sheet of
the Company or in the notes thereto which could reasonably be expected to have
an Adverse Effect on the Company.
g. Changes. Since March 22, 1999, (the date on which the
Company's Form 10-K for the year ended December 31, 1998 was filed with the
SEC), there has not been (a) any incurrence by the Company of any material
liability, absolute or contingent, or (b) any event or condition of any
character that has materially and adversely affected or might materially and
adversely affect the business, properties, prospects or financial condition of
the Company (as such business is presently conducted and as it is proposed to be
conducted). There is no material liability or contingency of the Company that is
not disclosed in the SEC Documents.
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<PAGE> 10
h. Governmental Consents, etc. No consent, approval or
authorization of or designation, declaration or filing with any governmental
authority on the part of the Company is required in connection with the valid
execution and delivery of this Agreement, any of the Warrants, the Standstill
Agreement or the Registration Rights Agreement, or the consummation of any other
transaction contemplated hereby and thereby, except such filings as may be
required to be made with the SEC, the National Association of Securities
Dealers, Inc. ("NASD"), the Nasdaq National Market, such filings as may be
required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended ("HSR") and filings with governmental authorities for purposes of
effecting compliance with the securities and blue sky laws in the states in
which Securities are offered and/or sold, which compliance will be effected in
accordance with such laws.
i. Litigation. There is no pending or, to the best of the
Company's knowledge, threatened lawsuit, administrative proceeding, arbitration,
labor dispute or governmental investigation ("Litigation") to which the Company
is a party or by which any material portion of its assets, taken as a whole, may
be bound, nor is the Company aware of any basis therefor, which Litigation, if
adversely determined, would have an Adverse Effect on the Company.
j. Patents and Trademarks. To its knowledge, and except as
disclosed in the SEC Documents, the Company owns or possesses sufficient legal
rights to all patents, trademarks, service marks, tradenames, copyrights, trade
secrets, licenses, information and proprietary rights and processes necessary
for its business as now conducted and as proposed to be conducted, without
infringement of any rights of a third party. The Company has not received any
communications alleging that the Company has violated or, by conducting its
business as proposed, would violate any of the patents, trademarks, service
marks, tradenames, copyrights, trade secrets or other proprietary rights or
processes of any other person or entity, which violation would have an Adverse
Effect on the Company. Except as disclosed in the SEC Documents, the Company has
not granted (nor has the Company licensed from a third party) any material
rights to or licenses to its patents, trademarks, service marks, tradenames,
copyrights, trade secrets or other proprietary rights or processes.
k. Registration Rights. Except for the registration rights
granted in connection with (i) that certain Amended and Restated Investors'
Rights Agreement dated May 10, 1996 between the Company and the purchasers
identified on Exhibit A thereto, (ii) that certain Agreement and Plan of Merger
dated June 22, 1998, by and among the Company, GenQuest, Inc. and Chinook
Corporation, (iii) certain warrants to purchase up to 454,533 shares of Common
Stock issued to former GenQuest, Inc. warrant holders, (iv) that certain
Agreement and Plan of Reorganization dated December 11, 1998, by and among the
Company, Anergen, Inc. and Yakima Acquisition Corporation, (v) certain warrants
to purchase up to 4,220 shares of Common Stock issued to former Anergen, Inc.
warrant holders and (vi) this Agreement, the Company has not agreed to register
the sale of any of its securities under the 1933 Act.
l. Disclosure. No representation or warranty of the
Company contained in this Agreement or the exhibits attached hereto (when read
together and taken as a
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<PAGE> 11
whole), contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein or
therein in light of the circumstances under which they were made not misleading.
m. Solvency; No Default. The Company has sufficient funds
and cash flow to pay its debts and other liabilities as they become due, and the
Company is not in default with respect to any material debt or liability.
n. No Material Default. The Company is not in violation of
or default under any provision of (a) its Certificate of Incorporation or Bylaws
or (b) any mortgage, indenture, lease or other agreement or instrument, permit,
concession, franchise or license to which it is a party or by which it is bound
or (c) any federal or state judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to the Company, except with respect to clauses (b)
and (c) above, such violations or defaults as would not have an Adverse Effect
on the Company.
5. COVENANTS.
a. Line of Credit. The Investor represents and covenants
that it has and will maintain immediately available funds sufficient to provide
the Line of Credit to the Company on the terms set forth in this Agreement.
b. Standstill Agreement. In accordance with the terms and
conditions of the Standstill Agreement substantially in the form attached hereto
as Exhibit G, the Investor covenants that neither it nor any of its Affiliates
(as such term is defined in the Standstill Agreement) will purchase any shares
of the Company's capital stock except pursuant to this Agreement and the
Warrants.
c. Minimum Conversion. The Investor will not request to
make an optional conversion of Preferred Shares pursuant to Section 6(A) of the
Certificate of Designation unless such conversion will result in the issuance of
that number of shares of Common Stock having an aggregate value of at least Ten
Million Dollars ($10,000,000), based upon the applicable Conversion Price (as
defined in Section 6(C) of the Certificate of Designation), provided that, if
the date is more than two (2) years after the Execution Date and the aggregate
value based upon the applicable Conversion Price of all of the shares of
Preferred Stock held by the Investor is less than Ten Million Dollars
($10,000,000), the Investor may convert all, but not less than all, of the
remaining Preferred Shares held by the Investor.
d. HSR Filings. From time to time during the term hereof
as may be required, the Company and the Investor each shall execute and file, or
cause the execution and filing of, all applications and documents that may be
required by the Federal Trade Commission ("FTC") and the Antitrust Division of
the Department of Justice ("Antitrust Division") a premerger notification form
and any other supplemental information which may be requested in connection with
this Agreement and the transactions contemplated hereby pursuant to HSR, which
filings and supplemental information will comply in all material respects with
HSR. The
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<PAGE> 12
Company and the Investor shall cooperate fully with each other in connection
with the preparation of such filings and shall each pay fifty percent (50%) of
any applicable HSR filing fee. Prior to any Subsequent Draws or the Investor's
exercise of any Warrants, and from time to time as may be appropriate, the
Company and the Investor shall consult with each other concerning the necessity
and timing of each applicable filing under HSR and mutually agree upon an
appropriate course of action. The Company and the Investor each shall use their
best commercial efforts to take such action as may be required to cause the
expiration or early termination the notice periods under HSR as promptly as
possible after any applicable filing date and to resolve such objections, if
any, as may be asserted with respect to the transactions contemplated by this
Agreement under HSR; provided, however, notwithstanding the foregoing, neither
party shall agree to any change or amendment to this Agreement unless such
change or amendment is agreed to by the other party in advance. In connection
therewith, if any administrative or judicial action or proceeding is instituted
(or threatened to be instituted) challenging any transaction contemplated by
this Agreement or the transactions contemplated hereby as violative of HSR, the
Company and the Investor shall cooperate and use best commercial efforts to
contest and resist any such action or proceeding and to have vacated, lifted,
reversed, or overturned any decree, judgment, injunction or other order, whether
temporary, preliminary or permanent that is in effect and that prohibits,
prevents, or restricts consummation and/or effectiveness of the Agreement or the
transactions contemplated hereby, unless by mutual agreement the Company and the
Investor decide that such action is not in their respective best interests. The
parties hereto will consult and cooperate with one another, and consider in good
faith the views of one another, in connection with any analyses, appearances,
presentations, memoranda, briefs, arguments, opinions and proposals made or
submitted by or on behalf of any party hereto in connection with proceedings
under or relating to HSR. Notwithstanding the foregoing, neither the Company nor
the Investor will have any obligation to litigate or contest any administrative
or judicial action or proceeding or any decree, judgment, injunction or other
order beyond the first anniversary of the applicable filing date.
e. Additional Equity Capital. Subject to the exceptions
described below, the Company will not, for a period of two (2) years after the
Initial Closing, without the prior written consent of the Investor, enter into
any agreement or arrangement with any third party to obtain additional financing
(including in the form of debt or equity) unless the Company has first drawn
down all funds available under the Line of Credit and issued the maximum number
of Preferred Shares allowed hereunder to the Investor in accordance with the
terms and conditions herein (such limitation is referred to as the "Capital
Raising Limitation"). The Capital Raising Limitation shall not apply to any
transaction involving (i) issuances of securities in an underwritten public
offering provided that the prospectus public offering price per share is not
less than one hundred twenty-five percent (125%) of the then applicable Ceiling
Price (as defined in the Certificate of Designation and appropriately adjusted
for any stock split, dividend, combination or other recapitalization), unless
otherwise agreed by the Investor, (ii) issuances of securities by the Company as
consideration for a merger, consolidation or purchase of assets, (iii) issuances
of securities by the Company in connection with any corporate partnering
relationship, including but not limited to any license, strategic partnership or
joint venture or similar transaction between the Company and a biotechnology or
pharmaceutical company, or in connection with the acquisition of rights to
technology from academic institutions, (iv) issuances
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<PAGE> 13
of capital stock, or options or warrants to purchase capital stock, and the
capital stock issued pursuant to the exercise of such options or warrants,
issued to lessors in connection with equipment financings or similar
transactions, (v) issuances of securities upon exercise or conversion of the
Company's options, warrants or other convertible securities outstanding as of
the date hereof, or (vi) the issuances of additional securities, under any
Company stock option or restricted stock plan approved by a majority of the
Company's disinterested directors.
f. Best Efforts. The parties shall use their commercially
reasonable best efforts to satisfy timely each of the conditions described in
Section 7 and Section 8 of this Agreement.
g. Form D; Blue Sky Laws. The Company agrees to file a
Form D with respect to the Securities as required under Regulation D and to
provide a copy thereof to Investor promptly after such filing. The Company shall
take such action as the Company shall reasonably determine is necessary to
qualify the Securities for sale to the Investor pursuant to this Agreement under
applicable securities or "blue sky" laws of the states of the United States (or
to obtain an exemption from such qualification), and shall provide evidence of
any such action so taken to Investor.
h. Use of Proceeds. The Company shall use the proceeds
from the Line of Credit only for acquisition(s) of technologies, related assets
and/or other companies or entities, as well as for working capital and general
corporate expenses associated with such acquisition(s) and/or ongoing support of
such technologies, related assets and/or companies or entities.
i. Expenses. The Investor shall be responsible for all of
its expenses incurred in connection with the negotiation, preparation,
execution, delivery and performance of this Agreement, the Registration Rights
Agreement, the Standstill Agreement, the Warrants and all other agreements or
documents to be executed in connection herewith and therewith and the
transactions contemplated hereby and thereby, including, without limitation,
attorneys' and consultants' fees and expenses.
j. Reservation of Shares. The Company shall at all times
have authorized, and reserved for the purpose of issuance, a sufficient number
of shares of Common Stock to provide for the full conversion of the outstanding
Preferred Shares and issuance of the Conversion Shares in connection therewith
(based on the applicable Conversion Price of the Preferred Shares in effect from
time to time) and for the full exercise of the Warrants in accordance with the
terms thereof. If at any time the number of shares of Common Stock authorized
and reserved for issuance is below the number of Conversion Shares issued and
issuable upon conversion of the Preferred Shares (based on the Conversion Price
of the Preferred Shares then in effect), the Company will promptly take all
corporate action necessary to authorize and reserve a sufficient number of
shares, including, without limitation, calling a special meeting of shareholders
to authorize additional shares to meet the Company's obligations under this
Section 5(j), in the case of an insufficient number of authorized shares, and
using its
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<PAGE> 14
commercially reasonable best efforts to obtain shareholder approval of an
increase in such authorized number of shares.
k. Listing. The Company shall, no later than ten (10)
business days after the Initial Draw or seventy (70) days after any Subsequent
Draw, secure the listing of the Conversion Shares and Common Stock issued or
issuable upon exercise of applicable Warrants (the "Warrant Shares") related to
such draw upon each national securities exchange or automated quotation system,
if any, upon which shares of Common Stock are then listed (subject to official
notice of issuance) and shall maintain, so long as any other shares of Common
Stock shall be so listed, such listing of all such Conversion Shares and Warrant
Shares. The Company will obtain and maintain the listing and trading of its
Common Stock on the Nasdaq National Market ("Nasdaq"), the Nasdaq SmallCap
Market, the New York Stock Exchange, or the American Stock Exchange as may then
be applicable, and will comply in all material respects with the Company's
reporting, filing and other obligations under the bylaws or rules of the NASD.
l. Nasdaq Rule 4460(i). So long as the Company's Common
Stock is listed for trading on Nasdaq or an exchange or quotation system with a
rule substantially similar to Rule 4460(i) of the Rules and Regulations of the
NASD ("Rule 4460(i)"), then, notwithstanding anything to the contrary contained
herein or in the Certificate of Designation, if, at any time, the aggregate
number of Conversion Shares and Warrant Shares then issued (including any shares
of capital stock or rights to acquire shares of capital stock issued by the
Company which are aggregated or integrated with the Conversion Shares and the
Warrant Shares for purposes of such rule), equals 19.99% of the "Outstanding
Common Amount" (as defined herein), or the aggregate number of Conversion Shares
and Warrant Shares to be issued in a Subsequent Draw pursuant to this Agreement,
when added together with already issued Conversion Shares and Warrant Shares,
would equal or exceed (including any shares of capital stock or rights to
acquire shares of capital stock issued by the Company which are aggregated or
integrated with the Conversion Shares and the Warrant Shares for purposes of
such rule) 19.99% of the Outstanding Common Amount, the Preferred Shares
previously issued pursuant to this Agreement shall, from that time forward,
cease to be convertible into Conversion Shares in accordance with the terms of
the Certificate of Designation, the outstanding Warrants shall, from that time
forward cease to be exercisable, and no additional shares of Preferred Stock or
Warrants shall be issued, until such time as the Company (i) has obtained
approval of the issuance of the Securities pursuant to this Agreement by a
majority of the total votes cast on such proposal, in person or by proxy, by the
holders of the then-outstanding Common Stock (not including any shares of
Preferred Stock or any Conversion Shares or Warrant Shares held by present or
former holders of Preferred Stock that were issued upon conversion of Preferred
Stock) (the "Stockholder Approval") or (ii) shall have otherwise obtained
permission to allow such issuances, exercises and/or conversions from Nasdaq in
accordance with Rule 4460(i). If the Company's Common Stock is not then listed
on Nasdaq or an exchange or quotation system that has a rule substantially
similar to Rule 4460(i) then the limitations set forth herein shall be
inapplicable and of no force and effect. For purposes of this paragraph,
"Outstanding Common Amount" means the number of shares of the Common Stock
outstanding immediately prior to the Initial Closing.
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<PAGE> 15
m. Stockholder Meeting. In compliance with SEC rules and
regulations, the Company shall, prior to providing the Investor with a
Subsequent Closing Notice for the initial Subsequent Draw (but in no event later
than June 30, 2000 or such other date as the Company and the Investor may
mutually agree), take all action necessary in accordance with Delaware law and
its then effective Certificate of Incorporation and Bylaws to convene a regular
or special meeting of the Company's stockholders for the purposes of approving
the issuance of Securities pursuant to this Agreement and the transactions
contemplated hereby.
n. Restriction on Short Sales. Investor covenants with the
Company that Investor will not engage in any short sales of the Company's Common
Stock.
o. Transfer of Securities by Investor.
(i) As set forth in this Section 5(o), the Investor
shall have limited rights to transfer the Securities before they are registered
under the 1933 Act or transferable under Rule 144. Once the Securities are
registered under the 1933 Act or transferable under Rule 144, the Investor may
transfer the Securities as permitted by federal and state securities laws. Prior
to such time, the Investor may transfer the Securities solely to (A) an
Affiliate of the Investor (as such term is defined in the Standstill Agreement),
(B) an entity solely in connection with charitable contributions by the Investor
or (C) an individual or entity solely for estate planning purposes, provided
that (x) written notice is provided to the Company five (5) business days prior
to any such assignment, (y) a minimum of 5,000 shares of Preferred Stock are
assigned in each instance, and (z) immediately following such assignment the
further disposition of such securities by the transferee or assignee is
restricted under the Securities Act and the transferee or assignee agrees in
writing to be bound by all of the provisions of this Agreement. All other
transfers of the Securities are prohibited unless the Investor has obtained the
Company's prior written consent.
(ii) At least five (5) business days prior to the
date it intends to transfer Securities, the Investor shall deliver to the
Company a written notice (the "Transfer Notice") stating: (A) the Investor's
bona fide intention to sell or otherwise transfer the Securities; (B) the name
and address of each permitted proposed purchaser or other transferee ("Proposed
Transferee"); (C) the quantity of Securities to be transferred to each Proposed
Transferee; and (D) the terms and conditions of each proposed sale or transfer,
including the price. Any such sale or other transfer shall be consummated within
30 days after the date of the Transfer Notice. Any such sale or other transfer
shall be effected in accordance with any applicable securities laws and the
Proposed Transferee shall agree in writing that the provisions of this Section
5(o) and the remaining restrictions and conditions contained in this Agreement
shall continue to apply to the Securities in the hands of such Proposed
Transferee. If the Securities described in the Transfer Notice are not
transferred to the Proposed Transferee within such period, a new Transfer Notice
shall be given to the Company before any Securities held by the Investor may be
sold or otherwise transferred.
p. Transactions with Affiliates. The Company agrees that
to the extent it engages in transactions with Affiliates (as such term is
defined in the Standstill
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<PAGE> 16
Agreement), it will do so upon fair and reasonable terms, as if the transaction
were with an unaffiliated party.
q. Board Representation. At such time as the Investor
acquires an aggregate of at least Twenty Five Thousand (25,000) shares of
Preferred Stock and/or Conversion Shares issued upon conversion of such shares
of Preferred Stock, (as adjusted for stock splits, stock dividends and
recapitalizations), and for so long as the Investor continues to hold at least
that amount of Preferred Stock and/or Conversion Shares, the Investor will be
allowed to designate one (1) member of the Company's Board of Directors,
provided that the appointment of such designee to the Company's Board of
Directors shall be subject to the approval of such designee by the Company's
stockholders at each annual meeting of such stockholders, at any meeting of the
Company's stockholders at which members of the Company's Board of Directors are
to be elected and whenever members of the Company's Board of Directors are to be
elected by written consent. Notwithstanding any such election by the Company's
stockholders, the Investor hereby agrees that any such designee shall resign
from the Company's Board of Directors immediately at such time as the Investor
holds less than 25,000 shares of Preferred Stock and/or Conversion Shares issued
upon conversion of such shares of Preferred Stock (as adjusted for stock splits,
stock dividends and recapitalizations).
6. TRANSFER AGENT INSTRUCTIONS. The Company shall issue
irrevocable instructions to its transfer agent to issue certificates, registered
in the name of Investor, for the Conversion Shares in such amounts as specified
from time to time by the Investor to the Company upon conversion of the
Preferred Shares in accordance with the terms hereof and of the Certificate of
Designation (the "Irrevocable Transfer Agent Instructions"). Prior to any
registration of the Conversion Shares under the 1933 Act, and Section 1.2 of the
Registration Rights Agreement, all such certificates shall bear the restrictive
legend specified in Section 3(g) of this Agreement. The Company warrants that no
instruction other than the Irrevocable Transfer Agent Instructions referred to
in this Section 6, and stop transfer instructions to give effect to Section 3(f)
hereof (in the case of the Conversion Shares, prior to registration of the
Conversion Shares under the 1933 Act), will be given by the Company to its
transfer agent and that the Securities shall otherwise be freely transferable on
the books and records of the Company as and to the extent provided in this
Agreement, the Standstill Agreement and the Registration Rights Agreement.
Nothing in this Section shall affect in any way the Investor's obligations and
agreement set forth in Section 3(g) hereof to comply with all applicable
prospectus delivery requirements, if any, upon resale of the Securities.
7. CONDITIONS TO THE COMPANY'S OBLIGATIONS. The obligation of the
Company hereunder (i) to execute this Agreement and (ii) to issue and sell the
Preferred Stock and the Warrants to the Investor at each applicable Closing is
subject to the satisfaction, at or before the Execution Date and/or the
applicable Closing Date, respectively, of each of the following conditions
thereto, provided that these conditions are for the Company's sole benefit and
may be waived by the Company at any time in its sole discretion:
a. Representations and Warranties Correct. The
representations and warranties made by the Investor in Section 3 hereof shall be
true and correct in all material
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<PAGE> 17
respects on and as of the Execution Date or the applicable Closing Date,
respectively, with the same effect as though such representations and warranties
had been made on and as of the Execution Date or such Closing Date,
respectively.
b. Performance. All covenants, agreements and conditions
contained in this Agreement to be performed by the Investor on or prior to the
Execution Date or the applicable Closing Date, respectively, shall have been
performed or complied with in all material respects.
c. HSR. With respect to Subsequent Closing(s), to the
extent the Company and the Investor mutually agree that filings under HSR are
necessary in accordance with Section 5(d), then the respective obligations of
the Company and the Investor to effect such Subsequent Closing(s) pursuant to
this Agreement and the transactions contemplated hereby shall be subject to the
expiration or early termination of the waiting period applicable to such HSR
filing.
d. Stockholder Approval. Prior to the initial Subsequent
Draw, the Company shall have obtained stockholder approval of the issuance of
Securities pursuant to this Agreement and the transactions contemplated hereby.
e. Execution of Documents. As of the Execution Date, the
Investor shall have executed this Agreement, the Registration Rights Agreement,
the Standstill Agreement and the Initial Closing Warrants and delivered the same
to the Company. As of any applicable Closing Date, each such agreement shall
remain in full force and effect.
f. Line of Credit. The Investor shall have made available
the Line of Credit in accordance with Section 1(a) above.
g. Certificate of Designation. As of the Execution Date,
the Certificate of Designation shall have been accepted for filing with the
Secretary of State of the State of Delaware.
h. No Order Pending. There shall not then be in effect any
order enjoining or restraining the transactions contemplated by this Agreement.
i. No Law Prohibiting or Restricting Such Sale. There
shall not be in effect any law, rule or regulation prohibiting or restricting
such sale, or requiring any consent or approval of any person which shall not
have been obtained to issue the Securities (except as otherwise provided in this
Agreement).
j. Legal Opinion. With respect to the Execution Date only,
the Company shall have received an opinion of the Investor's counsel, dated as
of the Execution Date, in substantially the form as Exhibit I attached hereto.
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<PAGE> 18
k. Compliance Certificate. The Investor shall have
delivered to the Company on the Execution Date and each applicable Closing Date,
respectively, a certificate executed by a duly authorized officer, dated the
Closing Date, and certifying to the fulfillment of the conditions specified in
Sections 7(a) and 7(b).
8. CONDITIONS TO INVESTOR'S OBLIGATIONS. The obligation of the
Investor hereunder (i) to execute this Agreement and (ii) to provide the Line of
Credit and purchase the Preferred Shares and Warrants is subject to the
satisfaction, at or before the Execution Date and/or each applicable Closing
Date, of each of the following conditions, provided that these conditions are
for Investor's sole benefit and may be waived by Investor at any time in its
sole discretion:
a. Representations and Warranties Correct. The
representations and warranties made by the Company in Section 4 shall be true
and correct in all material respects on and as of the Execution Date or the
applicable Closing Date, respectively, except for changes contemplated by this
Agreement and except for those representations and warranties that address
matters only as of a particular date (which shall remain true and correct as of
such particular date), with the same effect as though such representations and
warranties had been made on and as of the Execution Date or such Closing Date,
respectively, except in all such cases where the failure of such representations
and warranties to be so true and correct would not, individually or in the
aggregate, reasonably be expected to have a substantial Adverse Effect (a
"Substantial Adverse Effect") on the Company and its subsidiaries, taken as a
whole, after the Execution Date. The termination of Steven Gillis's relationship
with the Company shall be deemed to be a Substantial Adverse Effect. Prior to
each Subsequent Closing, the Company will provide the Investor with an updated
Schedule of Exceptions, and in the event such updated Schedule of Exceptions
reflects the occurrence of a Substantial Adverse Effect, then the existence of
such Substantial Adverse Effect must be acceptable to the Investor as a
condition of the Investor's obligation to fund such Subsequent Draw under this
Agreement.
b. Performance. All covenants, agreements and conditions
contained in this Agreement to be performed by the Company on or prior to the
Execution Date or the applicable Closing Date, respectively, shall have been
performed or complied with in all material respects.
c. Execution of Documents. As of the Execution Date, the
Company shall have executed this Agreement, the Registration Rights Agreement,
the Standstill Agreement and the Warrants, and delivered the same to the
Investor. As of the applicable Closing Date each such agreement shall remain in
full force and effect.
d. Certificate of Designation. The Certificate of
Designation shall have been accepted for filing with the Secretary of State of
the State of Delaware.
e. No Order Pending. There shall not then be in effect any
order enjoining or restraining the transactions contemplated by this Agreement.
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<PAGE> 19
f. No Law Prohibiting or Restricting Sale. There shall not
be in effect any law, rule or regulation prohibiting or restricting such sale,
or requiring any consent or approval of any person which shall not have been
obtained to issue the Securities (except as otherwise referenced in this
Agreement).
g. Legal Opinion. With respect to the Execution Date only,
the Investor shall have received an opinion of the Company's counsel, dated as
of the Execution Date, in substantially the form as Exhibit J attached hereto.
h. Compliance Certificate. The Company shall have
delivered to the Investor on the Execution Date and each applicable Closing
Date, respectively, a certificate executed by a duly authorized officer, dated
the Closing Date, and certifying to the fulfillment of the conditions specified
in Sections 8(a) and 8(b).
i. HSR. With respect to Subsequent Closing(s), to the
extent the Company and the Investor mutually agree that filings under HSR are
necessary in accordance with Section 5(d), then the respective obligations of
the Company and the Investor to effect such Subsequent Closing(s) pursuant to
this Agreement and the transactions contemplated hereby shall be subject to the
expiration or early termination of the waiting period applicable to such HSR
filing.
j. Stockholder Approval. Prior to the initial Subsequent
Draw, the Company shall have obtained stockholder approval of the issuance of
Securities pursuant to the Agreement and the transactions contemplated hereby.
k. Insolvency. The Company is not insolvent and no
Insolvency Proceeding has been commenced by or against the Company. As used
herein, "Insolvency Proceeding" means any proceeding commenced by or against any
person or entity under any provision of the United States Bankruptcy Code, as
amended, or under any other bankruptcy or insolvency law, including assignments
for the benefit of creditors, formal or informal moratoria, compositions,
extension generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief; provided that, with respect to any filing against
the Company of a petition in bankruptcy or under any other insolvency law, such
filing shall have been pending without dismissal for a period of sixty (60) days
or more.
l. Reporting Status. The Company shall have filed all
reports required to be filed with the SEC pursuant to the Exchange Act, and the
Company's status as an issuer required to file reports under the Exchange Act
shall be effective.
9. Waiver in Connection with Substantial Adverse Effect. With
respect to any Subsequent Draw, if the Investor determines pursuant to Section
8(a) that a Substantial Adverse Effect has occurred and as a result of that
Substantial Adverse Effect, the Investor determines that it will not fund the
Subsequent Draw requested by the Company pursuant to the Line of Credit, the
Company's and the Investor's rights, obligations and restrictions under this
Agreement and the related agreements with respect to the amount of funds
requested by the
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<PAGE> 20
Company in the applicable Subsequent Closing Notice (the "Additional Funds"),
including, without limitation, the Capital Raising Limitation contained in
Section 5(e) of this Agreement, shall be waived and the Company shall be allowed
to seek funds in an amount equal to or greater than such Additional Funds from
third parties, provided that all rights, obligations and restrictions under this
Agreement and the related agreements not in respect of the Additional Funds
shall remain in full force and effect. The Company shall have no obligation to
the Investor with respect to any funds received from any such third party.
10. GOVERNING LAW; MISCELLANEOUS.
a. Governing Law. This Agreement and all acts and
transactions pursuant hereto and the rights and obligations of the parties
hereto shall be governed, construed and interpreted in accordance with the laws
of the State of Washington, without giving effect to principles of conflicts of
law. The parties hereby submit to the exclusive jurisdiction and venue of the
courts located in King County Washington and the United States District Courts
of the Western District of Washington.
b. Counterparts; Signatures by Facsimile. This Agreement
may be executed in counterparts, and each such counterpart shall be deemed an
original for all purposes.
c. Captions and Headings. The captions and headings of
this Agreement are for convenience and ease of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
d. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
e. Entire Agreement; Amendment. This Agreement, the
Warrants, the Registration Rights Agreement, the Standstill Agreement and the
other documents delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to the subject
matter hereof and thereof and supersede all prior agreements and understandings
among the parties relating to the subject matter hereof. Neither this Agreement
nor any term hereof may be amended, waived, discharged or terminated other than
by a written instrument signed by the party against which enforcement of any
such amendment, waiver, discharge or termination is sought.
f. No Third Party Rights. Nothing in this Agreement shall
create or be deemed to create any rights in any person or entity not a party to
this Agreement.
g. Survival. Unless otherwise set forth in this Agreement,
the warranties, representations and covenants of the Company and the Investor
contained in or made pursuant to this Agreement shall survive the execution and
delivery of this Agreement and the Closing.
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h. Publicity. The Investor and the Company shall not issue
any public statement concerning the transactions contemplated by this Agreement
without the reasonable prior written consent of the parties named in such public
statement; provided, however, that the parties may disclose the transaction or
the terms hereof or thereof from time to time without the approval of the party
whose name is disclosed if (i) such approval has been requested and not received
and such party concludes (after consulting with counsel) that it is required by
law to disclose the transaction or the terms thereof or (ii) to the extent that
similar disclosure has been previously approved pursuant to this Section 10(h).
Except to the extent required by law, regulation or applicable exchange or
Nasdaq rule, the Company shall not make any announcement concerning, or
otherwise reference in any public document or public statement, the beneficial
owners of Investor. In addition, with respect to any press releases issued by
the Company, the Company shall provide copies to the Investor prior to public
dissemination thereof and shall consider Investor's comments to such press
release, if any, in good faith.
i. No Strict Construction. The language used in this
Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against
any party.
j. Costs and Expenses. Each party hereto shall pay its own
costs and expenses incurred in connection herewith, including the fees of its
counsel, auditors and other representatives, whether or not the transactions
contemplated herein are consummated.
k. Brokers.
(i) The Company has not engaged, consented to or
authorized any broker, finder or intermediary to act on its behalf, directly or
indirectly, as a broker, finder or intermediary in connection with the
transactions contemplated by this Agreement. The Company hereby agrees to
indemnify and hold harmless the Investor from and against all fees, commissions
or other payments owing to any party acting on behalf of the Company hereunder.
(ii) Investor has not engaged, consented to or
authorized any broker, finder or intermediary to act on its behalf, directly or
indirectly, as a broker, finder or intermediary in connection with the
transactions contemplated by this Agreement. Investor hereby agrees to indemnify
and hold harmless the Company from and against all fees, commissions or other
payments owing to any party acting on behalf of Investor hereunder.
l. Notices. Any notices required or permitted to be given
under the terms of this Agreement shall be sent by certified or registered mail
(return receipt requested) or delivered personally or by courier (including a
recognized overnight delivery service) or by facsimile and shall be effective
five days after being placed in the mail, if mailed by regular U.S. mail, or
upon receipt, if delivered personally or by courier (including a recognized
overnight delivery service) or by facsimile, in each case addressed to a party.
The addresses for such communications shall be:
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<PAGE> 22
If to the Company:
Corixa Corporation
1124 Columbia Street, Suite 200
Seattle, Washington 98104
Attention: Steven Gillis, Chairman & Chief
Executive Officer
Facsimile: (206) 754-5944
With copy to:
Venture Law Group
4750 Carillon Point
Kirkland, WA 98033
Attention: William W. Ericson
Facsimile: (425) 739-8750
If to Investor:
Castle Gate, L.L.C.
2365 Carillon Point
Kirkland, WA 98033
Attn: Michael Larson, Business Manager
With copy to:
Mark R. Beatty
Preston Gates & Ellis, LLP
701 Fifth Avenue, Suite 5000
Seattle, WA 98104
Facsimile: (206) 632-7022
Each party shall provide notice to the other party of any change
in address.
m. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their successors and assigns.
Neither the Company nor Investor shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other.
Notwithstanding the foregoing, the Company may assign its rights hereunder in
the event of a merger or consolidation or sale of all or substantially all of
the Company's assets without the consent of the Investor. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the undersigned Investor and the Company have
caused this Agreement to be duly executed as of the date first above written.
CORIXA CORPORATION
By: /s/ Steven Gillis
------------------------------------
Steven Gillis, Chairman and Chief
Executive Officer
CASTLE GATE, L.L.C.
By: /s/ Michael Larson
------------------------------------
Name: Michael Larson
----------------------------------
(print)
Title: Business Manager
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SIGNATURE PAGE TO THE
EQUITY LINE OF CREDIT AND
SECURITIES PURCHASE AGREEMENT
<PAGE> 1
EXHIBIT 4.03
CORIXA CORPORATION
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made as of the
8th day of April, 1999, by and between Corixa Corporation, a Delaware
corporation (the "Company") and Castle Gate, L.L.C., a Washington limited
liability company (the "Investor").
RECITALS
The Company and the Investor have entered into the Equity Line of Credit
and Securities Purchase Agreement (the "Purchase Agreement") of even date
herewith pursuant to which the Investor will provide to the Company a two-year
line of credit in the aggregate amount of $50,000,000 ("Credit Line") in
exchange for which the Company will issue and sell to the Investor up to 50,000
shares of Series A convertible preferred stock of the Company ("Preferred
Stock") and certain warrants to purchase shares of Common Stock of the Company
("Warrants") on the terms and conditions set forth in the Purchase Agreement. A
condition to the Investor's obligations under the Purchase Agreement is that the
Company and the Investor enter into this Agreement in order to provide the
Investor with certain rights to register shares of the Company's Common Stock
issuable upon conversion of the Preferred Stock held by the Investor and to
provide the Company with certain rights to notices of sales by Investor each as
set forth herein, upon the terms and conditions set forth herein.
AGREEMENT
The parties hereby agree as follows:
1. REGISTRATION RIGHTS. The Company and the Investor covenant and
agree as follows:
1.1 DEFINITIONS. For purposes of this Section 1:
(a) The terms "register," "registered," and "registration"
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Securities Act of 1933, as
amended (the "Securities Act"), and the declaration or ordering of effectiveness
of such registration statement or document;
(b) The term "Registrable Securities" means (i) the shares
of Common Stock issuable or issued upon conversion of the Preferred Stock, (ii)
the shares of Common Stock issuable or issued upon exercise of the Warrants, and
(iii) any other shares of Common Stock of the Company issued as (or issuable
upon the conversion or exercise of any warrant, right or other security which is
issued as) a dividend or other distribution with respect to, or in exchange for
or in replacement of, the shares listed in (i) or (ii); provided, however, that
the foregoing definition shall exclude in all cases any Registrable Securities
sold by a person in a transaction in which his or her rights under this
Agreement are not assigned. Notwithstanding
<PAGE> 2
the foregoing, Common Stock or other securities shall only be treated as
Registrable Securities if and so long as they have not been (A) sold to or
through a broker or dealer or underwriter in a public distribution or a public
securities transaction, or (B) sold in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act under
Section 4(1) thereof so that all transfer restrictions, and restrictive legends
with respect thereto, if any, are removed upon the consummation of such sale;
(c) The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of shares of Common Stock
outstanding which are, and the number of shares of Common Stock issuable
pursuant to then exercisable or convertible securities which are, Registrable
Securities;
(d) The term "Holder" means any person owning or having
the right to acquire Registrable Securities or any assignee thereof in
accordance with Section 1.9 of this Agreement;
(e) The term "Form S-3" means such form under the
Securities Act as in effect on the date hereof or any successor form that
permits significant incorporation by reference of the Company's filings under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"); and
(f) The term "SEC" means the Securities and Exchange
Commission.
1.2 FORM S-3 REGISTRATION. Unless otherwise instructed in writing
by the Holder, within thirty (30) days after any conversion of shares of
Preferred Stock held by Holder into shares of Common Stock in accordance with
Section 6 of the Certificate of Designation (as defined in the Purchase
Agreement), the Company will use its best efforts to effect a registration on
Form S-3 and all related qualifications and compliances as would permit or
facilitate the sale and distribution of such shares of Holder's Registrable
Securities that Holder requests; provided, however, that the Company shall not
be obligated to effect any such registration, qualification or compliance
pursuant to this Section 1.2: (a) if Form S-3 is not available for such offering
by the Holder; (b) if the Holder proposes to sell Registrable Securities having
an aggregate value of less than $10,000,000 based upon the applicable conversion
or exercise price for such shares of Registrable Securities, respectively, as
determined in accordance with Section 6(C) of the Certificate of Designation or
the applicable Warrants, respectively; (c) if the Company shall furnish to the
Holder a certificate signed by the President of the Company stating that in the
good faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its stockholders for such Form S-3
Registration to be effected at such time, in which event the Company shall have
the right to defer the filing of the Form S-3 registration statement for a
period of not more than 120 days after the applicable conversion of Holder's
Preferred Stock to Common Stock; provided, however, that the Company shall not
utilize this right more than once in any twelve-month period; (d) in any
particular jurisdiction in which the Company would be required to qualify to do
business or to execute a general consent to service of process in effecting such
registration, qualification or compliance; or (e) during the period ending
ninety (90) days after the effective date of a registration statement pursuant
to which the
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<PAGE> 3
Company registered any of its stock under the Securities Act in connection with
the public offering of such securities solely for cash.
1.3 OBLIGATIONS OF THE COMPANY. Whenever required under Section
1.2 to effect the registration of any Registrable Securities, the Company shall,
as expeditiously as reasonably possible, use its best commercial efforts to:
(a) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and cause such registration
statement to become effective, and, upon the request of the Holder of the
Registrable Securities registered thereunder, keep such registration statement
effective for up to one hundred twenty (120) days. The Company shall not be
required to file, cause to become effective or maintain the effectiveness of any
registration statement that contemplates a distribution of securities on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by such registration statement for up to one
hundred twenty (120) days.
(c) Furnish to the Holder such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as the Holder may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by the Holder.
(d) Register and qualify the Registrable Securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holder,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
(e) Notify the Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing, such obligation to continue for one hundred twenty (120) days.
(f) Cause all such Registrable Securities registered
pursuant the Section 1.2 to be listed on each securities exchange on which
similar securities issued by the Company are then listed.
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<PAGE> 4
(g) Provide a transfer agent and registrar for all
Registrable Securities registered pursuant hereunder and a CUSIP number for all
such Registrable Securities, in each case not later than the effective date of
such registration.
(h) Furnish, at the request of the Holder, on the date
that the registration statement with respect to such securities becomes
effective, (i) an opinion, dated such date, of the counsel representing the
Company for the purposes of such registration, in form and substance as is
customarily given to underwriters in an underwritten public offering, addressed
to the Holder and (ii) a letter dated such date, from the independent certified
public accountants of the Company, in form and substance as is customarily given
by independent certified public accountants to underwriters in an underwritten
public offering, addressed to the Holder.
1.4 RESTRICTIONS ON AND PROCEDURE FOR SALES PURSUANT TO A
REGISTRATION STATEMENT.
(a) Each Holder agrees to the following:
(i) Notice to Company. If Holder shall propose to
sell any Registrable Securities that have been registered in accordance with
this Section 1, the Holder shall notify the Company of its intent to do so on or
before three (3) business days prior to the date of such sale (the "Notice of
Sale"), and the provision of the Notice of Sale to the Company shall
conclusively be deemed to establish an agreement by the Holder to comply with
the registration provisions herein described. The Notice of Sale shall be deemed
to constitute a representation that any information supplied by the Holder in
connection with the Notice of Sale is accurate as of the date of such Notice of
Sale.
(ii) Notice of Sale. The Notice of Sale in
substantially the form attached as Attachment A shall be given in accordance
with the provisions of Section 2.3 hereof. However, the Holder may give the
Notice of Sale orally by telephoning the Chief Financial Officer at the Company
at (206) 754-5711. An oral Notice of Sale shall be deemed to have been received
only at such time as the Holder speaks directly with the Chief Financial
Officer. In addition, an oral Notice of Sale shall only be deemed effective if
it is followed by a written Notice of Sale received by the Company by personal
delivery or facsimile within twenty-four (24) hours after giving the oral Notice
of Sale.
(iii) Delay of Sale. The Company may refuse to
permit the Holder to resell any Registrable Securities for a specified period of
time; provided, however, that (a) in order to exercise this right, the Company
must deliver a certificate in writing to the Holder to the effect that the
registration statement in its then current form contains an untrue statement of
material fact or omits to state a material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading, and (b) in no event shall such delay exceed twenty-five
(25) days, and (c) in no event shall this right of delay be exercised on more
than one (1) occasion in any twelve (12) month period. During any suspension as
contemplated by this Section 1.4 (a)(iii), the Company will not allow any of its
officers or directors to buy or sell shares of the Company's securities.
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<PAGE> 5
1.5 FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 1 with
respect to the Registrable Securities of the Holder that the Holder shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as shall be required to effect the registration of such Holder's Registrable
Securities. The Company shall have no obligation with respect to any
registration requested pursuant to Section 1.2 of this Agreement if, as a result
of the application of the preceding sentence, the anticipated aggregate value of
the Registrable Securities to be included in the registration does not equal or
exceed the anticipated aggregate value required to originally trigger the
Company's obligation to initiate such registration as specified in subsection
1.2(b).
1.6 EXPENSES OF REGISTRATION ON FORM S-3. All expenses incurred
in connection with a registration requested pursuant to Section 1.2, including
(without limitation) all registration, filing, qualification, printers' and
accounting fees and the reasonable fees and disbursements of one counsel for the
selling Holder selected by Holder with the approval of the Company, which
approval shall not be unreasonably withheld, and counsel for the Company shall
be borne by the Company.
1.7 INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under Section 1:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless Holder and each person, if any, who controls Holder
or underwriter within the meaning of the Securities Act or the Exchange Act,
against any losses, claims, damages, or liabilities (joint or several) to which
they may become subject under the Securities Act, the Exchange Act or other
federal or state law, insofar as such losses, claims, damages, or liabilities
(or actions in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations (collectively a "Violation"): (i)
any untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading, or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law; and the
Company will pay to each such Holder or controlling person, as incurred, any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this subsection
1.7(a) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability, or action if such settlement is effected without the consent
of the Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable to any Holder or controlling person for any such loss, claim,
damage, liability, or action to the extent that it arises out of or is based
upon a Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
any such Holder or controlling person.
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<PAGE> 6
(b) To the extent permitted by law, the Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act and any
controlling person of any Holder, against any losses, claims, damages, or
liabilities (joint or several) to which any of the foregoing persons may become
subject, under the Securities Act, the Exchange Act or other federal or state
law, insofar as such losses, claims, damages, or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in reliance upon
and in conformity with written information furnished by Holder expressly for use
in connection with such registration; and Holder will pay, as incurred, any
legal or other expenses reasonably incurred by any person intended to be
indemnified pursuant to this subsection 1.7(b), in connection with investigating
or defending any such loss, claim, damage, liability, or action; provided,
however, that the indemnity agreement contained in this subsection 1.7(b) shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Holder, which consent shall not be unreasonably withheld; provided, that in no
event shall any indemnity under this subsection 1.7(b) exceed the net proceeds
from the offering received by Holder, except in the case of willful fraud by
Holder.
(c) Promptly after receipt by an indemnified party under
this Section 1.7 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.7, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the reasonable fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
1.7 but the omission so to deliver written notice to the indemnifying party will
not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 1.7.
(d) If the indemnification provided for in this Section
1.7 is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage or expense
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party hereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such loss, liability, claim, damage, or
expense in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the statements or omissions that resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
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<PAGE> 7
considerations; provided, that in no event shall any contribution by Holder
under this subsection 1.7(d) exceed the net proceeds from the offering received
by Holder, except in the case of willful fraud by Holder. The relative fault of
the indemnifying party and of the indemnified party shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party and
the parties' relative intent, knowledge, access to information, and opportunity
to correct or prevent such statement or omission.
(e) The obligations of the Company and Holder under this
Section 1.7 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1, and otherwise.
1.8 REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a view to
making available to the Holder the benefits of Rule 144 promulgated under the
Securities Act and any other rule or regulation of the SEC that may at any time
permit a Holder to sell securities of the Company to the public without
registration or pursuant to a registration on Form S-3, the Company agrees to
use its best commercial efforts to:
(a) make and keep public information available, as those
terms are understood and defined in SEC Rule 144, at all times so long as the
Company remains subject to the periodic reporting requirements under Sections 13
or 15(d) of the Exchange Act;
(b) take such action, including the voluntary registration
of its Common Stock under Section 12 of the Exchange Act, as is necessary to
enable the Holder to utilize Form S-3 for the sale of its Registrable
Securities;
(c) file with the SEC in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act; and
(d) furnish to Holder, so long as Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144,
the Securities Act and the Exchange Act, or that it qualifies as a registrant
whose securities may be resold pursuant to Form S-3 (at any time when it so
qualifies), (ii) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the Company, and (iii)
such other information as may be reasonably requested in availing any Holder of
any rule or regulation of the SEC which permits the selling of any such
securities without registration or pursuant to such form.
1.9 ASSIGNMENT OF REGISTRATION RIGHTS. The right to cause the
Company to register Registrable Securities pursuant to Section 1.2 may not be
assigned without the Company's prior written consent; provided, however, such
consent shall not be required in connection with the assignment by the Investor
of such registration rights (but only with all related obligations) to (i) an
Affiliate of the Investor (as such term is defined in the Standstill Agreement),
(ii) an entity solely in connection with charitable contributions by the
Investor or (iii) an individual or entity solely for estate planning purposes,
provided that (x) written notice is provided to the Company five (5) business
days prior to any such assignment, (y) a minimum of
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5,000 shares of Registrable Securities are assigned in each instance, and (z)
immediately following such assignment the further disposition of such securities
by the transferee or assignee is restricted under the Securities Act and the
transferee or assignee agrees in writing to be bound by all of the provisions of
this Agreement.
1.10 "MARKET STAND-OFF" AGREEMENT. Holder hereby agrees that,
during the period of duration (up to, but not exceeding, 90 days) specified by
the Company and an underwriter of Common Stock or other securities of the
Company, following the effective date of a registration statement of the Company
filed under the Securities Act, it shall not, to the extent requested by the
Company and such underwriter, directly or indirectly sell, offer to sell,
contract to sell (including, without limitation, any short sale), grant any
option to purchase or otherwise transfer or dispose of (other than to donees who
agree to be similarly bound) any securities of the Company held by it at any
time during such period except Common Stock included in such registration.
In order to enforce the foregoing covenant, the Company may
impose stop-transfer instructions with respect to the Registrable Securities of
the Holder (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period, and the Holder agrees that,
if so requested, the Holder will execute an agreement in the form provided by
the underwriter containing terms which are essentially consistent with the
provisions of this Section 1.10.
1.11 TERMINATION OF REGISTRATION RIGHTS. With respect to shares
of Registrable Securities issued to the Investor at the Initial Closing or any
particular Subsequent Closing(s) (as such terms are defined in the Purchase
Agreement), the Holder shall not be entitled to exercise any right provided for
in this Section 1 after such time as Rule 144(k) or another similar exemption
under the Securities Act is available for the sale of all of such Holder's
shares that were issued at the Initial Closing or the applicable Subsequent
Closing, respectively, during a three (3) month period without registration. For
purposes of clarity, the registration rights of a Holder provided for in this
Section 1 shall terminate in stages, which stages shall correspond to the
initial issuance date of such Registrable Securities.
2. MISCELLANEOUS.
2.1 SUCCESSORS AND ASSIGNS. Except as otherwise provided in this
Agreement, the terms and conditions of this Agreement shall inure to the benefit
of and be binding upon the respective permitted successors and assigns of the
parties (including transferees of any of the Preferred Stock or any Common Stock
issued upon conversion thereof). Nothing in this Agreement, express or implied,
is intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
2.2 AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended or waived only with the written consent of the Company and the holders
of a majority of the Registrable Securities then outstanding. Any amendment or
waiver effected in accordance
-8-
<PAGE> 9
with this paragraph shall be binding upon each holder of any Registrable
Securities then outstanding, each future holder of all such Registrable
Securities, and the Company.
2.3 NOTICES. Unless otherwise provided, any notice required or
permitted by this Agreement shall be in writing and shall be deemed sufficient
upon delivery, when delivered personally or by overnight courier or sent by
telegram or fax, or forty-eight (48) hours after being deposited in the U.S.
mail, as certified or registered mail, with postage prepaid, and addressed to
the party to be notified at such party's address or fax number as set forth on
the signature page hereto or as subsequently modified by written notice, and if
to Investor, with a copy to Mark Beatty, Preston Gates & Ellis, 701 Fifth
Avenue, #5000, Seattle, Washington 98104, and if to Corixa, with a copy to
William W. Ericson, Venture Law Group, 4750 Carillon Point, Kirkland, Washington
98033.
2.4 SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith. In the event that the parties cannot reach a
mutually agreeable and enforceable replacement for such provision, then (a) such
provision shall be excluded from this Agreement, (b) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (c) the
balance of the Agreement shall be enforceable in accordance with its terms.
2.5 GOVERNING LAW. This Agreement and all acts and transactions
pursuant hereto shall be governed, construed and interpreted in accordance with
the laws of the State of Washington, without giving effect to principles of
conflicts of laws.
2.6 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
2.7 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
[Signature Page Follows]
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<PAGE> 10
The parties have executed this Registration Rights Agreement as of the
date first above written.
COMPANY:
CORIXA CORPORATION
By: /s/ Steven Gillis
-------------------------------------
Steven Gillis
Chairman and Chief Executive Officer
Address: 1124 Columbia Street, Suite 200
Seattle, Washington 98104
Fax: (206) 754-5762
INVESTOR:
CASTLE GATE, L.L.C.
By: /s/ Michael Larson
-------------------------------------
Name: Michael Larson
-----------------------------------
(print)
Title: Business Manager
----------------------------------
SIGNATURE PAGE TO THE
REGISTRATION RIGHTS AGREEMENT
<PAGE> 11
ATTACHMENT A
CORIXA CORPORATION
NOTICE OF SALE
Pursuant to the Registration Rights Agreement dated as of April 8, 1999
by and between Corixa Corporation (the "Company") and Castle Gate, L.L.C., a
Washington limited liability company, the undersigned hereby gives notice to the
Company of the undersigned's intent to sell _______ shares of the Company's
Common Stock registered pursuant to the registration statement on ___________
(File No. ______ ).
Dated: By:
-------------- ------ -------------------------------------
(signature)
Name:
-----------------------------------
(print)
Title:
----------------------------------
(if applicable)
<PAGE> 1
EXHIBIT 4.04
STANDSTILL AGREEMENT
This Standstill Agreement (the "Agreement") is made as of April 8, 1999
by and between Corixa Corporation, a Delaware corporation, with a principal
office located at 1124 Columbia Street, Suite 200, Seattle, Washington 98104
(the "Company") and Castle Gate, L.L.C., a Washington limited liability company,
with a principal office located at 2365 Carillon Point, Kirkland, Washington
98033 ("Investor").
RECITALS
The Company and Investor are parties to that certain Equity Line of
Credit and Securities Purchase Agreement dated as of an even date herewith (the
"Purchase Agreement") pursuant to which Investor has committed to provide to the
Company a two-year line of credit in the aggregate amount of $50,000,000 and the
Company will issue and sell up to 50,000 shares of Series A Preferred Stock of
the Company and certain warrants to purchase shares of common stock of the
Company to Investor. In connection with the execution of the Purchase Agreement,
Investor desires to make certain covenants to the Company, and the Company
desires that Investor make such covenants, so as to provide limits on Investor's
ownership of capital stock of the Company other than pursuant to the Purchase
Agreement.
In consideration of the foregoing and the mutual promises contained in
this Agreement, the parties agree as follows:
AGREEMENT
1. DEFINITIONS.
For the purposes of this Agreement, the following words and phrases
shall have the following meanings:
(a) "Affiliate" of an entity means, for so long as one of the
following relationships is maintained, any individual, corporation or other
business entity owned, owning or under common ownership with a party to this
Agreement to the extent of at least fifty percent (50%) of the equity having the
power to vote on or direct the affairs of the entity and any person, firm,
partnership, corporation or other entity actually controlled by, controlling or
under common control with a party to this Agreement.
(b) "Investor Group" means Investor and its Affiliates.
(c) "13D Group" means any group of persons formed for the purpose
of acquiring, holding, voting or disposing of Voting Securities which would be
required under the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and the rules and regulations promulgated thereunder, to file a statement
on Schedule 13D with the Securities and Exchange Commission as a "person" within
the meaning of Section 13(d)(3) of the Exchange Act if such group beneficially
owned sufficient securities to require such a filing under the Exchange Act.
<PAGE> 2
(d) "Purchase Agreement Securities" means all the Securities (as
such term in defined in the Purchase Agreement) to be issued and sold to
Investor by the Company pursuant to the Purchase Agreement including capital
stock of the Company that may be issued with respect to such Securities pursuant
to the terms and conditions of the Certificate of Designation (as defined in the
Purchase Agreement).
(e) "Voting Security" means, as of the date of determination, the
Common Stock of the Company, any other security generally entitled to vote for
the election of directors and any outstanding convertible securities, options,
warrants or other rights which are convertible into or exchangeable or
exercisable for securities entitled to vote for the election of directors.
2. STANDSTILL OBLIGATIONS.
(a) LIMITATION. At any time following the date of this Agreement,
except with the prior written consent of the Company's Board of Directors
(excluding the vote of any director representing, employed by or otherwise
affiliated with any member of the Investor Group), no member of the Investor
Group shall, directly or indirectly, acquire any Voting Securities which are not
also Purchase Agreement Securities, except by way of (i) stock splits, stock
dividends or other distributions or offerings made available to holders of
Voting Securities generally, or (ii) stock options, warrants, or other rights to
purchase Voting Securities approved by the Board of Directors of the Company
(excluding the vote of any director representing, employed by or otherwise
affiliated with any member of the Investor Group).
(b) PARTICIPATION. Except with the prior written consent of the
Company's Board of Directors, the Investor Group will not (i) solicit proxies in
respect of any Voting Securities, (ii) become a "participant" or "participant in
a solicitation", as those terms are defined in Rule 14a-11 under the Exchange
Act, in opposition to a solicitation by the Company, (iii) form or join any
group for the purpose of voting, purchasing or disposing of Voting Securities,
or (iv) deposit any Voting Securities in a voting trust or subject them to a
voting agreement or other arrangement of similar effect, except as contemplated
by this Agreement; provided, however, that the Investor Group shall not be
deemed to be a "participant" or to have become engaged in a solicitation
hereunder solely by reason of (I) the membership of an individual representing,
employed by or otherwise affiliated with any member of the Investor Group on the
Board of Directors, (II) the voting of the Investor Group's Voting Securities in
any election of such representative of the Investor Group to the Board of
Directors, or (III) the Company's solicitation of proxies in connection with any
annual meeting of the stockholders of the Company.
3. EXCEPTION FOR CERTAIN THIRD-PARTY ACQUISITIONS.
(a) EXCEPTION TO STANDSTILL OBLIGATION. Notwithstanding Section
2(a) but subject to Section 4, the Investor Group may acquire Voting Securities
without regard to the limitations set forth above if any of the following events
shall occur:
(i) TENDER OR EXCHANGE OFFER. If a bona fide tender or
exchange offer is made by any person or 13D Group (other than an Affiliate of,
or any person acting in concert with, any member of the Investor Group) to
acquire Voting Securities which, if added to
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<PAGE> 3
the Voting Securities (if any) already owned by such person or 13D Group, would
represent ownership of Voting Securities greater than the total number of shares
of Purchase Agreement Securities; or
(ii) NONPUBLIC TRANSACTIONS. If it is publicly disclosed
or Investor otherwise learns that Voting Securities representing more than the
total number of shares of Purchase Agreement Securities have been acquired in a
nonpublic transaction or that a bona fide offer has been made to acquire such
securities in a nonpublic transaction by any person or 13D Group (other than an
Affiliate of, or any person acting in concert with, any member of the Investor
Group).
(b) COMPETING OFFERS. If any event identified in Section 3(a)
occurs, the Investor Group shall be permitted to take such action and make such
offers as may be considered to be of the same nature and type of action or offer
and directed to the same person or persons and for the same resulting number of
shares as that which is being taken by such person or 13D Group; provided that
the Investor Group may only acquire that number of shares which when added to
the number of shares already owned by the Investor Group shall not exceed the
number of shares acquired or to be acquired (assuming any offers to purchase
have been consummated) by such person or 13D Group. In proceeding with any
action or offer permitted under this Section 3(b), the Investor Group shall be
permitted to offer more favorable terms such as price, cash versus securities or
other such terms as may be consistent with an offer of the same nature and type
of consideration as that which is being proposed by such person or 13D Group.
For example (but without limitation):
(i) TENDER OFFER. If a person or 13D Group makes a bona
fide public tender offer for all of the Company's outstanding shares, the
Investor Group may similarly tender for all of the outstanding shares of the
Company.
(ii) NONPUBLIC TRANSACTION. If any person or 13D Group
holding less than the total number of shares of Purchase Agreement Securities
proposes to the Board of Directors of the Company to acquire directly from the
Company shares equal to a specified number of Voting Securities in excess of the
total number of shares of Purchase Agreement Securities, the Investor Group may
make a similar proposal to acquire directly from the Company an additional
number of shares that would, if accepted, increase its ownership of Voting
Securities to be equal to the specified number of Voting Securities.
4. RESTRICTIONS.
(a) HART-SCOTT-RODINO. Prior to any acquisition of any Voting
Securities pursuant to Section 3, the Company and the Investor shall consult
with each other pursuant to the terms of Section 5(d) of the Purchase Agreement
as to whether any applications and/or documents may be required to be executed
and filed under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended ("HSR") in connection with such acquisition of Voting Securities and
shall mutually agree on an appropriate cause of action with respect to the
foregoing. In the event the Company and the Investor mutually agree that the
filing of
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<PAGE> 4
applications and/or documents are required under HSR, then no acquisition of
Voting Securities pursuant to Section 3 shall take place until the expiration or
early termination of any notice periods required under HSR with respect to the
filing of such applications and/or documents.
(b) NASDAQ RULE 4460(i). So long as the Company's Common Stock is
listed for trading on the Nasdaq National Market or an exchange or quotation
system with a rule substantially similar to Rule 4460(i) of the Rules and
Regulations of the National Association of Securities Dealers, Inc., then any
acquisition of Voting Securities pursuant to Section 3 shall be subject to the
conditions set forth in Section 5(l) of the Purchase Agreement.
5. MISCELLANEOUS.
(a) EQUITABLE RELIEF. The Parties acknowledge and agree that
irreparable damage would occur in the event any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. Accordingly, it is agreed that the parties shall be entitled
to an injunction or injunctions to prevent or cure breaches of the provisions of
this Agreement and to enforce specifically the terms and provisions of this
Agreement in any court of the United States or any state thereof having
jurisdiction, in addition to any other remedy to which they may be entitled in
law or in equity.
(b) WAIVER. The failure of either party to assert a right
hereunder or to insist upon compliance with any term or condition of this
Agreement shall not constitute a waiver of that right or excuse a similar
subsequent failure to perform any such term or condition by the other party.
None of the terms, covenants and conditions of this Agreement can be waived
except by the written consent of the party waiving compliance.
(c) AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended or waived only with the written consent of the parties or their
respective successors and assigns. Any amendment or waiver effected in
accordance with this Section 5(c) shall be binding upon the parties and their
respective successors and assigns.
(d) ASSIGNMENT. This Agreement may not be assigned by either
party without the prior written consent of the other, except that the Company
may assign this Agreement to a party which acquires all or substantially all of
the Company's assets, whether by merger, sale of assets or otherwise. A merger
or consolidation shall be deemed to constitute an assignment. Subject to the
foregoing, the terms and conditions of this Agreement shall inure to the benefit
of and be binding upon the respective successors and assigns of the parties.
Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties hereto or their respective successors and assigns
any rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
(e) GOVERNING LAW; JURISDICTION. This Agreement and all acts and
transactions pursuant hereto and the rights and obligations of the parties
hereto shall be governed, construed and interpreted in accordance with the laws
of the State of Washington, without giving effect to principles of conflicts of
law. Each of the parties to this Agreement
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<PAGE> 5
consents to the exclusive jurisdiction and venue of the courts of the state and
federal courts of King County, Washington.
(f) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
(g) TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
(h) NOTICES. Any notice required or permitted by this Agreement
shall be in writing and shall be deemed sufficient upon receipt, when delivered
personally or by courier, overnight delivery service or confirmed facsimile, or
forty-eight (48) hours after being deposited in the regular mail as certified or
registered mail (airmail if sent internationally) with postage prepaid, if such
notice is addressed to the party to be notified at such party's address or
facsimile number as set forth below, or as subsequently modified by written
notice, and if to Company, to William W. Ericson, Venture Law Group, 4750
Carillon Point, Kirkland, Washington 98033, and if to the Investor, to Mark
Beatty, Preston Gates & Ellis, 701 Fifth Avenue, #5000, Seattle, Washington
98104.
(i) SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith, in order to maintain the economic position enjoyed
by each party as close as possible to that under the provision rendered
unenforceable. In the event that the parties cannot reach a mutually agreeable
and enforceable replacement for such provision, then (i) such provision shall be
excluded from this Agreement, (ii) the balance of the Agreement shall be
interpreted as if such provision were so excluded and (iii) the balance of the
Agreement shall be enforceable in accordance with its terms.
(j) ATTORNEY'S FEES. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorney's fees, costs and necessary
disbursements in addition to any other relief to which such party may be
entitled.
(k) ENTIRE AGREEMENT. This Agreement is the product of both of
the parties hereto, and constitutes the entire agreement between such parties
pertaining to the subject matter hereof, and merges all prior negotiations and
drafts of the parties with regard to the transactions contemplated herein. Any
and all other written or oral agreements existing between the parties hereto
regarding such transactions are expressly canceled.
[Signature Page Follows]
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<PAGE> 6
The parties have caused this Standstill Agreement to be duly executed
and delivered by their proper and duly authorized officers as of the day and
year first written above.
COMPANY:
CORIXA CORPORATION
By: /s/ Steven Gillis
------------------------------------
Steven Gillis, Chief Executive
Officer
Address: 1124 Columbia Street, Suite 200
Seattle, Washington 98104
Facsimile Number: (206) 754-5762
INVESTOR:
CASTLE GATE, L.L.C.
By: /s/ Michael Larson
------------------------------------
Name: Michael Larson
----------------------------------
Title: Business Manager
---------------------------------
Address: 2365 Carillon Point
--------------------------------
Kirkland, WA 98033
----------------------------------------
Facsimile Number: (425) 889-0288
SIGNATURE PAGE TO STANDSTILL AGREEMENT
<PAGE> 1
EXHIBIT 4.05
THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR QUALIFIED UNDER APPLICABLE STATE
SECURITIES LAWS, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A
VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO
SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION AND QUALIFICATION ARE
NOT REQUIRED.
WARRANT NO. CG-1 DATE OF ISSUANCE: April 8, 1999
WARRANT TO PURCHASE SHARES
OF COMMON STOCK OF
CORIXA CORPORATION
This Warrant is issued to Castle Gate, L.L.C., a Washington limited
liability company ("Purchaser") pursuant to that certain Equity Line of Credit
and Securities Purchase Agreement dated as of April 8, 1999 between Corixa
Corporation, a Delaware corporation ("Corixa" or the "Company"), and Purchaser
(the "Purchase Agreement") and is subject to the terms and conditions therein.
1. EXERCISE OF WARRANT.
(a) Method of Exercise. Subject to the terms and conditions herein
set forth, upon surrender of this Warrant at the principal office of Corixa and
upon payment of the purchase price by wire transfer to Corixa or cashiers check
drawn on a United States bank made to the order of Corixa, or exercise of the
right to credit the Warrant Price (as defined in Section 1(d)) against the fair
market value of the Warrant Stock (as defined below) at the time of exercise
(the "Net Exercise Right") pursuant to Section 1(b), Purchaser is entitled to
purchase from Corixa, at any time following the occurrence of an event set forth
in Subsections 1(c)(i)-(iii) respectively, and on or before the ten (10) year
anniversary of an event set forth in Subsections 1(c)(i)-(iii), respectively,
that number of fully paid and non-assessable shares of Corixa Common Stock, par
value $0.001 per share ("Warrant Stock") set forth in such Subsections
1(c)(i)-(iii), respectively, upon the occurrence of such event. Subject to
adjustment as hereinafter provided, the purchase price of one share of Warrant
Stock (or such securities as may be substituted for one share of Warrant Stock
pursuant to the provisions hereinafter set forth) shall be the Warrant Price.
(b) Net Exercise Right. If the Company shall receive written
notice from the holder of this Warrant at the time of exercise of this Warrant
that the holder elects to exercise
<PAGE> 2
Purchaser's Net Exercise Right, Corixa shall deliver to such holder (without
payment by the Purchaser of any exercise price of any cash or other
consideration ) that number of shares of fully paid and nonassessable Common
Stock equal to the quotient obtained by dividing (x) the value of this Warrant
(or the specified portion thereof) on the date of exercise, which value shall be
determined by subtracting (1) the aggregate Warrant Price of the Warrant Stock
immediately prior to the exercise of this Warrant from (2) the aggregate fair
market value of the Warrant Stock issuable upon exercise of this Warrant (or
specified portion thereof) on the date of exercise by (y) the fair market value
of one share of Common Stock on the date of exercise. For purposes of this
Section 1(b), "fair market value" of a share of Common Stock shall mean the
closing price of the Common Stock on the business day prior to the date of
exercise as reported by the Nasdaq National Market or such other principal
exchange or quotation system on which the Common Stock is then traded. For
purposes of this Warrant, shares issued pursuant to the Net Exercise Right shall
be treated as if they were issued upon the exercise of this Warrant.
(c) Number of Shares Subject to Warrant. Subject to Section 1(a),
this Warrant is exercisable for:
(i) up to 250,000 shares of Common Stock at any time on or
after the date Corixa and Purchaser enter into the Purchase Agreement;
(ii) up to 62,500 shares at any time upon or after the
consummation of the Initial Draw (as that term is defined in the
Purchase Agreement); and
(iii) upon each Subsequent Draw (as defined in the Purchase
Agreement) consummated by the Company in accordance with the Purchase
Agreement, up to that number of shares equal to the product obtained by
multiplying (x) 250,000 by (y) a fraction, the numerator of which is the
amount of such Subsequent Draw and the denominator of which is
$50,000,000, at any time effective after such Subsequent Draw; provided,
however, that in no event will this Warrant be exercisable for greater
than an aggregate of 187,500 shares of Common Stock under this
Subsection 1(c)(iii).
(d) Price of Shares Subject to Warrant. The "Warrant Price" shall
be equal to (i) in the case of Subsections 1(c)(i) and 1(c)(ii), $8.50 per share
and (ii) in the case of Subsection 1(c)(iii), the average per share closing
price of Corixa Common Stock on the Nasdaq National Market as reported in the
Wall Street Journal for the period beginning sixty (60) days before the date the
Subsequent Draw is consummated and ending sixty (60) days after the date the
Subsequent Draw is consummated (or such shorter period during which Corixa
shares are traded if Corixa shares shall for any reason cease to be publicly
traded).
2. CERTAIN ADJUSTMENTS.
(a) Mergers or Consolidations. If at any time after the date
hereof there shall be a capital reorganization (other than a combination or
subdivision of Warrant Stock otherwise provided for herein), or a merger or
consolidation of Corixa with another corporation (other than a merger with
another corporation in which Corixa is a continuing corporation and which does
not result in any reclassification or change of outstanding securities issuable
upon exercise of this
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<PAGE> 3
Warrant), then, as a part of such reorganization, merger or consolidation,
lawful provision shall be made so that Purchaser shall thereafter be entitled to
receive upon exercise of this Warrant, during the period specified in this
Warrant and upon payment of the Warrant Price, the number of shares of stock or
other securities or property of Corixa or the successor corporation resulting
from such reorganization, merger or consolidation, to which a holder of the
Common Stock deliverable upon exercise of this Warrant would have been entitled
under the provisions of the agreement in such reorganization, merger or
consolidation if this Warrant had been exercised immediately before that
reorganization, merger or consolidation. In any such case, appropriate
adjustment (as determined in good faith by Corixa's Board of Directors) shall be
made in the application of the provisions of this Warrant with respect to the
rights and interests of Purchaser after the reorganization, merger or
consolidation to the end that the provisions of this Warrant (including
adjustment of the Warrant Price then in effect and the number of shares of
Warrant Stock) shall be applicable after that event, as near as reasonably may
be, in relation to any shares or other property deliverable after that event
upon exercise of this Warrant.
(b) Splits and Subdivisions; Dividends. In the event Corixa
should at any time or from time to time fix a record date for the effectuation
of a split or subdivision of the outstanding shares of Common Stock or the
determination of the holders of Common Stock entitled to receive a dividend or
other distribution payable in additional shares of Common Stock or other
securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly, additional shares of Common Stock (hereinafter
referred to as the "Common Stock Equivalents") without payment of any
consideration by such holder for the additional shares of Common Stock or Common
Stock Equivalents (including the additional shares of Common Stock issuable upon
conversion or exercise thereof), then, as of such record date (or the date of
such distribution, split or subdivision if no record date is fixed), the per
share Warrant Price shall be appropriately decreased and the number of shares of
Warrant Stock shall be appropriately increased in proportion to such increase
(or potential increase) of outstanding shares.
(c) Combination of Shares. If the number of shares of Common
Stock outstanding at any time after the date hereof is decreased by a
combination of the outstanding shares of Common Stock, the per share Warrant
Price shall be appropriately increased and the number of shares of Warrant Stock
shall be appropriately decreased in proportion to such decrease in outstanding
shares.
(d) Adjustments for Other Distributions. In the event Corixa
shall declare a distribution payable in securities of other persons, evidences
of indebtedness issued by Corixa or other persons, assets (excluding cash
dividends paid out of net profits) or options or rights not referred to in
Section 2(b), then, in each such case for the purpose of this Section 2(d), upon
exercise of this Warrant the holder hereof shall be entitled to a proportionate
share of any such distribution as though such holder was the holder of the
number of shares of Common Stock of Corixa into which this Warrant may be
exercised as of the record date fixed for the determination of the holders of
Common Stock of Corixa entitled to receive such distribution.
3. NO FRACTIONAL SHARES. No fractional shares of Warrant Shares will be
issued in connection with any exercise of this Warrant. In lieu of any
fractional shares which would
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<PAGE> 4
otherwise be issuable, Corixa shall pay cash equal to the product of such
fraction multiplied by the closing price of one Warrant Share as reported on the
Nasdaq National Market on the date of exercise.
4. NO STOCKHOLDER RIGHTS. Until the exercise of this Warrant or any
portion of this Warrant, Purchaser shall not have nor exercise any rights by
virtue hereof as a stockholder of Corixa (including without limitation the right
to notification of stockholder meetings or the right to receive any notice or
other communication concerning the business and affairs of Corixa).
5. RESERVATION OF STOCK. Corixa covenants that during the period this
Warrant is exercisable, Corixa will reserve from its authorized and unissued
Common Stock a sufficient number of shares of Common Stock (or other securities,
if applicable) to provide for the issuance of Warrant Stock (or other
securities) upon the exercise of this Warrant. Corixa agrees that its issuance
of this Warrant shall constitute full authority to its officers who are charged
with the duty of executing stock certificates to execute and issue the necessary
certificates for the Warrant Stock upon the exercise of this Warrant.
6. EXERCISE OF WARRANT.
(a) Procedural Requirements. Subject to Section 6(b), this
Warrant may be exercised by the holder hereof, in whole or in part, by the
surrender of this Warrant and the Notice of Exercise attached hereto as Exhibit
A duly completed and executed on behalf of the holder hereof, at the principal
office of Corixa together with payment in full of the Warrant Price then in
effect with respect to the number of shares of Warrant Stock as to which the
Warrant is being exercised. The Warrant Price shall be paid by wire transfer to
Corixa or cashiers check drawn on a United States bank made to the order of
Corixa or by exercise of the Net Exercise Right pursuant to Section 1(b). This
Warrant shall be deemed to have been exercised immediately prior to the close of
business on the date of its surrender for exercise as provided above, and the
person entitled to receive the Warrant Stock issuable upon such exercise shall
be treated for all purposes as the holder of such shares of record as of the
close of business on such date. As promptly as practicable on or after such date
and in any event within twenty (20) days thereafter, Corixa at its expense shall
cause to be issued and delivered to the person or persons entitled to receive
the same a certificate or certificates for the number of full shares of Warrant
Stock issuable upon such exercise, together with cash in lieu of any fraction of
a share as provided above. The shares of Warrant Stock issuable upon exercise
hereof shall, upon their issuance, be fully paid and nonassessable. In the event
that this Warrant is exercised in part, Corixa at its expense will execute and
deliver a new Warrant of like tenor exercisable for the number of shares for
which this Warrant may then be exercised.
(b) Hart-Scott-Rodino. Prior to any exercise of this Warrant, the
Company and the Purchaser shall consult with each other pursuant to Section 5(d)
of the Purchase Agreement as to whether any applications and/or documents may be
required to be executed and filed under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended ("HSR") in connection with such exercise
and shall mutually agree on an appropriate cause of action with respect to the
foregoing. In the event the Company and the Purchaser mutually agree that the
- 4 -
<PAGE> 5
filing of applications and/or documents are required under HSR, then no exercise
of this Warrant shall take place until the expiration or early termination of
any notice periods required under HSR with respect to the filing of such
applications and/or documents.
7. CERTIFICATE OF ADJUSTMENT. Whenever the Warrant Price or number or
type of securities issuable upon exercise of this Warrant is adjusted, as herein
provided, Corixa shall, at its expense, promptly deliver to the record holder of
this Warrant a certificate of an officer of Corixa setting forth the nature of
such adjustment and showing in detail the facts upon which such adjustment is
based.
8. REPRESENTATIONS OF PURCHASER. As of the date hereof, Purchaser hereby
confirms the representations and warranties made by Purchaser in Section 3 of
the Purchase Agreement.
9. TRANSFER RESTRICTIONS.
(a) UNREGISTERED SECURITY. The holder of this Warrant
acknowledges that this Warrant and the Warrant Stock have not been registered
under the Securities Act of 1933, as amended (the "1933 Act") and agrees not to
sell, pledge, distribute, offer for sale, transfer or otherwise dispose of this
Warrant or any Warrant Stock issued upon its exercise in the absence of (i) an
effective registration statement under the 1933 Act as to this Warrant or such
Warrant Stock and registration or qualification of this Warrant or such Warrant
Stock under any applicable U.S. federal or state securities law then in effect
or (ii) an opinion of counsel, satisfactory to Corixa, that such registration
and qualification are not required. Each certificate or other instrument for
Warrant Stock issued upon the exercise of this Warrant shall bear a legend
substantially to the foregoing effect.
(b) NO TRANSFER. This Warrant is not transferable without the
Company's prior written consent; provided, however, such consent shall not be
required in connection with the transfer by the Purchaser of such Warrant (but
only with all related obligations) to (i) an Affiliate of the Purchaser (as such
term is defined in the Standstill Agreement dated as of April 8, 1999 between
the Company and the Purchaser), (ii) an entity solely in connection with
charitable contributions by the Purchaser or (iii) an individual or entity
solely for estate planning purposes, provided that (x) written notice (in the
form of Exhibit B as attached hereto) is provided to the Company at least five
(5) business days prior to any such transfer, (y) a minimum of 5,000 shares of
Warrant Stock are transferred in each instance, and (z) immediately following
such transfer the further disposition of such Warrant Stock by the transferee is
restricted under the 1933 Act and the transferee agrees in writing to be bound
by all of the provisions of this Warrant.
10. NOTICES OF RECORD DATE. In the event of:
(a) any taking by Corixa of a record of the holders of any class
of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend (other than a cash dividend payable out of
earned surplus of Corixa) or other distribution, or any right to
- 5 -
<PAGE> 6
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right; or
(b) any capital reorganization of Corixa, any reclassification or
recapitalization of the capital stock of Corixa or any transfer of all or
substantially all the assets of Corixa to or consolidation or merger of Corixa
with or into any other person; or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of Corixa,
then and in each such event Corixa will mail or cause to be
mailed to the holder of this Warrant a notice specifying (i) the date on which
any such record is to be taken for the purpose of such dividend, distribution or
right, and stating the amount and character of such dividend, distribution or
right, and (ii) the date on which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation or
winding-up is to take place, and the time, if any, as of which the holders of
record of Common Stock (or other securities) shall be entitled to exchange their
shares of Common Stock (or other securities) for securities or other property
deliverable upon such reorganization, reclassification, recapitalization,
transfer, consolidation, merger, dissolution, liquidation or winding-up. Such
notice shall be mailed at least 10 days prior to the date therein specified.
11. REPLACEMENT OF WARRANTS. On receipt of evidence reasonably
satisfactory to Corixa of the loss, theft, destruction or mutilation of this
Warrant and, in the case of any such loss, theft, destruction or mutilation of
this Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to Corixa or, in the case of any such
mutilation, on surrender and cancellation of such Warrant, Corixa at its expense
will execute and deliver, in lieu thereof, a new Warrant of like tenor.
12. MARKET STANDOFF.
(a) Purchaser hereby agrees that, during the period of duration
(up to, but not exceeding, 90 days) specified by Corixa and an underwriter of
Common Stock or other securities of Corixa, following the effective date of a
registration statement of Corixa filed under the 1933 Act, it shall not, to the
extent requested by Corixa and such underwriter, directly or indirectly sell,
offer to sell, contract to sell (including, without limitation, any short sale),
grant any option to purchase or otherwise transfer or dispose of (other than to
donees who agree to be similarly bound) any securities of Corixa held by it at
any time during such period except Common Stock included in such registration.
(b) In order to enforce the foregoing covenant, Corixa may impose
stop-transfer instructions with respect to the securities held by Purchaser
until the end of such period, and Purchaser agrees that, if so requested,
Purchaser will execute an agreement in the form provided by the underwriter
containing terms which are essentially consistent with the provisions of this
Section 12.
- 6 -
<PAGE> 7
13. NO IMPAIRMENT. Corixa will not, by amendment of its charter or
through reorganization, consolidation, merger, dissolution, sale of assets or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will at all times in good faith assist
in the carrying out of all such terms and in the taking of all such action as
may be necessary or appropriate in order to protect the rights of the holder of
this Warrant against impairment.
14. TERMINATION. This Warrant (and the right to purchase Warrant Stock
upon exercise hereof) shall terminate as to the right to purchase that number of
Warrant Stock set forth in Subsections 1(c)(i)-(iii), respectively, upon the
date that is the ten (10) year anniversary of the occurrence of the applicable
event set forth in Subsections 1(c)(i)-(iii), respectively.
15. SATURDAYS, SUNDAYS, HOLIDAYS, ETC. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday or Sunday or shall be a legal holiday, then such
action may be taken or such right may be exercised on the next succeeding day
not a Saturday, Sunday or legal holiday.
16. EXCHANGE ACT FILINGS. Purchaser agrees and acknowledges that it
shall have sole responsibility for making any filings with the U.S. Securities
and Exchange Commission pursuant to Sections 13 and 16 of the Securities
Exchange Act of 1934, as amended, as a result of its acquisition of this Warrant
and the Warrant Stock (collectively, the "Securities") and any future retention
or transfer thereof.
17. NO LEGAL, TAX OR INVESTMENT ADVICE. Purchaser understands that
nothing in this Agreement or any other materials presented to Purchaser in
connection with the acquisition of the Securities constitutes legal, tax or
investment advice. Purchaser has consulted such legal, tax and investment
advisors as it, in its sole discretion, has deemed necessary or appropriate in
connection with its acquisition of the Securities.
18. MISCELLANEOUS. This Warrant shall be governed by the laws of the
State of Washington. The headings in this Warrant are for purposes of
convenience and reference only, and shall not be deemed to constitute a part
hereof. Neither this Warrant nor any term hereof may be changed, waived,
discharged or terminated orally but only by an instrument in writing signed by
Corixa and the Purchaser. All notices and other communications from Corixa to
the holder of this Warrant shall be sufficient if in writing and sent by
registered or certified mail, domestic or international courier, or facsimile,
return receipt requested, postage or courier charges prepaid, to the address
furnished to Corixa in writing by Purchaser. All such notices and communications
shall be effective if delivered (i) personally, (ii) by facsimile transmission
(receipt verified), (iii) by registered or certified mail (return receipt
requested), postage prepaid, or (iv) sent by express courier service (receipt
verified), and if to Purchaser, with a copy to Mark Beatty, Preston Gates &
Ellis, 701 Fifth Avenue, #5000, Seattle, Washington 98104, and if to Corixa,
with a copy to William W. Ericson, Venture Law Group, 4750 Carillon Point,
Kirkland, Washington 98033. The invalidity or unenforceability of any provision
hereof shall in no way affect the validity or enforceability of any other
provisions.
- 7 -
<PAGE> 8
IN WITNESS WHEREOF, this Common Stock Purchase Warrant is issued
effective as of this 8th day of April, 1999.
CORIXA CORPORATION
By: /s/ Steven Gillis
------------------------------------
Steven Gillis
Chairman and Chief Executive Officer
ACKNOWLEDGED AND AGREED:
CASTLE GATE, L.L.C.
By: /s/ MICHAEL LARSON
------------------------------------
Name: Michael Larson
----------------------------------
Title: Business Manager
---------------------------------
SIGNATURE PAGE TO THE WARRANT TO
PURCHASE SHARES OF COMMON STOCK
<PAGE> 9
EXHIBIT A
NOTICE OF INTENT TO EXERCISE
(To be signed only upon exercise of Warrant)
To: CORIXA CORPORATION
The undersigned, the Holder of the within Warrant, hereby irrevocably elects to
exercise the purchase right represented by such Warrant for, and to purchase
thereunder, _____________ ____________________________ (_____________) shares of
Common Stock of Corixa Corporation and (choose one)
___ herewith makes payment of ____________________ Dollars ($__________)
thereof
or
___ exercises Holder's Net Exercise Right pursuant to Section 1(b)
thereof .
and requests that the certificates for such shares be issued in the name of, and
delivered to ________________________________, whose address is ________________
________________________________________________________________________________
_____________________________.
DATED: ______________
________________________________________
(Signature must conform in all respects
to name of Holder as specified on the
face of the Warrant)
________________________________________
________________________________________
(Address)
<PAGE> 10
EXHIBIT B
NOTICE OF ASSIGNMENT FORM
FOR VALUE RECEIVED, _________________________________________ hereby
sells, assigns and transfers all of the rights of the undersigned under the
attached Warrant with respect to the number of shares of Common Stock covered
thereby set forth below, to:
<TABLE>
<CAPTION>
NAME OF ASSIGNEE ADDRESS/FAX NUMBER NO. OF SHARES
---------------- ------------------ -------------
<S> <C> <C>
</TABLE>
Dated:_________________ Signature:
Witness:
<PAGE> 1
EXHIBIT 4.06
THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR QUALIFIED UNDER APPLICABLE STATE
SECURITIES LAWS, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A
VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO
SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION AND QUALIFICATION ARE
NOT REQUIRED.
WARRANT NO. CG-2 DATE OF ISSUANCE: April 8, 1999
WARRANT TO PURCHASE SHARES
OF COMMON STOCK OF
CORIXA CORPORATION
This Warrant is issued to Castle Gate, L.L.C., a Washington limited
liability company ("Purchaser"), pursuant to that certain Equity Line of Credit
and Securities Purchase Agreement dated as of April 8, 1999 between Corixa
Corporation, a Delaware corporation ("Corixa" or the "Company"), and Purchaser
(the "Purchase Agreement") and is subject to the terms and conditions therein.
1. EXERCISE OF WARRANT.
(a) Number and Price of Shares Subject to Warrant; Method of
Exercise. Subject to the terms and conditions herein set forth, upon surrender
of this Warrant at the principal office of Corixa and upon payment of the
purchase price by wire transfer to Corixa or cashiers check drawn on a United
States bank made to the order of Corixa, or exercise of the right to credit the
Warrant Price (as defined below) against the fair market value of the Warrant
Stock (as defined below) at the time of exercise (the "Net Exercise Right")
pursuant to Section 1(b), Purchaser is entitled to purchase from Corixa, at any
time after the date of issuance hereof and on or before April 8, 2004, that
number of fully paid and non-assessable shares of Corixa Common Stock, par value
$0.001 per share ("Warrant Stock") equal to (A) $6,000,000.00 divided by (B) the
"Warrant Price", which shall be equal to the average per share closing price of
Corixa Common Stock on the Nasdaq National Market as reported in the Wall Street
Journal for the ten (10) day period immediately preceding but not including the
date Corixa and Purchaser enter into the Purchase Agreement. Subject to
adjustment as hereinafter provided, the purchase price of one share of Warrant
Stock (or such securities as may be substituted for one share of Warrant Stock
pursuant to the provisions hereinafter set forth) shall be the Warrant Price.
<PAGE> 2
(b) Net Exercise Right. If the Company shall receive written
notice from the holder of this Warrant at the time of exercise of this Warrant
that the holder elects to exercise Purchaser's Net Exercise Right, Corixa shall
deliver to such holder (without payment by the Purchaser of any exercise price
of any cash or other consideration ) that number of shares of fully paid and
nonassessable Common Stock equal to the quotient obtained by dividing (x) the
value of this Warrant (or the specified portion thereof) on the date of
exercise, which value shall be determined by subtracting (1) the aggregate
Warrant Price of the Warrant Stock immediately prior to the exercise of this
Warrant from (2) the aggregate fair market value of the Warrant Stock issuable
upon exercise of this Warrant (or specified portion thereof) on the date of
exercise by (y) the fair market value of one share of Common Stock on the date
of exercise. For purposes of this Section 1(b), "fair market value" of a share
of Common Stock shall mean the closing price of the Common Stock on the business
day prior to the date of exercise as reported by the Nasdaq National Market or
such other principal exchange or quotation system on which the Common Stock is
then traded. For purposes of this Warrant, shares issued pursuant to the Net
Exercise Right shall be treated as if they were issued upon the exercise of this
Warrant.
2. CERTAIN ADJUSTMENTS.
(a) Mergers or Consolidations. If at any time after the date
hereof there shall be a capital reorganization (other than a combination or
subdivision of Warrant Stock otherwise provided for herein), or a merger or
consolidation of Corixa with another corporation (other than a merger with
another corporation in which Corixa is a continuing corporation and which does
not result in any reclassification or change of outstanding securities issuable
upon exercise of this Warrant), then, as a part of such reorganization, merger
or consolidation, lawful provision shall be made so that Purchaser shall
thereafter be entitled to receive upon exercise of this Warrant, during the
period specified in this Warrant and upon payment of the Warrant Price, the
number of shares of stock or other securities or property of Corixa or the
successor corporation resulting from such reorganization, merger or
consolidation, to which a holder of the Common Stock deliverable upon exercise
of this Warrant would have been entitled under the provisions of the agreement
in such reorganization, merger or consolidation if this Warrant had been
exercised immediately before that reorganization, merger or consolidation. In
any such case, appropriate adjustment (as determined in good faith by Corixa's
Board of Directors) shall be made in the application of the provisions of this
Warrant with respect to the rights and interests of Purchaser after the
reorganization, merger or consolidation to the end that the provisions of this
Warrant (including adjustment of the Warrant Price then in effect and the number
of shares of Warrant Stock) shall be applicable after that event, as near as
reasonably may be, in relation to any shares or other property deliverable after
that event upon exercise of this Warrant.
(b) Splits and Subdivisions; Dividends. In the event Corixa
should at any time or from time to time fix a record date for the effectuation
of a split or subdivision of the outstanding shares of Common Stock or the
determination of the holders of Common Stock entitled to receive a dividend or
other distribution payable in additional shares of Common Stock or other
securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly, additional shares of Common Stock (hereinafter
referred to as the "Common Stock Equivalents") without payment of any
consideration by such holder for the additional shares of
- 2 -
<PAGE> 3
Common Stock or Common Stock Equivalents (including the additional shares of
Common Stock issuable upon conversion or exercise thereof), then, as of such
record date (or the date of such distribution, split or subdivision if no record
date is fixed), the per share Warrant Price shall be appropriately decreased and
the number of shares of Warrant Stock shall be appropriately increased in
proportion to such increase (or potential increase) of outstanding shares.
(c) Combination of Shares. If the number of shares of Common
Stock outstanding at any time after the date hereof is decreased by a
combination of the outstanding shares of Common Stock, the per share Warrant
Price shall be appropriately increased and the number of shares of Warrant Stock
shall be appropriately decreased in proportion to such decrease in outstanding
shares.
(d) Adjustments for Other Distributions. In the event Corixa
shall declare a distribution payable in securities of other persons, evidences
of indebtedness issued by Corixa or other persons, assets (excluding cash
dividends paid out of net profits) or options or rights not referred to in
Section 2(b), then, in each such case for the purpose of this Section 2(d), upon
exercise of this Warrant the holder hereof shall be entitled to a proportionate
share of any such distribution as though such holder was the holder of the
number of shares of Common Stock of Corixa into which this Warrant may be
exercised as of the record date fixed for the determination of the holders of
Common Stock of Corixa entitled to receive such distribution.
3. NO FRACTIONAL SHARES. No fractional shares of Warrant Shares will be
issued in connection with any exercise of this Warrant. In lieu of any
fractional shares which would otherwise be issuable, Corixa shall pay cash equal
to the product of such fraction multiplied by the closing price of one Warrant
Share as reported on the Nasdaq National Market on the date of exercise.
4. NO STOCKHOLDER RIGHTS. Until the exercise of this Warrant or any
portion of this Warrant, Purchaser shall not have nor exercise any rights by
virtue hereof as a stockholder of Corixa (including without limitation the right
to notification of stockholder meetings or the right to receive any notice or
other communication concerning the business and affairs of Corixa).
5. RESERVATION OF STOCK. Corixa covenants that during the period this
Warrant is exercisable, Corixa will reserve from its authorized and unissued
Common Stock a sufficient number of shares of Common Stock (or other securities,
if applicable) to provide for the issuance of Warrant Stock (or other
securities) upon the exercise of this Warrant. Corixa agrees that its issuance
of this Warrant shall constitute full authority to its officers who are charged
with the duty of executing stock certificates to execute and issue the necessary
certificates for the Warrant Stock upon the exercise of this Warrant.
6. EXERCISE OF WARRANT.
(a) Procedural Requirements. Subject to Section 6(b), this
Warrant may be exercised by the holder hereof, in whole or in part, by the
surrender of this Warrant and the Notice of Exercise attached hereto as Exhibit
A duly completed and executed on behalf of the holder hereof, at the principal
office of Corixa together with payment in full of the Warrant Price
- 3 -
<PAGE> 4
then in effect with respect to the number of shares of Warrant Stock as to which
the Warrant is being exercised. The Warrant Price shall be paid by wire transfer
to Corixa or cashiers check drawn on a United States bank made to the order of
Corixa or by exercise of the Net Exercise Right pursuant to Section 1(b). This
Warrant shall be deemed to have been exercised immediately prior to the close of
business on the date of its surrender for exercise as provided above, and the
person entitled to receive the Warrant Stock issuable upon such exercise shall
be treated for all purposes as the holder of such shares of record as of the
close of business on such date. As promptly as practicable on or after such date
and in any event within twenty (20) days thereafter, Corixa at its expense shall
cause to be issued and delivered to the person or persons entitled to receive
the same a certificate or certificates for the number of full shares of Warrant
Stock issuable upon such exercise, together with cash in lieu of any fraction of
a share as provided above. The shares of Warrant Stock issuable upon exercise
hereof shall, upon their issuance, be fully paid and nonassessable. In the event
that this Warrant is exercised in part, Corixa at its expense will execute and
deliver a new Warrant of like tenor exercisable for the number of shares for
which this Warrant may then be exercised.
(b) Hart-Scott-Rodino. Prior to any exercise of this Warrant, the
Company and the Purchaser shall consult with each other pursuant to Section 5(d)
of the Purchase Agreement as to whether any applications and/or documents may be
required to be executed and filed under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended ("HSR") in connection with such exercise
and shall mutually agree on an appropriate cause of action with respect to the
foregoing. In the event the Company and the Purchaser mutually agree that the
filing of applications and/or documents are required under HSR, then no exercise
of this Warrant shall take place until the expiration or early termination of
any notice periods required under HSR with respect to the filing of such
applications and/or documents.
7. CERTIFICATE OF ADJUSTMENT. Whenever the Warrant Price or number or
type of securities issuable upon exercise of this Warrant is adjusted, as herein
provided, Corixa shall, at its expense, promptly deliver to the record holder of
this Warrant a certificate of an officer of Corixa setting forth the nature of
such adjustment and showing in detail the facts upon which such adjustment is
based.
8. REPRESENTATIONS OF PURCHASER. As of the date hereof, Purchaser hereby
confirms the representations and warranties made by Purchaser in Section 3 of
the Purchase Agreement.
9. TRANSFER RESTRICTIONS.
(a) UNREGISTERED SECURITY. The holder of this Warrant
acknowledges that this Warrant and the Warrant Stock have not been registered
under the Securities Act of 1933, as amended (the "1933 Act") and agrees not to
sell, pledge, distribute, offer for sale, transfer or otherwise dispose of this
Warrant or any Warrant Stock issued upon its exercise in the absence of (i) an
effective registration statement under the 1933 Act as to this Warrant or such
Warrant Stock and registration or qualification of this Warrant or such Warrant
Stock under any applicable U.S. federal or state securities law then in effect
or (ii) an opinion of counsel, satisfactory to Corixa, that such registration
and qualification are not required. Each certificate
- 4 -
<PAGE> 5
or other instrument for Warrant Stock issued upon the exercise of this Warrant
shall bear a legend substantially to the foregoing effect.
(b) NO TRANSFER. This Warrant is not transferable without the Company's
prior written consent; provided, however, such consent shall not be required in
connection with the transfer by the Purchaser of such Warrant (but only with all
related obligations) to (i) an Affiliate of the Purchaser (as such term is
defined in the Standstill Agreement dated as of April 8, 1999 between the
Company and the Purchaser), (ii) an entity solely in connection with charitable
contributions by the Purchaser or (iii) an individual or entity solely for
estate planning purposes, provided that (x) written notice (in the form of
Exhibit B as attached hereto) is provided to the Company at least five (5)
business days prior to any such transfer, (y) a minimum of 5,000 shares of
Warrant Stock are transferred in each instance, and (z) immediately following
such transfer the further disposition of such Warrant Stock by the transferee is
restricted under the 1933 Act and the transferee agrees in writing to be bound
by all of the provisions of this Warrant.
10. NOTICES OF RECORD DATE. In the event of:
(a) any taking by Corixa of a record of the holders of any class
of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend (other than a cash dividend payable out of
earned surplus of Corixa) or other distribution, or any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right; or
(b) any capital reorganization of Corixa, any reclassification or
recapitalization of the capital stock of Corixa or any transfer of all or
substantially all the assets of Corixa to or consolidation or merger of Corixa
with or into any other person; or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of Corixa,
then and in each such event Corixa will mail or cause to be
mailed to the holder of this Warrant a notice specifying (i) the date on which
any such record is to be taken for the purpose of such dividend, distribution or
right, and stating the amount and character of such dividend, distribution or
right, and (ii) the date on which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation or
winding-up is to take place, and the time, if any, as of which the holders of
record of Common Stock (or other securities) shall be entitled to exchange their
shares of Common Stock (or other securities) for securities or other property
deliverable upon such reorganization, reclassification, recapitalization,
transfer, consolidation, merger, dissolution, liquidation or winding-up. Such
notice shall be mailed at least 10 days prior to the date therein specified.
11. REPLACEMENT OF WARRANTS. On receipt of evidence reasonably
satisfactory to Corixa of the loss, theft, destruction or mutilation of this
Warrant and, in the case of any such loss, theft, destruction or mutilation of
this Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to Corixa or, in the case of any such
- 5 -
<PAGE> 6
mutilation, on surrender and cancellation of such Warrant, Corixa at its expense
will execute and deliver, in lieu thereof, a new Warrant of like tenor.
12. MARKET STANDOFF.
(a) Purchaser hereby agrees that, during the period of duration
(up to, but not exceeding, 90 days) specified by Corixa and an underwriter of
Common Stock or other securities of Corixa, following the effective date of a
registration statement of Corixa filed under the 1933 Act, it shall not, to the
extent requested by Corixa and such underwriter, directly or indirectly sell,
offer to sell, contract to sell (including, without limitation, any short sale),
grant any option to purchase or otherwise transfer or dispose of (other than to
donees who agree to be similarly bound) any securities of Corixa held by it at
any time during such period except Common Stock included in such registration.
(b) In order to enforce the foregoing covenant, Corixa may impose
stop-transfer instructions with respect to the securities held by Purchaser
until the end of such period, and Purchaser agrees that, if so requested,
Purchaser will execute an agreement in the form provided by the underwriter
containing terms which are essentially consistent with the provisions of this
Section 12.
13. NO IMPAIRMENT. Corixa will not, by amendment of its charter or
through reorganization, consolidation, merger, dissolution, sale of assets or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will at all times in good faith assist
in the carrying out of all such terms and in the taking of all such action as
may be necessary or appropriate in order to protect the rights of the holder of
this Warrant against impairment.
14. TERMINATION. This Warrant (and the right to purchase securities upon
exercise hereof) shall terminate on April 8, 2004.
15. SATURDAYS, SUNDAYS, HOLIDAYS, ETC. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday or Sunday or shall be a legal holiday, then such
action may be taken or such right may be exercised on the next succeeding day
not a Saturday, Sunday or legal holiday.
16. EXCHANGE ACT FILINGS. Purchaser agrees and acknowledges that it
shall have sole responsibility for making any filings with the U.S. Securities
and Exchange Commission pursuant to Sections 13 and 16 of the Securities
Exchange Act of 1934, as amended, as a result of its acquisition of this Warrant
and the Warrant Stock (collectively, the "Securities") and any future retention
or transfer thereof.
17. NO LEGAL, TAX OR INVESTMENT ADVICE. Purchaser understands that
nothing in this Agreement or any other materials presented to Purchaser in
connection with the acquisition of the Securities constitutes legal, tax or
investment advice. Purchaser has consulted such legal, tax and investment
advisors as it, in its sole discretion, has deemed necessary or appropriate in
connection with its acquisition of the Securities.
- 6 -
<PAGE> 7
18. MISCELLANEOUS. This Warrant shall be governed by the laws of the
State of Washington. The headings in this Warrant are for purposes of
convenience and reference only, and shall not be deemed to constitute a part
hereof. Neither this Warrant nor any term hereof may be changed, waived,
discharged or terminated orally but only by an instrument in writing signed by
Corixa and the Purchaser. All notices and other communications from Corixa to
the holder of this Warrant shall be sufficient if in writing and sent by
registered or certified mail, domestic or international courier, or facsimile,
return receipt requested, postage or courier charges prepaid, to the address
furnished to Corixa in writing by Purchaser. All such notices and communications
shall be effective if delivered (i) personally, (ii) by facsimile transmission
(receipt verified), (iii) by registered or certified mail (return receipt
requested), postage prepaid, or (iv) sent by express courier service (receipt
verified), and if to Purchaser, with a copy to Mark Beatty, Preston Gates &
Ellis, 701 Fifth Avenue, #5000, Seattle, Washington 98104, and if to Corixa,
with a copy to William W. Ericson, Venture Law Group, 4750 Carillon Point,
Kirkland, Washington 98033. The invalidity or unenforceability of any provision
hereof shall in no way affect the validity or enforceability of any other
provisions.
SIGNATURE PAGE TO FOLLOW
<PAGE> 8
IN WITNESS WHEREOF, this Common Stock Purchase Warrant is issued
effective as of this 8th day of April, 1999.
CORIXA CORPORATION
By: /s/ Steven Gillis
------------------------------------
Steven Gillis
Chairman and Chief Executive Officer
ACKNOWLEDGED AND AGREED:
CASTLE GATE, L.L.C.
By: /s/ MICHAEL LARSON
------------------------------------
Michael Larson
Name:
----------------------------------
Title: Business Manager
---------------------------------
SIGNATURE PAGE TO THE WARRANT TO
PURCHASE SHARES OF COMMON STOCK
<PAGE> 9
EXHIBIT A
NOTICE OF INTENT TO EXERCISE
(To be signed only upon exercise of Warrant)
To: CORIXA CORPORATION
The undersigned, the Holder of the within Warrant, hereby irrevocably elects to
exercise the purchase right represented by such Warrant for, and to purchase
thereunder, _____________ ____________________________ (_____________) shares of
Common Stock of Corixa Corporation and (choose one)
___ herewith makes payment of ____________________ Dollars ($__________)
thereof
or
___ exercises Holder's Net Exercise Right pursuant to Section 1(b)
thereof .
and requests that the certificates for such shares be issued in the name of, and
delivered to ________________________________, whose address is ________________
______________________________________________________________________________ .
DATED: ______________
________________________________________
(Signature must conform in all respects
to name of Holder as specified on the
face of the Warrant)
________________________________________
(Address)
<PAGE> 10
EXHIBIT B
NOTICE OF ASSIGNMENT FORM
FOR VALUE RECEIVED, _________________________________________ hereby
sells, assigns and transfers all of the rights of the undersigned under the
attached Warrant with respect to the number of shares of Common Stock covered
thereby set forth below, to:
<TABLE>
<CAPTION>
NAME OF ASSIGNEE ADDRESS/FAX NUMBER NO. OF SHARES
---------------- ------------------ -------------
<S> <C> <C>
</TABLE>
Dated:_________________ Signature:
Witness:
<PAGE> 1
EXHIBIT 4.07
THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR QUALIFIED UNDER APPLICABLE STATE
SECURITIES LAWS, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A
VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO
SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION AND QUALIFICATION ARE
NOT REQUIRED.
WARRANT NO. CG-3 DATE OF ISSUANCE: April 8, 2000
WARRANT TO PURCHASE SHARES
OF COMMON STOCK OF
CORIXA CORPORATION
This Warrant is issued to Castle Gate, L.L.C., a Washington limited
liability company ("Purchaser") pursuant to that certain Equity Line of Credit
and Securities Purchase Agreement dated as of April 8, 1999 between Corixa
Corporation, a Delaware corporation ("Corixa" or the "Company"), and Purchaser
(the "Purchase Agreement") and is subject to the terms and conditions therein.
1. EXERCISE OF WARRANT.
(a) Number and Price of Shares Subject to Warrant; Method of
Exercise. Subject to the terms and conditions herein set forth, upon surrender
of this Warrant at the principal office of Corixa and upon payment of the
purchase price by wire transfer to Corixa or cashiers check drawn on a United
States bank made to the order of Corixa, or exercise of the right to credit the
Warrant Price (as defined below) against the fair market value of the Warrant
Stock (as defined below) at the time of exercise (the "Net Exercise Right")
pursuant to Section 1(b), Purchaser is entitled to purchase from Corixa, at any
time after the date of issuance hereof and on or before April 8, 2005, that
number of fully paid and non-assessable shares of Corixa Common Stock, par value
$0.001 per share ("Warrant Stock") equal to (A) $1,125,000.00 divided by (B) the
"Warrant Price", which shall be equal to the average per share closing price of
Corixa Common Stock on the Nasdaq National Market as reported in the Wall Street
Journal for the ten (10) day period immediately preceding but not including the
date one year after the date Corixa and Purchaser enter into the Purchase
Agreement. Subject to adjustment as hereinafter provided, the purchase price of
one share of Warrant Stock (or such securities as may be substituted for one
share of Warrant Stock pursuant to the provisions hereinafter set forth) shall
be the Warrant Price.
<PAGE> 2
(b) Net Exercise Right. If the Company shall receive written
notice from the holder of this Warrant at the time of exercise of this Warrant
that the holder elects to exercise Purchaser's Net Exercise Right, Corixa shall
deliver to such holder (without payment by the Purchaser of any exercise price
of any cash or other consideration ) that number of shares of fully paid and
nonassessable Common Stock equal to the quotient obtained by dividing (x) the
value of this Warrant (or the specified portion thereof) on the date of
exercise, which value shall be determined by subtracting (1) the aggregate
Warrant Price of the Warrant Stock immediately prior to the exercise of this
Warrant from (2) the aggregate fair market value of the Warrant Stock issuable
upon exercise of this Warrant (or specified portion thereof) on the date of
exercise by (y) the fair market value of one share of Common Stock on the date
of exercise. For purposes of this Section 1(b), "fair market value" of a share
of Common Stock shall mean the closing price of the Common Stock on the business
day prior to the date of exercise as reported by the Nasdaq National Market or
such other principal exchange or quotation system on which the Common Stock is
then traded. For purposes of this Warrant, shares issued pursuant to the Net
Exercise Right shall be treated as if they were issued upon the exercise of this
Warrant.
2. CERTAIN ADJUSTMENTS.
(a) Mergers or Consolidations. If at any time after the date
hereof there shall be a capital reorganization (other than a combination or
subdivision of Warrant Stock otherwise provided for herein), or a merger or
consolidation of Corixa with another corporation (other than a merger with
another corporation in which Corixa is a continuing corporation and which does
not result in any reclassification or change of outstanding securities issuable
upon exercise of this Warrant), then, as a part of such reorganization, merger
or consolidation, lawful provision shall be made so that Purchaser shall
thereafter be entitled to receive upon exercise of this Warrant, during the
period specified in this Warrant and upon payment of the Warrant Price, the
number of shares of stock or other securities or property of Corixa or the
successor corporation resulting from such reorganization, merger or
consolidation, to which a holder of the Common Stock deliverable upon exercise
of this Warrant would have been entitled under the provisions of the agreement
in such reorganization, merger or consolidation if this Warrant had been
exercised immediately before that reorganization, merger or consolidation. In
any such case, appropriate adjustment (as determined in good faith by Corixa's
Board of Directors) shall be made in the application of the provisions of this
Warrant with respect to the rights and interests of Purchaser after the
reorganization, merger or consolidation to the end that the provisions of this
Warrant (including adjustment of the Warrant Price then in effect and the number
of shares of Warrant Stock) shall be applicable after that event, as near as
reasonably may be, in relation to any shares or other property deliverable after
that event upon exercise of this Warrant.
(b) Splits and Subdivisions; Dividends. In the event Corixa
should at any time or from time to time fix a record date for the effectuation
of a split or subdivision of the outstanding shares of Common Stock or the
determination of the holders of Common Stock entitled to receive a dividend or
other distribution payable in additional shares of Common Stock or other
securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly, additional shares of Common Stock (hereinafter
referred to as the "Common Stock Equivalents") without payment of any
consideration by such holder for the additional shares of
- 2 -
<PAGE> 3
Common Stock or Common Stock Equivalents (including the additional shares of
Common Stock issuable upon conversion or exercise thereof), then, as of such
record date (or the date of such distribution, split or subdivision if no record
date is fixed), the per share Warrant Price shall be appropriately decreased and
the number of shares of Warrant Stock shall be appropriately increased in
proportion to such increase (or potential increase) of outstanding shares.
(c) Combination of Shares. If the number of shares of Common
Stock outstanding at any time after the date hereof is decreased by a
combination of the outstanding shares of Common Stock, the per share Warrant
Price shall be appropriately increased and the number of shares of Warrant Stock
shall be appropriately decreased in proportion to such decrease in outstanding
shares.
(d) Adjustments for Other Distributions. In the event Corixa
shall declare a distribution payable in securities of other persons, evidences
of indebtedness issued by Corixa or other persons, assets (excluding cash
dividends paid out of net profits) or options or rights not referred to in
Section 2(b), then, in each such case for the purpose of this Section 2(d), upon
exercise of this Warrant the holder hereof shall be entitled to a proportionate
share of any such distribution as though such holder was the holder of the
number of shares of Common Stock of Corixa into which this Warrant may be
exercised as of the record date fixed for the determination of the holders of
Common Stock of Corixa entitled to receive such distribution.
3. NO FRACTIONAL SHARES. No fractional shares of Warrant Shares will be
issued in connection with any exercise of this Warrant. In lieu of any
fractional shares which would otherwise be issuable, Corixa shall pay cash equal
to the product of such fraction multiplied by the closing price of one Warrant
Share as reported on the Nasdaq National Market on the date of exercise.
4. NO STOCKHOLDER RIGHTS. Until the exercise of this Warrant or any
portion of this Warrant, Purchaser shall not have nor exercise any rights by
virtue hereof as a stockholder of Corixa (including without limitation the right
to notification of stockholder meetings or the right to receive any notice or
other communication concerning the business and affairs of Corixa).
5. RESERVATION OF STOCK. Corixa covenants that during the period this
Warrant is exercisable, Corixa will reserve from its authorized and unissued
Common Stock a sufficient number of shares of Common Stock (or other securities,
if applicable) to provide for the issuance of Warrant Stock (or other
securities) upon the exercise of this Warrant. Corixa agrees that its issuance
of this Warrant shall constitute full authority to its officers who are charged
with the duty of executing stock certificates to execute and issue the necessary
certificates for the Warrant Stock upon the exercise of this Warrant.
6. EXERCISE OF WARRANT.
(a) Procedural Requirements. Subject to Section 6(b), this
Warrant may be exercised by the holder hereof, in whole or in part, by the
surrender of this Warrant and the Notice of Exercise attached hereto as Exhibit
A duly completed and executed on behalf of the holder hereof, at the principal
office of Corixa together with payment in full of the
- 3 -
<PAGE> 4
Warrant Price then in effect with respect to the number of shares of Warrant
Stock as to which the Warrant is being exercised. The Warrant Price shall be
paid by wire transfer to Corixa or cashiers check drawn on a United States bank
made to the order of Corixa or by exercise of the Net Exercise Right pursuant to
Section 1(b). This Warrant shall be deemed to have been exercised immediately
prior to the close of business on the date of its surrender for exercise as
provided above, and the person entitled to receive the Warrant Stock issuable
upon such exercise shall be treated for all purposes as the holder of such
shares of record as of the close of business on such date. As promptly as
practicable on or after such date and in any event within twenty (20) days
thereafter, Corixa at its expense shall cause to be issued and delivered to the
person or persons entitled to receive the same a certificate or certificates for
the number of full shares of Warrant Stock issuable upon such exercise, together
with cash in lieu of any fraction of a share as provided above. The shares of
Warrant Stock issuable upon exercise hereof shall, upon their issuance, be fully
paid and nonassessable. In the event that this Warrant is exercised in part,
Corixa at its expense will execute and deliver a new Warrant of like tenor
exercisable for the number of shares for which this Warrant may then be
exercised.
(b) Hart-Scott-Rodino. Prior to any exercise of this Warrant, the
Company and the Purchaser shall consult with each other pursuant to Section 5(d)
of the Purchase Agreement as to whether any applications and/or documents may be
required to be executed and filed under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended ("HSR") in connection with such exercise
and shall mutually agree on an appropriate cause of action with respect to the
foregoing. In the event the Company and the Purchaser mutually agree that the
filing of applications and/or documents are required under HSR, then no exercise
of this Warrant shall take place until the expiration or early termination of
any notice periods required under HSR with respect to the filing of such
applications and/or documents.
7. CERTIFICATE OF ADJUSTMENT. Whenever the Warrant Price or number or
type of securities issuable upon exercise of this Warrant is adjusted, as herein
provided, Corixa shall, at its expense, promptly deliver to the record holder of
this Warrant a certificate of an officer of Corixa setting forth the nature of
such adjustment and showing in detail the facts upon which such adjustment is
based.
8. REPRESENTATIONS OF PURCHASER. As of the date hereof, Purchaser hereby
confirms the representations and warranties made by Purchaser in Section 3 of
the Purchase Agreement.
9. TRANSFER RESTRICTIONS.
(a) UNREGISTERED SECURITY. The holder of this Warrant
acknowledges that this Warrant and the Warrant Stock have not been registered
under the Securities Act of 1933, as amended (the "1933 Act") and agrees not to
sell, pledge, distribute, offer for sale, transfer or otherwise dispose of this
Warrant or any Warrant Stock issued upon its exercise in the absence of (i) an
effective registration statement under the 1933 Act as to this Warrant or such
Warrant Stock and registration or qualification of this Warrant or such Warrant
Stock under any applicable U.S. federal or state securities law then in effect
or (ii) an opinion of counsel, satisfactory to Corixa, that such registration
and qualification are not required. Each certificate
- 4 -
<PAGE> 5
or other instrument for Warrant Stock issued upon the exercise of this Warrant
shall bear a legend substantially to the foregoing effect.
(b) NO TRANSFER. This Warrant is not transferable without the
Company's prior written consent; provided, however, such consent shall not be
required in connection with the transfer by the Purchaser of such Warrant (but
only with all related obligations) to (i) an Affiliate of the Purchaser (as such
term is defined in the Standstill Agreement dated as of April 8, 1999 between
the Company and the Purchaser), (ii) an entity solely in connection with
charitable contributions by the Purchaser or (iii) an individual or entity
solely for estate planning purposes, provided that (x) written notice (in the
form of Exhibit B as attached hereto) is provided to the Company at least five
(5) business days prior to any such transfer, (y) a minimum of 5,000 shares of
Warrant Stock are transferred in each instance, and (z) immediately following
such transfer the further disposition of such Warrant Stock by the transferee is
restricted under the 1933 Act and the transferee agrees in writing to be bound
by all of the provisions of this Warrant.
10. NOTICES OF RECORD DATE. In the event of:
(a) any taking by Corixa of a record of the holders of any class
of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend (other than a cash dividend payable out of
earned surplus of Corixa) or other distribution, or any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right; or
(b) any capital reorganization of Corixa, any reclassification or
recapitalization of the capital stock of Corixa or any transfer of all or
substantially all the assets of Corixa to or consolidation or merger of Corixa
with or into any other person; or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of Corixa,
then and in each such event Corixa will mail or cause to be
mailed to the holder of this Warrant a notice specifying (i) the date on which
any such record is to be taken for the purpose of such dividend, distribution or
right, and stating the amount and character of such dividend, distribution or
right, and (ii) the date on which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation or
winding-up is to take place, and the time, if any, as of which the holders of
record of Common Stock (or other securities) shall be entitled to exchange their
shares of Common Stock (or other securities) for securities or other property
deliverable upon such reorganization, reclassification, recapitalization,
transfer, consolidation, merger, dissolution, liquidation or winding-up. Such
notice shall be mailed at least 10 days prior to the date therein specified.
11. REPLACEMENT OF WARRANTS. On receipt of evidence reasonably
satisfactory to Corixa of the loss, theft, destruction or mutilation of this
Warrant and, in the case of any such loss, theft, destruction or mutilation of
this Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to Corixa or, in the case of any such
- 5 -
<PAGE> 6
mutilation, on surrender and cancellation of such Warrant, Corixa at its expense
will execute and deliver, in lieu thereof, a new Warrant of like tenor.
12. MARKET STANDOFF.
(a) Purchaser hereby agrees that, during the period of duration
(up to, but not exceeding, 90 days) specified by Corixa and an underwriter of
Common Stock or other securities of Corixa, following the effective date of a
registration statement of Corixa filed under the 1933 Act, it shall not, to the
extent requested by Corixa and such underwriter, directly or indirectly sell,
offer to sell, contract to sell (including, without limitation, any short sale),
grant any option to purchase or otherwise transfer or dispose of (other than to
donees who agree to be similarly bound) any securities of Corixa held by it at
any time during such period except Common Stock included in such registration.
(b) In order to enforce the foregoing covenant, Corixa may impose
stop-transfer instructions with respect to the securities held by Purchaser
until the end of such period, and Purchaser agrees that, if so requested,
Purchaser will execute an agreement in the form provided by the underwriter
containing terms which are essentially consistent with the provisions of this
Section 12.
13. NO IMPAIRMENT. Corixa will not, by amendment of its charter or
through reorganization, consolidation, merger, dissolution, sale of assets or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will at all times in good faith assist
in the carrying out of all such terms and in the taking of all such action as
may be necessary or appropriate in order to protect the rights of the holder of
this Warrant against impairment.
14. TERMINATION. This Warrant (and the right to purchase securities upon
exercise hereof) shall terminate on April 8, 2005.
15. SATURDAYS, SUNDAYS, HOLIDAYS, ETC. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday or Sunday or shall be a legal holiday, then such
action may be taken or such right may be exercised on the next succeeding day
not a Saturday, Sunday or legal holiday.
16. EXCHANGE ACT FILINGS. Purchaser agrees and acknowledges that it
shall have sole responsibility for making any filings with the U.S. Securities
and Exchange Commission pursuant to Sections 13 and 16 of the Securities
Exchange Act of 1934, as amended, as a result of its acquisition of this Warrant
and the Warrant Stock (collectively, the "Securities") and any future retention
or transfer thereof.
17. NO LEGAL, TAX OR INVESTMENT ADVICE. Purchaser understands that
nothing in this Agreement or any other materials presented to Purchaser in
connection with the acquisition of the Securities constitutes legal, tax or
investment advice. Purchaser has consulted such legal, tax and investment
advisors as it, in its sole discretion, has deemed necessary or appropriate in
connection with its acquisition of the Securities.
- 6 -
<PAGE> 7
18. MISCELLANEOUS. This Warrant shall be governed by the laws of the
State of Washington. The headings in this Warrant are for purposes of
convenience and reference only, and shall not be deemed to constitute a part
hereof. Neither this Warrant nor any term hereof may be changed, waived,
discharged or terminated orally but only by an instrument in writing signed by
Corixa and the Purchaser. All notices and other communications from Corixa to
the holder of this Warrant shall be sufficient if in writing and sent by
registered or certified mail, domestic or international courier, or facsimile,
return receipt requested, postage or courier charges prepaid, to the address
furnished to Corixa in writing by Purchaser. All such notices and communications
shall be effective if delivered (i) personally, (ii) by facsimile transmission
(receipt verified), (iii) by registered or certified mail (return receipt
requested), postage prepaid, or (iv) sent by express courier service (receipt
verified), and if to Purchaser, with a copy to Mark Beatty, Preston Gates &
Ellis, 701 Fifth Avenue, #5000, Seattle, Washington 98104, and if to Corixa,
with a copy to William W. Ericson, Venture Law Group, 4750 Carillon Point,
Kirkland, Washington 98033. The invalidity or unenforceability of any provision
hereof shall in no way affect the validity or enforceability of any other
provisions.
- 7 -
<PAGE> 8
IN WITNESS WHEREOF, this Common Stock Purchase Warrant is issued
effective as of this 8th day of April, 2000.
CORIXA CORPORATION
By:
------------------------------------
Steven Gillis
Chairman and Chief Executive Officer
ACKNOWLEDGED AND AGREED:
CASTLE GATE, L.L.C.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
SIGNATURE PAGE TO THE WARRANT TO
PURCHASE SHARES OF COMMON STOCK
<PAGE> 9
EXHIBIT A
NOTICE OF INTENT TO EXERCISE
(To be signed only upon exercise of Warrant)
To: CORIXA CORPORATION
The undersigned, the Holder of the within Warrant, hereby irrevocably elects to
exercise the purchase right represented by such Warrant for, and to purchase
thereunder, _____________ ____________________________ (_____________) shares of
Common Stock of Corixa Corporation and (choose one)
___ herewith makes payment of ____________________ Dollars ($__________)
thereof
or
___ exercises Holder's Net Exercise Right pursuant to Section 1(b)
thereof .
and requests that the certificates for such shares be issued in the name of, and
delivered to ________________________________, whose address is ________________
______________________________________________________________________________ .
DATED: ______________
________________________________________
(Signature must conform in all respects
to name of Holder as specified on the
face of the Warrant)
________________________________________
________________________________________
(Address)
<PAGE> 10
EXHIBIT B
NOTICE OF ASSIGNMENT FORM
FOR VALUE RECEIVED, _________________________________________ hereby
sells, assigns and transfers all of the rights of the undersigned under the
attached Warrant with respect to the number of shares of Common Stock covered
thereby set forth below, to:
<TABLE>
<CAPTION>
NAME OF ASSIGNEE ADDRESS/FAX NUMBER NO. OF SHARES
---------------- ------------------ -------------
<S> <C> <C>
</TABLE>
Dated:_________________ Signature:
Witness:
<PAGE> 1
EXHIBIT 4.08
THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR QUALIFIED UNDER APPLICABLE STATE
SECURITIES LAWS, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A
VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO
SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION AND QUALIFICATION ARE
NOT REQUIRED.
WARRANT NO. CG-4 DATE OF ISSUANCE: April 8, 2001
WARRANT TO PURCHASE SHARES
OF COMMON STOCK OF
CORIXA CORPORATION
This Warrant is issued to Castle Gate, L.L.C., a Washington limited
liability company ("Purchaser") pursuant to that certain Equity Line of Credit
and Securities Purchase Agreement dated as of April 8, 1999 between Corixa
Corporation, a Delaware corporation ("Corixa" or the "Company"), and Purchaser
(the "Purchase Agreement") and is subject to the terms and conditions therein.
1. EXERCISE OF WARRANT.
(a) Number and Price of Shares Subject to Warrant; Method of
Exercise. Subject to the terms and conditions herein set forth, upon surrender
of this Warrant at the principal office of Corixa and upon payment of the
purchase price by wire transfer to Corixa or cashiers check drawn on a United
States bank made to the order of Corixa, or exercise of the right to credit the
Warrant Price (as defined below) against the fair market value of the Warrant
Stock (as defined below) at the time of exercise (the "Net Exercise Right")
pursuant to Section 1(b), Purchaser is entitled to purchase from Corixa, at any
time after the date of issuance hereof and on or before April 8, 2006, that
number of fully paid and non-assessable shares of Corixa Common Stock, par value
$0.001 per share ("Warrant Stock") equal to (A) $1,000,000.00 divided by (B) the
"Warrant Price", which shall be equal to the average per share closing price of
Corixa Common Stock on the Nasdaq National Market as reported in the Wall Street
Journal for the ten (10) day period immediately preceding but not including the
date two years after the date Corixa and Purchaser enter into the Purchase
Agreement. Subject to adjustment as hereinafter provided, the purchase price of
one share of Warrant Stock (or such securities as may be substituted for one
share of Warrant Stock pursuant to the provisions hereinafter set forth) shall
be the Warrant Price.
<PAGE> 2
(b) Net Exercise Right. If the Company shall receive written
notice from the holder of this Warrant at the time of exercise of this Warrant
that the holder elects to exercise Purchaser's Net Exercise Right, Corixa shall
deliver to such holder (without payment by the Purchaser of any exercise price
of any cash or other consideration ) that number of shares of fully paid and
nonassessable Common Stock equal to the quotient obtained by dividing (x) the
value of this Warrant (or the specified portion thereof) on the date of
exercise, which value shall be determined by subtracting (1) the aggregate
Warrant Price of the Warrant Stock immediately prior to the exercise of this
Warrant from (2) the aggregate fair market value of the Warrant Stock issuable
upon exercise of this Warrant (or specified portion thereof) on the date of
exercise by (y) the fair market value of one share of Common Stock on the date
of exercise. For purposes of this Section 1(b), "fair market value" of a share
of Common Stock shall mean the closing price of the Common Stock on the business
day prior to the date of exercise as reported by the Nasdaq National Market or
such other principal exchange or quotation system on which the Common Stock is
then traded. For purposes of this Warrant, shares issued pursuant to the Net
Exercise Right shall be treated as if they were issued upon the exercise of this
Warrant.
2. CERTAIN ADJUSTMENTS.
(a) Mergers or Consolidations. If at any time after the date
hereof there shall be a capital reorganization (other than a combination or
subdivision of Warrant Stock otherwise provided for herein), or a merger or
consolidation of Corixa with another corporation (other than a merger with
another corporation in which Corixa is a continuing corporation and which does
not result in any reclassification or change of outstanding securities issuable
upon exercise of this Warrant), then, as a part of such reorganization, merger
or consolidation, lawful provision shall be made so that Purchaser shall
thereafter be entitled to receive upon exercise of this Warrant, during the
period specified in this Warrant and upon payment of the Warrant Price, the
number of shares of stock or other securities or property of Corixa or the
successor corporation resulting from such reorganization, merger or
consolidation, to which a holder of the Common Stock deliverable upon exercise
of this Warrant would have been entitled under the provisions of the agreement
in such reorganization, merger or consolidation if this Warrant had been
exercised immediately before that reorganization, merger or consolidation. In
any such case, appropriate adjustment (as determined in good faith by Corixa's
Board of Directors) shall be made in the application of the provisions of this
Warrant with respect to the rights and interests of Purchaser after the
reorganization, merger or consolidation to the end that the provisions of this
Warrant (including adjustment of the Warrant Price then in effect and the number
of shares of Warrant Stock) shall be applicable after that event, as near as
reasonably may be, in relation to any shares or other property deliverable after
that event upon exercise of this Warrant.
(b) Splits and Subdivisions; Dividends. In the event Corixa
should at any time or from time to time fix a record date for the effectuation
of a split or subdivision of the outstanding shares of Common Stock or the
determination of the holders of Common Stock entitled to receive a dividend or
other distribution payable in additional shares of Common Stock or other
securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly, additional shares of Common Stock (hereinafter
referred to as the "Common Stock Equivalents") without payment of any
consideration by such holder for the additional shares of
- 2 -
<PAGE> 3
Common Stock or Common Stock Equivalents (including the additional shares of
Common Stock issuable upon conversion or exercise thereof), then, as of such
record date (or the date of such distribution, split or subdivision if no record
date is fixed), the per share Warrant Price shall be appropriately decreased and
the number of shares of Warrant Stock shall be appropriately increased in
proportion to such increase (or potential increase) of outstanding shares.
(c) Combination of Shares. If the number of shares of Common
Stock outstanding at any time after the date hereof is decreased by a
combination of the outstanding shares of Common Stock, the per share Warrant
Price shall be appropriately increased and the number of shares of Warrant Stock
shall be appropriately decreased in proportion to such decrease in outstanding
shares.
(d) Adjustments for Other Distributions. In the event Corixa
shall declare a distribution payable in securities of other persons, evidences
of indebtedness issued by Corixa or other persons, assets (excluding cash
dividends paid out of net profits) or options or rights not referred to in
Section 2(b), then, in each such case for the purpose of this Section 2(d), upon
exercise of this Warrant the holder hereof shall be entitled to a proportionate
share of any such distribution as though such holder was the holder of the
number of shares of Common Stock of Corixa into which this Warrant may be
exercised as of the record date fixed for the determination of the holders of
Common Stock of Corixa entitled to receive such distribution.
3. NO FRACTIONAL SHARES. No fractional shares of Warrant Shares will be
issued in connection with any exercise of this Warrant. In lieu of any
fractional shares which would otherwise be issuable, Corixa shall pay cash equal
to the product of such fraction multiplied by the closing price of one Warrant
Share as reported on the Nasdaq National Market on the date of exercise.
4. NO STOCKHOLDER RIGHTS. Until the exercise of this Warrant or any
portion of this Warrant, Purchaser shall not have nor exercise any rights by
virtue hereof as a stockholder of Corixa (including without limitation the right
to notification of stockholder meetings or the right to receive any notice or
other communication concerning the business and affairs of Corixa).
5. RESERVATION OF STOCK. Corixa covenants that during the period this
Warrant is exercisable, Corixa will reserve from its authorized and unissued
Common Stock a sufficient number of shares of Common Stock (or other securities,
if applicable) to provide for the issuance of Warrant Stock (or other
securities) upon the exercise of this Warrant. Corixa agrees that its issuance
of this Warrant shall constitute full authority to its officers who are charged
with the duty of executing stock certificates to execute and issue the necessary
certificates for the Warrant Stock upon the exercise of this Warrant.
6. EXERCISE OF WARRANT.
(a) Procedural Requirements. Subject to Section 6(b), this
Warrant may be exercised by the holder hereof, in whole or in part, by the
surrender of this Warrant and the Notice of Exercise attached hereto as Exhibit
A duly completed and executed on behalf of the holder hereof, at the principal
office of Corixa together with payment in full of the
- 3 -
<PAGE> 4
Warrant Price then in effect with respect to the number of shares of Warrant
Stock as to which the Warrant is being exercised. The Warrant Price shall be
paid by wire transfer to Corixa or cashiers check drawn on a United States bank
made to the order of Corixa or by exercise of the Net Exercise Right pursuant to
Section 1(b). This Warrant shall be deemed to have been exercised immediately
prior to the close of business on the date of its surrender for exercise as
provided above, and the person entitled to receive the Warrant Stock issuable
upon such exercise shall be treated for all purposes as the holder of such
shares of record as of the close of business on such date. As promptly as
practicable on or after such date and in any event within twenty (20) days
thereafter, Corixa at its expense shall cause to be issued and delivered to the
person or persons entitled to receive the same a certificate or certificates for
the number of full shares of Warrant Stock issuable upon such exercise, together
with cash in lieu of any fraction of a share as provided above. The shares of
Warrant Stock issuable upon exercise hereof shall, upon their issuance, be fully
paid and nonassessable. In the event that this Warrant is exercised in part,
Corixa at its expense will execute and deliver a new Warrant of like tenor
exercisable for the number of shares for which this Warrant may then be
exercised.
(b) Hart-Scott-Rodino. Prior to any exercise of this Warrant, the
Company and the Purchaser shall consult with each other pursuant to Section 5(d)
of the Purchase Agreement as to whether any applications and/or documents may be
required to be executed and filed under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended ("HSR") in connection with such exercise
and shall mutually agree on an appropriate cause of action with respect to the
foregoing. In the event the Company and the Purchaser mutually agree that the
filing of applications and/or documents are required under HSR, then no exercise
of this Warrant shall take place until the expiration or early termination of
any notice periods required under HSR with respect to the filing of such
applications and/or documents.
7. CERTIFICATE OF ADJUSTMENT. Whenever the Warrant Price or number or
type of securities issuable upon exercise of this Warrant is adjusted, as herein
provided, Corixa shall, at its expense, promptly deliver to the record holder of
this Warrant a certificate of an officer of Corixa setting forth the nature of
such adjustment and showing in detail the facts upon which such adjustment is
based.
8. REPRESENTATIONS OF PURCHASER. As of the date hereof, Purchaser hereby
confirms the representations and warranties made by Purchaser in Section 3 of
the Purchase Agreement.
9. TRANSFER RESTRICTIONS.
(a) UNREGISTERED SECURITY. The holder of this Warrant
acknowledges that this Warrant and the Warrant Stock have not been registered
under the Securities Act of 1933, as amended (the "1933 Act") and agrees not to
sell, pledge, distribute, offer for sale, transfer or otherwise dispose of this
Warrant or any Warrant Stock issued upon its exercise in the absence of (i) an
effective registration statement under the 1933 Act as to this Warrant or such
Warrant Stock and registration or qualification of this Warrant or such Warrant
Stock under any applicable U.S. federal or state securities law then in effect
or (ii) an opinion of counsel, satisfactory to Corixa, that such registration
and qualification are not required. Each certificate
- 4 -
<PAGE> 5
or other instrument for Warrant Stock issued upon the exercise of this Warrant
shall bear a legend substantially to the foregoing effect.
(b) NO TRANSFER. This Warrant is not transferable without the
Company's prior written consent; provided, however, such consent shall not be
required in connection with the transfer by the Purchaser of such Warrant (but
only with all related obligations) to (i) an Affiliate of the Purchaser (as such
term is defined in the Standstill Agreement dated as of April 8, 1999 between
the Company and the Purchaser), (ii) an entity solely in connection with
charitable contributions by the Purchaser or (iii) an individual or entity
solely for estate planning purposes, provided that (x) written notice (in the
form of Exhibit B as attached hereto) is provided to the Company at least five
(5) business days prior to any such transfer, (y) a minimum of 5,000 shares of
Warrant Stock are transferred in each instance, and (z) immediately following
such transfer the further disposition of such Warrant Stock by the transferee is
restricted under the 1933 Act and the transferee agrees in writing to be bound
by all of the provisions of this Warrant.
10. NOTICES OF RECORD DATE. In the event of:
(a) any taking by Corixa of a record of the holders of any class
of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend (other than a cash dividend payable out of
earned surplus of Corixa) or other distribution, or any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right; or
(b) any capital reorganization of Corixa, any reclassification or
recapitalization of the capital stock of Corixa or any transfer of all or
substantially all the assets of Corixa to or consolidation or merger of Corixa
with or into any other person; or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of Corixa,
then and in each such event Corixa will mail or cause to be
mailed to the holder of this Warrant a notice specifying (i) the date on which
any such record is to be taken for the purpose of such dividend, distribution or
right, and stating the amount and character of such dividend, distribution or
right, and (ii) the date on which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation or
winding-up is to take place, and the time, if any, as of which the holders of
record of Common Stock (or other securities) shall be entitled to exchange their
shares of Common Stock (or other securities) for securities or other property
deliverable upon such reorganization, reclassification, recapitalization,
transfer, consolidation, merger, dissolution, liquidation or winding-up. Such
notice shall be mailed at least 10 days prior to the date therein specified.
11. REPLACEMENT OF WARRANTS. On receipt of evidence reasonably
satisfactory to Corixa of the loss, theft, destruction or mutilation of this
Warrant and, in the case of any such loss, theft, destruction or mutilation of
this Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to Corixa or, in the case of any such
- 5 -
<PAGE> 6
mutilation, on surrender and cancellation of such Warrant, Corixa at its expense
will execute and deliver, in lieu thereof, a new Warrant of like tenor.
12. MARKET STANDOFF.
(a) Purchaser hereby agrees that, during the period of duration
(up to, but not exceeding, 90 days) specified by Corixa and an underwriter of
Common Stock or other securities of Corixa, following the effective date of a
registration statement of Corixa filed under the 1933 Act, it shall not, to the
extent requested by Corixa and such underwriter, directly or indirectly sell,
offer to sell, contract to sell (including, without limitation, any short sale),
grant any option to purchase or otherwise transfer or dispose of (other than to
donees who agree to be similarly bound) any securities of Corixa held by it at
any time during such period except Common Stock included in such registration.
(b) In order to enforce the foregoing covenant, Corixa may impose
stop-transfer instructions with respect to the securities held by Purchaser
until the end of such period, and Purchaser agrees that, if so requested,
Purchaser will execute an agreement in the form provided by the underwriter
containing terms which are essentially consistent with the provisions of this
Section 12.
13. NO IMPAIRMENT. Corixa will not, by amendment of its charter or
through reorganization, consolidation, merger, dissolution, sale of assets or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will at all times in good faith assist
in the carrying out of all such terms and in the taking of all such action as
may be necessary or appropriate in order to protect the rights of the holder of
this Warrant against impairment.
14. TERMINATION. This Warrant (and the right to purchase securities upon
exercise hereof) shall terminate on April 8, 2006.
15. SATURDAYS, SUNDAYS, HOLIDAYS, ETC. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday or Sunday or shall be a legal holiday, then such
action may be taken or such right may be exercised on the next succeeding day
not a Saturday, Sunday or legal holiday.
16. EXCHANGE ACT FILINGS. Purchaser agrees and acknowledges that it
shall have sole responsibility for making any filings with the U.S. Securities
and Exchange Commission pursuant to Sections 13 and 16 of the Securities
Exchange Act of 1934, as amended, as a result of its acquisition of this Warrant
and the Warrant Stock (collectively, the "Securities") and any future retention
or transfer thereof.
17. NO LEGAL, TAX OR INVESTMENT ADVICE. Purchaser understands that
nothing in this Agreement or any other materials presented to Purchaser in
connection with the acquisition of the Securities constitutes legal, tax or
investment advice. Purchaser has consulted such legal, tax and investment
advisors as it, in its sole discretion, has deemed necessary or appropriate in
connection with its acquisition of the Securities.
- 6 -
<PAGE> 7
18. MISCELLANEOUS. This Warrant shall be governed by the laws of the
State of Washington. The headings in this Warrant are for purposes of
convenience and reference only, and shall not be deemed to constitute a part
hereof. Neither this Warrant nor any term hereof may be changed, waived,
discharged or terminated orally but only by an instrument in writing signed by
Corixa and the Purchaser. All notices and other communications from Corixa to
the holder of this Warrant shall be sufficient if in writing and sent by
registered or certified mail, domestic or international courier, or facsimile,
return receipt requested, postage or courier charges prepaid, to the address
furnished to Corixa in writing by Purchaser. All such notices and communications
shall be effective if delivered (i) personally, (ii) by facsimile transmission
(receipt verified), (iii) by registered or certified mail (return receipt
requested), postage prepaid, or (iv) sent by express courier service (receipt
verified), and if to Purchaser, with a copy to Mark Beatty, Preston Gates &
Ellis, 701 Fifth Avenue, #5000, Seattle, Washington 98104, and if to Corixa,
with a copy to William W. Ericson, Venture Law Group, 4750 Carillon Point,
Kirkland, Washington 98033. The invalidity or unenforceability of any provision
hereof shall in no way affect the validity or enforceability of any other
provisions.
- 7 -
<PAGE> 8
IN WITNESS WHEREOF, this Common Stock Purchase Warrant is issued
effective as of this 8th day of April, 2001.
CORIXA CORPORATION
By:
------------------------------------
Steven Gillis
Chairman and Chief Executive Officer
ACKNOWLEDGED AND AGREED:
CASTLE GATE, L.L.C.
By:
------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
SIGNATURE PAGE TO THE WARRANT
TO PURCHASE SHARES OF COMMON STOCK
<PAGE> 9
EXHIBIT A
NOTICE OF INTENT TO EXERCISE
(To be signed only upon exercise of Warrant)
To: CORIXA CORPORATION
The undersigned, the Holder of the within Warrant, hereby irrevocably elects to
exercise the purchase right represented by such Warrant for, and to purchase
thereunder, _____________ ____________________________ (_____________) shares of
Common Stock of Corixa Corporation and (choose one)
___ herewith makes payment of ____________________ Dollars ($__________)
thereof
or
___ exercises Holder's Net Exercise Right pursuant to Section 1(b)
thereof .
and requests that the certificates for such shares be issued in the name of, and
delivered to ________________________________, whose address is ________________
______________________________________________________________________________ .
DATED: ______________
________________________________________
(Signature must conform in all respects
to name of Holder as specified on the
face of the Warrant)
________________________________________
________________________________________
(Address)
<PAGE> 10
EXHIBIT B
NOTICE OF ASSIGNMENT FORM
FOR VALUE RECEIVED, _________________________________________ hereby
sells, assigns and transfers all of the rights of the undersigned under the
attached Warrant with respect to the number of shares of Common Stock covered
thereby set forth below, to:
<TABLE>
<CAPTION>
NAME OF ASSIGNEE ADDRESS/FAX NUMBER NO. OF SHARES
---------------- ------------------ -------------
<S> <C> <C>
</TABLE>
Dated:_________________
Signature:_________________________
Witness: __________________________
<PAGE> 1
EXHIBIT 5.01
Letterhead of Venture Law Group
August 12, 1999
Corixa Corporation
1124 Columbia Street, Suite 200
Seattle, Washington 98104
REGISTRATION STATEMENT ON FORM S-4 (FILE NO. 333-81939)
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-4 (File No.
333-81939) (the "Registration Statement") to be filed by you with the Securities
and Exchange Commission on June 30, 1999, as amended on August 12, 1999, in
connection with the registration under the Securities Act of 1933 of shares of
your Common Stock (the "Shares"). As your legal counsel in connection with
this transaction, we have examined the proceedings taken and we are familiar
with the proceedings proposed to be taken by you in connection with the sale
and issuance of the Shares.
It is our opinion that the Shares, when issued and sold in the manner
described in the Registration Statement, will be legally and validly issued,
fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the
Registration Statement and further consent to the use of our name wherever it
appears in the Registration Statement and in any amendment to it.
Sincerely,
VENTURE LAW GROUP
A Professional Corporation
/S/ VENTURE LAW GROUP
<PAGE> 1
EXHIBIT 8.01
FORM OF TAX OPINION
____ __, 1999
Corixa Corporation
1124 Columbia Street, Suite 200
Seattle, WA 98104-2040
Ladies and Gentlemen:
We have acted as counsel for Corixa Corporation, a Delaware corporation
("Company"), in connection with the preparation and execution of the Agreement
and Plan of Merger dated as of June 9, 1999, by and among Company and Ribi
ImmunoChem Research, Inc., a Delaware corporation ("Target"). Pursuant to the
Agreement, Target will merge with and into Company (the "Merger"). Unless
otherwise defined, capitalized terms referred to herein have the meanings set
forth in the Agreement. All section references, unless otherwise indicated, are
to the Internal Revenue Code of 1986, as amended (the "Code").
You have requested our opinion regarding certain United States federal
income tax consequences of the Merger. In delivering this opinion, we have
reviewed and relied upon (without any independent investigation) the facts,
statements, descriptions and representations set forth in the Agreement
(including Exhibits), the registration statement on Form S-4 filed with the
Securities and Exchange Commission (which includes a proxy statement-prospectus
relating to the Merger) (the "Registration Statement"), and such other documents
pertaining to the Merger as we have deemed necessary or appropriate. We have
also relied upon (without any independent investigation) certificates of
officers of Company and Target, respectively (the "Officers' Certificates") in
forms attached hereto as Exhibits A and B.
In connection with rendering this opinion, we have also assumed (without
any independent investigation) that:
1. At all relevant times prior to and including the Effective Time, (i)
no outstanding indebtedness of Target or Company has or will represent equity
for tax purposes; (ii) no outstanding equity of Target or Company has
represented or will represent indebtedness for tax purposes; (iii) no
outstanding security, instrument, agreement or arrangement that provides for,
contains, or represents either a right to acquire Target's capital stock (or to
share in the appreciation thereof) constitutes or will constitute "stock" for
purposes of Section 368(c) of the Code.
<PAGE> 2
Corixa Corporation
____ __, 1999
Page 2
2. Original documents (including signatures) are authentic, documents
submitted to us as copies conform to the original documents, and there has been
(or will be by the Effective Time) due execution and delivery of all documents
where due execution and delivery are prerequisites to effectiveness thereof.
3. Any representation or statement referred to above made "to the
knowledge of," "to the best of the knowledge" or otherwise similarly qualified
is correct without such qualification. As to all matters in which a person or
entity making a representation referred to above has represented that such
person or entity either is not a party to, does not have, or is not aware of,
any plan, intention, understanding or agreement, there is in fact no such plan,
intention, understanding or agreement.
4. All statements, descriptions and representations contained in any of
the documents referred to herein or otherwise made to us are true and correct in
all material respects and will continue to be true and correct in all material
respects as of the Effective Time and all other relevant times, and no actions
have been (or will be) taken which are inconsistent with such representations.
5. The Merger will be reported by Company and Target on their respective
federal income tax returns in a manner consistent with the opinion set forth
below.
6. The Merger will be consummated in accordance with the Agreement (and
without any waiver, breach or amendment of any of the provisions thereof) and
will be effective under the applicable state laws.
7. An opinion of counsel, substantially identical in substance to this
opinion, has been delivered to Target from Morrison & Foerster LLP, and will not
be withdrawn prior to the Effective Time.
Based on our examination of the foregoing items and subject to the
assumptions, exceptions, limitations and qualifications set forth herein and in
the Registration Statement, we are of the opinion that if the Merger is
consummated in accordance with the provisions of the Agreement (and without any
waiver, breach or amendment of any of the provisions thereof) and the statements
set forth in the Officers' Certificates are true and correct as of the Effective
Time:
(a) the Merger will be a "reorganization" for federal income tax
purposes within the meaning of Section 368(a) of the Code, and Company and
Target will each be "a party to a reorganization" within the meaning of Section
368(b) of the Code; and
<PAGE> 3
Corixa Corporation
____ __, 1999
Page 3
(b) the disclosure of the material federal income tax
consequences of the Merger to Target stockholders in the Registration Statement
under the heading "Federal Income Tax Consequences" is correct in all material
respects, subject to the limitations set forth therein.
This opinion represents and is based upon our best judgment regarding
the application of federal income tax laws arising under the Code, existing
judicial decisions, administrative regulations and published rulings and
procedures. Our opinion is not binding upon the Internal Revenue Service or the
courts, and there is no assurance that the Internal Revenue Service will not
successfully assert a contrary position. Furthermore, no assurance can be given
that future legislative, judicial or administrative changes, on either a
prospective or retroactive basis, would not adversely affect the accuracy of the
conclusions stated herein. Nevertheless, we undertake no responsibility to
advise you of any new developments in the application or interpretation of the
federal income tax laws.
This opinion concerning certain of the U.S. federal tax consequences of
the Merger is limited to the specific U.S. federal tax consequences presented
above, and does not address any other federal, state, local or foreign tax
consequences that may result from the Merger or any other transaction (including
any transaction undertaken in connection with the Merger).
No opinion is expressed as to any transaction other than the Merger as
described in the Agreement or to any transaction whatsoever, including the
Merger, if all the transactions described in the Agreement are not consummated
in accordance with the terms of such Agreement and without waiver or breach of
any material provision thereof or if all of the representations, warranties,
statements and assumptions upon which we relied are not true and accurate at all
relevant times. In the event any one of the statements, representations,
warranties or assumptions upon which we have relied to issue this opinion is
incorrect, our opinion might be adversely affected and may not be relied upon.
<PAGE> 4
Corixa Corporation
____ __, 1999
Page 4
We consent to the use of this opinion as an exhibit to the Registration
Statement, to references to this opinion in the Registration Statement and to
the use of our name in the Registration Statement under the heading "Federal
Income Tax Consequences" therein. In giving this consent, we do not admit that
we are within the category of persons whose consent is required under Section 7
of the Securities Act of 1933, as amended, or the rules or regulations
promulgated thereunder. The filing of this opinion as an exhibit to the
Registration Statement and the references to the opinion and our firm therein
are not intended to create liability under applicable state law to any person
other than Company, our client.
Very truly yours,
VENTURE LAW GROUP
A Professional Corporation
<PAGE> 1
EXHIBIT 8.02
FORM OF TAX OPINION
[MORRISON & FOERSTER LLP LETTERHEAD]
____ __, 1999
Ribi Immunochem Research, Inc.
553 Old Corvallis Road
Hamilton, Montana 59840
Ladies and Gentlemen:
We have acted as counsel for Ribi Immunochem Research, Inc., a Delaware
corporation ("Ribi"), in connection with the preparation and execution of the
Agreement and Plan of Merger dated as of June 9, 1999, by and Ribi and Corixa
Corporation, a Delaware corporation ("Corixa"). Pursuant to the Agreement, Ribi
will merge with and into Corixa (the "Merger"). Unless otherwise defined,
capitalized terms referred to herein have the meanings set forth in the
Agreement. All section references, unless otherwise indicated, are to the
Internal Revenue Code of 1986, as amended (the "Code").
You have requested our opinion regarding certain United States federal
income tax consequences of the Merger. In delivering this opinion, we have
reviewed and relied upon (without any independent investigation) the facts,
statements, descriptions and representations set forth in the Agreement
(including Exhibits), the registration statement on Form S-4 filed with the
Securities and Exchange Commission (which includes a proxy statement-prospectus
relating to the Merger) (the "Registration Statement"), and such other documents
pertaining to the Merger as we have deemed necessary or appropriate. We have
also relied upon (without any independent investigation) certificates of
officers of Corixa and Ribi, respectively (the "Officers' Certificates") in
forms attached hereto as Exhibits A and B.
In connection with rendering this opinion, we have also assumed (without
any independent investigation) that:
1. At all relevant times prior to and including the Effective Date, (i)
no outstanding indebtedness of Ribi or Corixa has or will represent equity for
tax purposes; (ii) no outstanding equity of Ribi or Corixa has represented or
will represent indebtedness for tax purposes; (iii) no outstanding security,
instrument, agreement or arrangement that provides for, contains, or represents
either a right to acquire Ribi's
<PAGE> 2
MORRISON & FOERSTER LLP
Corixa Corporation
____ __, 1999
Page 2
capital stock (or to share in the appreciation thereof) constitutes or will
constitute "stock" for purposes of Section 368(c) of the Code.
2. Original documents (including signatures) are authentic, documents
submitted to us as copies conform to the original documents, and there has been
(or will be by the Effective Time) due execution and delivery of all documents
where due execution and delivery are prerequisites to effectiveness thereof.
3. Any representation or statement referred to above made "to the
knowledge of," "to the best of the knowledge" or otherwise similarly qualified
is correct without such qualification. As to all matters in which a person or
entity making a representation referred to above has represented that such
person or entity either is not a party to, does not have, or is not aware of,
any plan, intention, understanding or agreement, there is in fact no such plan,
intention, understanding or agreement.
4. All statements, descriptions and representations contained in any of
the documents referred to herein or otherwise made to us are true and correct in
all material respects and will continue to be true and correct in all material
respects as of the Effective Time and all other relevant times, and no actions
have been (or will be) taken which are inconsistent with such representations.
5. The Merger will be reported by Corixa and Ribi on their respective
federal income tax returns in a manner consistent with the opinion set forth
below.
6. The Merger will be consummated in accordance with the Agreement (and
without any waiver, breach or amendment of any of the provisions thereof) and
will be effective under the applicable state laws.
7. An opinion of counsel, substantially identical in substance to this
opinion, has been delivered to Ribi from Morrison & Foerster LLP, and will not
be withdrawn prior to the Effective Date.
Based on our examination of the foregoing items and subject to the
assumptions, exceptions, limitations and qualifications set forth herein and in
the Registration Statement, we are of the opinion that if the Merger is
consummated in accordance with the provisions of the Agreement (and without any
waiver, breach or amendment of any of the provisions thereof) and the statements
set forth in the Officers' Certificates are true and correct as of the Effective
Time:
(a) the Merger will be a "reorganization" for federal income tax
purposes within the meaning of Section 368(a) of the Code;
<PAGE> 3
MORRISON & FOERSTER LLP
Corixa Corporation
____ __, 1999
Page 3
(b) each of Ribi and Corixa will be a "party to a reorganization"
within the meaning of Section 368(b) of the Code; and
(c) the disclosure of the material federal income tax
consequences of the Merger to Ribi stockholders in the Registration Statement
under the heading "Material Federal Income Tax Considerations" is correct in all
material respects, subject to the limitations set forth therein.
This opinion represents and is based upon our best judgment regarding
the application of federal income tax laws arising under the Code, existing
judicial decisions, administrative regulations and published rulings and
procedures. Our opinion is not binding upon the Internal Revenue Service or the
courts, and there is no assurance that the Internal Revenue Service will not
successfully assert a contrary position. Furthermore, no assurance can be given
that future legislative, judicial or administrative changes, on either a
prospective or retroactive basis, would not adversely affect the accuracy of the
conclusions stated herein. Nevertheless, we undertake no responsibility to
advise you of any new developments in the application or interpretation of the
federal income tax laws.
This opinion concerning certain of the U.S. federal tax consequences of
the Merger is limited to the specific U.S. federal tax consequences presented
above, and does not address any other federal, state, local or foreign tax
consequences that may result from the Merger or any other transaction (including
any transaction undertaken in connection with the Merger).
No opinion is expressed as to any transaction other than the Merger as
described in the Agreement or to any transaction whatsoever, including the
Merger, if all the transactions described in the Agreement are not consummated
in accordance with the terms of such Agreement and without waiver or breach of
any material provision thereof or if all of the representations, warranties,
statements and assumptions upon which we relied are not true and accurate at all
relevant times. In the event any one of the statements, representations,
warranties or assumptions upon which we have relied to issue this opinion is
incorrect, our opinion might be adversely affected and may not be relied upon.
<PAGE> 4
MORRISON & FOERSTER LLP
Corixa Corporation
____ __, 1999
Page 4
We consent to the use of this opinion as an exhibit to the Registration
Statement, to references to this opinion in the Registration Statement and to
the use of our name in the Registration Statement under the heading "Material
Federal Income Tax Consequences" therein. In giving this consent, we do not
admit that we are within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended, or the rules or regulations
promulgated thereunder. The filing of this opinion as an exhibit to the S-4
Registration Statement and the references to the opinion and our firm therein
are not intended to create liability under applicable state law to any person
other than Corixa, our client.
Very truly yours,
MORRISON & FOERSTER LLP
<PAGE> 1
EXHIBIT 10.24
RIBI IMMUNOCHEM RESEARCH, INC.
1996 STOCK OPTION PLAN
SECTION 1: PURPOSE
The purpose of the Ribi ImmunoChem Research, Inc. 1996 Stock Option
Plan (the "Plan") is to further the growth and development of Ribi ImmunoChem
Research, Inc. (the "Company") by affording an opportunity for stock ownership
to selected employees, Directors and consultants of the Company and its
Subsidiaries who are responsible for the conduct and management of its business
or who are involved in endeavors significant to its success.
SECTION 2: DEFINITIONS
Unless otherwise indicated, the following words when used herein shall
have the following meanings:
(a) "Board of Directors" shall mean the Board of Directors of the
Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(c) "Common Stock" shall mean the Company's common stock (par value
$.001 per share) and any share or shares of the Company's stock
hereafter issued or issuable in substitution for such shares.
(d) "Disability" shall mean a person's inability to engage in any
substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected
to result in death or which has lasted or can be expected to last
for a continuous period of not less than 12 months.
(e) "Director" shall mean a member of the Board of Directors.
(f) "Incentive Stock Option" shall mean any option granted to an
eligible employee under the Plan, which the Company intends at
the time the option is granted to be an Incentive Stock Option
within the meaning of Section 422 of the Code.
(g) "Nonqualified Stock Option" shall mean any option granted to an
eligible employee, Non-Employee Director or consultant under the
Plan which is not an Incentive Stock Option.
(h) "Non-Employee Director" shall mean any Director who is not an
employee of the Company.
(i) "Option" shall mean and refer collectively to Incentive Stock
Options and Nonqualified Stock Options.
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(j) "Optionee" shall mean any employee, Non-Employee Director or
consultant who is granted an option under the Plan. "Optionee"
shall also mean the personal representative of an Optionee and
any other person who acquires the right to exercise an Option by
bequest or inheritance.
(k) "Stock Appreciation Right" shall mean a right to surrender to the
Company all or a portion of an Option, to the extent the Option
is then exercisable, and to receive in exchange a payment as
provided in Section 11.
(l) "Subsidiary" shall mean a subsidiary corporation of the Company
as defined in Section 424(f) of the Code.
SECTION 3: EFFECTIVE DATE
The effective date of the Plan is February 11, 1996; provided,
however, that such adoption is subject to approval and ratification by the
stockholders of the Company within 12 months of the effective date. No Options
may be granted under the Plan prior to approval of the Plan by the stockholders
of the Company.
SECTION 4: ADMINISTRATION
4.1 ADMINISTRATIVE COMMITTEE. The Plan shall be administered by the
Board of Directors of the Company (the "Board"). Subject to Subsection 4.3
below, the Board may delegate the responsibility for administering the Plan to a
committee, under such terms and conditions as the Board shall determine (the
"Committee"). The Committee shall consist of two or more members of the Board or
such lesser number of members of the Board as permitted by Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended ("Rule 16b-
3"). Except as permitted by Rule 16b-3, none of the members of the Committee
shall receive, while serving on the Committee, or during the one-year period
preceding appointment to the Committee, a grant or award of equity securities
under (a) the Plan or (b) any other plan of the Company or its affiliates under
which the participants are entitled to acquire Common Stock, Options, related
rights or Stock Appreciation Rights of the Company or any of its Subsidiaries,
other than pursuant to the grant of Options provided in Subsection 7.8 below,
and pursuant to transactions in any such other plan which do not disqualify a
Director from being a disinterested person under Rule 16b-3. The limitations set
forth in this Subsection 4.1 shall automatically incorporate any additional
requirements that may in the future be necessary for the Plan to comply with
Rule 16b-3. Members of the Committee shall serve at the pleasure of the Board.
If the Board does not delegate administration of the Plan to the Committee, then
each reference in this Plan to "the Committee" shall be construed to refer to
the Board.
4.2 COMMITTEE MEETINGS AND ACTIONS. The Committee shall hold meetings
at such times and places as it may determine and shall select one of its members
as chairman. A majority of the members of the Committee shall constitute a
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<PAGE> 3
quorum, and the acts of the majority of the members present at a meeting or a
consent in writing signed by all members of the Committee shall be the acts of
the Committee and shall be final, binding and conclusive upon all persons,
including the Company, its Subsidiaries, its stockholders, and all persons
having any interest in Options which may be or have been granted pursuant to the
Plan.
4.3 POWERS OF COMMITTEE. Except for Options granted to Non-Employee
Directors pursuant to Subsection 7.8, the Committee shall have the full and
exclusive right to grant and determine terms and conditions of all Options
granted under the Plan and to prescribe, amend and rescind rules and regulations
for administration of the Plan. In granting Options, the Committee shall take
into consideration the contribution the Optionee has made or may make to the
success of the Company or its Subsidiaries and such other factors as the
Committee shall determine. Except for Options granted to Non-Employee Directors
pursuant to Subsection 7.8, the Committee may amend the terms of any outstanding
Option granted under this Plan, but any amendment which would adversely affect
the Optionee's rights under an outstanding Option shall not be made without the
Optionee's written consent. The Committee may, with the Optionee's written
consent, cancel any outstanding Option or accept any outstanding Option in
exchange for a new Option.
4.4 INTERPRETATION OF PLAN. The determination of the Committee as to
any disputed question arising under the Plan, including questions of
construction and interpretation, shall be final, binding and conclusive upon all
persons, including the Company, its Subsidiaries, its stockholders and all
persons having any interest in Options which may be or have been granted
pursuant to the Plan.
SECTION 5: STOCK SUBJECT TO THE PLAN
5.1 NUMBER. The aggregate number of shares of Common Stock which may
be issued under Options granted pursuant to the Plan shall not exceed 900,000
shares. Such shares may consist, in whole or in part, of authorized but unissued
stock or treasury stock of the Company not reserved for any other purpose.
5.2 UNUSED STOCK. If any outstanding Option under the Plan expires or
for any other reason ceases to be exercisable, in whole or in part, other than
upon exercise of the Option or a related Stock Appreciation Right, the shares
which were subject to such Option and as to which the Option had not been
exercised shall continue to be available under the Plan.
5.3 ADJUSTMENT FOR CHANGE IN OUTSTANDING SHARES. If there is any
change, increase or decrease, in the outstanding shares of Common Stock which is
effected without receipt of additional consideration by the Company, by reason
of a stock dividend (in excess of 2 percent), re-incorporation, reorganization,
recapitalization, merger, consolidation, stock split, combination or exchange of
stock, or other similar change in the capital structure of the Company, then in
each such event, the Committee shall make an appropriate adjustment in the
aggregate number of shares of stock available under the Plan, the number of
shares of stock subject to each outstanding Option and the option prices in
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<PAGE> 4
order to preserve but not to increase the benefits to an Optionee; provided,
however, that fractional shares shall be rounded to the nearest whole share. The
Committee's determinations in making adjustments shall be final and conclusive.
SECTION 6: ELIGIBILITY
All full- or part-time salaried employees of the Company and its
Subsidiaries who are responsible for the conduct and management of its business
or who are involved in endeavors significant to its success shall be eligible to
receive both Incentive Stock Options and Nonqualified Stock Options under the
Plan. Consultants who are neither full- nor part-time salaried employees of the
Company or its Subsidiaries but who are involved in endeavors significant to its
success shall be eligible to receive Nonqualified Stock Options, but not
Incentive Stock Options, under the Plan. Other than below-market Options granted
to Non-Employee Directors in lieu of part or all of his or her Director fees in
accordance with Subsection 7.8, Non-Employee Directors shall not be eligible to
receive grants under the Plan.
SECTION 7: GRANT OF OPTIONS
7.1 GRANT OF OPTIONS. Except for Options granted pursuant to
Subsection 7.8, the Committee may from time to time in its discretion determine
which of the eligible employees of the Company or its Subsidiaries should
receive Options, the type of Options to be granted (whether Incentive Stock
Options or Nonqualified Stock Options), the number of shares subject to such
Options, and the dates on which such Options are to be granted. In the case of
Incentive Stock Options, the aggregate fair market value (determined as of the
time such option is granted) of the Common Stock with respect to which Incentive
Stock Options are exercisable for the first time by an eligible employee in any
calendar year (under this Plan and any other plans of the Company or its
Affiliates) shall not exceed $100,000. If the aggregate fair market value of
stock with respect to which Incentive Stock Options are exercisable by an
Optionee for the first time during any calendar year exceeds $100,000, such
Options shall be treated as Nonqualified Stock Options to the extent required by
Section 422 of the Code. The rule set forth in the preceding sentence shall be
applied by taking Options into account in the order in which they were granted.
7.2 OPTION AGREEMENT. Except for grants to Non-Employee Directors
pursuant to Subsection 7.8, which shall be granted on the form of Option
Agreement attached hereto as Exhibit A, the Option Agreement may contain such
other terms, provisions and conditions as may be determined by the Committee not
inconsistent with this Plan. If an Option, or any part thereof is intended to
qualify as an Incentive Stock Option, the Option Agreement shall contain those
terms and conditions which are necessary to so qualify it.
7.3 OPTION PRICE. Except as provided for in Subsection 7.8 below, the
option price per share of Common Stock under each Option shall be determined by
the Committee and stated in the Option Agreement. Except as provided for in
Subsection 7.8 below, the option price for Options granted under the Plan shall
not be less than 100% of the fair market value (determined as of the day the
Option is granted) of the shares subject to the Option.
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<PAGE> 5
7.4 DETERMINATION OF FAIR MARKET VALUE. If the Common Stock is listed
upon an established stock exchange or exchanges, then the fair market value per
share shall be deemed to be the mean between the highest and lowest quoted
selling prices of the Common Stock on such stock exchange or exchanges on the
day for which the determination is made, or if no sale of the Common Stock shall
have been made on any stock exchange on that day, on the next preceding day on
which there was such a sale. If the Common Stock is not listed upon an
established stock exchange but is traded in the national over-the-counter
market, the fair market value per share shall be deemed to be the closing price
of the Common Stock in the national over-the-counter market on the day for which
the determination is made, or if there shall have been no trading of the Common
Stock on that day, on the next preceding day on which there was such trading. If
the Common Stock is not listed upon an established stock exchange and is not
traded in the national over-the-counter market, the fair market value per share
shall be deemed to be an amount as determined by the Committee by applying any
reasonable valuation method.
7.5 DURATION OF OPTIONS. Each Option shall be of a duration as
specified in the Option Agreement; provided, however, that the term of each
Option shall be no more than ten years from the date on which the Option is
granted and shall be subject to early termination as provided herein.
7.6 ADDITIONAL LIMITATIONS ON GRANT. No Incentive Stock Option shall
be granted to an employee who, at the time the Incentive Stock Option is
granted, owns stock (as determined in accordance with Section 424(d) of the
Code) representing more than 10% of the total combined voting power of all
classes of stock of the Company, unless the option price of such Incentive Stock
Option is at least 110% of the fair market value (determined as of the day the
Incentive Stock Option is granted) of the stock subject to the Incentive Stock
Option and the Incentive Stock Option by its terms is not exercisable more than
five years from the date it is granted.
7.7 OTHER TERMS AND CONDITIONS. Except for Options granted pursuant to
Subsection 7.8, Options may contain such other provisions, which shall not be
inconsistent with the Plan, as the Committee shall deem appropriate, including,
without limitation, provisions that relate the Optionee's ability to exercise an
Option to the passage of time or the achievement of specific goals established
by the Committee.
7.8 NON-EMPLOYEE DIRECTOR OPTIONS. Each Non-Employee Director may
elect to receive below-market, Nonqualified Stock Options to purchase Common
Stock of the Company in lieu of part or all of his or her Director fees. Such
election must be made by June 30 of each year prior to the year services are
provided. Such Options shall have an exercise price of eighty percent (80%) of
the fair market value of the Common Stock on the grant date. The number of
Options to be granted shall be determined by dividing the amount of the
Director's fees (that the Director irrevocably elected to take in the form of
below-market Options instead of cash) by the fair market value of a share of
Common Stock on the date of the grant after subtracting the discounted option
exercise price from such fair market value. These Options shall be granted at
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<PAGE> 6
the end of each calendar quarter and shall be fully vested as of the date of
grant; provided, however, said Options may not be exercised prior to six (6)
months after the date of grant. The term of these Options shall be for ten
years, and they shall not be transferable otherwise than by will or the laws of
descent and distribution and may only be exercised by the Director, his or her
guardian or legal representative during the exercise period as defined elsewhere
herein, except as provided in the Option Agreement attached hereto as Exhibit A.
SECTION 8: EXERCISE OF OPTIONS
8.1 MANNER OF EXERCISE. Subject to the limitations and conditions of
the Plan or the Option Agreement, an Option shall be exercisable, in whole or in
part, from time to time, by giving written notice of exercise to the President
of the Company or the President's designee, which notice shall specify the
number of shares of Common Stock to be purchased and shall be accompanied by
payment in full to the Company of the purchase price of the shares to be
purchased. Payment of the purchase price upon exercise of any Option granted
under this Plan shall be made in cash, by Optionee's personal check, a certified
check, bank draft, or postal or express money order payable to the order of the
Company in lawful money of the United States (collectively, "Cash
Consideration'); provided, however, that, except for Options granted under
Subsection 7.8, the Committee, in its sole discretion, may permit an Optionee to
pay the option price in whole or in part (a) with shares of Common Stock owned
by the Optionee; (b) by delivery on a form prescribed by the Committee of an
irrevocable direction to a securities broker approved by the Committee to sell
shares of Common Stock and deliver all or a portion of the proceeds to the
Company in payment for the Common Stock; or (c) in any combination of the
foregoing. The exercise price of any Options granted under Subsection 7.8 shall
be paid in Cash Consideration, the consideration specified in clauses (a) or (b)
of the preceding sentence, or in any combination thereof. Any Common Stock used
to exercise Options shall be valued at its fair market value on the date of the
exercise of the Option.
8.2 WITHHOLDING TAXES. No Common Stock shall be delivered under the
Plan to any participant until the participant has made arrangements acceptable
to the Committee for the satisfaction of federal, state, and local income and
social security tax withholding obligations, including, without limitation,
obligations incident to the receipt of Common Stock under the Plan or to the
failure to satisfy the conditions for treatment as Incentive Stock Options under
applicable tax law. Upon exercise of an Option, the Company may withhold from
the Optionee an amount sufficient to satisfy federal, state and local income and
social security tax withholding obligations.
8.3 ACCELERATION OF EXERCISE PERIOD. Notwithstanding any vesting
requirements contained in any Option Agreement, all outstanding Options shall
become immediately exercisable (a) following the first purchase of Common Stock
pursuant to a tender offer or exchange offer (other than an offer made by the
Company) for all or part of the Common Stock, (b) at such time as a third
person, including a "group" as defined in Section 13(d)(3) of the Securities
Exchange Act of 1934, becomes the beneficial owner of shares of the Company
having 25% or more of the total number of votes that may be cast for the
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<PAGE> 7
election of Directors of the Company, (c) on the date on which the stockholders
of the Company approve (i) any agreement for a merger or consolidation in which
the Company will not survive as an independent, publicly owned corporation or
(ii) any sale, exchange or other disposition of all or substantially all of the
Company's assets, or (d) on any date on which the persons who were the Directors
of the Company 90 days prior to such date no longer constitute a majority of the
Board of Directors of the Company or any successor to the Company. The
Committee's reasonable determination as to whether such an event has occurred
shall be final and conclusive.
SECTION 9: TERMINATION OF EMPLOYMENT
9.1 TERMINATION UPON RETIREMENT OR WITH COMMITTEE APPROVAL. Upon
termination of an Optionee's employment with the Company or a Subsidiary upon
retirement at or after age 65 or under circumstances for which the Committee,
either before or after the termination, has given its approval, and other than
upon death or Disability, an Optionee may, at any time within three months after
the date of termination but not later than the date of expiration of the Option,
exercise the Option or Stock Appreciation Right to the extent the Optionee was
entitled to do so on the date of termination. Any Options not exercisable as of
the date of termination and any Options or portions of Options of terminated
employees not exercised as provided herein shall terminate.
9.2 TERMINATION BY DEATH OF OPTIONEE. If an Optionee dies while in the
employ of the Company or a Subsidiary or within a period of three months after
the termination upon retirement pursuant to Subsection 9.1 above of his
employment with the Company or a Subsidiary, the personal representatives of the
Optionee's estate or the person or persons who shall have acquired the Option
from the Optionee by bequest or inheritance may exercise the Option or Stock
Appreciation Right at any time within the year after the date of death but not
later than the expiration date of the Option, to the extent the Optionee was
entitled to do so on the date of death. Any Options not exercisable as of the
date of death and any Options or portions of Options of deceased employees not
exercised as provided herein shall terminate.
9.3 TERMINATION BY DISABILITY OF OPTIONEE. Upon termination of an
Optionee's employment with the Company or a Subsidiary by reason of the
Optionee's Disability, the Optionee may exercise the Option or Stock
Appreciation Right at any time within one year after the date of termination but
not later than the expiration date of the Option, to the extent the Optionee was
entitled to do so on the date of termination. Any Options not exercisable as of
the date of termination under this Subsection 9.3 and any Options or portions of
Options of disabled employees not exercised as provided herein shall terminate.
9.4 OTHER TERMINATIONS. Upon termination of an Optionee's employment
with the Company or a Subsidiary under circumstances other than those set forth
in Subsections 9.1 through 9.3, Options granted to the Optionee shall terminate
immediately.
9.5 TERMINATION OF DIRECTORS AND CONSULTANTS. For purposes of this
Section 9, a termination of employment shall be deemed to include the
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<PAGE> 8
termination of a Director's service as a member of the Board of Directors and
the termination of a consulting arrangement in the case of consultants. The
effect of the termination of a Non-Employee Director's service as a member of
the Board of Directors on the exercisability of Options granted pursuant to
Subsection 7.8 shall be determined in accordance with the terms of the Option
Agreement evidencing such Options, attached hereto as Exhibit A.
SECTION 10: NON-TRANSFERABILITY OF OPTION
To the extent required by Rule 16b-3, no Option granted pursuant to
this Plan shall be transferable by the holder except by operation of law or by
will or the laws of descent and distribution; provided, that, if Rule 16b-3 is
amended after the date of the Board's adoption of the Plan to permit broader
transferability of Options under that Rule, (a) Options granted under Subsection
7.8 to Non-Employee Directors shall be transferable to the fullest extent
permitted by Rule 16b-3 as so amended, (b) any other Option shall be
transferable to the extent provided in the Option Agreement covering the Option,
and the Committee shall have discretion to amend any such outstanding Option to
provide for broader transferability of the Option as the Committee may authorize
within the limitations of Rule 16b-3. Notwithstanding the foregoing, if required
by the Code, each Incentive Stock Option under the Plan shall be transferable by
the Optionee only by will or the laws of descent and distribution, and, during
the Optionee's lifetime, shall be exercisable only by the Optionee. In the event
of any Rule 16b-3 permitted transfer of an Option hereunder, the transferee
shall be entitled to exercise the Option in the same manner and only to the same
extent as the Optionee (or his personal representative or the person who would
have acquired the right to exercise the Option by bequest or intestate
succession) would have been entitled to exercise the Option had the Option not
been transferred.
SECTION 11: STOCK APPRECIATION RIGHTS
Except for Options granted pursuant to Subsection 7.8, any Option
under the Plan may include a right (the "Stock Appreciation Right") to surrender
to the Company all or a portion of the Option, to the extent the Option is then
exercisable, and to receive in exchange a payment equal to the excess of the
fair market value on the date preceding the date of surrender of the shares
covered by the Option (or the portion that is surrendered) over the aggregate
option price of such shares. Such payment shall be made by the Company in shares
of Common Stock, in cash or partly in Common Stock and partly in cash, as the
Committee in its sole discretion shall determine, whether before or after
exercise of the Stock Appreciation Right. A Stock Appreciation Right may be
granted by the Committee concurrently with the grant of the Option or thereafter
by amendment to the Option. A Stock Appreciation Right may contain such terms
and conditions, which shall not be inconsistent with the Plan, as the Committee
shall deem appropriate, including, without limitation, a provision that limits
the amount which may be paid in satisfaction of a Stock Appreciation Right to
some multiple of the option exercise price of the underlying Option or a
provision which limits the times at which a Stock Appreciation Right may be
exercised. Shares subject to Options (or such portion of an Option that has been
surrendered upon exercise of a Stock Appreciation Right) shall not thereafter be
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available for Option grants under the Plan.
SECTION 12: ISSUANCE OF SHARES
12.1 TRANSFER OF SHARES TO OPTIONEE. As soon as practicable after the
Optionee has given the Company written notice of exercise of an Option or Stock
Appreciation Right and, upon exercise of an Option, has otherwise met the
requirements of Subsections 8.1 and 8.2, the Company shall issue or transfer to
the Optionee the number of shares of Common Stock as to which the Option has
been exercised or with respect to which the Stock Appreciation Right will be
paid and shall deliver to the Optionee a certificate or certificates therefor,
registered in Optionee's name. In no event shall the Company be required to
transfer fractional shares to the Optionee, and in lieu thereof, the Company may
pay an amount in cash equal to the fair market value of such fractional shares
on the date of exercise. If the issuance or transfer of shares by the Company
would for any reason, in the opinion of counsel for the Company, violate any
applicable federal or state laws or regulations, the Company may delay issuance
or transfer of such shares to the Optionee until compliance with such laws can
reasonably be obtained.
12.2 INVESTMENT REPRESENTATION. Upon demand by the Company, the
Optionee shall deliver to the Company a representation in writing that the
purchase of all shares with respect to which notice of exercise of the Option or
Stock Appreciation Right has been given by Optionee is being made for investment
only and not for resale or with a view to distribution, and containing such
other representations and provisions with respect thereto as the Company may
require. Upon such demand, delivery of such representation promptly and prior to
the transfer or delivery of any such shares and prior to the expiration of the
Option period shall be a condition precedent to the right to purchase such
shares.
SECTION 13: AMENDMENTS
The Board of Directors may at any time and from time to time alter,
amend, suspend or terminate the Plan or any part thereof as it may deem proper,
except that no such action shall diminish or impair the rights under an Option
previously granted; provided, however, that unless the stockholders of the
Company shall have given their approval, the total number of shares for which
Options may be issued under the Plan shall not be increased, except as
provided in Subsection 5.3, and no amendment shall be made which reduces the
price at which the Common Stock may be offered under the Plan below the minimum
required by Subsection 7.3, except as provided in Subsection 5.3, or which
materially modifies the requirements as to eligibility for participation in the
Plan. Notwithstanding the foregoing provisions of this Section 13, the
provisions set forth in Subsection 7.8 of the Plan (and any other sections of
the Plan that affect the terms of Options granted to Non-Employee Directors
required to be specified in the Plan by Rule 16b-3) shall not be amended
periodically and in no event more than once every six months, other than to
comport with changes to the Code, the Employee Retirement Income Security Act of
1974, as amended, or any applicable rules and regulations thereunder.
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SECTION 14: TERM OF PLAN
This Plan shall terminate at midnight on February 11, 2006; provided,
however, that the Board of Directors may at any time prior thereto suspend or
terminate the Plan.
SECTION 15: RIGHTS AS STOCKHOLDER
An Optionee shall have no rights as a stockholder of the Company with
respect to any shares of Common Stock covered by an Option until the date of the
issuance of the stock certificate for such shares.
SECTION 16: RULE 16B-3 COMPLIANCE
Transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the Exchange Act. To the extent
any provision of the Plan or action by the Board or the Committee fails to so
comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Board or the Committee. Moreover, in the event the Plan
does not include a provision required by Rule 16b-3 to be stated therein in
order to qualify the grants under Subsection 7.8 hereof as grants under a non-
discretionary formula under Rule 16b-3 such provision (other than one relating
to eligibility requirements, or the price and amount of awards) shall be deemed
automatically to be incorporated by reference into the Plan with respect to
grants of Options to Non-Employee Directors.
SECTION 17: GOVERNING LAW
Options granted under this Plan shall be construed and shall take
effect in accordance with the law of the State of Montana, except to the extent
it is superseded by the laws of the United States.
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EXHIBIT A (of Appendix A)
RIBI IMMUNOCHEM RESEARCH, INC.
DIRECTORS' NON-QUALIFIED STOCK OPTION AGREEMENT
This agreement (the "Agreement") is made as of _____________, 199__
(the "Grant Date") between Ribi ImmunoChem Research, Inc. (the "Company") and
_________________ ("Optionee").
WITNESSETH:
WHEREAS, the Company has adopted the Ribi ImmunoChem Research, Inc.
1996 Stock Option Plan (the "Plan"), which Plan is incorporated in this
Agreement by reference and made a part of it (capitalized terms shall have the
meaning ascribed to them in the Plan);
WHEREAS, the Plan provides for option grants to Non-Employee Directors
of the Company;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth, the parties to this Agreement hereby agree as follows:
1. OPTION GRANT. The Company hereby grants to Optionee the right and
option to purchase from the Company on the terms and conditions hereinafter set
forth, all or any part of an aggregate of _________ Thousand (___________)
shares of the Common Stock, $.001 par value, of the Company (the "Stock"). The
exercise price of the Stock subject to this option shall be $_______ per share,
which price is 80% of the per share fair market value as of the Grant Date.
2. OPTION PERIOD. This option shall be exercisable only during the
Option Period, and during such Option Period, the exercisability of the option
shall be subject to the limitations of paragraph 3 and the vesting provisions of
paragraph 4. The Option Period shall commence on the Grant Date and, except as
provided in paragraph 3, shall end on the Terminal Date which shall be ten years
from the Grant Date.
3. LIMITS ON OPTION PERIOD. The Option Period may end before the
Terminal Date, as follows:
(a) If Optionee ceases to be a Director on the Company's Board of
Directors (the "Board") for any reason other than cause, disability (within the
meaning of subparagraph (c) below) or death during the Option Period, the Option
Period shall terminate three months after the date Optionee ceases to be a
Director or on the Terminal Date, whichever shall first occur, and the option
shall be exercisable only to the extent exercisable under paragraph 4 on the
date Optionee ceases to be a Director.
(b) If Optionee dies while serving on the Board, the Option
Period shall end one year after the date of death or on the Terminal Date,
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whichever shall first occur, and Optionee's executor or administrator or the
person or persons to whom Optionee's rights under this option shall pass by will
or by the applicable laws of descent and distribution may exercise this option
only to the extent exercisable under paragraph 4 on the date of Optionee's
death.
(c) If Optionee ceases to be a Director by reason of disability,
as defined below, the Option Period shall end one year after the date Optionee
ceases to be a Director or on the Terminal Date, whichever shall first occur,
and this option shall be exercisable only to the extent exercisable under
paragraph 4 on the date Optionee ceases to be a Director. For purposes of this
subparagraph (c), an individual is permanently and totally disabled if he is
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period of
not less than 12 months. An individual shall not be considered to be permanently
and totally disabled unless he or she furnishes proof of the existence thereof
in such form and manner, and at such times, as the Board may require.
(d) If Optionee is removed from the Board for cause during the
Option Period, the Option Period shall terminate on the date of such Optionee's
removal as a Director and shall not thereafter be exercisable to any extent.
4. VESTING OF RIGHT TO EXERCISE OPTIONS. This option is fully vested;
provided, however, said option may not be exercised prior to six (6) months
following the Grant Date. No partial exercise of this option may be for less
than five percent (5%) of the total number of shares then available under this
option to purchase shares of Stock. In no event shall the Company be required to
issue fractional shares. Notwithstanding the foregoing, all options granted
under this Agreement shall be subject to the provisions of Subsection 8.3 of the
Plan (relating to the acceleration of vesting upon the occurrence of certain
events).
5. METHOD OF EXERCISE. Optionee may exercise the option with respect
to all or any part of the shares of Stock then subject to such exercise as
follows:
(a) By giving the President of the Company or the President's
designee written notice of such exercise, specifying the number of such shares
as to which this option is exercised. Such notice shall be accompanied by an
amount equal to the exercise price of such shares, in the form of any one or
combination of the following: (1) Cash Consideration; or (2) by delivery on a
form prescribed by the Committee of an irrevocable direction to a securities
broker approved by the Committee to sell shares of Stock and deliver all or a
portion of the proceeds to the Company in payment for the Stock.
(b) If required by the Company, Optionee shall give the Company
satisfactory assurance in writing, signed by Optionee or Optionee's legal
representative, as the case may be, that such shares are being purchased for
investment and not with a view to the distribution thereof, provided that such
assurance shall be deemed inapplicable to (1) any sale of such shares by such
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<PAGE> 13
Optionee made in accordance with the terms of a registration statement covering
such sale, which has heretofore been (or may hereafter be) filed and become
effective under the Securities Act of 1933, as amended, and with respect to
which no stop order suspending the effectiveness thereof has been issued, and
(2) any other sale of such shares with respect to which, in the opinion of
counsel for the Company, such assurance is not required to be given in order to
comply with the provisions of the Securities Act of 1933, as amended.
(c) As soon as practicable after receipt of the notice required
in paragraph 5(a) and satisfaction of the conditions set forth in paragraph
5(b), the Company shall, without transfer or issue tax and without other
incidental expense to Optionee, deliver to Optionee at the office of the
Company, at 553 Old Corvallis Road, Hamilton, Montana 59840, attention of the
Corporate Secretary, or such other place as may be mutually acceptable to the
Company and Optionee, a certificate or certificates of such shares of Stock;
provided, however, that the time of such delivery may be postponed by the
Company for such period as may be required for it with reasonable diligence to
comply with applicable registration requirements under the Securities Act of
1933, as amended, the Securities Exchange Act of 1934, as amended, any
applicable listing requirements of any national securities exchange, and
requirements under any other law or regulation applicable to the issuance or
transfer of such shares. If Optionee fails to accept delivery of and pay for all
or any part of the number of shares specified in such notice upon tender or
delivery thereof, Optionee's right to purchase such shares may be terminated by
the Company at its election.
6. CHANGES IN CAPITALIZATION. If there should be any change in a class
of Stock subject to this option, through merger, consolidation, reorganization,
recapitalization, re-incorporation, stock split, stock dividend (in excess of 2
percent) or other change in the capital structure of the Company, the Company
shall make appropriate adjustments in order to preserve, but not to increase,
the benefits to Optionee, including adjustments of the number and kind of shares
of such Stock subject to this option and of the price per share. Any adjustment
made pursuant to this paragraph 6 as a consequence of a change in the capital
structure of the Company shall not entitle Optionee to acquire a number of
shares of such Stock of the Company or shares of stock of any successor company
greater than the number of shares Optionee would receive if, prior to such
change, Optionee had actually held a number of shares of such Stock equal to the
number of shares subject to this option.
7. LIMITATIONS ON TRANSFER. To the extent required by Rule 16b-3 of
the Exchange Act, no Option shall be transferable by an Optionee other than by
operation of law or by will or by the laws of descent or distribution; provided
that, if Rule 16b-3 is amended after the Board's adoption of the Plan to permit
greater transferability of an Option, the Option hereunder shall be transferable
to the fullest extent provided by Rule 16b-3 as so amended. In the event of any
Rule 16b-3 permitted transfer of the Option, the transferee shall be entitled to
exercise the Option in the same manner and only to the same extent as the
Optionee (or his personal representative or the person who would have acquired
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<PAGE> 14
the right to exercise the Option by bequest or intestate succession) would have
been entitled to exercise the Option had the Option not been transferred.
8. NO STOCKHOLDER RIGHTS. Neither Optionee nor any person entitled to
exercise Optionee's rights in the event of Optionee's death shall have any of
the rights of a stockholder with respect to the shares of Stock subject to this
option except to the extent the certificates for such shares shall have been
issued upon the exercise of this option.
9. NOTICE. Any notice required to be given under the terms of this
Agreement shall be addressed to the Company in care of its President at the
office of the Company at 553 Old Corvallis Road, Hamilton, Montana 59840, and
any notice to be given to Optionee shall be addressed to Optionee at the address
given by Optionee beneath Optionee's signature to this Agreement, or such other
address as either party to this Agreement may hereafter designate in writing to
the other. Any such notice shall be deemed to have been duly given when enclosed
in a properly sealed envelope addressed as aforesaid, registered or certified
and deposited (postage and registration or certification fee prepaid) in a post
office or branch post office regularly maintained by the United States.
10. SUCCESSORS. This Agreement shall be binding upon and inure to the
benefit of any successor or successors of the Company. Where the context
permits, "Optionee" as used in this Agreement shall include Optionee's executor,
administrator or other legal representative or the person or persons to whom
Optionee's rights pass by will or the applicable laws of descent and
distribution.
11. WITHHOLDING. Optionee agrees to make appropriate arrangements with
the Company for satisfaction of any applicable federal, state or local income
tax withholding requirements or social security requirements.
12. APPLICABLE LAW. The interpretation, performance, and enforcement
of this Agreement shall be governed by the laws of the State of Montana.
IN WITNESS WHEREOF, this Agreement has been executed as of the day and
year first written above.
Ribi ImmunoChem Research, Inc.,
a Delaware corporation
By_________________________________
___________________________________
__________________________,Optionee
Address:
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<PAGE> 1
EXHIBIT 10.25
RIBI IMMUNOCHEM RESEARCH, INC.
1986 STOCK OPTION PLAN
(INCLUDING THE FIRST AND SECOND AMENDMENTS)
SECTION 1: PURPOSE
The purpose of the Ribi ImmunoChem Research, Inc. 1986 Stock Option Plan
(the "Plan") is to further the growth and development of Ribi ImmunoChem
Research, Inc. (the "Company") by affording an opportunity for stock ownership
to selected employees of the Company and its Subsidiaries who are responsible
for the conduct and management of its business or who are involved in endeavors
significant to its success.
SECTION 2: DEFINITIONS
Unless otherwise indicated, the following words when used herein shall
have the following meanings:
(a) "Board of Directors" shall mean the Board of Directors of the
Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(c) "Common Stock" shall mean the Company's common stock (par
value $.001 per share) and any share or shares of the Company's stock hereafter
issued or issuable in substitution for such shares.
(d) "Director" shall mean a member of the Board of Directors.
(e) "Incentive Stock Option" shall mean any option granted to an
eligible employee under the Plan, which the Company intends at the time the
option is granted to be an Incentive Stock Option within the meaning of Section
422 of the Code.
(f) "Nonqualified Stock Option" shall mean any option granted to
an eligible employee under the Plan which is not an Incentive Stock Option.
(g) "Option" shall mean and refer collectively to Incentive Stock
Options and Nonqualified Stock Options.
(h) "Optionee" shall mean any employee who is granted an Option
under the Plan. "Optionee" shall also mean the personal representative of an
Optionee and any other person who acquires the right to exercise an Option by
bequest or inheritance.
<PAGE> 2
(i) "Stock Appreciation Right" shall mean a right to surrender to
the Company all or a portion of an Option, to the extent the Option is then
exercisable, and to receive in exchange a payment as provided in Section 11.
(j) "Subsidiary" shall mean a subsidiary corporation of the
Company as defined in Section 424(f) of the Code.
SECTION 3: EFFECTIVE DATE
The effective date of the Plan is the date of its adoption by the Board
of Directors, February 10, 1986; provided, however, that such adoption is
subject to approval and ratification by the shareholders of the Company within
12 months of the effective date. No Options may be granted under the Plan prior
to approval of the Plan by the shareholders of the Company.
SECTION 4: ADMINISTRATION
4.1 Administrative Committee. The Plan shall be administered by the
Board of Directors; provided, however, that in all matters concerning or
affecting officers and directors of the company or individuals who were at one
time officers or directors of the Company, the Plan shall be administered by a
committee appointed by and serving at the pleasure of the Board of Directors,
consisting of not less than two Directors (the "Disinterested Committee"). The
Board of Directors may from time to time remove members from or add members to
the Disinterested Committee, and vacancies on the Disinterested Committee,
howsoever caused, shall be filled by the Board of Directors. A Director may
serve as a member of the Disinterested Committee if he or she has not been
granted or awarded options pursuant to the Plan or any other plan of the
Company, other than exempt grants, for one year prior to serving on the
Disinterested Committee and while he or she continues to serve on the Committee.
All further references herein to the "Committee" shall refer to the Board of
Directors and/or the Disinterested Committee, as the context requires.
4.2 Committee Meetings and Actions. The Committee shall hold meetings at
such times and places as it may determine. A majority of the members of the
Committee shall constitute a quorum, and the acts of the majority of the members
present at a meeting or a consent in writing signed by all members of the
Committee shall be the acts of the Committee and shall be final, binding and
conclusive upon all persons, including the Company, its Subsidiaries, its
shareholders, and all persons having any interest in Options which may be or
have been granted pursuant to the Plan.
4.3 Powers of Committee. The Committee shall have the full and exclusive
right to grant and determine terms and conditions of all options granted under
the Plan and to prescribe, amend and rescind rules and regulations for
administration of the Plan. In granting options, the Committee shall take into
consideration the contribution the Optionee has made or may make to the success
of the Company or its Subsidiaries and such other factors as the Committee shall
determine.
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<PAGE> 3
4.4 Interpretation of Plan. The determination of the Committee as to any
disputed question arising under the Plan, including questions of construction
and interpretation, shall be final, binding and conclusive upon all persons,
including the Company, its subsidiaries, its shareholders, and all persons
having any interest in Options which may be or have been granted pursuant to the
Plan.
SECTION 5: STOCK SUBJECT TO THE PLAN
5.1 Number. The aggregate number of shares of Common Stock which may be
issued under Options granted pursuant to the Plan shall not exceed 1,400,000
shares. Such shares may consist, in whole or in part, of authorized but unissued
stock or treasury stock of the Company not reserved for any other purpose.
5.2 Unused Stock. If any outstanding Option under the Plan expires or
for any other reason ceases to be exercisable, in whole or in part, other than
upon exercise of the Option or a related Stock Appreciation Right, the shares
which were subject to such Option and as to which the Option had not been
exercised shall continue to be available under the Plan.
5.3 Adjustment for Change in Outstanding Shares. If there is any change,
increase or decrease, in the outstanding shares of Common Stock which is
effected without receipt of additional consideration by the Company, by reason
of a stock dividend, recapitalization, merger, consolidation, stock split,
combination or exchange of stock, or other similar circumstances, then in each
such event, the Committee shall make an appropriate adjustment in the aggregate
number of shares of stock available under the Plan, the number of shares of
stock subject to each outstanding Option and the option prices; provided,
however, that fractional shares shall be rounded to the nearest whole share. The
Committee's determinations in making adjustments shall be final and conclusive.
SECTION 6: ELIGIBILITY
All full- or part-time salaried employees of the Company and its
Subsidiaries who are responsible for the conduct and management of its business
or who are involved in endeavors significant to its success shall be eligible to
receive both Incentive Stock Options and Nonqualified Stock Options under the
Plan. Directors and consultants who are neither full- nor part-time salaried
employees of the Company or its Subsidiaries but who are involved in endeavors
significant to its success shall be eligible to receive Nonqualified Stock
Options, but not Incentive Stock Options, under the Plan. Any member of the
Board of Directors, otherwise eligible to participate, who makes an election in
writing not to receive any grants under the Plan shall not be eligible to
receive any such grants during the period set forth in such election.
Below-market stock options may also be granted to any Outside Director of the
Company in lieu of part or all of his or her Director fees in accordance with
Subsection 7.8.
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<PAGE> 4
SECTION 7: GRANT OF OPTIONS
7.1 Grant of Options. The Committee may from time to time in its
discretion determine which of the eligible employees of the Company or its
Subsidiaries should receive Options, the type of Options to be granted (whether
Incentive Stock Options or Nonqualified Stock Options), the number of shares
subject to such Options, and the dates on which such Options are to be granted.
No employee may be granted Incentive Stock Options in any calendar year
beginning on or after January 1, 1987 to the extent that the aggregate fair
market value (determined as of the time each option is granted) of the Common
Stock with respect to which any such options granted on or after January 1, 1987
are exercisable for the first time during a calendar year (under all incentive
stock option plans of the Company and its Subsidiaries) would exceed $100,000.
7.2 Option Agreement. Each option granted under the Plan shall be
evidenced by a written Option Agreement setting forth the terms upon which the
Option is granted. Each Option Agreement shall designate the type of Options
being granted (whether Incentive Stock Options or Nonqualified Stock Options)
and shall state the number of shares of Common Stock, as designated by the
Committee, to which that option pertains. More than one Option may be granted to
an eligible employee.
7.3 Option Price. Except as provided for in Subsection 7.8 below, the
option price per share of Common Stock under each Option shall be determined by
the Committee and stated in the Option Agreement. Except as provided for in
subsection 7.8 below, the option price for options granted under the Plan shall
not be less than 100% of the fair market value (determined as of the day the
Option is granted) of the shares subject to the Option.
7.4 Determination of Fair Market Value. If the Common Stock is listed
upon an established stock exchange or exchanges, then the fair market value per
share shall be deemed to be the mean between the highest and lowest quoted
selling prices of the Common Stock on such stock exchange or exchanges on the
day for which the determination is made, or if no sale of the Common Stock shall
have been made on any stock exchange on that day, on the next preceding day on
which there was such a sale. If the Common Stock is not listed upon an
established stock exchange but if traded in the national over-the-counter
market, the fair market value per share shall be deemed to be the closing price
of the Common Stock in the national over-the-counter market on the day for which
the determination is made, or if there shall have been no trading of the Common
Stock on that day, on the next preceding day on which there was such trading. If
the Common Stock is not listed upon an established stock exchange and is not
traded in the national over-the-counter market, the fair market value per share
shall be deemed to be an amount as determined by the Committee by applying any
reasonable valuation method.
7.5 Duration of Options. Each option shall be of a duration as specified
in the Option Agreement; provided, however, that the term of each Option shall
be no more than ten years from the date on which the Option is granted and shall
be subject to early termination as provided herein.
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<PAGE> 5
7.6 Additional Limitations on Grant. No Incentive Stock Option shall be
granted to an employee who, at the time the Incentive Stock Option is granted,
owns stock (as determined in accordance with Section 424(d) of the Code)
representing more than 10% of the total combined voting power of all classes of
stock of the Company, unless the option price of such Incentive Stock Option is
at least 110% of the fair market value (determined as of the day the Incentive
Stock Option is granted) of the stock subject to the Incentive Stock Option and
the Incentive Stock Option by its terms is not exercisable more than five years
from the date it is granted.
7.7 Other Terms and Conditions. Options may contain such other
provisions, which shall not be inconsistent with the Plan, as the Committee
shall deem appropriate, including, without limitation, provisions that relate
the Optionee's ability to exercise an Option to the passage of time or the
achievement of specific goals established by the Committee.
7.8 Director Options. Each Director who is not an employee of the
Company (an "Outside Director") may elect to receive below-market, nonqualified
stock options to purchase Common Stock of the Company in lieu of part or all of
his or her Director fees. Such election must be made by June 30 of each year
prior to the year services are provided. Such Options shall have an exercise
price of eighty percent (80%) of the market price of the Common Stock on the
grant date. The number of Options to be granted shall be determined by dividing
the amount of the Director's fees (that the Director irrevocably elected to take
in the form of below-market options instead of cash) by the fair market value of
a share of Common Stock on the date of the grant after subtracting the
discounted option exercise price from such fair market value. These Options
shall be granted at the end of each calendar quarter and shall he fully vested
as of the grant date. The Options shall not be exercisable until vested and in
no event until at least six (6) months after the date of grant. The term of
these Options shall be for ten years, and they shall not be transferable
otherwise than by will or the laws of descent and distribution and may only be
exercised by the Director, his or her guardian or legal representative during
the exercise period as defined elsewhere herein.
SECTION 8: EXERCISE OF OPTIONS
8.1 Manner of Exercise. Subject to the limitations and conditions of the
Plan or the Option Agreement, an Option shall be exercisable, in whole or in
part, from time to time, by giving written notice of exercise to the President
of the Company, which notice shall specify the number of shares of Common Stock
to be purchased and shall be accompanied by (1) payment in full to the Company
of the purchase price of the shares to be purchased, plus (2) payment in cash or
by certified or bank cashier's check of such amount as the company shall
determine to be sufficient to satisfy any liability it may have for any
withholding of federal, state or local income or other taxes incurred by reason
of the exercise of the Option, and (3) a representation meeting the requirements
of Section 12.2 below if requested by the Company. Payment for shares shall be
in the form of either (1) cash, (2) a certified or bank cashier's check to the
order of the Company, (3) shares of the Common Stock, properly endorsed to the
Company, in an amount the
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<PAGE> 6
fair market value of which on the date of receipt by the Company (as determined
in accordance with Section 7.4) equals or exceeds the aggregate option price of
the shares with respect to which the Option is being exercised, or (4) in any
combination thereof; provided, however, that payment shall be in such form as
the Committee may from time to time determine, whether before or after exercise
of the Option.
8.2 Sequential Exercise of Incentive Stock Options Granted Prior to
January 1, 1987. No Incentive Stock Option granted prior to January 1, 1987
shall be exercisable while there is outstanding any other Incentive Stock Option
also granted prior to January 1, 1987 which was granted to the Optionee by the
Company or any subsidiary or any predecessor of such corporations at a prior
time. An Incentive Stock Option shall be treated as outstanding until it is
exercised in full or expires by reason of lapse of time.
8.3 Acceleration of Exercise Period. Notwithstanding any vesting
requirements contained in any Option Agreement, all outstanding Options shall
become immediately exercisable (1) following the first purchase of Common Stock
pursuant to a tender offer or exchange offer (other than an offer made by the
Company) for all or part of the Common Stock, (2) at such time as a third
person, including a "group" as defined in Section 13(d)(3) of the Securities
Exchange Act of 1934, becomes the beneficial owner of shares of the Company
having 25% or more of the total number of votes that may be cast for the
election of Directors of the Company, (3) on the date on which the stockholders
of the Company approve (i) any agreement for a merger or consolidation in which
the Company will not survive as an independent, publicly owned corporation or
(ii) any sale, exchange or other disposition of all or substantially all of the
Company's assets, or (4) on any date on which the persons who were the Directors
of the Company ninety days prior to such date no longer constitute a majority of
the Board of Directors of the Company or any successor to the Company. The
Committee's reasonable determination as to whether such an event has occurred
shall be final and conclusive.
SECTION 9: TERMINATION OF EMPLOYMENT
9.1 Termination Upon Retirement or With Committee Approval. Upon
termination of an Optionee's employment with the Company or a Subsidiary upon
retirement at or after age 65 or under circumstances for which the Committee,
either before or after the termination, has given its approval, and other than
upon death or disability, an Optionee may, at any time within three months after
the date of termination but not later than the date of expiration of the Option,
exercise the Option or Stock Appreciation Right to the extent the Optionee was
entitled to do so on the date of termination. Disability is defined as:
inability ... to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or which has lasted or can be expected to last for a continuous
period of not less than 12 months. Any Options not exercisable as of the date of
termination and any Options or portions of Options of terminated employees not
exercised as provided herein shall terminate.
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<PAGE> 7
9.2 Termination By Death of Optionee. If an Optionee shall die while in
the employ of the Company or a Subsidiary or within a period of three months
after the termination of his employment with the Company or a Subsidiary, the
personal representatives of the Optionee's estate or the person or persons who
shall have acquired the option from the Optionee by bequest or inheritance may
exercise the Option or Stock Appreciation Right at any time within the year
after the date of death but not later than the expiration date of the Option, to
the extent the Optionee was entitled to do so on the date of death. Any Options
not exercisable as of the date of death and any Options or portions of Options
of deceased employees not exercised as provided herein shall terminate.
9.3 Termination By Disability Of Optionee. Upon termination of an
Optionee's employment with the Company or a subsidiary by reason of the
Optionee's disability, the Optionee may exercise the Option or Stock
Appreciation Right at any time within one year after the date of termination but
not later than the expiration date of the Option, to the extent the Optionee was
entitled to do so on the date of termination. Disability is defined as:
inability ... to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or which has lasted or can be expected to last for a continuous
period of not less than 12 months. Any Options not exercisable as of the date of
termination and any Options or portions of Options of disabled employees not
exercised as provided herein shall terminate.
9.4 Other Terminations. Upon termination of an Optionee's employment
with the Company or a Subsidiary under circumstances other than those set forth
in Sections 9.1 through 9.3, Options granted to the Optionee shall terminate
immediately.
9.5 Termination of Directors and Consultants. For purposes of this
Section 9, a termination of employment shall be deemed to include the
termination of a Director's service as a member of the Board of Directors and
the termination of a consulting arrangement in the case of consultants.
SECTION 10: NON-TRANSFERABILITY OF OPTION
Options granted pursuant to the Plan are not transferable by the
Optionee other than by Will or the laws of descent and distribution and Options
shall be exercisable during the Optionee's lifetime only by the Optionee. Upon
any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of the
Option contrary to the provisions hereof, or upon the levy of any attachment or
similar process upon the Option, the Option shall immediately become null and
void.
SECTION 11: STOCK APPRECIATION RIGHTS
Any Option under the Plan may include a right (the "Stock Appreciation
Right") to surrender to the Company all or a portion of the Option, to the
extent the Option is then exercisable, and to receive in exchange a payment
equal to the excess of the fair
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<PAGE> 8
market value on the date preceding the date of surrender of the shares covered
by the Option (or the portion that is surrendered) over the aggregate option
price of such shares. Such payment shall be made by the Company in shares of
Common Stock, in cash or partly in Common Stock and partly in cash, as the
Committee in its sole discretion shall determine, whether before or after
exercise of the Stock Appreciation Right. A Stock Appreciation Right may be
granted by the Committee concurrently with the grant of the Option or thereafter
by amendment to the Option. A Stock Appreciation Right may contain such terms
and conditions, which shall not be inconsistent with the Plan, as the committee
shall deem appropriate, including, without limitation, a provision that limits
the amount which may be paid in satisfaction of a Stock Appreciation Right to
some multiple of the option exercise price of the underlying Option or a
provision which limits the times at which a Stock Appreciation Right may be
exercised. Shares subject to Options (or such portion of an Option that has been
surrendered upon exercise of a Stock Appreciation Right) shall not thereafter be
available for Option grants under the Plan.
SECTION 12: ISSUANCE OF SHARES
12.1 Transfer of Shares to Optionee. As soon as practicable after the
Optionee has given the Company written notice of exercise of an Option or Stock
Appreciation Right and, upon exercise of an Option, has otherwise met the
requirements of Section 8.1, the Company shall issue or transfer to the Optionee
the number of shares of Common Stock as to which the Option has been exercised
or with respect to which the Stock Appreciation Right will be paid and shall
deliver to the Optionee a certificate or certificates therefor, registered in
Optionee's name. In no event shall the Company be required to transfer
fractional shares to the Optionee, and in lieu thereof, the Company may pay an
amount in cash equal to the fair market value of such fractional shares on the
date of exercise. If the issuance or transfer of shares by the Company would for
any reason, in the opinion of counsel for the Company, violate any applicable
federal or state laws or regulations, the Company may delay issuance or transfer
of such shares to the Optionee until compliance with such laws can reasonably be
obtained.
12.2 Investment Representation. Upon demand by the Company, the Optionee
shall deliver to the Company a representation in writing that the purchase of
all shares with respect to which notice of exercise of the Option or Stock
Appreciation Right has been given by Optionee is being made for investment only
and not for resale or with a view to distribution, and containing such other
representations and provisions with respect thereto as the Company may require.
Upon such demand, delivery of such representation promptly and prior to the
transfer or delivery of any such shares and prior to the expiration of the
option period shall be a condition precedent to the right to purchase such
shares.
SECTION 13: AMENDMENTS
The Board of Directors may at any time and from time to time alter,
amend, suspend or terminate the Plan or any part thereof as it may deem proper,
except that no
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<PAGE> 9
such action shall diminish or impair the rights under an Option previously
granted; provided, however, that unless the shareholders of the Company shall
have given their approval, the total number of shares for which Options may be
issued under the Plan shall not be increased, except as provided in Section 5.3,
and no amendment shall be made which reduces the price at which the Common Stock
may be offered under the Plan below the minimum required by Section 7.3, except
as provided in Section 5.3, or which materially modifies the requirements as to
eligibility for participation in the Plan.
SECTION 14: TERM OF PLAN
This Plan shall terminate on February 10, 1996; provided, however, that
the Board of Directors may at any time prior thereto suspend or terminate the
Plan.
SECTION 15: RIGHTS AS STOCKHOLDER
An Optionee shall have no rights as a stockholder of the Company with
respect to any shares of Common Stock covered by an Option until the date of the
issuance of the stock certificate for such shares.
SECTION 16: GOVERNING LAW
Options granted under this Plan shall be construed and shall take effect
in accordance with the laws of the State of Montana.
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<PAGE> 1
EXHIBIT 10.26
Ribi ImmunoChem Research, Inc.
1996 Directors' Stock Option Plan
1. Establishment and Purpose.
(a) There is hereby adopted by the Company, the Ribi ImmunoChem Research,
Inc. 1996 Directors' Stock Option Plan. The Plan is intended to provide a means
whereby eligible members of the Board may be given an opportunity to purchase
shares of Stock pursuant to options which are not intended to qualify as
incentive stock options under Section 422 of the Code.
(b) The purpose of the Plan is to enable the Company to attract the best
available individuals to serve as members of the Board, to provide additional
performance incentives to such individuals while serving as directors, and to
encourage their continued service on the Board.
2. Definitions.
As used herein, the following definitions shall apply:
(a) "Affiliate" shall mean any parent or subsidiary corporations of the
Company, as defined in Sections 424(e) and (f) of the Code (but substituting
"the Company" for "employer corporation"), including parents or subsidiaries of
the Company that become such after adoption of the Plan.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(d) "Company" shall mean Ribi ImmunoChem Research, Inc., a Delaware
corporation.
(e) "Director" shall mean a member of the Board.
(f) "Employee" shall mean any person, including officers and Directors, who
is an employee of the Company, or any Affiliate of the Company, for purposes of
tax withholding under the Code. The payment of a director's fee by the Company
shall not be sufficient to constitute "employment" by the Company.
(g) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(h) "Fair Market Value" means, as of any date, the value of the Stock
determined as follows:
(i) Where there exists a public market for the Stock, the Fair Market
Value shall be the closing sales price for a share of Stock for the trading day
<PAGE> 2
on which the options are granted ("Grant Date") (or, if no sales were reported
on that date, on the last trading date on which sales were reported) on the
NASDAQ National Market or the principal securities exchange on which the Stock
is listed for trading, whichever is applicable, as reported in The Wall Street
Journal or such other source as the Board deems reliable; or
(ii) In the absence of an established market of the type described in
(i), above, for the Stock, the Fair Market Value thereof shall be determined in
good faith by the Board, and such determination shall be conclusive and binding
on all persons.
(i) "Option" shall mean an option to purchase shares of Stock granted
pursuant to the Plan.
(j) "Optionee" shall mean an Outside Director who receives an Option.
(k) "Outside Director" shall mean a Director who is not an Employee.
(l) "Plan" shall mean the Ribi ImmunoChem Research, Inc. 1996 Directors'
Stock Option Plan.
(m) "Rule 16b-3" shall mean Rule 16b-3 promulgated under the Exchange Act
or any successor thereto.
(n) "Securities Act" shall mean the Securities Act of 1933, as amended.
(o) "Stock" shall mean the Common Stock, par value $.001 per share, of the
Company.
3. Stock Subject to the Plan.
Subject to the provisions of Section 13 of the Plan, the maximum number of
shares of Stock which may be made subject to Options and sold under the Plan is
two hundred ten thousand (210,000) shares of Stock. If an Option expires or
becomes unexercisable for any reason and has not been exercised in full, the
Stock subject to such Option shall be available for future grant under the Plan.
If Stock which was acquired upon exercise of an Option is subsequently
repurchased by the Company, such Stock shall not be available for future grant
under the Plan.
4. Administration of the Plan.
(a) The Plan is intended to be self-executing pursuant to the terms hereof,
however, any questions concerning the interpretation or execution of the Plan or
grants hereunder shall be decided by the Board. All decisions, determinations
and interpretations of the Board shall be final and binding on all holders of
any Options granted under the Plan.
(b) Subject to the provisions and restrictions of the Plan, the Board
- 2 -
<PAGE> 3
shall have the authority to authorize any person to execute on behalf of the
Company any agreements or other documents in connection with grants of Options
under the Plan and to make all other determinations deemed necessary or
advisable for the implementation of the Plan.
5. Option Grants.
(a) All grants of Options hereunder shall be automatic and nondiscretionary
and shall be made strictly in accordance with the provisions of this Section 5.
No person shall have any discretion to select which Outside Directors shall be
granted Options or to determine the number of shares of Stock to be covered by
Options granted to Outside Directors, the timing of such Option grants or the
exercise price thereof.
(b) An Option to purchase thirty thousand (30,000) shares of Stock shall be
granted ("Initial Grant") to each Outside Director, such Initial Grant to be
made (i) to the then-existing Outside Directors upon approval of the Plan by the
Board ("Approval Date") and (ii) to other Outside Directors elected or appointed
to the Board after the Approval Date upon the date each such Outside Director
first becomes an Outside Director following the Approval Date. In addition,
immediately following each annual meeting of the Company's stockholders, each
Outside Director who continues as an Outside Director following such annual
meeting shall be granted an Option to purchase five hundred (500) shares of
Stock ("Subsequent Grant"). Each such Subsequent Grant shall be made as of the
date of the annual stockholders' meeting in question.
(c) Limitations.
(i) Notwithstanding the provisions of Section 5(b), above, in the
event that a sufficient number of shares of Stock is not available under the
Plan, the remaining shares shall be prorated based upon the
number of shares each Outside Director was entitled to receive under the Plan.
Any further grants of Options shall then be deferred until such time that
additional shares become available for grant under the Plan. The Board shall
have the authority at any time to make additional shares available for grant
under the Plan, subject to obtaining stockholder approval of such increase to
the extent required under Section 14(a), below.
(ii) Notwithstanding the provisions of Sections 5(b), above, any grant
of an Option made before the Company has obtained stockholder approval of the
Plan and any grant of an Option made after amendment of the Plan where such
amendment of the Plan requires stockholder approval under Section 14(a), below,
shall be conditioned upon obtaining such stockholder approval.
6. Terms and Conditions of Options.
(a) Each Option granted pursuant to the Plan shall be evidenced by a
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<PAGE> 4
written stock option agreement in the form attached hereto as Exhibit A
("Directors' NonQualified Stock Option Agreement") executed by the Company and
the Outside Director.
(b) The exercise price per share shall be 100% of the Fair Market Value per
share of Stock on the date of grant of the Option, subject to adjustment to the
extent provided in Section 13, below.
(c) Each Initial Grant and Subsequent Grant shall be vested and exercisable
as to fifty percent (50%) of the total number of the shares of Stock covered by
the Option on the date of grant and the balance shall vest and become
exercisable at the rate of twenty-five percent (25%) of the total number of
shares of Stock covered by the Option on each anniversary of the date of grant,
beginning on the first anniversary of the date of grant such that the Option
will be fully vested and exercisable two (2) years after its date of grant;
provided, however, that no portion of the Option shall vest on an anniversary of
the date of grant if the Outside Director does not continue as an Outside
Director immediately following such anniversary.
(d) The term of each Option shall be ten (10) years from the date of grant,
unless a shorter period is required to comply with any applicable law, in which
case such shorter period shall apply.
7. Eligibility.
Options may be granted only to Outside Directors. The Plan shall not confer
upon any Outside Director any right with respect to continuation of service as a
Director or nomination to serve as a Director, nor shall it interfere in any way
with any rights that the Director or the Company may have to terminate his or
her directorship at any time.
8. Term of Plan; Effective Date.
The Plan shall become effective upon its adoption by the Board. Options may
be granted under the Plan at any time on or before the tenth anniversary of the
date of adoption of the Plan.
9. Payment Upon Exercise.
Payment of the exercise price upon exercise of any Option shall be made (i)
by cash or check; (ii) by delivery on a form prescribed by the Board of an
irrevocable direction to a securities broker approved by the Board to sell
shares and deliver all or a portion of the proceeds to the Company in payment
for the Stock; (iii) with shares of Stock owned by the Optionee; or (iv) any
combination of the foregoing.
10. Withholding Taxes.
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<PAGE> 5
No Stock shall be sold under the Plan to any individual until the
individual has made arrangements acceptable to the Board for the satisfaction of
applicable federal, state, and local income and employment tax withholding
obligations.
11. Exercise of Option.
(a) An Option shall be deemed to be exercised when notice of such exercise
has been given to the Company in accordance with the terms of the Directors'
Nonqualified Stock Option Agreement by the person entitled to exercise the
Option and full payment for the Stock has been received by the Company. An
Option may not be exercised for a fraction of a share of Stock.
(b) Notwithstanding the exercise of the Option, until the issuance (as
evidenced by the appropriate entry on the books of a duly authorized transfer
agent of the Company) of the certificate evidencing such Stock, no right to vote
or to receive dividends or to exercise any other rights as a stockholder shall
exist with respect to the Stock. A stock certificate for the number of shares of
Stock so acquired shall be issued to the Optionee as soon as practicable after
exercise of the Option. No adjustment will be made for a dividend or other right
if the record date is prior to the date the stock certificate is issued.
(c) In event of a Change in Control of the Company, all outstanding Options
shall become immediately vested and exercisable. For purposes of this
subsection, a Change in Control shall be deemed to occur upon:
(i) the first purchase of Stock pursuant to a tender offer or exchange
offer (other than an offer made by the Company) for all or part of the Stock;
(ii) a third person, including a "group" as defined in Section
13(d)(3) of the Exchange Act, becomes the beneficial owner of Shares of the
Company having 25% or more of the total number of votes that may be cast for the
election of Directors;
(iii) on any date on which the persons who were the Directors of the
Company ninety (90) days prior to such date no longer constitute a majority of
the Board of Directors of the Company or any successor to the Company;
(iv) approval by the Company's stockholders of a merger or
consolidation in which the Company will not survive as an independent publicly
owned corporation; or
(v) approval by the Company's stockholders of the sale or disposition
of all or substantially all of the assets of the Company.
12. Nontransferability of Options.
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<PAGE> 6
To the extent required by Rule 16b-3, no Option may be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution; provided, that if Rule 16b-3 is
amended after the date of the Board's adoption of the Plan to permit broader
transferability of Options under Rule 16b-3, the Options granted hereunder shall
be transferable to the fullest extent permitted by Rule 16b-3 as so amended. In
the event of any Rule 16b-3 permitted transfer of an Option hereunder, the
transferee shall be entitled to exercise the Option in the same manner and only
to the same extent as the Optionee (or his personal representative or the
persons who would have acquired the right to exercise the Option by bequest or
intestate succession) would have been entitled to exercise the Option had the
Option not been transferred.
13. Adjustment Upon Changes in Capitalization.
In the event that the number of outstanding shares of Stock of the Company
is changed by a merger, consolidation, reorganization, recapitalization,
reincorporation, stock dividend (in excess of two percent (2%)), stock split, or
similar change in the capital structure of the Company without consideration,
the number of shares of Stock available under the Plan, the number of shares of
Stock deliverable in connection with any Option and the exercise price per share
of such Options shall be proportionately adjusted, subject to any required
action by the Board or stockholders of the Company and compliance with
applicable securities laws; provided, however, that fractional shares shall be
rounded to the nearest whole share.
14. Amendment and Termination of the Plan.
(a) The Board may amend the Plan from time to time in such respects as the
Board may deem advisable; provided, however, that to the extent necessary to
comply with Rule 16b-3 under the Exchange Act (or any other applicable law or
regulation), the Company shall obtain approval by the Company's stockholders to
amend the Plan to the extent and in the manner required by such law or
regulation. Notwithstanding the foregoing, the provisions set forth in sections
5 and 6 of the Plan (and any other sections of the Plan that affect the formula
award terms required to be specified in the Plan by Rule 16b-3) shall not be
amended more than once every six (6) months, other than to comport with changes
in the Code, the Employee Retirement Income Security Act of 1974, as amended, or
any applicable rules and regulations thereunder.
(b) The Board, without further approval of the stockholders, may at any
time terminate or suspend the Plan. Except as otherwise provided herein, any
such termination or suspension of the Plan shall not affect Options already
granted hereunder and such Options shall remain in full force and effect as if
the Plan had not been terminated or suspended.
15. Conditions Upon Issuance of Stock.
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<PAGE> 7
(a) Stock shall not be issued pursuant to the exercise of an Option unless
the exercise of such Option and the issuance and delivery of such Stock pursuant
thereto shall comply with all relevant provisions of law, including, without
limitation, the Securities Act, the Exchange Act, the rules and regulations
promulgated thereunder, state securities laws, and the requirements of any stock
exchange upon which the Stock may then be listed, and shall be further subject
to the approval of counsel for the Company with respect to such compliance.
(b) As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the Stock is being purchased only for investment and without
any present intention to sell or distribute such Stock, if, in the opinion of
counsel for the Company, such a representation is required by any provisions of
applicable law.
(c) Inability of the Company to obtain authority from any regulatory body
having jurisdictional authority deemed by the Company's counsel to be necessary
for the lawful issuance and sale of any Stock hereunder shall relieve the
Company of any liability for failure to issue or sell such Stock.
16. Reservation of Stock.
The Company, during the term of the Plan, will at all times reserve and
keep available such number of shares of Stock as shall be sufficient to satisfy
the requirements of the Plan.
17. Stockholder Approval.
Continuance of the Plan shall be subject to approval by the stockholders at
the next annual stockholder's meeting that occurs after the date the Plan is
adopted by the Board. Such shareholder approval shall be obtained in the degree
and manner required under applicable state and federal law and the rules of any
stock exchange upon which the Stock is listed. In the event that such
stockholder approval is not obtained, all Options previously granted hereunder
shall terminate.
18. Additional Restrictions of Rule 16b-3.
The terms and conditions of Options granted hereunder to persons subject to
Section 16 of the Exchange Act shall comply with the applicable provisions of
Rule 16b-3. The Plan and the Options granted hereunder shall be deemed to
contain such additional conditions and restrictions as may be required for the
Plan to qualify as a "formula plan" under Rule 16b-3, as then applicable to the
Company, and to qualify for the maximum exemptions from Section 16 of the
Exchange Act with respect to transactions pursuant to the Plan.
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<PAGE> 8
Exhibit A
RIBI IMMUNOCHEM RESEARCH, INC.
DIRECTORS' NONQUALIFIED STOCK OPTION AGREEMENT
This agreement (the "Agreement") is made as of __________, 199__ (the
"Grant Date") between Ribi ImmunoChem Research, Inc. (the "Company") and
___________________________("Optionee").
WITNESSETH:
WHEREAS, the Company has adopted the Ribi ImmunoChem Research, Inc. 1996
Directors' Stock Option Plan (the "Plan"), which Plan is incorporated in this
Agreement by reference and made a part of it (capitalized terms shall have the
meaning ascribed to them in the Plan);
WHEREAS, the Plan provides for option grants to Outside Directors of the
Company;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the parties to this Agreement hereby agree as follows:
1. OPTION GRANT. The Company hereby grants to Optionee the right and option
to purchase from the Company on the terms and conditions hereinafter set forth,
all or any part of an aggregate of _______________ (_________) shares of the
Common Stock of the Company (the "Stock"). The exercise price of the Stock
subject to this option shall be $_________ per share, which price is the per
share Fair Market Value as of the Grant Date. This grant is an Initial Grant
under the Plan.
2. OPTION PERIOD. This option shall be exercisable only during the Option
Period, and during such Option Period, the exercisability of the option shall be
subject to the limitations of paragraph 3 and the vesting provisions of
paragraph 4. The Option Period shall commence on the Grant Date and, except as
provided in paragraph 3, shall end on the Terminal Date which shall be ten (10)
years from the Grant Date.
3. LIMITS ON OPTION PERIOD. The Option period may end before the Terminal
Date, as follows:
(a) If Optionee ceases to be a Director for any reason other than
disability (within the meaning of subparagraph (c), below) or death during the
Option Period, the Option Period shall terminate three (3) months after the date
Optionee ceases to be a Director or on the Terminal Date, whichever shall first
occur, and the option shall be exercisable only to the extent exercisable under
paragraph 4 on the date Optionee ceases to be a Director.
(b) If Optionee dies while serving on the Board or within three (3) months
of the date the Optionee ceases to be a Director, the Option Period shall end
one (1) year after the date of death or on the Terminal Date, whichever
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<PAGE> 9
shall first occur, and Optionee's executor or administrator or the person or
persons to whom Optionee's rights under this option shall pass by will or by the
applicable laws of descent and distribution may exercise this option only to the
extent exercisable under paragraph 4 on the date of Optionee's death.
(c) If Optionee ceases to be a Director by reason of disability, as defined
below, the Option Period shall end one (1) year after the date Optionee ceases
to be a Director or on the Terminal Date, whichever shall first occur, and this
option shall be exercisable only to the extent exercisable under paragraph 4 on
the date Optionee ceases to be a Director. For purposes of this subparagraph
(c), an individual is disabled if he is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or which has lasted or can
be expected to last for a continuous period of not less than twelve (12) months.
An individual shall not be considered to be disabled unless he furnishes proof
of the existence thereof in such form and manner, and at such time, as the Board
may require.
4. VESTING OF RIGHT TO EXERCISE OPTIONS. This option will be vested and
exercisable as to fifty percent (50%) of the total number of shares of Stock
covered by the option on the Grant Date and the balance shall vest and become
exercisable at the rate of twenty-five percent (25%) of the total number of
shares of Stock covered by the option on each anniversary of the Grant Date,
beginning on the first anniversary of the Grant Date such that the option will
be fully vested and exercisable two (2) years after the Grant Date; provided,
however, that no portion of the option shall vest on an anniversary of the Grant
Date if the Optionee does not continue as a Director immediately following such
anniversary. No partial exercise of this option may be for less than five
percent (5%) of the total number of shares then available under this option to
purchase shares of Stock. In no event shall the Company be required to issue
fractional shares. Notwithstanding the foregoing, all options granted under this
Agreement shall be subject to the provisions of Subsection 11(c) of the Plan
(relating to the acceleration of vesting upon the occurrence of a Change in
Control).
5. METHOD OF EXERCISE. Optionee may exercise the option with respect to all
or any part of the shares of Stock then subject to such exercise as follows:
(a) By giving the Secretary of the Company written notice of such exercise,
specifying the number of such shares as to which this option is exercised. Such
notice shall be accompanied by an amount equal to the exercise price of such
shares, in the form of any one or combination of the following: (1) cash or
check; (2) by delivery on a form prescribed by the Board of an irrevocable
direction to a securities broker approved by the Board to sell shares of Stock
and deliver all or a portion of the proceeds to the Company in payment for the
Stock; or (3) with shares of Stock owned by Optionee.
(b) If required by the Company, Optionee shall give the Company
satisfactory assurance in writing, signed by Optionee or Optionee's legal
representative, as the case may be, that such shares are being purchased for
investment and not with a view to the distribution thereof, provided that such
- 9 -
<PAGE> 10
assurance shall be deemed inapplicable to (1) any sale of such shares by such
Optionee made in accordance with the terms of a registration statement covering
such sale, which has heretofore been (or may hereafter be) filed and become
effective under the Securities Act of 1933, as amended, and with respect to
which no stop order suspending the effectiveness thereof has been issued, and
(2) any other sale of such shares with respect to which, in the opinion of
counsel of the Company, such assurance is not required to be given in order to
comply with the provisions of the Securities Act of 1933, as amended.
(c) As soon as practicable after receipt of the notice required in
paragraph 5(a) and satisfaction of the conditions set forth in paragraph 5(b),
the Company shall, without transfer or issue tax and without other incidental
expense to Optionee, deliver to Optionee at the office of the Company, at 553
Old Corvallis Road, Hamilton, Montana 59840, attention of the Corporate
Secretary, or such other place as may be mutually acceptable to the Company and
Optionee, a certificate or certificates of such shares of Stock; provided,
however, that the time of such delivery may be postponed by the Company for such
period as may be required for it with reasonable diligence to comply with
applicable registration requirements under the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, any applicable listing
requirements of any securities exchange upon which the Stock may then be listed,
and requirements under any other law or regulation applicable to the issuance or
transfer of such shares.
6. CHANGES IN CAPITALIZATION. If there should be any change in a class of
Stock subject to this option, through merger, consolidation, reorganization,
recapitalization, reincorporation, stock split, stock dividend (in excess of two
percent {2%}) or other change in the capital structure of the Company without
consideration, the Company shall make appropriate adjustments in order to
preserve, but not to increase, the benefits to Optionee including adjustments of
the number and kind of shares of such Stock subject to this option and of the
price per share. Any adjustment made pursuant to this paragraph 6 as a
consequence of a change in the capital structure of the Company shall not
entitle Optionee to acquire a number of shares of such Stock of the Company or
shares of stock of any successor company greater than the number of shares
Optionee would receive if, prior to such change, Optionee had actually held a
number of shares of such Stock equal to the number of shares subject to this
option; provided, however, that fractional shares shall be rounded to the
nearest whole share.
7. LIMITATIONS ON TRANSFER. To the extent required by Rule 16b-3 of the
Securities Exchange Act of 1934, this option shall not be transferable by
Optionee other than by operation of law or by will or by the laws of descent or
distribution; provided that, if Rule 16b-3 is amended after the Board's adoption
of the Plan to permit greater transferability of an option, the option hereunder
shall be transferable to the fullest extent provided by Rule 16b-3 as so
amended. In the event of any Rule 16b-3 permitted transfer of the option, the
transferee shall be entitled to exercise the option in the same manner and only
to the same extent as Optionee (or his personal representative or the person who
would have acquired the right to exercise the option by bequest or intestate
succession) would have been entitled to exercise the option had the option not
- 10 -
<PAGE> 11
been transferred.
8. NO STOCKHOLDER RIGHTS. Neither Optionee nor any person entitled to
exercise Optionee's rights shall have any of the rights of a stockholder with
respect to the shares of Stock subject to this option except to the extent the
certificates for such shares shall have been issued upon the exercise of this
option.
9. NOTICE. Any notice required to be given under the terms of this
Agreement shall be addressed to the Company in care of its Secretary at the
office of the Company at 553 Old Corvallis Road, Hamilton, Montana 59840, and
any notice to be given to Optionee shall be addressed to Optionee at the address
given by Optionee beneath Optionee's signature to this Agreement, or such other
address as either party to this Agreement may hereafter designate in writing to
the other. Any such notice shall be deemed to have been duly given when enclosed
in a properly sealed envelope addressed as aforesaid, registered or certified
and deposited (postage and registration or certification fee prepaid) in a post
office or branch post office regularly maintained by the United States.
10. SUCCESSORS. This Agreement shall be binding upon and insure to the
benefit of any successor or successors of the Company. Where the context
permits, "Optionee" as used in this Agreement shall include any transferee,
Optionee's executor, administrator or other legal representative or the person
or persons to whom Optionee's rights pass by will or the applicable laws of
descent and distribution.
11. WITHHOLDING. Optionee agrees to make appropriate arrangements with the
Company for satisfaction of any applicable federal, state or local income tax
withholding requirements or social security requirements.
12. APPLICABLE LAW. The interpretation, performance, and enforcement of
this Agreement shall be governed by the laws of the State of Montana.
- 11 -
<PAGE> 12
IN WITNESS WHEREOF, this Agreement has been executed as of the day and year
first written above.
Ribi ImmunoChem Research, Inc.
a Delaware corporation.
By __________________________
Its Chief Executive Officer,
President & Chairman
______________________________
Optionee
Address:
______________________________
______________________________
______________________________
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<PAGE> 1
EXHIBIT 21.01
List of Subsidiaries
of Corixa Corporation
Chinook Corporation
Anergen, Inc.
<PAGE> 1
EXHIBIT 23.01
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-4 and related Proxy Statement/Prospectus of
Corixa Corporation for the registration of 4,716,860 shares of its common stock
and to the incorporation by reference therein of our report dated February 3,
1999, with respect to the consolidated financial statements of Corixa
Corporation included in its Annual Report (Form 10-K) for the year ended
December 31, 1998, filed with the Securities and Exchange Commission.
Seattle, Washington ERNST & YOUNG LLP
August 11, 1999
<PAGE> 1
EXHIBIT 23.02
CONSENT OF KPMG LLP, INDEPENDENT AUDITORS
The Board of Directors
Ribi ImmunoChem Research, Inc.
We consent to the use of our report and to the reference to our firm under the
heading "Experts" included herein.
KPMG LLP
Billings, Montana
August 11, 1999
<PAGE> 1
EXHIBIT 23.03
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4) and related Proxy Statement/Prospectus of
Corixa Corporation for the registration of 4,716,860 shares of its common stock
and to the incorporation by reference therein of: (i) our report dated February
22, 1999 with respect to the financial statements of Anergen, Inc. included in
Current Report on Form 8-K of Corixa Corporation dated August 9, 1999; and (ii)
our report dated February 6, 1998 except for the second paragraph of Note 1, as
to which the date is December 21, 1998 with respect to the financial statements
of Anergen, Inc., included in Current Report on Form 8-K of Corixa Corporation
dated February 12, 1999, filed with the Securities and Exchange Commission.
Seattle, Washington ERNST & YOUNG LLP
August 11, 1999
<PAGE> 1
EXHIBIT 23.04
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4) and related Proxy Statement/Prospectus of
Corixa Corporation for the registration of 4,716,860 shares of its common stock
and to the incorporation by reference therein of our report dated January 28,
1998 except for Note 9, as to which the date is February 28, 1998 with respect
to the financial statements of GenQuest Inc. included in Corixa Corporation's
dated August 9, 1999 Current Report on Form 8-K of filed with the Securities and
Exchange Commission.
Seattle, Washington ERNST & YOUNG LLP
August 11, 1999
<PAGE> 1
EXHIBIT 23.05
Board of Directors
Corixa Corporation
1124 Columbia Street, Suite 200
Seattle, WA 98104-2040
Members of the Board:
We hereby consent to the inclusion of our opinion letter to the Board of
Directors of Corixa Corporation as Appendix B to the proxy statement/prospectus
of Corixa Corporation constituting a part of the Registration Statement on Form
S-4 relating to the proposed merger transaction involving Corixa and Ribi
ImmunoChem Research, Inc. and references thereto in such proxy
statement/prospectus under the captions "SUMMARY - Opinion of Corixa's Financial
Advisor", "THE MERGER - Recommendation of Corixa's Board; Corixa's Reasons for
the Merger", and "THE MERGER - Opinion of Corixa's Financial Advisor". In giving
such consent, we do not admit that we come within the category of persons whose
consent is required under, and we do not admit that we are "experts" for
purposes of, the Securities Act of 1993, as amended, and the rules and
regulations promulgated thereunder.
PACIFIC GROWTH EQUITIES, INC.
/s/ George J. Millstein
----------------------------------
George J. Millstein
<PAGE> 1
EXHIBIT 23.06
Board of Directors
Ribi ImmunoChem Research, Inc.
553 Old Corvallis Road
Hamilton, MT 59840-3131
Members of the Board:
We hereby consent to the inclusion of our opinion letter to the Board of
Directors of Ribi ImmunoChem Research, Inc. as Appendix C to the proxy
statement/prospectus of Ribi ImmunoChem Research, Inc. constituting a part of
the Registration Statement on Form S-4 relating to the proposed merger
transaction involving Ribi and Corixa Corporation and references thereto in such
proxy statement/prospectus under the captions "SUMMARY - Opinion of Ribi's
Financial Advisor", "THE MERGER - Recommendation of Ribi's Board; Ribi's Reasons
for the Merger", and "THE MERGER - Opinion of Ribi's Financial Advisor". In
giving such consent, we do not admit that we come within the category of persons
whose consent is required under, and we do not admit that we are "experts" for
purposes of, the Securities Act of 1993, as amended, and the rules and
regulations promulgated thereunder.
/s/ HAMBRECHT & QUIST LLC
<PAGE> 1
EXHIBIT 99.01
PROXY
PROXY FOR 1999 SPECIAL MEETING OF STOCKHOLDERS OF CORIXA CORPORATION
THE PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE SPECIAL
MEETING OF STOCKHOLDERS TO BE HELD SEPTEMBER 24, 1999.
The undersigned stockholder of Corixa Corporation, a Delaware
corporation (the "Company"), hereby acknowledges receipt of the Notice of
Special Meeting of Stockholders and joint proxy statement/prospectus, each dated
August 12, 1999, and hereby appoints Steven Gillis and Michelle Burris or each
of them, proxies and attorneys-in-fact, with full power to each of substitution,
on behalf and in the name of the undersigned, to represent the undersigned at
the Special Meeting of Stockholders of the Company to be held on September 24,
1999, at 9:00 a.m. local time, in the Cedar Room at the Company's headquarters
located at 1124 Columbia Street, Seattle, Washington 98104, and at any
postponement or adjournment thereof, and to vote all the stock of the Company
which the undersigned would be entitled to vote if then and there personally
present, on the matters set forth in the Notice of Special Meeting of
Stockholders and joint proxy statement/prospectus.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED,
WILL BE VOTED "FOR" EACH OF THE PROPOSALS SET FORTH IN THE NOTICE OF SPECIAL
MEETING OF STOCKHOLDERS AND JOINT PROXY STATEMENT/PROSPECTUS, AND, IN THEIR
DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE ON SUCH OTHER MATTER OR MATTERS
AS MAY PROPERLY COME BEFORE THE MEETING AND ANY POSTPONEMENTS OR ADJOURNMENTS
THEREOF.
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY FORM USING THE ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side.)
<PAGE> 2
Corixa Corporation
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
1. Proposal to approve the merger of Ribi ImmunoChem Research, Inc., a
Delaware corporation, ("Ribi") with and into the Company whereby, among other
things:
- each outstanding share of Ribi common stock will be converted into
the right to receive 0.1685 shares of the Company's common stock;
- each outstanding option and warrant to purchase shares of Ribi common
stock that is not terminated as a result of the merger will be
assumed by the Company and converted into an option or warrant to
purchase shares of the Company's common stock;
- Ribi's stock option plans and option agreements granted to employees
and directors will be amended; and
- each share of Ribi Series A preferred stock that is not converted
into Ribi common stock prior to the merger will be redeemed by Ribi.
- FOR - AGAINST - ABSTAIN
2. Proposal to approve the terms of the Company's equity line of credit
with Castle Gate L.L.C. to allow the Company at its option to conduct additional
draw-downs of funds that could trigger the issuance of a total of 20% or more of
the Company's capital stock to Castle Gate in the form of Series A preferred
stock and warrants to purchase common stock at a price less than the greater of
book or market value of such stock.
- FOR - AGAINST - ABSTAIN
3. Proposal to amend the Company's Amended and Restated 1994 Stock
Option Plan to increase the shares available for issuance thereunder by
2,500,000 to an aggregate of 5,266,234 shares and to increase the maximum annual
increase in the number of shares reserved for issuance under the 1994 plan from
500,000 to 750,000.
- FOR - AGAINST - ABSTAIN
NOTE: This Proxy should be marked, dated, signed by the stockholder(s) exactly
as his or her name appears hereon, and returned in the enclosed envelope.
Please sign exactly as name appears hereon. When shares are held
by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate
name by the President or other authorized officer. If a
partnership, please sign in partnership name by an authorized
person.
YOUR VOTE IS IMPORTANT!
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY
FORM USING THE ENCLOSED ENVELOPE.
________________________________________
Signature
________________________________________
Signature
Dated:____________________________, 1999
<PAGE> 1
EXHIBIT 99.03
PROXY
PROXY FOR 1999 SPECIAL MEETING OF STOCKHOLDERS OF
RIBI IMMUNOCHEM RESEARCH, INC.
The Proxy is Solicited on Behalf of the Board of Directors for the Special
Meeting of Stockholders to be Held September 23, 1999.
The undersigned stockholder of Ribi ImmunoChem Research, Inc., a
Delaware corporation (the "Company"), hereby acknowledges receipt of the Notice
of Special Meeting of Stockholders and joint proxy statement/prospectus, each
dated August 12, 1999, and hereby appoints Robert Ivy and Ronald Kullick or
each of them, proxies and attorneys-in-fact, with full power to each of
substitution, on behalf and in the name of the undersigned, to represent the
undersigned at the Special Meeting of Stockholders of the Company to be held on
September 23, 1999, at 10:00 a.m., local time, at Hamilton City Hall/Community
Center which is located at 223 S. 2nd Street, Hamilton, Montana 59840, and at
any postponement or adjournment thereof, and to vote all the stock of the
Company which the undersigned would be entitled to vote if then and there
personally present, on the matters set forth in the Notice of Special Meeting
of Stockholders and joint proxy statement/prospectus.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED,
WILL BE VOTED "FOR" EACH OF THE PROPOSALS SET FORTH IN THE NOTICE OF SPECIAL
MEETING OF STOCKHOLDERS AND JOINT PROXY STATEMENT/PROSPECTUS, AND, IN THEIR
DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE ON SUCH OTHER MATTER OR MATTERS
AS MAY PROPERLY COME BEFORE THE MEETING AND ANY POSTPONEMENTS OR ADJOURNMENTS
THEREOF.
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY FORM USING THE ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side.)
<PAGE> 2
Ribi ImmunoChem Research, Inc.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
1. Proposal to approve the merger of the Company with and into Corixa
Corporation, a Delaware corporation ("Corixa") whereby, among other things:
- each outstanding share of the Company's common stock will be
converted into the right to receive 0.1685 shares of Corixa common
stock;
- each outstanding option and warrant to purchase shares of the
Company's common stock that is not terminated as a result of the
merger will be assumed by Corixa and converted into an option or
warrant to purchase shares of Corixa common stock;
- the Company's stock option plans and option agreements granted to
employees and directors will be amended; and
- each share of the Company's Series A preferred stock that is not
converted into the Company's common stock prior to the merger will be
redeemed by the Company.
- FOR - AGAINST - ABSTAIN
NOTE: This Proxy should be marked, dated, signed by the stockholder(s) exactly
as his or her name appears hereon, and returned in the enclosed envelope.
Please sign exactly as name appears hereon. When shares are held
by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate
name by the President or other authorized officer. If a
partnership, please sign in partnership name by an authorized
person.
YOUR VOTE IS IMPORTANT!
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY FORM
USING THE ENCLOSED ENVELOPE.
________________________________________
Signature
________________________________________
Signature
Dated:____________________________, 1999
