<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 30, 1998
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
IgX CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 2836 33-0505269
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
------------------------
ONE SPRINGFIELD AVENUE
SUMMIT, NEW JERSEY 07960
(908) 598-4663
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
ALBERT J. HENRY
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
ONE SPRINGFIELD AVENUE
SUMMIT, NEW JERSEY 07960
(908) 598-4663
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
Copies to:
<TABLE>
<S> <C>
SETH I. TRUWIT, ESQ. DENNIS N. BERMAN, ESQ.
EPSTEIN BECKER & GREEN, P.C. SONNENSCHEIN NATH & ROSENTHAL
250 PARK AVENUE 1221 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10177 NEW YORK, NEW YORK 10020
(212) 351-4500 (212) 768-6700
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. /x/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. / /
If 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. / /
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
check the following box. / /
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED
MAXIMUM OFFERING PROPOSED MAXIMUM
TITLE OF SECURITIES BEING AMOUNT TO BE PRICE PER AGGREGATE AMOUNT OF
REGISTERED REGISTERED SHARE(1) OFFERING PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, $.001 par
value......................... 2,645,000(2) $10.00 $26,450,000 $7,803
Representative's Warrants..... 230,000(3) $.0001 $23 (3)
Common Stock underlying the
Representative's Warrants..... 230,000(4) $12.00 $2,760,000 $815
Total......................... $8,618
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457.
(2) Includes 345,000 shares of Common Stock that the Underwriters have the
option to purchase to cover over-allotments, if any.
(3) No fee due pursuant to Rule 457(g).
(4) Pursuant to Rule 416, the Registration Statement also covers such additional
shares of Common Stock as may be issued as a result of the anti-dilution
provisions of the Representative's Warrants.
------------------------
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 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN
OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED SEPTEMBER 29, 1998
PROSPECTUS
- --------------------------------------------------------------------------------
2,300,000 SHARES
IgX CORP.
COMMON STOCK
- --------------------------------------------------------------------------------
IgX Corp. ("IgX" or the "Company") hereby offers 2,300,000 shares of its common
stock, par value $.001 per share (the "Common Stock"). Prior to this offering
(the "Offering"), there has been no public market for the Common Stock, and
there can be no assurance that a public market for the Common Stock will develop
after completion of this Offering, or if developed, that it will be sustained.
It is presently anticipated that the initial public offering price will be
between $8.00 and $10.00 per share. See "Underwriting" for information regarding
the factors to be considered in determining the initial public offering price.
Application will be made to include the Common Stock on the Nasdaq National
Market under the symbol "IGXC."
- --------------------------------------------------------------------------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK AND IMMEDIATE AND
SUBSTANTIAL DILUTION. SEE "RISK FACTORS" BEGINNING ON PAGE 8 AND "DILUTION."
- --------------------------------------------------------------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION 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.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
<S> <C> <C> <C>
Per Share....................... $ $ $
Total(3)........................ $ $ $
</TABLE>
(1) Does not include compensation payable to Josephthal & Co. Inc., as
representative of the several Underwriters (the "Representative"), in the
form of a non-accountable expense allowance and a financial advisor's fee.
In addition, see "Underwriting" for information concerning indemnification
and contribution arrangements with, and other compensation payable to, the
Underwriters.
(2) Before deducting estimated expenses of $1,114,000, including the
Representative's non-accountable expense allowance and financial advisor's
fee.
(3) The Company has granted the Underwriters an option (the "Over-Allotment
Option"), exercisable for a period of 45 days after the date of this
Prospectus, to purchase up to an additional 345,000 shares of Common Stock
upon the same terms and conditions set forth above, solely to cover
over-allotments, if any. If the Over-Allotment Option is exercised in full,
the total Price to Public, Underwriting Discount and Proceeds to Company
will be $ , $ and $ , respectively. See "Underwriting."
- --------------------------------------------------------------------------------
The shares of Common Stock are offered by the Underwriters, subject to prior
sale, when, as and if delivered to and accepted by the Underwriters and subject
to the approval of certain legal matters by their counsel and to certain other
conditions. The Underwriters reserve the right to withdraw, cancel or modify the
Offering without notice and to reject any order in whole or in part. It is
expected that delivery of the shares of Common Stock offered hereby will be made
against payment on or about , 1998 at the offices of Josephthal &
Co. Inc., New York, New York.
JOSEPHTHAL & CO. INC.
The date of this Prospectus is , 1998.
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING PURCHASES OF THE COMMON STOCK TO STABILIZE ITS MARKET PRICE, PURCHASES
OF THE COMMON STOCK TO COVER SOME OR ALL OF A SHORT POSITION IN THE COMMON STOCK
MAINTAINED BY THE UNDERWRITERS AND THE IMPOSITION OF PENALTY BIDS. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
The Company will furnish its stockholders with annual reports containing
audited financial statements certified by an independent public accounting firm
and will make available quarterly reports containing unaudited financial
statements for the first three quarters of each fiscal year.
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and Consolidated Financial
Statements and Notes thereto appearing elsewhere in this Prospectus. Except as
otherwise noted, all information in this Prospectus assumes no exercise of the
Over-Allotment Option or of the Representative's Warrants to purchase 230,000
shares of Common Stock from the Company and reflects the conversion of all
outstanding shares of preferred stock into an aggregate of 4,854,066 shares of
Common Stock effective upon the closing of this Offering. See "Underwriting"
and, for a description of the outstanding shares of preferred stock, see Notes
to Consolidated Financial Statements.
This Prospectus includes forward-looking statements which involve known and
unknown risks and uncertainties or other factors that may cause actual results,
performance or achievements of the Company to be materially different from any
future results, performance or achievements expressed or implied by such
forward-looking statements. Factors that might cause such differences include,
but are not limited to, those discussed under the heading "Risk Factors." An
investment in the securities offered hereby involves a high degree of risk. See
"Risk Factors."
THE COMPANY
IgX Corp. ("IgX" or the "Company") is a development stage company
developing drugs principally for the treatment of infectious diseases of the
human gastrointestinal ("GI") tract for which there is a significant medical
need for improved therapies. The Company's initial three drug candidates seek to
treat human GI tract infections caused by specific parasites or bacteria (types
of pathogens) with immunoglobulin (a type of antibody) produced by hens. This is
an example of passive immunity, using an antibody produced by one individual or
animal to treat another. Specifically, these drug candidates consist of
proprietary, low lipid (fat), polyclonal antibodies derived from egg yolks of
hens. The hens are injected with an amount of pathogen-specific antigens
(foreign substances) necessary to cause the hens to produce an increased level
of antibodies to that pathogen ("Avian Technology"). The Company's lead product
candidate, IGX-CPL3, is seeking to offer a treatment for cryptosporidial
diarrhea, focusing on HIV-advanced patients (as defined below) where the Company
believes no effective treatment currently exists. The two other Avian
Technology-based drug candidates currently under development, IGX-CDL3 and
IGX-HPL3, may offer valuable alternatives to traditional antibiotic treatments
at a time where there is an increasing development of drug resistance to
antibiotics. The Company believes that the Avian Technology may be applied to
the development of other drug candidates to treat additional GI tract
infections. The Avian Technology has been developed in collaboration with
Charles R. Sterling, Ph.D. and his colleagues at the University of Arizona.
Further, in August 1998, the Company organized a majority-owned subsidiary, IgX
Oxford Hepatitis Corp. ("IgX Oxford"), which is seeking to develop a drug
candidate using a proprietary compound, N-nonyl-deoxynojirimycin
("N-nonyl-DNJ"), licensed to it exclusively from Monsanto Company ("Monsanto"),
to treat another infectious disease, Hepatitis B, for which there also is a
significant medical need for improved therapy. N-nonyl-DNJ seeks to prevent the
secretion of the Hepatitis B virus from the infected cells. The mechanism of
action is that N-nonyl-DNJ prevents the sugars of one of the Hepatitis B virus
antigens from being correctly biosynthesized, so that the virus does not form,
as evidenced in animal studies described in the May 1998 edition of Nature
Medicine, a referee journal.
3
<PAGE>
The following chart illustrates the disease indications and various stages
of research and development of the Company's initial drug candidates:
<TABLE>
<CAPTION>
DRUG CANDIDATE DISEASE INDICATION STAGE OF RESEARCH AND DEVELOPMENT
- -------------------- --------------------------------------- ------------------------------------------------
Avian Technology-based
<S> <C> <C>
IGX-CPL3 Cryptosporidial diarrhea, European Union ("EU")-reviewed protocol,
focusing on HIV-advanced patients Phase III double-blind, placebo controlled
multicenter trial in South Africa commenced
January 1998. Expanded trial in Mexico in July
1998 pursuant to the same protocol. U.S.
Phase I/II trial of earlier high lipid
formulation for AIDS related cryptosporidial
diarrhea completed in November 1995.
IGX-CDL3 Clostridium difficile-associated Animal studies.
diarrhea and related complications
arising from antibiotic therapy
IGX-HPL3 Peptic ulcers due to Helicobacter Research.
pylori infections
N-nonyl-DNJ* Hepatitis B Animal studies.
-------------------------------------------------------------------------------------------------------------
* Being developed by IgX's majority-owned subsidiary, IgX Oxford.
</TABLE>
IGX-CPL3
The Company's lead Avian Technology-based drug candidate, IGX-CPL3, is
designed to treat diarrhea caused by Cryptosporidium parvum ("C. parvum"), a
parasite often found in municipal drinking water. IGX-CPL3 is seeking to treat
Cryptosporidial diarrhea in patients infected with the human immunodeficiency
virus ("HIV"), the retrovirus responsible for Acquired Immune Deficiency
Syndrome ("AIDS"), who have CD-4 blood cell counts below 180 ("HIV-advanced
patients"). Cryptosporidial diarrhea can be chronic or life-threatening in
HIV-advanced patients.
In November 1995, the Company completed a U.S. Phase I/II clinical trial at
New York Hospital-Cornell Medical Center in New York City to determine the
safety and preliminary efficacy of IGX-CP, an earlier high lipid, liquid
formulation of the IGX-CPL3 drug candidate, for AIDS-related cryptosporidial
diarrhea. IGX-CP for the trial was produced at the Company's Tucson, Arizona
pilot production facility. The trial was an open-label, ascending dose, pilot
study of two dose levels of IGX-CP, in which 16 of the 24 patients enrolled were
evaluable, having completed at least 2 weeks of treatment under either dose
level. The data, measured at the end of 3 and 6 weeks of treatment, suggested
that both dose levels were safe for administration to AIDS patients. In
addition, at least 60% of the total evaluable patients at the end of 3 and 6
weeks of treatment showed a decrease in daily frequency of bowel movements and
daily frequency of liquid stools, two of the trial's three primary efficacy
points. While daily frequency of bowel movements and daily frequency of liquid
stools decreased in only 40% and 20%, respectively, of the patients treated at
the high dose level at the end of 6 weeks, the Company attributes this decline
to the high lipid content of IGX-CP, which induced some diarrhea. The third
primary end point of the trial was stool oocyst quantitation, which measures the
density of the parasites in the stool and 25% of the evaluable patients met this
end point. The Company believes that stool oocyst quantitation is not a
significant measure of efficacy because it does not directly measure parasitic
volume. By contrast, the Company believes that bowel movement frequency is an
absolute measure of C. parvum, and its reduction in the trial evidenced a
corresponding reduction in C. parvum.
Following the conclusion of the Phase I/II trial, the Company reformulated
IGX-CP to reduce the lipid content by approximately 50%, and to produce it as a
powder. During 1996 and 1997, the Company tested the reformulated drug
candidate, IGX-CPL3, in mice, and those animal studies demonstrated a reduction
in C. parvum counts. Based upon these animal studies, the Company believes that
IGX-CPL3 at the high dose level utilized in the Phase I/II trial should be more
effective than the prior formulation of the drug candidate, and the current
Phase III trial uses such high dose level. There can be no assurance that
IGX-CPL3 will be more effective than or as effective as the prior formulation of
such drug candidate.
Since the late 1995 introduction of combination drug therapy, including
protease inhibitors, to treat HIV-positive patients, the number of HIV-positive
patients in the U.S. and portions of Europe who have chronic or life-threatening
cryptosporidial diarrhea has been significantly reduced. As a result, during
1996 and 1997 the
4
<PAGE>
Company refocused its marketing strategy of IGX-CPL3, seeking to obtain
regulatory approval to market IGX-CPL3 as a treatment for cryptosporidial
diarrhea in HIV-advanced patients in countries where combination drug therapy is
not widely available. Similarly, the Company decided that its clinical trials
should be conducted in those countries that would facilitate patient enrollment.
U.S. regulations prohibit the exportation of biologics for use in foreign
clinical trials. Accordingly, during 1996, the Company, through its wholly-owned
subsidiary, IgX Limited, built a pilot production facility in Ireland to support
the production of IGX-CPL3 and other Avian Technology-based drug candidates for
use in clinical trials outside the U.S.
In January, 1998, the Company commenced a double-blind, placebo-controlled,
randomized multicenter Phase III clinical trial in South Africa pursuant to an
EU-reviewed protocol. In July 1998, the Company expanded the trial to Mexico
using the same protocol. The Company expects to enroll 135 HIV-advanced patients
with cryptosporidial diarrhea to be treated for a minimum of four weeks with
IGX-CPL3, a low lipid formulation, at the high dose level used in the
Phase I/II trial. It is anticipated that at least 90 patients will complete the
trial. The trial's primary efficacy end-point is the patient's percentage
reduction in weekly stool frequency. At September 15, 1998, the Company had
screened over 450 patients based upon the trial's inclusion and exclusion
criteria and enrolled a total of 40 patients at 14 sites in South Africa and
Mexico, 26 of whom (all treated in South Africa) have completed the trial. The
Company anticipates that the trial will be completed in the first half of 1999.
If the trial is successful, IgX intends to apply for marketing approval of
IGX-CPL3 in the EU and certain South American countries to treat cryptosporidial
diarrhea in HIV-advanced patients and may apply for similar approval in the U.S.
The approximate reported number of HIV-advanced patients who have
cryptosporidial-based diarrhea is 14,500 in the EU and 700,000 in South America.
If the current Phase III clinical trial for IGX-CPL3 is successful and
establishes its safety and efficacy in treating cryptosporidial diarrhea in
HIV-advanced patients, IgX believes that it will have demonstrated the principle
that Avian Technology-based drug candidates may treat infectious diseases of the
human GI tract. There can be no assurance that the Phase III clinical trial for
IGX-CPL3 will demonstrate any efficacy or safety or that it will be completed
successfully and in a timely manner. Furthermore, there can be no assurance as
to the timing of EU and other foreign or domestic regulatory filings or if or
when any of those regulatory authorities will approve IGX-CPL3 for sale.
Additionally, there can be no assurance that IGX-CPL3, if and when regulatory
approvals are received, will achieve market acceptance.
The Company also plans to conduct clinical trials to determine the safety
and efficacy of using IGX-CPL3 to treat cryptosporidial diarrhea in patients
with a healthy immune system ("immunocompetent"). While cryptosporidial diarrhea
in immunocompetent patients is generally neither chronic nor life-threatening,
to the Company's knowledge, no effective treatment currently exists. The Company
expects to file an IND application with the U.S. Food and Drug Administration
(the "FDA") by the end of the first quarter of 1999 to commence a U.S. Phase I
clinical trial of IGX-CPL3 to treat cryptosporidial diarrhea in immunocompetent
children. The Company also expects to file an IND application to test IGX-CPL3
in immunocompetent adults later in 1999. The approximate reported number of
immunocompetent patients infected with cryptosporidial diarrhea annually is
600,000 in the U.S., 1.1 million in Europe, and 4.6 million in South America.
There can be no assurance as to the timing of the filing of these IND
applications, the timing or outcome of the FDA's review of any such
applications, or, if and when such review is completed, the timing or outcome of
the related clinical trials.
IGX-CDL3
The Company's second Avian Technology-based drug candidate, IGX-CDL3, is a
proposed treatment for Clostridium difficile ("C. difficile")-associated
diarrhea and related complications arising from antibiotic therapy prescribed to
patients in hospitals and long-term health care institutions.
C. difficile-associated diarrhea is currently treated with antibiotics but their
efficacy has been reduced due to increasing development of drug resistance to
these antibiotics. Currently, the Company is testing IGX-CDL3 in hamsters. IgX
anticipates completing those studies in the fourth quarter of 1998. If such
studies are successful, as to which there can be no assurance, the Company
intends to submit an IND application to the FDA to commence a U.S. Phase I/II
clinical trial of IGX-CDL3 as a treatment for C. difficile-associated diarrhea
and related complications. Annually, approximately 2.3 million patients in the
U.S., approximately 4 million patients in the EU and approximately 194,000
patients in South America have C. difficile-associated diarrhea.
5
<PAGE>
IGX-HPL3
The Company's third Avian Technology-based product candidate, IGX-HPL3,
seeks to treat peptic ulcers caused by the bacteria Helicobacter pylori
("H. pylori"). H. pylori has been implicated as a cause of peptic ulcer disease
and chronic gastritis. There also appears to be a strong statistical association
between H. pylori and gastric carcinoma and types of lymphoma. Ulcers caused by
H. pylori are currently treated with certain antibiotics but their efficacy has
been reduced slightly due to an increasing development of drug resistance to
these antibiotics. The Company anticipates commencing animal studies for
IGX-HPL3 in mice by the end of 1998. Each year approximately 4 million new
incidences of ulcers or other complications arising from H. pylori are reported
in the U.S.
N-NONYL-DNJ
In September 1998, IgX Oxford acquired an exclusive worldwide license from
Monsanto to commercialize N-nonyl-DNJ, a glucosidase inhibitor, as a treatment
for Hepatitis B. N-nonyl-DNJ seeks to prevent the secretion of the Hepatitis B
virus from the infected cells. The mechanism of action is that N-nonyl-DNJ
prevents the sugars of one of the Hepatitis B virus antigens from being
correctly biosynthesized, so that the virus does not form, as evidenced in
animal studies described in the May 1998 edition of Nature Medicine, a referee
journal. While alpha interferon and antivirals are currently available to treat
Hepatitis B, these therapies have a limited clinical success rate, high
recidivism rate and significant undesirable side effects. To date, Monsanto has
sponsored research and animal studies on N-nonyl-DNJ at Oxford University
("Oxford") in Oxford, England and Thomas Jefferson University ("TJU") in
Philadelphia, Pennsylvania. The results of these woodchuck animal studies,
published in the May 1998 edition of Nature Medicine, showed a reduction of the
enveloped Hepatitis B virus correlated with the dosing level of N-nonyl-DNJ in
the serum of the treated animals. IgX has agreed to fund IgX Oxford with up to
$2 million. Such funds are anticipated to be used to conduct further animal
studies relating to N-nonyl-DNJ at Oxford and TJU, which are necessary to
determine whether an IND application to conduct a Phase I human clinical trial
is appropriate. These animal studies are anticipated to be completed by the end
of the first half of 1999. If they are successful, as to which there can be no
assurance, IgX Oxford anticipates filing an IND application with the FDA.
Monsanto has retained certain exclusive rights of first refusal to license for
further development and/or commercialize N-nonyl-DNJ. Approximately 350 million
people worldwide are chronically infected with the Hepatitis B virus, which is
usually fatal in approximately 20-40% of the chronically infected population if
untreated.
The Company's strategy is to develop products both independently and
through strategic partnerships with large pharmaceutical companies, under which
the Company will seek financial, preclinical and clinical trial, manufacturing
and marketing assistance while retaining parallel manufacturing and/or marketing
rights for the products. In addition to the IgX Oxford joint venture, in August
1998 IgX entered into strategic partnerships with Laboratorios Sintofarma S.A.
("Sintofarma"), a Brazilian company currently responsible for the manufacturing
and marketing of 26 pharmaceutical products in South America, and Gador S.A.
("Gador"), the second largest manufacturer and distributor of pharmaceutical
products in Argentina based on both unit volume and sales. These agreements
relate to the development and commercialization of the Company's Avian
Technology-based drug candidates in South America, Latin America and Mexico.
Under its agreement with the Company, Sintofarma agreed to pay for clinical
trials in Brazil of the Company's Avian Technology-based drug candidates
currently under development (IGX-CPL3, IGX-CDL3 and IGX-HPL3), and to form a
Brazilian joint venture entity with the Company to manufacture Avian
Technology-based drug candidates for sale in Brazil and elsewhere. The joint
venture entity to be formed ("Sintofarma IgX Biotech, Ltda"), which is expected
to be owned 40% by IgX and 60% by Sintofarma, will manufacture all Avian
Technology-based drugs for commercial sale, if and when any such drug candidates
are approved for sale in Brazil. Under the strategic partnership, IgX granted
Sintofarma an exclusive license to distribute and market IGX-CPL3 and IGX-CDL3
in Brazil, if and when approved for sale, and Sintofarma will pay IgX a royalty
to be agreed upon ranging from 10% to 16.6% of net sales. Sintofarma and Gador
also have rights of first negotiation for similar licenses on other Avian
Technology-based drug candidates. Under its agreement with the Company, Gador
agreed to manage the process of seeking regulatory approval to commercialize
IGX-CPL3 and IGX-CDL3 in all countries in South America, except Brazil, as well
as Latin America and Mexico. IgX also granted Gador the exclusive distribution
and marketing rights to IGX-CPL3 and IGX-CDL3 in those countries if and when
approved for sale, for which Gador will pay IgX a royalty of 10% of net sales.
In addition, Gador will purchase the ingredients for IGX-CPL3 and IGX-CDL3 from
IgX or its designee (including Sintofarma IgX Biotech, Ltda) at a cost of up to
20% of the net sales of drugs sold by Gador.
The Company was incorporated in Delaware in 1992. In addition to its
majority equity interest in IgX Oxford, IgX has one wholly-owned subsidiary, IgX
Limited, which is organized under the laws of the Republic of Ireland and
operates a pilot production facility. The Company's principal executive offices
are located at One Springfield Avenue, Summit, New Jersey 07960 and its
telephone number is (908) 598-4663.
6
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered by the Company............ 2,300,000 shares
Common Stock to be outstanding after the
Offering..................................... 8,966,643 shares(1)
Use of proceeds................................ Clinical development, research programs and general corporate
purposes, including working capital.
Proposed Nasdaq National Market symbol......... IGXC
</TABLE>
- ------------------
(1) Based on the number of shares of Common Stock outstanding on September 28,
1998. Excludes 825,857 shares of Common Stock issuable upon exercise of
options outstanding on such date, which had a weighted average exercise
price of $1.51 per share. Also excludes 600,000 shares available for future
grant under the Company's 1998 Stock Option Plan. See "Management--Stock
Option Plans."
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
FEBRUARY 11,
1992
(INCEPTION)
DECEMBER 31, TO JUNE 30,
---------------------------------------------------- DECEMBER 31, -------------------
1993 1994 1995 1996 1997 1997 1997 1998
-------- -------- -------- -------- -------- ------------ -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Operating expenses:
Research and development..... $ 176 $ 330 $ 475 $ 1,136 $ 3,426 $ 5,800 $ 1,874 $ 1,577
General and administrative... 80 281 718 1,119 1,733 4,095 521 1,911
Net interest expense........... 23 64 144 207 373 811 164 147
Net loss....................... (279) (675) (1,337) (2,467) (5,555) (10,734) (2,576) (3,640)
Basic and diluted loss per
share........................ $ (0.80) $ (1.52) $ (1.88) $ (3.48) $ (7.82) $ (3.63) $ (5.13)
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
Weighted average shares
outstanding used for basic
and diluted loss per
share(1)..................... 350,030 444,715 710,030 710,030 710,030 710,030 710,030
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
<CAPTION>
FEBRUARY 11,
1992
(INCEPTION)
TO
JUNE 30,
1998
------------
<S> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Operating expenses:
Research and development..... $ 7,377
General and administrative... 6,006
Net interest expense........... 958
Net loss....................... (14,374)
Basic and diluted loss per
share........................
Weighted average shares
outstanding used for basic
and diluted loss per
share(1).....................
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1998
---------------------------------------------
PRO FORMA
ACTUAL PRO FORMA(2)(3) AS ADJUSTED(4)
------- --------------- ---------------
<S> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash....................................................................... 2,543 2,543 20,680
Working capital............................................................ 1,284 1,624 19,761
Total assets............................................................... 3,654 3,654 21,791
Total liabilities.......................................................... 5,498 1,013 1,013
Deficit accumulated during development stage............................... (14,374) (16,039) (16,039)
Total (capital deficiency) stockholders' equity............................ (1,844) 2,641 20,779
</TABLE>
- ------------------
(1) See Note 2 of the Notes to the Consolidated Financial Statements for an
explanation of the method used to determine the number of shares to compute
basic and diluted loss per share.
(2) Gives effect to the September 1998 conversion of all notes payable to
stockholders of the Company into 719,281 shares of Common Stock at $7.00 per
share.
(3) Deficit accumulated during development stage reflects the recognition into
expense of $550, representing the unamortized portion of the discount
associated with the $1,000 promissory note issued to NEGF II, L.P., and a
$1,115 loss on conversion of notes payable to stockholders into 719,281
shares of Common Stock at $7.00 per share assuming conversion at June 30,
1998.
(4) Gives effect to the sale of the shares of Common Stock offered hereby, at an
assumed initial offering price of $9.00 per share, and the application of
the estimated net proceeds therefrom, after deducting underwriting discount
and estimated offering expenses. See "Use of Proceeds" and "Capitalization."
7
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RISK FACTORS
This Prospectus contains "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. All such forward-looking
statements involve known and unknown risks and uncertainties or other factors
which may cause actual results, performance or achievements of the Company to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. In addition to
statements which explicitly describe such risks and uncertainties, investors are
urged to consider statements labeled with the terms "believes," "belief,"
"expects," "plans," "anticipates," or "intends" to be uncertain and
forward-looking. An investment in the shares of Common Stock offered hereby
involves a high degree of risk. Prospective investors should carefully consider
the following risk factors, in addition to the other information set forth in
this Prospectus, in connection with an investment in the shares of Common Stock
offered hereby. All cautionary statements made in this Prospectus should be read
as being applicable to all related forward-looking statements wherever they
appear in this Prospectus.
Early Stage of Development; Accumulated Deficit; Substantial Doubt about
the Company's Ability to Continue as a Going Concern; and Expectation of Future
Losses. IgX has generated no revenues to date and has experienced significant
losses in each year since its inception. At June 30, 1998, the Company had an
accumulated deficit of approximately $14.4 million since its inception in
February 1992. These losses have resulted primarily from expenses associated
with the Company's research and development activities, including preclinical
and clinical trials, and general and administrative expenses. The Company's
financial statements have been prepared assuming that the Company will continue
as a going concern. The auditors' report states that the Company is a
development stage enterprise and has suffered recurring losses and net cash
outflows from operations since inception that raise substantial doubt about the
Company's ability to continue as a going concern. The Company is dependent upon
capital infusions from existing and/or new investors to fund operations. See
"Consolidated Financial Statements." The Company expects cumulative losses to
increase significantly as the Company continues to expand its reseach and
development, clinical trials, and manufacturing and marketing activities. The
Company's ability to achieve profitable operations is dependent on successfully
commercializing its Avian Technology-based drug candidates. There can be no
assurance that the Company's Avian Technology-based drug candidate development
efforts or its other drug candidate development efforts will be successfully
completed, that clinical trials will be successful, that regulatory approvals
will be obtained in a timely manner, if at all, that its drug candidates can be
manufactured at an acceptable cost and with acceptable quality, that any
approved drugs can be successfully marketed or that the Company will achieve
profitability. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Business."
Uncertainty of Technology. The Company's proposed business strategy is
based principally upon the application of the Company's Avian Technology
platform, which encompasses various elements from the fields of biotechnology
and pharmaceutical chemistry, and the application of these technologies to the
discovery and development of pharmaceuticals for the treatment of infections of
the human GI tract. This strategy is subject to the risks inherent in the
development of new drugs using new and emerging technologies. There can be no
assurance that unforeseen problems will not develop with these technologies or
applications, that the Company will be able to address successfully
technological challenges it encounters in its research and development programs
or that commercially feasible drugs will ultimately be developed by the Company.
See "Risk Factors--Competition" and "Business-Competition."
Unproven Safety and Effectiveness of Drug Candidates; Uncertainties Related
to Clinical Trials. The Company's drug candidates will require additional
research and development, extensive clinical testing and regulatory approval
prior to any commercial sales. The Company cannot predict if or when any of its
drug candidates under development will be commercialized. The Company currently
has only one drug candidate, IGX-CPL3, in human clinical trials. The Company
will be required to successfully complete clinical trials to demonstrate the
safety and efficacy of IGX-CPL3 as a treatment for cryptosporidial diarrhea in
HIV-advanced patients, currently in a Phase III clinical trial in South Africa
and Mexico, prior to seeking EU or other foreign regulatory approval or FDA
approval. In addition, there can be no assurance that the FDA will accept data
obtained from any foreign clinical trials. Further, there can be no assurance
that any clinical trial will be successful, that it will be completed in a
timely manner or that additional clinical trials will not be required. Although
there were no clinically significant adverse effects from IGX-CP in the
Phase I/II clinical trial which
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<PAGE>
was completed in November 1995, there can be no assurance that serious side
effects from IGX-CPL3 will not be reported as the Phase III clinical trial
proceeds. The results from early clinical trials may not be predictive of
results that will be obtained in large scale clinical trials, as a number of
companies have suffered significant setbacks in advanced clinical trials, even
after promising results in earlier trials.
There can be no assurance that the Phase III clinical trial for IGX-CPL3
will demonstrate any safety and efficacy or will be completed successfully in a
timely manner, if at all. There also can be no assurance that clinical trials
for the Company's other drug candidates will be commenced, or if commenced, that
they will demonstrate safety and efficacy or will be completed successfully in a
timely manner, if at all. The rate of completion of the Company's clinical
trials is dependent upon, among other things, the rate of patient enrollment.
Patient enrollment is a result of many factors, including the size of the
patient population, the nature of the clinical protocol under which the
particular drug candidate will be studied, the proximity of the patient to a
clinical site, the eligibility criteria for the study, the availability of
alternative treatments and cultural views on treatment. Delays in planned
patient enrollment may result in increased costs, regulatory filing delays,
abandonment of drug development efforts or any of the foregoing. Furthermore,
the Company, the EU, other foreign regulatory authorities or the FDA may suspend
or terminate clinical trials at any time. Failure to complete successfully any
of its clinical trials on a timely basis, or at all, would have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Business--Government Regulation."
Extensive Government Regulation; No Assurance of Regulatory Approval. The
Company is subject to extensive governmental regulatory requirements and a
lengthy approval process for its drug candidates. The development and commercial
use of the Company's drug candidates will be regulated by numerous federal,
state and local governmental authorities in the U.S., including the FDA, and
comparable foreign regulatory agencies abroad. Further, the nature of the
Company's research and development and manufacturing processes require testing
on certain laboratory animals. Accordingly, the Company is subject to extensive
federal, state and local laws, rules, regulations and policies governing the use
of and care for laboratory animals. Although the Company believes it is in
compliance with all such laws and maintains policies and procedures to ensure
that it remains in compliance, there can be no assurance that accidents will not
happen that would expose the Company to legal risk and/or financial loss.
Furthermore, there can be no assurance that current laws will not be changed or
that new laws will not be passed that force the Company to change its policies
and procedures, an event which could impose significant costs on the Company.
The U.S. and foreign regulatory approval processes for the Company's drug
candidates, including required preclinical studies and clinical trials, are
lengthy and expensive. The Company has only limited experience in conducting
clinical trials, filing or pursuing applications necessary to gain regulatory
approvals. Preclinical testing of the Company's drug candidates in the U.S. is
subject to current Good Laboratory Practices ("GLP") as prescribed by the FDA
and the manufacture of any drug candidates developed by the Company will be
subject to current Good Manufacturing Practices ("GMP") as prescribed by the FDA
as well as comparable foreign practices. There can be no assurance that the
necessary foreign regulatory and FDA clearances and subsequent approvals will be
obtained in a timely manner, if at all. There can be no assurance as to the
length of the clinical trial period or the number of patients that will be
required to be tested in the clinical trials in order to establish the safety
and efficacy of IGX-CPL3 or any future drug candidates of the Company. The
Company may encounter unanticipated delays or significant costs in its efforts
to secure necessary foreign or FDA approvals. There can be no assurance, even
after the performance of clinical trials and the passage of time and the
expenditure of such resources, that regulatory approval will be obtained for any
of the drug candidates that may be developed by the Company. The Company's
analysis of data obtained from preclinical and clinical activities is subject to
confirmation and interpretation by regulatory authorities which could delay,
limit or prevent EU, other foreign agency or FDA regulatory approval.
The Company and its strategic partners are subject to numerous and varying
foreign regulatory requirements governing the design and conduct of preclinical
and clinical trials and the manufacturing and marketing of its drug candidates.
The Phase III clinical trial of IGX-CPL3 is being conducted in South Africa
under an EU-reviewed protocol. The Company expanded the Phase III clinical trial
in Mexico in July 1998 under the same protocol. If the trial is successful, the
Company intends to file for marketing approval of IGX-CPL3 to treat
cryptosporidial diarrhea in HIV-advanced patients in the EU and certain South
American countries. Approval of a
9
<PAGE>
drug candidate by applicable regulatory authorities of foreign countries must be
obtained prior to the commencement of marketing the drugs in those countries.
The time required to obtain such approval may be longer or shorter than that
required for FDA approval discussed below. The foreign regulatory approval
process may include all of the risks associated with obtaining FDA approval set
forth below, and there can be no assurance that foreign regulatory approvals
will be obtained on a timely basis, if at all. There can be no assurance that
the EU regulatory authorities will in fact accept the data from that portion of
the clinical trial conducted in Mexico.
The Company also may apply for FDA approval of IGX-CPL3 to treat
cryptosporidial diarrhea in HIV-advanced patients. The current Phase III
clinical trial in South Africa and Mexico is based upon a protocol that has not
been approved by the FDA. If such trial is successful, there can be no assurance
that the FDA will in fact accept the data obtained from such trial in connection
with seeking FDA approval of IGX-CPL3. Even if regulatory approvals are
obtained, they may include significant limitations on the indicated uses for
which a drug may be marketed. A marketed drug also is subject to continual FDA
and other regulatory agency review and regulation. Later discovery of previously
unknown problems or failure to comply with the applicable regulatory
requirements may result in restrictions on the marketing of a drug or withdrawal
of the drug from the market, as well as possible civil or criminal sanctions. In
addition, if marketing approval is obtained, the FDA may require post-marketing
testing and surveillance programs to monitor the drug's efficacy and side
effects. Results of these post-marketing programs may prevent or limit the
further marketing of the monitored drug. See "Business--Government Regulation."
Uncertainty Regarding Patents and Proprietary Rights. The Company and the
University of Arizona (the "University") have entered into research agreements
(the "Research Agreements") under which the Company has funded research
undertaken by the University. As a result of certain research, the Company and
the University have entered into license agreements (the "Licenses") under which
the Company is granted certain exclusive, worldwide, royalty-bearing licenses to
commercialize the inventions set forth in the University's one issued patent and
several patent applications relating to aspects of Avian Technology utilized by
the Company in exchange for royalty payments by the Company. However, the
Licenses do not provide the Company with rights to license from the University
inventions relating to Avian Technology where the related research has not been
funded by the Company. See "Business--Research and Development."
The Licenses presently pertain to one issued U.S. patent, two continuation
applications pending in the U.S., three other patent applications pending in the
U.S. (as well as three corresponding foreign applications) and one provisional
patent application pending in the U.S. The issued U.S. patent (No. 5,753,228),
which issued on May 19, 1998 and will expire on May 19, 2015, relates to a
method for treating parasitosis by the enteral administration of hyperimmune hen
egg yolk antibodies.
The Company believes that its ability to compete effectively will depend in
large part on obtaining and maintaining access to patent and intellectual
property protection on technologies utilized in its business (particularly with
respect to aspects of Avian Technology licensed from the University). Pursuant
to its rights and obligations under the Research Agreements and the License
Agreements, the Company and the University pursue patent protection in the U.S.
and certain foreign jurisdictions for certain technologies believed to be
proprietary to the University and advantageous for the University and the
Company. The Company's ability to compete effectively will depend in large part
on the ability of the University to obtain and maintain a proprietary interest
in such technologies which are licensed to the Company. The University may
terminate any License on 90 days' notice upon any breach or default by the
Company under the License or upon the bankruptcy or insolvency or receivership
of the business of the Company. Upon termination of any License, all rights
granted thereunder revert back to the University and, in such event, the
University reserves the right to terminate all of the other Licenses. Any such
termination would have a material adverse effect on the Company's business,
financial condition and results of operations, or could result in cessation of
the Company's business.
Under the license agreement between IgX Oxford and Monsanto, either party
may terminate the license agreement upon an event of default, including
bankruptcy or insolvency of the other party or a material breach of the license
agreement that is not cured within 30 days of notice of the breach. Monsanto
also may terminate the license agreement if IgX Oxford shall have failed to give
notice on or before September 1, 2000 of its intent to commence a Phase I
clinical for N-nonyl-DNJ as a treatment for the Hepatitis B virus, which notice
triggers
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<PAGE>
Monsanto's initial right of first refusal described herein or if IgX Oxford
shall have failed to provide the notice required to trigger Monsanto's second
right of first refusal described herein. Further, Monsanto can terminate the
license agreement if IgX Oxford fails to commercialize N-nonyl-DNJ as a
treatment for the Hepatitis B virus in at least one of the "Major Markets"
(United States, the EU, Japan or the People's Republic of China) prior to
September 1, 2004; alternatively, Monsanto has the option in such event to
obtain an exclusive license from IgX Oxford for N-nonyl-DNJ as a treatment for
the Hepatitis B virus in any such Major Market that it has so failed to
commercialize such product. Finally, Monsanto may terminate the license
agreement if IgX defaults under its obligations to fund IgX Oxford with up to $2
million as described in this Prospectus and fails to cure that default within 30
days notice. Any termination of the license agreement between IgX Oxford and
Monsanto could have a material adverse effect on the Company's business,
financial condition and results of operations.
The patent and intellectual property positions of pharmaceutical and
biotechnology companies, including the Company, are uncertain and involve
complex legal and factual questions for which important legal principles are
largely unresolved. A number of pharmaceutical companies, biotechnology
companies, universities and research institutions, many of whom have
substantially greater resources than the Company and have made substantial
investments and may be further along in development in technologies competitive
with those utilized by the Company, have filed patent applications or received
patents relating to treatments and technologies which are similar to or
competitive with those of interest to the Company.
Since a United States patent application is maintained under conditions of
confidentiality while the application is pending in the United States Patent and
Trademark Office (the "PTO"), the Company is unable to determine the inventions
being claimed in pending patent applications filed by its competitors in the
PTO. In addition, patents issued and applications pending which relate to the
Company's areas of interest are numerous, and there can be no assurance that the
Company is aware of all potentially competitive or conflicting patents (either
pending or issued) or other intellectual property rights. The existence of such
other patents, patent applications and rights could result in a significant
reduction of the coverage of rights held or to be held by the Company (i.e.,
rights held under the Licenses) and the Company's ability to realize any
significant patent protection with respect to such rights.
Furthermore, while the Company holds rights (under the Licenses) to one
issued U.S. patent and several pending applications in the U.S. and
internationally, there can be no assurance that any of the pending applications
will result in the issuance of any patents, that such applications will have
priority over the applications of others, that, if issued, any patents to which
the Company holds rights might offer protection against competitors with similar
technologies or that the Company will not require additional rights to conduct
its business. There can also be no assurance that any patent, if issued or
following issuance, will not be challenged, invalidated or circumvented, or that
the rights created thereunder would afford the Company a competitive advantage.
The commercial success of the Company also depends in large part on the
Company neither infringing valid, enforceable patents or proprietary rights of
third parties, nor breaching any licenses that may relate to the Company's
business. In this regard, the Company is aware of certain third-party patents
and competitive proprietary technologies that may relate to its business.
Specifically, the Company is aware of certain intellectual property rights
belonging to third parties that could be interpreted to compromise the Company's
freedom to practice and/or obtain rights to patent protection with respect to
certain aspects of the Company's technologies in the areas of the treatment of
infections with hen egg antibodies and the formulation of lipid-reduced
preparations. In the event of an unfavorable interpretation of third party
intellectual property rights (including the third party intellectual property
rights of which the Company is aware), the Company may be required to obtain
licenses from such third parties. There can be no assurance that any such
licenses would be available to the Company upon reasonably acceptable terms, if
at all. If the Company were so required to obtain licenses from such parties,
and if the Company were unable to obtain such licenses on reasonably acceptable
terms or the Company were unable to practice, develop and exploit such
technologies, the Company's technologies and business could be materially and
adversely affected. There can also be no assurance that the Company does not or
will not infringe other patents, intellectual property or proprietary rights of
third parties (including patents and rights which may issue or arise in the
future). Any legal action or threat against the Company claiming damages or
seeking to enjoin commercial activities relating to the Company's business
affected by third-party rights, in addition to
11
<PAGE>
subjecting the Company to potential litigation and liability for damages, may
require the Company to obtain licenses in order to continue to pursue its
business. There can be no assurances that the Company would prevail in any such
action or that any license (including licenses proposed by third parties)
required under any third party rights would be made available on commercially
acceptable terms, if at all. The Company could also face significant costs and
loss of time by management and key employees as a result of any litigation
relating to such third party rights.
Certain underlying aspects of the technologies utilized and pursued by the
Company and the University may already be and have been in existence in the
scientific community in certain embodiments. There are United States and foreign
patents and patent applications held by third parties in the Company's
commercial areas of interest and the Company believes that there may be
significant litigation in the Company's industry and commercial areas of
interest regarding patent and other intellectual property rights. If the Company
becomes involved in such litigation, it could consume a substantial portion of
the Company's managerial and financial resources, which could have a material
adverse effect on the Company. Additionally, the defense and prosecution of
patent interference proceedings before the PTO or other related administrative
or court proceedings could result in substantial expense to the Company and
significant diversion of effort by the Company's technical and managerial
personnel. There can be no assurance that the Company will not in the future
become involved in PTO interference proceedings or other litigation to determine
the priority of inventions. In addition, laws of certain foreign countries do
not protect intellectual property to the same extent as laws in the United
States, which may subject the Company to additional difficulties in protecting
its intellectual property in foreign countries.
The Company uses intellectual property owned by others and licensed to the
Company. Disputes may arise as to the ownership rights in such intellectual
property and related technology. The Company may also rely on certain
technologies to which it does not have exclusive rights or which may not be
patentable or proprietary and thus may be available to competitors.
There can be no assurance that the steps taken by the Company, the
University or Monsanto to protect intellectual property and proprietary rights
will be adequate to prevent misappropriation or that others will not develop
competitive technologies or products. Furthermore, there can be no assurance
that others will not independently develop products that are similar or superior
to those proposed for development or commercialization by the Company, duplicate
any of the technologies utilized by the Company or design around any patent or
other intellectual property rights held by the Company.
The Company's commercial success and ability to compete effectively will
also depend upon the unpatented trade secrets and confidential information of
the Company and its licensors (such as the University), especially where patent
protection is not believed to be appropriate or obtainable. In this regard, the
Company relies upon trade secrets, technical know-how and continuing inventions
of the Company and its licensors to develop and maintain the Company's
competitive position. There can be no assurance that the Company can obtain or
maintain meaningful protection of such trade secrets or know how or that the
Company will be capable of obtaining or maintaining protection for its rights to
such trade secrets or know how. The Company attempts to protect its trade
secrets and technologies utilized by it in part through confidentiality
agreements with its employees, consultants and certain contractors. There can be
no assurance, however, that these agreements will not be breached or terminated,
that licensors utilizing similar agreements with their employees, consultants
and contractors will not suffer from the breach or termination of such
agreements, that the Company would have adequate remedies for any breach or that
trade secrets or know-how utilized by the Company will not otherwise become
known or be independently discovered by competitors. See "Business--Patents and
Proprietary Rights."
Dependence on Strategic Partners. The Company is dependent on strategic
partners including Sintofarma and Gador for support in drug research and
development and the regulatory approval process, manufacturing, marketing and
distribution of its drug candidates abroad and in the U.S., if and when they are
approved for marketing by the EU, other foreign regulatory agencies and the FDA.
The Company's receipt of royalties from strategic partners, if any, will be
affected by the level of efforts and financial resources of its partners. There
can be no assurance that the Company's partners will devote the resources
necessary to complete research and development, and commence manufacturing and
marketing, of the drug candidates in their respective territories,
12
<PAGE>
or that they will successfully market such drugs. Strategic partners may pursue
alternative drug candidates and technologies which may compete with the
Company's drug candidates and technologies. There can be no assurance that any
particular partner will have sufficient financial resources to assist the
Company in drug research and development, the regulatory approval process,
manufacturing, marketing and distribution of its drug candidates abroad and in
the U.S. There can be no assurance that any strategic partner will commercialize
the Company's drug candidates.
IgX has recently entered into two strategic partnerships with respect to
the development and commercialization of its Avian Technology-based drug
candidates in South America, Latin America and Mexico. In addition, the Company
also recently entered into a joint venture for the potential treatment of the
Hepatitis B virus infection. See "Business--Strategic Partnerships" There can be
no assurance that these strategic partnerships and joint ventures, or that any
future strategic partnership, will lead to the development or commercialization
of current or future drug candidates, nor that future partnerships, if entered
into, will be on terms favorable to the Company or will be successful. If the
Company were unable to enter into strategic partnerships with capable partners
on commercially reasonable terms, or if existing arrangements were terminated,
the development and commercialization of future drug candidates would be delayed
and possibly postponed indefinitely. See "Business--Strategic Partnerships" and
"--Manufacturing."
Uncertainty of Market Acceptance of Avian Technology and Drugs. The
commercial success of the Company's drug candidates, if and when approved for
marketing by the EU, other foreign agencies and the FDA, will depend on their
acceptance by the medical community and third-party payors as safe and
cost-effective. Market acceptance will depend on the ability of the Company and
its strategic partners to educate the medical community and third-party payors
about the benefits of the Avian Technology embodied in the Company's initial
drug candidates compared to other available treatments for GI tract diseases,
such as antibiotics and vaccines. The Company's Avian Technology represents a
new approach to treating GI tract diseases and market acceptance of the
Company's drug candidates is critical to the Company's success. There can be no
assurance that the Company's drug candidates will gain market acceptance if
approved for marketing by the EU, other foreign agencies or the FDA. Failure to
achieve market acceptance would have a material adverse effect on the Company's
business, financial condition and results of operations. See "Business--IgX
Strategy" and "--Competition."
Uncertainty of Adequate Reimbursement. The Company expects that sales
volumes and prices of its drug candidates will be dependent in large measure on
the availability of reimbursement from governmental and other third-party
payors, including health insurance companies. The Company believes that
reimbursement in the future will be subject to increased restrictions in the
U.S. and in foreign markets. The Company believes that the overall escalating
cost of medical drugs and services has led to, and will continue to lead to,
increased pressures on the health care industry, both foreign and domestic, to
reduce the cost of drugs and services, including any drugs offered by the
Company. There can be no assurance, in either the U.S. or foreign markets, that
governmental and other third party reimbursement and coverage will be available
or adequate, that current reimbursement amounts will not be decreased in the
future or that future legislation, regulation, or reimbursement policies of
governmental and other third-party payors will not otherwise adversely affect
the demand for the Company's drug candidates or its ability to sell its drug
candidates on a profitable basis. The unavailability or inadequacy of
governmental and other third-party payor coverage or reimbursement could have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Business--Reimbursement."
Intense Competition. The pharmaceutical industry is subject to intense
competition. The Company has many competitors, including pharmaceutical,
biotechnology and chemical companies, a number of which are actively developing
and marketing drugs that could compete with the Company's drug candidates. IgX
is aware of direct competition from companies with drugs and drug candidates
designed to use immune mechanisms to treat infections and also potential
competition from companies developing new antibiotics and other anti-infective
substances. Several companies are or have been developing milk-derived drugs for
treating or preventing cryptosporidial diarrhea; others are developing vaccines
designed to elicit active immune defenses against H. pylori or C. difficile. In
addition, certain companies are developing drug candidates that seek to treat
Hepatitis B. Numerous pharmaceutical, biotechnology and chemical companies,
academic institutions, governmental agencies and other public and private
research organizations are conducting research and
13
<PAGE>
development of new drugs which will address the same diseases IgX seeks to
address. Many of these competitors have substantially greater financial, human
and other resources and greater expertise in research and development,
manufacturing, marketing and distribution than the Company. Some of these
competitors may be further along in clinical trials of their drug candidates
than the Company. Such companies may succeed in developing technologies and
drugs that are more effective or less costly than any of those that may be
developed by the Company and may be more successful in developing, manufacturing
and marketing drugs. There can be no assurance that the Company will be able to
compete successfully in the future, that developments by others will not render
the Company's drug candidates non-competitive or that the Company's customers
will not choose to use competing technologies or drugs. See
"Business--Competition."
Risk of Technological Obsolescence. The pharmaceutical industry is subject
to rapid technological change. Numerous pharmaceutical, biotechnology and
chemical companies, academic institutions, governmental agencies and other
public and private research organizations are conducting research and
development of new products which will address the same diseases IgX seeks to
address. There can be no assurance that developments by others will not render
the Company's drug candidates obsolete.
Quarterly Fluctuations in Operating Results. The Company's results of
operations have varied and will continue to vary significantly from quarter to
quarter and depend on, among other factors: the timing of royalties, if any,
received from strategic partners; the formation of new strategic partnerships by
the Company; the timing of expenditures in connection with research and
development activities, including clinical trials, and further developing the
Company's manufacturing capabilities; the timing of drug candidate introductions
and associated launch, marketing and sales activities if and when any of the
Company's drug candidates is approved; and the timing and extent of any drug
candidate acceptance for different indications and geographical areas of the
world. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
Future Capital Needs; Uncertainty of Additional Funding. Since inception,
the Company has funded its operations primarily through private sales of debt
and equity securities. The Company believes that the proceeds of this Offering,
together with existing cash and cash equivalents, will be sufficient to fund its
operations through December, 2000. The Company believes that it will need to
raise substantial additional funds for research, development and other expenses,
through equity or debt financings, strategic partnerships or otherwise, prior to
commercialization of any of its drug candidates other than IGX-CPL3 as a
treatment of cryptosporidial diarrhea in HIV-advanced patients. Depending on the
success of its current Phase III clinical trial and the timing of governmental
regulatory approvals, if any, the Company also may need to raise additional
funds prior to commercialization of IGX-CPL3 as a treatment for cryptosporidial
diarrhea in HIV-advanced patients. The Company's future liquidity and capital
requirements will depend upon numerous factors, including the following: the
progress and scope of clinical trials; the timing and costs of filing any future
regulatory submissions; the timing and costs required to receive EU, U.S. and
other foreign governmental approvals; the cost of filing, prosecuting, defending
and enforcing patent claims and other intellectual property rights; the cost and
timing of establishing any FDA-approved or foreign government approved
full-scale manufacturing facilities; the extent to which the Company's drug
candidates gain market acceptance; the timing and costs of any drug candidate
introductions; the extent of the Company's ongoing research and development
programs; and, if necessary once any regulatory approvals are received, if at
all, the costs of developing marketing and distribution capabilities. There can
be no assurance that additional financing will be available on terms acceptable
to the Company, or at all. The Company's inability to fund its capital
requirements would have a material adverse effect on the Company's business,
financial condition and results of operations. If adequate funds are not
available, the Company may be required to curtail its operations significantly
or to obtain funds by entering into arrangements with strategic partners or
others that may require the Company to relinquish rights to certain of its
technologies, drug candidates, or potential markets. To the extent that
additional capital is raised through the sale of equity or securities
convertible into equity, the issuance of such securities could result in
dilution to the Company's existing stockholders. Future investors may be granted
rights that are superior to those held by the holders of Common Stock. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
Limited Manufacturing Capability. To date, the Company has been able to
produce sufficient quantities of its drug candidates for development and
clinical trials from its pilot production facilities in Arizona and Ireland. The
Company does not have full-scale manufacturing capability for any of its drug
candidates. The Company
14
<PAGE>
intends to continue to utilize its pilot production facilities for continuing
research and development, including preclinical and clinical trials. Under its
strategic partnership with Sintofarma, the Company and Sintofarma have agreed to
form a joint venture entity, IgX Sintofarma, to own and operate a manufacturing
facility in Brazil initially for pilot production of sufficient quantities of
its drug candidates for clinical trials in Brazil and for full-scale production
for the Company's Avian Technology-based products, if and when approved for
sale. The future Brazilian facility is anticipated to be an FDA-approved
facility. See "Risk Factors--Dependence on Strategic Partnerships" for a
discussion of certain risks relating to the Company's reliance on Sintofarma. In
addition, if the existing Phase III clinical trial of IGX-CPL3 is successful,
the Company may develop its own FDA-approved full-scale manufacturing facility,
in Ireland or elsewhere. If the Company elects to build such a facility in
Ireland, it may seek Irish government financing. There can be no assurance that
such financing will be available or, if available, that the terms of such
financing will be satisfactory to the Company. Such development would require
significant expenditures of capital and significant devotion of management
attention and resources. The Company would be required to hire and train
sufficient personnel and comply with the extensive regulations applicable to
such a facility. There is no assurance that IgX, either directly or through any
of its strategic partnerships, will be able to establish a manufacturing
facility that complies with current GMP requirements sufficient for full-scale
commercial manufacturing. See "Business--Strategic Partnerships" and
"--Manufacturing."
Potential Product Liability Exposure and Insurance. The clinical testing,
manufacturing and marketing of the Company's drug candidates may expose the
Company to product liability claims, and there can be no assurance that the
Company will not experience material product liability losses in the future. IgX
Limited currently has limited product liability insurance in the amount of
approximately $7.5 million (or Irish pounds 5 million) per occurrence for the
use of IgX's drug candidates in clinical trials, but there can be no assurance
that such coverage limits will be adequate, that such coverage will continue to
be available on terms acceptable to IgX Limited or that such coverage will be
adequate for liabilities actually incurred. The Company does not currently have
product liability insurance coverage for the commercial sale of its drug
candidates but intends to obtain such coverage if and when its drug candidates
are commercialized. However, there can be no assurance that the Company will be
able to obtain adequate additional product liability insurance coverage on
acceptable terms, if at all. A successful claim brought against the Company in
excess of available insurance coverage, or any claim or product recall that
results in significant adverse publicity against the Company, may have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Business--Product Liability Insurance."
Animal Rights Activists. The current and future activities of the Company
involve animals and products derived from animals. The utilization of animals in
research and development and drug candidate commercialization is subject to
increasing focus by animal rights activists. It is the Company's policy to
implement immunization and procurement practices that do not interfere with the
normal animal health and production practices used by the dairy and poultry
industries. The Company, however, may be adversely affected by the activities of
animal rights groups and other organizations that have protested various animal
research and development programs.
Dependence Upon Key Personnel. The Company's business and operating
results depend in significant part upon the continued contributions of its key
technical and senior management personnel, many of whom would be difficult to
replace and certain of whom perform important functions for the Company beyond
those functions suggested by their respective job title or description. The
Company's business and operating results also depend in significant part upon
its ability to attract and retain qualified management, scientific and technical
personnel. Competition for such personnel is intense, and there can be no
assurance that the Company will be successful in attracting or retaining such
personnel. Although the Company maintains a $3 million key man insurance policy
on the life of Albert J. Henry, its Chairman and Chief Executive Officer, the
loss of Mr. Henry, or a key employee, the failure of any key employee to perform
in his or her current position, or the Company's inability to attract and retain
skilled employees, as needed, could have a material adverse effect on the
Company's business, financial condition and results of operations. See
"Management--Executive Officers and Directors."
International Operations; Currency Fluctuations. The Company's operating
expenses are incurred in several international currencies, since it is
headquartered in the U.S. and owns properties and participates in
15
<PAGE>
operations abroad. Such operations abroad are subject to certain risks,
including government regulation, export and import license requirements, risks
of tariffs or trade barriers and political and economic instability.
The Company expects that any drug candidate, if and when approved for sale,
will be marketed internationally and priced in the currency of the country in
which it is sold. Accordingly, the prices of such products in local currency
will vary as the value of the U.S. dollar fluctuates against such local
currencies. In addition, any royalty payment to be made to IgX or its affiliate
companies by Sintofarma or Gador is denominated in the currency of the country
where sales are made. There can be no assurance that there will not be increases
in the value of the U.S. dollar against such currencies, reducing the U.S.
dollar return to IgX on the sales of products. Furthermore, there can be no
assurance that significant fluctuations in foreign currency values will not
occur that will create sufficient differences in the relative prices of the
products in different countries, such that IgX will find it necessary to reduce
its prices in certain local currencies in order to bring the relative cost of
any of its products into a competitive price range. The Company does not
currently engage in foreign currency hedging transactions. However, as the
Company continues to expand its international operations, exposures to gains and
losses on foreign currency transactions may increase, and the Company may
consider engaging in such hedging transactions to limit its exposure to
potential losses from foreign currency transactions.
No Prior Public Market; Possible Volatility of Share Price. Prior to this
Offering, there has been no prior public market for the Common Stock, and there
can be no assurance that an active public trading market will develop or be
sustained after this Offering. The initial public offering price will be
determined through negotiations between the Company and the Representative based
on several factors and may not be indicative of the market price of the Common
Stock after this Offering. The market prices of the capital stock of
biotechnology companies have historically been volatile, and the market price of
the shares of Common Stock may be highly volatile. The market price of the
shares of the Common Stock may be significantly affected by factors such as
actual or anticipated fluctuations in the Company's operating results,
announcements of results of clinical trials, status of regulatory submissions
and regulatory approvals, if at all, technological innovations, new drugs, drug
candidates or new contracts by the Company or its competitors, developments with
respect to patents or proprietary rights, conditions and trends in the
pharmaceutical and biotechnology industries, adoption of new accounting
standards affecting such industries, changes in financial estimates by
securities analysts, general market conditions and other factors. In addition,
the stock market has from time to time experienced significant price and volume
fluctuations that have particularly affected the market prices for the common
stock of development stage companies. These broad market fluctuations may
adversely affect the market price of the Common Stock. In the past, following
periods of volatility in the market price of a particular company's securities,
class action securities litigation has often been brought against that company.
Such litigation, if brought against the Company, could result in substantial
costs and a diversion of management's attention and resources. There can be no
assurance that the market price of the Common Stock will not decline below the
initial public offering price. See "Underwriting."
Anti-Takeover Effect of Certain Charter and By-law Provisions and Delaware
Law. The Company's Amended and Restated Certificate of Incorporation (the
"Restated Certificate") authorizes the Board of Directors to issue, without
stockholder approval, up to 5,000,000 shares of preferred stock ("Preferred
Stock") with voting, conversion and other rights and preferences that could
adversely affect the voting power or other rights of the holders of Common
Stock. The issuance of Preferred Stock or of rights to purchase Preferred Stock
could be used to discourage an unsolicited acquisition proposal. In addition,
the possible issuance of Preferred Stock could discourage a proxy contest, make
more difficult the acquisition of a substantial block of the Company's Common
Stock or limit the price that investors might be willing to pay for shares of
the Company's Common Stock. The Restated Certificate also provides for staggered
terms for the members of the Board of Directors. A staggered Board of Directors
and certain provisions of the Company's By-laws (the "By-laws") and of Delaware
law applicable to the Company could delay or make more difficult a merger,
tender offer or proxy contest involving the Company. The Company, for example,
will be subject to Section 203 of the General Corporate Law of Delaware which,
subject to certain exceptions, restricts certain transactions and business
combinations between a corporation and a stockholder owning 15% or more of the
corporation's outstanding voting stock (an "interested stockholder") for a
period of three years from the date the stockholder becomes an interested
stockholder. In addition shareholder action may not be taken by written consent
and Directors of the Company may only be terminated for cause. These provisions
may have the effect of delaying or preventing a
16
<PAGE>
change of control of the Company without action by the stockholders and,
therefore, could adversely affect the price of the Common Stock. See
"Management," "Description of Capital Stock--Preferred Stock" and
"--Anti-Takeover Measures."
Control by Directors, Officers and Principal Stockholders. Upon completion
of this Offering, the present directors, executive officers and principal
stockholders of the Company and their affiliates will beneficially own
approximately 69.8% of the outstanding Common Stock of the Company. As a result,
these stockholders will be able to effectively control all corporate actions
requiring stockholder approval, including the election of directors and approval
of significant corporate transactions such as a merger of the Company or the
sale of all or substantially all of the Company's assets. Such concentration of
ownership may have the effect of delaying or preventing a change in control of
the Company. See "Principal Stockholders."
Shares Eligible for Future Sale; Registration Rights. Future sales of
substantial amounts of Common Stock in the public market following this Offering
could adversely affect the market price of the Common Stock. Upon completion of
this Offering, the Company will have 8,966,643 shares of Common Stock
outstanding, assuming no exercise of options and warrants outstanding on
September 28, 1998. Of these shares, the 2,300,000 shares sold in this Offering
(plus any additional shares sold upon exercise of the Over-Allotment Option)
will be freely tradeable without restriction under the Securities Act except any
such shares which may be held by "affiliates" of the Company, as defined in
Rule 144 under the Securities Act. The Company's officers, directors and
existing stockholders, holding an aggregate of 6,666,643 shares, have agreed,
subject to certain limited exceptions, not to offer to sell, sell, transfer,
assign, hypothecate, pledge or otherwise dispose of any of the shares held by
them as of the date of this Prospectus for nine months after the date of this
Prospectus (the "lock-up period") without the prior written consent of the
Representative. After the nine month period, all of such shares of Common Stock
(plus approximately 159,589 shares issuable upon exercise of vested options)
will be eligible for immediate sale in the public market subject to compliance
with Rule 144 under the Securities Act. The holders of 4,854,066 shares of
Common Stock have the right in certain circumstances to demand that the Company
to register their shares under the Securities Act for resale to the public
beginning one year after the effective date of the Registration Statement. In
addition, if the Company proposes to register any of its securities under the
Securities Act, for its own account, such holders are entitled to exercise their
"piggyback rights" to include their shares in such registration beginning nine
months after the effective date of the Registration Statement.
No prediction can be made as to the effect, if any, that market sales of
additional shares or the availability of such additional shares for sale will
have on the market price of the Common Stock. Nevertheless, sales of substantial
amounts of Common Stock in the public market, or the perception that such sales
may occur, could have an adverse impact on the market price for the Common Stock
or impair the Company's ability to raise additional capital through an offering
of its equity securities. In addition, approximately nine months after the date
of this Prospectus, the Company expects to file a registration statement on Form
S-8 registering a total of approximately 1,425,857 shares of Common Stock
reserved for issuance under the Company's stock option plans, 825,857 of which
shares are subject to outstanding options. See "Management--Director
Compensation," "--Stock Option Plans," "Description of Capital Stock," "Shares
Eligible for Future Sale--Registration Rights" and "Underwriting."
Immediate and Substantial Dilution. Purchasers of the shares of Common
Stock offered hereby will experience immediate and substantial dilution of
approximately $6.58 per share in the per-share net tangible book value of their
investment from the assumed $9.00 per share initial public offering price.
Additional dilution will occur upon exercise of outstanding options. See
"Dilution" and "Shares Eligible for Future Sale."
Potential Adverse Effect of Representative's Warrants. At the consummation
of this Offering, the Company will sell to the Representative for nominal
consideration the Representative's Warrants to purchase 230,000 shares of Common
Stock (the "Representative's Warrants"). The Representative's Warrants will be
exercisable for a period of four years commencing one year from the date of this
Prospectus at an exercise price equal to 120% of the initial public offering
price per share of Common Stock. For the term of the Representative's Warrants,
the holders thereof will have, at nominal cost, the opportunity to profit from a
rise in the market price of the Common Stock without assuming the risk of
ownership, with a resulting dilution in the interest of other security holders.
As long as the Representative's Warrants remain unexercised, the Company's
17
<PAGE>
ability to obtain additional capital might be adversely affected. Moreover, the
holders of the Representative's Warrants may be expected to exercise such
Warrants at a time when the Company would, in all likelihood, be able to obtain
any needed capital through a new offering of its securities on terms more
favorable than those provided by the Representative's Warrants. See
"Underwriting."
Year 2000 Risk. In common with users of computers around the world, IgX is
investigating whether and to what extent the date change from 1999 to 2000 may
affect its information systems. The Company expects to implement the systems and
programming changes necessary to address year 2000 issues with respect to its
internal systems without significant expense. Nevertheless, there can be no
assurance that the Company's systems will not be affected by the date change
from 1999 to 2000, or that the cost of any remedial actions, if necessary, will
not have a material adverse effect on its business, financial condition and
results of operations. The Company also relies, directly and indirectly, on
external systems of business enterprises such as strategic partners, suppliers,
financial organizations, research facilities and governmental entities, both
domestic and international, for accurate exchange of data. Even if the internal
systems of the Company are not materially affected by the year 2000 computer
programming issue, the Company could be affected by disruptions in the operation
of the enterprises with which the Company interacts.
Absence of Dividends. To date, the Company has neither declared nor paid
any cash dividends on shares of its Common Stock and it does not anticipate
paying any cash dividends in the foreseeable future. See "Dividend Policy."
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 2,300,000 shares of
Common Stock offered hereby are estimated to be $18.1 million ($21.0 million if
the Over-Allotment Option is exercised in full), after deducting the
underwriting discount and other estimated expenses of this Offering, based on an
assumed initial public offering price of $9.00 per share.
The Company expects to use the net proceeds of this Offering for further
research and development and animal studies on Avian Technology-based drug
candidates, clinical development, including the manufacture of drug candidates
for use in any trials (not otherwise funded by its strategic partners) and
approximately $2.0 million to fund IgX Oxford. The balance of the net proceeds
of this Offering will be used for working capital and general corporate
purposes. Exact allocation of the net proceeds and the timing of such
expenditures will depend on various factors, including the results of further
animal studies, timing of the Company's and IgX Oxford's human clinical trials
and regulatory filings.
Pending the use of the net proceeds of this Offering, the Company will
invest the funds in short-term interest bearing, investment grade securities.
DIVIDEND POLICY
To date, the Company has neither declared nor paid any cash dividends on
shares of its Common Stock and it does not anticipate declaring or paying any
cash dividends in the foreseeable future.
18
<PAGE>
DILUTION
Purchasers will experience immediate dilution in net tangible book value of
their Common Stock from the assumed initial public offering price. As of
June 30, 1998, the Company had a negative net tangible book value of
approximately $1.8 million, or $2.60 per share of Common Stock. Net tangible
book value per share represents the amount of total tangible assets, less total
liabilities, divided by the number of shares of Common Stock then outstanding.
Giving effect to (i) the conversion of all indebtedness owed to stockholders of
the Company ($5.0 million of principal and accrued interest at June 30, 1998)
into 719,281 shares of Common Stock, and (ii) the conversion of the outstanding
shares of preferred stock into 4,854,066 shares of Common Stock upon
consummation of this Offering, the pro forma net tangible book value as of June
30, 1998 would be approximately $2.6 million or $0.42 per share. After giving
effect to the sale of 2,300,000 shares of Common Stock offered hereby (at an
assumed initial public offering price of $9.00 per share and after deducting the
underwriting discount and other estimated expenses of this Offering), the pro
forma net tangible book value of the Company as of June 30, 1998 would have been
$20.8 million, or $2.42 per share of Common Stock. This represents an immediate
increase in pro forma net tangible book value of $2.00 per share to existing
investors and an immediate dilution of $6.58 per share of to new investors
purchasing shares of Common Stock in the Offering. The following table
illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial offering price per share............................................... $9.00
Pro forma net tangible book value per share before the Offering...................... $0.42
Increase per share attributable to new investors..................................... 2.00
-----
Pro forma net tangible book value per share after the Offering......................... 2.42
-----
Dilution in pro forma net tangible book value per share to new investors(1)............ $6.58
-----
-----
</TABLE>
- ------------------
(1) Does not give effect to the exercise of (i) 825,857 shares subject to
options to purchase shares of Common Stock outstanding as of September 28,
1998 at a weighted average exercise price of $1.51 per share and (ii) a
warrant on September 25, 1998, issued to an existing stockholder, into
370,000 shares of Common Stock.
If the Over-Allotment Option is exercised in full, the pro forma net
tangible book value per share of the Common Stock after this Offering would be
$2.64 per share, which would result in dilution to new investors in this
Offering of $6.36 per share.
The following table sets forth as of June 30, 1998, after giving pro forma
effect to (i) the conversion of all indebtedness owed to stockholders of the
Company ($5.0 million of principal and accrued interest at June 30, 1998), into
719,281 shares of Common Stock, and (ii) the conversion of the outstanding
shares of preferred stock into 4,854,066 shares of Common Stock upon
consummation of this Offering, the number of shares of Common Stock purchased
from the Company, the total consideration paid and the average price per share
paid by the existing stockholders and the new investors (before deducting the
underwriting discount and estimated Offering expenses):
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
-------------------- ---------------------- PRICE PAID
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ----------- ------- ----------
<S> <C> <C> <C> <C> <C>
Existing stockholders....................... 6,283,377 73.20% $17,013,497 45.11% $ 2.71
New investors............................... 2,300,000 26.80 20,700,000 54.89 $ 9.00
--------- ------- ----------- -------
Total (1)............................... 8,583,377 100.00% $37,713,497 100.00%
--------- ------- ----------- -------
--------- ------- ----------- -------
</TABLE>
- ------------------
(1) Does not give effect to the exercise of (i) 825,857 shares subject to
options to purchase shares of Common Stock outstanding as of September 28,
1998 at a weighted average exercise price of $1.51 per share and (ii) a
warrant on September 25, 1998, issued to an existing stockholder, into
370,000 shares of Common Stock. See "Management--Stock Option Plan" and
"Description of Capital Stock."
19
<PAGE>
CAPITALIZATION
The following table sets forth, at June 30, 1998, (i) the actual capitalization
of the Company, (ii) the pro forma capitalization after giving effect to
(A) the conversion of all indebtedness owed to stockholders of the Company
($5.0 million of principal and accrued interest at June 30, 1998) into 719,281
shares of Common Stock and (B) the conversion of the outstanding shares of
preferred stock into 4,854,066 shares of Common Stock upon consummation of this
Offering, and (iii) the pro forma capitalization as adjusted to give effect to
the sale of 2,300,000 shares of Common Stock offered by the Company at an
assumed initial offering price of $9.00 per share and the application of the
estimated net proceeds therefrom after deducting the underwriting discount and
other estimated expenses of the Offering. This table should be read in
conjunction with the Consolidated Financial Statements of the Company and the
Notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
JUNE 30, 1998
-----------------------------------------
(AMOUNTS IN THOUSANDS EXCEPT SHARE
AND PER SHARE AMOUNTS)
PRO FORMA
ACTUAL PRO FORMA(1) AS ADJUSTED(2)
------- ------------ --------------
<S> <C> <C> <C>
Notes payable to stockholders........................................... $ 4,485 -- --
Capital deficiency:
Series B preferred stock ($0.001 par value; 1,874,999 shares authorized;
1,154,065 shares issued and outstanding, actual; none issued and
outstanding, pro forma and pro forma as adjusted)..................... 1 -- --
Series A preferred stock ($0.001 par value; 3,700,001 shares authorized,
issued and outstanding, actual; none issued and outstanding, pro forma
and pro forma as adjusted)............................................ 4 -- --
Common stock ($0.001 par value; 15,000,000 shares authorized; 710,030
shares issued and outstanding, actual; 6,283,377 shares issued and
outstanding, pro forma; 8,583,377 shares issued and outstanding, pro
forma as adjusted).................................................... 1 $ 6 $ 9
Additional paid-in capital................................................ 12,925 19,075 37,209
Cumulative translation adjustment......................................... (401) (401) (401)
Deficit accumulated during development stage(3)........................... (14,374) (16,039) (16,039)
------- -------- --------
Total (capital deficiency) stockholders' equity......................... (1,844) 2,641 20,778
------- -------- --------
Total capitalization.................................................. $ 2,641 $ 2,641 $ 20,778
------- -------- --------
------- -------- --------
</TABLE>
- ------------------
(1) Gives effect to the September 1998 conversion of all notes payable to
stockholders of the Company into 719,281 shares of Common Stock at $7.00 per
share, assuming conversion at June 30, 1998.
(2) Gives effect to the sale of the shares of Common Stock offered hereby, at an
assumed initial offering price of $9.00 per share and the application of the
estimated net proceeds thereon, after deducting the underwriting discount
and estimated offering expenses.
(3) Gives effect to the recognition into expense of $550 representing the
unamortized portion of the discount associated with the $1,000 promissory
note issued to NEGF II, L.P., and a $1,115 loss on conversion of notes
payable to stockholders into 719,281 shares of Common Stock at $7.00 per
share, as described in note (1) above.
20
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
The following selected consolidated financial data for each of the years in
the three-year period ended December 31, 1997 are derived from, and are
qualified by reference to, the audited Consolidated Financial Statements
included elsewhere herein. The following selected financial data for each year
in the two-year period ended December 31, 1994 are derived from, and are
qualified by reference to, the Company's audited financial statements not
included herein. The selected consolidated financial data for the six-month
periods ended June 30, 1997 and 1998 are derived from the unaudited financial
statements of the Company included elsewhere herein and, in the opinion of
management, include all adjustments, consisting of normal recurring accruals
necessary for a fair presentation of the data presented. The results for the six
months ended June 30, 1998 are not indicative of results for the full year. The
information presented below should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Financial Statements included elsewhere herein.
<TABLE>
<CAPTION>
FEBRUARY 11,
1992
(INCEPTION)
DECEMBER 31, TO JUNE 30,
---------------------------------------------------- DECEMBER 31, -------------------
1993 1994 1995 1996 1997 1997 1997 1998
-------- -------- -------- -------- -------- ------------ -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS
DATA:
Operating expenses:
Research and development.............. $ 176 $ 330 $ 475 $ 1,136 $ 3,426 $ 5,800 $ 1,874 $ 1,577
General and administrative............ 80 281 718 1,119 1,733 4,095 521 1,911
-------- -------- -------- -------- -------- -------- -------- --------
Total operating expenses................ 256 611 1,193 2,255 5,159 9,895 2,395 3,488
Net interest expense.................... 23 64 144 207 373 811 164 147
-------- -------- -------- -------- -------- -------- -------- --------
Net loss before income taxes............ (279) (675) (1,337) (2,462) (5,532) (10,706) (2,559) (3,635)
Income taxes............................ -- -- -- 5 23 28 17 5
-------- -------- -------- -------- -------- -------- -------- --------
Net loss................................ $ (279) $ (675) $ (1,337) $ (2,467) $ (5,555) $(10,734) $ (2,576) $ (3,640)
-------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- --------
Basic and diluted loss per share........ $ (0.80) $ (1.52) $ (1.88) $ (3.48) $ (7.82) $ (3.63) $ (5.13)
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
Weighted average shares outstanding used
for basic and diluted loss per
share................................. 350,030 444,715 710,030 710,030 710,030 710,030 710,030
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
BALANCE SHEET DATA (AT PERIOD END):
Cash.................................... 171 61 86 4,257 1,973 2,543
Working capital (deficiency)............ (356) (1,035) (2,741) 3,312 628 1,284
Total assets............................ 212 103 493 5,891 3,308 3,654
Total liabilities....................... 540 1,104 2,831 6,190 5,075 5,498
Capital deficiency...................... (329) (1,001) (2,338) (299) (1,768) (1,844)
<CAPTION>
FEBRUARY 11,
1992
(INCEPTION)
TO
JUNE 30,
1998
------------
<S> <C>
CONSOLIDATED STATEMENT OF OPERATIONS
DATA:
Operating expenses:
Research and development.............. $ 7,377
General and administrative............ 6,006
--------
Total operating expenses................ 13,383
Net interest expense.................... 958
--------
Net loss before income taxes............ (14,341)
Income taxes............................ 33
--------
Net loss................................ $(14,374)
--------
--------
Basic and diluted loss per share........
Weighted average shares outstanding used
for basic and diluted loss per
share.................................
BALANCE SHEET DATA (AT PERIOD END):
Cash....................................
Working capital (deficiency)............
Total assets............................
Total liabilities.......................
Capital deficiency......................
</TABLE>
21
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(ALL DOLLAR AMOUNTS IN THOUSANDS)
The following discussion and analysis should be read in conjunction with
"Selected Consolidated Financial Data" and the Consolidated Financial Statements
and Notes thereto included elsewhere in this Prospectus. Except for the
historical information contained herein, the discussion in this Prospectus
contains certain forward-looking statements that involve risks and
uncertainties, such as statements of the Company's plans, objectives,
expectations and intentions. The cautionary statements made in this Prospectus
should be read as being applicable to all related forward-looking statements
wherever they appear in this Prospectus. The Company's actual results could
differ materially from those discussed here. Factors that could cause or
contribute to such differences include those discussed in "Risk Factors," as
well as those discussed elsewhere herein.
OVERVIEW
The Company is a development stage enterprise developing drugs principally
for the treatment of infectious diseases of the human GI tract for which there
is a significant medical need for improved therapies. Since its inception in
February 1992, the Company's efforts have been principally devoted to research
and development and raising capital. To date, the Company has not generated any
revenues and has not commercialized any products. From inception to June 30,
1998, the Company has incurred cumulative losses of $14,374, which includes
non-cash charges of approximately $435 related to stock option compensation
expense. These losses were primarily the result of expenditures related to
research and development, general and administrative activities and interest
expense on stockholder loans.
The Company's initial three drug candidates seek to treat human GI tract
infections caused by specific parasites or bacteria (types of pathogens) with
proprietary, low lipid (fat), polyclonal antibodies derived from egg yolks of
hens. The hens are injected with an amount of pathogen-specific antigens
(foreign substances) necessary to cause the hens to produce an increased level
of antibodies to that pathogen ("Avian Technology"). The Company's lead product
candidate, IGX-CPL3, is designed to offer a treatment for cryptosporidial
diarrhea, focusing on HIV-advanced patients where the Company believes no
effective treatment currently exists. The two other Avian Technology-based drug
candidates currently under development, IGX-CDL3 and IGX-HPL3, may offer
valuable alternatives to traditional antibiotic treatments for certain GI tract
infections at a time where there is an increasing development of drug resistance
to antibiotics. The Company believes that the Avian Technology may be applied to
the development of other drug candidates to treat additional GI tract
infections. The Avian Technology has been developed in collaboration with
Charles R. Sterling, Ph.D. and his colleagues at the University of Arizona.
The Company's strategy is to develop products both independently and
through strategic partnerships with large pharmaceutical companies, under which
the Company will seek financial, preclinical and clinical trial, manufacturing
and marketing assistance while retaining parallel manufacturing and/or marketing
rights for the products. In August 1998, the Company organized a majority-owned
subsidiary, IgX Oxford, which is seeking to develop a drug candidate using a
proprietary compound (N-nonyl-DNJ), licensed to it exclusively from Monsanto, to
treat Hepatitis B, for which there also is a significant medical need for
improved therapy. N-nonyl-DNJ seeks to prevent the secretion of the Hepatitis B
virus from the infected cells. In addition to IgX Oxford, in August 1998, IgX
entered into strategic partnerships with Sintofarma, a Brazilian company
currently responsible for the manufacturing and marketing of 26 pharmaceutical
products in Argentina based on both unit volume and sales, and Gador, the second
largest manufacturer and distributor of pharmaceutical products in Argentina.
These agreements relate to the development and commercialization of the
Company's Avian Technology-based drug candidates in South America, Latin America
and Mexico. Each agreement requires IgX and the other party to make certain
contributions and stipulates that IgX will receive a royalty from any eventual
sale of specified products by the other party. To date, no revenue has been
generated from any of these agreements.
The Company is not expected to have any commercially available drugs for
the foreseeable future and expects to continue to incur substantial research and
development costs in the future from ongoing research and development programs
and manufacturing of drug candidates for use in preclinical testing and clinical
trials. The Company also expects that general and administrative costs,
including regulatory costs, and the creation of a marketing and sales
organization, if warranted, will increase in the future. Accordingly, the
Company expects to incur increasing operating losses for the foreseeable future.
There can be no assurance that the Company will ever achieve profitable
operations.
22
<PAGE>
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE 30, 1997
Research and development expenses were $1,577 and $1,874 for the six months
ended June 30, 1998 and 1997, respectively, representing a decrease of $297,or
approximately 16%. This decrease was due to the higher costs incurred during the
six months ended June 30, 1997 related to locating sites to conduct Phase III
clinical trials of IGX-CPL3 and costs incurred to obtain regulatory approvals to
conduct these trials. This decrease was partially offset by an increase in
patent applications and related costs on behalf of the University of Arizona.
General and administrative expenses were $1,911 and $521 for the six months
ended June 30, 1998 and 1997, respectively. This represents an increase of
approximately $1,390, or 267%. This higher level of expense was the result of
several factors, including the opening of the New Jersey and London offices
during the latter half of 1997 for which there were expenses during the first
half of 1998 compared to none during the same period in 1997. Further, there
were increases in consulting costs related to market analysis and research
during 1998, and non-cash compensation expense was recognized on certain stock
option grants made during 1998.
Net interest expense was $146 and $165 for the six months ended June 30,
1998 and 1997, respectively. The decrease of approximately 12% reflects the
reduction in the average principal amount of notes payable to stockholders
through the conversion of approximately $2.0 million of such indebtedness into
shares of the Company's Series B Convertible Preferred Stock during December
1997.
YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996
Research and development expenses were $3,426 and $1,136 for the years
ended December 31, 1997 and 1996, respectively, representing an increase of
approximately $2,290, or 202%. This increase was a result of investments in
research and development funding for the Company's pilot production facility in
Ireland, which commenced during the latter part of 1996; and the cost incurred
in 1997 related to locating sites to conduct Phase III clinical trials of
IGX-CPL3. During 1997, the Company also entered into sponsored university
research agreements with the University, thereby increasing research and
development costs.
General and administrative expenses were $1,733 during 1997 compared to
$1,119 during 1996, representing an increase of $614, or 55%. This increase was
the result of the opening of the New Jersey and London offices in 1997 and the
costs incurred in the Company's executive search efforts during 1997.
Net interest expense was $372 and $207 for the years ended December 31,
1997 and 1996, respectively, representing an increase of $165, or 80%. This
increase was attributable to the fact that 1997 included a full year of interest
expense on loans received by the Company from its principal stockholder during
1996.
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
Research and development expenses were $1,136 for the year ended
December 31, 1996, representing a $661 increase over the research and
development expenses of $475 for the year ended December 31, 1995. This increase
was the direct result of additional costs incurred related to the establishment
of the Irish pilot production facility during 1996.
General and administrative expenses were $1,119 and $718 for the years
ended December 31, 1996 and 1995, respectively, representing an increase of
$401, or 56%. This increase was also the direct result of additional costs
incurred to establish an Irish administrative office of the Company.
Net interest expense was $207 and $144 for the years ended December 31,
1996 and 1995, respectively. The increase of approximately $63, or 44%,
reflected an increase in the average balance due on loans to the principal
stockholder during 1996.
INCOME TAXES
The Company has reported losses for tax purposes and, therefore, has not
paid any federal or state income taxes in the U.S. since inception. The Company
accounts for U.S. income taxes under Statement of Financial Accounting Standards
No. 109, "Accounting for Income Taxes." Realization of deferred income tax
assets is dependent on future events and earnings, if any, the timing and extent
of which are uncertain. Deferred tax assets at June 30, 1998 and at
December 31, 1997 and 1996 of $3,532; $2,724; and $1,722, respectively, have
been reduced to the estimated amount realizable, or zero. The reduction to zero
is due to a valuation allowance based on management's assessment as to the
Company's history of losses and uncertainty about future recoverability. At June
30, 1998, the Company had net operating loss carryforwards of approximately
$13,000 available to offset future taxable income. These amounts, subject to
certain limitations, will begin to expire at various dates from
23
<PAGE>
2007 through 2018 for U.S. income tax purposes. These loss carryforwards are
subject to limitation on future years utilization should certain ownership
changes occur.
The provision for income taxes for the years ended December 31, 1996 and
1997 and the six months ended June 30, 1998 primarily relates to the Irish tax
on interest income earned on bank accounts in the Republic of Ireland.
LIQUIDITY AND CAPITAL RESOURCES
The Company has accumulated a deficit during its development stage of
$14,374 as of June 30, 1998 and has used cash amounting to $11,357 in the
aggregate to fund operations from inception through June 30, 1998, including
over $7,000 related to research and development of technology and new drug
candidates. As of June 30, 1998, the Company was committed to fund approximately
$390 under sponsored research agreements with certain universities. To date, the
Company has satisfied its cash requirements primarily through obtaining loans
from stockholders and the issuances of preferred and common stock in private
placement transactions. At June 30, 1998 the Company had $2,543 in cash and
$1,284 in working capital. Net cash used in operating activities for the six
months ended June 30, 1998 and 1997 was approximately $3,360 and $2,372,
respectively. Net cash used in investing activities for the six months ended
June 30, 1998 and 1997 was approximately $26 and $163. For the six months ended
June 30, 1998, cash of approximately $3,950 was provided by financing
activities, of which approximately $2,950 was provided from the issuance of
Series B Preferred Stock. There was no cash provided by financing activities for
the six months ended June 30, 1997. The Company believes that the proceeds from
this Offering, together with existing cash and cash equivalents, will be
sufficient to fund its operations through December 2000.
Net cash used in operating activities for the years ended December 31, 1997
and 1996 was $4,501 and $1,372, respectively. For the years ended December 31,
1997 and 1996, net cash used in investing activities was $151 and $1,038,
respectively. Net cash provided by financing activities for the years ended
December 31, 1997 and 1996 was $2,554 and $6,875, respectively.
As a means of raising capital, the Company and its subsidiary have from
time to time received loans in the form of promissory notes from stockholders,
principally from Henry Venture II Limited, the Chairman of which Albert J. Henry
is also Chairman and Chief Executive Officer of the Company. The notes are
unsecured and bear interest at a stated rate of 9% per annum. From the Company's
inception to date, no amounts of principal or accrued interest have been repaid.
However, from time to time, portions of the amounts due have been canceled in
exchange for issuance of preferred stock of the Company. The amount of notes
canceled corresponds to the value of the preferred stock issued upon
cancellation of the notes. A reconciliation of the total proceeds received from
the issuance of notes payable to stockholders to the balance of these notes
payable at June 30, 1998 is as follows:
<TABLE>
<CAPTION>
INCEPTION
(FEBRUARY 11, 1992)
THROUGH
------------------------
DECEMBER 31, JUNE 30,
1997 1998
------------ --------
<S> <C> <C>
Cumulative proceeds from issuance of notes payable to stockholders............. $ 9,352 $ 10,351
Cumulative interest accrued on notes payable to stockholders................... 693 856
-------- --------
10,045 11,207
Less: notes payable to Henry Venture II Limited canceled and exchanged for:
Series B mandatorily redeemable convertible preferred stock*................. (2,086) (2,086)
Series C mandatorily redeemable convertible preferred stock*................. (2,086) (2,086)
Series B convertible preferred stock......................................... (2,000) (2,000)
-------- --------
3,873 5,035 **
Less unamortized discount on note payable to NEGF II, L.P...................... -- 550
-------- --------
Notes payable to stockholders.................................................. $ 3,873 $ 4,485
-------- --------
-------- --------
</TABLE>
- ------------------
* These securities were, in turn, canceled during 1996 in exchange for issuance
of Series A convertible preferred stock.
** In September 1998, these notes were converted into 732,547 shares of Common
Stock of the Company at $7.00 per share.
24
<PAGE>
Interest expense amounted to $162, $470 and $231 for the six months ended
June 30, 1998 and for the years ended December 31, 1997 and 1996, respectively.
At June 30, 1998, the balance due to stockholders under the promissory notes,
including accrued and unpaid interest, amounted to $5,035. Of this balance, $341
is payable upon demand and has been recorded as a current liability.
During September 1998, the Company entered into an agreement with Henry
Venture II Limited and NEGF II, L.P. to cancel the outstanding balance of all
notes payable to stockholders in exchange for 732,547 shares of Common Stock of
the Company, at a conversion price of $7.00 per share. The cancellation of the
notes payable to stockholders will require the Company to recognize a loss of
approximately $527, representing the unamortized portion of the debt discount,
on the early extinguishment of the notes payable NEGF II, L.P., for the quarter
ending September 30, 1998. In addition, as a result of this exchange at a price
per share below the expected initial public offering price of this Offering, the
Company will be required to recognize an additional charge of approximately
$1,100 million as a loss on extinguishment of notes payable to stockholders for
the quarter ending September 30, 1998.
The Company's principal source of liquidity consists of cash of
approximately $2,543 at June 30, 1998. The Company expects that its capital
requirements will increase substantially in future periods as the Company funds
its current and anticipated research and development programs, including
preclinical and clinical trials, and investments in property, plant and
equipment to enhance manufacturing capabilities. As of June 30, 1998, the
Company had outstanding commitments of $390 to fund sponsored university
research agreements as well as $2,000 million to further research at IgX Oxford.
The Company's future capital requirements will depend on many factors, including
the progress and results of the Company's research and development programs and
clinical trials, the time and costs required to gain regulatory approvals, if at
all, costs of conducting research, costs of filing patents on behalf of
organizations collaborating in the Company-sponsored research, costs of
maintaining existing licenses and obtaining new licenses to use the Avian
Technology and other technologies, the status of competing products and the
market acceptance of the Company's products, if and when approved. The Company
believes that the existing cash balances, along with the net proceeds from this
initial public offering will be sufficient to meet the Company's strategic
objectives, including anticipated cash needs for working capital, for a
reasonable period of time. However, there can be no assurance that the Company
will be able to obtain sufficient funds to continue the development of, and if
successful, commence the manufacture and sale of its drug candidates, if and
when approved by the applicable regulatory agencies. The Company's forecast of
the period of time through which its financial resources will be adequate to
support its operations is a forward-looking statement that involves risks and
uncertainties, and actual results could differ significantly.
In order to meet its long-term financing requirements, the Company may be
required to raise additional funds through public or private financing of
securities, strategic partnerships or other arrangements. The Company has
recently signed certain agreements with strategic partners and is engaged in
preliminary discussions with several other potential strategic partners.
However, there can be no assurance that the Company will benefit from strategic
relationships and/or be able to obtain additional financing. There can be no
assurance that such additional financing, if needed, will be available on terms
attractive to the Company, or at all. The Company's ability to raise additional
financing may be dependent on many factors beyond the Company's control,
including the state of capital markets and the rate of progress on the Company's
clinical trials. Furthermore, any additional equity financing may be dilutive to
stockholders, and debt financing, if available, may involve restrictive
covenants. Future strategic partnerships, if necessary to raise additional
funds, may require the Company to relinquish its rights to certain of its
intellectual property. Any of these events could adversely impact the Company's
ability to commercialize its drug candidates. Refer to "Risk Factors--Future
Capital Needs; Uncertainty of Additional Financing." Also refer to Note 2 of the
Consolidated Financial Statements.
Cash requirements for the Company may vary materially from those now
planned due to the results of research and development activities, results of
clinical testing, changes in focus and direction of the Company's research and
development programs, manufacturing processes, competitive and technological
advances, the FDA and other regulatory entities' approval processes, changes in
the Company's marketing and distribution strategies and other factors.
25
<PAGE>
YEAR 2000 RISK
In common with users of computers around the world, IgX is investigating
whether and to what extent the date change from 1999 to 2000 may affect its
information systems. The Company expects to implement the systems and
programming changes necessary to address year 2000 issues with respect to its
internal systems without significant expense. Nevertheless, there can be no
assurance that the Company's systems will not be affected by the date change
from 1999 to 2000, or that the cost of any remedial actions, if necessary will
not have a material adverse effect on its business, financial condition and
results of operations. The Company also relies, directly and indirectly, on
external systems of business enterprises such as stragetic partners, suppliers,
financial organizations, research facilities and governmental entities, both
domestic and international, for accurate exchange of data. Even if the internal
systems of the Company are not materially affected by the year 2000 computer
programming issue, the Company could be affected by disruptions in the operation
of the enterprises with which the Company interacts.
26
<PAGE>
BUSINESS
OVERVIEW
IgX is a development stage company developing drugs principally for the
treatment of infectious diseases of the human GI tract for which there is a
significant medical need for improved therapies. The Company's initial three
drug candidates seek to treat human GI tract infections caused by specific
parasites or bacteria (types of pathogens) with immunoglobulin (a type of
antibody) produced by hens. This is an example of passive immunity, using an
antibody produced by one individual or animal to treat or prevent infections in
another ("passive immunity"). Specifically, these drug candidates consist of
proprietary, low lipid (fat), polyclonal antibodies derived from egg yolks of
hens. The hens are injected with an amount of pathogen-specific antigens
(foreign substances) necessary to cause the hens to produce an increased level
of antibodies to that pathogen ("Avian Technology"). The Company's lead product
candidate, IGX-CPL3, is designed to offer a treatment for cryptosporidial
diarrhea, initially focusing on HIV-advanced patients where the Company believes
no effective treatment currently exists. The two other Avian Technology-based
drug candidates currently under development, IGX-CDL3 and IGX-HPL3, may offer
valuable alternatives to traditional antibiotic treatments at a time where there
is an increasing development of drug resistance to antibiotics. The Company
believes that the Avian Technology may be applied to the development of other
drug candidates to treat additional GI tract infections. The Avian Technology
has been developed in collaboration with Charles R. Sterling, Ph.D. and his
colleagues at the University of Arizona. Further, in August 1998 the Company
organized a majority-owned subsidiary, IgX Oxford, which is seeking to develop a
drug candidate using a proprietary compound, N-nonyl-DNJ, licensed to it
exclusively from Monsanto, to treat another infectious disease, Hepatitis B, for
which there also is a significant medical need for improved therapy. N-nonyl-DNJ
seeks to prevent the secretion of the Hepatitis B virus from the infected cells.
The mechanism of action is that N-nonyl-DNJ prevents the sugars of one of the
Hepatitis B virus antigens from being correctly biosynthesized, so that the
virus does not form, as evidenced in animal studies described in the May 1998
edition of Nature Medicine a referee journal.
The Company's strategy is to develop products both independently and
through strategic partnerships with large pharmaceutical companies, under which
the Company will seek financial, preclinical and clinical trial, manufacturing
and marketing assistance while retaining parallel manufacturing and/or marketing
rights for the products. In addition to the IgX Oxford joint venture, in August
1998 IgX entered into strategic partnerships with Sintofarma, a Brazilian
company currently responsible for the manufacturing and marketing of 26
pharmaceutical products in South America, and Gador, the second largest
manufacturer and distributor of pharmaceutical products in Argentina based on
both unit volume and sales. These agreements relate to the development and
commercialization of the Company's Avian Technology-based drug candidates in
South America, Latin America and Mexico. See "Business--Strategic Partnerships."
AVIAN TECHNOLOGY
Background. Antibiotics and vaccines (active immunizations) are currently
the most common therapies for the treatment and prevention of infections. While
both of these therapies have demonstrated effectiveness in certain infections,
the Company believes both have significant limitations for the treatment of GI
tract infections. Pathogens are becoming increasingly resistant to antibiotics.
The overuse and misuse of antibiotics induce antibiotic resistant pathogens, and
occasionally results in the onset of serious, and sometimes fatal, secondary
infections. Vaccines generate an immune response against various pathogens and
usually take several weeks or more before they can provide that immunity.
Additionally, a person may require repeated vaccinations to raise the
concentration of antibodies in the body to levels high enough to prevent or
counteract infection. For many of the GI tract diseases the Company is seeking
to address, this delay in effectiveness may be unacceptable, because it may
permit progression of the disease to severe or even fatal stages. In addition,
vaccines are not currently available for the majority of GI tract infections
that are the focus of IgX's initial drug candidates. For these reasons, the
Company believes that new therapeutic approaches for treating and preventing GI
tract infections are needed.
27
<PAGE>
One alternative to antibiotics and vaccines is passive immunity. Passive
immunity consists of using antibodies produced by one individual or animal to
treat or prevent infection in another. Such antibodies can be administered by
injection for systemic infections or orally for GI tract infections. Breast
feeding is the most familiar example of passive immunity delivered to the GI
tract with the mother providing natural protective antibodies to her infant
through her milk.
The Company believes that the advantages of passive immunity for treating
or preventing GI tract infections are numerous. The Company believes that orally
delivered antibodies may provide immediate treatment of existing infections and
rapid temporary immunity against developing infection. The orally delivered
antibodies go directly to the site of infection in the GI tract rather than
through the blood-stream. The antibodies are polyclonal, meaning that they bind
to many different surface features of a pathogen, and thus, the Company
believes, are less likely to permit the development of resistant pathogens. The
antibodies may not disrupt the GI tract's natural bacterial flora, which is
necessary for normal digestion and intestinal function. As a result of these
advantages, passive immunity can be used for both acute treatment as well as a
prophylaxis to prevent the onset of infection or for long-term prevention of
disease.
Description of Avian Technology. Avian Technology is based upon the
principle of passive immunity, i.e., utilizing hen-derived egg yolks containing
an increased level of antibodies to treat human GI tract infections.
Specifically, the Avian Technology involves the immunization of hens with
pathogen-specific antigens. The antibodies are produced by the hens and
concentrated in the egg yolks. The antibody-rich egg yolks are collected and
processed by the Company. At least 50% of the lipids from the egg yolks are
currently extracted by precipitation, leaving the antibodies in a liquid form.
This liquid is then concentrated by cross flow filtration and freeze dried
(lyophilized) to produce a polyclonal antibody drug candidate in powder form.
The Avian Technology is used to develop drug candidates to treat bacterial
and parasitic infections. For bacterial infections, the polyclonal antibodies
are directed to binding sites on either the surface of the bacteria or to
bacterial products, such as toxins or enzymes. Antibodies which are directed to
bacterial surface sites interfere with bacterial adhesion and attachment in the
host, and prevent bacteria from colonizing host tissues. In animal studies,
polyclonal antibodies, which bind to toxins or enzymes, interfere with receptors
and neutralize the bacteria or bacterial products.
The Company believes that infections due to C. parvum may be treated in a
similar manner. In animal studies, the polyclonal antibodies bind to parasites
as they move from cell to cell in the GI tract. In animal studies, these
antibodies recognize multiple binding sites on the target parasite and have
multiple potential mechanisms of action including the neutralization of toxins.
Due to the polyclonal antibody, the parasite is prevented from invading a cell
and, as a result, subsequently dies and is swept from the intestine, as
evidenced in animal studies. The reproductive cycle of the parasite is thus
interrupted, and the infection should terminate over time. However, there can be
no assurance that the polyclonal antibodies will cause the infection to
terminate.
IGX-CPL3 is in the form of stable powder concentrate with a shelf life
exceeding eighteen months and it is anticipated that other Avian
Technology-based drug candidates developed by IgX will be produced in a similar
form. The Company believes that the Avian Technology-based drug candidates may
be formulated into various forms, including tablets, capsules and sterile
liquids.
IgX OXFORD TECHNOLOGY
The Company believes N-nonyl-DNJ acts on the host liver cell infected with
Hepatitis B to inhibit the utilization of an enzyme which is a key component in
the production of envelope proteins. Without these envelope proteins, the
Hepatitis B virus should not produce its protective shell necessary to survive.
This therapeutic approach differs from traditional therapies in that it acts on
the host liver cells as opposed to the virus. The Company believes that in doing
so, it could be an effective antiviral that may overcome some potential clinical
obstacles to successful therapeutic intervention such as the development of drug
resistant mutations of the Hepatitis B virus.
28
<PAGE>
IgX STRATEGY
IgX's objective is to develop and rapidly commercialize pharmaceutical
products that principally seek to treat and prevent infections of the human GI
tract. The Company is pursuing this objective using the following strategies:
o Leverage Avian Technology. IgX is seeking to leverage the core Avian
Technology based on hyperimmune egg yolk immunoglobulin to develop a
portfolio of orally delivered polyclonal antibody drug candidates that
would treat diseases of the GI tract. IgX believes that this technology
could be used to develop individual drug candidates for additional
separate infections of the GI tract. Production of such drug candidates
would be based on similar manufacturing processes. The technology
employed in the development of IGX-CPL3 is similar to that which IgX is
seeking to use to develop two other drug candidates, IGX-CDL3 and
IGX-HPL3.
o Demonstrate principle of Avian Technology with cryptosporidial diarrhea
HIV-advanced patients. IgX is initially seeking to develop IGX-CPL3 to
treat cryptosporidial diarrhea in HIV-advanced patients. If the current
Phase III clinical trial for IGX-CPL3 is successful and establishes its
efficacy in treating cryptosporidial diarrhea in HIV-advanced patients,
IgX believes that it will have demonstrated the principle that Avian
Technology-based drug candidates may treat certain infectious diseases of
the human GI tract. There can be no assurance that the clinical trial
will be successful or that it will demonstrate the principle that Avian
Technology-based drug candidates may treat certain infectious diseases of
the human GI tract.
o Develop manufacturing capability in the EU, South America and the
U.S. IgX intends to maintain control of its proprietary manufacturing
processes by maintaining rights to the manufacture of bulk materials
required for the commercialization of its drug candidates. IgX Limited
has built a GMP pilot production facility in Granard, County Longford,
Ireland to support the existing Phase III clinical trial of IGX-CPL3 in
South Africa and Mexico. The Company maintains a second pilot production
facility in Tucson, Arizona to provide Avian Technology-based drug
candidates for animal studies at the University of Arizona and any U.S.
clinical trials. Under its strategic partnership with Sintofarma, the
Company and Sintofarma have agreed to form a joint venture that expects
to own and operate a manufacturing facility in Brazil for pilot
production for clinical trials in Brazil and for full-scale production
for the Company's Avian Technology-based drug candidates for sale in
Brazil and elsewhere, if and when approved for sale. The Brazilian
facility is anticipated to be an FDA-approved facility and Sintofarma has
agreed to bear all costs of manufacture other than the supply of the
pathogen-specific antigens for the hyperimmunization process. If the
existing Phase III clinical trial of IGX-CPL3 is successful, IgX also may
elect to build a full-scale manufacturing facility in Ireland or
elsewhere. The Company believes that through the Sintofarma strategic
partnership, future strategic partnerships or directly, it will be able
to meet its long term production needs of the Avian Technology-based drug
candidates and drugs, if and when approved for sale.
o Leverage Strategic Partnerships. The Company's strategy is to develop
products both independently and through strategic partnerships with
larger pharmaceutical companies, under which the Company will seek
financial, preclinical and clinical trial, manufacturing and marketing
assistance while retaining parallel manufacturing and/or marketing rights
for the drug candidates. IgX has recently entered into strategic
partnerships with Sintofarma and Gador. These agreements relate to the
development and commercialization of the Company's Avian Technology-based
drug candidates in South America, Latin America and Mexico. In addition,
in August 1998, the Company entered into a joint venture with Monsanto
and several other parties to organize IgX Oxford, a majority-owned
subsidiary of the Company. IgX Oxford seeks to develop N-nonyl-DNJ,
licensed to it exclusively from Monsanto, to treat Hepatitis B. See
"Business--Strategic Partnerships."
29
<PAGE>
DRUG CANDIDATES UNDER RESEARCH AND DEVELOPMENT
The following chart illustrates the disease indications and various stages
of research and development of the Company's initial drug candidates:
<TABLE>
<CAPTION>
DRUG CANDIDATE DISEASE INDICATION STAGE OF RESEARCH AND DEVELOPMENT
- -------------------- --------------------------------------- ------------------------------------------------
Avian Technology-based
<S> <C> <C>
IGX-CPL3 Cryptosporidial diarrhea, focusing on European Union ("EU")-reviewed protocol,
HIV-advanced patients Phase III double-blind, placebo controlled
multicenter trial in South Africa commenced
January 1998. Expanded trial in Mexico in July
1998 pursuant to the same protocol. U.S.
Phase I/II trial of earlier high lipid
formulation for AIDS related cryptosporidial
diarrhea completed in November 1995.
IGX-CDL3 Clostridium difficile-associated Animal studies.
diarrhea and related complications
arising from antibiotic therapy
IGX-HPL3 Peptic ulcers due to Helicobacter Research.
pylori infections
N-nonyl-DNJ* Hepatitis B Animal studies.
- ---------------------------------------------------------------------------------------------------------------
* Being developed by IgX's majority-owned subsidiary, IgX Oxford.
</TABLE>
IGX-CPL3
The Company's lead Avian Technology-based drug candidate, IGX-CPL3, is
designed to treat diarrhea caused by C. parvum, a parasite often found in
municipal drinking water. IGX-CPL3 is initially seeking to treat Cryptosporidial
diarrhea in HIV-advanced patients. Cryptosporidial diarrhea can be chronic or
life-threatening in HIV-advanced patients. The parasite C. parvum is a major
cause of uncontrollable diarrhea in approximately 20% of AIDS patients which
results in profound weight loss, malnutrition, dehydration, and in some cases
death. HIV-advanced patients with cryptosporidial diarrhea often require
hospitalization for administration of intravenous fluids and nutrition. Unless
triple drug therapy reverses an HIV-advanced patient's immunologic defects,
cryptosporidiosis usually continues in a persistent or relapsing fashion for the
duration of the patient's life. This requires maintenance therapy for those
patients.
In November 1995, the Company completed a U.S. Phase I/II clinical trial at
New York Hospital-Cornell Medical Center in New York City to determine the
safety and preliminary efficacy of IGX-CP, an earlier high lipid, liquid
formulation of the IGX-CPL3 drug candidate, for AIDS-related cryptosporidial
diarrhea. IGX-CP for the trial was produced at the Company's Tucson, Arizona
pilot production facility. The trial was an open-label, ascending dose, pilot
study of two dose levels of IGX-CP, in which 16 of the 24 patients enrolled were
evaluable, having completed at least 2 weeks of treatment under either dose
level. The data, measured at the end of 3 and 6 weeks of treatment, suggested
that both dose levels were safe for administration to AIDS patients. In
addition, at least 60% of the total evaluable patients at the end of 3 and 6
weeks of treatment showed a decrease in daily frequency of bowel movements and
daily frequency of liquid stools, two of the trial's three primary efficacy
points. While daily frequency of bowel movements and daily frequency of liquid
stools decreased in only 40% and 20%, respectively, of the patients treated at
the high dose level at the end of 6 weeks, the Company attributes this decline
to the high lipid content of IGX-CP, which induced some diarrhea. The third
primary end point of the trial was stool oocyst quantitation, which measures the
density of the parasites in the stool and 25% of the evaluable patients met this
end point. The Company believes that stool oocyst quantitation is not a
significant measure of efficacy because it does not directly measure parasitic
volume. By contrast, the Company believes that bowel movement frequency is an
absolute measure of C. parvum, and its reduction in the trial evidenced a
corresponding reduction in C. parvum.
30
<PAGE>
Following the conclusion of the Phase I/II trial, the Company reformulated
IGX-CP to reduce the lipid content by approximately 50%, and to produce it as a
powder. During 1996 and 1997, the Company tested the reformulated drug
candidate, IGX-CPL3, in mice, and those animal studies demonstrated a reduction
in C. parvum counts. Based upon these animal studies, the Company believes that
IGX-CPL3 at the high dose level utilized in the Phase I/II trial should be more
effective than the prior formulation of the drug candidate, and the current
Phase III trial uses such high dose level. There can be no assurance that
IGX-CPL3 will be more effective than or as effective as the prior formulation of
such drug candidate.
Since the late 1995 introduction of combination drug therapy, including
protease inhibitors, to treat HIV-advanced patients, the number of HIV-advanced
patients in the U.S. and portions of Europe who have chronic or life-threatening
cryptosporidial diarrhea has been significantly reduced. As a result, during
1996 and 1997 the Company refocused its marketing strategy of IGX-CPL3, seeking
to obtain regulatory approval to market IGX-CPL3 as a treatment for
cryptosporidial diarrhea in HIV-advanced patients in countries where combination
drug therapy is not widely available. Similarly, the Company decided that its
clinical trials should be conducted in those countries that would facilitate
patient enrollment. U.S. regulations prohibit the exportation of biologics for
use in foreign clinical trials. Accordingly, during 1996, the Company, through
its wholly-owned subsidiary, IgX Limited, built a pilot production facility in
Ireland to support the production of IGX-CPL3 and other Avian Technology-based
drug candidates for use in clinical trials outside the U.S.
In January, 1998, the Company commenced a double-blind, placebo-controlled,
randomized multicenter Phase III clinical trial in South Africa pursuant to an
EU-reviewed protocol. In July 1998, the Company expanded the trial to Mexico
using the same protocol. The trial is being conducted through two clinical
research organizations, LCG Bioscience Limited and PRSI International. The
Company expects to enroll 135 HIV-advanced patients with cryptosporidial
diarrhea to be treated with IGX-CPL3, a low lipid formulation, at the high dose
level used in the Phase I/II trial. The trial protocol provides for an initial
four-week treatment consisting of five oral doses of IGX-CPL3 or placebo per
day. The trial's primary efficacy end point is the patient's percentage
reduction in weekly stool frequency. Patients whose stool frequency has not
decreased during this four week period will then be treated with open-label
IGX-CPL3 and omeprazole orally, or IGX-CPL3 alone by naso-duodenal tube or
percutaneous gastrostomy (if already fashioned), for a further four weeks. It is
anticipated that at least 90 patients will complete the trial. At September 15,
1998, the Company had screened over 450 patients based upon the trial's
inclusion and exclusion criteria and enrolled a total of 40 patients at 14 sites
in South Africa and Mexico, 26 of whom (all treated in South Africa) have
completed the trial. The Company anticipates that the trial will be completed in
the first half of 1999. If the trial is successful, IgX intends to apply for
marketing approval of IGX-CPL3 in the EU and certain South American countries to
treat cryptosporidial diarrhea in HIV-advanced patients and may apply for
similar approval in the U.S. The approximate reported number of HIV-advanced
patients who have cryptosporidial-based diarrhea is 14,500 in the EU and 700,000
in South America. If the current Phase III clinical trial for IGX-CPL3 is
successful and establishes its safety and efficacy in treating cryptosporidial
diarrhea in HIV-advanced patients, IgX believes that it will have demonstrated
the principle that Avian Technology-based drug candidates may treat certain
infectious diseases of the human GI tract. There can be no assurance that the
Phase III clinical trial for IGX-CPL3 will demonstrate any efficacy or safety or
that it will be completed successfully in a timely manner. Furthermore, there
can be no assurance as to the timing of EU and other foreign or domestic
regulatory filings or if or when any of those regulatory authorities will
approve IGX-CPL3 for sale. Additionally, there can be no assurance that
IGX-CPL3, if and when regulatory approvals are received, will achieve market
acceptance.
The Company also plans to conduct clinical trials to determine the safety
and preliminary efficacy of using IGX-CPL3 to treat cryptosporidial diarrhea in
immunocompetent patients. While cryptosporidial diarrhea in immunocompetent
patients is generally neither chronic nor life-threatening, to the Company's
knowledge, no effective treatment currently exists. The Company expects to file
an IND application with the FDA by the end of the first quarter of 1999 to
commence a U.S. Phase I clinical trial of IGX-CPL3 to treat cryptosporidial
diarrhea in immunocompetent children. The Company also expects to file an IND
application to test IGX-CPL3 in immunocompetent adults later in 1999. The
approximate reported number of immunocompetent patients infected with
cryptosporidial diarrhea annually is 600,000 in the U.S., 1.1 million in Europe,
and 4.6 million in South America. There can be no assurance as to the timing of
the filing of these IND applications, the timing or outcome of the FDA's review
of any such applications, or, if and when such review is completed, the timing
or outcome of the related clinical trials.
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IGX-CDL3
The Company's second Avian Technology-based drug candidate, IGX-CDL3, is a
proposed treatment for C. difficile-associated diarrhea and related
complications arising from the use of antibiotic therapy prescribed to patients
in hospitals and long-term health care institutions. Annually, approximately
2.3 million patients in the U.S., approximately 4.0 million patients in the EU
and approximately 194,000 patients in South America have
C. difficile-associated diarrhea.
C. difficile occurs when the antibiotics used in traditional antibiotic
therapy for other numerous diseases alter the homeostasis of the GI tract's
normal bacterial flora and foster the subsequent overgrowth of certain
disease-causing bacteria. Currently, the first stage of treatment for
C. difficile-associated diarrhea involves the discontinuation of the causal
antibiotic therapy, if possible, and often the initiation of different
antibiotics to treat the C. difficile infection. Discontinuation of the causal
antibiotic may result in inadequate treatment of the underlying infection.
C. difficile-associated diarrhea is currently treated with antibiotics but
the efficacy of the antibodies has been reduced due to increasing development of
drug resistance to these antibiotics. The Company believes that IGX-CDL3 may
prevent and treat C. difficile-associated diarrhea without the complications
associated with antibiotic treatment. However, there can be no assurance that
IGX-CDL3 will effectively prevent and treat C. difficile-associated diarrhea
without the complications associated with antibiotic treatment. Currently, the
Company is testing IGX-CDL3 in hamsters. IgX anticipates completing those
studies in the fourth quarter of 1998. If such studies are successful, as to
which there can be no assurance, the Company intends to submit an IND
application to the FDA to commence a U.S. Phase I/II clinical trial of IGX-CDL3
as a treatment for C. difficile-associated diarrhea and related complications.
IGX-HPL3
The Company's third Avian Technology-based product candidate, IGX-HPL3,
seeks to treat peptic ulcers caused by the bacteria, H. pylori. H. pylori has
been implicated as a cause of peptic ulcer disease and chronic gastritis. There
also appears to be a strong statistical association between H. pylori and
gastric carcinoma and types of lymphoma. Ulcers caused by H. pylori are
currently treated with certain antibiotics but their efficacy has been reduced
slightly due to an increasing development of drug resistance to these
antibiotics. The Company anticipates commencing animal studies for IGX-HPL3 in
mice by the end of 1998. Each year approximately 4 million new incidences of
ulcers or other complications arising from H. pylori are reported in the U.S.
Persistent H. pylori infections lead to a high relapse rate of ulcer
disease after conventional ulcer treatment regimens (e.g. acid-suppressing
agents). Since the discovery of the relationship between H. pylori infections
and ulcers, a major trend in ulcer treatment has been the increased use of
antibacterial "combination therapy" (a combination of several antibiotics,
bismuth, and inhibitors of gastric acid production) instead of, or in addition
to, conventional ulcer therapies. While current combination therapy shows an
efficacy in approximately 80 to 85% of patients, recent articles have shown the
development of resistance to current combination therapy. This combination
therapy is also somewhat difficult and prolonged for patients, while the
Company's drug candidate intends to be a monotherapy of shorter duration. In
addition, IgX's drug candidate may not develop the drug-resistance exhibited by
current therapeutics.
N-nonyl-DNJ
In September 1998, IgX Oxford acquired an exclusive worldwide license from
Monsanto to commercialize N-nonyl-DNJ, a glucosidase inhibitor, as a treatment
for Hepatitis B. N-nonyl-DNJ seeks to prevent the secretion of the Hepatitis B
virus from the infected cells. The mechanism of action is that N-nonyl DNJ
prevents the sugars of one of the Hepatitis B virus antigens from being
correctly biosynthesized, so that the virus does not form, as evidenced in
animal studies described in the May 1998 edition of Nature Medicine, a referee
journal. While alpha interferon and antivirals are currently available to treat
Hepatitis B, these therapies have a limited clinical success rate, high
recidivism rate and significant undesirable side effects. To date, Monsanto has
sponsored research and animal studies on N-nonyl-DNJ at Oxford University
("Oxford") in Oxford, England and Thomas Jefferson University ("TJU") in
Philadelphia, Pennsylvania. The results of these woodchuck animal studies,
published in the May 1998 edition of Nature Medicine, showed a reduction of the
enveloped Hepatitis B virus correlated with the dosing level of N-nonyl-DNJ in
the serum of the treated animals. IgX has agreed to fund IgX Oxford with up
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to $2 million. Such funds are anticipated to be used to conduct further animal
studies relating to N-nonyl-DNJ at Oxford and TJU, which are necessary to
determine whether an IND application to conduct a Phase I human clinical trial
is appropriate. These animal studies are anticipated to be completed by the end
of the first half of 1999. If they are successful, as to which there can be no
assurance, IgX Oxford anticipates filing an IND application with the FDA.
Monsanto has retained certain exclusive rights of first refusal to license for
further development and/or commercialize N-nonyl-DNJ. Approximately 350 million
people worldwide are chronically infected with Hepatitis B virus, which is
usually fatal in approximately 20-40% of the chronically infected population if
untreated.
RESEARCH AND DEVELOPMENT
The Company has sponsored university research relating to the Avian
Technology principally at the University of Arizona under separate Research
Agreements relating to particular aspects of the Avian Technology. Under these
Research Agreements, the Company funds the research and development work at the
University for a specific time period. At June 30, 1998, the Company had
research funding commitments of $334,000 to the University under three separate
Research Agreements, for continuing research on IGX-CPL3, IGX-CDL3 and IGX-HPL3,
through March 31, 1999, December 31, 1998 and July 31, 1999, respectively. The
Research Agreements (and any remaining funding commitments) may be terminated by
the Company on 60 to 90 days' written notice. Under the Research Agreements with
the University (including those for previous Avian Technology research), the
Company obtained an exclusive option to license any invention derived from such
research (except that the University retains the right to use the invention for
teaching and research). The option is exercisable within six months of
notification by the University of the discovery of any such invention or such
longer period as the University may agree. By exercising these options, the
Company currently has five Licenses with the University covering certain aspects
of the Avian Technology. The terms and conditions of these Licenses are
substantially similar and are summarized under "Business--Patents and
Proprietary Rights." Since 1992, the Company has funded an aggregate of $2.4
million of research and development on the Avian Technology, of which $2.3
million has been received by the University. Research and development expenses
were $1,577,000 for the six months ended June 30, 1998, and $3,426,000,
$1,136,000 and $475,000 for the years ended December 31, 1997, 1996 and 1995,
respectively.
The Company has a close working relationship with the scientists at the
University of Arizona, and Company management and the scientists at the
University of Arizona Company management and scientists at the University of
Arizona review the progress of the research work weekly under the sponsored
research agreements. Nine scientists, 4 of whom have Ph.D degrees, and 4
technicians employed by the University of Arizona are working on the Company's
sponsored research under the supervision of Charles R. Sterling Ph.D., the Head
of Department of Veterinary Science at the University of Arizona and the
Company's Director of Research and chairman of the Company's Scientific Advisory
Board. By utilizing the significant resources of the University of Arizona,
including its equipment, its laboratory facilities for synthesis, analyses,
pharmacology, toxicology, in vitro and in vivo animal studies and its animal
facilities, the Company believes that it has accomplished significantly more in
the research and development of its licensed compounds than it would have been
able to do so on its own, without substantially greater need for capital.
With respect to the Company's research and development efforts for the
treatment of Hepatitis B, IgX has agreed to fund up to $2 million to IgX Oxford.
See "--Drug Candidates under Research and Development--
N-nonyl-DNJ."
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STRATEGIC PARTNERSHIPS
The Company's strategy is to develop products both independently and
through strategic partnerships with large pharmaceutical companies, under which
the Company will seek financial, preclinical and clinical trial, manufacturing
and marketing assistance while retaining parallel manufacturing and/or marketing
rights for the products.
In August 1998, IgX entered into strategic partnerships with Sintofarma, a
Brazilian company currently responsible for manufacturing and marketing 26
pharmaceutical products in South America, and Gador, the second largest
manufacturer and distributor of pharmaceutical products in Argentina based on
both unit volume and sales. These agreements relate to the development and
commercialization of the Company's Avian Technology-based drug candidates in
South America, Latin America and Mexico. Under its agreement with the Company,
Sintofarma has agreed to pay for clinical trials in Brazil of the Company's
Avian Technology-based drug candidates currently under development (IGX-CPL3,
IGX-CDL3 and IGX-HPL3), and to form a Brazilian joint venture entity with the
Company to manufacture Avian Technology-based drug candidates for sale in Brazil
and elsewhere. The joint venture entity ("Sintofarma IgX Biotech, Ltda"), which
is expected to be owned 40% by IgX and 60% by Sintofarma, will manufacture all
Avian Technology-based drugs for commercial sale, if and when any such drug
candidates are approved for sale. Under this strategic partnership, IgX granted
Sintofarma an exclusive license to distribute and market IGX-CPL3 and IGX-CDL3
in Brazil, if and when approved for sale, for a royalty to be agreed upon
ranging from 10% to 16.6% of net sales. Sintofarma and Gador also have rights of
first negotiation for similar licenses on other Avian Technology-based drug
candidates. Under its agreement with the Company, Gador agreed to manage the
process to obtain regulatory approval to commercialize IGX-CPL3 and IGX-CDL3 in
all countries in South America, except Brazil, as well as Latin America and
Mexico. IgX also has granted Gador the exclusive distribution and marketing
rights to IGX-CPL3 and IGX-CDL3 in those countries if and when approved for
sale, for which Gador will pay IgX a royalty of 10% of net sales. In addition,
Gador will purchase the ingredients for IGX-CPL3 and IGX-CDL3 from IgX or its
designee (including Sintofarma IgX Biotech, Ltda) at a cost of up to 20% of the
net sales of drugs sold by Gador.
In August 1998, the Company formed a joint venture, IgX Oxford, a
majority-owned subsidiary of the Company, with Monsanto and several other
parties. IgX Oxford seeks to develop a drug candidate using a proprietary
compound, N-nonyl-DNJ, licensed to it exclusively from Monsanto, to treat the
infectious disease, Hepatitis B, for which there also is a significant medical
need for improved therapy. N-nonly-DNJ seeks to prevent the secretion of the
Hepatitis B virus from the infected cells. The mechanism of action is that
N-nonyl-DNJ prevents the sugars of one of the Hepatitis B virus antigens from
being correctly synthesized, so that the virus does not form, as evidenced in
animal studies described in the May 1998 colition of the Nature Medicine, a
referee journal. To date, Monsanto has sponsored research and animal studies on
N-nonyl-DNJ at Oxford and TJU. The results of these woodchuck animal studies,
published in the May 1998 edition of Nature Medicine, showed a reduction of the
enveloped Hepatitis B virus correlated with the dosing level of N-nonyl-DNJ in
the serum of the treated animals. IgX has agreed to the funding of IgX Oxford to
conduct further animal studies relating to N-nonyl-DNJ at Oxford and TJU, which
are necessary to determine whether an IND application to conduct a Phase I human
clinical trial is appropriate. TJU, Raymond A. Dwek, Timothy Block, Ph.D.,
Baruch Blumberg, Ph.D., Hepatitis B Foundation and Monsanto own in the aggregate
the remaining 40% of the outstanding capital stock of IgX Oxford (on a
fully-diluted basis). Monsanto holds its ownership through a warrant to purchase
for nominal consideration that number of shares that would result in its owning
approximately 12.5% of the outstanding capital stock (assuming no other further
issuances of capital stock). Professor Dwek and Dr. Blumberg are directors of
the Company and Professors Dwek and Block have been the principal investigators
of the research conducted on N-nonyl-DNJ at Oxford.
The license agreement between IgX Oxford and Monsanto is for a term that
commenced September 1, 1998 and expires on the later of September 1, 2013, or
the expiration of all royalty obligations thereunder, unless terminated earlier
as provided in the license agreement. Under the license agreement, Monsanto is
entitled to (i) a royalty of 1.5% of the net sales of any drugs incorporating
N-nonyl-DNJ sold by IgX Oxford or any sublicensee for use in the treatment of
Hepatitus B virus and (ii) 25% of any compensation paid to IgX Oxford, other
than royalties measured by net sales, as consideration for any sublicense or
assignment of the Monsanto license agreement. The royalty payments are fully
payable on net sales of a product where a valid patent of Monsanto relating to
N-nonyl-DNJ as a treatment of the Hepatitus B virus is pending or issued or
where IgX Oxford has substantial market exclusivity and only during the life of
such patent or or the duration of the market exclusivity. Monsanto also has
retained certain exclusive rights of first refusal to license N-nonyl-DNJ for
further development and/or commercialization. Its initial right of first refusal
is exercisable prior to the commencement of a Phase I clinical trial involving
N-nonyl-DNJ as a treatment for the Hepatitis B virus. A second right of first
refusal is exercisable at the end of any subsequent Phase II clinical trial
unless IgX Oxford has previously entered
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into a similar agreement with a third party on terms no less favorable in the
aggregate to such third party than those offered to Monsanto in the initial
right of first refusal. If Monsanto exercises its right of first refusal, any
such development and license agreement with Monsanto would cover the clinical
development, registration and marketing of the drug candidate. Monsanto would
then be obligated to reimburse IgX Oxford for all costs incurred in the
development of the drug candidate, and pay a fee equal to the net present value
of the license, milestone payments based upon continuing development and
successful commercialization, if any, of the drug candidate by Monsanto, and
royalties based upon a percentage of net sales of the drug. Under its existing
license agreement with IgX Oxford, Monsanto also has a substantially similar
right of first refusal for other drug candidates developed by IgX Oxford using
any of the compound provided by Monsanto to IgX Oxford upon signing the license
agreement in September 1998. Monsanto also has similar rights of first refusal
with respect to the use of N-nonyl-DNJ for any application unrelated to
Hepatitis B.
Under the license agreement between IgX Oxford and Monsanto, either party
may terminate the license agreement upon an event of default, including
bankruptcy or insolvency of the other party or a material breach of the license
agreement that is not cured within 30 days of notice of the breach. IgX Oxford,
at its option, may also terminate the license agreement on a country-by-country
basis (a) at any time it unilaterally determines to discontinue development or
marketing of N-nonyl-DNJ, (b) immediately if the manufacture, use, sale or
distribution of N-nonyl-DNJ, as a treatment for the Hepatitis B virus is
determined in a final judicial or adminstrative order or decision to infringe
the patent rights of a third party or if upon the advice of patent counsel, IgX
Oxford determines that any such infringement in any Major Market (as defined
below is unavoidable, and (c) immediately if N-nonyl-DNJ as a treatement for the
Hepatitis B virus is deemed unmarketable. Monsanto also may terminate the
license agreement if IgX Oxford shall have failed to give notice on or before
September 1, 2000 of its intent to commence a Phase I clinical for N-nonyl-DNJ
as a treatment for the Hepatitis B virus, which notice triggers Monsanto's
initial right of first refusal decribed above or if IgX Oxford shall have failed
to provide the notice required to trigger Monsanto's second right of first
refusal described above. Further, Monsanto can terminate the license agreement
if IgX Oxford fails to commercialize N-nonyl-DNJ as a treatment for the Hepatits
B virus in at least one of the "Major Markets" (United States the EU, Japan or
the People's Republic of China) prior to September 1, 2004, alternately,
Monsanto has the option in such event to obtain an exclusive license from IgX
Oxford for N-nonyl-DNJ as a treatment for the Hepatitis B virus in any such
Major Market that IgX Oxford has so failed to commercialize such product.
Finally, Monsanto may terminate the license agreement if lgX defaults under its
obligations to fund lgX Oxford with up to $2 million as described in this
Prospectus and fails to cure that default within 30 days notice. Any termination
of the license agreement between lgX Oxford and Monsanto could have a material
adverse affect on the Company's business, financial condition and results of
operations.
MANUFACTURING
To date, the Company has been able to produce sufficient quantities of its
drug candidates for development and clinical trials from its pilot production
facilities in Arizona and Ireland. The Company produced IGX-CP at its pilot
production facility in Tucson, Arizona to support its U.S. Phase I/II clinical
trial at New York Hospital-Cornell Medical Center in New York City to determine
the safety and preliminary efficacy of IGX-CP for AIDS-related cryptosporidial
diarrhea. During 1996 and 1997 the Company refocused its regulatory strategy of
IGX-CPL3, seeking to obtain regulatory approval to market IGX-CPL3 as a
treatment for cryptosporidial diarrhea in HIV-advanced patients in countries
where combination drug therapy is not widely available. Similarly, the Company
decided that its clinical trials should be conducted in those countries that
would facilitate patient enrollment. U.S. regulations prohibit the exportation
of biologics for use in foreign clinical trials. Accordingly, during 1996, the
Company, through its wholly-owned subsidiary, IgX Limited, built a pilot
production facility in Ireland to support the production of IGX-CPL3 and other
Avian Technology-based drug candidates for use in clinical trials outside the
U.S.
The Company intends to continue to utilize its pilot production facilities
for continuing research and development, including preclinical testing and
clinical trials. Under its strategic partnership with Sintofarma, the Company
and Sintofarma have agreed to jointly own and operate a manufacturing facility
in Brazil for pilot production for clinical trials in Brazil and for full-scale
production for the Company's Avian Technology-based products for sale in Brazil
and elsewhere, if and when approved for sale. The Brazilian facility is
anticipated to be an FDA-approved facility and Sintofarma has agreed to bear all
costs of manufacture other than the supply of the pathogen-specific antigens for
the hyperimmunization process. In addition, if the existing Phase III clinical
trial of IGX-CPL3 is successful, the Company may develop its own FDA-approved
full-scale manufacturing capability, in Ireland or elsewhere. If the Company
elects to build such a facility in Ireland, it may seek Irish
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government financing. The Company believes that through the Sintofarma strategic
partnership, future strategic partnerships or directly it will be able to meet
its long term production needs of the Avian Technology-based drug candidates and
drugs, if and when approved for sale. See "Risk Factors--Manufacturing and
Dependence on Strategic Partners".
PATENTS AND PROPRIETARY RIGHTS
The Company and the University of Arizona (the "University") have entered
into research agreements (the "Research Agreements") under which the Company has
funded research undertaken by the University. As a result of certain research,
the Company and the University have entered into license agreements (the
"Licenses") under which the Company is granted certain exclusive (other than the
University's right to use the invention for teaching and research), worldwide,
royalty-bearing licenses to inventions set forth in the University's one issued
patent and patent applications relating to aspects of Avian Technology utilized
by the Company in exchange for royalty payments by the Company. See
"Business--Research and Development." However, the Licenses do not provide the
Company with rights to license from the University inventions relating to Avian
Technology where the related research has not been funded by the Company.
The Licenses presently pertain to one issued U.S. patent, two continuation
applications pending in the U.S., three other patent applications pending in the
U.S. (as well as three corresponding foreign applications) and one provisional
patent application pending in the U.S. The issued U.S. patent (No. 5,753,228),
which issued on May 19, 1998 and will expire on May 19, 2015, relates to a
method for treating parasitosis by the enteral administration of hyperimmune hen
egg yolk antibodies. One of the three pending patent applications refers to hen
egg yolk antibodies to C. difficile antigens and use in therapy for
pseudomembranous colitis. Another of the three pending patent applications
refers to the hen egg yolk antibodies to H. pylori and methods of use.
Under the Licenses, IgX must use its best efforts to produce and sell the
licensed drug candidate, and has agreed to pay the University royalties equal to
5% of the net sales price of the licensed product. The royalties payable to the
University are reduced by an amount of royalties actually paid by IgX to any
non-affiliated third party in connection with the licensing of additional patent
rights or know-how necessary to make, use or sell the applicable drug, provided
that the royalties payable to the University will not be less than 3% of the net
sales price.
The Company believes that its ability to compete effectively will depend in
large part on obtaining and maintaining access to patent and intellectual
property protection on technologies utilized in its business (particularly with
respect to aspects of Avian Technology licensed from the University). Pursuant
to its rights and obligations under the Research Agreements and the License
Agreements, the Company and the University pursue patent protection in the U.S.
and certain foreign jurisdictions for certain technologies believed to be
proprietary to the University and advantageous for the University and the
Company. The Company's ability to compete effectively will depend in large part
on the ability of the University to obtain and maintain a proprietary interest
in such technologies which are licensed to the Company. The University may
terminate any Licenses on 90 days' notice upon any breach or default by the
Company under the License or upon the bankruptcy or involvency or receivership
of the business of the Company. Upon termination of any License, all rights
granted thereunder revert back to the University and, in such event, the
University reserves the right to terminate all the other Licenses. Any such
termination would have a material adverse effect on the Company's business,
financial condition and results of operations, or could result in cessation of
the Company's business.
The patent and intellectual property positions of pharmaceutical and
biotechnology companies, including the Company, are uncertain and involve
complex legal and factual questions for which important legal principles are
largely unresolved. A number of pharmaceutical companies, biotechnology
companies, universities and research institutions, many of whom have
substantially greater resources than the Company and have made substantial
investments and may be further along in development in technologies competitive
with those utilized by the Company, have filed patent applications or received
patents relating to treatments and technologies which are similar to or
competitive with those of interest to the Company.
Since a United States patent application is maintained under conditions of
confidentiality while the application is pending in the United States Patent and
Trademark Office (the "PTO"), the Company is unable to determine the inventions
being claimed in pending patent applications filed by its competitors in the
PTO. In addition, patents issued and applications pending which relate to the
Company's areas of interest are numerous, and there can be no assurance that the
Company is aware of all potentially competitive or conflicting patents (either
pending or issued) or other intellectual property rights. The existence of such
other patents, patent applications and rights could result in a significant
reduction of the coverage of rights held or to be held by the Company (i.e.,
rights held under the Licenses) and the Company's ability to realize any
significant patent protection with respect to such rights.
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Furthermore, while the Company holds rights (under the Licenses) to one
issued U.S. patent and several pending applications in the U.S. and
internationally, there can be no assurance that any of the pending applications
will result in the issuance of any patents, that such applications will have
priority over the applications of others, that, if issued, any patents to which
the Company holds rights might offer protection against competitors with similar
technologies or that the Company will not require additional rights to conduct
its business. There can also be no assurance that any patent, if issued or
following issuance, will not be challenged, invalidated or circumvented, or that
the rights created thereunder would afford the Company a competitive advantage.
The commercial success of the Company also depends in large part on the
Company neither infringing valid, enforceable patents or proprietary rights of
third parties, nor breaching any licenses that may relate to the Company's
business. In this regard, the Company is aware of certain third-party patents
and competitive proprietary technologies that may relate to its business.
Specifically, the Company is aware of certain intellectual property rights
belonging to third parties that could be interpreted to compromise the Company's
freedom to practice and/or obtain rights to patent protection with respect to
certain aspects of the Company's technologies in the areas of the treatment of
infections with hen egg antibodies and the formulation of lipid-reduced
preparations. In the event of an unfavorable interpretation of third party
intellectual property rights (including the third party intellectual property
rights of which the Company is aware), the Company may be required to obtain
licenses from such third parties. There can be no assurance that any such
licenses would be available to the Company upon reasonably acceptable terms, if
at all. If the Company were so required to obtain licenses from such parties,
and if the Company were unable to obtain such licenses on reasonably acceptable
terms or the Company were unable to practice, develop and exploit such
technologies, the Company's technologies and business could be materially and
adversely affected. There can also be no assurance that the Company does not or
will not infringe other patents, intellectual property or proprietary rights of
third parties (including patents and rights which may issue or arise in the
future). Any legal action or threat against the Company claiming damages or
seeking to enjoin commercial activities relating to the Company's business
affected by third-party rights, in addition to subjecting the Company to
potential litigation and liability for damages, may require the Company to
obtain licenses in order to continue to pursue its business. There can be no
assurances that the Company would prevail in any such action or that any license
(including licenses proposed by third parties) required under any third party
rights would be made available on commercially acceptable terms, if at all. The
Company could also face significant costs and loss of time by management and key
employees as a result of any litigation relating to such third party rights.
Certain underlying aspects of the technologies utilized and pursued by the
Company and the University may already be and have been in existence in the
scientific community in certain embodiments. There are United States and foreign
patents and patent applications held by third parties in the Company's
commercial areas of interest and the Company believes that there may be
significant litigation in the Company's industry and commercial areas of
interest regarding patent and other intellectual property rights. If the Company
becomes involved in such litigation, it could consume a substantial portion of
the Company's managerial and financial resources, which could have a material
adverse effect on the Company. Additionally, the defense and prosecution of
patent interference proceedings before the PTO or other related administrative
or court proceedings could result in substantial expense to the Company and
significant diversion of effort by the Company's technical and managerial
personnel. There can be no assurance that the Company will not in the future
become involved in PTO interference proceedings or other litigation to determine
the priority of inventions. In addition, laws of certain foreign countries do
not protect intellectual property to the same extent as laws in the United
States, which may subject the Company to additional difficulties in protecting
its intellectual property in foreign countries.
The Company uses intellectual property owned by others and licensed to the
Company. Disputes may arise as to the ownership rights in such intellectual
property and related technology. The Company may also rely on certain
technologies to which it does not have exclusive rights or which may not be
patentable or proprietary and thus may be available to competitors.
There can be no assurance that the steps taken by the Company, the
University, or Monsanto to protect intellectual property and proprietary rights
will be adequate to prevent misappropriation or that others will not develop
competitive technologies or products. Furthermore, there can be no assurance
that others will not independently develop products that are similar or superior
to those proposed for development or commercialization by the Company, duplicate
any of the technologies utilized by the Company or design around any patent or
other intellectual property rights held by the Company.
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The Company's commercial success and ability to compete effectively will
also depend upon the unpatented trade secrets and confidential information of
the Company and its licensors (such as the University), especially where patent
protection is not believed to be appropriate or obtainable. In this regard, the
Company relies upon trade secrets, technical know-how and continuing inventions
of the Company and its licensors to develop and maintain the Company's
competitive position. There can be no assurance that the Company can obtain or
maintain meaningful protection of such trade secrets or know how or that the
Company will be capable of obtaining or maintaining protection for its rights to
such trade secrets or know how. The Company attempts to protect its trade
secrets and technologies utilized by it in part through confidentiality
agreements with its employees, consultants and certain contractors. There can be
no assurance, however, that these agreements will not be breached or terminated,
that licensors utilizing similar agreements with their employees, consultants
and contractors will not suffer from the breach or termination of such
agreements, that the Company would have adequate remedies for any breach or that
trade secrets or know how utilized by the Company will not otherwise become
known or be independently discovered by competitors.
COMPETITION
The pharmaceutical industry is subject to intense competition and rapid
technological change. Numerous pharmaceutical, biotechnology and chemical
companies, academic institutions, governmental agencies and other public and
private research organizations are conducting research and developing new drug
candidates designed to use immune mechanisms to treat infections. Further
competition is expected from companies developing new antibiotics and other
anti-infective substances.
Several companies are or have been developing products for treating or
preventing cryptosporidial diarrhea. Certain of those companies are attempting
to use antibody products developed from milk of dairy cows to prevent and treat
gastrointestinal diseases. IgX believes that the Avian Technology is superior to
the bovine products for two reasons: (i) the Avian Technology provides a more
stable source of cryptosporidium hyperimmune and (ii) the antibody activity
achieved by IgX is superior to those developed through bovine processes. Using a
different technology, Shaman Pharmaceuticals Inc. also competes with IgX's drug
candidate, IGX-CPL3, for the treatment of diarrhea. Shaman has developed a
product derived from an extract of the croton plant found in Latin America and
seeks to treat the underlying cellular mechanism for diarrhea by blocking
chloride secretion but does not treat the infection. IGX-CPL3 by contrast seeks
to eradicate the C. parvum parasite by providing polyclonal antibodies specific
to C. parvum that bind to the pathogen and prevent the parasite from attaching
to and invading intestinal epithelial cells. The Company believes these
antibodies should bind to the parasite when it moves from cell to cell following
its reproductive cycle. As the parasite should be prevented from invading a
cell, it should die and be swept from the intestine. The reproductive cycle of
the parasite should thus be interrupted and the infection should terminate over
time.
The Company is aware of direct competition with respect to its C. difficile
diarrhea drug candidate. Ophidian Pharmaceuticals Inc. has developed a passive
antibody formulation that neutralizes a disease causing toxin secreted by C.
difficile during infection of the human GI tract. Ophidian uses a recombinant
protein technology from hens eggs. Ophidian has recently reported the completion
of a Phase I clinical trial. IgX believes that the Ophidian drug candidate is
inferior to IGX-CDL3 because it seeks to treat the resultant toxins of C.
difficile while IGX-CDL3 seeks to attack the bacteria directly before it is able
to create toxins. In addition, the Ophidian drug candidate is produced through a
process of laboratory test tube centrifuge. Ophidian, to the Company's
knowledge, has not succeeded at producing the drug candidate in commercially
viable quantities and to date, has no manufacturing facility.
The Company also encounters competition with respect to its drug candidate
IGX-HPL3. Astra Merck Inc. is currently in Phase III studies of its drug
candidate Perprozole, and Eisai Co., Ltd has entered the Japanese market with
its product Rabeprazole sodium. Both products are antiulcer agents used together
with antibiotics to eradicate H. pylori. The Company believes that the Astra and
Eisai drug candidates are inferior to IGX-HPL3 because they are indirect
approaches to the eradication of the H. pylori bacteria. Perprozole and
Rabeprazole sodium seek to limit the acid present in the bowel thereby creating
a hostile environment for H. pylori. The Company believes that IGX-HPL3 by
contrast, seeks to act by blocking the urease receptors on H. pylori, thereby
creating an acid-rich environment which may kill the pathogen. In addition, AMBI
Inc. is conducting Phase III studies for its drug candidate, Nisin, an
antibiotic which seeks to eradicate H. pylori through triple drug therapy. The
Company believes that IGX-HPL3 is superior to Nisin because recent articles have
shown the development of resistance to current triple drug therapy. Triple drug
therapy is also somewhat difficult and prolonged for patients, while the
Company's drug candidate intends to be a monotherapy of shorter duration. In
addition, the
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Company believes that its drug candidate should not develop the drug-resistance
exhibited by current therapeutics.
The Company anticipates competition for IgX Oxford from certain companies
with drugs already on the market as well as companies developing drug candidates
which seek to treat Hepatitis B.
Many of these competitors have substantially greater financial, human and
other resources and greater expertise in research and development,
manufacturing, marketing and distribution than the Company and may represent
significant competition for the Company. Such companies may succeed in
developing technologies and products that are more effective or less costly than
any of those that may be developed by the Company, and such companies may be
more successful than the Company in developing, manufacturing and marketing
products. In addition, some companies may be further along in their clinical
development as compared to the drug candidates of the Company. There can be no
assurance that the Company will be able to compete successfully in the future or
that developments by others will not render the Company's drug candidates
obsolete or non-competitive or that the Company's customers will not choose to
use competing technologies or products.
Any drug candidate developed by the Company that gains regulatory clearance
or approval will have to compete for market acceptance and market share. An
important factor of such competition may be the timing of market introduction of
competitive products. Accordingly, the relative speed with which the Company can
develop drug candidates, gain regulatory approval and reimbursement acceptance
and supply commercial quantities of the product to the market are expected to be
important competitive factors. Although the Company believes that it is the
first in the U.S. to have initiated an FDA-approved human clinical trial of an
Avian Technology-based polyclonal antibody, there can be no assurance that the
Company will be first to market such a technology or to market such a technology
effectively.
GOVERNMENT REGULATION
United States
IgX's drug candidates are classified as human biological drugs and their
research, development and marketing are subject to substantial regulation by the
FDA as well as state and local entities. The Federal Food, Drug and Cosmetic
Act, the Public Health Service Act and other federal statutes govern the
testing, manufacture, safety, effectiveness, approval, storage, recordkeeping,
labeling, advertising and promotion of the Company's drug candidates.
Noncompliance with applicable statutory and regulatory requirements may result
in fines, recall or seizure of products, refusal to permit the Company to enter
into government supply contracts, refusal to approve Product Licensing
Applications ("PLA"), suspension or revocation of product licenses previously
granted and criminal prosecution.
The process required by the FDA before the Company's drug candidates may be
marketed in the U.S. generally involves the following: (1) conducting
appropriate preclinical laboratory and animal tests; (2) the submission to the
FDA of an application for an IND which must be approved prior to approval to
conduct human clinical trials; (3) conducting adequate and well-controlled human
clinical trials to establish the safety and efficacy of the biologic; (4) the
submission of a PLA for approval of a biologic drug candidate; and (5) obtaining
FDA approval of and issuance of a license pertaining to a PLA prior to any
commercial sale or shipment of the drug or biologic. In addition to obtaining
FDA approval for each indication to be treated with each drug candidate, drug
manufacturing establishments must be registered with and approved by the FDA,
and manufacturers of biologics must also submit and obtain approval of an
Establishment License Application ("ELA") prior to commercial distribution of an
approved biologic. Manufacturing establishments are subject to regular
inspections by the FDA. All manufacturing facilities, production, testing and
packaging operations and recordkeeping practices must comply with current GMP
regulations, among other requirements.
Preclinical Studies. Preclinical studies are conducted in the laboratory
and in animal models to gain preliminary information on biochemical and
pharmacological properties of the investigational drug or biologic and to
identify any significant safety problems. The results of these studies are
submitted to the FDA as part of an IND application. Testing of previously
unapproved new drugs and biologics in humans may not commence until the IND
becomes effective.
IND Application. The IND application notifies the FDA of the sponsor's
investigational plan for the drug candidate or biologic and provides brief
descriptions of the chemical structure of the compound, the known
pharmacological and toxicological effects of the compound, and known information
relating to the compound's safety and effectiveness in humans, including
possible risks and anticipated side effects. An IND is effective in 30 days
unless the FDA objects. An IND that is effective authorizes a sponsor to conduct
human clinical studies (Phase I or Phase I/II) in order to demonstrate relative
safety and efficacy of the drug candidate in support of an ELA/PLA. Any
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time prior to or following the commencement of clinical trials under an IND, the
FDA may determine that human subjects are or would be exposed to an unreasonable
and significant risk of injury by participating in the trial and may delay
initiation of or suspend an ongoing trial. There is no certainty that the
submission of an IND application will result in FDA authorization to commence
trials or that authorization of one phase of trials will result in authorization
of other phases or that the performance of any clinical trials will result in
FDA approval of any drug candidate.
Clinical Studies. Human clinical studies are typically conducted in three
phases, which may overlap, and are designed to collect additional data relating
to the safety, dosing and side effects of the proposed drug candidate and to the
drug candidate's efficacy in comparison with placebos or any currently accepted
therapy. Phase I clinical studies are generally performed in selected patients
with a disease or disorder to attempt to establish an initial data base
cataloguing tolerance, safety and dosing of the drug candidate. Phase II
clinical studies are generally performed in small numbers of carefully selected
patients and are used to obtain statistical evidence of the preliminary efficacy
and safety of the drug candidate and dosing regimen. Phase III consists of
expanded large-scale studies of patients with the target disease or disorder, to
obtain statistical evidence of the efficacy and safety of the proposed drug
candidate, dosing regimen in a broader patient population, overall risk-benefit
relationship and product labeling. These studies may include investigation of
the effects in subpopulations of patients, such as the elderly, women or certain
racial groups.
When patients are studied, Phase I and II studies may be combined. Phase
I/II clinical studies are designed to establish initial data regarding the
tolerance, safety and dosing of the investigational drug or biologic, and to
obtain preliminary efficacy data in patients with the specific diseases. The
combination of different phases encourages the use of larger sample sizes and
may result in more reliable statistical results in the earlier phases.
Subsequent to the Phase I and II studies, pivotal Phase III studies are required
to be carried out with larger numbers of patients with the target disease or
disorder. These pivotal studies may be either Phase II or Phase III. Additional
clinical trials beyond the pivotal studies are sometimes required for licensing.
Product Licensing Application. Upon successful completion of clinical
testing, the PLA and ELA are filed with the FDA. These applications include,
among other things, details of the manufacturing and testing processes, proposed
packaging, labeling and results of preclinical studies and clinical trials
which, taken together, demonstrate that the drug candidate or biologic is safe,
pure, potent and effective. FDA approval of the applications is required before
the new drug candidate may be marketed. There can be no assurance that the FDA
will act favorably or quickly in reviewing submitted applications, and
significant difficulties or costs may be encountered by the Company in its
efforts to obtain FDA novel biological drug candidates. The FDA may grant
marketing approval, require additional testing or information or deny the
applications. The clinical trials may take three to five years or more to
complete, may be very costly, and there are no assurances that the clinical data
obtained will demonstrate to the FDA that the drug candidate is safe and
effective. The FDA may require the Company to perform additional human testing.
There can be no assurance that the FDA will ever accept the Company's data as
being sufficient to demonstrate the drug candidate's safety, purity, potency or
efficacy.
Even after FDA approval of a PLA has been obtained, further studies are
generally required to provide additional data on safety or to gain approval for
the use of a drug as a treatment in a clinical indication other than those for
which the drug was initially tested. The FDA may also require post-marketing
testing and surveillance programs to monitor a drug's effects. Significant side
effects may prevent or limit the further marketing of the drug, or move the FDA
to withdraw its approval, if any, to market the drug, either temporarily, for
example, by ordering a drug recall, or permanently, by withdrawing the ELA or
PLA approval. Continued compliance with all FDA requirements and the conditions
in an approved application, including product specification, manufacturing
process, labeling and promotional materials and record keeping and reporting
requirements, is necessary for all drugs.
International
Sales of biologics outside the U.S. are subject to foreign regulatory
requirements that may vary widely from country to country. Approval of a product
by regulatory authorities of foreign countries comparable to the FDA must be
obtained prior to the commencement of marketing the products in those countries.
The time required to obtain such approval may be longer or shorter than that
required for FDA approval discussed above. The foreign regulatory approval
process may include all of the risks associated with obtaining FDA approval set
forth above, and there can be no assurance that foreign regulatory approvals
will be obtained on a timely basis, if at all.
EU
In 1995, the European Medicines Evaluation Agency ("EMEA") instituted a new
centralized drug-approval process for the member states of the European Union
(EU). The member states currently include Austria, Belgium, Denmark, Finland,
France, Germany, Greece, Ireland (Republic of), Italy, Luxembourg, the
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Netherlands, Portugal, Spain, Sweden and the United Kingdom. This centralized
process supplements the traditional decentralized approach and allows for a
single central evaluation and approval that is binding in all EU member
countries. Similar to the FDA process, the safety, efficacy and quality of a
biologic drug candidate must be demonstrated according to criteria under EU law
and extensive preclinical and human clinical trials are likely to be required.
The results of all preclinical, development/manufacturing and Phase I, II and
III clinical trial data may be submitted to the EMEA, the counterpart of the
FDA, to seek approval for a Marketing Approval Application ("MAA"), which is the
equivalent of the PLA. The MAA is assigned to a "rapporteur" and/or "co-
rapporteur", an individual who coordinates the assessment of the application by
a team of experts in the preclinical, product manufacturing and clinical areas.
An overview of the results of the assessment is then presented to the Committee
on Proprietary Medicinal Products ("CPMP"). The CPMP, which is comprised of two
members from each of the member states of the European Union, evaluates both the
MAA and the rapporteur's recommendations and forms an opinion on the approval or
rejection of the MAA. This opinion is then referred to the European Commission,
and the European Council if appropriate, for a final decision. Approval of the
MAA by the European Commission and European Council, if appropriate, permits
product marketing within all countries of the European Union. This MAA procedure
takes a minimum of 300 days from submission of the application, excluding the
time taken by the applicant to respond to questions raised by the CPMP.
In addition to the centralized EU regulatory process, national laws of each
EU member states govern clinical trials, good manufacturing practices,
reimbursement and pricing, advertising and promotion and other matters. Thus,
even if a drug candidate receives EU Marketing approval, it is not available for
sale until the foregoing items are complete.
The Company is currently engaged in a Phase III clinical trial to test the
efficacy of IGX-CPL3 in treating cryptosporidial diarrhea in HIV-advanced
patients. The trial is being conducted in South Africa and Mexico. If the trial
is successful, IgX intends to apply for marketing approval of IGX-CPL3 in the EU
and certain South American countries to treat cryptosporidial diarrhea in
HIV-advanced patients and may apply for similar approval in the U.S.
REIMBURSEMENT
The Company expects that sales volumes and prices of its drug candidates
will be dependent in large measure on the availability of reimbursement from
governmental and other third-party payors, including health insurance companies.
The Company believes that reimbursement in the future will be subject to
increased restrictions both in the U.S. and in foreign markets. The Company
believes that the overall escalating cost of medical drugs and services has led
to, and will continue to lead to, increased pressures on the health care
industry, both foreign and domestic, to reduce the cost of drugs and services,
including any drug candidates which may be offered by the Company. There can be
no assurance that, in either the U.S. or foreign markets, governmental and other
third-party reimbursement and coverage will be available or adequate, that
current reimbursement amounts will not be decreased in the future or that future
legislation, regulation, or reimbursement policies of governmental and other
third-party payors will not otherwise adversely affect the demand for the
Company's drug candidates or its ability to sell its drug candidates on a
profitable basis. The unavailability or inadequacy of governmental and other
third-party payor coverage or reimbursement could have a material adverse effect
on the Company's business, financial condition and results of operations.
PRODUCT LIABILITY INSURANCE
The clinical and commercial development of pharmaceuticals, including those
being developed by the Company, may entail exposure to product liability claims.
While the Company has never been subject to any liability claims stemming from
the manufacture of, or preclinical or clinical trials of, its drug candidates,
there can be no assurance that it will not be subject to such claims in the
future. While IgX Limited currently has product liability insurance coverage in
an amount of approximately $7.5 million (or Irish pounds 5 million) per
occurrence for the use of IGX-CPL3 in the Company's Phase III clinical trial,
there can be no assurance that such coverage limits will be adequate nor that a
successful product liability lawsuit would not have a material adverse effect on
the Company. The Company does not have product liability insurance coverage for
the commercial sale of its drug candidates but intends to obtain such coverage
if and when its drug candidates are commercialized however, regulatory bodies,
there can be no assurance that sufficient product liability insurance will be
available on terms acceptable to the Company or at all. See "Risk
Factors--Potential Product Liability Exposure and Insurance."
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FACILITIES
IgX's executive offices are located in Summit, New Jersey in square
feet of leased office space. The Company leases a pilot production facility in
Tucson, Arizona which is responsible for developing drug candidates used in
research and development. In addition, through its wholly owned subsidiary, IgX
Limited, the Company owns a pilot production facility in Granard, Ireland. The
Company believes that its current facilities are adequate to meet its
requirements for the foreseeable future. Under its strategic partnership with
Sintofarma, the Company and Sintofarma have agreed to jointly build and own a
manufacturing facility in Brazil initially for pilot production of sufficient
quantities of its drug candidates for clinical trials in Brazil and for
full-scale production for the Company's Avian Technology-based products, if and
when approved for sale in Brazil. The future Brazilian facility is anticipated
to be an FDA-approved facility.
EMPLOYEES
As of September 15, 1998 the Company employed 31 persons on a full-time
basis, of which 8 were involved in research and development, 16 in manufacturing
its drug candidate for clinical trial and 7 in administration and business
development. The Company believes that its relations are good with its
employees. None of the Company's employees is a party to a collective bargaining
agreement. See "Management--Executive Officers and Directors."
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MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information regarding the executive
officers and directors of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------- --- ---------------------------------------------------------
<S> <C> <C>
Albert J. Henry(1)................... 60 Chairman of the Board, Chief Executive Officer, Director
Carroll "Bo" Allen................... 53 Senior Vice President, Business Development and Marketing
Robert L. Renfroe.................... 64 Senior Vice President, Operations, Managing Director IgX
Limited
Vitaliano A. Cama, DVM............... 38 Vice President, Research and Development
Charles R. Sterling, Ph.D............ 52 Director of Research
Tony Geoghegan....................... 40 Chief Financial Officer
Annette Fernandez, Ph.D.............. 29 Assistant Vice President, Clinical Affairs
Baruch Blumberg, Ph.D................ 73 Director
Raymond A. Dwek...................... 56 Director
Donald H. Picker, Ph.D.(1)(2)(3).....
Director
Edwin Snape, Ph.D.(1)................ 58 Director
Randolph C. Steer, MD, Ph.D.(2)...... 48 Director
</TABLE>
- ------------------
(1) Member of Executive Committee.
(2) Member of Compensation Committee.
(3) Member of Audit Committee.
Albert J. Henry. Mr. Henry has been Chairman of the Board of IgX since its
inception in February 1992 and its Chief Executive Officer since May 1998.
Mr. Henry also served as Chief Executive Officer of the Company from February
1992 until April 1997. Since 1983, Mr. Henry served as Chairman and Chief
Executive Officer of Henry & Co., venture capital firm, and of Henry Venture II
Limited, an Isle of Man venture capital fund and a principal stockholder of IgX.
From 1983 to 1993, Mr. Henry also served as Chairman and Chief Executive Officer
of the Henry Venture Fund Limited, a Cayman Island investment company. From
December, 1994 to December 1996 Mr. Henry was Vice Chairman and a Director of
IVAC Medical Systems, Inc., which designs, manufactures and sells electronic
instrumentation to administer intravenous therapy. From 1977 to 1982, Mr. Henry
was Chief Financial Officer, Director and Chairman, Executive Committee of IMED
Corporation, which invented, designed, manufactured and sold the first
electronic, volumetric infusion pump used to administer intravenous therapy. For
more than 5 years prior thereto, Mr. Henry was Chairman of Henry & Associates,
New York, a Wall Street securities research and venture capital firm and for 5
years was a lending officer at First National City Bank, a predecessor to
Citibank N.A. He holds a Masters in Business Administration, Finance and
Marketing, from Kellogg Graduate School of Management, Northwestern University
and a Bachelor of Science in Civil and Mechanical Engineering from Bradley
University. Mr. Henry is also adjunct professor of finance at Kellogg.
Carroll "Bo" Allen. Mr. Allen has been the Company's Senior Vice
President, Business Development and Marketing since July 1997 and served as a
Director from July 1997 to August 1998. For one year prior to joining IgX,
Mr. Allen was Senior Vice President of Marketing & Business Development in
Kimeragen, a gene repair company. From March 1994 to March 1996 Mr. Allen served
as Vice President of Business Development for CoCensys, Inc. a biopharmaceutical
company. From 1989 to 1994, Mr. Allen served as Product Director at Ciba-Geigy
Pharmaceuticals. Prior to that, from 1978 to 1989, Mr. Allen worked in the
marketing division of Sandoz Pharmaceuticals and Boehringer Ingelheim.
Mr. Allen received his Masters of Science in Biology from University of
Tennessee and a Bachelor of Science in Biology from Middle Tennessee State
University.
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Robert L. Renfroe. Mr. Renfroe has been IgX's Senior Vice President,
Operations since April 1994 and Managing Director of IgX Limited since 1996. He
is responsible for management of the IgX Limited pilot production plant in
Ireland. From 1988 to 1994, Mr. Renfroe was Managing Partner of CIW, Inc., an
engineering, design and capital equipment provider to the electronic and
chemical industries. Mr. Renfroe was General Manager--Ireland and Vice President
of Operations of IMED Corporation, from 1980 to 1987. He holds a Masters of
Business from University of London and a Bachelor of Science in Electrical
Engineering from University of California.
Vitaliano A. Cama, DVM. Dr. Cama has served as Vice President, Research
and Development of the Company since January 1997 and for five years prior
thereto held a similar position in the Company. Dr. Cama is a co-inventor with
Dr. Sterling of the IgX Avian Technology. Since 1988 he has also been a research
associate in the Department of Veterinary Science at the University of Arizona.
During 1988 he was also a member of the Scientific Committee for the IX
Panamerican Congress of Veterinary Sciences. Prior to 1988, from in 1988
Dr. Cama was a research associate at Asociacion Benefica PRISMA and Department
of Microbiology, Universidad Peruana Cayetano Heredia in Lima, Peru. From 1986
to 1987 Dr. Cama was a teaching assistant at the Avian Pathology Laboratory.
From 1983 to 1985 he served as a teaching assistant in the Department of Animal
Production, School of Veterinary Medicine, Universidad Nacional Mayor de San
Marcos, in Lima, Peru. From 1982 to 1987 he was also a supervisor of AVI-VET
poultry farms in Lima, Peru. He holds a Doctor of Veterinary Medicine degree and
a Bachelor of Veterinary Sciences degree from the Universidad Nacional Mayor de
San Marcos in Lima, Peru and completed post-doctoral work at the University of
Arizona from 1988-1991 in immunoparasitology.
Charles R. Sterling, Ph.D. Dr. Sterling has been Director of Research and
Chairman of the Scientific Advisory Board of the Company since 1992.
Dr. Sterling is a co-inventor with Dr. Cama of the Avian Technology. Since 1983,
Dr. Sterling has been a professor at the University of Arizona having served as
the Head, Department of Veterinary Science since 1990. Dr. Sterling was also
Associate Professor, Department of Immunology and Microbiology, and Assistant
Professor, Department of Comparative Medicine, Wayne State University School of
Medicine, Detroit, Michigan from 1974 to 1983. Dr. Sterling's laboratory at
University of Arizona developed the leading diagnostic test for C. parvum and
Giardia. He was a postdoctoral fellow in Pathology, Case Western Reserve
University School of Medicine, Cleveland, Ohio, and received his Ph.D. from
Wayne State University and Bachelor of Science from Syracuse University.
Tony Geoghegan. Mr. Geoghegan has been the Company's Chief Financial
Officer since May 1998 and its Controller since September 1996. From August 1993
to August 1996 Mr. Geoghegan was Group Financial Controller of Aall Trust &
Banking Corporation Limited in the Cayman Islands. For 7 years prior thereto, he
was employed in the audit practice in the Dublin and Grand Cayman offices of
Coopers & Lybrand. Mr. Geoghegan has a Business Studies degree from Trinity
College, Dublin, and is a Fellow of the Institute of Chartered Accountants in
Ireland.
Annette Fernandez, Ph.D. Dr. Fernandez has been Assistant Vice President,
Clinical Affairs of the Company since December 1997. From August 1996 to
November 1997, after completing her education, Dr. Fernandez was the Assistant
Director of Technology Assessment & PharmacoEconomic Services (TAPES) Institute
of Excellence at the Jefferson Health System in Philadelphia, Pennsylvania.
Dr. Fernandez holds a Ph.D. from the University of Utah and a B.Pharm. from
Bombay University.
Baruch Blumberg, Ph.D. Baruch S. Blumberg has been a Director of the
Company since September 1998. Dr. Blumberg has been a Distinguished Scientist at
Fox Chase Cancer Center, Philadelphia since 1989, and a University Professor of
Medicine and Anthropology at the University of Pennsylvania, since 1977. He was
Master of Balliol College, Oxford University, from 1989 to 1994 and Associate
Director for Clinical Research at Fox Chase Cancer Center from 1964 to 1989. He
was awarded the Nobel Prize in 1976 for "discoveries concerning new mechanisms
for the origin and dissemination of infectious diseases" and specifically, for
the discovery of the Hepatitis B virus. He was on the staff of the National
Institutes of Health, Bethesda, MD, from 1957 to 1964. He earned an M.D. degree
from the College of Physicians and Surgeons, Columbia University, New York, in
1951, and a Ph.D. (D. Phil.) in Biochemistry from Oxford University in 1957.
Raymond Allen Dwek, MA, MSc, D.Phil, DSc, C Chem, FRSC, FRS. Professor
Dwek has been a Director of the Company since August 1998. In 1988 he was, as
founding scientist, instrumental in the foundation of Oxford Glycosciences plc
("OGS"), which is a minority shareholder in IgX Oxford. Professor Dwek has
served
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as a non-executive Director of OGS and its predecessor, Oxford Glycosciences
Limited since 1988 and has been a member of its Scientific Advisory Board since
1997. Since 1988, Professor Dwek has been director of the Glycobiology
Institute, Professor of Glycobiology at the University of Oxford and
Professorial Fellow of Exeter College, Oxford, Professor of Glycobiology. Since
1996 Professor Dwek has been the Associate Head of the Department of
Biochemistry at the University of Oxford. In 1988 Professor Dwek was elected a
Fellow of the Royal Society of London and since 1988 he has been a member of the
European Molecular Biology Organisation and is Chairman of its Scientific
Advisory board. Professor Dwek received his Bachelor of Science in Chemistry and
his Master of Science in Physical Chemistry from Manchester University. He
received a Doctorate in Physical Chemistry at Oxford University.
Donald H. Picker, Ph.D. Dr. Picker has been a Director of the Company
since September 1998. Since 1996, Dr. Picker has been President and Chief
Operating Officer of LXR Biotechnology Inc., a drug development company. From
March 1996 until June 1996, Dr. Picker was Chief Operating Officer and Executive
Vice President at Corvas, a biopharmaceutical firm. Prior to that, from 1991
until 1996, he was Vice President of Research and Development at Genta, a
biopharmaceutical firm. From 1983 to 1991 he was Vice President Research and
Development for Johnson Matthey, Inc., where he developed platinum anticancer
drugs, including Paraplatin, a worldwide leading anticancer drug. Dr. Picker
received his Ph.D. in organic chemistry from State University of New York at
Albany, and received his Bachelor of Science degree in chemistry from the
Brooklyn Polytechnic Institute.
Edwin Snape, Ph.D. Dr. Snape has been a Director of the Company as well as
Chairman, Executive Committee for Corporate Development since January 1998.
Since 1995, Dr. Snape has been one of four principals in New England Partners, a
private equity firm headquartered in Boston, and has primary responsibility for
its healthcare investments. Dr. Snape is a partner of New England Partners II,
L.P. an affiliate of New England Partners, which is the general partner of NEGF
II, L.P., a principal stockholder of IgX. Dr. Snape has been a General Partner
of several venture capital partnerships since 1983, and was a Managing General
Partner of Vista III, L.P. from August 1986 to 1998. From March 1997 until
October 1997, Dr. Snape served as one of Vista's designees on the Board of
Directors of Superior Air Parts, a wholesaler of aircraft parts, in which Vista
then owned a majority of the outstanding equity. In July 1997, Superior Air
Parts filed for Bankruptcy protection under Chapter 11, and thereafter
reorganized. Dr. Snape holds a Doctorate of Science and Bachelor of Science
degrees in Metallurgy from Leeds University in England.
Randolph C. Steer, M.D., Ph.D. Dr. Steer has been a Director of the
Company since 1996 and a member of the Scientific Advisory Board since 1993.
Since 1989 Dr. Steer has been an independent regulatory and business development
consultant. He has a broad background in the commercial development of drugs,
biologics and medical devices. From 1985 to 1989 he served as Chairman of ATC
International, a pharmaceutical regulatory, marketing and publishing firm. From
1984 to 1985 he was the Medical Director at Ciba-Geigy Pharmaceuticals and from
1982 to 1984 he held a position in the Research and Development division of
Marion Laboratories. Dr. Steer is a member of the board of directors of Techne
Corporation, a manufacturer of cellular biologic reagents and BioCryst
Pharmaceuticals, a drug design and development company. Dr. Steer received his
MD degree from Mayo Medical School, Ph.D. from the University of Minnesota, and
completed residency and subspecialty training in clinical and chemical pathology
at the University of Minnesota Hospitals.
The Company's Board of Directors is divided into three classes, each of
which will serve a term of three years, with one class being elected each year.
Each of the Company's directors has been elected to serve until his successor
has been elected and duly qualified. The terms of Donald Picker and Raymond Dwek
will expire at the annual meeting of stockholders in 1999; the terms of Baruch
Blumberg and Randolph Steer will expire at the annual meeting of stockholders in
2000; and the terms of Albert J. Henry and Edwin Snape will expire at the annual
meeting of stockholders in 2001. The Restated Certificate provides that
Directors may be removed only for cause by a majority of stockholders. See
"Description of Capital Stock--Anti-Takeover Measures."
The Company has agreed, at the election of the Representative, to nominate
and use its best efforts at any time through June 14, 2003 to elect a designee
of the Representative to the Board of Directors or, at the Representative's
option, as an attendee at the meetings of the Board of Directors and has agreed
to reimburse any such designee for expenses incurred in attending Board
meetings.
Under the Investors' Rights Agreement dated December 24, 1997 by and among
the Company and certain investors, including NEGF II, L.P., a principal
stockholder of the Company, the Company has agreed, for so long
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<PAGE>
as NEGF II, L.P. owns not less than 207,940 shares of Common Stock, to use its
best efforts to cause and maintain the election of Edwin Snape, Ph.D., a partner
of the general partner of NEGF II, L.P. or another designee of NEGF II, L.P., to
the Board. Dr. Snape has served as a Director of the Company pursuant to the
Investors' Rights Agreement since December 1997.
The Company has entered into indemnification agreements with each of the
Directors of the Company, under which the Company has agreed to indemnify and
hold harmless each Director to the fullest extent permitted by law for losses
incurred by reasons of acts or omissions in his capacity as a Director of the
Company.
The Company is the beneficiary of a $3 million "keyman" life insurance
policy on the life of Mr. Albert J. Henry.
BOARD COMMITTEES
The Company has Audit, Compensation and Executive Committees of the Board
of Directors. The Audit Committee consists of Donald H. Picker. The primary
function of the Audit Committee is to assist the Board of Directors in the
discharge of its duties and responsibilities by providing the Board with an
independent review of the financial condition of the Company and of the
Company's financial controls and financial reporting systems. The Audit
Committee also reviews the general scope of the Company's annual audit, the fee
charged by the Company's independent accountants and other matters relating to
internal control systems.
The Compensation Committee of the Board of Directors determines salaries,
incentives and other forms of compensation to be paid to all executive officers
of the Company, including the Chief Executive Officer. The Compensation
Committee's duties include the administration of the Company's Amended and
Restated 1993 Stock Option Plan. The Compensation Committee consists of Randolph
C. Steer, Chairman and Donald H. Picker.
The Executive Committee consists of Albert J. Henry, Chairman, Edwin Snape
and Donald Picker. The primary function of the Executive Committee is to assist
the Board of Directors in evaluating acquisitions of clinical materials and
overseeing general business matters.
SCIENTIFIC ADVISORY BOARD
The Company's Scientific Advisory Board consists of individuals with
expertise in various fields who advise the Company concerning long-term
scientific planning, research and development. Members of the Scientific
Advisory Board also evaluate the Company's research program, recommend personnel
to the Company and advise the Company on technology matters. While the
Scientific Advisory Board has not met collectively, its members have been
available individually to advise the Company on specific scientific and
technical issues. Scientific Advisory Board members are compensated $1,500 per
meeting and reimbursed for out-of-pocket expenses. In addition, each member will
receive nonstatutory stock options to purchase 10,000 shares of common stock
under the 1998 Stock Option Plan which vest over a period of three years. The
Company has entered into confidentiality agreements with the members of the
Scientific Advisory Board.
No member of the Scientific Advisory Board is employed by the Company, and
members may have other commitments to or consulting or advisory contracts with
their employers or other entities that may conflict or compete with their
obligations to the Company. Accordingly, such persons are expected to devote
only a small portion of their time to the Company.
Charles R. Sterling, Ph.D. acts as the Chairman of the Scientific Advisory
Board and Dr. Steer is also a member of the Scientific Advisory Board. The other
members of the Scientific Advisory Board are Dr. Robert Fekety, Dr. Robert
Gilman, Dr. Richard Guerrant, Dr. Gerald Keusch, Dr. Willis Maddrey, Dr. Matilde
Parente, Dr. Julie Parsonnet, Dr. Cynthia Sears, Dr. David N. Taylor, Dr. Reno
Vlahcevic and Dr. Christine Wanke.
Robert Fekety, M.D. Dr. Fekety has been a Professor Emeritus of
Epidemiology at the University of Michigan, School of Public Health since 1995.
Prior to that, from 1985 to 1995, he held the position of Professor of
Epidemiology at the same University. Dr. Fekety received his Medical Degree from
Yale Medical School and a bachelors of Arts from Wesleyan Universtiy.
Robert Gilman, M.D. Dr. Gilman is a Professor in the Department of Health
at John Hopkins University. He is a Director of the NIH-CIDR Program Project and
a Director of Summer Institute of Tropical Medicine and Health. Dr. Gilman has
authored approximately 160 scientific publications in peer reviewed journals and
seven text-books. His area of specialty is tropical disease and hygiene with an
emphasis in C. parvum and cyclospora.
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<PAGE>
Richard L. Guerrant, M.D. Since 1990, Dr. Gerrant has been a Professor of
International Medicine at the University of Virginia and Head of its Division of
Geographic and International Medicine since 1981. Dr. Guerrant has been the
Director of the Office of International Health at the University of Virginia
since 1995. Dr. Guerrant received his Medical Degree from the University of
Virginia School of Medicine, and his Bachelor of Schiece degree from Davidson
College.
Gerald T. Keusch M.D. Dr. Keusch is a Professor at the New England Medical
Center, Division of Infectious Disease. He is also a member of its Editorial
Board. He has authored numerous scientific publications in peer reviewed
journals on the impact of nutrition on immunity with a special emphasis on
C. parvum, Rotavirus and enteric toxins.
Willis Maddrey, M.D. Dr. Maddrey is Executive Vice President for Clinical
Affairs and a Professor of Internal Medicine at The University of Texas
Southwestern. He is also a member of the Michigan Quarterly Review. Dr. Maddrey
is the past President of the American College of Physicians and the American
Association of the Study of Liver Disease, as well as the Vice President of the
American Gastroenterological Association. He is an honorary fellow of the Royal
College of Physicians, London, the Royal College of Physicians, Glasgow and the
Royal Australasian College of Physicians and Surgeons. He is on numerous boards
of directors including Wellspan Health Care System and Southwestern Health Care
Systems. Dr. Maddrey's expertise is in hepatology, gastroenterology and
regulatory compliance.
Matilde Parente, M.D. Dr. Parente is Vice President of the Desert AIDS
Project and a Member of the Board of Councillors of the Riverside County Medical
Association in California. She is a diplomate of the American Board of Pathology
with certification in the specialties of Anatomic and Clinical Pathology and is
a Fellow of the College of American Pathologists.
Julie Parsonnet, M.D.
Cynthia Sears, M.D. Dr. Sears is an Associate Professor of Medicine,
Division of Infectious Diseases and Gastroenterology at Johns Hopkins
University. She has authored approximately 16 scientific publications in peer
reviewed journals with an emphasis on enteric pathogens, specifically
C. parvum, Bacteriolides and E. coli.
David N. Taylor, M.D.
Z. Reno Vlahcevic, M.D. Dr. Vlahcevic has been a Professor of Medicine at
the Virginia Commonwealth University, Medical College since 1974. He is also an
Associate Chairman for Research, Department of Internal Medicine at Virginia
Commonwealth. Dr. Vlahcevic received his Medical Degree from the Medical School
of the University, Zagreb in Croatia.
Christine A. Wanke M.D. Dr. Wanke is an Assistant Professor of Medicine at
Tufts University School of Medicine. From 1981 through 1998, Dr. Wanke was an
Assistant Professor of Medicine at Harvard Medical School. She received her
Medical Doctorate degree from the University of Wisconsin School of Medicine,
and her Bachelor of Science degree in South Asian Studies from University of
Wisconsin.
DIRECTOR COMPENSATION
Directors who are not full-time employees of the Company are reimbursed
their out-of-pocket expenses and receive a fee of $1,500 per board meeting
attended and, upon their initial election and each subsequent reelection to the
Board, options to purchase 20,000 shares of Common Stock at the fair market
value of the Common Stock on the date of the grant. See "Stock Option Plans"
below.
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<PAGE>
The following table sets forth certain compensation paid or earned with
respect to the Company's fiscal year ended December 31, 1997 for each of the
Chief Executive Officers of the Company during 1997 and the other executive
officers of the Company whose salary and bonus for that fiscal year exceeded
$100,000 (together, the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE FOR 1997 FISCAL YEAR
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL NUMBER OF
COMPENSATION SECURITIES
------------------ UNDERLYING
SALARY BONUS OPTION
NAME AND PRINCIPAL POSITION ($) ($) (#)
- ------------------------------------------------------------------ ------- ------- ------------
<S> <C> <C> <C>
Albert J. Henry
Chairman and Chief Executive Officer............................ -- -- --
Craig R. Rennie
Chief Executive Officer, President(1)........................... 177,000 -- 200,000
Carroll W. Allen
Senior Vice President,
Business Development and Research............................... 76,000 52,000 125,000(2)
Robert L. Renfroe
Senior Vice President, Operations
Managing Director IgX Limited................................... 110,000 -- --
</TABLE>
- ------------------
(1) Due to office closure, Mr. Rennie's employment ceased as of May 12, 1998.
Compensation was paid in Pounds Sterling, with amounts stated in US$ at an
exchange rate of US$1 = pounds .6079 on December 31, 1997.
(2) Mr. Allen's stock options were rescinded in January 1998.
The following table sets forth certain information regarding options
granted during the fiscal year ended December 31, 1997 by the Company to the
Named Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
NUMBER OF PERCENT OF RATES OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION FOR OPTION
UNDERLYING GRANTED TO EXERCISE OR TERMS
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION -----------------------
NAME GRANTED FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- ---------------------- ---------- ------------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Craig R. Rennie....... 200,000(1) 61.5% 5.00 4/1/2007 1,932,000 3,669,000
Carroll W. Allen...... 125,000(2) 38.5% 5.00 6/15/2007 1,208,000 2,293,000
</TABLE>
- ------------------
(1) These options terminated in May 1998.
(2) These options were rescinded in January 1998.
The following table sets forth certain information concerning the number
and value of securities underlying exercisable and unexercisable stock options
held by the Named Executive Officers as of December 31, 1997:
1997 FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL YEAR IN-THE-MONEY OPTIONS AT
END(#) FISCAL YEAR END($)(1)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Craig R. Rennie(2)............................... 50,000 150,000 200,000 600,000
Carroll W. Allen(3).............................. 37,500 112,500 175,000 525,000
Robert L. Renfroe................................ 20,924 62,772 167,000 502,000
</TABLE>
(Footnotes on next page)
48
<PAGE>
(Footnotes from previous page)
- ------------------
(1) Based on the assumed $9.00 per share initial public offering price of the
Common Stock offered hereby minus the applicable exercise price.
(2) Mr. Rennie's options terminated in September 1998.
(3) Mr. Allen's options were rescinded in January 1998.
------------------------
In January 1998, the Company granted a five-year-stock option to
Mr. Renfroe to purchase 50,000 shares of Common Stock at $1.00 per share. The
options become first exercisable at the rate 25% of the underlying shares
subject to the option, commencing January 1999.
EMPLOYMENT AGREEMENTS
Albert J. Henry serves as Chief Executive Officer of the Company without
compensation and is subject to an agreement containing certain non-competition
and confidentiality provisions.
Robert L. Renfroe is employed by IgX Limited ("Limited") under an
employment agreement that commenced December 1, 1996 and expires December 31,
1998 (the "Renfroe Employment Agreement"). Under the Renfroe Employment
Agreement, Mr. Renfroe receives an annual base salary of $110,000 and benefits
generally offered to Limited's employees. The Renfroe Employment Agreement
provides that the employment of Mr. Renfroe may be terminated by Limited with or
without "Cause." "Cause" is defined as a determination by a majority of the
Board of Directors of Limited that Mr. Renfroe has engaged in conduct not
appropriate for an employee of Limited. If Mr. Renfroe's employment is
terminated without cause, Limited must provide him with at least 30 days' prior
written notice. If the Phase III clinical trial for IGX-CPL3 is terminated by
Limited during the Pilot Plant Period or Manufacturing Plant Period (as such
terms are defined in the Renfroe Employment Agreement), Limited must pay
Mr. Renfroe a severance payment equal to twelve months of his annual base
salary, plus all applicable benefits. The agreement also contains a provision
prohibiting Mr. Renfroe from competing with Limited for three years from the
termination of employment. Pursuant to the Renfroe Employment Agreement,
Mr. Renfroe holds options to purchase 83,696 shares of Common Stock at an
exercise price of $1.00 per share. These options (which were originally issued
under a Limited stock option plan and subsequently assumed by the Company) are
exercisable at the rate of 25% per year over a four-year period, commencing
October 1, 1997, one year following the date of grant.
Carroll "Bo" Allen is employed by the Company under an employment agreement
originally entered into with Limited and amended and assumed by the Company that
commenced June 1, 1997 and expires May 31, 1999 (the "Allen Employment
Agreement"). Under the Allen Employment Agreement, Mr. Allen receives an annual
base salary of $160,000, a cash incentive bonus (up to fifty percent of base
salary for each twelve-month period), a signing bonus of $40,000 available at
the rate of $10,000 per year and benefits generally offered to the Company's
employees.
The Allen Employment Agreement provides that the employment of Mr. Allen
may be terminated by IgX with or without "Cause". "Cause" is defined as
(i) Mr. Allen's conviction of a felony; (ii) any neglect or breach of duty by
Mr. Allen, or any failure by Mr. Allen to perform to the reasonable satisfaction
of the Board, such duties as may be delegated to Mr. Allen from time to time;
(iii) Mr. Allen otherwise materially breaches any provision of the Allen
Employment Agreement; or (iv) a determination by a majority of the Board acting
in good faith that Mr. Allen has engaged in conduct not appropriate of an
employee. If Mr. Allen's employment is terminated without Cause and if he
executes a written release, the Company must pay Mr. Allen liquidated damages in
an amount equal to the amount of Mr. Allen's base salary for the remainder of
the initial two year employment term. In addition, if the Company terminates
Mr. Allen's employment without Cause, IgX must provide him with at least
60 days' prior written notice. If Mr. Allen's employment is terminated due to
his death and/or permanent disability, the Company must pay to Mr. Allen's
executor or representative an amount equal to Mr. Allen's base salary accrued
through the date of termination, plus a pro rata share of any annual bonus to
which Mr. Allen would otherwise be entitled for the year in which death or
permanent disability occurs. The agreement also contains a provision prohibiting
Mr. Allen from competing without written release with IgX during his employment
with the Company.
Craig R. Rennie was employed by IgX Limited under an employment agreement
that commenced April 1, 1997 and would expire March 31, 1999 (the "Rennie
Employment Agreement"). Under the Rennie Employment
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<PAGE>
Agreement, Mr. Rennie would receive an annual base salary of $230,301
(pounds 140,000), a cash incentive bonus (up to fifty percent of base salary for
each twelve-month period), and benefits generally offered to Limited's
employees. In addition, pursuant to the Rennie Employment Agreement, Mr. Rennie
was issued options to purchase 200,000 shares of Limited's Common Stock at an
exercise price of $5.00 per share. These options were issued under the Limited's
1996 Stock Option Plan and are exercisable at the rate of 25% per year over a
four-year period, commencing April 1, 1997.
The Rennie Employment Agreement provides that the employment of Mr. Rennie
may be terminated by Limited with or without "Cause". "Cause" is defined as
(i) Mr. Rennie's conviction of a felony; (ii) any neglect or breach of duty by
Mr. Rennie, or any failure by Mr. Rennie to perform to the reasonable
satisfaction of the Board, such duties as may be delegated to Mr. Rennie from
time to time; (iii) Mr. Rennie otherwise materially breaches any provision of
the Rennie Employment Agreement; or (iv) a determination by a majority of the
Board acting in good faith, that Mr. Rennie has engaged in conduct not
appropriate of an employee. If Mr. Rennie's employment is terminated without
Cause and if he executes a written release, the Company must pay Mr. Rennie
liquidated damages in an amount equal to the amount of Mr. Rennie's base salary
for the remainder of the initial two year employment term. In addition, if
Limited terminates Mr. Rennie's employment without Cause, Limited must provide
him with at least one year's prior written notice after the initial employment
term of two years has occurred. If Mr. Rennie's employment is terminated due to
his death and/or permanent disability, the Company must pay to Mr. Rennie's
executor or representative an amount equal to Mr. Rennie's base salary accrued
through the date of termination, plus a pro rata share of any annual bonus to
which Mr. Rennie would otherwise be entitled for the year in which death or
permanent disability occurs. The Rennie Employment Agreement also contains a
provision prohibiting Mr. Rennie from competing with Limited during the period
of the Rennie Employment Agreement.
Due to an office closure, Mr. Rennie's employment with Limited ceased
effective May 12, 1998. According to a termination agreement between Limited and
Craig Rennie entered into in September 1998, Mr. Rennie received a termination
payment in the amount of approximately $141,142 (British pounds 85,800) and all
of Mr. Rennie's outstanding options were cancelled. The termination letter
requires Mr. Rennie to maintain as confidential, all information he acquired
through his employment with Limited. By its terms, the termination letter is a
full and final settlement of any claim which Mr. Rennie may have arising out of
his employment with Limited.
STOCK OPTION PLANS
1993 Stock Option Plan. The Company's initial Stock Option Plan was
adopted in 1993 and subsequently amended (as amended, the "1993 Stock Option
Plan"). The 1993 Stock Option Plan was designed to attract and retain key
employees of, consultants of, and directors to the Company and to enable them to
participate in the long-term growth of the Company. The 1993 Stock Option Plan
provided for the grant of stock options (incentive and nonstatutory). As of
September 25, 1998, options to purchase an aggregate of 825,857 shares of Common
Stock had been granted under the 1993 Stock Option Plan, of which options to
purchase 159,589 shares were exercisable as of such date. Options to purchase
360,000 shares had been exercised prior to that date. In September, 1998, in
light of the Board's adoption of the 1998 Stock Option Plan, the Compensation
Committee determined that no further grants would be made under the 1993 Stock
Option Plan.
1998 Stock Option Plan. The Company's 1998 Stock Option Plan was adopted
in September 1998 (the "1998 Stock Option Plan"). The 1998 Stock Option Plan is
designed to attract and retain key employees of, consultants of, and directors
to the Company and to enable them to participate in the long-term growth of the
Company. The 1998 Stock Option Plan provides for the grant of stock options
(incentive and nonstatutory) for the purchase of up to an aggregate of 600,000
shares of Common Stock, subject to adjustment for stock-splits and similar
capital changes. Awards under the 1998 Stock Option Plan can be granted to
officers, employees, non-employee directors, consultants and other individuals
as determined by the committee of the Board of Directors which administers the
1998 Stock Option Plan, each of whose members is a "non-employee director"
within the meaning of Rule 16b-3 under the Securities Act. The Compensation
Committee of the Board of Directors administers the 1998 Stock Option Plan. The
Compensation Committee selects the participants and establishes the terms and
conditions of each option granted under the 1998 Stock Option Plan, including
the exercise price, the number of shares subject to options and the time at
which such options become exercisable. The exercise price of all "incentive
stock options" within the meaning of Section 422 of the Code granted under the
Stock Option Plan must be at least equal to 100% of the fair market value of the
shares underlying the option on the
50
<PAGE>
date of grant and the exercise price of any nonstatutory option must be at least
85% of the fair market value of the shares underlying the option on the date of
grant. The term of any incentive stock option granted under the 1998 Stock
Option Plan may not exceed ten years. As of September 28, 1998, no options to
purchase shares of Common Stock had been granted under the 1998 Stock Option
Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to the establishment of the Compensation Committee in September 1998,
the Board of Directors of the Company was responsible for determining salaries,
incentives and other forms of compensation for directors, officers and other
employees of the Company. See "Management--Stock Option Plans." Albert J. Henry
and Carroll W. Allen, the Chairman of the Board and Chief Executive Officer of
the Company and the Senior Vice President, Business Development and Marketing,
respectively, served as Board members during 1997 and participated in
deliberations of the Board concerning executive officer compensation.
CERTAIN TRANSACTIONS
IgX Corp. (the "Company") was organized by Albert J. Henry, Chairman and
Chief Executive Officer of the Company, in February 1992 to conduct research and
development of drug candidates for the treatment of various infections.
To fund the Company's operations, Henry Venture II Limited ("Henry
Venture"), a venture capital fund of which Mr. Henry is the Chairman and Chief
Executive Officer, purchased 350,030 shares of Common Stock for an aggregate
purchase price of approximately $350 (or $0.001 per share) in July 1992. In
August 1992 Henry Venture and another principal shareholder of the Company, IX
Limited, purchased 350,000 and 20,000 shares, respectively, of Series A
Preferred Stock for an aggregate purchase price of $370,000 (or $1.00 per
share). During September 1993, the Board of Directors of the Company effected a
10-for-1 stock split of the Series A Preferred Stock. From the period September
1992 through July 1996, the Company and IgX Limited obtained unsecured loans
from Henry Venture an existing stockholder, totalling $4,023,000, which bore
interest at 9% per annum, in the form of promissory notes (the "Original
Notes"). During August 1996, Henry Venture was issued 2,086,096 shares of Series
B mandatory redeemable convertible preferred stock (the "Series B Redeemable")
and 2,086,096 shares of Series C mandatory redeemable convertible preferred
stock (the "Series C Redeemable") of IgX Limited in exchange for the
cancellation of the Original Notes along with accrued and unpaid interest
thereupon of $149,192. Further, in August 1996, in consideration of the
cancellation of Series B Redeemable and Series C Redeemable, the Company issued
one additional share of Series A Preferred of IgX Limited to Henry Venture.
In September 1994, IX Limited exercised options to purchase 360,000 shares
of Common Stock at $.01 per share under a stock option granted in 1993.
In September 1995, the Company consummated a reorganization, under which
the Company became a wholly owned subsidiary of a newly organized corporation,
IgX Limited, formed under the laws of the Republic of Ireland. The
reorganization was effected to attempt to take advantage of certain Irish tax
benefits and government grants relating to IgX Limited's pilot production
facility in Ireland. In connection with this reorganization, all of the
outstanding capital stock (and securities convertible or exercisable into such
capital stock) of the Company was exchanged for shares of IgX Limited on a share
for share basis.
In addition, from November 1996 to December 1997, Henry Venture loaned IgX
Limited an aggregate principal amount of $5,328,546 with interest accrued
thereon at 9% per annum (the "1996/1997 Henry Venture Notes"). The first
promissory note in the amount of $3,544,312 at December 31, 1997, which includes
$544,312 of accrued and unpaid interest through December 31, 1997, bears
interest at a rate of 9% per annum and is payable in full on December 31, 2001.
The second promissory note issued was in the amount of $328,546, representing
the remaining balance, also bears interest at 9% per annum, and is payable in
full on demand.
In December 1997, as a condition to another venture capital financing, a
further reorganization was effected by which IgX Limited became the wholly owned
subsidiary of the Company, again with all of the outstanding capital stock (and
securities convertible or exercisable into such capital stock) of IgX Limited
being exchanged for shares of the Company on a share for share basis and with
the Company assuming all outstanding indebtedness due to Henry Venture from IgX
Limited.
Further, in December 1997, the Company sold an aggregate of 748,582 shares
of Series B Preferred Stock for $4,799,982 (or $6.4121 per share), to six
investors, including Henry Venture and NEGF II, L.P., principal
51
<PAGE>
stockholders of the Company, which purchased 311,910 and 155,955 shares,
respectively. To effect payment for its shares of Series B Preferred Stock,
Henry Venture exchanged indebtedness of approximately $1,999,998 under the
1996/1997 Henry Venture Notes, and concurrently restructured the remaining
indebtedness into two promissory notes: one in the principal amount of
$3,544,311 (including interest) due December 31, 2001 with interest accruing
from the date thereof at 9% per annum, and the other note in the principal
amount of $328,548 payable on demand, together with interest accruing thereon at
9% per annum.
In February 1998, the Company sold an additional 155,955 shares of
Series B Preferred Stock for $999,999 to NEGF II, L.P., a principal stockholder
of the Company.
In May 1998, NEGF II, L.P. loaned the Company the principal amount of
$1,000,000, due May 6, 2008, with interest accruing thereon at 9% per annum. The
indebtedness is subject to prepayment upon the occurrence of certain conditions,
including the consummation of this Offering. In connection with this financing,
the Company issued NEGF II, L.P. warrants to purchase 370,000 shares of Common
Stock of the Company at an exercise price of $0.01 per share. The warrant was
exercised on September 25, 1998.
See "Management--Stock Option Plans" for options granted to executive
officers and directors.
On September 25, 1998, Henry Venture converted the 1996/1997 Henry Venture
Notes (aggregating $4,092,815 of principal and accrued interest) into
584,688 shares of Common Stock at $7.00 per share. Concurrently NEGF II, L.P.
converted the $1,000,000 promissory note issued to it by the Company in May 1998
(aggregating $1,035,014 of principal and accrued interest) into 147,859 shares
of Common Stock also at $7.00 per share.
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<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth as of September 28, 1998, giving pro forma
effect to the conversion of all outstanding preferred stock into 4,854,066
shares of Common Stock to be effective upon the closing of this Offering,
information with respect to the beneficial ownership of the Common Stock before
this Offering after giving effect to the conversion of Preferred Stock and as
adjusted to reflect the sale of the Common Stock offered hereby by (i) each
person known by the Company to own beneficially five percent or more of the
outstanding Common Stock, (ii) each director of the Company, (iii) each person
named in the Summary Compensation Table under "Management--Executive
Compensation," and (iv) all executive officers and directors as a group,
together with their respective percentage ownership of such shares:
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT BENEFICIALLY OWNED
BENEFICIALLY ------------------------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED(1) BEFORE OFFERING AFTER OFFERING
- -------------------------------------------------------- ---------------- ----------------- ---------------------
<S> <C> <C> <C>
Henry Venture II Limited ............................... 4,746,629 71.2% 52.9%
100 Market Street
Douglas, IM99 1TT
Isle of Man
NEGF II, L.P. .......................................... 829,769 11.8% 8.9%
One Boston Place
Suite 2100
Boston, MA 02108
IX Limited ............................................. 642,684 9.5% 7.1%
Les Nicolles House
Les Nicolles
St. Martin, Guernsey
Channel Islands GY4 6UQ
Baruch Blumberg, Ph.D................................... -- -- --
Raymond A. Dwek, Ph.D................................... -- -- --
Donald H. Picker, Ph.D.................................. -- -- --
Albert J. Henry(2)...................................... -- -- --
Edwin Snape, Ph.D.(3)................................... -- -- --
Randolph C. Steer, M.D., Ph.D........................... 37,500 * *
Robert Renfroe.......................................... 41,848 * *
Carroll "Bo" Allen...................................... -- -- --
Craig S. Rennie (4)..................................... -- -- --
All executive officers and directors as as a group
(12 persons).......................................... 79,348 1.2% *
</TABLE>
- ------------------
* less than 1%
(1) A person is deemed to be the beneficial owner of Common Stock that can be
acquired within 60 days from September 28, 1998 upon the exercise of
options, and that person's options are assumed to have been exercised (and
the underlying shares of Common Stock outstanding) in determining such
person's percentage ownership. Accordingly, the following shares issuable
upon exercise of options have been included in the shares beneficially owned
by the following persons: IX Limited--82,684 shares; Randolph Steer--37,500
shares; and Robert Renfroe--41,848 shares.
(2) Does not include shares held by Henry Venture II Limited, for which
Mr. Henry serves as Chairman and Chief Executive Officer. Mr. Henry
disclaims beneficial ownership of such shares.
(3) Does not include shares held by NEGF II, L.P. Dr. Snape is a partner of New
England Partners II, L.P., which is the general partner of NEGF II, L.P.
Dr. Snape disclaims beneficial ownership of such shares.
(4) Due to an office closure, Mr. Rennie's employment ceased on May 12, 1998.
53
<PAGE>
DESCRIPTION OF CAPITAL STOCK
After giving pro forma effect to the conversion of the outstanding
preferred stock into 4,854,066 shares of Common Stock upon consummation of this
Offering, the authorized capital stock of the Company consists of 20,000,000
shares of Common Stock, $0.001 par value per share, of which 6,666,643 shares
were issued and outstanding and held by nine holders of record as of September
28, 1998 and 5,000,000 shares of Preferred Stock, $0.001 par value per share,
none of which were outstanding as of such date. Immediately following the
closing of this Offering, the Company will file an amendment to the Company's
Restated Certificate eliminating the currently authorized Series A and Series B
Preferred Stock.
The following summary of certain provisions of the Common Stock and
Preferred Stock does not purport to be complete and is subject to, and qualified
in its entirety by, (i) the provisions of the Company's Restated Certificate and
By-laws (each as included as exhibits to the Registration Statement) and
(ii) the provisions of applicable law.
COMMON STOCK
Holders of Common Stock are entitled to one vote per share on matters to be
voted upon by the stockholders. There are no cumulative voting rights. Holders
of Common Stock are entitled to receive dividends if, as and when declared by
the Board of Directors out of funds legally available therefor. See "Dividend
Policy." Upon the liquidation, dissolution or winding up of the Company, holders
of Common Stock are entitled to share ratably in the assets of the Company
available for distribution to its stockholders, subject to the preferential
rights of any then outstanding shares of Preferred Stock. No shares of Preferred
Stock will be outstanding immediately following the closing of this Offering.
All the outstanding shares of Common Stock are, and the Common Stock to be
outstanding upon completion of this Offering will be, fully paid, validly
issued, and nonassessable.
PREFERRED STOCK
The Company's Board of Directors will have the authority to issue up to
5,000,000 shares of Preferred Stock in one or more series and to fix the
relative rights, preferences, privileges, qualifications, limitations and
restrictions thereof, including dividend rights, dividend rates, conversion
rights, voting rights, terms of redemption, redemption prices, liquidation
preferences, sinking fund terms and the number of shares constituting any series
or the designation of such series, without further vote or action by the
stockholders. The Company believes that the power to issue Preferred Stock will
provide flexibility in connection with possible corporate transactions. The
issuance of Preferred Stock could adversely affect the voting power of the
holders of Common Stock and restrict their rights to receive payment upon
liquidation and could have the effect of delaying, deferring or preventing a
change-in-control of the Company. See "Description of Capital
Stock--Anti-Takeover Measures." The Company has no present plans to issue any
shares of Preferred Stock.
ANTI-TAKEOVER MEASURES
In addition to the Board of Directors' ability to issue shares of Preferred
Stock, the Restated Certificate and the By-laws contain several other provisions
that are commonly considered to discourage unsolicited takeover bids. The
Restated Certificate includes a provision classifying the Board of Directors
into three classes with staggered three-year terms. A Director may be removed
only for cause by the holders of a majority of the outstanding shares of capital
stock entitled to vote, voting together as a single class. For purposes of the
Restated Certificate, "cause" means an act or acts by an individual involving
the commission of a felony, willful misconduct, fraud, embezzlement, dishonesty,
breach of fiduciary duty or violation or breach of a written employment or
consulting agreement or of the Company's policy as described in a Company manual
or handbook, any of which acts cause the Company material damage. Any amendment
to the Restated Certificate relating to Board composition requires the
affirmative vote of the holders of at least two-thirds (2/3) of the combined
voting power of the then outstanding shares of stock entitled to vote generally
in the election of directors, voting together as a single class. The By-laws
include a provision prohibiting stockholder action by written consent except as
otherwise provided by law. Under the Restated Certificate and By-laws, the Board
of Directors may enlarge the size of the Board and fill any vacancies on the
Board.
54
<PAGE>
Upon the consummation of the Offering, the Company will be subject to the
provisions of Section 203 of the Delaware General Corporation Law, a law
regulating corporate takeovers (the "Anti-Takeover Law"). In certain
circumstances, the Anti-Takeover Law prevents certain Delaware corporations,
including those whose securities are listed on the Nasdaq National Market, from
engaging in a "business combination" (which includes a merger or sale of more
than ten percent of the corporation's assets) with an "interested stockholder"
(a stockholder who owns 15% or more of the corporation's outstanding voting
stock) for three years following the date on which such stockholder became an
"interested stockholder" subject to certain exceptions, unless the transaction
is approved by the board of directors and authorized by the affirmative vote of
at least 66 2/3% of the outstanding voting stock of the corporation at the time
the transaction commenced (excluding shares held by the interested stockholder).
The statutory ban does not apply if, upon consummation of the transaction in
which any person becomes an interested stockholder, the interested stockholder
owns at least 85% of the outstanding voting stock of the corporation (excluding
shares held by persons who are both directors and officers or by certain
employee stock plans). A Delaware corporation subject to the Anti-Takeover Law
may "opt out" of the Anti-Takeover Law with an express provision either in its
certificate of incorporation or by-laws resulting from a stockholders' amendment
approved by at least a majority of the outstanding voting shares; such an
amendment is effective following expiration of twelve months from adoption. The
Company has not "opted out" of the Anti-Takeover Law.
The foregoing provisions of the Restated Certificate and By-laws and
Delaware law could have the effect of discouraging others from attempting
hostile takeovers of the Company and, as a consequence, they may also inhibit
temporary fluctuations in the market price of the Common Stock that might result
from actual or rumored hostile takeover attempts. Such provisions may also have
the effect of preventing changes in the management of the Company. It is
possible that such provisions could make it more difficult to accomplish
transactions which stockholders may otherwise deem to be in their best
interests.
TRANSFER AGENT
The transfer agent and registrar for the Common Stock is Continental Stock
Transfer and Trust Company, 26 Broadway, New York, New York 10004.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this Offering, the Company will have 8,966,643 shares of
Common Stock outstanding. Of these shares, the 2,300,000 shares sold in this
Offering will be freely transferable, without restriction or further
registration under the Securities Act, except for shares purchased by
"affiliates" of the Company as that term is defined in Rule 144 under the
Securities Act.
The remaining 6,666,643 outstanding shares of Common Stock are owned by
existing stockholders and are deemed "restricted securities" under Rule 144, in
that such shares were issued and sold by the Company in private transactions not
involving a public offering. These may not be resold, except pursuant to an
effective registration statement or an applicable exemption from registration.
All of the stockholders of the Company have agreed to enter into nine-month
lock-up agreements described below. At the end of such nine-month period, all
such shares of Common Stock will be eligible for sale under Rule 144.
In general, under Rule 144, as currently in effect, a person (or persons
whose shares are aggregated), including an affiliate of the Company, who has
beneficially owned restricted securities for at least one year from the later of
the date such restricted securities were acquired from the Company and (if
applicable) the date they were acquired from an affiliate, is entitled to sell,
within any three-month period, a number of shares that does not exceed the
greater of 1% of the then outstanding shares of Common Stock or the average
weekly trading volume in the public market during the four calendar weeks
preceding such sale. Sales under Rule 144 are also subject to certain
requirements as to the manner and notice of such sales and the availability of
current public information concerning the Company. Affiliates may sell shares
not constituting restricted securities in accordance with the foregoing volume
limitations and other requirements but without regard to the one-year holding
period.
55
<PAGE>
All of the Company's stockholders have agreed that they will not, without
the prior written consent of the Representatives, offer to sell, sell, transfer,
assign, hypothecate, pledge or otherwise dispose of any securities issued by the
Company, including without limitation any options, warrants or other securities
convertible into or exercisable or exchangeable for shares of Common Stock
during the nine-month period following the effective date of the Registration
Statement. In addition, all of the Company's shareholders have waived their
right to require the Company to file with the Commission a registration
statement under the Securities Act to register any of the foregoing securities
for one year from the effective date of the Registration Statement.
The Company plans to file a registration statement on Form S-8 under the
Securities Act to register approximately 1,425,857 shares of Common Stock
issuable under the Stock Option Plans, nine months after the date of this
Prospectus. Upon registration, such shares will be eligible for immediate resale
upon exercise, subject, in the case of affiliates, to the volume, manner of sale
and notice requirements of Rule 144.
No prediction can be made as to the effect, if any, that market sales of
additional shares or the availability of such additional shares for sale will
have on the market price of the Common Stock. Nevertheless, sales of substantial
amounts of Common Stock in the public market, or the perception that such sales
may occur, could have an adverse impact on the market price for the Common Stock
or impair the Company's ability to raise additional capital through an offering
of its equity securities. See "Risk Factors--Shares Eligible for Future Sale;
Registration Rights" and "--Immediate and Substantial Dilution."
REGISTRATION RIGHTS
The holders of all shares of Common Stock (the "Registrable Shares") are
entitled to certain rights with respect to registration of the Registrable
Shares under the Securities Act. If the Company proposes to register any of its
securities under the Securities Act, either for its own account or for the
account of other security holders, such holders are entitled to notice of such
registration and are entitled to exercise their "piggyback rights" to include
such Registrable Shares in the registration. The rights are subject to certain
conditions and limitations, among them, the right of the underwriters of a
registered offering to limit the number of shares included in such registration.
Commencing six months after the date of this Prospectus, holders of Registrable
Shares benefiting from these rights may also exercise "demand rights" and
require the Company to file at its expense a registration statement under the
Securities Act with respect to their shares of Common Stock and, subject to
certain conditions and limitations, the Company is required to use its best
efforts to effect such registration. Furthermore, such holders may, subject to
certain conditions and limitations, require the Company to file additional
registration statements on Form S-3 with respect to such Registrable Shares. The
holders of Registrable Shares have waived their right to exercise piggyback
rights for a period of nine months from the date of this Prospectus and demand
rights for a period of twelve months from the date of this Prospectus.
56
<PAGE>
UNDERWRITING
The Underwriters named below (the "Underwriters"), for whom Josephthal &
Co. Inc. is acting as the Representative, have severally agreed, subject to the
terms and conditions of the Underwriting Agreement (the "Underwriting
Agreement"), to purchase from the Company and the Company has agreed to sell to
the Underwriters on a firm commitment basis the respective number of shares of
Common Stock set forth below opposite their names:
<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF SHARES
- ------------------------------------------------------------------------------------------------ ----------------
<S> <C>
Josephthal & Co. Inc............................................................................
Total........................................................................................... 2,300,000
</TABLE>
The Underwriters are committed to purchase all of the shares of Common
Stock offered hereby if any of such shares are purchased. The Underwriting
Agreement provides that the obligations of the several Underwriters are subject
to the conditions precedent specified therein.
The Company has been advised by the Representative that the Underwriters
initially propose to offer the shares of Common Stock to the public at the
initial public offering price set forth on the cover page of this Prospectus and
to certain dealers at such price less concessions of not in excess of $ per
share of Common Stock. Such dealers may re-allow a concession not in excess of
$ per share of Common Stock to other dealers. After the commencement of the
Offering, the public offering price, concession and reallowance may be changed.
The Representative has advised the Company that it does not anticipate
sales to discretionary accounts by the Underwriters to exceed five percent of
the total number of shares of Common Stock offered hereby.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, or to contribute to
payments that the Underwriters may be required to make in connection with this
Offering. The Company has also agreed to pay to the Representative an expense
allowance on a non-accountable basis equal to one percent (1%) of the gross
proceeds of this Offering and a financial advisor's fee equal to one percent
(1%) of the gross proceeds of this Offering, none of which has been paid to
date.
The Underwriters have been granted an option by the Company, exercisable
within 45 days of the date of this Prospectus, to purchase up to an additional
345,000 shares of Common Stock at the initial public offering price per share of
Common Stock offered hereby, less underwriting discounts, the non-accountable
expense allowance and the financial advisor's fee. Such option may be exercised
only for the purpose of covering over-allotments, if any, incurred in the sale
of the shares offered hereby. To the extent such option is exercised, in whole
or in part, each Underwriter will have a firm commitment, subject to certain
conditions, to purchase the number of the additional shares of Common Stock
proportionate to its initial commitment.
In connection with this Offering, the Company has agreed to sell to the
Representative, for nominal consideration, the Representative's Warrants to
purchase from the Company 230,000 shares of Common Stock. The Representative's
Warrants are initially exercisable for shares of Common Stock at a price per
share equal to 120% of the initial public offering price per share of Common
Stock for a period of four (4) years commencing one (1) year from the date of
this Prospectus and are restricted from sale, transfer, assignment, or
hypothecation for a period of twelve (12) months from the date hereof, except to
officers of the Representative. The
57
<PAGE>
Representative's Warrants also provide for adjustment in the number of shares of
Common Stock issuable upon the exercise thereof as a result of certain
subdivisions or combinations of the Common Stock. The Representative's Warrants
grant to the holders thereof certain rights of registration for the securities
issuable upon exercise of the Representative's Warrants. See "Description of
Capital Stock--Registration Rights."
The foregoing is a summary of the principal terms of the agreements
described above and does not purport to be complete. Reference is made to a copy
of each such agreement which are filed as exhibits to the Registration
Statement. See "Additional Information."
The Company has also agreed, for a period of five years from the date of
this Prospectus, if so requested by the Representative, to nominate and use its
best efforts to elect a designee of the Representative as a director of the
Company or, at the Representative's option, as an attendee at the meetings of
the Company's Board of Directors and such designee will be reimbursed his
expenses for attendance at meetings of the Board of Directors. The
Representative has not yet exercised its right to designate such a person.
All of the Company's officers, directors and existing stockholders have
agreed not to, directly or indirectly, offer to sell, sell, transfer, assign,
hypothecate, pledge or otherwise dispose of any securities of the Company owned
by them for a period of nine months following the date of this Prospectus,
without the prior written consent of the Representative. An appropriate legend
shall be marked on the face of the certificates representing all of such
securities.
Prior to this Offering, there has been no public market for the Common
Stock. Consequently, the initial public offering price of the Common Stock will
be determined by negotiations between the Company and the Representative. Among
the factors to be considered in determining the offering price will be, in
addition to prevailing market conditions, the history of and prospects for the
industry in which the Company competes, an assessment of the Company's
management, the prospects of the Company, its capital structure and such other
factors that are deemed relevant. The initial offering price does not
necessarily bear any relationship to the assets, net worth or other established
criteria of value.
In connection with this Offering, certain Underwriters and selling group
members and their respective affiliates may engage in transactions that
stabilize, maintain or otherwise affect the market price of the Common Stock.
Such transactions may include stabilization transactions effected in accordance
with Rule 104 of Regulation M, pursuant to which such persons may bid for or
purchase Common Stock for the purpose of stabilizing its market price. The
Underwriters also may create a short position for the account of the
Underwriters by selling more Common Stock in connection with the Offering than
they are committed to purchase from the Company, and in such case may purchase
Common Stock in the open market following completion of the Offering to cover
all or a portion of such short position. The Underwriters may also cover all or
a portion of such short position, up to 345,000 shares of Common Stock, by
exercising the Over-Allotment Option. In addition, the Representative may impose
"penalty bids" under contractual arrangements with the Underwriters, whereby it
may reclaim from an Underwriter (or dealer participating in the Offering) for
the account of other Underwriters, the selling concession with respect to Common
Stock that is distributed in the Offering but subsequently purchased for the
account of the Underwriters in the open market. Any of the transactions
described in this paragraph may result in the maintenance of the price of the
Common Stock at a level above that which might otherwise prevail in the open
market. None of the transactions described in this paragraph is required, and,
if they are undertaken, they may be discontinued at any time.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Epstein Becker & Green, P.C., New York, New York.
Certain legal matters will be passed upon for the Underwriters by Sonnenschein
Nath & Rosenthal, New York, New York.
58
<PAGE>
EXPERTS
The financial statements as of December 31, 1996 and 1997 and for each of
the three years in the period ended December 31, 1997 included in this
Prospectus have been so included in reliance on the report (which contains an
explanatory paragraph relating to the Company's ability to continue as a going
concern as described in Note 2 to the financial statements) of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
ADDITIONAL INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-1 (the "Registration Statement") under the Securities Act, with respect to the
shares of Common Stock offered hereby. This Prospectus does not contain all of
the information set forth in the Registration Statement and the exhibits and
schedules thereto. For further information with respect to the Company and the
Common Stock offered hereby, reference is made to the Registration Statement and
the exhibits and schedules thereto. All statements made in this Prospectus
regarding the contents of any contract, agreement or other document filed as an
exhibit to the Registration Statement are qualified by reference to the copy of
such document filed as an exhibit to the Registration Statement. A copy of the
Registration Statement may be inspected without charge at the offices of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, and copies of all or
any part thereof may be obtained from the Commission upon the payment of certain
fees prescribed by the Commission. Such reports and other information can also
be reviewed through the Commission's Web site (http://www.sec.gov).
Statements made in this Prospectus as to the contents of any contract,
agreement or other document referred to are not necessarily complete. With
respect to each such contract, agreement or other document filed as an exhibit
to the Registration Statement, reference is made to the exhibit for a more
complete description of the matter involved, and each such statement shall be
deemed qualified in its entirety by such reference.
The Company intends to distribute to its stockholders annual reports
containing financial statements audited by its independent auditors and will
make available copies of quarterly reports for the first three quarters of each
fiscal year containing unaudited financial information.
59
<PAGE>
IgX CORP.
(A DEVELOPMENT STAGE COMPANY)
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----------
<S> <C>
Report of Independent Accountants.................................................................. F-2
Consolidated Balance Sheet......................................................................... F-3
Consolidated Statement of Operations............................................................... F-4
Consolidated Statement of Capital Deficiency....................................................... F-5
Consolidated Statement............................................................................. F-6
Notes to Consolidated Financial Statements......................................................... F-7 - F-17
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
IgX Corp.
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of operations, of capital deficiency and of cash flows
present fairly, in all material respects, the financial position of IgX Corp.
and subsidiary (the "Company") (a development stage company) at December 31,
1996 and 1997, and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 1997 and for the period from
inception (February 11, 1992) through December 31, 1997, in conformity with
generally accepted accounting principles. 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 of these statements in accordance with generally accepted auditing
standards which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company is a development stage enterprise and has
suffered recurring losses and net cash outflows from operations since inception
that raise substantial doubt about its ability to continue as a going concern.
As such, the Company is dependent upon capital infusions from existing and/or
new investors to fund operations. Management's plans with regard to these
matters are also described in Note 2. The accompanying financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
PRICEWATERHOUSECOOPERS LLP
Stamford, Connecticut
September 14, 1998
F-2
<PAGE>
IgX CORP.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
PRO FORMA
DECEMBER 31, JUNE 30,
-------------------------- JUNE 30, 1998
1996 1997 1998 (NOTE 12)
---------- ------------ ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash............................................. $4,256,990 $ 1,973,025 $ 2,543,188 $ 2,543,188
Prepaid and other current assets................. 168,888 185,704 94,168 94,168
---------- ------------ ------------ ------------
Total current assets............................... 4,425,878 2,158,729 2,637,356 2,637,356
Property and equipment, net (Note 4)............. 1,464,705 1,149,028 1,016,423 1,016,423
---------- ------------ ------------ ------------
Total assets....................................... $5,890,583 $ 3,307,757 $ 3,653,779 $ 3,653,779
---------- ------------ ------------ ------------
---------- ------------ ------------ ------------
LIABILITIES AND CAPITAL DEFICIENCY
Current liabilities:
Notes payable to stockholders (Note 6)........... $ 225,000 $ 328,546 $ 340,866 --
Accounts payable and accrued expenses............ 884,443 1,178,111 1,011,970 $ 1,011,970
Income taxes payable (Note 10)................... 5,000 24,388 586 586
---------- ------------ ------------ ------------
Total current liabilities.......................... 1,114,443 1,531,045 1,353,422 1,012,556
Long term liabilities
Notes payable to stockholders (Note 6)........... 5,075,107 3,544,312 4,144,107 --
---------- ------------ ------------ ------------
Total liabilities.................................. 6,189,550 5,075,357 5,497,529 1,012,556
---------- ------------ ------------ ------------
Commitments and contingencies (Note 11)............ -- -- -- --
Capital deficiency (Note 7):
Series B preferred stock ($0.001 par value;
1,874,999 shares authorized; none issued and
outstanding in 1996, 748,582 shares and
1,154,065 shares issued and outstanding in
1997 and 1998, respectively, pro forma none
issued and outstanding) (liquidation
preference of $4,799,982 and $7,399,980 at
December 31, 1997 and June 30, 1998,
respectively)................................. -- 749 1,154 --
Series A preferred stock ($0.001 par value;
3,700,001 shares authorized, issued and
outstanding, pro forma none issued and
outstanding) (liquidation preference of
$5,778,009, $6,383,042 and $6,708,917 at
December 31, 1996 and 1997 and June 30, 1998,
respectively)................................. 3,700 3,700 3,700 --
Common stock ($0.001 par value; 15,000,000 shares
authorized; 710,030 shares issued and
outstanding, pro forma 6,283,377 shares issued
and outstanding).............................. 710 710 710 6,283
Additional paid-in capital....................... 4,913,635 9,712,871 12,925,779 19,074,919
Preferred stock subscription receivable.......... -- (350,000) -- --
Cumulative translation adjustment................ (37,656) (401,339) (401,045) (401,045)
Deficit accumulated during development stage..... (5,179,356) (10,734,291) (14,374,048) (16,038,934)
---------- ------------ ------------ ------------
Total (capital deficiency) stockholders' equity.... (298,967) (1,767,600) (1,843,750) 2,641,223
---------- ------------ ------------ ------------
Total liabilities and (capital deficiency)
stockholders' equity............................. $5,890,583 $ 3,307,757 $ 3,653,779 $ 3,653,779
---------- ------------ ------------ ------------
---------- ------------ ------------ ------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
IgX CORP.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FEBRUARY 11,
1992 SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, (INCEPTION) TO JUNE 30,
----------------------------------------- DECEMBER 31, --------------------------
1995 1996 1997 1997 1997 1998
----------- ----------- ----------- -------------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
OPERATING EXPENSES:
Research and development........ $ 475,282 $ 1,136,203 $ 3,426,235 $ 5,799,780 $ 1,873,822 $ 1,577,384
General and administrative...... 717,937 1,119,485 1,732,788 4,095,245 520,878 1,911,009
----------- ----------- ----------- ------------ ----------- -----------
TOTAL OPERATING EXPENSES.......... 1,193,219 2,255,688 5,159,023 9,895,025 2,394,700 3,488,393
----------- ----------- ----------- ------------ ----------- -----------
Interest income................. 4,124 24,222 97,498 131,652 54,804 15,651
Interest expense................ (147,769) (230,976) (469,957) (942,465) (219,558) (162,115)
----------- ----------- ----------- ------------ ----------- -----------
NET INTEREST EXPENSE.............. (143,645) (206,754) (372,459) (810,813) (164,754) (146,464)
----------- ----------- ----------- ------------ ----------- -----------
NET LOSS BEFORE INCOME TAXES...... (1,336,864) (2,462,442) (5,531,482) (10,705,838) (2,559,454) (3,634,857)
Income taxes...................... -- 5,000 23,453 28,453 17,000 4,900
----------- ----------- ----------- ------------ ----------- -----------
NET LOSS.......................... $(1,336,864) $(2,467,442) $(5,554,935) $(10,734,291) $(2,576,454) $(3,639,757)
----------- ----------- ----------- ------------ ----------- -----------
----------- ----------- ----------- ------------ ----------- -----------
Basic and diluted loss per share
(Note 9)........................ $ (1.88) $ (3.48) $ (7.82) $ (3.63) $ (5.13)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Weighted average shares
outstanding used for basic and
diluted loss per share.......... 710,030 710,030 710,030 710,030 710,030
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
<CAPTION>
FEBRUARY 11,
1992
(INCEPTION)
TO
-------------
(UNAUDITED)
<S> <C>
OPERATING EXPENSES:
Research and development........ $ 7,377,164
General and administrative...... 6,006,254
------------
TOTAL OPERATING EXPENSES.......... 13,383,418
------------
Interest income................. 147,303
Interest expense................ (1,104,580)
------------
NET INTEREST EXPENSE.............. (957,277)
------------
NET LOSS BEFORE INCOME TAXES...... (14,340,695)
Income taxes...................... 33,353
------------
NET LOSS.......................... $(14,374,048)
------------
------------
Basic and diluted loss per share
(Note 9)........................
Weighted average shares
outstanding used for basic and
diluted loss per share..........
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
IgX CORP.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CAPITAL DEFICIENCY
<TABLE>
<CAPTION>
MANDATORY REDEEMABLE CONVERTIBLE
PREFERRED STOCK (SEE NOTES 6 AND 7)
----------------------------------------------
SERIES B CONVERTIBLE SERIES A CONVERTIBLE
SERIES B SERIES C PREFERRED STOCK PREFERRED STOCK
---------------------- ---------------------- ---------------------- ----------------------
SHARES PAR VALUE SHARES PAR VALUE SHARES PAR VALUE SHARES PAR VALUE
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1,
1995...................... -- -- -- -- -- -- 3,700,000 $3,700
Net loss................... -- -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Balance at December 31,
1995...................... -- -- -- -- -- -- 3,700,000 3,700
Issuance of mandatory
redeemable Preferred
Stock..................... 2,086,096 $2,086,096 2,086,096 $2,086,096 -- -- -- --
Redemption of mandatory
redeemable preferred stock
in exchange for Series A
Preferred Stock........... (2,086,096) (2,086,096) (2,086,096) (2,086,096) -- -- 1 --
Non-cash compensation based
on fair value of stock
options granted........... -- -- -- -- -- -- -- --
Cumulative translation
adjustment................ -- -- -- --
Net loss................... -- -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Balance at December 31,
1996...................... -- -- -- -- -- -- 3,700,001 3,700
Issuance of Series B
Convertible Preferred
Stock..................... -- -- -- -- 748,582 $749 -- --
Cumulative translation
adjustment................ -- -- -- -- -- -- -- --
Net loss................... -- -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Balance at December 31,
1997...................... -- -- -- -- 748,582 749 3,700,001 3,700
Issuance of Series B
Convertible Preferred
Stock..................... -- -- -- -- 405,483 405 -- --
Issuance of warrant with
Promissory Note to NEGF
II, L.P................... -- -- -- -- -- -- --
Non-cash compensation based
on fair value of stock
options granted........... -- -- -- -- -- -- --
Cumulative translation
adjustment................ -- -- -- -- -- -- -- --
Net loss................... -- -- -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Balance at June 30, 1998
(unaudited)............... -- -- -- -- 1,154,065 $1,154 3,700,001 $3,700
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<CAPTION>
DEFICIT
PREFERRED ACCUMULATED
COMMON STOCK ADDITIONAL STOCK OTHER DURING TOTAL
---------------------- PAID-IN SUBSCRIPTION COMPREHENSIVE DEVELOPMENT CAPITAL
SHARES PAR VALUE CAPITAL RECEIVABLE INCOME (LOSS) STAGE DEFICIENCY
---------- ---------- ----------- ------------ ------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1,
1995...................... 710,030 $710 $ 369,543 -- -- $ (1,375,050) $(1,001,097)
Net loss................... -- -- -- -- -- (1,336,864) (1,336,864)
---------- ---------- ----------- ---------- ----------- ------------ -----------
Balance at December 31,
1995...................... 710,030 710 369,543 -- -- (2,711,914) (2,337,961)
Issuance of mandatory
redeemable Preferred
Stock..................... -- -- -- -- -- -- 4,172,192
Redemption of mandatory
redeemable preferred stock
in exchange for Series A
Preferred Stock........... -- -- 4,172,192 -- -- -- --
Non-cash compensation based
on fair value of stock
options granted........... -- -- 371,900 -- -- -- 371,900
Cumulative translation
adjustment................ -- -- -- -- $ (37,656) -- (37,656)
Net loss................... -- -- -- -- -- (2,467,442) (2,467,442)
---------- ---------- ----------- ---------- ----------- ------------ -----------
Balance at December 31,
1996...................... 710,030 710 4,913,635 -- (37,656) (5,179,356) (298,967)
Issuance of Series B
Convertible Preferred
Stock..................... -- -- 4,799,236 $(350,000) -- -- 4,449,985
Cumulative translation
adjustment................ -- -- -- -- (363,683) -- (363,683)
Net loss................... -- -- -- -- -- (5,554,935) (5,554,935)
---------- ---------- ----------- ---------- ----------- ------------ -----------
Balance at December 31,
1997...................... 710,030 710 9,712,871 (350,000) (401,339) (10,734,291) (1,767,600)
Issuance of Series B
Convertible Preferred
Stock..................... -- -- 2,599,585 350,000 -- -- 2,949,990
Issuance of warrant with
Promissory Note to NEGF
II, L.P................... -- -- 550,000 -- -- -- 550,000
Non-cash compensation based
on fair value of stock
options granted........... -- -- 63,323 -- -- -- 63,323
Cumulative translation
adjustment................ -- -- -- -- 294 -- 294
Net loss................... -- -- -- -- -- (3,639,757) (3,639,757)
---------- ---------- ----------- ---------- ----------- ------------ -----------
Balance at June 30, 1998
(unaudited)............... 710,030 $710 $12,925,779 $ -- $(401,045) $(14,374,048) $(1,843,750)
---------- ---------- ----------- ---------- ----------- ------------ -----------
---------- ---------- ----------- ---------- ----------- ------------ -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
IgX CORP.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FEBRUARY 11,
1992 SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, (INCEPTION) TO JUNE 30,
----------------------------------------- DECEMBER 31, --------------------------
1995 1996 1997 1997 1997 1998
----------- ----------- ----------- -------------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Cash flows from operating
activities:
Net loss........................ $(1,336,864) $(2,467,442) $(5,554,935) $(10,734,291) $(2,576,454) $(3,639,757)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Depreciation.................. 29,843 88,328 290,015 412,108 61,181 148,380
Loss on disposal of property
and equipment............... -- -- 17,890 17,890 -- --
Accrued interest on notes
payable to stockholders..... 147,769 113,824 341,272 693,502 218,433 162,115
Non-cash compensation
expense..................... -- 371,900 -- 371,900 -- 63,323
Changes in assets and
liabilities:
Prepaid and other current
assets.................... 4,542 (147,458) (40,213) (191,591) 48,632 91,294
Accounts payable and accrued
expenses.................. 289,297 663,985 423,701 1,407,673 (118,751) (159,714)
Income taxes payable........ -- 4,445 21,314 25,759 (4,612) (25,759)
----------- ----------- ----------- ------------ ----------- -----------
Net cash used in operating
activities...................... (865,413) (1,372,418) (4,500,956) (7,997,050) (2,371,571) (3,360,118)
----------- ----------- ----------- ------------ ----------- -----------
Cash flows from investing
activities:
Proceeds from disposal of
property and equipment........ -- -- 66,063 66,063 -- --
Purchase of property and
equipment..................... (399,275) (1,037,701) (217,346) (1,691,935) (163,048) (26,175)
----------- ----------- ----------- ------------ ----------- -----------
Net cash used in investing
activities...................... (399,275) (1,037,701) (151,283) (1,625,872) (163,048) (26,175)
----------- ----------- ----------- ------------ ----------- -----------
Cash flows from financing
activities:
Proceeds from issuance of notes
payable to stockholders (see
Note 6)....................... 1,290,000 6,875,000 103,546 9,351,546 -- 1,000,000
Proceeds from issuance of
preferred stock............... -- -- 2,449,987 2,719,990 -- 2,599,996
Collection of stock subscription
receivable.................... -- -- -- -- -- 350,000
Exercise of stock options....... -- -- -- 3,600 -- --
----------- ----------- ----------- ------------ ----------- -----------
Net cash provided by financing
activities...................... 1,290,000 6,875,000 2,553,533 12,075,136 -- 3,949,996
----------- ----------- ----------- ------------ ----------- -----------
Effect of exchange rates on
cash............................ -- (293,930) (185,259) (479,189) (148,601) 6,460
----------- ----------- ----------- ------------ ----------- -----------
Net increase (decrease) in cash... 25,312 4,170,951 (2,283,965) 1,973,025 (2,683,220) 570,163
Cash at beginning of period....... 60,727 86,039 4,256,990 -- 4,256,990 1,973,025
----------- ----------- ----------- ------------ ----------- -----------
Cash at end of period............. $ 86,039 $ 4,256,990 $ 1,973,025 $ 1,973,025 $ 1,573,770 $ 2,543,188
----------- ----------- ----------- ------------ ----------- -----------
----------- ----------- ----------- ------------ ----------- -----------
<CAPTION>
FEBRUARY 11,
1992
(INCEPTION)
TO
------------
(UNAUDITED)
<S> <C>
Cash flows from operating
activities:
Net loss........................ $(14,374,048)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Depreciation.................. 560,488
Loss on disposal of property
and equipment............... 17,890
Accrued interest on notes
payable to stockholders..... 855,617
Non-cash compensation
expense..................... 435,223
Changes in assets and
liabilities:
Prepaid and other current
assets.................... (100,297)
Accounts payable and accrued
expenses.................. 1,247,959
Income taxes payable........ --
------------
Net cash used in operating
activities...................... (11,357,168)
------------
Cash flows from investing
activities:
Proceeds from disposal of
property and equipment........ 66,063
Purchase of property and
equipment..................... (1,718,110)
------------
Net cash used in investing
activities...................... (1,652,047)
------------
Cash flows from financing
activities:
Proceeds from issuance of notes
payable to stockholders (see
Note 6)....................... 10,351,546
Proceeds from issuance of
preferred stock............... 5,319,986
Collection of stock subscription
receivable.................... 350,000
Exercise of stock options....... 3,600
------------
Net cash provided by financing
activities...................... 16,025,132
------------
Effect of exchange rates on
cash............................ (472,729)
------------
Net increase (decrease) in cash... 2,543,188
Cash at beginning of period....... --
------------
Cash at end of period............. $ 2,543,188
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
IgX CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED WITH RESPECT TO THE SIX MONTH PERIODS ENDED JUNE 30, 1997 AND 1998)
1. ORGANIZATION AND BUSINESS
IgX Corp. (the "Company") was incorporated in the State of Delaware on
February 11, 1992. The Company is a development stage enterprise developing
drugs principally for the treatment of infectious diseases of the human
gastrointestinal (GI) tract. The Company maintains two pilot production
facilities for use in conducting clinical trials, one outside the U.S. and one
in the U.S. The Company's strategy is to develop products both independently and
through strategic partnerships with large pharmaceutical companies, under which
the Company will seek financial, preclinical and clinical trial, marketing and
manufacturing assistance while retaining parallel manufacturing and/or marketing
rights for the products.
The Company's primary activities since inception have consisted of research
and development and raising capital. The Company relies primarily on a
university to provide the personnel and other resources necessary to develop
technologies through its sponsored research agreements with the university (see
Note 4).
In 1995, the Company became a wholly-owned subsidiary of a newly-formed
corporation, IgX Limited, which is registered under the laws of the Republic of
Ireland, as a result of a series of transactions in which the Company's
stockholders exchanged their common and preferred stock for ordinary and
preference shares of IgX Limited. In December 1997, as a condition to receiving
an equity infusion from a U.S. investor, the aforementioned series of
transactions was reversed such that IgX Limited became a wholly-owned subsidiary
of the Company. The above transactions involved the same parties, affected the
capital structure of IgX Corp. and IgX Limited in legal form only, and thus have
no effect on reported amounts on a consolidated basis.
2. BASIS OF PREPARATION
Since inception, the Company has suffered recurring losses and net cash
outflows from operations. The Company expects to continue to incur substantial
additional losses to complete the development and testing of its drug
candidates, and does not expect to complete the development stage and begin
commercialization of its products for the foreseeable future. Management is
actively pursuing various options, which include entering into strategic
partnerships with large pharmaceutical companies. Certain such agreements for
strategic partnerships have been executed (see Note 12). Since its inception,
the Company has funded operations through issuing debt and equity securities to
its principal investors. It is management's intention to continue to fund the
operations of the Company through additional debt or preferred stock issuances
in order to meet its strategic objectives. Management is also actively pursuing
other financing options, which include securing additional equity financing
through an initial public offering, and believes that sufficient funding will be
available to meet its planned business objectives including anticipated cash
needs for working capital, for a reasonable period of time. However, there can
be no assurance that the Company will be able to obtain sufficient funds to
continue the development of, and if successful, to commence the manufacture and
sale of its drug candidates, if and when approved by the applicable regulatory
agencies. As a result of the foregoing, there exists substantial doubt about the
Company's ability continue as a going concern. These financial statements do not
include any adjustments relating to the recoverability of the carrying amounts
of recorded assets or the amount of liabilities that might result from the
outcome of this uncertainty.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF SIGNIFICANT ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
F-7
<PAGE>
IgX CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED WITH RESPECT TO THE SIX MONTH PERIODS ENDED JUNE 30, 1997 AND 1998)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
CONSOLIDATION
These consolidated financial statements include the accounts of the Company
and IgX Limited, a wholly-owned subsidiary, which is registered under the laws
of the Republic of Ireland. All intercompany transactions are eliminated in
consolidation.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost and depreciated using the
straight-line method over the estimated useful lives of the respective assets,
as follows: buildings and improvements over 5 years; research equipment over 5
to 10 years; and office furniture and equipment over 5 years.
IMPAIRMENT OF LONG-LIVED ASSETS
The Company accounts for the impairment and disposition of long-lived
assets in accordance with Statement of Financial Accounting Standards ("SFAS")
No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of ("FAS 121"). In accordance with FAS 121, the Company
periodically assesses whether any events or changes in circumstances have
occurred that would indicate that the carrying amount of a long-lived asset may
not be recoverable. If such an event or change in circumstances occurs, the
Company evaluates whether the carrying amount of such assets is recoverable by
comparing the net book value of the assets to estimated future undiscounted cash
flows attributable to such assets. If it is determined that the carrying amount
may not recoverable, the Company recognizes an impairment loss equal to the
excess of the net carrying amount of the asset over its fair value.
COMPREHENSIVE INCOME/(LOSS)
Effective January 1, 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income." This standard requires that the total changes in capital
resulting from revenue, expenses and gains and losses, including those which do
not affect deficit accumulated during development stage, be reported.
Accordingly, comprehensive income (loss), which is comprised of net loss and the
change in cumulative translation adjustments, was ($2,505,098), ($5,918,618) and
($3,639,463) for the years ended December 31, 1996 and 1997 and the six months
ended June 30, 1998.
RESEARCH AND DEVELOPMENT
Research and development costs are expensed as incurred and include, among
other costs, those related to the production of experimental drugs, including
payroll costs, sponsored third party research costs and costs incurred for
conducting clinical trials.
INCOME TAXES
Income taxes are accounted for under the asset and liability method
prescribed by SFAS No. 109, "Accounting for Income Taxes." Deferred income taxes
are recorded for temporary differences between financial statement carrying
amounts and the tax bases of assets and liabilities. Deferred tax assets and
liabilities reflect the tax rates expected to be in effect for the years in
which the differences are expected to reverse. A valuation allowance is provided
if it is more likely than not that some or all of the deferred tax asset will
not be realized.
NET LOSS PER COMMON SHARE
Effective December 31, 1997, the Company adopted SFAS No. 128, "Earnings
per Share" ("FAS 128"), which requires presentation of basic earnings per share
("Basic EPS") and diluted earnings per share ("Diluted EPS") by all entities
that have publicly traded common stock or potential common stock (options,
warrants,
F-8
<PAGE>
IgX CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED WITH RESPECT TO THE SIX MONTH PERIODS ENDED JUNE 30, 1997 AND 1998)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
convertible securities or contingent stock arrangements). FAS 128 also requires
presentation of earnings per share by an entity that has made a filing or is in
the process of filing with a regulatory agency in preparation for the sale of
securities in a public market.
Basic EPS is computed by dividing income (loss) available to common
stockholders by the weighted average number of common shares outstanding during
the period. Diluted EPS gives effect to all dilutive potential common shares
outstanding during the period. The computation of Diluted EPS does not assume
conversion, exercise or contingent exercise of securities that would have an
antidilutive effect on earnings. Refer to Note 9 for methodology for determining
net loss per share.
INTERIM FINANCIAL DATA (UNAUDITED)
The unaudited financial data as of and for the six months ended June 30,
1998 and 1997 have been prepared by management and include all adjustments which
in management's opinion are necessary to present fairly the Company's financial
condition, results of operations and cash flows. The results of operations for
the six months ended June 30, 1998 are not necessarily indicative of the
operating results to be expected for the year ended December 31, 1998.
FOREIGN CURRENCY TRANSLATION
Assets and liabilities of IgX Limited are translated into U.S. dollars at
the prevailing exchange rates in effect at the end of the reporting period.
Income statement accounts are translated at a weighted average of exchange rates
which were in effect during the period. Translation adjustments that arise from
translating the foreign subsidiary's financial statements from local currency to
U.S. dollars are recorded in the cumulative translation adjustment component of
capital deficiency.
FINANCIAL INSTRUMENTS
The carrying values of accounts payable and accrued expenses approximate
their fair values.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1997, the FASB issued SFAS No.131, "Disclosures about Segments of
an Enterprise and Related Information" ("FAS 131"), which is effective for
fiscal years beginning after December 15, 1997 for annual reporting purposes and
for interim periods thereafter. The statement requires that public companies
report certain information, including segment revenues, reported profit and loss
and assets, about operating segments in their annual and interim financial
statements. The statement also requires that public companies report certain
information about their products and services, the geographic areas in which
they operate, and their major customers. FAS 131 is not expected to materially
affect the presentation and disclosure in the Companys financial statements.
F-9
<PAGE>
IgX CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED WITH RESPECT TO THE SIX MONTH PERIODS ENDED JUNE 30, 1997 AND 1998)
4. PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1996 1997
---------- ----------
<S> <C> <C>
Land........................................................................ $ 9,000 $ 9,000
Buildings and improvements.................................................. 1,070,683 846,985
Research equipment.......................................................... 481,512 609,066
Office furniture and equipment.............................................. 27,417 74,038
---------- ----------
1,588,612 1,539,089
Less--accumulated depreciation.............................................. (123,907) (390,061)
---------- ----------
Property and equipment, net................................................. $1,464,705 $1,149,028
---------- ----------
---------- ----------
</TABLE>
5. SPONSORED RESEARCH AGREEMENTS
The Company has sponsored research primarily at the University of Arizona
(the "University") and has entered into separate research agreements with the
University for the development of each drug candidate using particular aspects
of its licensed technology. Under these agreements, the Company is required to
fund the research and development work of the laboratory for a specific period
of time, usually in one year to eighteen-month increments. From inception
through June 30, 1998, the Company has funded approximately $2.4 million in
research through these activities. The following is a summary of amounts the
Company is required to fund under these sponsored research agreements.
<TABLE>
<S> <C>
Commitments as of December 31, 1997......................................... $ 174,000
Commitments as of June 30, 1998............................................. $ 390,000
</TABLE>
The patentable discoveries, inventions and other intellectual property
developed as a result of such research are property of the University. The
Company incurs the cost of coordinating and filing the applicable patent
applications on behalf of the University and records these costs as incurred in
research and development expense.
In addition, the Company maintains license agreements with the University
which, among other things, give the Company the option for six months to acquire
an exclusive royalty-bearing license to use the intellectual property underlying
a drug candidate. The term of the license agreement is generally 20 years
effective from the first commercial sale of a product and is renewable for two
consecutive 10-year periods. The license agreements require the Company to begin
paying the University up to 5% of the net sales price of all licensed products
when and if they are sold.
6. RELATED PARTY TRANSACTIONS
NOTES PAYABLE TO STOCKHOLDERS
As a means of raising capital, the Company and its subsidiary have from
time to time received loans in the form of promissory notes from stockholders,
principally from Henry Venture II Limited, the Chairman of which is Albert J.
Henry, who is also the Chairman and Chief Executive Officer of the Company. The
notes are unsecured and bear interest at a stated rate of 9% per annum. From the
Company's inception to date, no amounts of principal or accrued interest have
been repaid. However, from time to time, portions of the amounts due have been
canceled in exchange for issuance of preferred stock of the Company. The amount
of notes canceled corresponds to the value of the preferred stock issued upon
cancellation of the notes. A reconciliation of the total
F-10
<PAGE>
IgX CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED WITH RESPECT TO THE SIX MONTH PERIODS ENDED JUNE 30, 1997 AND 1998)
6. RELATED PARTY TRANSACTIONS--(CONTINUED)
proceeds received from the issuance of notes payable to stockholders to the
balance of these notes payable at June 30, 1998 is as follows:
<TABLE>
<CAPTION>
INCEPTION
(FEBRUARY 11, 1992)
THROUGH
---------------------------
DECEMBER 31, JUNE 30,
1997 1998
------------ -----------
<S> <C> <C>
Cumulative proceeds from issuance of notes payable to stockholders....... $ 9,351,546 $10,351,546
Cumulative interest accrued on notes payable to stockholders............. 693,502 855,617
------------ -----------
10,045,048 11,207,163
Less: notes payable to Henry Venture II Limited canceled and exchanged
for:
IgX Limited Series B mandatorily redeemable convertible preferred
stock............................................................... (2,086,096) (2,086,096)*
IgX Limited Series C mandatorily redeemable convertible preferred
stock............................................................... (2,086,096) (2,086,096)*
IgX Corp. Series B convertible preferred stock......................... (1,999,998) (1,999,998)
------------ -----------
3,872,858 5,034,973
Less--unamortized discount on note payable to NEGF II, L.P............... -- (550,000)
------------ -----------
Notes payable to stockholders............................................ $ 3,872,858 $ 4,484,973
------------ -----------
------------ -----------
</TABLE>
- ------------------
* As noted below, these stock issuances were, in turn, subsequently canceled in
exchange for issuance of Series A convertible preferred stock.
Notes payable to stockholders consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------ JUNE 30,
1996 1997 1998
---------- ---------- ----------
<S> <C> <C> <C>
Notes payable to Henry Venture II Limited,
9% per annum, due on demand................................. $ 225,000 $ 328,546 $ 340,866
Notes payable to Henry Venture II Limited
9% per annum, due December 31, 2001......................... 5,075,107 3,544,312 3,694,107
Note payable to NEGF II, L.P.,
9% per annum, due May 6, 2008............................... -- -- 1,000,000
Less--unamortized discount on note payable to NEGF II, L.P.... -- -- (550,000)
---------- ---------- ----------
Total.................................................... 5,300,107 3,872,858 4,484,973
Less--current maturities...................................... 225,000 328,546 340,866
---------- ---------- ----------
Notes payable to stockholders--long term portion.............. 5,075,107 3,544,312 4,144,107
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
From the period November 1996 to December 1997, IgX Limited obtained
unsecured loans totaling $5,328,546, which bore interest at 9% per annum, in the
form of promissory notes (the "Notes") from Henry Venture II Limited. Accrued
and unpaid interest totaled $544,312 through December 1997. In December 1997,
the Company entered into a novation agreement to transfer the liability for
amounts due from IgX Limited to IgX
F-11
<PAGE>
IgX CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED WITH RESPECT TO THE SIX MONTH PERIODS ENDED JUNE 30, 1997 AND 1998)
6. RELATED PARTY TRANSACTIONS--(CONTINUED)
Corp. in exchange for cancellation of the Notes due the stockholder from IgX
Limited. Under this agreement, Henry Venture II Limited agreed to cancel
$1,999,998 of amounts due in exchange for 311,910 shares of the Company's Series
B convertible preferred stock (the "Series B Preferred") (see Note 7). Further,
the Company issued two unsecured promissory notes to Henry Venture II Limited
for the remaining balances under the Notes, plus accrued and unpaid interest to
the date of the novation.
The first promissory note in the amount of $3,544,312 at December 31, 1997,
which includes $544,312 of accrued and unpaid interest at December 31, 1997,
bears interest at a rate of 9% per annum and is payable in full on December 31,
2001. As such, this portion has been classified as long-term. The second
promissory note issued was in the amount of $328,546, representing the remaining
balance, also bears interest at 9% per annum, is payable in full on demand and,
as such, is included in current liabilities.
In May 1998, the Company issued a $1,000,000 unsecured promissory note (the
"$1,000,000 Note") which bears interest at a rate of 9% per annum to NEGF II,
L.P., a holder of Series B Preferred (see Note 7). The $1,000,000 Note, together
with all accrued and unpaid interest, is payable upon the earlier of: (i) the
closing of an initial public offering of the Company, (ii) a merger,
consolidation, reorganization or sale of all or substantially all of the assets
of the Company, (iii) any other event, which, in the judgement of the Board of
Directors, would allow the Company to pay all indebtedness under the $1,000,000
Note, or (iv) May 6, 2008 (see also Note 12).
WARRANT ATTACHED TO PROMISSORY NOTE
As a condition for the $1,000,000 Note, NEGF II, L.P. received from the
Company a warrant to purchase up to 370,000 shares of common stock at an
exercise price of $0.01 per share. The warrant is exercisable at any time for a
period of ten years from the date of issuance. The fair value of the warrant,
using the Black-Scholes option-pricing model, approximates $1.7 million. This
value has been allocated to the $1,000,000 Note and the Series B Preferred in
proportion to the relative amounts of debt and equity financing provided to the
Company by NEGF II, L.P. The portion allocated to the $1,000,000 Note has been
reflected as a discount on the $1,000,000 Note, and is being accreted to
interest expense over the stated term of the $1,000,000 Note. The portion
allocated to the Series B Preferred is effectively a discount on the price per
share for the $2,000,000 paid for the Series B Preferred by NEGF II, L.P. The
appropriate waivers have been obtained from all other Preferred stockholders
waiving their rights to any conversion price adjustment provisions contained in
the applicable stockholder agreements and certificate of incorporation.
MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK
From the period September 1992 through July 1996, the Company obtained
unsecured loans from Henry Venture II Limited, an existing stockholder, totaling
$4,023,000, which bore interest at 9% per annum, in the form of promissory notes
(the "Original Notes"). During August 1996, Henry Venture II Limited was issued
2,086,096 shares each of Series B mandatory redeemable convertible preferred
stock (the "Series B Redeemable") and Series C mandatory redeemable convertible
preferred stock (the "Series C Redeemable") of IgX Limited in exchange for the
cancellation of the Original Notes along with accrued and unpaid interest
thereupon of $149,192. During August 1996, the Series B and C Redeemable shares
were canceled in exchange for one share of Series A convertible preferred stock
("Series A Preferred") (see Note 7).
7. CAPITAL DEFICIENCY
SERIES A CONVERTIBLE PREFERRED STOCK
In August 1992, the Company issued 370,000 shares of Series A Preferred at
$1.00 per share providing proceeds of $370,000. During September 1993, the Board
of Directors of the Company effected a 10-for-1 stock split of the Series A
Preferred. Further, in August 1996, in consideration for the cancellation of
Series B
F-12
<PAGE>
IgX CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED WITH RESPECT TO THE SIX MONTH PERIODS ENDED JUNE 30, 1997 AND 1998)
7. CAPITAL DEFICIENCY--(CONTINUED)
Redeemable and Series C Redeemable, the Company issued one additional share of
Series A Preferred to an existing holder of Series A Preferred. After giving
effect to the stock split and the issuance of the additional share, there were a
total of 3,700,001 shares of Series A Preferred issued and outstanding. Each
Series A Preferred share can be converted into common stock, at the option of
the holder, at an initial conversion rate of one to one, subject to adjustment
from time to time based on the consideration paid for additional stock issued
and options granted by the Company. The Series A Preferred will automatically
convert into common stock upon the consummation of a public offering of the
Company's common stock with a per share price as defined in the certificate of
incorporation. There is no established dividend rate on the Series A Preferred.
However, the holders of Series A Preferred are entitled to receive preference to
a declaration or payment of any dividend on the common stock of the Company in
amounts equal to that paid to other outstanding shares of the Company. In the
event of a voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Company, the Series A Preferred stockholders are entitled to
receive a liquidation preference equal to $1.23 for each outstanding share of
the Series A Preferred plus a preferential amount equal to 10% of the original
issue price for each twelve month period outstanding from the date of issuance
to date of distribution.
The holders of Series A Preferred are entitled to vote on all matters in
which holders of common stock have the right to vote.
SERIES B CONVERTIBLE PREFERRED STOCK
In December 1997, the Company issued 436,672 shares of Series B Preferred
at $6.41 per share providing proceeds of $2,799,984. In addition, the Company
issued 311,910 shares of Series B Preferred to an existing common stockholder in
exchange for the cancellation of a promissory note due the common stockholder
(see Note 6). Each Series B Preferred share can be converted into common stock,
at the option of the holder, at an initial conversion rate of one to one,
subject to adjustment from time to time based on the consideration paid for
additional stock issued and options granted by the Company. The holders of
Series B Preferred are also entitled to anti-dilution provisions in the event
the Company were to issue additional shares of common stock for less than
specified amounts and prior to certain dates, as defined in the applicable
agreement. The Series B Preferred will automatically convert into common stock
upon the consummation of a public offering of the Company's common stock with a
per share price as defined in the certificate of incorporation. There is no
established dividend rate on the Series B Preferred. However, the holders of
Series B Preferred are entitled to receive preference to any declaration or
payment of any dividend on the common stock of the Company in amounts equal to
that paid to other outstanding shares of the Company. In the event of a
voluntary or involuntary liquidation, dissolution or winding up of the affairs
of the Company, the Series B Preferred stockholders are entitled to receive a
liquidation preference equal to the original issue price of $6.41 for each
outstanding share of the Series B Preferred.
The holders of Series B Preferred are entitled to vote on all matters which
holders of common stock have the right to vote.
8. STOCK-BASED COMPENSATION
1993 STOCK OPTION PLAN
During 1993, the Company implemented its 1993 Stock Option Plan (the 1993
Plan), whereby incentive and nonqualified options to purchase shares of the
Company common stock may be granted to key employees, officers, directors and
consultants. The vesting and exercise periods for options granted under the 1993
Plan are determined by a committee of the Board of Directors.
F-13
<PAGE>
IgX CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED WITH RESPECT TO THE SIX MONTH PERIODS ENDED JUNE 30, 1997 AND 1998)
8. STOCK-BASED COMPENSATION--(CONTINUED)
The 1993 Plan stipulates that no option may be exercisable after ten years
from the date of grant. The fair market value of the Company's common stock is
determined by the Board of Directors from time to time. Options granted under
the 1993 Plan generally vest in equal installments over a period of four years.
The following table summarizes activity regarding stock options for the
years ended December 31, 1996 and 1997, and the six months ended June 30, 1998:
<TABLE>
<CAPTION>
JUNE 30, 1998
DECEMBER 31, 1996 DECEMBER 31, 1997 (UNAUDITED)
------------------- --------------------- ---------------------
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
------- -------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of period....... -- -- 753,357 $ 1.08 1,078,357 $ 2.26
Granted.................................. 753,357 $ 1.08 325,000 $ 5.00 77,500 $ 1.26
Forfeited................................ -- -- -- -- 415,000 $ 4.13
------- ------ --------- ------ ---------
Outstanding at end of period............. 753,357 $ 1.08 1,078,357 $ 2.26 740,857 $ 1.11
</TABLE>
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
-------------------------------
NUMBER NUMBER
OUTSTANDING AVERAGE EXERCISABLE
AT DECEMBER 31, REMAINING AT DECEMBER 31,
EXERCISE PRICES 1997 LIFE (YEARS) 1997
- --------------------------------------------------------- --------------- ------------ ---------------
<S> <C> <C> <C>
$1.00.................................................... 738,357 3.1 176,839
$5.00.................................................... 340,000 3.0 85,000
</TABLE>
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
(UNAUDITED)
-------------------------------- NUMBER
NUMBER AVERAGE EXERCISABLE
OUTSTANDING REMAINING AT JUNE 30, 1998
EXERCISE PRICES AT JUNE 30, 1998 LIFE (YEARS) (UNAUDITED)
- -------------------------------------------------------- ---------------- ------------ ----------------
<S> <C> <C> <C>
$1.00................................................... 720,857 3.2 155,839
$5.00................................................... 20,000 4.8 3,750
</TABLE>
The Company applies Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees," and related interpretations in accounting for
its 1993 Plan. During the years ended December 31, 1996 and 1997, the Company
was not required to recognize compensation expense for options granted to
employees. For the six months ended June 30, 1998, the Company was required to
recognize compensation expense in the amount of $18,323 for options granted to
employees. Compensation expense recorded for stock options granted to
consultants based on the estimated fair value of the stock options amounted to
$371,900 and $45,000, respectively, in 1996 and the six months ended June 30,
1998. Options were not granted to consultants during 1995 and 1997; thus no
compensation expense was recorded in these years.
Had compensation costs for option grants to employees been determined based
upon the fair value at the date of grant for awards under the 1993 Plan
consistent with the methodology prescribed under SFAS No. 123, "Accounting for
Stock Based Compensation," the Company's net loss would not have been affected
for any of the periods presented.
F-14
<PAGE>
IgX CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED WITH RESPECT TO THE SIX MONTH PERIODS ENDED JUNE 30, 1997 AND 1998)
8. STOCK-BASED COMPENSATION--(CONTINUED)
The fair value of the options granted to employees during the years ended
December 31, 1996 and 1997 and the six months ended June 30, 1998 has been
determined on the date of the respective grant using the Black-Scholes
option-pricing model based on the following weighted average assumptions:
<TABLE>
<CAPTION>
1996 1997 1998
------- ------- -------
<S> <C> <C> <C>
Dividend yield........................................................... None None None
Weighted average risk free interest rate on date of grant................ 6.50 6.29 5.61
Forfeitures.............................................................. None None None
Expected life............................................................ 5 years 5 years 5 years
</TABLE>
1998 STOCK OPTION PLAN
In September 1998, the Company adopted its 1998 Stock Incentive Plan (the
"1998 Plan"), whereby incentive and nonqualified stock options to purchase
shares of the Company's common stock may be granted to employees, outside
directors and consultants. The vesting and exercise periods of options granted
under the 1998 Plan are to be determined by a committee of the Board of
Directors.
The 1998 Plan stipulates that the exercise price of incentive stock options
will not be less than the fair market value at the date of grant or in the case
of nonqualified stock options less than 85% of the fair market value at the date
of grant. The exercise period of options granted shall not exceed 10 years
(5 years in the case of incentive options granted to individuals owning 10% or
more of the voting stock of the Company) from the date of grant and shall vest
at a rate specified from time to time by the Board of Directors.
On a combined basis, the 1993 Plan and the 1998 Plan allow the Company to
issue an aggregate of up to 1,425,857 shares of common stock of the Company.
9. NET LOSS PER SHARE
Basic EPS and Diluted EPS for the years ended December 31, 1995, 1996 and
1997 and for the six months ended June 30, 1997 and 1998 have been computed by
dividing the net loss for each respective period by the weighted average shares
outstanding during that period. All outstanding stock options and warrants have
been excluded from the computation of Diluted EPS as they are antidilutive.
Common stock issuable upon conversion of the Series A Preferred and Series B
Preferred have also been excluded from the computation of Diluted EPS as they
are antidilutive.
10. INCOME TAXES
The Company has incurred losses since inception which have generated net
operating loss carryforwards on a consolidated basis of approximately
$13 million at June 30, 1998 which are available to offset future taxable
income. The net operating loss carryforwards will expire in 2007 through 2018.
These loss carryforwards are subject to limitation on future years utilization
should certain ownership changes occur.
The net operating loss carryforwards and other temporary differences,
arising primarily from depreciation, result in a deferred tax asset at
December 31, 1996 and 1997 and June 30, 1998 of $1,721,750, $2,724,292 and
$3,532,167, respectively. In consideration of the Company's accumulated losses
and uncertainty of its ability to utilize this deferred asset in the future, the
Company has recorded a valuation allowance of equal amounts on such dates to
fully offset the net deferred tax asset and bring its carrying amount to zero
for all periods presented.
For the years ended December 31, 1995, 1996 and 1997 and the six months
ended June 30, 1998, the Company's effective tax rate differs from the federal
statutory rate principally due to net operating losses and other temporary
differences for which no benefit was recorded.
F-15
<PAGE>
IgX CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED WITH RESPECT TO THE SIX MONTH PERIODS ENDED JUNE 30, 1997 AND 1998)
10. INCOME TAXES--(CONTINUED)
The provision for income taxes of $5,000, $23,453 and $4,900 for the years
ended December 31, 1996 and 1997 and the six months ended June 30, 1998,
respectively, primarily relates to the Irish tax on interest earned on bank
deposits located in the Republic of Ireland.
11. COMMITMENTS AND CONTINGENCIES
EMPLOYMENT AGREEMENTS
The Company has an employment agreement with a managing director of IgX
Limited in Ireland which expires in November 2000. Under the terms of the
agreement, the employee is to receive an annual base salary of $110,000. Upon
execution of the agreement, the Company granted the employee options to purchase
83,696 shares of the Company's common stock at an exercise price of $1.00 per
share. The agreement also contains a non-compete provision which extends for a
period of three years from the termination of the agreement.
In June 1997, the Company entered into an employment agreement with another
executive which expires in May 1999. Under the terms of the agreement, the
employee is to receive minimum annual compensation of $160,000, with a bonus of
up to 50% of the minimum compensation.
LEASES
Future minimum payments under non-cancelable operating leases, which
primarily relate to office space, a pilot production facility and office
equipment, with initial or remaining terms of one year or more, consist of the
following at December 31, 1997:
<TABLE>
<CAPTION>
YEAR
- ----------------------------------------------------------------------------------
<S> <C>
1998.............................................................................. $ 92,000
1999.............................................................................. 32,000
2000.............................................................................. 19,000
2001.............................................................................. 11,000
--------
$154,000
--------
--------
</TABLE>
Rent expense amounted to $9,859, $27,731, $ 68,121, and $38,078 for the
years ended December 31, 1995, 1996 and 1997 and the six months ended June 30,
1998, respectively.
Refer to Note 5 for commitments under sponsored research agreements.
12. SUBSEQUENT EVENTS
STRATEGIC PARTNERSHIPS
IgX Oxford
In August 1998, the Company obtained a majority interest in a corporation
newly formed in collaboration with the Glycobiology Institute of Oxford
University and Thomas Jefferson University which has, in turn, obtained an
exclusive worldwide license from the Monsanto Company ("Monsanto") to certain
intellectual property to be used in developing drug candidates for the treatment
of Hepatitis B.
The Company has agreed to fund the corporation with up to $2 million to
complete animal studies to determine whether the preparation of an
Investigational New Drug Application ("IND") application to conduct human
clinical trials is appropriate.
F-16
<PAGE>
IgX CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED WITH RESPECT TO THE SIX MONTH PERIODS ENDED JUNE 30, 1997 AND 1998)
12. SUBSEQUENT EVENTS--(CONTINUED)
IgX/Sintofarma
In August 1998, the Company signed a manufacturing and license agreement
with Laboratorios Sintofarma S. A. ("Sintofarma"). Under the terms of this
agreement, the Company and Sintofarma have agreed to form a joint venture under
which the Company will grant to the joint venture the rights to the licensed
technology underlying three of its drug candidates, while Sintofarma will be
responsible to bear all costs of manufacturing drug candidates for use in
clinical trials, and for marketing the products in Brazil, if clinical trials
are successful.
Gador license agreement
During August 1998, the Company entered into a license and supply agreement
with Gador S. A. ("Gador"). Under the terms of the agreement, the Company will
license to Gador all of the Company's rights to the technology underlying two of
its drug candidates in order to enable Gador to manufacture and market the
products throughout South America, except Brazil, as well as Central America and
Mexico if clinical trials are successful. The Company will supply the
ingredients necessary for production and will receive a royalty of 10% of net
sales of any product produced and sold by Gador. Gador has also agreed to remit
to IgX or its designee a percentage of net sales in order for IgX to partially
or fully recover the cost of the ingredients.
EXERCISE OF WARRANT (UNAUDITED)
During September 1998, NEGF II, L.P., an existing stockholder, exercised a
warrant to purchase 370,000 shares of common stock of the Company. Net proceeds
to the Company from the exercise of this warrant amounted to $3,700. Refer to
Note 6 for further description of the warrant, its valuation and classification
as of June 30, 1998.
CANCELLATION OF NOTES PAYABLE TO STOCKHOLDERS (UNAUDITED)
During September 1998, the Company entered into an agreement with Henry
Venture II Limited and NEGF II, L.P. to cancel the outstanding balance of all
notes payable to stockholders in exchange for 732,547 shares of common stock of
the Company, representing a conversion price of $7.00 per share. The
cancellation of the notes payable to stockholders will require the Company to
recognize a charge of approximately $527,000, representing the unamortized
portion of the debt discount, on the early extinguishment of the note payable to
NEGF II, L.P., for the quarter ending September 30, 1998. In addition, as a
result of this exchange at a price per share below the expected offering price
of the Company's anticipated IPO, the Company is expected to recognize an
additional charge of approximately $1.1 million as loss on extinguishment of
notes payable to stockholders for the quarter ending September 30, 1998.
The effects of the transactions with Henry Venture II Limited and NEGF II,
L.P. have been reflected in the "Pro forma June 30, 1998" column of the
Consolidated Balance Sheet.
INITIAL PUBLIC OFFERING AND PRO FORMA PRESENTATION (UNAUDITED)
In September 1998, the Board of Directors of the Company authorized
management to pursue an underwritten sale of shares of the Company's common
stock in an initial public offering ("IPO") pursuant to the Securities Act of
1933.
Upon the closing of the IPO, all outstanding shares of Series A and B
Preferred will automatically convert into common stock. The effects of this
conversion to the Company's equity have been reflected in the unaudited "Pro
Forma June 30, 1998" column in the Consolidated Balance Sheet.
F-17
<PAGE>
------------------------------------------------------
------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED
HEREBY IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE
DATE OF THIS PROSPECTUS.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.............................. 3
Risk Factors.................................... 8
Use of Proceeds................................. 18
Dividend Policy................................. 18
Dilution........................................ 19
Capitalization.................................. 20
Selected Consolidated Financial Data............ 21
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................... 22
Business........................................ 27
Management...................................... 43
Certain Transactions............................ 51
Principal Stockholders.......................... 53
Description of Capital Stock.................... 54
Shares Eligible for Future Sale................. 55
Underwriting.................................... 57
Legal Matters................................... 58
Experts......................................... 59
Additional Information.......................... 59
Index to Consolidated Financial Statements...... F-1
</TABLE>
------------------------
UNTIL , 1998 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE SHARES OF COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATIONS OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
2,300,000 SHARES
[LOGO]
IgX CORP.
COMMON STOCK
------------------------
PROSPECTUS
------------------------
JOSEPHTHAL & CO. INC.
, 1998
------------------------------------------------------
------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses of this Offering are as follows:
<TABLE>
<S> <C>
S.E.C. Registration Fee..................................... $ 8,618
N.A.S.D. Filing Fee......................................... 3,421
Nasdaq National Market Qualification Fee.................... 72,875
Representative's non-accountable expense allowance and
financial advisor's fee................................... 414,000(1)
Accounting Fees............................................. 175,000
Legal Fees and Expenses..................................... 225,000
Blue Sky Qualification Fees and Expenses.................... 25,000
Printing and Engraving...................................... 100,000
Transfer Agent's Fees and Expenses.......................... 5,000
Miscellaneous Expenses...................................... 85,086
----------
Total.................................................. $1,114,000
----------
----------
</TABLE>
- ------------------
(1) Assuming an initial public offering price of $9.00 per share.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law grants corporations the
power to indemnify their directors, officers, employees and agents in accordance
with the provisions thereof, Article X of Registrant's Amended and Restated
Certificate of Incorporation and Article VII of Registrant's Bylaws provide for
indemnification of Registrant's directors, officers, agents and employees to the
full extent permissible under Section 145 of the Delaware General Corporation
Law. The Registrant has also entered into indemnification agreements with its
directors under which it has agreed to indemnify the directors to the fullest
extent permitted by Section 145 of the Delaware General Corporation Law.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
In September 1995, Registrant consummated a reorganization, under which
Registrant became a wholly owned subsidiary of a newly organized corporation,
IgX Limited, formed under the laws of the Republic of Ireland. The
reorganization was effected to attempt to take advantage of certain Irish tax
benefits and government grants relating to IgX Limited's pilot production
facility in Ireland. In connection with this reorganization, all of the
outstanding capital stock (and securities convertible or exercisable into such
capital stock) of Registrant were exchanged for shares of IgX Limited on a share
for share basis.
From the period September 1995 through July 1996, IgX Limited obtained
unsecured loans from Henry Venture II Limited ("Henry Venture"), an existing
stockholder, totalling $2,340,000, which bore interest at 9% per annum, in the
form of promissory notes (the "Original Notes"). During August 1996, Henry
Venture was issued 2,086,096 shares of Series B mandatory redeemable convertible
preferred stock (the "Series B Redeemable") and 2,086,096 shares of Series C
mandatory redeemable convertible preferred stock (the "Series C Redeemable") of
IgX Limited in exchange for the cancellation of the Original Notes and other
notes in the aggregate principal amount of $1,683,000 issued prior to September
1995, along with accrued and unpaid interest thereupon of $149,192. Further, in
August 1996, in consideration of the cancellation of Series B Redeemable and
Series C Redeemable, IgX Limited issued one additional share of Series A
Preferred of IgX Limited to Henry Venture.
II-1
<PAGE>
In addition, from November 1996 to December 1997, Henry Venture loaned IgX
Limited an aggregate principal amount of $5,328,546 with interest accrued
thereon at 9% per annum (the "1996/1997 Henry Venture Notes"). The first
promissory note in the amount of $3,544,312 at December 31, 1997, which includes
$544,312 of accrued and unpaid interest through December 31, 1997, bears
interest at a rate of 9% per annum and is payable in full on December 31, 2001.
The second promissory note issued was in the amount of $328,546, representing
the remaining balance, also bears interest at 9% per annum, and is payable in
full on demand.
In December 1997, as a condition to another venture capital financing, a
further reorganization was effected by which IgX Limited became the wholly owned
subsidiary of Registrant, again with all of the outstanding capital stock (and
securities convertible or exercisable into such capital stock) of IgX Limited
being exchanged for shares of Registrant on a share for share basis and with
Registrant assuming all outstanding indebtedness due to Henry Venture from IgX
Limited.
Further, in December 1997, Registrant sold an aggregate of 748,582 shares
of Series B Preferred Stock for $4,799,983 (or $6.4121 per share), to the
following investors for the number of shares set forth below opposite their
respective names:
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
SERIES B
NAME OF STOCKHOLDER PREFERRED STOCK
- ------------------------------------------------------------------------------ ---------------
<S> <C>
Henry Venture II Limited...................................................... 311,910
NEGF II, L.P.................................................................. 155,955
English and Scottish plc...................................................... 155,955
Meriken Nominees.............................................................. 109,168
Morton I. Kamien.............................................................. 7,797
Lloyd E. Shefsky.............................................................. 7,797
</TABLE>
To effect payment for its shares of Series B Preferred Stock, Henry Venture
exchanged indebtedness of approximately $1,999,998 under the 1996/1997 Henry
Venture Notes, and concurrently restructured the remaining indebtedness into two
promissory notes: one in the principal amount of $3,544,311 (including interest)
due December 31, 2001 with interest accruing from the date thereof at 9% per
annum, and the other note in the principal amount of $328,548 payable on demand,
together with interest accruing thereon at 9% per annum.
In February 1998, Registrant sold an additional 155,955 shares of Series B
Preferred Stock for $999,999 (or $6.4121 per share) to NEGF II, L.P., a
principal stockholder of Registrant and 54,584 shares for $350,000 to Meriken
Nominees.
In May 1998, NEGF II, L.P. loaned Registrant the principal amount of
$1,000,000, due May 6, 2008, with interest accruing thereon at 9% per annum. The
indebtedness is subject to prepayment upon the occurrence of certain conditions,
including the consummation of this Offering. In connection with this financing,
Registrant issued NEGF II, L.P. warrants to purchase 370,000 shares of Common
Stock of Registrant at an exercise price of $0.01 per share. The warrant was
exercised on September 25, 1998.
In May 1998, Registrant sold 249,528 shares of Series B Preferred Stock for
a total of $1,599,998 (or $6.4121 per share) to the following investors for the
number of shares set forth below opposite their respective name:
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
SERIES B
NAME OF STOCKHOLDER PREFERRED STOCK
- ------------------------------------------------------------------------------ ---------------
<S> <C>
English and Scottish plc...................................................... 155,955
Zorn Nominees Limited......................................................... 23,393
Meriken Nominees.............................................................. 31,191
Sundial International Fund Ltd................................................ 38,989
</TABLE>
On September 25, 1998, Henry Venture converted the 1996/1997 Henry Venture
Notes (aggregating $4,092,815 of principal and accrued interest) into
584,688 shares of Common Stock at $7.00 per share. Concurrently NEGF II, L.P.
converted the $1,000,000 promissory note issued to it by Registrant in May 1998
II-2
<PAGE>
(aggregating $1,035,014 of principal and accrued interest) into 147,859 shares
of Common Stock also at $7.00 per share.
From January 1, 1996 through December 1996, IgX Limited granted under its
Stock Option Plan 738,357 options at $1.00 per share to 11 holders and 15,000
options at $5.00 per share to one holder.
In 1997, IgX Limited granted under its Stock Option Plan 325,000 options at
$5.00 per share to 2 holders.
In December 1997, Registrant assumed the outstanding options under the IgX
Limited Stock Option Plan as part of the corporate reorganization referred to
above.
In January 1998, Registrant granted under its 1993 Stock Option Plan 72,500
options at $1.00 per share to 4 holders and 5,000 options at $5.00 per share to
one holder.
In August 1998, Registrant granted under its 1993 Stock Option Plan 40,000
options at $5.00 per share to 2 holders.
In August 1998, Registrant granted under its 1993 Stock Option Plan 40,000
options at $5.00 per share to 2 holders.
The foregoing transactions of Registrant were exempt from registration
under the Securities Act of 1933, as amended, under Sections 3(a)(9) and 4(2)
thereunder and Regulation D and Rule 701 under said Act, and all stock
certificates issued in connection therewith were legended to reflect their
restricted status.
ITEM 16. EXHIBITS
(a) Exhibits:
<TABLE>
<S> <C> <C>
1 -- Form of Underwriting Agreement. In September 1998, Registrant granted under its 1993 Stock
Option Plan 45,000 options at $5.00 per share to holders.
3.1 -- Amended and Restated Certificate of Incorporation of Registrant dated December 24, 1997.
3.1a -- Certificate of Amendment of Amended and Restated Certificate of Incorporation of Registrant
filed January 6, 1998.
3.1b -- Certificate of Amendment of Amended and Restated Certificate of Incorporation of Registrant
filed September 29, 1998.
3.1c -- Form of Amended and Restated Certificate of Incorporation of Registrant to be filed
immediately following the closing of the offering.
3.2 -- Amended and Restated Bylaws of Registrant.
4.1 -- Form of specimen Common Stock Certificate of Registrant.*
4.2 -- IgX Investors' Rights Agreement, dated December 24, 1997, by and among Registrant and
certain investors, as amended by Amendment dated September , 1998.
4.3 -- Stock Purchase Warrant, dated May 6, 1998, between Registrant and NEGF II, L.P.
4.4 -- Form of Lock-up Agreement.*
4.5 -- Waiver of Anti-dilution Rights relating to issuance of May 1998 warrants with respect to
Series A and Series B Preferred Stock.
4.6 -- Waivers of Anti-dilution Rights relating to the initial public offering with respect to
Series B Preferred Stock.
4.7 -- Waivers of Registration Rights.
4.8 -- Form of Representative's Warrants.
4.9 -- Promissory Notes for NEGF note and Henry Venture Notes and agreement to convert debt into
equity.
</TABLE>
II-3
<PAGE>
<TABLE>
<S> <C> <C>
4.10 -- Certificate of Incorporation of IgX Oxford Hepatitis, Corp. together with an Amendment
thereto filed on August 17, 1998 and on Certificate of Designation of Preferred Stock.
4.11 -- Warrant issued to Monsanto Company to purchase shares of IgX Oxford Hepatitis, Corp.
5 -- Opinion of Epstein Becker & Green, P.C., as to legality of the securities being offered
hereby.*
10.1 -- Amended and Restated 1993 Stock Option Plan of Registrant, as amended.
10.2 -- License Agreement, dated May 27, 1992 between University of Arizona and the Registrant.
10.2a -- First Amendment to License Agreement of May 27, 1992, dated August 9, 1993 between
University of Arizona and the Registrant.
10.2b -- Second Amendment to License Agreement of May 27, 1992 dated September 18, 1998 between
University of Arizona and the Registrant.
10.3 -- License Agreement, dated June 19, 1992 between University of Arizona and the Registrant.
10.4 -- License Agreement, dated July 1, 1996 between University of Arizona and the Registrant.
10.4a -- First Amendment to License Agreement of July 1, 1996 dated September 18, 1998 between
University of Arizona and the Registrant.
10.5 -- License Agreement, dated November 1, 1996 between University of Arizona and the Registrant.
10.6 -- License Agreement, dated August 25, 1998 between University of Arizona and the Registrant.
10.7 -- License Agreement dated September 18, 1998 between University of Arizona and the
Registrant.
10.8 -- Letter Agreement dated September 18, 1998 between the Arizona Board of Regents, Charles
Sterling, Vitaliano Cama, Michael Riggs, J. Glenn Songer and the Registrant.
10.9 -- Research Agreement, dated June 1, 1992 between University of Arizona and the Registrant
(F. Javier Enriquez).*
10.10 -- Research Agreement, dated June 1, 1992 between University of Arizona and the Registrant
(Charles R. Sterling).*
10.11 -- Research Agreement, dated March 12, 1993 between University of Arizona and the Registrant.*
10.12 -- Research Agreement, dated July 1, 1996 between University of Arizona and the Registrant.
10.13 -- Research Agreement, dated November 1, 1996 between University of Arizona and the
Registrant.
10.14 -- Research Agreement, dated August 17, 1998 between IgX Oxford Hepatitis Corp. And the
Registrant.
10.15 -- Heads of Agreement dated August 6, 1998 between Laboratorios Sintofarma S.A. and the
Registrant.
10.16 -- Heads of a License and Supply Agreement dated August 7, 1998 between Gador S.A. and the
Registrant.
10.17 -- 1998 Stock Option Plan of Registrant.
10.18 -- Development and License Agreement between IgX Oxford Hepatitis Corp. and Monsanto Company.
10.19 -- Form of Indemnification Agreement with Directors of Registrant.
</TABLE>
II-4
<PAGE>
<TABLE>
<S> <C> <C>
10.20 -- Employment Agreement between Registrant and Carroll Allen.
10.21 -- Employment Agreement between Registrant and Robert Renfroe.
10.22 -- Employment Agreement between Registrant and Craig R. Rennie.
10.22a -- Severance Agreement between Registrant and Craig R. Rennie.
10.23 -- Real Estate Leases.*
21 -- Subsidiaries*
23.1 -- Consent of PricewaterhouseCoopers LLP (included on Page II-8)
23.2 -- Consent of Epstein Becker & Green, P.C. (included in Exhibit 5)*
24 -- Power of Attorney (included on Page II-7).
27 -- Financial Data Schedule.
</TABLE>
- ------------------
*To be filed by amendment.
(b) Financial Statement Schedules:
Schedules have been omitted for the reason that they are not required or
are not applicable or because the required information is included in the
financial statements or the notes thereto.
ITEM 17. UNDERTAKINGS.
Registrant hereby undertakes to provide to the Underwriters at the closing
specified in the Underwriting Agreement certificates in such denominations and
registered in such names as required by the Underwriters to permit prompt
delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of Registrant
pursuant to the foregoing provisions, or otherwise, Registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by Registrant for expenses
incurred or paid by a director, officer or controlling person of 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, Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
Registrant hereby further undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424
(b) if, in the aggregate, the changes in volume and price
represent no more than 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
II-5
<PAGE>
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(5) That, for purposes of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement for the securities offered in the
registration statement, and the offering of the securities at that time shall be
deemed to be the initial bona fide offering of these securities.
II-6
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below does hereby constitute and appoint ALBERT J. HENRY and EDWIN SNAPE, PH.D.,
and each of them, with full power to act without the other, his true and lawful
attorney-in-fact and agent for him and in his name, place and stead, in any and
all capacities, to sign any or all amendments to this Registration Statement and
to file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises in order to effectuate the same, as fully, for all
intents and purposes, as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may
lawfully do or cause to be done by virtue hereof.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, REGISTRANT HAS
DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF NEW YORK, STATE OF NEW
YORK, ON THE 29TH DAY OF SEPTEMBER 1998.
IGX CORP.
By: /s/ ALBERT J. HENRY
----------------------------------
Albert J. Henry
Chairman of the Board
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ------------------------------------------- -------------------
<S> <C> <C>
/s/ ALBERT J. HENRY Chairman of the Board, Chief Executive September 29, 1998
- ------------------------------------------ Officer and Director (Principal Executive
Albert J. Henry Officer)
/s/ TONY GEOGHEGAN Chief Financial Officer (Principal September 29, 1998
- ------------------------------------------ Financial and Accounting Officer)
Tony Geoghegan
/s/ BARUCH BLUMBERG, PH.D. Director September 29, 1998
- ------------------------------------------
Baruch Blumberg, Ph.D.
/s/ RAYMOND A. DWEK Director September 29, 1998
- ------------------------------------------
Raymond A. Dwek
/s/ DONALD H. PICKER PH.D. Director September 29, 1998
- ------------------------------------------
Donald H. Picker Ph.D.
/s/ EDWIN SNAPE, PHD. Director September 29, 1998
- ------------------------------------------
Edwin Snape, PhD.
/s/ RANDOLPH C. STEER, MD, PH.D. Director September 29, 1998
- ------------------------------------------
Randolph C. Steer, MD, Ph.D.
</TABLE>
II-7
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 of our report dated September 14, 1998
relating to the consolidated financial statements of IgX Corp., which appears in
such Prospectus. We also consent to the references to us under the headings
"Experts" in such Prospectus.
/S/ PRICEWATERHOUSECOOPERS LLP
Stamford, Connecticut
September 29, 1998
II-8
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NO.
- ---------- -------------------------------------------------------------------------------------------- -----------
<S> <C> <C> <C>
1 -- Form of Underwriting Agreement.
3.1 -- Amended and Restated Certificate of Incorporation of Registrant dated December 24,
1997.
3.1a -- Certificate of Amendment of Amended and Restated Certificate of Incorporation of
Registrant filed January 6, 1998.
3.1b -- Certificate of Amendment of Amended and Restated Certificate of Incorporation of
Registrant filed September 29, 1998.
3.1c -- Form of Amended and Restated Certificate of Incorporation of Registrant to be filed
immediately following the closing of the offering.
3.2 -- Amended and Restated Bylaws of Registrant.
4.1 -- Form of specimen Common Stock Certificate of Registrant.*
4.2 -- IgX Investors' Rights Agreement, dated December 24, 1997, by and among Registrant and
certain investors, as amended by Amendment dated September , 1998.
4.3 -- Stock Purchase Warrant, dated May 6, 1998, between Registrant and NEGF II, L.P.
4.4 -- Form of Lock-up Agreement.*
4.5 -- Waiver of Anti-dilution Rights relating to issuance of May 1998 warrants with respect
to Series A and Series B Preferred Stock.
4.6 -- Waivers of Anti-dilution Rights relating to the initial public offering with respect
to Series B Preferred Stock.
4.7 -- Waivers of Registration Rights.
4.8 -- Form of Representative's Warrants.
4.9 -- Promissory Notes for NEGF note and Henry Venture Notes and agreement to convert debt
into equity.
4.10 -- Certificate of Incorporation of IgX Oxford Hepatitis, Corp., filed August 4, 1998 together
with an Amendment thereto filed on August 17, 1998 and a Certificate of Designation of
Preferred Stock.
4.11 -- Warrant issued to Monsanto Company to purchase shares of IgX Oxford Hepatitis, Corp.
5 -- Opinion of Epstein Becker & Green, P.C., as to legality of the securities being
offered hereby.*
10.1 -- Amended and Restated 1993 Stock Option Plan of Registrant, as amended.
10.2 -- License Agreement, dated May 27, 1992 between University of Arizona and the Registrant.
10.2a -- First Amendment to License Agreement of May 27, 1992, dated August 9, 1993 between
University of Arizona and the Registrant.
10.2b -- Second Amendment to License Agreement of May 27, 1992 dated September 18, 1998
between University of Arizona and the Registrant.
10.3 -- License Agreement, dated June 19, 1992 between University of Arizona and the
Registrant.
10.4 -- License Agreement, dated July 1, 1996 between University of Arizona and the
Registrant.
10.4a -- First Amendment to License Agreement of July 1, 1996 dated September 18, 1998 between
University of Arizona and the Registrant.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NO.
- ---------- -------------------------------------------------------------------------------------------- -----------
<S> <C> <C> <C>
10.5 -- License Agreement, dated November 1, 1996 between University of Arizona and the
Registrant.
10.6 -- License Agreement, dated August 25, 1998 between University of Arizona and the
Registrant.
10.7 -- License Agreement dated September 18, 1998 between University of Arizona and the
Registrant.
10.8 -- Letter Agreement dated September 18, 1998 between the Arizona Board of Regents,
Charles Sterling, Vitaliano Cama, Michael Riggs, J. Glenn Songer and the Registrant.
10.9 -- Research Agreement, dated June 1, 1992 between University of Arizona and the
Registrant (F. Javier Enriquez).*
10.10 -- Research Agreement, dated June 1, 1992 between University of Arizona and the
Registrant (Charles R. Sterling).*
10.11 -- Research Agreement, dated March 12, 1993 between University of Arizona and the
Registrant.*
10.12 -- Research Agreement, dated July 1, 1996 between University of Arizona and the
Registrant.
10.13 -- Research Agreement, dated November 1, 1996 between University of Arizona and the
Registrant.
10.14 -- Research Agreement, dated August 17, 1998 between IgX Oxford Hepatitis Corp. And the
Registrant.
10.15 -- Heads of Agreement dated August 6, 1998 between Laboratorios Sintofarma S.A. and the
Registrant.
10.16 -- Heads of a License and Supply Agreement dated August 7, 1998 between Gador S.A. and
the Registrant.
10.17 -- 1998 Stock Option Plan of Registrant.
10.18 -- Development and License Agreement between IgX Oxford Hepatitis Corp. and Monsanto
Company.
10.19 -- Form of Indemnification Agreement with Directors of Registrant.
10.20 -- Employment Agreement between Registrant and Carroll Allen.
10.21 -- Employment Agreement between Registrant and Robert Renfroe.
10.22 -- Employment Agreement between Registrant and Craig R. Rennie.
10.22a -- Severance Agreement between Registrant and Craig R. Rennie.
10.23 -- Real Estate Leases.*
21 -- Subsidiaries*
23.1 -- Consent of PricewaterhouseCoopers LLP (included on Page II-8)
23.2 -- Consent of Epstein Becker & Green, P.C. (included in Exhibit 5)*
24 -- Power of Attorney (included on Page II-7).
27 -- Financial Data Schedule.
</TABLE>
- ------------------
*To be filed by amendment.
<PAGE>
[FORM OF UNDERWRITING AGREEMENT]
2,300,000 shares of Common Stock
IgX Corp.
UNDERWRITING AGREEMENT
New York, New York
____________, 1998
Josephthal & Co. Inc.
As Representative of the
Several Underwriters listed on Schedule A hereto
200 Park Avenue, 25th Floor
New York, New York 10166
Ladies and Gentlemen:
IgX Corp., a Delaware corporation (the "Company") confirms its
agreement with Josephthal & Co. Inc. ("Josephthal") and each of the
underwriters named in Schedule A hereto (collectively, the "Underwriters"),
which term shall also include any underwriter substituted as hereinafter
provided in Section 11), for whom Josephthal is acting as representative (in
such capacity, Josephthal shall hereinafter be referred to as "you" or the
"Representative"), with respect to the sale by the Company and the purchase by
the Underwriters, acting severally and not jointly, of the respective numbers
of shares ("Shares") of the Company's common stock, $.001 par value per share
("Common Stock"), set forth in Schedule A annexed hereto. Such Shares are
hereinafter referred to as the "Firm Securities." Upon your request, as
provided in Section 2(b) of this Agreement, the Sellers shall also sell to the
Underwriters, acting severally and not jointly, up to an additional 345,000
shares of Common Stock for the purpose of covering over-allotments, if any.
Such Shares are hereinafter referred to as the "Option Securities." The
Company also proposes to issue and sell to you warrants (the "Representative's
Warrants") pursuant to the Representative's Warrant Agreement dated as of
______, 1998 between the Company and the Representative (the "Representative's
Warrant Agreement") for the purchase of an additional 230,000 shares of Common
Stock. The shares of Common Stock issuable upon exercise of the
Representative's Warrants are hereinafter referred to as the "Representative's
Securities." The Firm Securities, the Option Securities, the Representative's
Warrants and the Representative's Securities are more fully described in the
Registration Statement and the Prospectus referred to below.
1. Representations and Warranties of the Company.
The Company represents and warrants to, and agrees with, each of the
Underwriters as of the date hereof, and as of the Closing Date (as hereinafter
defined) and the Option Closing Date (as hereinafter defined), if any, as
follows:
<PAGE>
(a) The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement, and an
amendment or amendments thereto, on Form S-1 (No. 333-_____ ),
including any related preliminary prospectus ("Preliminary
Prospectus"), for the registration of the Firm Securities, the Option
Securities, the Representative's Warrants and the Representative's
Securities (collectively, hereinafter referred to as the
"Securities"), under the Securities Act of 1933, as amended (the
"Act"), which registration statement and amendment or amendments have
been prepared by the Company in conformity with the requirements of
the Act, and the rules and regulations (the "Regulations") of the
Commission under the Act. The Company will promptly file a further
amendment to said registration statement in the form heretofore
delivered to the Underwriters and will not file any other amendment
thereto to which the Underwriters shall have objected in writing
after having been furnished with a copy thereof. Except as the
context may otherwise require, such registration statement, as
amended, on file with the Commission at the time the registration
statement becomes effective (including the prospectus, financial
statements, schedules, exhibits and all other documents filed as a
part thereof or incorporated therein (including, but not limited to
those documents or information incorporated by reference therein) and
all information deemed to be a part thereof as of such time pursuant
to paragraph (b) of Rule 430(A) of the Regulations), is hereinafter
called the "Registration Statement", and the form of prospectus in
the form first filed with the Commission pursuant to Rule 424(b) of
the Regulations, is hereinafter called the "Prospectus." For purposes
hereof, "Rules and Regulations" mean the rules and regulations
adopted by the Commission under either the Act or the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as applicable.
(b) Neither the Commission nor any state regulatory authority has issued
any order preventing or suspending the use of any Preliminary
Prospectus, the Registration Statement or the Prospectus or any part
of any thereof and no proceedings for a stop order suspending the
effectiveness of the Registration Statement or any of the Company's
securities have been instituted or are pending or threatened. Each of
the Preliminary Prospectus, the Registration Statement and the
Prospectus at the time of filing thereof conformed with the
requirements of the Act and the Rules and Regulations, and none of
the Preliminary Prospectus, the Registration Statement or the
Prospectus at the time of filing thereof contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein and necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading, except that this representation and warranty does not
apply to statements made in reliance upon and in conformity with
written information furnished to the Company with respect to the
Underwriters by or on behalf of the Underwriters expressly for use in
such Preliminary Prospectus, Registration Statement or Prospectus.
(c) When the Registration Statement becomes effective and at all times
subsequent thereto up to the Closing Date and each Option Closing
Date, if any, and during such longer period as the Prospectus may be
required to be delivered in connection with sales by the Underwriters
or a dealer, the Registration Statement and the Prospectus will
contain all statements which are required to be stated therein in
accordance with the Act and the
-2-
<PAGE>
Rules and Regulations, and will conform to the requirements of the
Act and the Rules and Regulations; neither the Registration Statement
nor the Prospectus, nor any amendment or supplement thereto, will
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading, provided, however, that this
representation and warranty does not apply to statements made or
statements omitted in reliance upon and in conformity with
information furnished to the Company with respect to the Underwriters
in writing by or on behalf of any Underwriter expressly for use in
the Preliminary Prospectus, Registration Statement or Prospectus or
any amendment thereof or supplement thereto.
(d) Each of the Company and its subsidiaries, IgX Limited, a Republic of
Ireland corporation ("IgX Ltd."), and IgX Oxford Hepatitis Corp., a
Delaware corporation, ("IgX Oxford"), has been duly organized and is
validly existing as a corporation in good standing under the laws of
the state or country of its incorporation. IgX Ltd. and IgX Oxford
are hereinafter collectively referred to as the "Subsidiaries."
Except as set forth in the Prospectus, neither the Company nor the
Subsidiaries owns an interest in any corporation, partnership, trust,
joint venture or other business entity. Each of the Company and the
Subsidiaries is duly qualified and licensed and in good standing as a
foreign corporation in each jurisdiction in which its ownership or
leasing of any properties or the character of its operations require
such qualification or licensing. The Company owns one hundred percent
(100%) of the outstanding capital stock of IgX Ltd. and __% of the
outstanding capital stock of IgX Oxford and all such shares have been
validly issued, are fully paid and non-assessable, were not issued in
violation of any preemptive rights and are owned free and clear of
any liens, charges, claims, encumbrances, pledges, security
interests, defects or other restrictions or equities of any kind
whatsoever (collectively, "Liens"). Each of the Company and the
Subsidiaries has all requisite power and authority (corporate and
other), and has obtained any and all necessary authorizations,
approvals, orders, licenses, certificates, franchises and permits of
and from all governmental or regulatory officials and bodies
(including, without limitation, those having jurisdiction over
environmental or similar matters), to own or lease its properties and
conduct its business as described in the Prospectus; each of the
Company and the Subsidiaries is and has been doing business in
compliance with all such authorizations, approvals, orders, licenses,
certificates, franchises and permits and all federal, state, local
and foreign laws, rules and regulations; and neither the Company nor
the Subsidiaries has received any notice of proceedings relating to
the revocation or modification of any such authorization, approval,
order, license, certificate, franchise, or permit which, singly or in
the aggregate, if the subject of an unfavorable decision, ruling or
finding, would materially and adversely affect the condition,
financial or otherwise, or the earnings, position, prospects, value,
operation, properties, business or results of operations of the
Company or any of the Subsidiaries. The disclosures in the
Registration Statement concerning the effects of federal, state,
local, and foreign laws, rules and regulations on each of the
Company's and the Subsidiaries' businesses as currently conducted and
as contemplated are correct in all respects and do not omit to state
a material fact necessary to make the statements contained therein
not misleading in light of the circumstances in which they were made.
-3-
<PAGE>
(e) The Company has a duly authorized, issued and outstanding
capitalization as set forth in the Prospectus, under "Capitalization"
and "Description of Capital Stock" and will have the adjusted
capitalization set forth therein on the Closing Date and the Option
Closing Date, if any, based upon the assumptions set forth therein,
and neither the Company nor any of the Subsidiaries is a party to or
bound by any instrument, agreement or other arrangement providing for
it to issue any capital stock, rights, warrants, options or other
securities, except for this Agreement and as described in the
Prospectus. The Securities and all other securities issued or
issuable by the Company conform or, when issued and paid for, will
conform, in all respects to all statements with respect thereto
contained in the Registration Statement and the Prospectus. All
issued and outstanding securities of the Company and the Subsidiaries
have been duly authorized and validly issued and are fully paid and
non-assessable and the holders thereof have no rights of rescission
with respect thereto, and are not subject to personal liability by
reason of being such holders; and none of such securities were issued
in violation of the preemptive rights of any holders of any security
of the Company or similar contractual rights granted by the Company
or any of the Subsidiaries. The Securities are not and will not be
subject to any preemptive or other similar rights of any stockholder,
have been duly authorized and, when issued, paid for and delivered in
accordance with the terms hereof, will be validly issued, fully paid
and nonassessable and will conform to the description thereof
contained in the Prospectus; the holders thereof will not be subject
to any liability solely as such holders; all corporate action
required to be taken for the authorization, issue and sale of the
Securities has been duly and validly taken; and the certificates
representing the Securities will be in due and proper form. Upon the
issuance and delivery pursuant to the terms hereof of the Securities
to be sold by the Company hereunder, the Underwriters or the
Representative, as the case may be, will acquire good and marketable
title to such Securities free and clear of any Lien, of any kind
whatsoever.
(f) The consolidated financial statements of the Company and the
Subsidiaries, together with the related notes and schedules thereto,
included in the Registration Statement, each Preliminary Prospectus
and the Prospectus fairly present the consolidated financial
position, income, changes in cash flow, changes in stockholders'
equity and the results of operations of the Company and the
Subsidiaries at the respective dates and for the respective periods
to which they apply and such financial statements have been prepared
in conformity with generally accepted accounting principles and the
Rules and Regulations, consistently applied throughout the periods
involved. The pro forma financial statements and other pro forma
financial information (including the notes thereto) included in the
Registration Statement and the Prospectus (A) present fairly, in all
material respects, the information shown therein, (B) have been
prepared, in all material respects, in accordance with the applicable
requirements of Rule 11-02 of Regulation S-X promulgated under the
Exchange Act, (C) have been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial
statements, and (D) have been properly compiled on the bases
described therein, and the assumptions used in the preparation of the
pro forma financial statements and other pro forma financial
information and included in the Registration Statement and the
Prospectus are reasonable and the adjustments used therein are
appropriate to give effect to the transactions or
-4-
<PAGE>
circumstances referred to therein. There has been no adverse change
or development involving a material prospective change in the
condition, financial or otherwise, or in the earnings, position,
prospects, value, operation, properties, business, or results of
operation of each of the Company and the Subsidiaries, whether or not
arising in the ordinary course of business, since the date of the
financial statements included in the Registration Statement and the
Prospectus and the outstanding debt, the property, both tangible and
intangible, and the businesses of each of the Company and the
Subsidiaries conform in all respects to the descriptions thereof
contained in the Registration Statement and the Prospectus. Financial
information set forth in the Prospectus under the headings "Summary
Consolidated Financial Data", "Selected Consolidated Financial Data,"
"Capitalization," and "Management's Discussion and Analysis of
Financial Condition and Results of Operations," fairly present, on
the basis stated in the Prospectus, the information set forth
therein, have been derived from or compiled on a basis consistent
with that of the audited consolidated financial statements included
in the Prospectus.
(g) Each of the Company and the Subsidiaries (i) has paid all federal,
state, local, and foreign taxes for which it is liable, including,
but not limited to, withholding taxes and amounts payable under
Chapters 21 through 24 of the Internal Revenue Code of 1986 (the
"Code"), and has furnished all information returns it is required to
furnish pursuant to the Code, (ii) has established adequate reserves
for such taxes which are not due and payable, and (iii) does not have
any tax deficiency or claims outstanding, proposed or assessed
against it.
(h) No transfer tax, stamp duty or other similar tax is payable by or on
behalf of the Underwriters in connection with (i) the issuance by the
Company of the Securities, (ii) the purchase by the Underwriters of
the Securities from the Company and the purchase by the
Representative of the Representative's Warrants from the Company,
(iii) the consummation by the Company of any of its obligations under
this Agreement, or (iv) resales of the Securities in connection with
the distribution contemplated hereby.
(i) Each of the Company and the Subsidiaries maintains insurance
policies, including, but not limited to, general liability and
property insurance, which insures the Company, the Subsidiaries and
their respective employees, against such losses and risks generally
insured against by comparable businesses. Neither the Company nor the
Subsidiaries (A) has failed to give notice or present any insurance
claim with respect to any matter, including but not limited to the
Company's or the Subsidiaries' business, property or employees, under
any insurance policy or surety bond in a due and timely manner, (B)
has any disputes or claims against any underwriter of such insurance
policies or surety bonds or has failed to pay any premiums due and
payable thereunder, or (C) has failed to comply with all conditions
contained in such insurance policies and surety bonds. There are no
facts or circumstances under any such insurance policy or surety bond
which would relieve any insurer of its obligation to satisfy in full
any valid claim of the Company or either of the Subsidiaries.
-5-
<PAGE>
(j) There is no action, suit, proceeding, inquiry, arbitration,
investigation, litigation or governmental proceeding (including,
without limitation, those having jurisdiction over environmental or
similar matters), domestic or foreign, pending or threatened against
(or circumstances that may give rise to the same), or involving the
properties or business of, the Company or either of the Subsidiaries
which (i) questions the validity of the capital stock of the Company,
this Agreement or the Representative's Warrant Agreement, or of any
action taken or to be taken by the Company pursuant to or in
connection with this Agreement or the Representative's Warrant
Agreement, (ii) is required to be disclosed in the Registration
Statement which is not so disclosed (and such proceedings as are
summarized in the Registration Statement are accurately summarized in
all respects), or (iii) might materially and adversely affect the
condition, financial or otherwise, or the earnings, position,
prospects, stockholders' equity, value, operation, properties,
business or results of operations of the Company and the
Subsidiaries, taken as a whole.
(k) The Company has full legal right, power and authority to authorize,
issue, deliver and sell the Securities, and the Representative's
Securities, to enter into this Agreement and the Representative's
Warrant Agreement and to consummate the transactions provided for in
such agreements; and this Agreement and the Representative's Warrant
Agreement have each been duly and properly authorized, executed and
delivered by the Company. Each of this Agreement and the
Representative's Warrant Agreement constitutes a legal, valid and
binding agreement of the Company enforceable against the Company in
accordance with its terms, and none of the Company's issue and sale
of the Securities, or the Representative's Securities, the execution
or delivery of this Agreement or the Representative's Warrant
Agreement, its performance hereunder and thereunder, its consummation
of the transactions contemplated herein and therein, or the conduct
of its business as described in the Registration Statement, the
Prospectus, and any amendments or supplements thereto, conflicts with
or will conflict with or results or will result in any breach or
violation of any of the terms or provisions of, or constitutes or
will constitute a default under, or result in the creation or
imposition of any Lien of any kind whatsoever upon, any property or
assets (tangible or intangible) of the Company or either of the
Subsidiaries pursuant to the terms of (i) the articles of
incorporation, by-laws, memorandum of association or articles of
association of the Company or the Subsidiaries (as the case may be),
(ii) any license, contract, indenture, mortgage, deed of trust,
voting trust agreement, stockholders agreement, note, loan or credit
agreement or any other agreement or instrument to which the Company
or either of the Subsidiaries is a party or by which either of them
is or may be bound or to which either of their properties or assets
(tangible or intangible) is or may be subject, or any indebtedness,
or (iii) any statute, judgment, decree, order, rule or regulation
applicable to the Company or either of the Subsidiaries of any
arbitrator, court, regulatory body or administrative agency or other
governmental agency or body (including, without limitation, those
having jurisdiction over environmental or similar matters), domestic
or foreign, having jurisdiction over the Company or either of the
Subsidiaries or any of their respective activities or properties.
-6-
<PAGE>
(l) Except as described in the Prospectus, no consent, approval,
authorization or order of, and no filing with, any court, regulatory
body, government agency or other body, domestic or foreign, is
required for the issuance of the Securities pursuant to the
Prospectus and the Registration Statement, the issuance of the
Representative's Warrants, the performance of this Agreement and the
Representative's Warrant Agreement and the transactions contemplated
hereby and thereby, including without limitation, any waiver of any
preemptive, first refusal or other rights that any entity or person
may have for the issue and/or sale of any of the Securities, or the
Representative's Warrants, except such as have been or may be
obtained under the Act or may be required under state securities or
blue sky laws (collectively, "Blue Sky") in connection with the
Underwriters' purchase and distribution of the Securities, and the
Representative's Warrants to be sold by the Company hereunder.
(m) All executed agreements, contracts or other documents or copies of
executed agreements, contracts or other documents filed as exhibits
to the Registration Statement to which the Company or either of the
Subsidiaries is a party or by which any of them may be bound or to
which any of their assets, properties or businesses may be subject,
have been duly and validly authorized, executed and delivered by the
Company or the Subsidiaries and constitute the legal, valid and
binding agreements of the Company or the Subsidiaries, as the case
may be, enforceable against the Company or the Subsidiaries, as the
case may be, in accordance with their respective terms. The
descriptions in the Registration Statement of agreements, contracts
and other documents are accurate and fairly present the information
required to be shown with respect thereto by Form S-1, and there are
no contracts or other documents which are required by the Act to be
described in the Registration Statement or filed as exhibits to the
Registration Statement which are not described or filed as required,
and the exhibits which have been filed are complete and correct
copies of the documents of which they purport to be copies.
(n) Subsequent to the respective dates as of which information is set
forth in the Registration Statement and the Prospectus, and except as
may otherwise be indicated or contemplated herein or therein, neither
the Company nor the Subsidiaries has (i) issued any securities or
incurred any liability or obligation, direct or contingent, for
borrowed money, (ii) entered into any transaction other than in the
ordinary course of business consistent with past practice, or (iii)
declared or paid any dividend or made any other distribution on or in
respect of its capital stock of any class, and there has not been any
change in the capital stock, or any change in the debt (long or short
term) or liabilities or material change in or affecting the general
affairs, management, financial operations, stockholders' equity or
results of operations of the Company and the Subsidiaries taken as a
whole.
(o) No default exists in the due performance and observance of any term,
covenant or condition of any license, contract, indenture, mortgage,
installment sale agreement, lease, deed of trust, voting trust
agreement, stockholders agreement, partnership agreement, note, loan
or credit agreement, purchase order, or any other material agreement
or instrument evidencing an obligation for borrowed money, or any
other material agreement or instrument to which the Company or the
Subsidiaries is a party or by which the Company
-7-
<PAGE>
or the Subsidiaries may be bound or to which the property or assets
(tangible or intangible) of the Company or the Subsidiaries is
subject or affected.
(p) Each of the Company and the Subsidiaries has generally enjoyed a
satisfactory employer-employee relationship with its employees and is
in compliance with all federal, state, local, and foreign laws and
regulations respecting employment and employment practices, terms and
conditions of employment and wages and hours. There are no pending
investigations involving the Company or the Subsidiaries, by the U.S.
Department of Labor, or any other governmental agency responsible for
the enforcement of such federal, state, local, or foreign laws and
regulations. There is no unfair labor practice charge or complaint
against the Company or the Subsidiaries pending before the National
Labor Relations Board or any strike, picketing, boycott, dispute,
slowdown or stoppage pending or threatened against or involving the
Company or the Subsidiaries, or any predecessor entity, and none has
ever occurred. No representation question exists respecting the
employees of the Company or the Subsidiaries, and no collective
bargaining agreement or modification thereof is currently being
negotiated by the Company or the Subsidiaries. No grievance or
arbitration proceeding is pending under any expired or existing
collective bargaining agreements of the Company or the Subsidiaries.
No labor dispute with the employees of the Company or the
Subsidiaries exists, or is imminent.
(q) Except as described in the Prospectus, neither the Company nor any of
the Subsidiaries maintains, sponsors or contributes to any program or
arrangement that is an "employee pension benefit plan," an "employee
welfare benefit plan," or a "multiemployer plan" as such terms are
defined in Sections (2), 3(1) and 3(37), respectively, of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")
(the foregoing are collectively, "ERISA Plans"). Neither the Company
nor any of the Subsidiaries maintains or contributes, now or at any
time previously, to a defined benefit plan, as defined in Section
3(35) of ERISA. No ERISA Plan (or any trust created thereunder) has
engaged in a "prohibited transaction" within the meaning of Section
406 of ERISA or Section 4975 of the Code, which could subject the
Company or any of the Subsidiaries to any tax penalty on prohibited
transactions and which has not adequately been corrected. Each ERISA
Plan is in compliance with all material reporting, disclosure and
other requirements of the Code and ERISA as they relate to any such
ERISA Plan. Determination letters have been received from the
Internal Revenue Service with respect to each ERISA Plan which is
intended to comply with Code Section 401(a), stating that such ERISA
Plan and the attendant trust are qualified thereunder. Neither the
Company nor any of the Subsidiaries has ever completely or partially
withdrawn from a "multiemployer plan."
(r) None of the Company, the Subsidiaries, or any of their respective
employees, directors, stockholders, partners, or affiliates (within
the meaning of the Rules and Regulations) has taken or will take,
directly or indirectly, any action designed to or which has
constituted or which might be expected to cause or result in, under
the Exchange Act, or otherwise,
-8-
<PAGE>
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities or
otherwise.
(s) Except as otherwise disclosed in the Prospectus, none of the patents,
patent applications, trademarks, service marks, trade names and
copyrights, and licenses and rights to the foregoing presently owned
or held by the Company and the Subsidiaries, are in dispute so far as
known by the Company or are in any conflict with the right of any
other person or entity. To the best of the Company's knowledge, each
of the Company and the Subsidiaries (i) owns or has the right to use,
free and clear of all Liens of any kind whatsoever, all patents,
trademarks, service marks, trade names and copyrights, technology and
licenses and rights with respect to the foregoing, used in the
conduct of its business as now conducted or proposed to be conducted
without infringing upon or otherwise acting adversely to the right or
claimed right of any person, corporation or other entity under or
with respect to any of the foregoing and (ii) except as set forth in
the Prospectus, is not obligated or under any liability whatsoever to
make any payment by way of royalties, fees or otherwise to any owner
or licensee of, or other claimant to, any patent, trademark, service
mark, trade name, copyright, know-how, technology or other intangible
asset, with respect to the use thereof or in connection with the
conduct of its business or otherwise.
(t) Each of the Company and the Subsidiaries owns and has the
unrestricted right to use all trade secrets, know-how (including all
other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), inventions, designs, processes,
works of authorship, computer programs and technical data and
information (collectively herein "Intellectual Property") that are
material to the development, manufacture, operation and sale of all
products and services sold or proposed to be sold by any of the
Company or the Subsidiaries, free and clear of and without violating
any right, Lien, or claim of others, including without limitation,
former employers of its employees; provided, however, that the
possibility exists that other persons or entities, completely
independently of the Company or the Subsidiaries, as the case may be,
or their respective employees or agents, could have developed trade
secrets or items of technical information similar or identical to
those of the Company and the Subsidiaries. The Company is not aware
of any such development of similar or identical trade secrets or
technical information by others.
(u) Each of the Company and the Subsidiaries has taken reasonable
security measures to protect the secrecy, confidentiality and value
of all its Intellectual Property in all material aspects.
(v) Each of the Company and the Subsidiaries has good and marketable
title to, or valid and enforceable leasehold estates in, all items of
real and personal property stated in the Prospectus, to be owned or
leased by it free and clear of all Liens, of any kind whatsoever,
other than those referred to in the Prospectus and Liens for taxes
not yet due and payable.
-9-
<PAGE>
(w) Pricewaterhouse Coopers LLP, whose report is filed with the
Commission as a part of the Registration Statement, are independent
certified public accountants as required by the Act and the Rules and
Regulations.
(x) The Company has caused to be duly executed legally binding and
enforceable agreements pursuant to which, each of the Company's
stockholders and all holders of securities exchangeable or
exercisable for or convertible into shares of Common Stock have
agreed not to, directly or indirectly, offer to sell, sell, grant any
option for the sale of, assign, transfer, pledge, hypothecate or
otherwise encumber or dispose of any shares of Common Stock or
securities convertible into, exercisable or exchangeable for or
evidencing any right to purchase or subscribe for any shares of
Common Stock (either pursuant to Rule 144 of the Rules and
Regulations or otherwise) or dispose of any beneficial interest
therein for a period of not less than 9 months following the
effective date of the Registration Statement without the prior
written consent of the Representative. The Company will cause the
Transfer Agent, as defined below, to mark an appropriate legend on
the face of stock certificates representing all of such securities
and to place "stop transfer" orders on the Company's stock ledgers.
(y) There are no claims, payments, issuances, arrangements or
understandings, whether oral or written, for services in the nature
of a finder's, consulting or origination fee with respect to the sale
of the Securities hereunder or any other arrangements, agreements,
understandings, payments or issuances with respect to the Company,
the Subsidiaries or any of their respective officers, directors,
stockholders, partners, employees or affiliates that may affect the
Underwriters' compensation, as determined by the National Association
of Securities Dealers, Inc. ("NASD").
(z) The Securities have been approved for quotation on the National
Association of Securities Dealers, Inc. Automated Quotation
System/National Market ("NASDAQ-NM") .
(aa) Neither the Company nor the Subsidiaries, nor any of their respective
officers, employees, agents or any other person acting on behalf of
the Company or the Subsidiaries has, directly or indirectly, given or
agreed to give any money, gift or similar benefit (other than legal
price concessions to customers in the ordinary course of business) to
any customer, supplier, employee or agent of a customer or supplier,
or official or employee of any governmental agency (domestic or
foreign) or instrumentality of any government (domestic or foreign)
or any political party or candidate for office (domestic or foreign)
or other person who was, is, or may be in a position to help or
hinder the business of the Company or the Subsidiaries (or assist the
Company or the Subsidiaries in connection with any actual or proposed
transaction) which (a) might subject the Company or either of the
Subsidiaries, or any other such person to any damage or penalty in
any civil, criminal or governmental litigation or proceeding
(domestic or foreign), (b) if not given in the past, might have had a
materially adverse effect on the assets, business or operations of
the Company or either of the Subsidiaries, or (c) if not continued in
the future, might adversely affect the assets, business, operations
or prospects of the Company or either of the Subsidiaries. The
Company's and the Subsidiaries' internal accounting
-10-
<PAGE>
controls are sufficient to cause the Company and the Subsidiaries to
comply with the Foreign Corrupt Practices Act of 1977, as amended.
(ab) Except as set forth in the Prospectus, no officer, director,
stockholder or partner of the Company or the Subsidiaries, or any
"affiliate" or "associate" (as these terms are defined in Rule 405
promulgated under the Rules and Regulations) of any of the foregoing
persons or entities has or has had, either directly or indirectly (i)
an interest in any person or entity which (A) furnishes or sells
services or products which are furnished or sold or are proposed to
be furnished or sold by the Company or the Subsidiaries, or (B)
purchases from or sells or furnishes to the Company or the
Subsidiaries any goods or services, or (ii) a beneficial interest in
any contract or agreement to which the Company or either of the
Subsidiaries is a party or by which it may be bound or affected.
Except as set forth in the Prospectus under "Certain Transactions,"
there are no existing agreements, arrangements, understandings or
transactions, or proposed agreements, arrangements, understandings or
transactions, between or among the Company or the Subsidiaries, and
any officer, director, principal stockholder of the Company or the
Subsidiaries, or any partner, affiliate or associate of any of the
foregoing persons or entities.
(ac) Any certificate signed by any officer of the Company or any officer
of the Subsidiaries, and delivered to the Underwriters or to
Underwriters' Counsel (as defined herein) shall be deemed a
representation and warranty by the Company to the Underwriters as to
the matters covered thereby.
(ad) Each of the minute books of the Company and the Subsidiaries have
been made available to the Underwriters and contains a complete
summary of all meetings and actions of the directors and stockholders
of the Company and the Subsidiaries, respectively, since the time of
its respective incorporation, and reflects all transactions referred
to in such minutes accurately in all respects.
(ae) Except and to the extent described in the Prospectus or otherwise
waived, no holders of any securities of the Company or the
Subsidiaries or of any options, warrants or other convertible or
exchangeable securities of the Company or the Subsidiaries have the
right to include any securities issued by the Company or the
Subsidiaries in the Registration Statement or any registration
statement to be filed by the Company or to require the Company to
file a registration statement under the Act and no person or entity
holds any anti-dilution rights with respect to any securities of the
Company or the Subsidiaries.
(af) The Company has as of the effective date of the Registration
Statement (i) entered into an employment agreement with each of
Robert L. Renfroe and Carroll W. Allen in the forms filed as Exhibits
__________ and ________, respectively, to the Registration Statement,
and (ii) purchased term key-man insurance on the life of Albert J.
Henry and in the amount of $3,000,000, which policy names the Company
as the sole beneficiary thereof.
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<PAGE>
(ag) The Company will conduct its operations in a manner that will not
subject it to registration as an investment company under the
Investment Company Act of 1940, as amended, and this transaction will
not cause the Company to become an investment company subject to
registration under such Act.
(ah) All offers and sales of the Company's capital stock prior to the date
hereof, including the offer and sale of an aggregate of _______shares
of Series B Preferred Stock in connection with the 1997 Private
Placement and the 1998 Private Placement _______________ (as each
such term is defined in the Prospectus or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus), were at all
relevant times exempt from the registration requirements of the Act,
and were the subject of an available exemption from the registration
requirements of all applicable state securities or blue sky laws; and
the Confidential Private Placement Memorandum, dated as of
____________, 1997 and the Confidential Private Placement Memorandum,
dated as of ____________, 1998, delivered to potential investors in
connection with the 1997 Private Placement and the 1998 Private
Placement, respectively, did not include any untrue statement of a
material fact or omit to state any material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(ai) The clinical trials and the human and animal studies conducted by or
on behalf of the Company or in which the Company has participated
that are described in the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) were and, if still
pending, are being conducted in accordance with standard medical and
scientific research procedures, and the Company has operated and
currently is in compliance in all respects with all applicable laws
and regulations, including without limitation, all United States Food
and Drug Administration rules, regulations and policies.
(aj) The Company has not received and is not aware of any communication
(written or oral) relating to the termination or modification of any
of the agreements described or referred to in the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary
Prospectus) under the caption "Business -Patents and Proprietary
Rights," the termination or modification of which would have a
material adverse effect on the Company.
2. Purchase, Sale and Delivery of the Securities and Representative's
Warrants.
(a) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions
herein set forth, the Company agrees to sell to each Underwriter, and
each Underwriter, severally and not jointly, agrees to purchase from
the Company at a price of $________[93% of the public offering price]
per Share, that number of Firm Securities set forth in Schedule A
opposite the name of such Underwriter, subject to such adjustment as
the Representative in its sole discretion shall make to eliminate any
sales or purchases of fractional shares, plus any additional number
of Firm Securities which such Underwriter may become obligated to
purchase pursuant to the provisions of Section 11 hereof.
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<PAGE>
(b) In addition, on the basis of the representations, warranties,
covenants and agreements herein contained, but subject to the terms
and conditions herein set forth, the Company hereby grants an option
to the Underwriters, severally and not jointly, to purchase all or
any part of an additional 345,000 shares of Common Stock at a price
of $________ [93% of the public offering price] per Share. The option
granted hereby will expire 45 days after (i) the date the
Registration Statement becomes effective, if the Company has elected
not to rely on Rule 430A under the Rules and Regulations, or (ii) the
date of this Agreement if the Company has elected to rely upon Rule
430A under the Rules and Regulations, and may be exercised in whole
or in part from time to time only for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Firm Securities upon notice by the Representative
to the Company setting forth the number of Option Securities as to
which the several Underwriters are then exercising the option and the
time and date of payment and delivery for any such Option Securities.
Any such time and date of delivery (an "Option Closing Date") shall
be determined by the Representative, but shall not be later than
seven full business days after the exercise of said option, nor in
any event prior to the Closing Date, as hereinafter defined, unless
otherwise agreed upon by the Representative and the Company. Nothing
herein contained shall obligate the Underwriters to make any
over-allotments. No Option Securities shall be delivered unless the
Firm Securities shall be simultaneously delivered or shall
theretofore have been delivered as herein provided.
(c) Payment of the purchase price for, and delivery of certificates for,
the Firm Securities shall be made at the offices of the
Representative at 200 Park Avenue, 25th Floor, New York, New York
10166, or at such other place as shall be agreed upon by the
Representative and the Company. Such delivery and payment shall be
made at 10:00 a.m. (New York City time) on _______________, 1998 or
at such other time and date as shall be agreed upon by the
Representative and the Company, but not less than three (3) nor more
than four (4) full business days after the effective date of the
Registration Statement (such time and date of payment and delivery
being herein called "Closing Date"). In addition, in the event that
any or all of the Option Securities are purchased by the
Underwriters, payment of the purchase price for, and delivery of
certificates for, such Option Securities shall be made at the above
mentioned office of the Representative or at such other place as
shall be agreed upon by the Representative and the Company on each
Option Closing Date as specified in the notice from the
Representative to the Company. Delivery of the certificates for the
Firm Securities and the Option Securities, if any, shall be made to
the Underwriters against payment by the Underwriters, severally and
not jointly, of the purchase price for the Firm Securities and the
Option Securities, if any, to the order of the Company for the Firm
Securities and the Option Securities, if any, by New York Clearing
House funds. In the event such option is exercised, each of the
Underwriters, acting severally and not jointly, shall purchase that
proportion of the total number of Option Securities then being
purchased which the number of Firm Securities set forth in Schedule A
hereto opposite the name of such Underwriter bears to the total
number of Firm Securities, subject in each case to such adjustments
as the Representative in its discretion shall make to eliminate any
sales or purchases of fractional shares. Certificates for the Firm
Securities and the Option Securities, if any,
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<PAGE>
shall be in definitive, fully registered form, shall bear no
restrictive legends and shall be in such denominations and registered
in such names as the Underwriters may request in writing at least two
(2) business days prior to the Closing Date or the relevant Option
Closing Date, as the case may be. The certificates for the Firm
Securities and the Option Securities, if any, shall be made available
to the Representative at such office or such other place as the
Representative may designate for inspection, checking and packaging
no later than 9:30 a.m. on the last business day prior to the Closing
Date or the relevant Option Closing Date, as the case may be.
(d) On the Closing Date, the Company shall issue and sell to the
Representative Representative's Warrants at a purchase price of
$.0001 per warrant, which warrants shall entitle the holders thereof
to purchase an aggregate of 230,000 shares of Common Stock. The
Representative's Warrants shall be exercisable for a period of four
(4) years commencing one (1) year from the effective date of the
Registration Statement at a price equaling one hundred twenty percent
(120%) of the public offering price of the Shares. The
Representative's Warrant Agreement and form of Warrant Certificate
shall be substantially in the form filed as Exhibit __ to the
Registration Statement. Payment for the Representative's Warrants
shall be made on the Closing Date.
3. Public Offering of the Shares. As soon after the Registration Statement
becomes effective as the Representative deems advisable, the Underwriters
shall make a public offering of the Shares (other than to residents of or in
any jurisdiction in which qualification of the Shares is required and has not
become effective) at the price and upon the other terms set forth in the
Prospectus. The Representative may from time to time increase or decrease the
public offering price after distribution of the Shares has been completed to
such extent as the Representative, in its sole discretion deems advisable. The
Underwriters may enter into one or more agreements as the Underwriters, in
each of their sole discretion, deem advisable with one or more broker-dealers
who shall act as dealers in connection with such public offering.
4. Covenants and Agreements of the Company. The Company covenants and agrees
with each of the Underwriters as follows:
(a) The Company shall use its best efforts to cause the Registration
Statement and any amendments thereto to become effective as promptly
as practicable and will not at any time, whether before or after the
effective date of the Registration Statement, file any amendment to
the Registration Statement or supplement to the Prospectus or file
any document under the Act or Exchange Act before termination of the
offering of the Shares by the Underwriters of which the
Representative shall not previously have been advised and furnished
with a copy, or to which the Representative shall have objected or
which is not in compliance with the Act, the Exchange Act or the
Rules and Regulations.
(b) As soon as the Company is advised or obtains knowledge thereof, the
Company will advise the Representative and confirm the notice in
writing (i) when the Registration Statement, as amended, becomes
effective, if the provisions of Rule 430A promulgated under the Act
will be relied upon, when the Prospectus has been filed in accordance
with
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<PAGE>
said Rule 430A and when any post-effective amendment to the
Registration Statement becomes effective, (ii) of the issuance by the
Commission of any stop order or of the initiation, or the
threatening, of any proceeding, suspending the effectiveness of the
Registration Statement or any order preventing or suspending the use
of the Preliminary Prospectus or the Prospectus, or any amendment or
supplement thereto, or the institution of proceedings for that
purpose, (iii) of the issuance by the Commission or by any state
securities commission of any proceedings for the suspension of the
qualification of any of the Securities for offering or sale in any
jurisdiction or of the initiation, or the threatening, of any
proceeding for that purpose, (iv) of the receipt of any comments from
the Commission; and (v) of any request by the Commission for any
amendment to the Registration Statement or any amendment or
supplement to the Prospectus or for additional information. If the
Commission or any state securities commission or authority shall
enter a stop order or suspend such qualification at any time, the
Company will make every effort to obtain promptly the lifting of such
order or suspension.
(c) The Company shall file the Prospectus (in form and substance
satisfactory to the Representative) or transmit the Prospectus by a
means reasonably calculated to result in filing with the Commission
pursuant to Rule 424(b)(1) (or, if applicable and if consented to by
the Representative, pursuant to Rule 424(b)(4)) not later than the
Commission's close of business on the earlier of (i) the second
business day following the execution and delivery of this Agreement,
and (ii) the fifth business day after the effective date of the
Registration Statement.
(d) The Company will give the Representative notice of its intention to
file or prepare any amendment to the Registration Statement
(including any post-effective amendment) or any amendment or
supplement to the Prospectus (including any revised prospectus which
the Company proposes for use by the Underwriters in connection with
the offering of the Securities which differs from the corresponding
prospectus on file at the Commission at the time the Registration
Statement becomes effective, whether or not such revised prospectus
is required to be filed pursuant to Rule 424(b) of the Rules and
Regulations), and will furnish the Representative with copies of any
such amendment or supplement a reasonable amount of time prior to
such proposed filing or use, as the case may be, and will not file
any such prospectus to which the Representative or Sonnenschein Nath
& Rosenthal ("Underwriters' Counsel"), shall object.
(e) The Company shall endeavor in good faith, in cooperation with the
Representative, at or prior to the time the Registration Statement
becomes effective, to qualify the Securities for offering and sale
under the securities laws of such jurisdictions as the Representative
may designate to permit the continuance of sales and dealings therein
for as long as may be necessary to complete the distribution, and
shall make such applications, file such documents and furnish such
information as may be required for such purpose; provided, however,
the Company shall not be required to qualify as a foreign corporation
or file a general or limited consent to service of process in any
such jurisdiction. In each jurisdiction where such qualification
shall be effected, the Company will, unless the Representative agrees
that such action is not at the time necessary or advisable, use all
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<PAGE>
reasonable efforts to file and make such statements or reports at
such times as are or may reasonably be required by the laws of such
jurisdiction to continue such qualification.
(f) During the time when a prospectus is required to be delivered under
the Act, the Company shall use all reasonable efforts to comply with
all requirements imposed upon it by the Act and the Exchange Act, as
now and hereafter amended and by the Rules and Regulations, as from
time to time in force, so far as necessary to permit the continuance
of sales of or dealings in the Securities in accordance with the
provisions hereof and the Prospectus, or any amendments or
supplements thereto. If at any time when a prospectus relating to the
Securities or the Representative's Securities is required to be
delivered under the Act, any event shall have occurred as a result of
which, in the opinion of counsel for the Company or Underwriters'
Counsel, the Prospectus, as then amended or supplemented, includes an
untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which
they were made, not misleading, or if it is necessary at any time to
amend the Prospectus to comply with the Act, the Company will notify
the Representative promptly and prepare and file with the Commission
an appropriate amendment or supplement in accordance with Section 10
of the Act, each such amendment or supplement to be satisfactory to
Underwriters' Counsel, and the Company will furnish to the
Underwriters copies of such amendment or supplement as soon as
available and in such quantities as the Underwriters may request.
(g) As soon as practicable, but in any event not later than 45 days after
the end of the 12-month period beginning on the day after the end of
the fiscal quarter of the Company during which the effective date of
the Registration Statement occurs (90 days in the event that the end
of such fiscal quarter is the end of the Company's fiscal year), the
Company shall make generally available to its security holders, in
the manner specified in Rule 158(b) of the Rules and Regulations, and
to the Representative, an earnings statement which will be in the
detail required by, and will otherwise comply with, the provisions of
Section 11(a) of the Act and Rule 158(a) of the Rules and
Regulations, which statement need not be audited unless required by
the Act, covering a period of at least 12 consecutive months after
the effective date of the Registration Statement.
(h) During a period of seven years after the date hereof, the Company
will furnish to its stockholders, as soon as practicable, annual
reports (including financial statements audited by independent public
accountants) and unaudited quarterly reports of earnings, and will
deliver to the Representative:
i) concurrently with furnishing such quarterly reports to its
stockholders, statements of income of the Company and the
Subsidiaries for each quarter in the form furnished to the
Company's stockholders and certified by the Company's
principal financial or accounting officer;
ii) concurrently with furnishing such annual reports to its
stockholders, a balance sheet of the Company and the
Subsidiaries as at the end of the preceding fiscal
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<PAGE>
year, together with statements of operations, stockholders
equity, and cash flows of the Company and the Subsidiaries
for such fiscal year, accompanied by a copy of the
certificate thereon of independent certified public
accountants;
iii) as soon as they are available, copies of all reports
(financial or other) mailed to stockholders;
iv) as soon as they are available, copies of all reports and
financial statements furnished to or filed with the
Commission, the NASD or any securities exchange;
v) every press release and every material news item or article
of interest to the financial community in respect of the
Company, the Subsidiaries or their respective affairs which
was released or prepared by or on behalf of the Company or
the Subsidiaries; and
vi) any additional information of a public nature concerning the
Company or the Subsidiaries (and any future subsidiaries) or
any of their respective businesses which the Representative
may request.
During such seven-year period, if the Company has active
subsidiaries, the foregoing financial statements will be on
a consolidated basis to the extent that the accounts of the
Company and its subsidiaries are consolidated, and will be
accompanied by similar financial statements for any
significant subsidiary which is not so consolidated.
(i) The Company will maintain a transfer agent and, if necessary under
the jurisdiction of incorporation of the Company, a Registrar (which
may be the same entity as the transfer agent) for its Common Stock.
(j) The Company will furnish or cause to be furnished to the
Representative, without charge, at such place as the Representative
may designate, copies of each Preliminary Prospectus, the
Registration Statement and any pre-effective or post-effective
amendments thereto (two of which copies will be manually signed and
will include all financial statements and exhibits), the Prospectus,
and all amendments and supplements thereto, including any prospectus
prepared after the effective date of the Registration Statement, in
each case as soon as available and in such quantities as the
Representative may request.
(k) On or before the effective date of the Registration Statement, the
Company shall provide the Representative with true copies of duly
executed, legally binding and enforceable agreements pursuant to
which for a period of nine (9) months from the effective date of the
Registration Statement, each of the Company's stockholders and all
holders of securities exchangeable or exercisable for or convertible
into shares of Common Stock, agrees that it or he or she will not
directly or indirectly, issue, offer to sell, sell, grant an option
for the sale of, assign, transfer, pledge, hypothecate or otherwise
encumber or dispose of any shares of Common Stock or securities
convertible into, exercisable or
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<PAGE>
exchangeable for or evidencing any right to purchase or subscribe for
any shares of Common Stock (either pursuant to Rule 144 of the Rules
and Regulations or otherwise) or dispose of any beneficial interest
therein without the prior written consent of the Representative
(collectively, the "Lock-up Agreements". In addition, during the nine
(9) month period commencing with the effective date of the
Registration Statement, the Company shall not, without the prior
written consent of the Representative sell, contract or offer to
sell, issue, transfer, assign, pledge, distribute, or otherwise
dispose of, directly or indirectly, any shares of Common Stock or any
securities convertible into or exchangeable or exercisable for shares
of Common Stock. On or before the Closing Date, the Company shall
deliver instructions to the Transfer Agent authorizing it to place
appropriate legends on the certificates representing the securities
subject to the Lock-up Agreements and to place appropriate stop
transfer orders on the Company's ledgers.
(l) None of the Company, the Subsidiaries, nor any of their respective
officers, directors, stockholders, nor any of their respective
affiliates (within the meaning of the Rules and Regulations) will
take, directly or indirectly, any action designed to, or which might
in the future reasonably be expected to cause or result in,
stabilization or manipulation of the price of any securities of the
Company.
(m) The Company shall apply the net proceeds from the sale of the
Securities in the manner, and subject to the conditions, set forth
under "Use of Proceeds" in the Prospectus. No portion of the net
proceeds will be used, directly or indirectly, to acquire any
securities issued by the Company or the Subsidiaries [except pursuant
to the right of first refusal with respect to securities of IgX
Oxford].
(n) The Company shall timely file all such reports, forms or other
documents as may be required (including, but not limited to, a Form
SR as may be required pursuant to Rule 463 under the Act) from time
to time, under the Act, the Exchange Act, and the Rules and
Regulations. and all such reports, forms and documents filed will
comply as to form and substance with the applicable requirements
under the Act, the Exchange Act, and the Rules and Regulations.
(o) The Company shall furnish to the Representative as early as
practicable prior to each of the date hereof, the Closing Date and
each Option Closing Date, if any, but no later than two (2) full
business days prior thereto, a copy of the latest available unaudited
interim financial statements of the Company (which in no event shall
be as of a date more than thirty (30) days prior to the date of the
Registration Statement) which have been read by the Company's
independent public accountants as stated in their letters to be
furnished pursuant to Section 6(k) hereof.
(p) The Company shall cause the Securities to be listed on NASDAQ/NM and
for a period of seven (7) years from the date hereof, use its best
efforts to maintain the NASDAQ/NM listing of the Securities to the
extent outstanding.
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<PAGE>
(q) For a period of five (5) years from the Closing Date, the Company
shall furnish to the Representative at the Company's sole expense (i)
daily consolidated transfer sheets relating to the Common Stock, (ii)
the list of holders of all of the Company's securities and (iii) a
Blue Sky "Trading Survey" for secondary sales of the Company's
securities prepared by counsel to the Company.
(r) As soon as practicable (i) but in no event more than 10 business days
before the effective date of the Registration Statement, file a Form
8-A with the Commission providing for the registration under the
Exchange Act of the Securities, and (ii) but in no event more than 30
days from the effective date of the Registration Statement, take all
necessary and appropriate actions to be included in Standard and
Poors Corporation Descriptions and Moodys OTC Manual and to continue
such inclusion for a period of not less than seven (7) years.
(s) The Company hereby agrees that it will not for a period of nine (9)
months from the effective date of the Registration Statement, adopt,
propose to adopt or otherwise permit to exist any employee, officer,
director, consultant or compensation plan or arrangement permitting
(i) the grant, issue, sale or entry into any agreement to grant,
issue or sell any option, warrant or other contract right for any
shares of Common Stock or other securities of the Company (x) at an
exercise or sale price that is less than the greater of the public
offering price of the Shares set forth herein and the fair market
value of the Common Stock on the date of grant or sale or (y) to any
of its executive officers or directors or to any holder of 5% or more
of the Common Stock; (ii) the maximum number of shares of Common
Stock or other securities of the Company purchasable at any time
pursuant to options or warrants issued by the Company to exceed
______shares; (iii) the payment for such securities with any form of
consideration other than cash, or (iv) the existence of stock
appreciation rights, phantom options or similar arrangements.
(t) Until the completion of the distribution of the Securities, the
Company shall not, without the prior written consent of the
Representative and Underwriters' Counsel, issue, directly or
indirectly any press release or other communication or hold any press
conference with respect to the Company or its activities or the
offering contemplated hereby, other than trade releases issued in the
ordinary course of the Company's business consistent with past
practices with respect to the Company's operations.
(u) For a period equal to the lesser of (i) seven (7) years from the date
hereof, and (ii) the sale to the public of the Representative's
Securities, the Company will not take any action or actions which may
prevent or disqualify the Company's use of Form S-1 (or other
appropriate form) for the registration under the Act of the
Representative's Securities.
(v) For a period of five years after the effective date of the
Registration Statement, the Representative shall have the right to
designate one (1) individual to the Board of Directors of the Company
(the "Board"). In the event the Representative shall not have
designated such individual at the time of any meeting of the Board or
such person is unavailable to serve, the Company shall notify the
Representative of each meeting of the Board. An individual selected
by the Representative shall be permitted to attend all
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<PAGE>
meetings of the Board and to receive all notices and other
correspondence and communications sent by the Company to members of
the Board. Such individual shall be reimbursed for all out-of-pocket
expenses incurred in connection with his service on, or attendance of
meetings of, the Board.
5. Payment of Expenses.
(a) The Company hereby agrees to pay on each of the Closing Date and the
Option Closing Date (to the extent not paid at the Closing Date) all
expenses and fees (other than fees of Underwriters' Counsel, except
as provided in (iv) below) incident to the performance of the
obligations of the Company under this Agreement and the
Representative's Warrant Agreement, including, without limitation,
(i) the fees and expenses of accountants and counsel for the Company,
(ii) all costs and expenses incurred in connection with the
preparation, duplication, printing (including mailing and handling
charges), filing, delivery and mailing (including the payment of
postage with respect thereto) of the Registration Statement, and the
Prospectus and any amendments and supplements thereto and the
printing, mailing (including the payment of postage with respect
thereto) and delivery of this Agreement, the Representative's Warrant
Agreement and related documents, including the cost of all copies
thereof and of the Preliminary Prospectuses and of the Prospectus and
any amendments thereof or supplements thereto supplied to the
Underwriters and such dealers as the Underwriters may request, in
quantities as herein above stated, (iii) the printing, engraving,
issuance and delivery of the Securities including, but not limited to
(x) the purchase by the Underwriters of the Securities and the
purchase by the Representative of the Representative's Warrants from
the Company, (y) the consummation by the Company of any of its
obligations under this Agreement and the Representative's Warrant
Agreement, and (z) resale of the Securities by the Underwriters in
connection with the distribution contemplated hereby, (iv) the
qualification of the Securities under state or foreign securities or
"Blue Sky" laws and determination of the status of such securities
under legal investment laws, including the costs of printing and
mailing the "Preliminary Blue Sky Memorandum", the "Supplemental Blue
Sky Memorandum" and "Legal Investments Survey," if any, and
disbursements and fees of counsel in connection therewith, (v)
advertising costs and expenses, including but not limited to costs
and expenses in connection with the "road show", information meetings
and presentations, bound volumes and prospectus memorabilia and
"tomb-stone" advertisement expenses, (vi) costs and expenses in
connection with Company counsel's due diligence investigations,
including but not limited to the fees of any independent counsel or
consultant retained, (vii) fees and expenses of the transfer agent,
registrar and custodian, (viii) the fees payable to the Commission
and the NASD, and (ix) the fees and expenses incurred in connection
with the listing of the Securities on NASDAQ/NM and any other
exchange.
(b) If this Agreement is terminated by the Underwriters in accordance
with the provisions of Section 6, Section 10 (a) or Section 12, the
Company shall reimburse and indemnify the Representative for all of
its actual out-of-pocket expenses, including the fees and
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<PAGE>
disbursements of Underwriters' Counsel, less any amounts already paid
pursuant to Section 5(d) hereof.
(c) The Company further agrees that, in addition to the expenses payable
pursuant to subsection (a) of this Section 5, it will pay to the
Representative on the Closing Date by certified or bank cashiers
check or, at the election of the Representative, by deduction from
the proceeds of the offering contemplated herein a non-accountable
expense allowance equal to one percent (1%) of the gross proceeds
received by the Company from the sale of the Firm Securities and
Option Securities, if any, and a financial advisory fee equal to one
percent (1%) of the gross proceeds received by the Company from the
sale of the Firm Securities and Option Securities, if any, $_______
of which has been paid to date.
6. Conditions of the Underwriters' Obligations. The obligations of the
Underwriters hereunder shall be subject to the continuing accuracy of the
representations and warranties of the Company herein as of the date hereof and
as of the Closing Date and each Option Closing Date, if any, as if they had
been or his made on and as of the Closing Date or each Option Closing Date, as
the case may be; the accuracy on and as of the Closing Date or Option Closing
Date, if any, of the statements of officers of the Company (where applicable)
made pursuant to the provisions hereof; and the performance by the Company on
and as of the Closing Date and each Option Closing Date, if any, of its
covenants and obligations hereunder and to the following further conditions:
(a) The Registration Statement shall have become effective not later than
12:00 A.M., New York time, on the date of this Agreement or such
later date and time as shall be consented to in writing by the
Representative, and, at the Closing Date and each Option Closing
Date, if any, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for
that purpose shall have been instituted or shall be pending or
contemplated by the Commission and any request on the part of the
Commission for additional information shall have been complied with
to the reasonable satisfaction of Underwriters' Counsel. If the
Company has elected to rely upon Rule 430A of the Rules and
Regulations, the price of the Shares and any price-related
information previously omitted from the effective Registration
Statement pursuant to such Rule 430A shall have been transmitted to
the Commission for filing pursuant to Rule 424(b) of the Rules and
Regulations within the prescribed time period, and prior to Closing
Date the Company shall have provided evidence satisfactory to the
Representative of such timely filing, or a post-effective amendment
providing such information shall have been promptly filed and
declared effective in accordance with the requirements of Rule 430A
of the Rules and Regulations.
(b) The Representative shall not have advised the Company that the
Registration Statement, or any amendment thereto, contains an untrue
statement of fact which, in the Representative's opinion, is
material, or omits to state a fact which, in the Representative's
opinion, is material and is required to be stated therein or is
necessary to make the statements therein not misleading, or that the
Prospectus, or any supplement
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<PAGE>
thereto, contains an untrue statement of fact which, in the
Representative's opinion, is material, or omits to state a fact
which, in the Representative's opinion, is material and is required
to be stated therein or is necessary to make the statements therein,
in light of the circumstances under which they were made, not
misleading.
(c) On or prior to the Closing Date, the Representative shall have
received from Underwriters' Counsel, such opinion or opinions with
respect to the organization of the Company, the validity of the
Securities, the Representative's Warrants, the Registration
Statement, the Prospectus and other related matters as the
Representative may request and Underwriters' Counsel shall have
received such papers and information as they request to enable them
to pass upon such matters.
(d) At the Closing Date, the Underwriters shall have received the
favorable opinion of Epstein Becker & Green, P.C., counsel to the
Company and the Subsidiaries, dated the Closing Date, addressed to
the Underwriters and in form and substance satisfactory to
Underwriters ("Company Counsel"), to the effect that:
i) each of the Company and the Subsidiaries (A) has been duly
organized and is validly existing as a corporation in good
standing under the laws of its jurisdiction, (B) is duly
qualified and licensed and in good standing as a foreign
corporation in each jurisdiction in which its ownership or
leasing of any properties or the character of its operations
requires such qualification or licensing, and (C) has all
requisite power and authority (corporate and other), and has
obtained any and all necessary authorizations, approvals,
orders, licenses, certificates, franchises and permits of
and from all governmental or regulatory officials and bodies
(including, without limitation, those having jurisdiction
over environmental or similar matters), to own or lease its
properties and conduct its respective business as described
in the Prospectus; each of the Company and the Subsidiaries
is and has been doing business in compliance with all such
authorizations, approvals, orders, licenses, certificates,
franchises and permits and all foreign, federal, state and
local laws, rules and regulations; and, neither the Company
nor any of the Subsidiaries has received any notice of
proceedings relating to the revocation or modification of
any such authorization, approval, order, license,
certificate, franchise, or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling
or finding, would materially adversely affect the business,
operations, condition, financial or otherwise, or the
earnings, business affairs, position, prospects, value,
operation, properties, business or results of operations of
the Company or the Subsidiaries taken as a whole. The
disclosures in the Registration Statement concerning the
effects of foreign, federal, state and local laws, rules and
regulations on the Company's business as currently conducted
and as contemplated are correct in all respects and do not
omit to state a fact necessary to make the statements
contained therein not misleading in light of the
circumstances in which they were made.
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<PAGE>
ii) the Company owns one hundred percent (100%) of the
outstanding capital stock of IgX Ltd., ___ percent (___%) of
the outstanding capital stock of IgX Oxford, and [JV with
Sintofarma]; and neither the Company nor any of the
Subsidiaries owns an interest in any other corporation,
partnership, joint venture, trust or other business entity;
iii) the Company has a duly authorized, issued and outstanding
capitalization as set forth in the Prospectus, and any
amendment or supplement thereto, under "Capitalization" and
"Description of Capital Stock", and neither the Company nor
any of the Subsidiaries is a party to or bound by any
instrument, agreement or other arrangement providing for it
to issue any capital stock, rights, warrants, options or
other securities, except for this Agreement and the
Representative's Warrant Agreement and as described in the
Prospectus. The Securities, the Representative's Warrants
and all other securities issued or issuable by the Company
conform in all respects to all statements with respect
thereto contained in the Registration Statement and the
Prospectus. All issued and outstanding securities of each of
the Company and the Subsidiaries have been duly authorized
and validly issued and are fully paid and non-assessable;
the holders thereof have no rights of rescission with
respect thereto, and are not subject to personal liability
by reason of being such holders; and none of such securities
were issued in violation of the preemptive rights of any
holders of any security of the Company or the Subsidiaries.
The Securities and the Representative's Securities to be
sold by the Company hereunder and under the Representative's
Warrant Agreement are not and will not be subject to any
preemptive or other similar rights of any stockholder, have
been duly authorized and, when issued, paid for and
delivered in accordance with the terms hereof, will be
validly issued, fully paid and non-assessable and conform to
the description thereof contained in the Prospectus; the
holders thereof will not be subject to any liability solely
as such holders; all corporate action required to be taken
for the authorization, issue and sale of the Securities and
the Representative's Securities has been duly and validly
taken; and the certificates representing the Securities and
the Representative's Warrants are in due and proper form.
The Representative's Warrants constitute valid and binding
obligations of the Company to issue and sell, upon exercise
thereof and payment therefor, the number and type of
securities of the Company called for thereby. Upon the
issuance and delivery pursuant to this Agreement of the
Securities and the Representatives Warrants to be sold by
the Company, the Underwriters and the Representative,
respectively, will acquire good and marketable title to the
Securities and Representative's Warrants free and clear of
any Lien of any kind whatsoever. No transfer tax is payable
by or on behalf of the Underwriters in connection with (A)
the issuance by the Company of the Securities, (B) the
purchase by the Underwriters and the Representative of the
Securities and the Representative's Securities,
respectively, from the Company, (C) the consummation by the
Company of any of its obligations under this Agreement or
the Representative's Warrant Agreement, or (D) resales of
the Securities in connection with the distribution
contemplated hereby.
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<PAGE>
iv) the Registration Statement is effective under the Act, and,
if applicable, filing of all pricing information has been
timely made in the appropriate form under Rule 430A, and no
stop order suspending the use of the Preliminary Prospectus,
the Registration Statement or Prospectus or any part of any
thereof or suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that
purpose have been instituted or are pending or, to the best
of such counsel's knowledge after due inquiry, threatened or
contemplated under the Act;
v) each of the Preliminary Prospectus, the Registration
Statement, and the Prospectus and any amendments or
supplements thereto (other than the financial statements and
other financial and statistical data included therein, as to
which no opinion need be rendered) comply as to form in all
material respects with the requirements of the Act and the
Rules and Regulations. Such counsel shall state that such
counsel has participated in conferences with officers and
other representatives of the Company, the Subsidiaries and
representatives of the independent public accountants for
the Company and the Subsidiaries, at which conferences such
counsel made inquiries of such officers, representatives and
accountants and discussed the contents of the Preliminary
Prospectus, the Registration Statement, the Prospectus, and
related matters were discussed and, although such counsel is
not passing upon and does not assume any responsibility for
the accuracy, completeness or fairness of the statements
contained in the Preliminary Prospectus, the Registration
Statement and Prospectus, on the basis of the foregoing, no
facts have come to the attention of such counsel which lead
them to believe that either the Registration Statement or
any amendment thereto, at the time such Registration
Statement or amendment became effective or the Preliminary
Prospectus or Prospectus or amendment or supplement thereto
as of the date of such opinion contained any untrue
statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading in light of the
circumstances in which they were made (it being understood
that such counsel need express no opinion with respect to
the financial statements and schedules and other financial
and statistical data included in the Preliminary Prospectus,
the Registration Statement or Prospectus).
vi) to the best of such counsel's knowledge after due inquiry,
(A) there are no agreements, contracts or other documents
required by the Act to be described in the Registration
Statement and the Prospectus and filed as exhibits to the
Registration Statement other than those described in the
Registration Statement (or required to be filed under the
Exchange Act if upon such filing they would be incorporated,
in whole or in part, by reference therein) and the
Prospectus and filed as exhibits thereto, and the exhibits
which have been filed are correct copies of the documents of
which they purport to be copies; (B) the descriptions in the
Registration Statement and the Prospectus and any supplement
or amendment thereto of contracts and other documents to
which the Company or any of the Subsidiaries is a party or
by which it is bound, including any document to which the
Company or any of the Subsidiaries is a party or by which it
is bound,
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<PAGE>
incorporated by reference into the Prospectus and any
supplement or amendment thereto, are accurate and fairly
represent the information required to be shown by Form S-l;
(C) there is not pending or threatened against the Company
or any of the Subsidiaries any action, arbitration, suit,
proceeding, inquiry, investigation, litigation, governmental
or other proceeding (including, without limitation, those
having jurisdiction over environmental or similar matters),
domestic or foreign, pending or threatened against (or
circumstances that may give rise to the same), or involving
the properties or business of, any of the Company or any of
the Subsidiaries which (x) is required to be disclosed in
the Registration Statement which is not so disclosed (and
such proceedings as are summarized in the Registration
Statement are accurately summarized in all respects), (y)
questions the validity of the capital stock of the Company
or any of the Subsidiaries or this Agreement or the
Representative's Warrant Agreement, or of any action taken
or to be taken by the Company pursuant to or in connection
with any of the foregoing; (D) no statute or regulation or
legal or governmental proceeding required to be described in
the Prospectus is not described as required; and (E) there
is no action, suit or proceeding pending or threatened
against or affecting the Company or any of the Subsidiaries
before any court or arbitrator or governmental body, agency
or official (or any basis thereof known to such counsel) in
which there is a reasonable possibility of an adverse
decision which may result in a material adverse change in
the condition, financial or otherwise, or the earnings,
position, prospects, stockholders equity, value, operation,
properties, business or results of operations of the Company
or any of the Subsidiaries, which could adversely affect the
present or prospective ability of the Company to perform its
obligations under this Agreement or the Representative's
Warrant Agreement or which in any manner draws into question
the validity or enforceability of this Agreement or the
Representative's Warrant Agreement.
vii) the Company has full legal right, power and authority to
enter into each of this Agreement and the Representative's
Warrant Agreement, and to consummate the transactions
provided for therein; and each of this Agreement and the
Representative's Warrant Agreement has been duly authorized,
executed and delivered by the Company. Each of this
Agreement and the Representative's Warrant Agreement,
assuming due authorization, execution and delivery by each
other party thereto, constitutes a legal, valid and binding
agreement of the Company enforceable against the Company in
accordance with its terms (except as such enforceability may
be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general
application relating to or affecting enforcement of
creditors' rights and the application of equitable
principles in any action, legal or equitable, and except as
rights to indemnity or contribution may be limited by
applicable law), and none of the Company's execution or
delivery of this Agreement or the Representative's Warrant
Agreement, its performance hereunder or thereunder, its
consummation of the transactions contemplated herein or
therein, or the conduct of its or the Subsidiaries'
businesses as described in the Registration Statement, the
Prospectus,
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and any amendments or supplements thereto, conflicts with or
will conflict with or results or will result in any breach
or violation of any of the terms or provisions of, or
constitutes or will constitute a default under, or result in
the creation or imposition of any Lien, of any kind
whatsoever upon, any property or assets (tangible or
intangible) of the Company or of any of the Subsidiaries
pursuant to, the terms of (A) the articles of incorporation,
by-laws, memorandum of association or articles of
association of the Company or of any of the Subsidiaries (as
the case may be), (B) any license, contract, indenture,
mortgage, deed of trust, voting trust agreement,
stockholder's agreement, note, loan or credit agreement or
any other agreement or instrument to which the Company or
any of the Subsidiaries is a party or by which any of them
is or may be bound or to which any of their respective
properties or assets (tangible or intangible) is or may be
subject, or any indebtedness, or (C) any statute, judgment,
decree, order, rule or regulation applicable to the Company
or any of the Subsidiaries of any arbitrator, court,
regulatory body or administrative agency or other
governmental agency or body (including, without limitation,
those having jurisdiction over environmental or similar
matters), domestic or foreign, having jurisdiction over the
Company or any of the Subsidiaries or any of their
respective activities or properties.
viii) except as described in the Prospectus, no consent, approval,
authorization or order, and no filing with, any court,
regulatory body, government agency or other body (other than
such as may be required under Blue Sky laws, as to which no
opinion need be rendered) is required in connection with the
issuance of the Securities or the Representative's Warrants
pursuant to the Prospectus or the Registration Statement,
the issuance of the Representative's Warrants, the
performance of this Agreement and the Representative's
Warrant Agreement and the transactions contemplated hereby
and thereby;
ix) the properties and business of each of the Company and the
Subsidiaries conform to the description thereof contained in
the Registration Statement and the Prospectus; and each of
the Company and the Subsidiaries has good and marketable
title to, or valid and enforceable leasehold estates in, all
items of real and personal property stated in the Prospectus
to be owned or leased by it, in each case free and clear of
all Liens of any kind whatsoever, other than those referred
to in the Prospectus and Liens for taxes not yet due and
payable;
x) neither the Company nor any of the Subsidiaries is in breach
of, or in default under, any term or provision of any
license, contract, indenture, mortgage, installment sale
agreement, deed of trust, lease, voting trust agreement,
stockholders agreement, partnership agreement, note, loan or
credit agreement or any other agreement or instrument
evidencing any obligation for borrowed money, or any other
agreement or instrument to which the Company or any of the
Subsidiaries is a party or by which either of the Company or
any of the Subsidiaries may be bound or to which the
property or assets (tangible or
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intangible) of any of the Company or any of the Subsidiaries
is subject or affected; and neither the Company nor any of
the Subsidiaries is in violation of any term or provision of
its Certificate of Incorporation, By-Laws, Memorandum of
Association or Articles of Association or in violation of
any franchise, license, permit, judgment, decree, order,
statute, rule or regulation;
xi) the statements in the Prospectus under "THE COMPANY," "RISK
FACTORS," "BUSINESS," "MANAGEMENT," "PRINCIPAL
STOCKHOLDERS," "CERTAIN TRANSACTIONS," "DESCRIPTION OF
CAPITAL STOCK," and "SHARES ELIGIBLE FOR FUTURE SALE" have
been reviewed by such counsel, and insofar as they refer to
statements of law, descriptions of statutes, licenses, rules
or regulations or legal conclusions, are correct in all
respects;
xii) the Securities have been accepted for quotation by NASDAQ/NM;
xiii) each of the Company and the Subsidiaries owns or possesses,
free and clear of all Liens and rights thereto or therein by
third parties, the requisite licenses or other rights to use
all trademarks, service marks, copyrights, service names,
trade names, patents, patent applications and licenses
necessary to conduct its business (including, without
limitation any such licenses or rights described in the
Prospectus as being owned or possessed by the Company or any
of the Subsidiaries), and to the best of such counsel's
knowledge after due inquiry, there is no claim or action by
any person pertaining to, or proceeding, pending, or
threatened, which challenges the exclusive rights of the
Company or any of the Subsidiaries with respect to any
trademarks, service marks, copyrights, service names, trade
names, patents, patent applications and licenses used in the
conduct of the Company's and the Subsidiaries' respective
businesses (including, without limitation, any such licenses
or rights described in the Prospectus as being owned or
possessed by the Company and any of the Subsidiaries); the
Company's and the Subsidiaries' current products, services
and processes do not and will not infringe on the patents
currently held by third parties; and no product, service or
process of any third party infringes on any patent currently
held by the Company or any of the Subsidiaries;
xiv) the persons listed under the caption "PRINCIPAL
STOCKHOLDERS" in the Prospectus are the respective
"beneficial owners" (as such phrase is defined in Rule 13d-3
under the Rules and Regulations) of the securities set forth
opposite their respective names thereunder as and to the
extent set forth therein;
xv) except as described in the Prospectus or otherwise waived,
no person, corporation, trust, partnership, association or
other entity has the right to include and/or register any
securities of the Company or any of the Subsidiaries in the
Registration Statement, require the Company or any of the
Subsidiaries to file any registration statement or, if
filed, to include any security in such registration
statement;
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<PAGE>
xvi) except as described in the Prospectus, there are no claims,
payments, issuances, arrangements or understandings for
services in the nature of a finders or origination fee with
respect to the sale of the Securities hereunder or financial
consulting arrangement or any other arrangements,
agreements, understandings, payments or issuances that may
affect the Underwriters' compensation, as determined by the
NASD;
xvii) assuming due execution by the parties thereto other than the
Company, the Lock-up Agreements are legal, valid and binding
obligations of the parties thereto, enforceable against the
party and any subsequent holder of the securities subject
thereto in accordance with its terms; and
xviii) except as described in the Prospectus, neither the Company
nor any of the Subsidiaries (A) maintains, sponsors or
contributes to any ERISA Plans, (B) maintains or
contributes, now or at any time previously, to a defined
benefit plan, as defined in Section 3(35) of ERISA, and (C)
has ever completely or partially withdrawn from a
"multiemployer plan".
xix) the Company is not an "investment company" under the
Investment Company Act of 1940, as amended, and consummation
of the transactions herein contemplated will not cause the
Company to become an investment company subject to
registration under such Act;
xx) all offers and sales of the Company's capital stock prior to
the date hereof, including the offer and sale of an
aggregate of _________ shares of Preferred Stock in
connection with the 1997 Private Placement and the 1998
Private Placement (as each such term is defined in the
Prospectus or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus), were at all relevant
times exempt from the registration requirements of the Act,
and were the subject of an available exemption from the
registration requirements of all applicable state securities
or blue sky laws;
xxi) the Company and its Subsidiaries have operated and currently
is in compliance in all respects with all applicable laws
and regulations, including, without limitation, all United
States Food and Drug Administration rules, regulations and
policies; and
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United
States and jurisdictions in which they are admitted, to the extent
such counsel deems proper and to the extent specified in such
opinion, if at all, upon an opinion or opinions (in form and
substance satisfactory to Underwriters' Counsel) of other counsel
acceptable to Underwriters' Counsel, familiar with the applicable
laws; (B) as to matters of fact, to the extent they deem proper, on
certificates and written statements of responsible officers of the
Company or the Subsidiaries and certificates or other written
statements of officers of departments of
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<PAGE>
various jurisdictions having custody of documents respecting the
corporate existence or good standing of the Company, provided that
copies of any such statements or certificates shall be delivered to
Underwriters' Counsel, if requested. The opinion of such counsel for
the Company shall state that the opinion of any such other counsel is
in form satisfactory to such counsel and that the Representative and
they are justified in relying thereon.
(e) At the Closing Date, the Underwriters shall have received the
favorable opinion of Pillsbury Madison & Sutro LLP, patent counsel to
the Company, dated the Closing Date, addressed to the Underwriters
and in form and substance satisfactory to Underwriters' Counsel with
respect to such patent matters as Underwriters' Counsel may
reasonably require and opinions from ___________ and ___________,
regulatory consultants to the Company, dated the Closing Date,
addressed to the Underwriters and in form and substance satisfactory
to Underwriters' Counsel with respect to such regulatory and
compliance matters as Underwriters' Counsel may reasonably require.
(f) At each Option Closing Date, if any, the Underwriters shall have
received the favorable opinions of Epstein Becker & Green, P.C.,
counsel to the Company and the Subsidiaries, Pillsbury Madison &
Sutro LLP, patent counsel to the Company and the Subsidiaries, dated
the Option Closing Date, and _____________ and ____________,
regulatory consultants to the Company and the Subsidiaries, addressed
to the Underwriters and in form and substance satisfactory to
Underwriters' Counsel confirming as of each Option Closing Date the
statements made by each of _________________ and __________ and
________________ in their respective opinions delivered on the
Closing Date.
(g) On or prior to each of the Closing Date and the Option Closing Date,
if any, Underwriters' Counsel shall have been furnished such
documents, certificates and opinions as they may reasonably require
for the purpose of enabling them to review or pass upon the matters
referred to in subsection (c) of this Section 6, or in order to
evidence the accuracy, completeness or satisfaction of any of the
representations, warranties or conditions of the Company and the
Subsidiaries, or herein contained.
(h) Prior to each of the Closing Date and each Option Closing Date, if
any (i) there shall have been no adverse change or development
involving a prospective change in the condition, financial or
otherwise, prospects, stockholders equity or the business activities
of the Company or any of the Subsidiaries, whether or not in the
ordinary course of business consistent with past practice, from the
latest dates as of which such condition is set forth in the
Registration Statement and Prospectus; (ii) there shall have been no
transaction, not in the ordinary course of business, consistent with
past practice, entered into by the Company or any of the
Subsidiaries, from the latest date as of which the financial
condition of the Company and any of the Subsidiaries is set forth in
the Registration Statement and Prospectus which is adverse to the
Company or any of the Subsidiaries; (iii) neither the Company nor any
of the Subsidiaries shall be in default under any provision of any
instrument relating to any outstanding indebtedness; (iv) neither the
Company nor any of the Subsidiaries shall have issued any securities
(other than the Securities and the Representative's Warrants) or
declared or paid any dividend
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<PAGE>
or made any distribution in respect of its capital stock of any class
and there has not been any change in the capital stock or any change
in the debt (long or short term) or liabilities or obligations of the
Company or any of the Subsidiaries (contingent or otherwise); (v) no
material amount of the assets of the Company or any of the
Subsidiaries shall have been pledged or mortgaged, except as set
forth in the Registration Statement and Prospectus; (vi) no action,
suit or proceeding, at law or in equity, shall have been pending or
threatened (or circumstances giving rise to same) against the Company
or any of the Subsidiaries, or affecting any of their respective
properties or businesses, before or by any court or federal, state or
foreign commission, board or other administrative agency wherein an
unfavorable decision, ruling or finding may adversely affect the
business, operations, prospects or financial condition or income of
the Company or any of the Subsidiaries, except as set forth in the
Registration Statement and Prospectus; and (vii) no stop order shall
have been issued under the Act and no proceedings therefor shall have
been initiated, threatened or contemplated by the Commission.
(i) At each of the Closing Date and each Option Closing Date, if any, the
Underwriters shall have received a certificate of the Company signed
by the principal executive officer and by the chief financial or
chief accounting officer of the Company, dated the Closing Date or
Option Closing Date, as the case may be, to the effect that each of
such persons has carefully examined the Registration Statement, the
Prospectus and this Agreement, and that:
i) The representations and warranties of the Company and each
of the Subsidiaries in this Agreement are true and correct
as if made on and as of the Closing Date or the Option
Closing Date, as the case may be, and the Company has
complied with all agreements and covenants and satisfied all
conditions contained in this Agreement on its part to be
performed or satisfied at or prior to the Closing Date or
Option Closing Date, as the case may be;
ii) No stop order suspending the effectiveness of the
Registration Statement or any part thereof has been issued,
and no proceedings for that purpose have been instituted or
are pending or, to the best of each of such person's
knowledge after due inquiry, are contemplated or threatened
under the Act;
iii) The Registration Statement and the Prospectus and, if any,
each amendment and each supplement thereto, contain all
statements and information required to be included therein,
and none of the Registration Statement, the Prospectus nor
any amendment or supplement thereto includes any untrue
statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading and neither the
Preliminary Prospectus or any supplement thereto included
any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary
to make the statements therein, in light of the
circumstances under which they were made, not misleading;
and
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<PAGE>
iv) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus,
(a) neither the Company nor any of the Subsidiaries has
incurred up to and including the Closing Date or the Option
Closing Date, as the case may be, other than in the ordinary
course of its business consistent with past practice, any
material liabilities or obligations, direct or contingent;
(b) neither the Company nor any of the Subsidiaries has paid
or declared any dividends or other distributions on its
capital stock; (c) neither the Company nor any of the
Subsidiaries has entered into any transactions not in the
ordinary course of business consistent with past practice;
(d) there has not been any change in the capital stock or
long-term debt or any increase in the short-term borrowings
(other than any increase in the short-term borrowings in the
ordinary course of business consistent with past practice)
of the Company or any of the Subsidiaries; (e) neither the
Company nor any of the Subsidiaries has sustained any loss
or damage to its property or assets, whether or not insured;
(f) there is no litigation which is pending or threatened
(or circumstances giving rise to same) against the Company
or any of the Subsidiaries or any affiliated party of any of
the foregoing which is required to be set forth in an
amended or supplemented Prospectus which has not been set
forth; and (g) there has occurred no event required to be
set forth in an amended or supplemented Prospectus which has
not been set forth.
References to the Registration Statement and the Prospectus
in this subsection (i) are to such documents as amended and
supplemented at the date of such certificate.
(j) By the Closing Date, the Underwriters will have received clearance
from the NASD as to the amount of compensation allowable or payable
to the Underwriters, as described in the Registration Statement.
(k) At the time this Agreement is executed, the Underwriters shall have
received a letter, dated the date hereof, addressed to the
Underwriters in form and substance satisfactory (including the
non-material nature of the changes or decreases, if any, referred to
in clause (iii) below) in all respects to the Underwriters and
Underwriters' Counsel, from Pricewaterhouse Coopers LLP.
i) confirming that they are independent certified public
accountants with respect to the Company and the Subsidiaries
within the meaning of the Act and the applicable Rules and
Regulations;
ii) stating that it is their opinion that the consolidated
financial statements and supporting schedules of the Company
and the Subsidiaries included in the Registration Statement
comply as to form in all material respects with the
applicable accounting requirements of the Act and the Rules
and Regulations thereunder and that the Representative may
rely upon the opinion of
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<PAGE>
Pricewaterhouse Coopers LLP with respect to the financial
statements and supporting schedules included in the
Registration Statement;
iii) stating that, on the basis of a limited review which
included a reading of the latest available unaudited interim
consolidated financial statements of the Company and the
Subsidiaries (with an indication of the date of the latest
available unaudited interim financial statements), a reading
of the latest available minutes of the stockholders and
board of directors and the various committees of the boards
of directors of the Company and the Subsidiaries,
consultations with officers and other employees of the
Company and the Subsidiaries responsible for financial and
accounting matters and other specified procedures and
inquiries, nothing has come to their attention which would
lead them to believe that (A) the pro forma financial
information contained in the Registration Statement and
Prospectus does not comply as to form in all material
respects with the applicable accounting requirements of the
Act and the Rules and Regulations or is not fairly presented
in conformity with generally accepted accounting principles
applied on a basis consistent with that of the audited
consolidated financial statements of the Company or the
unaudited pro forma financial information included in the
Registration Statement, (B) the unaudited financial
statements and supporting schedules of the Company and the
Subsidiaries included in the Registration Statement do not
comply as to form in all material respects with the
applicable accounting requirements of the Act and the Rules
and Regulations or are not fairly presented in conformity
with generally accepted accounting principles applied on a
basis substantially consistent with that of the audited
consolidated financial statements of the Company and the
Subsidiaries included in the Registration Statement, or (C)
at a specified date not more than five (5) days prior to the
effective date of the Registration Statement, there has been
any change in the capital stock or long-term debt of the
Company and the Subsidiaries, or any decrease in the
stockholders' equity or net current assets or net assets of
the Company and the Subsidiaries as compared with amounts
shown in the balance sheet included in the Registration
Statement, other than as set forth in or contemplated by the
Registration Statement, or, if there was any change or
decrease, setting forth the amount of such change or
decrease, and (D) during the period from [June 30, 1998] to
a specified date not more than five (5) days prior to the
effective date of the Registration Statement, there was any
decrease in net revenues, net earnings or increase in net
earnings per common share of the Company and the
Subsidiaries, in each case as compared with the
corresponding period beginning [June 30, 1997] other than as
set forth in or contemplated by the Registration Statement,
or, if there was any such decrease, setting forth the amount
of such decrease;
iv) setting forth at a date not later than five (5) days prior
to the date of the Registration Statement, the amount of
liabilities of the Company and the Subsidiaries (including
any notes payable);
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v) stating that they have compared specific dollar amounts,
numbers of shares, percentages of revenues and earnings,
statements and other financial information pertaining to the
Company and the Subsidiaries set forth in the Prospectus in
each case to the extent that such amounts, numbers,
percentages, statements and information may be derived from
the general accounting records, including work sheets, of
the Company and the Subsidiaries and excluding any questions
requiring an interpretation by legal counsel, with the
results obtained from the application of specified readings,
inquiries and other appropriate procedures (which procedures
do not constitute an examination in accordance with
generally accepted auditing standards), set forth in the
letter and found them to be in agreement;
vi) stating that they have not during the immediately preceding
five (5) year period brought to the attention of any of the
Company's or the Subsidiaries' management any "weakness", as
defined in Statement of Auditing Standard No. 60
"Communication of Internal Control Structure Related Matters
Noted in an Audit," in any of the Company's or the
Subsidiaries' internal controls;
vii) stating that they have in addition carried out certain
specified procedures, not constituting an audit, with
respect to certain pro forma financial information which is
included in the Registration Statement and the Prospectus
and that nothing has come to their attention as a result of
such procedures that caused them to believe such unaudited
pro forma financial information does not comply in form in
all respects with the applicable accounting requirements of
Rule 11-02 of Regulation S-X or that the pro forma
adjustments have not been properly applied to the historical
amounts in the compilation of that information; and
viii) statements as to such other matters incident to the
transaction contemplated hereby as the Representative may
request.
(l) At the Closing Date and each Option Closing Date, if any, the
Underwriters shall have received from Pricewaterhouse Coopers LLP a
letter, dated as of the Closing Date or the Option Closing Date, as
the case may be, to the effect that they reaffirm the statements made
in the letter furnished pursuant to subsection (k) of this Section,
except that the specified date referred to shall be a date not more
than five days prior to the Closing Date or the Option Closing Date,
as the case may be, and, if the Company has elected to rely on Rule
430A of the Rules and Regulations, to the further effect that they
have carried out procedures as specified in clause (v) of subsection
(k) of this Section with respect to certain amounts, percentages and
financial information as specified by the Representative and deemed
to be a part of the Registration Statement pursuant to Rule 430A(b)
and have found such amounts, percentages and financial information to
be in agreement with the records specified in such clause (v).
(m) On each of the Closing Date and each Option Closing Date, if any,
there shall have been duly tendered to the Representative for the
several Underwriters' accounts the appropriate number of Securities.
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(n) No order suspending the sale of the Securities in any jurisdiction
designated by the Representative pursuant to subsection (e) of
Section 4 hereof shall have been issued on either the Closing Date or
the Option Closing Date, if any, and no proceedings for that purpose
shall have been instituted or shall be contemplated.
(o) On or before the Closing Date, the Company shall have executed and
delivered to the Representative (i) the Representative's Warrant
Agreement substantially in the form filed as Exhibit ______ to the
Registration Statement in final form and substance satisfactory to
the Representative, and (ii) the Representative's Warrants in such
denominations and to such designees as shall have been provided to
the Company.
(p) On or before Closing Date, the Securities shall have been duly
approved for quotation on NASDAQ/NM, subject to official notice of
issuance.
(q) On or before Closing Date, there shall have been delivered to the
Representative all of the Lock-up Agreements, in form and substance
satisfactory to Underwriters' Counsel.
If any condition to the Underwriters' obligations hereunder to be fulfilled
prior to or at the Closing Date or the relevant Option Closing Date, as the
case may be, is not so fulfilled, the Representative may terminate this
Agreement or, if the Representative so elects, it may waive any such
conditions which have not been fulfilled or extend the time for their
fulfillment.
7. Indemnification.
(a) The Company agrees to indemnify and hold harmless each of the
Underwriters (for purposes of this Section 7 "Underwriter" shall
include the officers, directors, stockholders, partners, employees,
agents and counsel of the Underwriter, including specifically each
person who may be substituted for an Underwriter as provided in
Section 11 hereof), and each person, if any, who controls the
Underwriter (a "controlling person") within the meaning of Section 15
of the Act or Section 20(a) of the Exchange Act, from and against any
and all losses, claims, damages, expenses or liabilities, joint or
several (and actions in respect thereof), whatsoever (including but
not limited to any and all expenses whatsoever incurred in
investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever), as such are
incurred, to which the Underwriter or such controlling person may
become subject under the Act, the Exchange Act or any other statute
or at common law or otherwise or under the laws of foreign countries,
arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained (i) in any Preliminary
Prospectus, the Registration Statement or the Prospectus (as from
time to time amended and supplemented); (ii) in any post-effective
amendment or amendments or any new registration statement and
prospectus in which is included securities of the Company issued or
issuable upon exercise of the Securities; or (iii) in any application
or other document or written communication (in this Section 7
collectively called "application") executed by the Company or based
upon written information furnished by the Company in any jurisdiction
in order to qualify the Securities under the securities laws thereof
or filed with the
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Commission, any state securities commission or agency, NASDAQ/NM or
any other securities exchange; or the omission or alleged omission
therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading (in the case
of the Prospectus, in the light of the circumstances under which they
were made), unless such statement or omission was made exclusively in
reliance upon and in conformity with written information furnished to
the Company with respect to any Underwriter by or on behalf of such
Underwriter expressly for use in any Preliminary Prospectus, the
Registration Statement or Prospectus, or any amendment thereof or
supplement thereto, or in any application, as the case may be.
The indemnity agreement in this subsection (a) shall be in addition
to any liability which the Company may have at common law or
otherwise.
(b) Each of the Underwriters agrees severally, but not jointly, to
indemnify and hold harmless the Company, each of its directors, each
of its officers who has signed the Registration Statement, and each
other person, if any, who controls the Company within the meaning of
the Act, to the same extent as the foregoing indemnity from the
Company to the Underwriters but only with respect to statements or
omissions, if any, made in any Preliminary Prospectus, the
Registration Statement or Prospectus or any amendment thereof or
supplement thereto or in any application made in reliance upon, and
in strict conformity with, written information furnished to the
Company with respect to any Underwriter by such Underwriter expressly
for use in such Preliminary Prospectus, the Registration Statement or
Prospectus or any amendment thereof or supplement thereto or in any
such application, provided that such written information or omissions
only pertain to disclosures in the Preliminary Prospectus, the
Registration Statement or Prospectus directly relating to the
transactions effected by the Underwriters in connection with this
offering. The Company acknowledges that the statements with respect
to the public offering of the Securities set forth under the heading
"Underwriting" and the stabilization legend in the Prospectus have
been furnished by the Underwriters expressly for use therein and
constitute the only information furnished in writing by or on behalf
of the Underwriters for inclusion in the Prospectus.
(c) Promptly after receipt by an indemnified party under this Section 7
of notice of the commencement of any action, suit or proceeding, such
indemnified party shall, if a claim in respect thereof is to be made
against one or more indemnifying parties under this Section 7, notify
each party against whom indemnification is to be sought in writing of
the commencement thereof (but the failure so to notify an
indemnifying party shall not relieve it from any liability which it
may have under this Section 7 except to the extent that it has been
prejudiced in any material respect by such failure or from any
liability which it may have otherwise). In case any such action is
brought against any indemnified party, and it notifies an
indemnifying party or parties of the commencement thereof, the
indemnifying party or parties will be entitled to participate
therein, and to the extent it may elect by written notice delivered
to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof
with counsel reasonably satisfactory to such indemnified party.
Notwithstanding the foregoing,
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the indemnified party or parties shall have the right to employ its
or their own counsel in any such case but the fees and expenses of
such counsel shall be at the expense of such indemnified party or
parties unless (i) the employment of such counsel shall have been
authorized in writing by the indemnifying party in connection with
the defense of such action at the expense of such indemnifying party,
(ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to such indemnified party to have charge of
the defense of such action within a reasonable period of time after
notice of commencement of the action, or (iii) such indemnified party
or parties shall have reasonably concluded that there may be defenses
available to it or them which are different from or additional to
those available to one or all of the indemnifying parties (in which
case the indemnifying parties shall not have the right to direct the
defense of such action on behalf of the indemnified party or
parties), in any of which events such fees and expenses of additional
counsel shall be borne by the indemnifying parties. Anything in this
Section 7 to the contrary notwithstanding, an indemnifying party
shall not be liable for any settlement of any claim or action
effected without its written consent; provided, however, that such
consent was not unreasonably withheld.
(d) In order to provide for just and equitable contribution in any case
in which (i) an indemnified party makes a claim for indemnification
pursuant to this Section 7, but it is judicially determined (by the
entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of
the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that the express
provisions of this Section 7 provide for indemnification in such
case, or (ii) contribution under the Act may be required on the part
of any indemnified party, then each indemnifying party shall
contribute to the amount paid as a result of such losses, claims,
damages, expenses or liabilities (or actions in respect thereof) (A)
in such proportion as is appropriate to reflect the relative benefits
received by each of the contributing parties, on the one hand, and
the party to be indemnified on the other hand, from the offering of
the Securities or (B) if the allocation provided by clause (A) above
is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in
clause (i) above, but also the relative fault of each of the
contributing parties, on the one hand, and the party to be
indemnified on the other hand, in connection with the statements or
omissions that resulted in such losses, claims, damages, expenses or
liabilities, as well as any other relevant equitable considerations.
In any case where the Company is a contributing party and the
Underwriters are the indemnified party, the relative benefits
received by the Company on the one hand, and the Underwriters, on the
other, shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Securities (before deducting
expenses) bear to the total underwriting discounts received by the
Underwriters hereunder, in each case as set forth in the table on the
cover page of the Prospectus. Relative fault shall be determined by
reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by
the Company, or by the Underwriters, and the parties' relative
intent, knowledge, access to information and opportunity to correct
or prevent such untrue statement or omission. The amount paid or
payable by an indemnified party as a result
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<PAGE>
of the losses, claims, damages, expenses or liabilities (or actions
in respect thereof) referred to above in this subdivision (d) shall
be deemed to include any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of
this subdivision (d) the Underwriters shall not be required to
contribute any amount in excess of the underwriting discount
applicable to the Securities purchased by the Underwriters hereunder.
No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls the
Company within the meaning of the Act, each officer of the Company
who has signed the Registration Statement, and each director of the
Company shall have the same rights to contribution as the Company,
subject in each case to this subparagraph (d). Any party entitled to
contribution will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect to
which a claim for contribution may be made against another party or
parties under this subparagraph (d), notify such party or parties
from whom contribution may be sought, but the omission so to notify
such party or parties shall not relieve the party or parties from
whom contribution may be sought from any obligation it or they may
have hereunder or otherwise than under this subparagraph (d), or to
the extent that such party or parties were not adversely affected by
such omission. The contribution agreement set forth above shall be in
addition to any liabilities which any indemnifying party may have at
common law or otherwise.
8. Representations and Agreements to Survive Delivery. All representations,
warranties and agreements contained in this Agreement or contained in
certificates of officers of the Company submitted pursuant hereto, shall be
deemed to be representations, warranties and agreements at the Closing Date
and the Option Closing Date, as the case may be, and such representations,
warranties and agreements of the Company and the respective indemnity
agreements contained in Section 7 hereof, shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of any
Underwriter, the Company, any controlling person of any Underwriter or the
Company, and shall survive termination of this Agreement or the issuance and
delivery of the Securities to the Underwriters and the Representative, as the
case may be.
9. Effective Date.
(a) This Agreement shall become effective at 10:00 a.m., New York City
time, on the next full business day following the date hereof, or at
such earlier time after the Registration Statement becomes effective
as the Representative, in its discretion, shall release the
Securities for the sale to the public; provided, however, that the
provisions of Sections 5, 7 and 10 of this Agreement shall at all
times be effective. For purposes of this Section 9, the Securities to
be purchased hereunder shall be deemed to have been so released upon
the earlier of dispatch by the Representative of telegrams to
securities dealers releasing such shares for offering or the release
by the Representative for publication of the first newspaper
advertisement which is subsequently published relating to the
Securities.
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<PAGE>
10. Termination.
(a) Subject to subsection (b) of this Section 10, the Representative
shall have the right to terminate this Agreement if (i) any domestic
or international event or act or occurrence has disrupted, or in the
Representative's opinion will in the immediate future disrupt, the
financial markets; or (ii) any material adverse change in the
financial markets shall have occurred; or (iii) trading on the New
York Stock Exchange, the American Stock Exchange, or in the
over-the-counter market shall have been suspended, or minimum or
maximum prices for trading shall have been fixed, or maximum ranges
for prices for securities shall have been required on the
over-the-counter market by the NASD or by order of the Commission or
any other government authority having jurisdiction; or (iv) the
United States shall have become involved in a war or major
hostilities, or if there shall have been an escalation in an existing
war or major hostilities or a national emergency shall have been
declared in the United States; or (v) a banking moratorium has been
declared by a state or federal authority; or (vi) a moratorium in
foreign exchange trading has been declared; or (vii) the Company
shall have sustained a loss material or substantial to the Company by
fire, flood, accident, hurricane, earthquake, theft, sabotage or
other calamity or malicious act which, whether or not such loss shall
have been insured, will, in the Representative's opinion, make it
inadvisable to proceed with the delivery of the Securities; or (viii)
there shall have been such a material adverse change in the
conditions or prospects of the Company, or such material adverse
change in the general market, political or economic conditions, in
the United States or elsewhere as in the Representative's judgment
would make it inadvisable to proceed with the offering, sale and/or
delivery of the Securities or (ix) if [Albert J. Henry] no longer
serve the Company in his present capacity.
(b) If this Agreement is terminated by the Representative in accordance
with the provisions of Section 10(a), the Company shall promptly
reimburse and indemnify the Representative for all of its actual
out-of-pocket expenses, including the fees and disbursements of
counsel for the Underwriters (less amounts previously paid pursuant
to Section 5(c) above). Notwithstanding any contrary provision
contained in this Agreement, if this Agreement shall not be carried
out within the time specified herein, or any extension thereof
granted to the Representative, by reason of any failure on the part
of the Company to perform any undertaking or satisfy any condition of
this Agreement by it to be performed or satisfied (including, without
limitation, pursuant to Section 6 or Section 12) then, the Company
shall promptly reimburse and indemnify the Representative for all of
its actual out-of-pocket expenses, including the fees and
disbursements of counsel for the Underwriters (less amounts
previously paid pursuant to Section 5(c) above). In addition, the
Company shall remain liable for all Blue Sky counsel fees and
expenses and Blue Sky filing fees. Notwithstanding any contrary
provision contained in this Agreement, any election hereunder or any
termination of this Agreement (including, without limitation,
pursuant to Sections 6, 10, 11 and 12 hereof), and whether or not
this Agreement is otherwise carried out, the provisions of Section 5
and Section 7 shall not be in any way affected by such election or
termination or failure to carry out the terms of this Agreement or
any part hereof.
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<PAGE>
11. Substitution of the Underwriters. If one or more of the Underwriters shall
fail (otherwise than for a reason sufficient to justify the termination of
this Agreement under the provisions of Section 6, Section 10 or Section 12
hereof) to purchase the Securities which it or they are obligated to purchase
on such date under this Agreement (the "Defaulted Securities"), the
Representative shall have the right, within 24 hours thereafter, to make
arrangements for one or more of the non-defaulting Underwriters, or any other
underwriters, to purchase all, but not less than all, of the Defaulted
Securities in such amounts as may be agreed upon and upon the terms herein set
forth; if, however, the Representative shall not have completed such
arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the
total number of Firm Securities to be purchased on such date, the
non-defaulting Underwriters shall be obligated to purchase the full
amount thereof in the proportions that their respective underwriting
obligations hereunder bear to the underwriting obligations of all
non-defaulting Underwriters; or
(b) if the number of Defaulted Securities exceeds 10% of the total number
of Firm Securities, this Agreement shall terminate without liability
on the part of any non-defaulting Underwriters.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of any default by such
Underwriter under this Agreement.
In the event of any such default which does not result in a
termination of this Agreement, the Representative shall have the
right to postpone the Closing Date for a period not exceeding seven
days in order to effect any required changes in the Registration
Statement or Prospectus or in any other documents or arrangements.
12. Default by the Company. If the Company shall fail at the Closing Date or
any Option Closing Date, as applicable, to sell and deliver the number of
Securities which it is obligated to sell hereunder on such date, then this
Agreement shall terminate (or, if such default shall occur with respect to any
Option Securities to be purchased on an Option Closing Date, the Underwriters'
may, at the Representative's option, by notice from the Representative to the
Company, terminate the Underwriters' obligation to purchase Option Securities
from the Company on such date) without any liability on the part of any
non-defaulting party other than pursuant to Section 5, Section 7 and Section
10 hereof. No action taken pursuant to this Section 12 shall relieve the
Company from liability, if any, in respect of such default.
13. Notices. All notices and communications hereunder, except as herein
otherwise specifically provided, shall be in writing and shall be deemed to
have been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriters shall be directed to the
Representative at Josephthal & Co. Inc., 200 Park Avenue, 24th Floor, New
York, New York 10166, Attention: __________________ with a copy to
Sonnenschein Nath & Rosenthal, 1221 Avenue of the Americas, 25th Floor, New
York, New York 10020, Attention: Dennis N. Berman, Esq. Notices to the Company
shall be directed to the Company at IgX Corp.,
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<PAGE>
One Springfield Avenue, Summit, New Jersey 07960, Attention: Albert J. Henry,
Chief Executive Officer, with a copy to Epstein Becker & Green, P.C., 250 Park
Avenue, New York, New York 10177, Attention: Seth I. Truwit, Esq.
14. Parties. This Agreement shall inure solely to the benefit of and shall be
binding upon, the Underwriters, the Company and the controlling persons,
directors and officers referred to in Section 7 hereof, and their respective
successors, legal representatives and assigns, and no other person shall have
or be construed to have any legal or equitable right, remedy or claim under or
in respect of or by virtue of this Agreement or any provisions herein
contained. No purchaser of Securities from any Underwriter shall be deemed to
be a successor by reason merely of such purchase.
15. Construction. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York, without giving
effect to its choice of law or conflict of laws principles.
16. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of
which taken together shall be deemed to be one and the same instrument.
17. Entire Agreement; Amendments. This Agreement and the Representative's
Warrant Agreement constitute the entire agreement of the parties hereto and
supersede all prior written or oral agreements, understandings and
negotiations with respect to the subject matter hereof. This Agreement may not
be amended except in a writing, signed by the Representative and the Company.
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<PAGE>
If the foregoing correctly sets forth the understanding between the
Underwriters and the Company, please so indicate in the space provided below
for that purpose, whereupon this letter shall constitute a binding agreement
among us.
Very truly yours,
IgX CORP.
By:
-----------------------------------
Name: Albert J. Henry
Title: Chief Executive Officer
Confirmed and accepted as of
the date first above written.
JOSEPHTHAL & CO. INC.
For itself and as Representative
of the several Underwriters named
in Schedule A hereto.
By:
-------------------------------
Name:
Title:
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<PAGE>
Schedule A
Name of Underwriter Number of Firm Securities to be Purchased
- ------------------- -----------------------------------------
Josephthal & Co. Inc.
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<PAGE>
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF IgX CORP.
a Delaware corporation
IgX Corp., a corporation organized and existing under the laws of the
State of Delaware (the "Corporation"), hereby certifies as follows:
A. The Corporation filed its original Certificate of Incorporation
(the "Original Certificate") with the Delaware Secretary of State on February
11, 1992.
B. The Corporation amended the Original Certificate by filing a
Certificate of Determination of Rights and Preferences of Series A Preferred
Stock of IgX Corp., a Delaware corporation, on August 3, 1992.
C. The Corporation further amended the Original Certificate by filing
a Certificate of Amendment with the Delaware Secretary of State on September
23, 1993.
D. This Amended and Restated Certificate of Incorporation (the
"Amended and Restated Certificate") amends and restates the provisions of the
Original Certificate, as amended and as heretofore in effect, and was duly
adopted by the directors and stockholders in accordance with Sections 242 and
245 of the Delaware General Corporation Law.
E. The text of the Original Certificate as heretofore amended and in
effect is hereby amended and restated in its entirety to read as set forth
herein:
ARTICLE I.
The name of this Corporation is IgX Corp.
ARTICLE II.
The address of the registered office of the Corporation in the State
of Delaware is 15 East North Street, Post Office Box 899, County of Kent,
Dover, Delaware, 19903-0899. The name of its registered agent at such address
is Incorporating Services, Ltd.
ARTICLE III.
The nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
<PAGE>
ARTICLE IV.
A. Classes of Stock. This Corporation is authorized to issue three
classes of stock to be designated, respectively, "Common Stock," "Series A
Preferred Stock" and "Series B Preferred Stock." The total number of shares
which the Corporation is authorized to issue is 20,575,000 shares. 15,000,000
shares shall be Common Stock, $0.001 par value per share; 3,700,001 shares
shall be Series A Preferred Stock, $0.001 par value per share; and 1,874,999
shares shall be Series B Preferred Stock, $0.001 par value per share.
B. Rights, Preferences and Restrictions of Preferred Stock. The
rights, preferences, restrictions and other matters relating to the Series A
Preferred Stock and Series B Preferred Stock are as follows:
1. Dividend Provisions. Subject to the rights of series of
Preferred Stock which may from time to time come into existence, the holders
of shares of Series A Preferred Stock and Series B Preferred Stock shall be
entitled to receive dividends, out of any assets legally available therefor,
prior and in preference to any declaration or payment of any dividend (payable
other than in Common Stock or other securities and rights convertible into or
entitling the holder thereof to receive, directly or indirectly, additional
shares of Common Stock of this Corporation) on the Common Stock of this
Corporation an amount equal to that paid on any other outstanding shares of
this Corporation, payable quarterly when, as and if declared by the Board of
Directors. Such dividends shall not be cumulative.
Unless full dividends on the Series A Preferred Stock and
Series B Preferred Stock for all past dividend periods and the then current
dividend period shall have been paid or declared and a sum sufficient for the
payment thereof set apart: (A) no dividend whatsoever (other than a dividend
payable solely in Common Stock or other securities and rights convertible into
or entitling the holder thereof to receive, directly or indirectly, additional
shares of Common Stock) shall be paid or declared, and no distribution shall
be made, on any Common Stock, and (B) no shares of Common Stock shall be
purchased, redeemed, or acquired by the Corporation and no funds shall be paid
into or set aside or made available for a sinking fund for the purchase,
redemption, or acquisition thereof; provided, however, that this restriction
shall not apply to the repurchase of shares of Common Stock held by employees,
officers, directors, consultants or other persons performing services for the
Corporation or any wholly-owned subsidiary (including, but not by way of
limitation, distributors and sales representatives) that are subject to
restrictive stock purchase 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.
2. Liquidation Preference.
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<PAGE>
(a) In the event of any liquidation, dissolution or
winding up of this Corporation, either voluntary or involuntary, subject to
the rights of series of Preferred Stock that may from time to time come into
existence, the holders of Series A Preferred Stock and Series B Preferred
Stock shall be entitled to receive, prior and in preference to any
distribution of any of the assets of this Corporation to the holders of Common
Stock by reason of their ownership thereof, an amount per share equal to (i)
the sum of $1.2276 for each outstanding share of Series A Preferred Stock (the
"Original Series A Issue Price") plus an amount equal to 10% of the Original
Series A Issue Price for each 12 months that has passed since the date of
issuance of any Series A Preferred Stock (such amount being referred to herein
as the "Premium") and (ii) the sum of $6.4121 for each outstanding share of
Series B Preferred Stock (the "Original Series B Issue Price"). If upon the
occurrence of such event, the assets and funds thus distributed among the
holders of the Series A Preferred Stock and the Series B Preferred Stock shall
be insufficient to permit the payment to such holders of the full aforesaid
preferential amounts, then, subject to the rights of series of Preferred Stock
that may from time to time come into existence, the entire assets and funds of
the Corporation legally available for distribution shall be distributed
ratably among the holders of the Series A Preferred Stock and Series B
Preferred Stock in proportion to the preferential amount each such holder is
otherwise entitled to receive.
(b) Upon the completion of the distribution required
by subparagraph (a) of this Section 2 and any other distribution that may be
required with respect to series of Preferred Stock that may from time to time
come into existence, if assets remain in this Corporation, the holders of the
Common Stock of this Corporation shall receive all of the remaining assets of
this Corporation.
(c) (i) For purposes of this Section 2, a
liquidation, dissolution or winding up of this Corporation shall be deemed to
be occasioned by, or to include, (A) the acquisition of the Corporation by
another entity by means of any transaction or series of related transactions
(including, without limitation, any reorganization, merger or consolidation
but, excluding any merger effected exclusively for the purpose of changing the
domicile of the Corporation); or (B) a sale of all or substantially all of the
assets of the Corporation; unless the Corporation's stockholders of record as
constituted immediately prior to such acquisition or sale will, immediately
after such acquisition or sale (by virtue of securities issued as
consideration for the Corporation's acquisition or sale or otherwise) hold at
least 50% of the voting power of the surviving or acquiring entity.
(ii) In any of such events, if the consideration
received by the Corporation is other than cash, its value will be deemed its
fair market value. Any securities shall be valued as follows:
(A) Securities not subject to investment
letter or other similar restrictions on free marketability covered by (B)
below:
(1) If traded on a securities exchange
or through NASDAQ-NMS, the value shall be deemed to be the average of the
closing prices of the securities on such exchange over the thirty-day period
ending three (3) days prior to the closing;
(2) 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 thirty-day period ending three
(3) days prior to the closing; and
(3) 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.
(B) 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 as above in (A)(1), (2) or (3) to reflect the
approximate fair market value thereof, as determined in good faith by the
Board of Directors of the Corporation.
(iii) In the event the requirements of this
subsection 2(c) are not complied with, this Corporation shall forthwith
either:
(A) cause such closing to be postponed
until such time as the requirements of this Section 2 have ben complied with; or
(B) cancel such transaction, in which
event the rights, preferences and privileges of the holders of the Series A
Preferred Stock and the Series B Preferred Stock shall revert to and be the
same as such rights, preferences and privileges existing immediately prior to
the date of the first notice referred to in subsection 2(c)(iv) hereof.
(iv) The Corporation shall give each holder of
record of Series A Preferred Stock and Series B Preferred Stock written notice
of such impending transaction not later than fifteen (15) days prior to the
stockholders' meeting called to approve such transaction, or fifteen (15) days
prior to the closing of such transaction, whichever is earlier, and shall also
notify such holders in writing of the final approval of such transaction. The
first of such notices shall describe the material terms and conditions of the
impending transaction and the provisions of this Section 2, and the
Corporation shall thereafter give such holders prompt notice of any material
changes. The transaction shall in no event take place sooner than fifteen (15)
days after the Corporation has given the first notice provided for herein or
sooner than ten (10) days after the Corporation has given notice of any
material changes provided for herein; provided, however, that such periods may
be shortened upon the written consent of the holders of Preferred Stock that
are entitled to such notice rights or similar notice rights and that represent
at least a majority of the voting power of all then outstanding shares of such
Preferred Stock.
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<PAGE>
3. Conversion. The holders of the Series A Preferred Stock
and Series B Preferred Stock shall have conversion rights as follows (the
"Conversion Rights"):
(a) Right to Convert. Each share of Series A
Preferred Stock and Series B Preferred Stock shall be convertible, at the
option of the holder thereof, at any time after the date of issuance of such
share at the office of this Corporation or any transfer agent for such stock,
into such number of fully paid and nonassessable shares of Common Stock as is
determined by dividing the Original Series A Issue Price or Original Series B
Issue Price by the Conversion Price applicable to such share, determined as
hereafter provided, in effect on the date the certificate is surrendered for
conversion. The initial Conversion Price per share for shares of Series A
Preferred Stock shall be the Original Series A Issue Price and the initial
Conversion Price per share for Series B Preferred Stock shall be the Original
Series B Issue Price; provided, however, that the Conversion Price for the
Series A Preferred Stock and Series B Preferred Stock shall be subject to
adjustment as set forth in subsection 3(d).
(b) Automatic Conversion. Each share of Series A
Preferred Stock and Series B Preferred Stock shall automatically be converted
into shares of Common Stock at the Conversion Price at the time in effect for
such Series A Preferred Stock or Series B Preferred Stock immediately upon the
earlier of (i) except as provided below in subsection 3(c), the Corporation's
sale of its Common Stock in a firm commitment underwritten public offering
pursuant to a registration statement under the Securities Act of 1933, as
amended, the public offering price of which was not less than $7.00 per share
(adjusted to reflect subsequent stock dividends, stock splits or
recapitalization) or (ii) the date specified by written consent or agreement
of the holders of 85% of the then outstanding shares of Series A Preferred
Stock and Series B Preferred Stock.
(c) Mechanics of Conversion. Before any holder of
Series A Preferred Stock or Series B Preferred Stock shall be entitled to
convert the same into shares of Common Stock, he shall surrender the
certificate or certificates therefor, duly endorsed, at the office of this
Corporation or of any transfer agent for the Series A Preferred Stock or
Series B Preferred Stock, and shall give written notice to this Corporation at
its principal corporate office, of the election to convert the same and shall
state therein the name or names in which the certificate or certificates for
shares of Common Stock are to be issued. This Corporation shall, as soon as
practicable thereafter, issue and deliver at such office to such holder of
Series A Preferred Stock or Series B 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.
Such conversion shall be deemed to have been made immediately prior to the
close of business on the date of such surrender of the shares of Series A
Preferred Stock or Series B 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. If the conversion is in
connection with an underwritten offering of securities registered pursuant to
the Securities Act of 1933, the conversion may, at the option of any holder
tendering Series A Preferred Stock or Series B Preferred Stock for conversion,
be conditioned upon the closing with the underwriters of the sale of
securities pursuant to such offering, in which event the person(s) entitled to
receive the Common Stock upon conversion of the Series A Preferred Stock or
Series B
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<PAGE>
Preferred Stock shall not be deemed to have converted such Series A Preferred
Stock or Series B Preferred Stock until immediately prior to the closing of
such sale of securities.
(d) Conversion Price Adjustments of Preferred Stock
for Certain Dilutive Issuances, Splits and Combinations. The Conversion Price
of the Series A Preferred Stock and Series B Preferred Stock shall be subject
to adjustment from time to time as follows:
(i) (A) If the Corporation shall issue, after
the date upon which any shares of Series A Preferred Stock and Series B
Preferred Stock were first issued (the "Purchase Date" with respect to such
series), any Additional Stock (as defined below) without consideration or for
a consideration per share less than the Conversion Price for such series in
effect immediately prior to the issuance of such Additional Stock, the
Conversion Price for such series in effect immediately prior to each such
issuance shall forthwith (except as otherwise provided in this clause (i)) be
adjusted to a price equal to the price paid per share for such Additional
Stock.
(B) No adjustment of the Conversion Price
for the Series A Preferred Stock or Series B Preferred Stock shall be made in
an amount less than one cent per share, provided that any adjustments which
are not required to be made by reason of this sentence shall be carried
forward and shall be either taken into account in any subsequent adjustment
made prior to 3 years from the date of the event giving rise to the adjustment
being carried forward, or shall be made at the end of 3 years from the date of
the event giving rise to the adjustment being carried forward. Except to the
limited extent provided for in subsections (E)(3) and (E)(4), no adjustment of
such Conversion Price pursuant to this subsection 4(d)(i) shall have the
effect of increasing the Conversion Price above the Conversion Price in effect
immediately prior to such adjustment.
(C) In the case of the issuance of Common
Stock for cash, the consideration shall be deemed to be the amount of cash
paid therefor before deducting any reasonable discounts, commissions or other
expenses allowed, paid or incurred by this Corporation for any underwriting or
otherwise in connection with the issuance and sale thereof.
(D) In the case of the issuance of the
Common Stock for a consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be the fair value thereof as
determined by the Board of Directors irrespective of any accounting treatment.
(E) In the case of the issuance (whether
before, on or after the applicable Purchase Date) of options to purchase or
rights to subscribe for Common Stock, securities by their terms convertible
into or exchangeable for Common Stock or options to purchase or rights to
subscribe for such convertible or exchangeable securities, the following
provisions shall apply for all purposes of this subsection 3(d)(i) and
subsection 3(d)(ii):
(1) The aggregate maximum number of shares
of Common Stock deliverable upon exercise (assuming the satisfaction of any
conditions to
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exercisability, including, without limitation, the passage of time, but
without taking into account potential antidilution adjustments) of such
options to purchase or rights to subscribe for Common Stock shall be deemed to
have been issued at the time such options or rights were issued and for a
consideration equal to the consideration (determined in the manner provided in
subsections 3(d)(i)(C) and (d)(i)(D)), if any, received by the Corporation
upon the issuance of such options or rights plus the minimum exercise price
provided in such options or rights (without taking into account potential
antidilution adjustments) for the Common Stock covered thereby.
(2) The aggregate maximum number of shares
of Common Stock deliverable upon conversion of or in exchange (assuming the
satisfaction of any conditions to convertibility or exchangeability,
including, without limitation, the passage of time, but without taking into
account potential antidilution adjustments) for any such convertible or
exchangeable securities or upon the exercise of options to purchase or rights
to subscribe for such convertible or exchangeable securities and subsequent
conversion or exchange thereof shall be deemed to have been issued at the time
such securities were issued or such options or rights were issued and for a
consideration equal to the consideration, if any, received by the Corporation
for any such securities and related options or rights (excluding any cash
received on account of accrued interest or accrued dividends), plus the
minimum additional consideration, if any, to be received by the Corporation
(without taking into account potential antidilution adjustments) upon the
conversion or exchange of such securities or the exercise of any related
options or rights (the consideration in each case to be determined in the
manner provided in subsections 3(d)(i)(C) and (d)(i)(D)).
(3) In the event of any change in the
number of shares of Common Stock deliverable or in the consideration payable
to this Corporation upon exercise of such options or rights or upon conversion
of or in exchange for such convertible or exchangeable securities, including,
but not limited to, a change resulting from the antidilution provisions
thereof, the Conversion Price of the Series A Preferred Stock or Series B
Preferred Stock, to the extent in any way affected by or computed using such
options, rights or securities, shall be recomputed to reflect such change, but
no further adjustment shall be made for the actual issuance of Common Stock or
any payment of such consideration upon the exercise of any such options or
rights or the conversion or exchange of such securities.
(4) Upon the expiration of any such options
or rights, the termination of any such rights to convert or exchange or the
expiration of any options or rights related to such convertible or
exchangeable securities, the Conversion Price of the Series A Preferred Stock
or the Series B Preferred Stock, to the extent in any way affected by or
computed using such options, rights or securities or options or rights related
to such securities, shall be recomputed to reflect the issuance of only the
number of shares of Common Stock (and convertible or exchangeable securities
which remain in effect) actually issued upon the exercise of such options or
rights, upon the conversion or exchange of such securities or upon the
exercise of the options or rights related to such securities.
(5) The number of shares of Common Stock
deemed issued and the consideration deemed paid therefor pursuant to
subsections 3(d)(i)(E)(1) and (2) shall
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be appropriately adjusted to reflect any change, termination or expiration of
the type described in either subsection 3(d)(i)(E)(3) or (4).
(ii) "Additional Stock" shall mean any shares of
Common Stock issued (or deemed to have been issued pursuant to subsection
3(d)(i)(E)) by this Corporation after the Purchase Date other than
(A) Common Stock issued pursuant to a
transaction described in subsection 3(d)(iii) hereof,
(B) The reissuance on one or more occasions
of up to 1,048,357 shares of Common Stock to employees consultants, directors
or vendors of this Corporation directly or pursuant to stock options in place
of options outstanding as of the date hereof in like amount issued by this
Corporation or IgX Limited.
(C) Common Stock issuable or issued upon
conversion of Series A Preferred Stock or Series B Preferred Stock,
(D) Common Stock or other securities issued
in connection with a bona fide business acquisition or strategic alliance by
the Corporation, whether by merger, consolidation, sale of assets, sale or
exchange of stock or otherwise,
(E) shares of Common Stock issued or
issuable (I) in a public offering before or in connection with which all
outstanding shares of Series A Preferred Stock and Series B Preferred Stock
will be converted to Common Stock or (II) upon exercise of warrants or rights
granted to underwriters in connection with such a public offering.
(iii) In the event the Corporation should at any
time or from time to time after the Purchase Date fix a record date for the
effectuation of a split or subdivision of the outstanding shares of Common
Stock or the determination of 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 "Common Stock Equivalents") without payment of any
consideration by such holder for the additional shares of Common Stock or the
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 dividend distribution, split or subdivision if no record
date is fixed), the Conversion Price of the Series A Preferred Stock and the
Series B Preferred Stock shall be appropriately decreased so that the number
of shares of Common Stock issuable on conversion of each share of such series
shall be increased in proportion to such increase of the aggregate of shares
of Common Stock outstanding and those issuable with respect to such Common
Stock Equivalents with the number of shares issuable with respect to Common
Stock Equivalents determined from time to time in the manner provided for
deemed issuances in subsection 3(d)(i)(E).
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(iv) If the number of shares of Common
Stock outstanding at any time after the Purchase Date is decreased by a
combination of the outstanding shares of Common Stock, then, following the
record date of such combination, the Conversion Price for the Series A
Preferred Stock and the Series B Preferred Stock shall be appropriately
increased so that the number of shares of Common Stock issuable on conversion
of each share of such series shall be decreased in proportion to such decrease
in outstanding shares.
(e) Other Distributions. In the event this
Corporation shall declare a distribution payable in securities of other
persons, evidences of indebtedness issued by this Corporation or other
persons, assets (excluding cash dividends) or options or rights not referred
to in subsection 3(d)(iii), then, in each such case for the purpose of this
subsection 3(e), the holders of the Series A Preferred Stock and Series B
Preferred Stock shall be entitled to a proportionate share of any such
distribution as though they were the holders of the number of shares of Common
Stock of the Corporation into which their shares of Series A Preferred Stock
or Series B Preferred Stock are convertible as of the record date fixed for
the determination of the holders of Common Stock of the Corporation entitled
to receive such distribution.
(f) Recapitalizations. If at any time or from time to
time there shall be a recapitalization of the Common Stock (other than a
subdivision, combination or merger or sale of assets transaction provided for
elsewhere in this Section 3 or Section 2) provision shall be made so that the
holders of the Series A Preferred Stock and Series B Preferred Stock shall
thereafter be entitled to receive upon conversion of the Series A Preferred
Stock or the Series B Preferred Stock the number of shares of stock or other
securities or property of the Company or otherwise, to which a holder of
Common Stock deliverable upon conversion would have been entitled on such
recapitalization. In any such case, appropriate adjustment shall be made in
the application of the provisions of this Section 3 with respect to the rights
of the holders of the Series A Preferred Stock and the Series B Preferred
Stock after the recapitalization to the end that the provisions of this
Section 3 (including adjustment of the Conversion Price then in effect and the
number of shares purchasable upon conversion of the Series A Preferred Stock
or the Series B Preferred Stock) shall be applicable after that event as
nearly equivalent as may be practicable.
(g) No Impairment. This Corporation will not, by
amendment of its Certificate of Incorporation 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 this Corporation, but will at all times in good faith
assist in the carrying out of all the provisions of this Section 3 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
and the Series B Preferred Stock against impairment.
(h) No Fractional Shares and Certificate as to
Adjustments.
(i) No fractional shares shall be issued upon
the conversion of any share or shares of the Series A Preferred Stock or the
Series B Preferred Stock, and the number
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of shares of Common Stock to be issued shall be rounded to the nearest whole
share. Whether or not fractional shares are issuable upon such conversion
shall be determined on the basis of the total number of shares of Series A
Preferred Stock or Series B Preferred Stock the holder is at the time
converting into Common Stock and the number of shares of Common Stock issuable
upon such aggregate conversion.
(ii) Upon the occurrence of each adjustment or
readjustment of the Conversion Price of Series A Preferred Stock or Series B
Preferred Stock pursuant to this Section 3, this 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 and Series B Preferred Stock a certificate setting forth such adjustment
or readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. This Corporation shall, upon the written request at any
time of any holder of Series A Preferred Stock or Series B Preferred Stock,
furnish or cause to be furnished to such holder a like certificate setting
forth (A) such adjustment and readjustment, (B) the Conversion Price for such
series of Preferred Stock 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 a share of Series A Preferred Stock
or Series B Preferred Stock.
(i) Notices of Record Date. In the event of any
taking by this Corporation 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) or other distribution,
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, this Corporation shall mail to each holder of Series A Preferred Stock
and Series B Preferred Stock, at least 20 days prior to the date specified
therein, a notice specifying the date on which any such record is to be taken
for the purpose of such dividend, distribution or right, and the amount and
character of such dividend, distribution or right.
(j) Reservation of Stock Issuable Upon Conversion.
This 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 shares of the Series A Preferred Stock and
Series B 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 Series B 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 then outstanding shares of
the Series A Preferred Stock and Series B Preferred Stock, in addition to such
other remedies as shall be available to the holder of such Preferred Stock,
this 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,
including, without limitation, engaging in best efforts to obtain the
requisite stockholder approval of any necessary amendment to this certificate.
(k) Notices. Any notice required by the provisions
of this Section 3 to be given to the holders of shares of Series A Preferred
Stock or Series B Preferred Stock shall be
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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
this Corporation.
(l) Special Adjustment to Series B Preferred Stock.
(i) In the event that on or prior to December
31, 1998, the Company shall issue additional shares of Common Stock in its
initial Public Offering, or in connection with a private sale, in any one
transaction or series of related transactions, of more than 50% of its voting
stock (determined after the consummation thereof), to a single person or group
of persons acting together (as defined in Section 13(d)(3) of the Securities
Exchange Act of 1934 (a "Private Sale"), for a consideration per share of
Common Stock of less than $8.9770, then immediately prior to the closing of
the sale of securities such Series B Conversion Price shall be reduced,
concurrently with such issue, to a price (calculated to the nearest
1/10,000th) equal to 57.14% of such consideration per share.
(ii) In the event that on or prior to
December 31, 1999, the Company shall issue additional shares of Common Stock in
its initial Public Offering or a Private Sale, for a consideration per share
of Common Stock of less than $15.7098, then immediately prior to the closing
of the sale of securities such Series B Conversion Price shall be reduced,
concurrently with such issue, to a price (calculated to the nearest
1/10,000th) equal to 32.65% of such consideration per share.
(iii) In the event on or prior to December
31, 2000 that the Company shall issue additional shares of Common Stock in its
initial Public Offering or a Private Sale, for a consideration per share of
Common Stock of less than $27.4921, then immediately prior to the closing of the
sale of securities such Series B Conversion Price shall be reduced, concurrently
with such issue, to a price (calculated to the nearest 1/10,000th) equal to
18.66% of such consideration per share.
(iv) In the event that, prior to December
31, 2000, the Company has not consummated a Public Offering or a Private Sale,
then, effective as of such date, the Series B Conversion Price shall be
reduced to 18.66% of the Current Market Price of the shares of Common Stock of
the Company.
4. Voting Rights. The holder of each share of Series A
Preferred Stock and Shares B Preferred Stock shall have the right to one vote
for each share of Common Stock into which such Series A Preferred Stock or
Series B 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,
notwithstanding any provision hereof, to notice of any stockholders' meeting
in accordance with the Bylaws of this 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 available on an
as-converted basis (after aggregating all shares into which shares of Series A
Preferred Stock or Series B Preferred Stock held by each holder
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<PAGE>
could be converted) shall be rounded to the nearest whole number (with
one-half being rounded upward).
5. Protective Provisions. Subject to the rights of series of
Preferred Stock which may from time to time come into existence, so long as
any shares of Series A Preferred Stock or Series B Preferred Stock are
outstanding, this Corporation shall not without first obtaining the approval
(by vote or written consent, as provided by law) of the holders of 85% of the
then outstanding shares of Series A Preferred Stock and Series B Preferred
Stock:
(a) sell, convey, or otherwise dispose of or
encumber 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 transaction or series of related transactions in
which more than fifty percent (50%) of the voting power of the Corporation is
disposed of;
(b) alter or change the rights, preferences or
privileges of the shares of Series A Preferred Stock or Series B Preferred
Stock so as to affect adversely the shares;
(c) increase or decrease (other than by redemption
or conversion) the total number of authorized shares of Series A Preferred
Stock or Series B Preferred Stock;
(d) issue, or obligate itself to issue, any other
equity security, including any other security convertible into or exercisable
for any equity security (i) having a preference over, or being on a parity
with, the Series A Preferred Stock or the Series B Preferred Stock with
respect to voting, dividends or upon liquidation, or (ii) having rights
similar to any of the rights of the Series A Preferred Stock or the Series B
Preferred Stock under this Section 5;
(e) redeem, purchase or otherwise acquire (or pay
into or set aside for a sinking fund for such purpose) any share or shares of
Preferred Stock or Common Stock; provided, however, that this restriction
shall not apply to (i) the repurchase of shares of Common Stock from
employees, officers, directors, consultants or other persons performing
services for the Company or any subsidiary pursuant to agreements under which
the Company has the option to repurchase such shares at cost or at cost upon
the occurrence of certain events, such as the termination of employment; or
(f) amend the Corporation's Certificate of
Incorporation or Bylaws.
6. Status of Converted or Redeemed Stock. In the event any
shares of Series A Preferred Stock or Series B Preferred Stock shall be
redeemed or converted pursuant to Section 3 or Section 4 hereof, the shares so
converted or redeemed shall be cancelled and shall not be issuable by the
Corporation. The Certificate of Incorporation of this Corporation shall be
appropriately amended to effect the corresponding reduction in the
Corporation's authorized capital stock.
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<PAGE>
C. Common Stock.
1. Dividend Rights. Subject to the prior rights of holders
of all classes of stock at the time outstanding having prior rights as to
dividends, the holders of the Common Stock shall be entitled to receive, when
and as declared by the Board of Directors, out of any assets of the
Corporation legally available therefor, such dividends as may be declared from
time to time by the Board of Directors.
2. Liquidation Rights. Upon the liquidation, dissolution or
winding up of the Corporation, the assets of the Corporation shall be
distributed as provided in Section 2 of Division (B) of this Article IV
hereof.
3. Redemption. The Common Stock is not redeemable.
4. Voting Rights. The holder of each share of Common Stock
shall have the right to one vote, and shall be entitled to notice of any
stockholders' meeting in accordance with the Bylaws of this Corporation, and
shall be entitled to vote upon such matters and in such manner as may be
provided by law.
ARTICLE V.
The Corporation shall have perpetual existence.
ARTICLE VI.
Except as otherwise provided in this Certificate of Incorporation, in
furtherance and not in limitation of the powers conferred by statute, the
Board of Directors is expressly authorized to make, repeal, alter, amend and
rescind any or all of the Bylaws of the Corporation.
ARTICLE VII.
The number of directors of the Corporation shall be fixed from time
to time by a Bylaw or amendment thereof duly adopted by the Board of Directors
or by the stockholders.
ARTICLE VIII.
Elections of directors need not be by written ballot unless the
Bylaws of the Corporation shall so provide.
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<PAGE>
ARTICLE IX.
Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of the Corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the Bylaws of the Corporation.
ARTICLE X.
A. Exculpation. A director of the Corporation shall not be personally
liable to the Corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, except for liability (i) for any breach of
the director's duty of loyalty to the Corporation or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentionally
misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law or (iv) for any transaction from which the
director derived any improper personal benefit. If the Delaware General
Corporation Law is hereafter amended to further reduce or to authorize, with
the approval of the Corporation's stockholders, further reductions in the
liability of the Corporation's directors for breach of fiduciary duty, then a
director of the Corporation shall not be liable for any such breach to the
fullest extent permitted by the Delaware General Corporation Law as so
amended.
B. Indemnification. To the extent permitted by applicable law, this
Corporation is also authorized to provide indemnification of (and advancement
of expenses to) such agents (and any other persons to which Delaware law
permits this Corporation to provide indemnification) through bylaw provisions,
agreements with such agents or other persons, vote of stockholders or
disinterested directors or otherwise, in excess of the indemnification and
advancement otherwise permitted by Section 145 of the Delaware General
Corporation Law, subject only to limits created by applicable Delaware law
(statutory or non-statutory) with respect to actions for breach of duty to the
Corporation, its stockholders and others.
C. Effect of Repeal or Modification. Any repeal or modification of
any of the foregoing provisions of this Tenth Article shall not adversely
affect any right or protection of a director, officer, agent or other person
existing at the time of or increase the liability of any director of the
Corporation with respect to any acts or omissions of such director occurring
prior to, such repeal or modification.
ARTICLE XI.
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Amended and Restated Certificate of
Incorporation, in the manner now or hereafter prescribed by statute and all
rights conferred upon stockholders herein are granted subject to this
reservation.
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<PAGE>
ARTICLE XII.
The Corporation shall not be subject to the provisions of Section 203
of the Delaware General Corporation Law.
We further declare under penalty of perjury under the laws of the
State of Delaware that the statements contained in the foregoing Amended and
Restated Certificate of Incorporation of IgX Corp. are true and correct of our
own knowledge.
Dated: December 24, 1997
/s/ Albert J. Henry
---------------------------
Albert J. Henry, Chairman
/s/ Kenneth D. Polin
---------------------------
Kenneth D. Polin, Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
OF
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
IgX CORP.
IgX Corp., a corporation organized and existing under and by virtue of
the Delaware General Corporation Law (the "Corporation"), does hereby certify
that:
FIRST: The Board of Directors of the Corporation adopted the following
resolution by unanimous written consent:
RESOLVED, that Article IV, Section 2(a) of the Amended and Restated
Certificate of Incorporation be and hereby is amended to read in its entirety as
follows:
"(a) In the event of any liquidation, dissolution or winding up of
this Corporation, either voluntary or involuntary, subject to the rights of
series of Preferred Stock that may from time to time come into existence, the
holders of Series A Preferred Stock and Series B Preferred Stock shall be
entitled to receive, prior and in preference to any distribution of any of the
assets of this Corporation to the holders of Common Stock by reason of their
ownership thereof, an amount per share equal to (i) the sum of $1.2276 for each
outstanding share of Series A Preferred Stock (the "Original Series A Issue
Price") and (ii) the sum of $6.4121 for each outstanding share of Series B
Preferred Stock (the "Original Series B Issue Price"). If upon the occurrence of
such event, the assets and funds thus distributed among the holders of the
Series A Preferred Stock and the Series B Preferred Stock shall be insufficient
to permit the payment to such holders of the full aforesaid preferential
amounts, then, subject to the rights of series of Preferred Stock that may from
time to time come into existence, the entire assets and funds of the Corporation
legally available for distribution shall be distributed ratably among the
holders of the Series A Preferred Stock and Series B Preferred Stock in
proportion to the preferential amount each such holder is otherwise entitled to
receive."
SECOND: Such amendment was consented to and authorized by the holders
of a majority of the issued and outstanding capital stock of the Corporation
entitled to vote on such amendment by unanimous written consent in accordance
with the applicable provisions of Section 228 of the Delaware General
Corporation Law.
THIRD: Such amendment was duly adopted in accordance with the
applicable provisions of Section 242 of the Delaware General Corporation Law.
[Remainder of Page Intentionally Left Blank]
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed by Albert J. Henry, its Chairman, and attested by Kenneth
D. Polin, its Secretary, this 6th day of January, 1998.
IgX CORP.,
a Delaware corporation
By/s/ Albert J. Henry
----------------------------------
Albert J. Henry, Chairman
ATTEST:
By: /s/ Kenneth D. Polin
---------------------------------
Kenneth D. Polin, Secretary
<PAGE>
EXHIBIT "A"
CERTIFICATE OF AMENDMENT
OF
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
IgX CORP.
IgX Corp., a corporation organized and existing under and by virtue
of the Delaware General Corporation Law (the "Corporation"), does hereby
certify that:
FIRST: The Board of Directors of the Corporation adopted the
following resolutions by unanimous written consent:
RESOLVED, that Article IV, paragraph A, of the Amended and Restated
Certificate of Incorporation be and hereby is amended to read in its entirety
as follows:
ARTICLE IV
A. Classes of Stock. This Corporation is authorized to issue
three classes of stock to be designated, respectively, "Common
Stock," "Series A Preferred Stock," "Series B Preferred Stock" and a
class of undesignated "Preferred Stock" to be issued from time to
time in one or more series. The total number of shares which this
Corporation is authorized to issue is 30,575,000 of which 20,000,000
shares shall be Common Stock, $0.001 par value per share, 3,700,001
shares shall be Series A Preferred Stock, $0.001 par value per share;
1,874,999 shares shall be Series B Preferred Stock, $0.001 par value
per share, and 5,000,000 shares shall be Preferred Stock, $0.001 par
value per share.
RESOLVED, FURTHER, that Article IV of the Amended and Restated
Certificate of Incorporation be amended to add a new paragraph D, to read in
its entirety as follows:
D. Preferred Stock. The Preferred Stock may be issued from
time to time in one or more series. The Board of Directors of the
Corporation is hereby expressly authorized to provide, by resolution
or resolutions duly adopted by it prior to issuance, for the creation
of each such series and to fix the designation and the powers,
preferences, rights, qualifications, limitations and restrictions
relating to the shares of each such series. The authority of the
Board of Directors with respect to each series of Preferred Stock
shall include, but not be limited to, determining the following:
<PAGE>
(1) the designation of such series, the number of shares to
constitute such series and the stated value if different from the par
value thereof;
(2) whether the shares of such series shall have voting
rights, in addition to any voting rights provided by law, and, if so,
the terms of such voting rights, which may be general or limited;
(3) the dividends, if any, payable on such series, whether
any such dividends shall be cumulative, and, if so, from what date,
the conditions and dates upon which such dividends shall be payable,
and the preference or relation which such dividends shall bear to the
dividends payable on any shares of stock of any other class or any
other series of Preferred Stock;
(4) whether the shares of such series shall be subject to
redemption by the Corporation, and, if so, the times, prices and
other conditions of such redemption;
(5) the amount or amounts payable upon shares of such series
upon, and the rights of the holders of such series in, the voluntary
or involuntary liquidation, dissolution or winding up, or upon any
distribution of the assets, of the Corporation;
(6) whether the shares of such series shall be subject to
the operation of a retirement or sinking fund and, if so, the extent
to and manner in which any such retirement or sinking fund shall be
applied to the purchase or redemption of the shares of such series
for retirement or other corporate purposes and the terms and
provisions relating to the operation thereof;
(7) whether the shares of such series shall be convertible
into, or exchangeable for, shares of stock of any other class or any
other series of Preferred Stock or any other securities and, if so,
the price or process or the rate or rates of conversion or exchange
and the method, if any, of adjusting the same, and any other terms
and conditions of conversion or exchange;
(8) the limitations and restrictions, if any, to be
effective while any shares of such series are outstanding upon the
payment of dividends or the making of other distributions on, and
upon the purchase, redemption or other acquisition by the Corporation
of, the Common Stock or shares of stock of any other class or any
other series of Preferred Stock;
(9) the conditions or restrictions, if any, upon the
creation of indebtedness of the Corporation or upon the issuance of
any additional stock,
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including additional shares of such series or of any other series of
Preferred Stock or of any other class; and
(10) any other powers, preferences and relative,
participating, optional and other special rights, and any
qualifications, limitations and restrictions thereof.
The powers, preferences and relative, participating, option and other
special rights of each series of Preferred Stock, and the
qualifications, limitations or restrictions thereof, if any, may
differ from those of any and all other series at any time
outstanding. All shares of any one series of Preferred Stock shall be
identical in all respects with all other shares of such series,
except that shares of any one series issued at different times may
differ as to the dates from which dividends thereof shall be
cumulative.
RESOLVED, FURTHER, that Article VII of the Amended and Restated
Certificate of Incorporation be and hereby is amended to read in its entirety
as follows:
ARTICLE VII
A. The number of directors of the Corporation shall be fixed
from time to time by a Bylaw or amendment thereof duly adopted by the
Board of Directors.
B. Commencing with the annual meeting of stockholders in
1998, the directors shall be classified, with respect to the time for
which they severally hold office, into three (3) classes, as nearly
equal in number as possible as the then total number of directors
constituting the entire board permits, pursuant to the provisions of
the Corporation's Certificate of Incorporation and its Bylaws. The
respective classes of directors shall be elected to terms of one, two
and three years. At each subsequent annual meeting of stockholders,
the successors to the class of directors whose term expires at that
meeting shall be elected, by a plurality of the votes cast, to hold
office for a term expiring at the annual meeting of the stockholders
held in the third year following the year of their election and until
their successors have been duly elected and qualified.
C. Except as otherwise fixed by resolution of the Board of
Directors pursuant to this Certificate of Incorporation relating to
the authorization of the Board of Directors to provide by resolution
for the issuance of preferred stock and determine the rights of the
holders of such preferred stock to elect directors, newly created
directorships resulting from any increase in the authorized number of
directors or any vacancies in the Board of Directors resulting from
death, resignation, retirement, disqualification, removal from office
or other cause shall be filled solely
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<PAGE>
by the Board of Directors, acting by not less than a majority of the
directors then in office or by a sole remaining director in office.
Any director so chosen shall hold office until the next election of
the class for which such director shall have been chosen and until
his successor shall be elected and qualified. No decrease in the
number of directors shall shorten the term of any incumbent director.
D. At any annual meeting of stockholders of the Corporation,
or at any special meeting of stockholders of the Corporation, the
notice of which shall have stated that the removal of a director or
directors is among the purposes of the meeting, the holders of
capital stock entitled to vote thereon, present in person or by
proxy, by vote of a majority of the outstanding shares thereof,
voting together as a single class, may remove such director or
directors only for cause. For purposes of this Certificate of
Incorporation, "cause" means an act or acts by an individual
involving the commission of a felony, willful misconduct, fraud,
embezzlement, dishonesty, breach of fiduciary duty or violation or
breach of a written employment or consulting agreement or of the
Corporation's policy as described in a Corporation manual or
handbook, any of which acts cause the Corporation material damage.
E. Notwithstanding any other provision of this Certificate
of Incorporation or the Bylaws of the Corporation, and
notwithstanding the fact that a lesser percentage may be specified by
law, this Certificate of Incorporation or the Bylaws of the
Corporation, the affirmative vote of the holders of at least
two-thirds (2/3) of the combined voting power of the then outstanding
shares of stock entitled to vote generally in the election of
directors, voting together as a single class, shall be required to
alter, amend, or adopt any provision inconsistent with or repeal this
Article VII.
SECOND: Such amendment was consented to and authorized by the holders
of a majority of the issued and outstanding Common Stock of the Corporation, 85
percent of the holders of the issued and oustanding shares of Series A Preferred
Stock of the Corporation, and 85 percent of the holders of the issued and
outstanding shares of Series B Preferred Stock of the Corporation entitled to
vote on such amendment by written consent in accordance with the applicable
provisions of Section 228 of the Delaware General Corporation Law.
THIRD: Such amendment was duly adopted in accordance with the
applicable provisions of Section 242 of the Delaware General Corporation Law.
[Remainder of Page Intentionally Left Blank]
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<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed by Albert J. Henry, its Chairman, this 29 day of
September, 1998.
IgX CORP.,
a Delaware corporation
By /s/ Albert J. Henry
------------------------------------------
Albert J. Henry, Chairman
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<PAGE>
DRAFT DATED September 29, 1998
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF IgX CORP.
a Delaware corporation
IgX Corp., a corporation organized and existing under the laws of the
State of Delaware (the "Corporation"), hereby certifies as follows:
A. The Corporation filed its original Certificate of Incorporation
(the "Original Certificate") with the Delaware Secretary of State on February
11, 1992.
B. The Corporation amended the Original Certificate by filing a
Certificate of Determination of Rights and Preferences of Series A Preferred
Stock of IgX Corp., a Delaware corporation, on August 3, 1992.
C. The Corporation further amended the Original Certificate by filing
a Certificate of Amendment with the Delaware Secretary of State on September
23, 1993.
D. The Corporation amended and restated the provisions of the
Original Certificate, as amended, by filing an Amended and Restated
Certificate of Incorporation (the "First Restated Certificate") with the
Delaware Secretary of State on December 24, 1997.
E. The Corporation amended the First Restated Certificate by filing a
Certificate of Amendment with the Delaware Secretary of State on January 27,
1998.
F. The Corporation further amended the First Restated Certificate by
filing a Certificate of Amendment with the Delaware Secretary of State on
September __, 1998.
G. The Corporaion further amended the First Restated Certificate by
filing a Certificate of Amendment with the Delaware Secretary of State on
___________, 1998.
F. This Amended and Restated Certificate of Incorporation (the
"Amended and Restated Certificate") amends and restates the provisions of the
First Restated Certificate, as amended and as heretofore in effect, and was
duly adopted by the directors and stockholders in accordance with Sections 242
and 245 of the Delaware General Corporation Law.
G. The text of the First Restated Certificate as heretofore amended
and in effect is hereby amended and restated in its entirety to read as set
forth herein:
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<PAGE>
DRAFT DATED September 29, 1998
ARTICLE I.
The name of this Corporation is IgX Corp.
ARTICLE II.
The address of the registered office of the Corporation in the State
of Delaware is 15 East North Street, Post Office Box 899, County of Kent,
Dover, Delaware, 19903-0899. The name of its registered agent at such address
is Incorporating Services, Ltd.
ARTICLE III.
The nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
ARTICLE IV.
A. Classes of Stock. This Corporation is authorized to issue two
classes of stock to be designated, respectively, "Common Stock" and "Preferred
Stock." The total number of shares which this Corporation is authorized to
issue is Twenty-five Million (25,000,000), of which Twenty Million
(20,000,000) shares shall be Common Stock, $0.001 par value per share and of
which Five Million (5,000,000) shares shall be Preferred Stock, $0.001 par
value per share.
B. Preferred Stock. The Preferred Stock may be issued from time to
time in one or more series. The Board of Directors of the Corporation is
hereby expressly authorized to provide, by resolution or resolutions duly
adopted by it prior to issuance, for the creation of each such series and to
fix the designation and the powers, preferences, rights, qualifications,
limitations and restrictions relating to the shares of each such series. The
authority of the Board of Directors with respect to each series of Preferred
Stock shall include, but not be limited to, determining the following:
(1) the designation of such series, the number of shares to
constitute such series and the stated value if different from the par value
thereof;
(2) whether the shares of such series shall have voting
rights, in addition to any voting rights provided by law, and, if so, the
terms of such voting rights, which may be general or limited;
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DRAFT DATED September 29, 1998
(3) the dividends, if any, payable on such series, whether
any such dividends shall be cumulative, and, if so, from what date, the
conditions and dates upon which such dividends shall be payable, and the
preference or relation which such dividends shall bear to the dividends
payable on any shares of stock of any other class or any other series of
Preferred Stock;
(4) whether the shares of such series shall be subject to
redemption by the Corporation, and, if so, the times, prices and other
conditions of such redemption;
(5) the amount or amounts payable upon shares of such series
upon, and the rights of the holders of such series in, the voluntary or
involuntary liquidation, dissolution or winding up, or upon any distribution
of the assets, of the Corporation;
(6) whether the shares of such series shall be subject to
the operation of a retirement or sinking fund and, if so, the extent to and
manner in which any such retirement or sinking fund shall be applied to the
purchase or redemption of the shares of such series for retirement or other
corporate purposes and the terms and provisions relating to the operation
thereof;
(7) whether the shares of such series shall be convertible
into, or exchangeable for, shares of stock of any other class or any other
series of Preferred Stock or any other securities and, if so, the price or
process or the rate or rates of conversion or exchange and the method, if any,
of adjusting the same, and any other terms and conditions of conversion or
exchange;
(8) the limitations and restrictions, if any, to be
effective while any shares of such series are outstanding upon the payment of
dividends or the making of other distributions on, and upon the purchase,
redemption or other acquisition by the Corporation of, the Common Stock or
shares of stock of any other class or any other series of Preferred Stock;
(9) the conditions or restrictions, if any, upon the
creation of indebtedness of the Corporation or upon the issuance of any
additional stock, including additional shares of such series or of any other
series of Preferred Stock or of any other class; and
(10) any other powers, preferences and relative,
participating, optional and other special rights, and any qualifications,
limitations and restrictions thereof.
The powers, preferences and relative, participating, option and other
special rights of each series of Preferred Stock, and the qualifications,
limitations or restrictions thereof, if any, may differ from those of any and
all other series at any time outstanding. All shares of any one series of
Preferred Stock shall be identical in all respects with all other shares of
such series, except that shares of any one series issued at different times
may differ as to the dates from which dividends thereof shall be cumulative.
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<PAGE>
DRAFT DATED September 29, 1998
B. Common Stock.
1. Dividend Rights. Subject to the prior rights of holders
of all classes of stock at the time outstanding having prior rights as to
dividends, the holders of the Common Stock shall be entitled to receive, when
and as declared by the Board of Directors, out of any assets of the
Corporation legally available therefor, such dividends as may be declared from
time to time by the Board of Directors.
2. Redemption. The Common Stock is not redeemable.
3. Voting Rights. The holder of each share of Common Stock
shall have the right to one vote, and shall be entitled to notice of any
stockholders' meeting in accordance with the Bylaws of this Corporation, and
shall be entitled to vote upon such matters and in such manner as may be
provided by law.
ARTICLE V.
The Corporation shall have perpetual existence.
ARTICLE VI.
Except as otherwise provided in this Certificate of Incorporation, in
furtherance and not in limitation of the powers conferred by statute, the
Board of Directors is expressly authorized to make, repeal, alter, amend and
rescind any or all of the Bylaws of the Corporation.
ARTICLE VII.
A. The number of directors of the Corporation shall be fixed from
time to time by a Bylaw or amendment thereof duly adopted by the Board of
Directors.
B. Commencing with the annual meeting of stockholders in 1998, the
directors shall be classified, with respect to the time for which they
severally hold office, into three (3) classes, as nearly equal in number as
possible as the then total number of directors constituting the entire board
permits, pursuant to the provisions of the Corporation's Certificate of
Incorporation and its Bylaws. The respective classes of directors shall be
elected to terms of one, two and three years. At each subsequent annual
meeting of stockholders, the successors to the class of directors whose term
expires at that meeting shall be elected, by a plurality of the votes cast, to
hold office for a term expiring at the annual meeting of the stockholders held
in the third year following the year of their election and until their
successors have been duly elected and qualified.
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<PAGE>
DRAFT DATED September 29, 1998
C. Except as otherwise fixed by resolution of the Board of Directors
pursuant to this Certificate of Incorporation relating to the authorization of
the Board of Directors to provide by resolution for the issuance of preferred
stock and determine the rights of the holders of such preferred stock to elect
directors, newly created directorships resulting from any increase in the
authorized number of directors or any vacancies in the Board of Directors
resulting from death, resignation, retirement, disqualification, removal from
office or other cause shall be filled solely by the Board of Directors, acting
by not less than a majority of the directors then in office or by a sole
remaining director in office. Any director so chosen shall hold office until
the next election of the class for which such director shall have been chosen
and until his successor shall be elected and qualified. No decrease in the
number of directors shall shorten the term of any incumbent director.
D. At any annual meeting of stockholders of the Corporation, or at
any special meeting of stockholders of the Corporation, the notice of which
shall have stated that the removal of a director or directors is among the
purposes of the meeting, the holders of capital stock entitled to vote
thereon, present in person or by proxy, by vote of a majority of the
outstanding shares thereof, voting together as a single class, may remove such
director or directors only for cause. For purposes of this Certificate of
Incorporation, "cause" means an act or acts by an individual involving the
commission of a felony, willful misconduct, fraud, embezzlement, dishonesty,
breach of fiduciary duty or violation or breach of a written employment or
consulting agreement or of the Corporation=s policy as described in a
Corporation manual or handbook, any of which acts cause the Corporation
material damage.
E. Notwithstanding any other provision of this Certificate of
Incorporation or the Bylaws of the Corporation, and notwithstanding the fact
that a lesser percentage may be specified by law, this Certificate of
Incorporation or the Bylaws of the Corporation, the affirmative vote of the
holders of at least two-thirds (2/3rds) of the combined voting power of the
then outstanding shares of stock entitled to vote generally in the election of
directors, voting together as a single class, shall be required to alter,
amend, or adopt any provision inconsistent with or repeal this Article VII.
ARTICLE VIII.
Elections of directors need not be by written ballot unless the
Bylaws of the Corporation shall so provide.
ARTICLE IX.
A. Meetings of Stockholders. Meetings of stockholders may be held
within or without the State of Delaware, as the Bylaws may provide. The books
of the Corporation may be kept (subject to any provision contained in the
statutes) outside the State of Delaware at such place or places as may be
designated from time to time by the Board of Directors or in the Bylaws of the
Corporation.
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<PAGE>
DRAFT DATED September 29, 1998
B. No Stockholder Action Without a Meeting. No action required by the
Delaware General Corporation Law to be taken at an annual or special meting of
stockholders, nor any action which may be taken at any annual or special
meeting of stockholders may be taken by consent of stockholders without a
meeting.
ARTICLE X.
A. Exculpation. A director of the Corporation shall not be personally
liable to the Corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, except for liability (i) for any breach of
the director's duty of loyalty to the Corporation or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentionally
misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law or (iv) for any transaction from which the
director derived any improper personal benefit. If the Delaware General
Corporation Law is hereafter amended to further reduce or to authorize, with
the approval of the Corporation's stockholders, further reductions in the
liability of the Corporation's directors for breach of fiduciary duty, then a
director of the Corporation shall not be liable for any such breach to the
fullest extent permitted by the Delaware General Corporation Law as so
amended.
B. Indemnification. To the extent permitted by applicable law, this
Corporation is also authorized to provide indemnification of (and advancement
of expenses to) such agents (and any other persons to which Delaware law
permits this Corporation to provide indemnification) through bylaw provisions,
agreements with such agents or other persons, vote of stockholders or
disinterested directors or otherwise, in excess of the indemnification and
advancement otherwise permitted by Section 145 of the Delaware General
Corporation Law, subject only to limits created by applicable Delaware law
(statutory or non-statutory) with respect to actions for breach of duty to the
Corporation, its stockholders and others.
C. Effect of Repeal or Modification. Any repeal or modification of
any of the foregoing provisions of this Tenth Article shall not adversely
affect any right or protection of a director, officer, agent or other person
existing at the time of or increase the liability of any director of the
Corporation with respect to any acts or omissions of such director occurring
prior to, such repeal or modification.
ARTICLE XI.
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Amended and Restated Certificate of
Incorporation, in the manner now or hereafter prescribed by statute and all
rights conferred upon stockholders herein are granted subject to this
reservation.
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<PAGE>
DRAFT DATED September 29, 1998
ARTICLE XII.
The Corporation shall not be subject to the provisions of Section 203
of the Delaware General Corporation Law.
We further declare under penalty of perjury under the laws of the
State of Delaware that the statements contained in the foregoing Amended and
Restated Certificate of Incorporation of IgX Corp. are true and correct of our
own knowledge.
Dated: _______________, 1998
------------------------------
Albert J. Henry, Chairman
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<PAGE>
EXHIBIT "B"
AMENDED AND RESTATED BYLAWS
OF
IGX CORP., A DELAWARE CORPORATION
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of Dover,
County of Kent, State of Delaware.
Section 2. The corporation may also have offices at such other places
both within and without the State of Delaware as the Board of Directors may
from time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election of
directors shall be held in the City of Livonia, State of Michigan, at such
place as may be fixed from time to time by the Board of Directors, or at such
other place either within or without the State of Delaware as shall be
designated from time to time by the Board of Directors and stated in the
notice of the meeting. Meetings of stockholders for any other purpose may be
held at such time and place, within or without the State of Delaware, as shall
be stated in the notice of the meeting or in a duly executed waiver of notice
thereof.
Section 2. Annual meetings of stockholders shall be held on such date
and at such time as shall be designated from time to time by the Board of
Directors and stated in the notice of the meeting, for the purpose of electing
Directors in the class whose term expires at the annual meeting, and for the
transaction of only such other business as is properly brought before the
meeting in accordance with these bylaws.
To be properly brought before the meeting, business must be either
(a) specified in the notice of the meeting (or any supplement thereto) given
by or at the direction of the Board of Directors, (b) otherwise properly
brought before the meeting by or at the direction of the Board of Directors or
(c) otherwise properly brought before the meeting by a stockholder. In
addition to any other applicable requirements, for business to be properly
brought before an annual meeting by a stockholder, the stockholder must have
satisfied all of the conditions set forth in Securities and Exchange
Commission Rule 14a-8, including particularly the requirement that the
stockholder give timely written notice of his proposal to the corporation. To
be timely, a stockholder's notice must be delivered to or mailed and received
by the Secretary of the corporation at the executive offices of the
corporation within the time period specified in Rule 14a-8(e) (Question 5(2)),
or any successor
<PAGE>
thereto, and such notice to the Secretary shall set forth, as to each matter
the stockholder proposes to bring before the annual meeting, the information
required by said Rule 14a-8. Notwithstanding anything in the bylaws to the
contrary, no business shall be conducted at the annual meeting except tin
accordance with the procedures and conditions set forth in this Article II,
Section 2 and said Rule 14a-8; provided, however, that nothing in this Article
II, Section 2 or said Rule 14a-8 shall be deemed to preclude discussion by any
stockholder of any business properly brought before the annual meeting. The
chairman of an annual meeting shall, if the facts warrants, determine and
declare to the meeting that business was not properly brought before the
meeting in accordance with the provisions of this Article II, Section 2, and
if he should so determine, he shall so declare to the meeting and any such
business not properly brought before the meeting shall not be transacted.
Section 3. Written notice of the annual meeting stating the place,
date and hour of the meeting shall be given to each stockholder entitled to
vote at such meeting not less than ten (10) nor more than sixty (60) days
before the date of the meeting.
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, or cause the corporation=s transfer agent
to prepare and make, at least ten (10) days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten (10) days prior to the meeting, either at a place
within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at
the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.
Section 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of a majority of the Board of
Directors, or at the request in writing of stockholders owning a majority in
amount of the entire capital stock of the corporation issued and outstanding
and entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.
Section 6. Written notice of a special meeting stating the place,
date and hour of the meeting and the purpose or purposes for which the meeting
is called, shall be given not less than ten (10) nor more than sixty (60) days
before the date of the meeting, to each stockholder entitled to vote at such
meeting.
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<PAGE>
Section 7. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement
at the meeting, until a quorum shall be present or represented. At such
adjourned meeting at which a quorum shall be present or represented any
business may be transacted which might have been transacted at the meeting as
originally notified. If the adjournment is for more than thirty (30) days, or
if after the adjournment a new record date is fixed for the adjourned meeting,
a notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes or
of the certificate of incorporation, a different vote is required, in which
case such express provision shall govern and control the decision of such
question.
Section 10. Unless otherwise provided in the certificate of
incorporation, each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such stockholder, but no proxy shall be voted on
after three (3) years from its date, unless the proxy provides for a longer
period.
Section 11. At and after such time as the corporation becomes subject
to the reporting requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), all action required to
be taken at any annual or special meeting of stockholders of the corporation,
and all action which may be taken at any annual or special meeting of such
stockholders, must be taken at a meeting, and may not be taken by written
consent of stockholders.
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the whole
board shall not be less than three (3). Subject to the minimum above
specified, the number of Directors shall be determined, from time to time,
only by the Board of Directors. No decrease in the number of directors shall
shorten the term of any incumbent director.
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<PAGE>
Section 2. Commencing with the annual meeting of stockholders in
1998, the directors shall be classified, with respect to the time for which
they severally hold office, into three (3) classes, as nearly equal in number
as possible as the then total number of directors constituting the entire
board permits, pursuant to the provisions of the Corporation's Certificate of
Incorporation and these Bylaws. The respective classes of directors shall be
elected to terms of one, two and three years. At each subsequent annual
meeting of stockholders, the successors to the class of directors whose term
expires at that meeting shall be elected, by a plurality of the votes cast, to
hold office for a term expiring at the annual meeting of the stockholders held
in the third year following the year of their election and until their
successors have been duly elected and qualified.
Section 3. Except as otherwise fixed by resolution of the Board of
Directors pursuant to the Corporation's Certificate of Incorporation relating
to the authorization of the Board of Directors to provide by resolution for
the issuance of preferred stock and determine the rights of the holders of
such preferred stock to elect directors, vacancies and newly created
directorships resulting from any increase in the authorized number of
directors shall be filled solely by the Board of Directors, acting by not less
than a majority of the directors then in office, though less than a quorum, or
by a sole remaining director. Any director so chosen shall hold office until
the next election of the class for which such director was chosen and until
his successor is duly elected and shall qualify, unless sooner removed. If
there are no directors in office, then an election of directors may be held in
the manner provided by statute. If, at the time of filling any vacancy or any
newly created directorship, the directors then in office shall constitute less
than a majority of the whole board (as constituted immediately prior to any
such increase), the Court of Chancery may, upon application of any stockholder
or stockholders holding at least ten (10%) percent of the total number of the
shares at the time outstanding having the right to vote for such directors,
summarily order an election to be held to fill any such vacancies or newly
created directorships, or to replace the directors chosen by the directors
then in office.
Section 4. At and after such time as the Corporation becomes subject
to the reporting requirements of Section 13 or 15(d) of the Exchange Act, only
persons who are nominated in accordance with the following procedures shall be
eligible for election as Directors. Nominations of persons for election to the
Board of Directors of the corporation at the annual meeting may be made at a
meeting of stockholders, by or at the direction of the Board of Directors, by
any committee or person appointed by the Board of Directors, or by any
stockholder of the corporation entitled to vote for the election of Directors at
the meeting who complies with the notice procedures set forth in this Article
III, Section 3. Such nominations, other than those made by or at the direction
of the Board of Directors, shall be made pursuant to timely notice in writing to
the Secretary of the corporation. To be timely, a stockholder's notice shall be
delivered to or mailed and received at the executive offices of the corporation
within the time period specified in Securities and Exchange Commission Rule
14a-8(e)(Question 5(2)). Such stockholder's notice to the Secretary shall set
forth (a) as to each person whom the stockholder proposes to nominate for
election or re-election as a
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<PAGE>
Director, (i) the name, age, business address and residence address of the
person, (ii) the principal occupation or employment of the person, (iii) the
class and number of shares of capital stock of the corporation which are
beneficially owned by the person and (iv) any other information relating to
the person that is required to be disclosed in solicitations for proxies for
election of Directors pursuant to Securities and Exchange Commission
Regulation 14A; and (b) as to the stockholder giving the notice, (i) the name
and address of the stockholder and (ii) the class and number of shares of
capital stock of the corporation which are beneficially owned by the
stockholder. The corporation may require any proposed nominee to furnish such
other information as may reasonably be required by the corporation to
determine the eligibility of such proposed nominee to serve as Director of the
corporation. No person shall be eligible for election as a Director of the
corporation unless nominated in accordance with the procedures set forth
herein. The chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and if he should so determine, he shall so declare to the
meeting and the defective nomination shall be disregarded.
Section 5. The business of the corporation shall be managed by or
under the direction of its board of directors which may exercise all such
powers of the corporation and do all such lawful acts and things as are not by
statute or by the certificate of incorporation or by these bylaws directed or
required to be exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 6. The Board of Directors of the corporation may hold
meetings, both regular and special, either within or without the State of
Delaware.
Section 7. Regular meetings of the Board of Directors may be held
without notice at such time and at such place as shall from time to time be
determined by the Board.
Section 8. Special meetings of the board may be called by the
Chairman of the Board or the President on four (4) days' notice to each
director by mail or forty-eight (48) hours' notice to each director either
personally or by telegram; special meetings shall be called by the President
or Secretary in like manner and on like notice on the written request of any
two (2) directors unless the board consists of only one (1) director, in which
case special meetings shall be called by the President or Secretary in like
manner and on like notice on the written request of the sole director.
Section 9. At all meetings of the board a majority of the directors
shall constitute a quorum for the transaction of business and the act of a
majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute or by the certificate of incorporation. If a
quorum shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the
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meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
Section 10. Any action required or permitted to be taken at any
meeting of the Board of Directors or of any committee thereof may be taken
without a meeting, if all members of the board or committee, as the case may
be, consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board or committee.
Section 11. Members of the Board of Directors, or any committee
designated by the Board of Directors, may participate in a meeting of the
Board of Directors, or any committee, by means of conference telephone or
similar communications equipment by means of which all persons participating
in the meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
COMMITTEES OF DIRECTORS
Section 12. The Board of Directors may, by resolution passed by a
majority of the whole board, designate one or more committees, each committee
to consist of one or more of the directors of the corporation. The board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee.
In the absence of disqualification of a member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member.
Any such committee, to the extent provided in the resolution of the
Board of Directors, shall have and may exercise all the powers and authority
of the Board of Directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to
all papers which may require it; but no such committee shall have the power or
authority in reference to the following matters: (1) approving or adopting, or
recommending to the stockholders, any action or matter expressly required by
the Delaware General Corporation Law to be submitted to stockholders for
approval or (ii) adopting, amending or repealing any bylaw of the corporation.
Section 13. Each committee shall keep regular minutes of its meetings
and report the same to the Board of Directors when required.
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COMPENSATION OF DIRECTORS
Section 14. The Board of Directors shall have the authority to fix
the compensation of directors. The directors may be paid their expenses, if
any, of attendance at each meeting of the Board of Directors and may be paid a
fixed sum for attendance at each meeting of the Board of Directors or a stated
fee for service as a director. No such payment shall preclude any director
from serving the corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees may be allowed like
compensation for attending committee meetings.
REMOVAL OF DIRECTORS
Section 15. Any director or the entire Board of Directors may be
removed by the holders of a majority of shares entitled to vote at an election
of directors only for cause. For purposes of these Bylaws, Acause@ means an
act or acts by an individual involving the commission of a felony, willful
misconduct, fraud, embezzlement, dishonesty, breach of fiduciary duty or
violation or breach of a written employment or consulting agreement or of the
Corporation=s policy as described in any policy manual or handbook, any of
which acts cause the Corporation material damage.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these bylaws, notice is required to be
given to any director or stockholder, it shall not be construed to mean
personal notice, but such notice may be given in writing, by mail, addressed
to such director or stockholder, at his address as it appears on the records
of the corporation, with postage thereon prepaid, and such notice shall be
deemed to be given at the time when the same shall be deposited in the United
States mail. Notice to directors may also be given by telegram or facsimile.
Section 2. Whenever any notice is required to be given under the
provisions of the statutes or of the certificate of incorporation or of these
bylaws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be
deemed equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be elected by the
Board of Directors and shall include a President and a Secretary. The Board of
Directors may elect from among its members a Chairman of the Board and a Vice
Chairman of the Board. The Board of Directors may also elect a Treasurer
and/or one or more Vice Presidents, Assistant Secretaries and Assistant
Treasurers. Any
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number of offices may be held by the same person, unless the certificate of
incorporation or these bylaws otherwise provide.
Section 2. The Board of Directors at its first meeting after each
annual meeting of stockholders shall elect a President and a Secretary and may
also elect Vice Presidents and a Treasurer.
Section 3. The Board of Directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board.
Section 4. The salaries of all officers and agents of the corporation
shall be fixed by the Board of Directors.
Section 5. The officers of the corporation shall hold office until
their successors are chosen and qualified. Any officer elected or appointed by
the Board of Directors may be removed at any time by the affirmative vote of a
majority of the Board of Directors. Any vacancy occurring in any office of the
corporation shall be filled by the Board of Directors.
THE CHAIRMAN OF THE BOARD
Section 6. The Chairman of the Board, if any, shall preside at all
meetings of the Board of Directors and of the stockholders at which he shall
be present. He shall have and may exercise such powers as are, from time to
time, assigned to him by the Board and as may be provided by law.
Section 7. In the absence of the Chairman of the Board, the Vice
Chairman of the Board, if any, shall preside at all meetings of the Board of
Directors and of the stockholders at which he shall be present. He shall have
and may exercise such powers as are, from time to time, assigned to him by the
Board and as may be provided by law.
CHIEF EXECUTIVE OFFICER
Section 8. The Board shall designate a Chief Executive Officer of the
corporation. In the absence of such a designation, the President shall be the
Chief Executive Officer of the corporation. He shall have general and active
management of the business of the corporation and shall see that all orders
and resolutions of the Board of Directors are carried into effect.
Section 9. In the absence of the Chairman and Vice Chairman of the
Board, the Chief Executive Officer shall preside at all meetings of the
stockholders and the Board of Directors.
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THE PRESIDENT AND VICE PRESIDENT
Section 10. The President shall have and may exercise such powers as
are, from time to time, assigned to him by the Board and as may be provided by
law. In the absence of the Chairman, Vice Chairman and Chief Executive
Officer, he shall preside at all meetings of the stockholders and the Board of
Directors.
Section 11. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the Board of
Directors to some other officer or agent of the corporation.
Section 12. In the absence of the President or in the event of his
inability or refusal to act, the Vice President, if any (or in the event there
be more than one Vice President, the Vice Presidents in the order designated
by the directors, or in the absence of any designation, then in the order of
their election), shall perform the duties of the President, and when so
acting, shall have all the powers of and be subject to all the restrictions
upon the President. The Vice Presidents shall perform such other duties and
have such other powers as the Board of Directors may from time to time
prescribe.
THE SECRETARY AND ASSISTANT SECRETARY
Section 13. The Secretary shall attend all meetings of the Board of
Directors and all meetings of the stockholders and record all the proceedings
of the meetings of the corporation and of the Board of Directors in a book to
be kept for that purpose and shall perform like duties for the standing
committees when required. He shall give, or cause to be given, notice of all
meetings of the stockholders and special meetings of the Board of Directors,
and shall perform such other duties as may be prescribed by the Board of
Directors or President, under whose supervision he shall be. He shall have
custody of the corporate seal of the corporation and he, or an Assistant
Secretary, shall have authority to affix the same to any instrument requiring
it and when so affixed, it may be attested by his signature or by the
signature of such Assistant Secretary. The Board of Directors may give general
authority to any other officer to affix the seal of the corporation and to
attest the affixing by his signature.
Section 14. The Assistant Secretary, or, if there be more than one,
the Assistant Secretaries in the order determined by the Board of Directors
(or if there be no such determination, then in the order of their election)
shall, in the absence of the Secretary or in the event of his inability or
refusal to act, perform the duties and exercise the powers of the secretary
and shall perform such other duties and have such other powers as the Board of
Directors may from time to time prescribe.
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THE TREASURER AND ASSISTANT TREASURERS
Section 15. The Treasurer shall have the custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all
moneys and other valuable effects in the name and to the credit of the
corporation in such depositories as may be designated by the Board of
Directors.
Section 16. The Treasurer shall disburse the funds of the corporation
as may be ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors,
at its regular meetings, or when the Board of Directors so requires, an
account of all his transactions as Treasurer and of the financial condition of
the corporation.
Section 17. If required by the Board of Directors, the Treasurer
shall give the corporation a bond (which shall be renewed every six years) in
such sum and with such surety or sureties as shall be satisfactory to the
Board of Directors for the faithful performance of the duties of his office
and for the restoration to the corporation, in case of his death, resignation,
retirement or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his control
belonging to the corporation.
Section 18. The Assistant Treasurer, or if there shall be more than
one, the Assistant Treasurers in the order determined by the Board of
Directors (or if there be no such determination, then in the order of their
election) shall, in the absence of the Treasurer or in the event of his
inability or refusal to act, perform the duties and exercise the powers of the
Treasurer and shall perform such other duties and have such other powers as
the Board of Directors may from time to time prescribe.
ARTICLE VI
CERTIFICATE OF STOCK
Section 1. Every holder of stock in the corporation shall be entitled
to have a certificate, signed by, or in the name of the corporation by, the
Chairman or Vice Chairman of the Board of Directors, or the President or a
Vice President and the Treasurer or an Assistant Treasurer, or the Secretary
or an Assistant Secretary of the corporation, certifying the number of shares
owned by him in the corporation.
Certificates may be issued for partly paid shares and in such case
upon the face or back of the certificates issued to represent any such partly
paid shares, the total amount of the consideration to be paid therefor, and
the amount paid thereon shall be specified.
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If the corporation shall be authorized to issue more than one class
of stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualification, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided in section 202 of the General Corporation Law of Delaware,
in lieu of the foregoing requirements, there may be set forth on the face or
back of the certificate which the corporation shall issue to represent such
class or series of stock, a statement that the corporation will furnish
without charge to each stockholder who so requests the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights.
Section 2. Any of or all the signatures on the certificate may be
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
LOST CERTIFICATES
Section 3. The Board of Directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing
such issue of a new certificate or certificates, the Board of Directors may,
in its discretion and as a condition precedent to the issuance thereof,
require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such
manner as it shall require and/or to give the corporation a bond in such sum
as it may direct as indemnity against any claim that may be made against the
corporation with respect to the certificate alleged to have been lost, stolen
or destroyed.
TRANSFER OF STOCK
Section 4. Upon surrender to the corporation or the transfer agent of
the corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignation or authority to transfer, it shall
be the duty of the corporation to issue a new certificate to the person
entitled thereto, cancel the old certificate and record the transaction upon
its books.
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FIXING RECORD DATE
Section 5. In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, or to express consent to corporate action in
writing without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors may fix, in
advance, a record date, which shall not be more than sixty (60) nor less than
ten (10) days before the date of such meeting, nor more than sixty (60) days
prior to any other action. A determination of stockholders of record entitled
to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of Directors may
fix a new record date for the adjourned meeting.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation,
subject to the provisions of the certificate of incorporation, if any, may be
declared by the Board of Directors at any regular or special meeting, pursuant
to law. Dividends may be paid in cash, in property, or in shares of the
capital stock, subject to the provisions of the certificate of incorporation.
Section 2. Before payment of any dividend, there may be set aside out
of any funds of the corporation available for dividends such sum or sums as
the directors from time to time, in their absolute discretion, think proper as
a reserve or reserves to meet contingencies, or for equalizing dividends, or
for repairing or maintaining any property of the corporation, or for such
other purposes as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
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CHECKS
Section 3. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person
or persons as the Board of Directors may from time to time designate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by
resolution of the Board of Directors.
SEAL
Section 5. The Board of Directors may adopt a corporate seal having
inscribed thereon the name of the corporation, the year of its organization
and the words "Corporate Seal, Delaware." The seal may be used by causing it
or a facsimile thereof to be impressed or affixed or reproduced or otherwise.
INDEMNIFICATION
Section 6. The corporation shall indemnify its officers, directors,
employees and agents to the fullest extent permitted by the General
Corporation Law of Delaware.
INSURANCE
Section 7. The corporation shall have the power to purchase and
maintain insurance on behalf of its officers, directors, employees or agents
to the fullest extent permitted by the General Corporation Law of Delaware,
whether or not the corporation would have the power to indemnify such person
against such liability under such law.
ARTICLE VIII
AMENDMENT
Section 1. These bylaws may be altered, amended or repealed or new
bylaws may be adopted by the stockholders or by the Board of Directors, when
such power is conferred upon the Board of Directors by the certificate of
incorporation, at any regular meeting of the stockholders or of the Board of
Directors or at any special meeting of the stockholders or of the Board of
Directors if notice of such alteration, amendment, repeal or adoption of new
bylaws be contained in the notice of such special meeting. If the power to
adopt, amend or repeal bylaws is conferred upon the Board of
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Directors by the certificate of incorporation it shall not divest or limit the
power of the stockholders to adopt, amend or repeal bylaws.
CERTIFICATE OF SECRETARY
The undersigned, being the Secretary of IgX Corp., a Delaware
corporation, does hereby certify the foregoing to be the Bylaws of said
Corporation, as adopted by the directors of the Corporation and which remain
in full force and effect as of the date hereof.
Executed at ________________________ effective as of September 28,
1998.
___________________________
Secretary
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INVESTORS' RIGHTS AGREEMENT
IgX CORP.
December 24, 1997
<PAGE>
INVESTORS' RIGHTS AGREEMENT
THIS INVESTORS' RIGHTS AGREEMENT is made as of the 24th day of
December, 1997, by and among IgX Corp., a Delaware corporation (the "Company"),
and the investors listed on Schedule "A" hereto, each of which is herein
referred to as an "Investor," and sometimes collectively as "Investors."
R E C I T A L S
WHEREAS, the Company and certain of the Investors are parties to the
Series B Preferred Stock Purchase Agreement of even date herewith (the "Stock
Purchase Agreement");
WHEREAS, in order to induce the Company to enter into the Stock
Purchase Agreement and to induce the Investors to invest funds in the Company
pursuant to the Stock Purchase Agreement, the Investors and the Company hereby
agree that this Agreement shall govern the rights of the Investors to cause the
Company to register shares of Common Stock issuable to the Investors and certain
other matters as set forth herein;
WHEREAS, certain of the Investors (the "Existing Investor(s)") hold the
Company's Series A Preferred Stock and/or shares of Common Stock issued upon
conversion thereof (the "Series A Preferred Stock"). The Series A Preferred
Stock and Series B Preferred Stock is sometimes collectively referred to as the
"Preferred Stock."
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, the Investors, the Existing Investors and the Company hereby
agree as follows:
1. Registration Rights. The Company covenants and agrees as
follows:
1.1 Definitions. For purposes of this Section 1:
1.1.1 The term "Act" means the Securities Act of
1933, as amended.
1.1.2 The term "Form S-3" means such form under the
Act as in effect on the date hereof or any registration form under the Act
subsequently adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the SEC.
1.1.3 The term "Holder" means any person owning or
having the right to acquire Registrable Securities or any assignee thereof in
accordance with Section 1.13 hereof.
1.1.4 The term "1934 Act" shall mean the Securities
Exchange Act of 1934, as amended.
1.1.5 The term "register," "registered," and
"registration" refer to a registration effected by preparing and filing a
registration statement or similar document in
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compliance with the Act, and the declaration or ordering of effectiveness of
such registration statement or document.
1.1.6 The term "Registrable Securities" means (i) the
Common Stock issuable or issued upon conversion of the Series B Preferred Stock,
(ii) the shares of Common Stock issuable or issued upon conversion of the Series
A Preferred Stock, and (iii) any 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 referenced in (i) and (ii)
above, excluding in all cases, however, any Registrable Securities sold by a
person in a transaction in which his rights under this Section 1 are not
assigned.
1.1.7 The number of shares of "Registrable Securities
then outstanding" shall be determined by the number of shares of shares of
Common Stock outstanding which are, and the number of shares of shares of Common
Stock issuable pursuant to then exercisable or convertible securities which are,
Registrable Securities.
1.1.8 The term "SEC" shall mean the Securities and
Exchange Commission.
1.2 Request for Registration.
1.2.1 If the Company shall receive at any time after
the earlier of (i) December 31, 2000, or (ii) six (6) months after the effective
date of the first registration statement for a public offering of securities of
the Company (other than a registration statement relating either to the sale of
securities to employees of the Company pursuant to a stock option, stock
purchase or similar plan or an SEC Rule 145 transaction), a written request from
the Holders of a majority of the Registrable Securities then outstanding that
the Company file a registration statement under the Act covering the
registration of at least forty percent (40%) of the Registrable Securities then
outstanding (or a lesser percent if the anticipated aggregate offering price,
net of underwriting discounts and commissions, would exceed $20,000,000), then
the Company shall:
1.2.1.1 Within fifteen (15) days of the receipt
thereof, give written notice of such request to all Holders; and
1.2.1.2 Effect as soon as practicable, and in any
event within ninety (90) days of the receipt of such request, the registration
under the Act of all Registrable Securities which the Holders request to be
registered, subject to the limitations of subsection 1.2.2, within twenty (20)
days of the mailing of such notice by the Company in accordance with Section
3.5.
1.2.2 If the Holders initiating the registration
request hereunder ("Initiating Holders") intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so
advise the Company as a part of their request made pursuant to subsection
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1.2.1 and the Company shall include such information in the written notice
referred to in subsection 1.2.1. The underwriter will be selected by the Company
and shall be reasonably acceptable to a majority in interest of the Initiating
Holders. In such event, the right of any Holder to include his Registrable
Securities in such registration shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting (unless otherwise mutually agreed by
a majority in interest of the Initiating Holders and such Holder) to the extent
provided herein. All Holders proposing to distribute their securities through
such underwriting shall (together with the Company as provided in subsection
1.4.5) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting. Notwithstanding any
other provision of this Section 1.2, if the underwriter advises the Initiating
Holders in writing that marketing factors require a limitation of the number of
shares to be underwritten, then the Initiating Holders shall so advise all
Holders of Registrable Securities which would otherwise be underwritten pursuant
hereto, and the number of shares of Registrable Securities that may be included
in the underwriting shall be allocated among all Holders thereof, including the
Initiating Holders, in proportion (as nearly as practicable) to the amount of
Registrable Securities of the Company owned by each Holder; provided, however,
that the number of shares of Registrable Securities to be included in such
underwriting shall not be reduced unless all other securities are first entirely
excluded from the underwriting.
1.2.3 Notwithstanding the foregoing, (a) if the
Company shall furnish to Holders requesting a registration statement pursuant to
this Section 1.2, a certificate signed by the Chief Executive Officer 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 shareholders
for such registration statement to be filed and it is therefore essential to
defer the filing of such registration statement, the Company shall have the
right to defer taking action with respect to such filing for a period of not
more than 120 days after receipt of the request of the Initiating Holders;
provided, however, that the Company may not utilize this right more than once in
any twelve-month period; (b) if the Company has not filed a Registration
Statement of any of its stock or securities under the Act upon a demand made by
the holders of the Registrable Securities under Section 1.2.1(i) hereinabove,
then such demand shall require the Company to proceed with the filing of a
Registration Statement of its own shares of Common Stock under the Act, rather
than the registration of shares of the Registrable Securities.
1.2.4 In addition, the Company shall not be obligated
to effect, or to take any action to effect, any registration pursuant to this
Section 1.2:
1.2.4.1 After the Company has effected two
registrations pursuant to this Section 1.2 and such registrations have been
declared or ordered effective;
1.2.4.2 During the period starting with the date
sixty (60) days prior to the Company's good faith estimate of the date of filing
of, and ending on a date one hundred eighty (180) days after the effective date
of, a registration subject to Section 1.3 hereof; provided that the Company is
actively employing in good faith all reasonable efforts to cause such
registration statement to become effective; or
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1.2.4.3 If the Initiating Holders propose to dispose
of shares of Registrable Securities that may be immediately registered on Form
S-3 pursuant to a request made pursuant to Section 1.12 below.
1.3 Company Registration. If (but without any obligation to do
so) the Company proposes to register any of its stock or other securities under
the Act in connection with the public offering of such securities solely for
cash (other than a registration relating solely to the initial public offering
of the Company=s securities, the sale of securities to participants in a Company
stock plan, an acquisition of a third party, a registration on any form which
does not include substantially the same information as would be required to be
included in a registration statement covering the sale of the Registrable
Securities or a registration in which the only shares of Common Stock being
registered is shares of Common Stock issuable upon conversion of debt securities
which are also being registered), the Company shall, at such time, promptly give
each Holder written notice of such registration. Upon the written request of
each Holder given within twenty (20) days after mailing of such notice by the
Company in accordance with Section 3.5, the Company shall, subject to the
provisions of Section 1.8, cause to be registered under the Act all of the
Registrable Securities that each such Holder has requested to be registered.
1.4 Obligations of the Company. Whenever required under this
Section 1 to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:
1.4.1 Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use its best efforts
to cause such registration statement to become effective, and, upon the request
of the Holders of a majority of the Registrable Securities registered
thereunder, keep such registration statement effective for a period of up to one
hundred twenty (120) days or until the distribution contemplated in the
Registration Statement has been completed; provided, however, that (i) such
120-day period shall be extended for a period of time equal to the period the
Holder refrains from selling any securities included in such registration at the
request of an underwriter of shares of Common Stock (or other securities) of the
Company; and (ii) in the case of any registration of Registrable Securities on
Form S-3 which are intended to be offered on a continuous or delayed basis, such
120-day period shall be extended, if necessary, to keep the registration
statement effective until all such Registrable Securities are sold, provided
that Rule 415, or any successor rule under the Act, permits an offering on a
continuous or delayed basis, and provided further that applicable rules under
the Act governing the obligation to file a post-effective amendment permit, in
lieu of filing a post-effective amendment which (I) includes any prospectus
required by Section 10(a)(3) of the Act or (II) reflects facts or events
representing a material or fundamental change in the information set forth in
the registration statement, the incorporation by reference of information
required to be included in (I) and (II) above to be contained in periodic
reports filed pursuant to Section 13 or 15(d) of the 1934 Act in the
registration statement.
1.4.2 Prepare and file with the SEC such amendments
and supplements to such registration statement and the prospectus used in
connection with such registration statement
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as may be necessary to comply with the provisions of the Act with respect to the
disposition of all securities covered by such registration statement.
1.4.3 Furnish to the Holders such numbers of copies
of a prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably request
in order to facilitate the disposition of Registrable Securities owned by them.
1.4.4 Use its best efforts to register and qualify
the securities covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by the Holders; 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, unless the Company is already subject to service in such
jurisdiction and except as may be required by the Act.
1.4.5 In the event of any underwritten public
offering, enter into and perform its obligations under an underwriting
agreement, in usual and customary form, with the managing underwriter of such
offering. Each Holder participating in such underwriting shall also enter into
and perform its obligations under such an agreement.
1.4.6 Notify each Holder of Registrable Securities
covered by such registration statement at any time when a prospectus relating
thereto is required to be delivered under the 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.
1.4.7 Cause all such Registrable Securities
registered pursuant hereunder to be listed on each securities exchange on which
similar securities issued by the Company are then listed.
1.4.8 Subject to the requirements of Irish law,
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.
1.4.9 Use its best efforts to furnish, at the request
of any Holder requesting registration of Registrable Securities pursuant to this
Section 1, on the date that such Registrable Securities are delivered to the
underwriters for sale in connection with a registration pursuant to this Section
1, if such securities are being sold through underwriters, or, if such
securities are not being sold through underwriters, 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 underwriters,
if any, and to the Holders requesting registration of Registrable Securities 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
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certified public accountants to underwriters in an underwritten public offering,
addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities.
1.5 Furnish Information.
1.5.1 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 any selling Holder that such 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.
1.5.2 The Company shall have no obligation with
respect to any registration requested pursuant to Section 1.2 or Section 1.12
if, due to the operation of subsection 1.5.1, the number of shares or the
anticipated aggregate offering price of the Registrable Securities to be
included in the registration does not equal or exceed the number of shares or
the anticipated aggregate offering price required to originally trigger the
Company's obligation to initiate such registration as specified in subsection
1.2.1 or subsection 1.12.2(2), whichever is applicable.
1.6 Expenses of Demand Registration. All expenses other than
underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Section 1.2, including
(without limitation) all registration, filing and qualification fees, printers'
and accounting fees, fees and disbursements of counsel for the Company shall be
borne by the Company; provided, however, that the Company shall not be required
to pay for any expenses of any registration proceeding begun pursuant to Section
1.2 if the registration request is subsequently withdrawn at the request of the
Holders of a majority of the Registrable Securities to be registered (in which
case all participating holders shall bear such expenses), unless the Holders of
a majority of the Registrable Securities agree to forfeit their right to one
unused demand registration pursuant to Section 1.2.
1.7 Expenses of Company Registration. The Company shall bear
and pay all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to Section 1.3 for each Holder (which right may be assigned as provided
in Section 1.13), including (without limitation) all registration, filing, and
qualification fees, printers and accounting fees relating or apportionable
thereto, but excluding underwriting discounts and commissions relating to
Registrable Securities.
1.8 Underwriting Requirements. In connection with any offering
involving an underwriting of shares of the Company's capital stock, the Company
shall not be required under Section 1.3 to include any of the Holders'
securities in such underwriting unless they accept the terms of the underwriting
as agreed upon between the Company and the underwriters selected by it (or by
other persons entitled to select the underwriters), and then only in such
quantity as the underwriters determine in their sole discretion will not
jeopardize the success of the offering by the Company. If the total amount of
securities, including Registrable Securities, requested by shareholders to be
included in such offering exceeds the amount of securities sold other than by
the Company that the
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underwriters determine in their sole discretion is compatible with the success
of the offering, then the Company shall be required to include in the offering
only that number of such securities, including Registrable Securities, which the
underwriters determine in their sole discretion will not jeopardize the success
of the offering (the securities so included to be apportioned pro rata among the
Selling Shareholders according to the total amount of securities entitled to be
included therein owned by each Selling Shareholder or in such other proportions
as shall mutually be agreed to by such Selling Shareholders) but in no event
shall (i) the amount of securities of the selling Holders included in the
offering be reduced below twenty percent (20%) of the total amount of securities
included in such offering, unless such offering is the initial public offering
of the Company's securities in which case the Selling Shareholders may be
excluded if the underwriters make the determination described above and no other
shareholder's securities are included or (ii) notwithstanding (i) above, any
shares being sold by a shareholder exercising a demand registration right
similar to that granted in Section 1.2 be excluded from such offering. For
purposes of the preceding parenthetical concerning apportionment, for any
Selling Shareholder which is a holder of Registrable Securities and which is a
partnership or corporation, the partners, retired partners and shareholders of
such holder, or the estates and family members of any such partners and retired
partners and any trusts for the benefit of any of the foregoing persons shall be
deemed to be a single "Selling Shareholder", and any pro- rata reduction with
respect to such "Selling Shareholder" shall be based upon the aggregate amount
of shares carrying registration rights owned by all entities and individuals
included in such "Selling Shareholder", as defined in this sentence.
1.9 Delay of Registration. No Holder shall have any right to
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 1.
1.10 Indemnification. In the event any Registrable Securities
are included in a registration statement under this Section 1:
1.10.1 To the extent permitted by law, the Company
will indemnify and hold harmless each Holder, any underwriter (as defined in the
Act) for such Holder and each person, if any, who controls such Holder or
underwriter within the meaning of the Act or the 1934 Act, against any losses,
claims, damages, or liabilities to which they may become subject under the Act,
or the 1934 Act or other applicable federal, state or foreign 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 Act, the 1934 Act, any state securities law or
any rule or regulation promulgated under the Act, or the 1934 Act or any state
securities law; and the Company will pay to each such Holder, underwriter 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
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subsection 1.10.1 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 in any such case 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, underwriter or controlling person.
1.10.2 To the extent permitted by law, each selling
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 Act, any underwriter, any
other Holder selling securities in such registration statement and any
controlling person of any such underwriter or other Holder, against any losses,
claims, damages, or liabilities to which any of the foregoing persons may become
subject, under the Act, or the 1934 Act or other applicable foreign, 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 such Holder
expressly for use in connection with such registration; and each such Holder
will pay, as incurred, any legal or other expenses reasonably incurred by any
person intended to be indemnified pursuant to this subsection 1.10.2, in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this subsection 1.10.2 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
1.10.2 exceed the gross proceeds from the offering received by such Holder.
1.10.3 Promptly after receipt by an indemnified party
under this Section 1.10 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 1.10,
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 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
1.10, 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 1.10.
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1.10.4 If the indemnification provided for in this
Section 1.10 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. 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.
1.10.5 Notwithstanding the foregoing, to the extent
that the provisions on indemnification and contribution contained in the
underwriting agreement entered into in connection with the underwritten public
offering are in conflict with the foregoing provisions, the provisions in the
underwriting agreement shall control.
1.10.6 The obligations of the Company and Holders
under this Section 1.10 shall survive the completion of any offering of
Registrable Securities in a registration statement under this Section 1, and
otherwise.
1.11 Reports Under Securities Exchange Act of 1934. With a
view to making available to the Holders the benefits of Rule 144 promulgated
under the 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:
1.11.1 Make and keep public information available, as
those terms are understood and defined in SEC Rule 144, at all times after
ninety (90) days after the effective date of the first registration statement
filed by the Company for the offering of its securities to the general public;
1.11.2 Take such action, including the voluntary
registration of its shares of Common Stock under Section 12 of the 1934 Act, as
is necessary to enable the Holders to utilize Form S-3 for the sale of their
Registrable Securities, such action to be taken as soon as practicable after the
end of the fiscal year in which the first registration statement filed by the
Company for the offering of its securities to the general public is declared
effective;
1.11.3 File with the SEC in a timely manner all
reports and other documents required of the Company under the Act and the 1934
Act; and
1.11.4 Furnish to any Holder, so long as the Holder
owns any Registrable Securities, forthwith upon request (i) a written statement
by the Company that it has complied with
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the reporting requirements of SEC Rule 144 (at any time after ninety (90) days
after the effective date of the first registration statement filed by the
Company), the Act and the 1934 Act (at any time after it has become subject to
such reporting requirements), or that it qualifies as a registrant whose
securities may be resold pursuant to Form S-3 (at any time after 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.
1.12 Form S-3 Registration. In case the Company shall receive
from any Holder or Holders a written request or requests that the Company effect
a registration on Form S-3 and any related qualification or compliance with
respect to all or a part of the Registrable Securities owned by such Holder or
Holders, the Company will:
1.12.1 Promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other Holders;
and
1.12.2 As soon as practicable, effect such
registration and all such qualifications and compliances as may be so requested
and as would permit or facilitate the sale and distribution of all or such
portion of such Holder's or Holders' Registrable Securities as are specified in
such request, together with all or such portion of the Registrable Securities of
any other Holder or Holders joining in such request as are specified in a
written request given within 15 days after receipt of such written notice from
the Company; provided, however, that the Company shall not be obligated to
effect any such registration, qualification or compliance, pursuant to this
Section 1.12: (1) if Form S-3 is not available for such offering by the Holders;
(2) if the Holders, together with the holders of any other securities of the
Company entitled to inclusion in such registration, propose to sell Registrable
Securities and such other securities (if any) at an aggregate price to the
public (net of any underwriters' discounts or commissions) of less than
$250,000; (3) if the Company shall furnish to the Holders 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 shareholders 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 60 days
after receipt of the request of the Holder or Holders under this Section 1.12;
provided, however, that the Company shall not utilize this right more than once
in any twelve month period; (4) if the Company has, within the twelve (12) month
period preceding the date of such request, already effected two registrations on
Form S-3 for the Holders pursuant to this Section 1.12; or (5) 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.
1.12.3 Subject to the foregoing, the Company shall
file a registration statement covering the Registrable Securities and other
securities so requested to be registered as soon as practicable after receipt of
the request or requests of the Holders. All expenses incurred in connection with
a registration requested pursuant to Section 1.12, including (without
limitation) all
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registration, filing, qualification, printer's and accounting fees and the
reasonable fees and disbursements of counsel for the selling Holder or Holders
and counsel for the Company, but excluding any underwriters' discounts or
commissions associated with Registrable Securities, shall be borne pro rata by
the Holder or Holders participating in the Form S-3 Registration. Registrations
effected pursuant to this Section 1.12 shall not be counted as demands for
registration or registrations effected pursuant to Sections 1.2 or 1.3,
respectively.
1.13 Assignment of Registration Rights. The rights to cause
the Company to register Registrable Securities pursuant to this Section 1 may be
assigned (but only with all related obligations) by a Holder to a transferee or
assignee of such securities who, after such assignment or transfer, holds at
least 7,795 shares of Registrable Securities (subject to appropriate adjustment
for stock splits, stock dividends, combinations and other recapitalizations),
provided: (a) the Company is, within a reasonable time after such transfer,
furnished with written notice of the name and address of such transferee or
assignee and the securities with respect to which such registration rights are
being assigned; (b) such transferee or assignee agrees in writing to be bound by
and subject to the terms and conditions of this Agreement, including without
limitation the provisions of Section 1.15 below; and (c) such assignment shall
be effective only if immediately following such transfer the further disposition
of such securities by the transferee or assignee is restricted under the Act.
For the purposes of determining the number of shares of Registrable Securities
held by a transferee or assignee, the holdings of transferees and assignees of a
partnership who are partners or retired partners of such partnership (including
spouses and ancestors, lineal descendants and siblings of such partners or
spouses who acquire Registrable Securities by gift, will or intestate
succession) shall be aggregated together and with the partnership; provided that
all assignees and transferees who would not qualify individually for assignment
of registration rights shall have a single attorney-in-fact for the purpose of
exercising any rights, receiving notices or taking any action under this Section
1.
1.14 Limitations on Subsequent Registration Rights. From and
after the date of this Agreement, the Company shall not, without the prior
written consent of the Holders of a majority of the outstanding Registrable
Securities, enter into any agreement with any holder or prospective holder of
any securities of the Company which would allow such holder or prospective
holder (a) to include such securities in any registration filed under Section
1.2 hereof, unless under the terms of such agreement, such holder or prospective
holder may include such securities in any such registration only to the extent
that the inclusion of his securities will not reduce the amount of the
Registrable Securities of the Holders which is included or (b) to make a demand
registration which could result in such registration statement being declared
effective prior to the earlier of either of the dates set forth in subsection
1.2.1 or within one hundred twenty (120) days of the effective date of any
registration effected pursuant to Section 1.2.
1.15 "Market Stand-Off" Agreement. Each Investor hereby agrees
that, during the period of duration specified by the Company and an underwriter
of shares of Common Stock or other securities of the Company, following the date
of the first sale to the public pursuant to a registration statement of the
Company filed under the 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
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than to donees who agree to be similarly bound) any securities of the Company
held by it at any time during such period except shares of Common Stock included
in such registration; provided, however, that:
1.15.1 Such agreement shall be applicable only to the
first two such registration statements of the Company which covers shares of
Common Stock (or other securities) to be sold on its behalf to the public in an
underwritten offering during the two-year period following the effective date of
a registration statement referenced in Section 1.2.1.2; and
1.15.2 Such market stand-off time period shall not
exceed twelve (12) months.
In order to enforce the foregoing covenant, the Company may impose
stop- transfer instructions with respect to the Registrable Securities of each
Investor (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.
Notwithstanding the foregoing, the obligations described in this
Section 1.15 shall not apply to a registration relating solely to employee
benefit plans on Form S-1 or Form S-8 or similar forms which may be promulgated
in the future, or a registration relating solely to a Commission Rule 145
transaction on Form S-4 or similar forms which may be promulgated in the future.
1.16 Termination of Registration Rights.
1.16.1 No Holder shall be entitled to exercise any
right provided for in this Section 1 after three (3) years following the
consummation of the sale of securities pursuant to a registration statement
filed by the Company under the Act in connection with the initial firm
commitment underwritten offering of its securities to the general public.
1.16.2 In addition, the right of any Holder to
request registration or inclusion in any registration pursuant to Section 1.3
shall terminate on the closing of the first Company-initiated registered public
offering of shares of Common Stock of the Company if all shares of Registrable
Securities held or entitled to be held upon conversion by such Holder may
immediately be sold under Rule 144 during any 90-day period, or on such date
after the closing of the first Company-initiated registered public offering of
shares of Common Stock of the Company as all shares of Registrable Securities
held or entitled to be held upon conversion by such Holder may immediately be
sold under Rule 144 during any 90-day period; provided, however, that the
provisions of this Section 1.16.2 shall not apply to any Holder who owns more
than two percent (2%) of the Company's outstanding stock until such time as such
Holder owns less than two percent (2%) of the outstanding stock of the Company.
2. Covenants of the Company.
2.1 Delivery of Financial Statements. The Company shall deliver
to each Investor:
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2.1.1 As soon as practicable, but in any event within
ninety (90) days after the end of each fiscal year of the Company, an income
statement for such fiscal year, a balance sheet of the Company and statement of
shareholder's equity as of the end of such year, and a schedule as to the
sources and applications of funds for such year, such year-end financial reports
to be in reasonable detail, prepared in accordance with generally accepted
accounting principles ("gaap"), and audited and certified by independent public
accountants of internationally recognized standing selected by the Company;
2.1.2 As soon as practicable, but in any event within
forty-five (45) days after the end of each of the first three (3) quarters of
each fiscal year of the Company, an unaudited profit or loss statement, schedule
as to the sources and application of funds for such fiscal quarter.
2.1.3 Within thirty (30) days of the end of each
month, an unaudited income statement and schedule as to the sources and
application of funds and balance sheet for and as of the end of such month, in
reasonable detail;
2.1.4 As soon as practicable, but in any event thirty
(30) days prior to the end of each fiscal year, a budget and business plan for
the next fiscal year, prepared on a monthly basis, including balance sheets and
sources and applications of funds statements for such months and, as soon as
prepared, any other budgets or revised budgets prepared by the Company;
2.1.5 Such other information relating to the
financial condition, business, prospects or corporate affairs of the Company as
the Investor or any assignee of the Investor may from time to time reasonably
request, provided, however, that the Company shall not be obligated under this
subsection 2.1.5 or any other subsection of Section 2.1 to provide information
which it deems in good faith to be a trade secret or similar confidential
information.
2.2 Inspection. The Company shall permit each Investor, at such
Investor's expense, to visit and inspect the Company's properties, to examine
its books of account and records and to discuss the Company's affairs, finances
and accounts with its officers, all at such reasonable times as may be requested
by the Investor; provided, however, that the Company shall not be obligated
pursuant to this Section 2.2 to provide access to any information which it
reasonably considers to be a trade secret or similar confidential information.
2.3 Termination of Information and Inspection Covenants. The
covenants set forth in subsections 2.1.3, 2.1.4 and 2.1.5 and Section 2.2 shall
terminate as to Investors and be of no further force or effect when the sale of
securities pursuant to a registration statement filed by the Company under the
Act in connection with the firm commitment underwritten offering of its
securities to the general public is consummated or when the Company first
becomes subject to the periodic reporting requirements of Sections 12(g) or
15(d) of the 1934 Act, whichever event shall first occur.
2.4 Board Representation. As long as NEGF II, L.P. ("NEGF")
owns not less than sixty-six and two-thirds percent (66 2/3%) of the shares of
the Series B Preferred Stock it is
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purchasing hereunder (or an equivalent amount of shares of Common Stock issued
upon conversion thereof), the Company shall use its best efforts to cause and
maintain the election to the Board of Directors Edwin Snape or another
representative of NEGF.
2.5 Independent Accountants. The Company agrees that it will
retain independent public accountants of recognized international standing who
shall certify the Company's financial statements at the end of each fiscal year.
In the event the services of the independent public accountants so selected, or
any firm of independent public accountants hereafter employed by the Company are
terminated, the Company will promptly thereafter notify the Holders and will
request the firm of independent public accountants whose services are terminated
to deliver to the Holders a letter from such firm setting forth the reasons for
the termination of their services. In the event of such termination, the Company
will promptly thereafter engage another firm of independent public accountants
of recognized national standing. In its notice to the Holders the Company shall
state whether the change of accountants was recommended or approved by the Board
of Directors of the Company or any committee thereof.
2.6 Right of First Offer. Subject to the terms and conditions
specified in this Section 2.6, the Company hereby grants to each Major Investor
a right of first offer with respect to future sales by the Company of its Shares
(as hereinafter defined). For purposes of this Section 2.6, a Major Investor
shall mean any Investor who holds shares of Registrable Securities. For purposes
of this Section 2.6, Investor includes any general partners and affiliates of an
Investor. An Investor shall be entitled to apportion the right of first offer
hereby granted it among itself and its partners and affiliates in such
proportions as it deems appropriate.
Each time the Company proposes to offer any shares of, or
securities convertible into or exercisable for any shares of, any class of its
capital stock ("Shares"), the Company shall first make an offering of such
Shares to each Major Investor in accordance with the following provisions:
2.6.1 The Company shall deliver a notice by certified
mail ("Notice") to the Major Investors stating (i) its bona fide intention to
offer such Shares, (ii) the number of such Shares to be offered, and (iii) the
price and terms, if any, upon which it proposes to offer such Shares.
2.6.2 Within twenty (20) calendar days after giving
of the Notice, the Major Investor may elect to purchase or obtain, at the price
and on the terms specified in the Notice, up to that portion of such Shares
which equals the proportion that the number of shares of Common Stock issued and
held, or issuable upon conversion of the Series A Preferred Stock then held, by
such Major Investor bears to the total number of shares of Common Stock of the
Company then outstanding (assuming full conversion and exercise of all
convertible or exercisable securities) issued and held, or issuable upon
conversion of the Series A Preferred Stock then held, by all the Major
Investors. The Company shall promptly, in writing, inform each Major Investor
which purchases all the shares available to it ("Fully Exercising Investor") of
any other Major Investor's failure to do likewise. During the ten-day period
commencing after receipt of such information is given, each Fully Exercising
Investor shall be entitled to obtain that portion of the Shares for which Major
Investors were entitled to subscribe but which were not subscribed for by the
Major Investors which
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is equal to the proportion that the number of shares of Common Stock issued and
held, or issuable upon conversion of Series B Preferred Stock then held, by such
Fully Exercising Investor bears to the total number of shares of Common Stock
issued and held, or issuable upon conversion of the Series B Preferred Stock
then held, by all Fully Exercising Investors who wish to purchase some of the
unsubscribed shares.
2.6.3 If all Shares referred to in the Notice, which
Investors are entitled to obtain pursuant to subsection 2.6.2, are not elected
to be obtained as provided in subsection 2.6.2 hereof, the Company may, during
the thirty (30) day period following the expiration of the period provided in
subsection 2.6.2 hereof, offer the remaining unsubscribed portion of such Shares
to any person or persons at a price not less than, and upon terms no more
favorable to the offeree than those specified in the Notice. If the Company does
not enter into an agreement for the sale of the Shares within such period, or if
such agreement is not consummated within thirty (30) days of the execution
thereof, the right provided hereunder shall be deemed to be revived and such
Shares shall not be offered unless first reoffered to the Major Investors in
accordance herewith.
2.6.4 The right of first offer in this Section 2.6
shall not be applicable (i) to the issuance or sale of not to exceed 200,000
shares of Common Stock (or options therefor) to employees for the primary
purpose of soliciting or retaining their employment; or (ii) the reissuance on
one or more occasions of options (and/or the shares of Common Stock issuable on
exercise thereof) from the Company's and/or IgX Limited's outstanding 1,048,357
options, or (iii) to or after consummation of a bona fide, firmly underwritten
public offering of shares of Common Stock, registered under the Act pursuant to
a registration statement on Form S-1, (iv) the issuance of securities pursuant
to the conversion or exercise of convertible or exercisable securities, (v) the
issuance of securities in connection with a bona fide business acquisition of or
by the Company, whether by merger, consolidation, sale of assets, sale or
exchange of stock or otherwise or (vi) the issuance of stock, warrants or other
securities or rights to persons or entities with which the Company has business
relationships.
2.6.5 The right of first refusal set forth in this
Section 2.6 may not be assigned or transferred, except that (i) such right is
assignable by each Investor to any Permitted Transferee (as hereinafter
defined), and (ii) such right is assignable between and among any of the
Holders.
2.7 Key-Man Insurance. The Company shall within one hundred
twenty (120) days of the date hereof use its best efforts to obtain from
financially sound and reputable insurers term life insurance on the life of
Albert J. Henry in the amount of Three Million Dollars ($3,000,000). The Company
shall maintain said policy in full force and effect for a period of five (5)
years from the date of Closing, with proceeds payable to the Company as loss
payee, until such time as the Board of Directors determines that such insurance
should be discontinued, or the premium for such insurance is cost prohibitive.
2.8 Co-Sale Rights.
15
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2.8.1 Rights of Co-Sale. In the event any Existing
Investor and/or Investor (the "Selling Stockholder") desires, at any time, to
sell, transfer, assign or otherwise dispose of any shares of Common Stock or
shares convertible into or exercisable for Common Stock (whether no held or
hereafter acquired) (the "Offered Shares"), or receives a bona fide offer from a
third party to purchase such Offered Shares, in a transaction or series of
related transactions which would result in the transfer to a "person" (as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934) of 50% or
more of the voting power of outstanding securities of the Company or which
results in such person holding 50% or more of the voting power of outstanding
securities of the Company (a "Control Transaction"), such Selling Stockholder
shall deliver a notice (the "Notice") to the Company stating (i) the Selling
Stockholder's bona fide intention to sell or transfer the Offered Shares, (ii)
the number of such Shares to be sold or transferred, (iii) the price for which
the Selling Stockholder proposes to sell or transfer such Offered Shares, (iv)
the name of the proposed purchaser or transferee, or class of purchaser or
transferee, and (v) all other material terms and provisions relating to the sale
or transfer. The Secretary of the Company shall then promptly give notice of the
contemplated transfer to each Investor, who shall have the right, exercisable
upon written notice to the Selling Stockholder within twenty (20) days after
receipt by such Investor from the Company of the notice described above, to
participate in the Selling Stockholder's sale of Offered Shares. To the extent
such Investor exercises such right of participation in accordance with the terms
and conditions set forth below, the number of Offered Shares which the Selling
Stockholder may sell pursuant to the Notice shall be correspondingly reduced.
The right of participation of such Investor shall be subject to the following
terms and conditions:
2.8.1.1 Each Investor may sell in such transaction
all or any part of that number of shares of Common Stock of the Company equal to
the product obtained by multiplying (i) the sum of the total number of shares of
Common Stock to be sold in such Control Transaction, plus the total number of
shares of Common Stock issuable upon the conversion or exercise of warrants or
convertible securities to be sold in such Control Transaction ("Common
Equivalents"), by (ii) a fraction, the numerator of which is the number of
shares of Underlying Common Stock then owned by such Investor, and the
denominator of which is the sum of the aggregate number of shares of Underlying
Common Stock then owned by the Investors plus the total number of shares of
Common Stock and Common Equivalents owned by all other Stockholders proposing to
sell shares in such Control Transaction. If required to permit each Investor to
sell the number of shares set forth above, each Selling Stockholder
participating in such transaction shall reduce the number of shares of Common
Stock it proposes to sell in such transaction, but in no event below its pro
rata shares of such shares determined in accordance with this Section 2.8.1.1.
Such reduction shall be made pro rata among the Selling Stockholder
participating in such transaction, in proportion to the aggregate number of
shares of Common Stock then hold by each such Selling Stockholder and shares of
Common Stock issuable upon conversion of convertible securities and exercise of
warrants and options then held by each such Selling Stockholder;
2.8.1.2 The Investor may effect its participation in
the sale by delivering to the Selling Stockholder for transfer to the purchase
offeror one or more certificates, properly endorsed for transfer, which
represent:
16
<PAGE>
2.8.1.2.1 the number of shares of Common Stock which
the Investor elects to sell purchase to this Section 2.8; or
2.8.1.2.2 that number of shares of Preferred Stock
which is at such time convertible into the number of shares of Common Stock
which such purchase elects to sell pursuant to this Section 2.8; provided,
however, that if the purchase offeror objects to the delivery of Preferred Stock
in lieu of Common Stock, the Investor may convert and deliver Common Stock as
provided in subparagraph 2.8.1.2.1 above.
2.8.2 Deliveries. The stock certificate or
certificates which a Investor delivers to the Selling Stockholder shall promptly
thereafter remit to such Investor that portion of the sale proceeds to which
such Investor is entitled by reason of its participation in such sale.
2.8.3 Prohibited Transfers. In the event any Investor
is not permitted by the Selling Stockholders or the purchase offeror to fully
participate as set forth in Section 2.8 above, no Selling Stockholders may sell
any of the Offered Shares. Any such transfer shall be void and without effect
and shall not be reflected on the books and records of the Company.
2.8.4 Termination. The provisions of this Section 2.8
shall terminate upon the occurrence of any one of the following events: (i) the
closing of an offering of the Company's Common Stock pursuant to a public
offering; or (ii) the number of shares of Common Stock held by the Investors on
an as-converted basis represent less than five percent (5%) of the fully diluted
outstanding shares of Common Stock of the Company.
2.8.5 Amendment of Co-Sale Rights. Any provision of
this Section 3 may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or prospectively)
only with the written consent of the Selling Stockholders to be affected and the
Investor owning at least a majority of the shares of Common Stock issuable on
conversion of the Preferred Stock.
2.9 Offer to All Shareholders. In the event that a person ("Offeror")
makes an offer ("Offer") to all stockholders of the Company to purchase all of
the outstanding capital stock of the Company and the Offer is approved by the
Company's stockholders in accordance with the Amended and Restated Certificate
of Incorporation of the Company and the provisions of the general Corporation
Law of the State of Delaware, each Investor hereby agrees to be bound by the
Offer and to sell all of their respective shares to the Offeror on the terms and
conditions contained in the Offer.
17
<PAGE>
30 Miscellaneous.
3.1 Successors and Assigns. Except as otherwise provided
herein, 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
(including transferees of any shares of Registrable Securities). The proposed
transferee of any rights under this Agreement (including transferees of the
Registrable Securities) shall be required to execute and deliver a counterpart
copy of an amendment to this Agreement agreeing to be bound by all obligations
and agreements of the transferor hereunder. 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.
3.2 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of Delaware as applied to agreements among
Delaware residents entered into and to be performed entirely within Delaware.
3.3 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.
3.4 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.
3.5 Notices. Any notice to be given or to be served upon the
Company or any party hereto in connection with this Agreement must be in writing
(which may include facsimile) and will be deemed to have been given and received
when delivered to the address specified by the party to receive the notice. Any
party may, at any time by giving ten (10) days' prior written notice to the
other Members, designate any other address in substitution of the foregoing
address to which such notice will be given. The addresses for such notice are as
set forth on the signature pages to this Agreement.
3.6 Expenses. 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 attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
3.7 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only 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.
3.8 Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the
18
<PAGE>
balance of the Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
3.9 Aggregation of Stock. All shares of Registrable Securities
held or acquired by affiliated entities or persons shall be aggregated together
for the purpose of determining the availability of any rights under this
Agreement.
3.10 Entire Agreement; Amendment; Waiver. This Agreement
(including the Exhibits hereto, if any) constitutes the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof.
3.11 Permitted Transferees. Notwithstanding any provision in
this Agreement to the contrary, subject to compliance with the applicable
provisions of the Act, any Investor may transfer shares of Preferred Stock
and/or Registrable Securities held by it without restriction as followings: (i)
by an Investor that is a partnership to a partner of such partnership or a
retired partner of such partnership who retires after the date hereof, or to the
estate of any such partner or retired partner or (ii) the transfer by gift, will
or intestate succession of any individual Investor to his or her spouse or to
the siblings, lineal descendants or ancestors of such individual Investor or his
or her spouse or (iii) by an Investor that is a corporation to the shareholders
of such corporation pursuant to a distribution in kind to such shareholders, or,
(iv) in the case of NEGF to a SBIC of which NEGF is a principal investor; if, in
each case, the transferee agrees in writing to be subject to the terms hereof to
the same extent as if it, he or she were an original Investor hereunder.
[PAGE LEFT INTENTIONALLY BLANK]
19
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
IgX CORP.
By:/s/ Albert J. Henry
----------------------------------------
Albert J. Henry, Chairman
Address: c/o 4370 La Jolla Village Dr., #400
La Jolla, California 92122
"Investors:" NEGF II, L.P.
By: New England Partners II, L.P.,
its General Partner
By: NEGF Ventures, Inc.,
its General Partner
By:/s/ President
----------------------------------------
President
Address: One Boston Place, Suite 2100
Boston, Massachusetts 02108-4406
ENGLISH AND SCOTTISH, PLC
By:/s/ Ian Beveridge
----------------------------------------
Title:Secretary
-------------------------------------
Address:
-----------------------------------
-----------------------------------
HENRY VENTURE II LIMITED
By:/s/ Albert J. Henry
----------------------------------------
Albert J. Henry, Chairman
Address: 100 Market Street
Douglas
Isle of Man
[SIGNATURES CONTINUE ON NEXT PAGE]
20
<PAGE>
IX LIMITED
By:/s/ Director
----------------------------------------
Title:
-------------------------------------
Address:
-----------------------------------
-----------------------------------
/s/ Morton I. Kamien
-------------------------------------------
Morton I. Kamien
Address: 1500 Sheridan Road
Wilmette, Illinois 60091
/s/ Lloyd E. Shefsky
-------------------------------------------
Lloyd E. Shefsky
444 North Michigan Avenue
Chicago, Illinois 60611
MERIKEN NOMINEES
By:/s/ Aiden Dougherty /s/ G. Forbes
----------------------------------------
Aiden Dougherty/G.Forbes
Address: Alltrust & Banking Company, Ltd.
The Aal Building
4 North Church Street
Georgetown, Grand Caymans
Cayman Islands, British West Indies
[SIGNATURE PAGE TO INVESTORS' RIGHTS AGREEMENT]
21
<PAGE>
SCHEDULE "A"
SCHEDULE OF INVESTORS
Name
NEGF II, L.P.
English and Scottish PLC
Henry Venture II Limited
Morton I. Kamien
Lloyd E. Shefsky
IX Limited
Meriken Nominees
Schedule A-1
<PAGE>
THE SECURITIES EVIDENCED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES ("STATE ACT"). THE SECURITIES EVIDENCED BY THIS
WARRANT MAY NOT BE OFFERED, SOLD OR TRANSFERRED FOR VALUE DIRECTLY OR
INDIRECTLY, IN THE ABSENCE OF SUCH REGISTRATION UNDER THE ACT AND QUALIFICATION
UNDER APPLICABLE STATE ACTS, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE ACT AND QUALIFICATION UNDER APPLICABLE STATE ACTS, THE AVAILABILITY OF WHICH
IS TO BE ESTABLISHED TO THE REASONABLE SATISFACTION OF THE COMPANY.
May 6, 1998 Warrant to Purchase
170,000 Shares of Common Stock
WARRANT TO PURCHASE COMMON STOCK
This is to certify that, for value received, NEGF II, L.P., or a proper
assignee (in each case, the "Holder"), is entitled to purchase, subject to the
provisions of this Warrant to Purchase Common Stock (the "Warrant"), from IgX
Corp., a Delaware corporation (the "Company"), at any time prior to May 6, 2003
(the "Expiration Date") at which time this Warrant shall expire and become void,
up to one hundred seventy thousand (170,000) shares (the "Warrant Shares") of
the Common Stock of the Company (the "Common Stock"), par value $0.001 per
share. Except as otherwise provided herein, this Warrant shall be exercisable at
$0.01 per share (the "Exercise Price"). The number of shares of Common Stock to
be received upon exercise of this Warrant and the Exercise Price shall be
adjusted from time to time as set forth in Section 5 below. This Warrant and the
Common Stock issuable upon exercise hereof are sometimes referred to
collectively as the "Securities." This Warrant is also subject to the following
terms and conditions:
1. Exercise and Payment; Exchange.
(a) This Warrant may be exercised in whole or in part (but only in
minimum increments of one thousand (1,000) full shares, and not for any
fractional interests) at any time after the date hereof and before the
Expiration Date, but if such date is a day on which federal or state chartered
banking institutions located in the State of Delaware are authorized to close,
then on the next succeeding day which is not such a day. Exercise shall be by
presentation and surrender to the Company at its principal office, or at the
office of any transfer agent designated by the Company (the "Transfer Agent"),
of (i) this Warrant, (ii) the properly executed Form of Exercise attached hereto
as Exhibit "A" and incorporated herein by this reference and (iii) a certified
or official bank check for the aggregate Exercise Price for the number of
Warrant Shares specified in the Form of Exercise; provided, however, that, at
the option of the Holder, the requirement described in this clause (iii) may
instead be satisfied by withholding from those Warrant Shares that would
otherwise be obtained upon such exercise (the "Total Warrant Shares") a number
of Warrant Shares having an aggregate Current Fair Market Value (as defined
below) equal to the aggregate Exercise Price that would otherwise have been
payable for the Total Warrant Shares. If this Warrant is exercised in part only,
the Company or the Transfer
<PAGE>
Agent shall, upon surrender of this Warrant, execute and deliver a new Warrant
evidencing the rights of the Holder to purchase the remaining number of Warrant
Shares purchasable hereunder. Upon receipt by the Company of this Warrant and
proper Form of Exercise, accompanied by payment as aforesaid (unless the option
described in the foregoing provision is selected by the Holder), the Holder
shall be deemed to be the holder of record of the Common Stock issuable upon
such exercise, notwithstanding that the stock transfer books of the Company
shall then be closed or that certificates representing such Warrant Shares shall
not then be actually delivered to the Holder. If the Holder elects to use the
option described in the foregoing provision to exercise this Warrant by
withholding a portion of the Total Warrant Shares, this Warrant shall be
terminated with respect to the number of Total Warrant Shares withheld.
(b) This Warrant shall be exercisable for all or any portion of the
Warrant Shares upon the reorganization, consolidation or merger of the Company
with another corporation after which the Company is not the surviving entity, or
a sale or other transfer of all or substantially all of the assets of the
Company to another corporation. The Company shall give advance written notice to
the Holder of the effective date of any transaction described in the preceding
sentence in accordance with Section 6 below, in order to permit the Holder to
exercise this Warrant by such date. This Warrant shall be terminated if not
exercised by the Holder on or prior to the effective date of any such
reorganization, merger, consolidation and/or sale or other transfer of assets.
2. Reservation of Shares. The Company shall, at all times until the
expiration of this Warrant, reserve for issuance and delivery upon exercise of
this Warrant a sufficient number of shares of Common Stock for issuance and
delivery upon exercise of this Warrant.
3. Fractional Interests; Determination of Current Fair Market Value.
(a) The Company shall not issue any fractional shares or scrip
representing fractional shares upon the exercise or exchange of this Warrant.
With respect to any fraction of a share resulting from the exercise or exchange
hereof, the Company shall pay to the Holder an amount in cash equal to such
fraction multiplied by the Current Fair Market Value per share of Common Stock.
(b) For the purposes of this Warrant, the "Current Fair Market Value"
of each share of Common Stock shall be determined as follows:
(1) If the Common Stock is listed on a national securities
exchange or admitted to unlisted trading privileges on such an exchange, the
Current Fair Market Value shall be the average of the last reported sale prices
of the Common Stock on such exchange based on the last five (5) Business Days
(as defined below) prior to the date of exercise of this Warrant, or, if the
Common Stock is not so listed or admitted to unlisted
-2-
<PAGE>
trading privileges on a national securities exchange but is listed on the
National Association of Securities Dealers Automated Quotation System
("NASDAQ"), the Current Fair Market Value shall be the average of the last
reported sale prices of the Common Stock on NASDAQ based on the last five (5)
Business Days prior to the date of exercise of this Warrant.
(2) If the Common Stock is not so listed or admitted to unlisted
trading privileges on a national securities exchange or quoted on NASDAQ, the
Current Fair Market Value shall be the average mean of the last closing bid and
asked prices reported on the last five (5) Business Days prior to the date of
exercise of this Warrant (i) by NASDAQ, or (ii) if reports are unavailable under
clause (i) above, by the National Quotation Bureau Incorporated ("NQB").
(3) If the Common Stock is not so listed or admitted to unlisted
trading privileges on a national securities exchange and bid and asked prices
are not so reported by NASDAQ or NQB, the Current Fair Market Value shall be an
amount per share, not less than book value, determined in such reasonable manner
as may be prescribed by the Board of Directors of the Company in good faith. As
used herein, "Current Fair Market Value" means, in respect of each share of
Common Stock, the fair market value of such share (determined without giving
effect to any discount for (i) a minority interest or (ii) any lack of liquidity
or the fact that the Company may have no class of registered equity securities)
as of the last day of the most recent fiscal month of the Company for which the
relevant financial information is reasonably available, as determined (at the
sole expense of the Holder) by an independent investment banking firm of
nationally recognized standing selected by the Holder and approved by the
Company (which approval shall not be unreasonably withheld).
(4) Notwithstanding the foregoing, if this Warrant is being
exercised concurrently with the consummation of an Acquisition Transaction (as
defined below), the Current Fair Market Value shall be the price per share being
paid pursuant to such Acquisition Transaction. As used herein, "Acquisition
Transaction" means any transaction or series of related transactions pursuant to
which fifty percent (50%) or more of the Common Stock of the Company is
transferred to one or more persons unaffiliated with the Company prior to such
transaction(s).
(c) As used in this Section 3, "Business Day" means any day other than
a Saturday or Sunday on which the relevant exchange, system or service is open
or available, as the case may be.
4. No Rights as Stockholder. This Warrant shall not entitle the Holder to
any rights as a stockholder of the Company, either at law or in equity. The
rights of the Holder are limited to those expressed in this Warrant and are not
enforceable against the Company except to the extent set forth herein.
-3-
<PAGE>
5. Adjustments in Number and Exercise Price of Warrant Shares.
(a) The number of shares of Common Stock for which this Warrant may be
exercised and the Exercise Price therefor shall be subject to adjustments as
follows:
(1) If the Company is recapitalized through the subdivision or
combination of its outstanding shares of Common Stock into a larger or smaller
number of shares, the number of shares of Common Stock for which this Warrant
may be exercised shall be increased or reduced, as of the record date for such
recapitalization, in the same proportion as the increase or decrease in the
outstanding shares of Common Stock, and the Exercise Price shall be adjusted so
that the aggregate amount payable for the purchase of all of the Warrant Shares
issuable hereunder immediately after the record date for such recapitalization
shall equal the aggregate amount so payable immediately before such record date.
(2) If the Company declares a dividend on Common Stock payable in
Common Stock or securities convertible into Common Stock, the number of shares
of Common Stock for which this Warrant may be exercised shall be increased as of
the record date for determining which holders of Common Stock shall be entitled
to receive such dividend, in proportion to the increase in the number of
outstanding shares (and shares of Common Stock issuable upon conversion of all
such securities convertible into Common Stock) of Common Stock as a result of
such dividend, and the Exercise Price shall be adjusted so that the aggregate
amount payable for the purchase of all the Warrant Shares issuable hereunder
immediately after the record date for such dividend shall equal the aggregate
amount so payable immediately before such record date.
(3) If the Company distributes to holders of its Common Stock,
other than as part of its dissolution or liquidation or the winding up of its
affairs, any shares of its Common Stock, any evidence of indebtedness or any of
its assets (other than cash, Common Stock or securities convertible into Common
Stock), the Company shall give written notice of any such distribution to the
Holder at least fifteen (15) days prior to the proposed record date in order to
permit the Holder to exercise this Warrant with respect to the Warrant Shares on
or before the record date. There shall be no adjustment in the number of shares
of Common Stock for which this Warrant may be exercised, or in the Exercise
Price, by virtue of any such distribution. This Warrant will terminate upon such
dissolution, liquidation or winding up.
(4) If the event as a result of which an adjustment is made under
Sections 5(a)(1) or 5(a)(2) above does not occur, then any adjustments in the
Exercise Price
-4-
<PAGE>
or number of shares issuable that were made in accordance with such Sections
5(a)(1) or 5(a)(2) shall be adjusted to the Exercise Price and number of shares
as were in effect immediately prior to the record date for such event.
(b) Whenever the number of Warrant Shares or Exercise Price shall be
adjusted as required by the provisions of this Section 5, the Company forthwith
shall file in the custody of its Secretary or an Assistant Secretary, at its
principal office, an officer's certificate showing the adjusted number of
Warrant Shares and Exercise Price and setting forth in reasonable detail the
circumstances requiring the adjustment. Each such officer's certificate shall be
made available at all reasonable times during reasonable hours for inspection by
the Holder.
6. Notices to Holders. So long as this Warrant shall be outstanding (i)
if the Company shall pay any dividends or make any distribution upon the Common
Stock otherwise than in cash or (ii) if there shall be any reorganization,
consolidation or merger of the Company into another corporation in which the
Company is not the surviving entity, sale or other transfer of all or
substantially all of the property and assets of the Company, or voluntary or
involuntary dissolution, liquidation or winding up of the Company, then in such
event, the Company shall cause to be mailed to the Holder, at least fifteen (15)
days prior to the relevant date described below (or such shorter period as is
reasonably possible if fifteen (15) days is not reasonably possible), a notice
containing a description of the proposed action and stating the date or expected
date on which a reorganization, consolidation, merger, sale or transfer,
dissolution, liquidation or winding up is to take place and the date or expected
date, if any is to be fixed, as of which the holders of Common Stock of record
shall be entitled to exchange their shares of Common Stock for securities or
other property deliverable upon such event.
7. Investment Representations. The Holder, by acceptance of this Warrant,
represents and warrants to the Company that:
(a) This Warrant and all shares of Common Stock acquired upon any and
all exercises of this Warrant are purchased for the Holder's own account and for
investment, and not with a view to resale or distribution of either this Warrant
or any shares purchasable upon any exercise hereof. The Holder understands that
this Warrant and the underlying shares are subject to certain restrictions
against transfer pursuant to federal securities laws.
(b) The Holder has been regularly apprised of the affairs of the
Company through delivery of periodic financial statements and other
communications regarding the business and operations of the Company.
(c) The Holder is an investor in securities of private companies and
acknowledges that it is able to fend for itself, can bear the economic risk of
its investment
-5-
<PAGE>
and has such knowledge and experience in financial or business matters that it
is capable of evaluating the merits and risks of the investment in the
Securities. The Holder also represents that it has not been organized for the
purpose of acquiring the Common Stock of the Company.
(d) The Holder is an "accredited investor" within the meaning of
Securities and Exchange Commission ("SEC") Rule 501 of Regulation D, as now in
effect.
(e) The Holder understands that the Securities are characterized as
"restricted securities" under the federal securities laws inasmuch as they are
being acquired from the Company in a transaction not involving a public offering
and that under such laws and applicable regulations such securities may be
resold, without registration under the Act, only in certain limited
circumstances. In this connection, each Holder represents that it is familiar
with SEC Rule 144, as now in effect, and understands the resale limitations
imposed thereby and by the Act.
(f) Without in any way limiting the representations set forth above,
the Holder further agrees not to make any disposition of all or any portion of
the Securities unless and until it has been established to the satisfaction of
the Company that such transfer will not violate any applicable federal
securities or state securities or blue sky laws and the transferee has agreed in
writing for the benefit of the Company to be bound by the applicable provisions
of this Section 7, and such Holder shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and if
reasonably requested by the Company, such Holder shall have furnished the
Company with an opinion of counsel or other evidence reasonably satisfactory to
the Company, that such disposition will not require registration of such
Securities under the Act.
(g) It is understood that this Warrant and/or the certificates
evidencing the Common Stock issuable upon exercise of this Warrant may bear one
or all of the legends substantially in the form set forth below, as well as any
legend required by applicable state securities laws:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH
RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR
UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT.
(h) If requested by the Company and an underwriter of Common Stock (or
other securities) of the Company, the Holder agrees not to exercise its rights
pursuant to this Warrant or to effect any public sale or distribution of equity
securities of the Company, or any securities convertible into or exchangeable or
exercisable for such
-6-
<PAGE>
securities (other than securities covered by an effective registration
statement) during the ten (10) days prior to and the one hundred eighty (180)
day period beginning on the effective date of a registration statement of the
Company filed under the Act (or such other longer period as may be required by
the underwriter), provided that (i) such agreement shall only apply to the first
such registration statement of the Company, including securities to be sold on
its behalf to the public in an underwritten offering and (ii) all officers and
directors of the Company and all other persons with registration rights shall
enter into similar agreements. In order to enforce the foregoing covenant, the
Company may impose stop-transfer instructions with respect to this Warrant and
the securities subject to the foregoing restriction until the end of such
period. Notwithstanding the foregoing, the obligations described above shall not
apply to a registration relating solely to employee benefit plans on Form S-4 or
similar forms that may be promulgated in the future, or a registration relating
solely to a Rule 145 transaction on Form S-14 or Form S-15 or similar forms that
may be promulgated in the future.
8. Transfer, Exchange, Assignment or Loss of Warrant.
(a) This Warrant may be transferred, in whole or in part,including
transfer to the limited partners of the Holder, subject to the following
restrictions. This Warrant and the Warrant Shares or any other securities
("Other Securities") received upon exercise of this Warrant shall be subject to
restrictions on transferability until registered under the Act unless an
exemption from registration is available. Any transfer of this Warrant or the
Warrant Shares shall be subject to full compliance with Section 7 and any
purported transfer of this Warrant and/or the Warrant Shares in violation of
said Section 7 shall be null and void ab initio. Until the Warrant and the
Warrant Shares are registered under the Act, the Holder shall reimburse the
Company for its reasonable expenses, including reasonable attorney's fees,
incurred in connection with any transfer or assignment, in whole or in part, of
this Warrant or any Warrant Shares. The restrictions set forth in this Section 8
shall apply equally to any securities issued or issuable with respect to this
Warrant and the Warrant Shares.
(b) Any transfer permitted hereunder shall be made by surrender of
this Warrant to the Company at its principal office or to the Transfer Agent at
its offices with a duly executed request to transfer the Warrant, which shall
provide adequate information to effect such transfer and shall be accompanied by
funds sufficient to pay any transfer taxes applicable. Upon satisfaction of all
transfer conditions set forth in Section 8(a) above, the Company or Transfer
Agent shall execute and deliver a new Warrant in the name of the transferee
named in such transfer request, and this Warrant promptly shall be cancelled.
(c) Upon receipt by the Company of evidence satisfactory to it of
loss, theft, destruction or mutilation of this Warrant and, in the case of loss,
theft or destruction, of reasonably satisfactory indemnification and/or bond,
or, in the case of mutilation, upon
-7-
<PAGE>
surrender of this Warrant, the Company will execute and deliver, or instruct the
Transfer Agent to execute and deliver, a new Warrant of like tenor and date, and
any such lost, stolen, destroyed or mutilated Warrant thereupon shall become
void.
9. Impairment. The Company will not, by amendment of its Certificate of
Incorporation, as amended, or otherwise, 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, take all such action as may be necessary or appropriate in order to
protect the rights of the Holder against impairment.
10. Notices. Notices and other communications to be given to the Holder
and/or Company shall be deemed sufficiently given if delivered by hand, or three
(3) business days after mailing if mailed by registered or certified mail,
postage prepaid, addressed in the name and at the address of such party
appearing below.
If to the Company: IgX Corp.
c/o Henry & Co.
4370 La Jolla Village Drive, Suite 400
San Diego, California 92122-1251
If to the Holder: NEGF II, L.P.
Attention: John F. Rousseau, Jr.
One Boston Place, Suite 2100
Boston, Massachusetts 02108
Either party may change the address to which notices shall be given by notice
pursuant to this Section 10.
11. Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of Delaware.
-8-
<PAGE>
IN WITNESS WHEREOF, the Company has executed this Warrant to Purchase
Common Stock as of the date first written above.
IgX CORP.
By:/s/ Albert J. Henry
----------------------------------------
Albert J. Henry, Chairman
-9-
<PAGE>
Void After May 6, 2003 Exhibit "A"
FORM OF EXERCISE
To: IgX Corp.
(1) Pursuant to the terms of the attached Warrant, the undersigned
hereby elects to purchase ________________ shares of Common Stock of IgX Corp.
(the "Company"), and tenders herewith payment of the Exercise Price of such
shares in full.
(2) Please issue a certificate or certificates representing said shares
of Common Stock, in the name of the undersigned or in such other name(s) as
is/are specified immediately below or, if necessary, on an attachment hereto:
Name Address
---- -------
(3) In the event of partial exercise, please reissue an appropriate
Warrant exercisable for the remaining shares.
Date:
--------------------
-----------------------------------
[Holder]
<PAGE>
WRITTEN CONSENT OF
THE HOLDERS OF SERIES B PREFERRED STOCK
OF IGX CORP.
The undersigned, being the holders of the Series B Preferred Stock of
IgX Corp., a Delaware corporation (the "Corporation"), acting pursuant to
Section 228 of the Delaware General Corporation Law and Article II, Section 11
of the Bylaws of the Corporation, do hereby adopt the following recitals and
resolutions by written consent, effective as of May 6, 1998, which shall have
the same force and effect as if adopted at a duly convened meeting of the
holders of the Series B Preferred Stock of the Corporation, and a copy of which
shall be filed with the minutes of the Corporation:
1. Waiver of Conversion Price Adjustment.
WHEREAS ARTICLE IV.B.3(d)(i) of the Corporation's Amended and Restated
Certificate of Incorporation, as amended (the "Certificate of Incorporation"),
provides for the adjustment of the conversion price of the Series B Preferred
Stock in the event of certain dilutive issuances of additional Common Stock,
including warrants to purchase Common Stock.
WHEREAS, the Corporation has agreed to issue a promissory note due May
6, 2008, in the aggregate principal amount of $1,000,000 to NEGF II, L.P.
("NEGF"), which promissory note obligates the Corporation to issue to NEGF a
warrant to purchase 370,000 shares of Common Stock at a purchase price of $0.01
per share (the "Warrant").
WHEREAS, the issuance of the Warrant would result in an adjustment of
the conversion price of the Series B Preferred Stock under Article IV.B.3(d)(i)
of the Certificate of Incorporation.
WHEREAS, Article IV.B.5(b) of the Certificate of Incorporation provides
that the Corporation shall not, without first obtaining the approval of the
holders of 85% of the then outstanding shares of Series B Preferred Stock alter
the rights of the Series B Preferred Stock so as to adversely affect the shares.
WHEREAS, the holders of the Series B Preferred Stock have determined
that it is in their best interest to waive the adjustment in the conversion
price of the Series B Preferred Stock arising as a result of the issuance of the
Warrant.
NOW, THEREFORE, BE IT RESOLVED, that the adjustment of the conversion
price of the Series B Preferred Stock pursuant to Article IV.B.3(d)(i) of the
Corporation's Certificate of Incorporation resulting from the Corporation's
issuance of the Warrant to NEGF on May 6, 1998, be and hereby is waived.
<PAGE>
2. General Authority.
RESOLVED, that any and all actions, whether previously or subsequently
taken by the officers of the Corporation which are consistent with the intents
and purposes of the foregoing resolutions, shall be, and the same hereby are, in
all respects, ratified, approved and confirmed.
RESOLVED, FURTHER, that the officers of the Corporation and such
persons appointed to act on their behalf pursuant to the foregoing resolutions,
are hereby authorized and directed in the name of the Corporation and on its
behalf, to execute any additional certificates (including any officer's
certificates), agreements, instruments or documents, or any amendments or
supplements thereto, or to do or to cause to be done any and all other acts and
to incur any expense and to pay any fees and amounts as they shall deem
necessary, appropriate or in furtherance of the full effectuation of the
purposes of each of the foregoing resolutions and the transactions contemplated
therein.
[Remainder of Page Intentionally Left Blank]
-2-
<PAGE>
IN WITNESS WHEREOF, the undersigned holders of the Series B Preferred
Stock have executed this Written Consent of the Holders of the Series B
Preferred Stock of IgX Corp. effective as of the date first written above. This
instrument may be executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument. This instrument may be executed by facsimile and such facsimile copy
shall be conclusive evidence of the consent and ratification of the matters
contained herein by the undersigned stockholders.
HENRY VENTURE II LIMITED
By:
--------------------------------
Albert J. Henry
NEGF II, L.P.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
[Signature Page No. 1 to Written Consent
of the Holders of the Series B Preferred Stock of IgX Corp.]
-3-
<PAGE>
ENGLISH AND SCOTTISH PLC
By:
------------------------------------------------------
Name:
----------------------------------------------------
Title:
---------------------------------------------------
---------------------------------------------------------
Morton I. Kamien
MERIKEN NOMINEES
By:
------------------------------------------------------
Name:
----------------------------------------------------
Title:
---------------------------------------------------
EASTERN BANK & TRUST COMPANY, Trustee, Shefsky & Froelich
Ltd. Profit Sharing 401(k) Plan f/b/o Lloyd E.Shefsky
By:
------------------------------------------------------
Name:
----------------------------------------------------
Title:
---------------------------------------------------
SUNDIAL INTERNATIONAL FUND LIMITED
By:
Name:
Title:
ZORN NOMINEES LIMITED
By:
------------------------------------------------------
Name:
----------------------------------------------------
Title:
---------------------------------------------------
[Signature Page No. 2 to Written Consent
of the Holders of the Series B Preferred Stock of IgX Corp.]
-4-
<PAGE>
WRITTEN CONSENT OF
THE HOLDERS OF SERIES B PREFERRED STOCK
OF IGX CORP.
The undersigned, being the holders of the Series B Preferred Stock of
IgX Corp., a Delaware corporation (the "Corporation"), acting pursuant to
Section 228 of the Delaware General Corporation Law and Article II, Section 11
of the Bylaws of the Corporation, do hereby adopt the following recitals and
resolutions by written consent, effective as of September 23, 1998, which shall
have the same force and effect as if adopted at a duly convened meeting of the
holders of the Series B Preferred Stock of the Corporation, and a copy of which
shall be filed with the minutes of the Corporation:
1. Conversion of Series B Preferred Stock.
WHEREAS Article IV.B.3 of the Corporation's Amended and Restated
Certificate of Incorporation, as amended (the "Certificate of Incorporation"),
provides for adjustments upon the conversion of the Series B Preferred Stock in
the event that, on or prior to December 31, 1998, the Corporation consummates
its initial public offering at less than a specified valuation (the "ratchet
provisions").
WHEREAS, the Corporation is planning an initial public offering (the
"IPO") for which Josephthal & Co. Inc. is to act as lead underwriter, which is
expected to be consummated on or before December 31, 1998 at an anticipated
valuation range of $8.00 to $10.00 per share of Common Stock, which could result
in the right to an adjustment under the ratchet provisions.
WHEREAS, Article IV.B.5(b) of the Certificate of Incorporation provides
that the Corporation shall not, without first obtaining the approval of the
holders of 85% of the then outstanding shares of Series B Preferred Stock alter
the terms of the Series B Preferred Stock so as to adversely affect their
rights.
WHEREAS, the holders of the Series B Preferred Stock have determined
that, based upon the short time elapsed since the issuance of the Series B
Preferred Stock and the anticipated valuation range and consummation date for
the IPO, it is in their best interest to waive any right to adjustments under
the ratchet provisions of the Series B Preferred Stock with the respect to the
IPO.
<PAGE>
NOW, THEREFORE, BE IT RESOLVED, that any rights to adjustments under
the ratchet provisions of the Series B Preferred Stock will be waived with
respect to the IPO, provided the IPO is consummated on or before December 31,
1998 at a valuation of $8.00 to $10.00 per share of Common Stock.
2. General Authority.
RESOLVED, that any and all actions, whether previously or subsequently
taken by the officers of the Corporation which are consistent with the intents
and purposes of the foregoing resolutions, shall be, and the same hereby are, in
all respects, ratified, approved and confirmed.
RESOLVED, FURTHER, that the officers of the Corporation and such
persons appointed to act on their behalf pursuant to the foregoing resolutions,
are hereby authorized and directed in the name of the Corporation and on its
behalf, to execute any additional certificates (including any officer's
certificates), agreements, instruments or documents, or any amendments or
supplements thereto, or to do or to cause to be done any and all other acts and
to incur any expense and to pay any fees and amounts as they shall deem
necessary, appropriate or in furtherance of the full effectuation of the
purposes of each of the foregoing resolutions and the transactions contemplated
therein.
[Remainder of Page Intentionally Left Blank]
-2-
<PAGE>
IN WITNESS WHEREOF, the undersigned holders of the Series B Preferred
Stock have executed this Written Consent of the Holders of the Series B
Preferred Stock of IgX Corp. effective as of the date first written above. This
instrument may be executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument. This instrument may be executed by facsimile and such facsimile copy
shall be conclusive evidence of the consent and ratification of the matters
contained herein by the undersigned stockholders.
HENRY VENTURE II LIMITED
By:
-----------------------------------------
Albert J. Henry
NEGF II, L.P.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
ENGLISH AND SCOTTISH PLC
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
[Signature Page No. 1 to Written Consent
of the Holders of the Series B Preferred Stock of IgX Corp.]
-3-
<PAGE>
----------------------------------------------
Morton I. Kamien
MERIKEN NOMINEES
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
EASTERN BANK & TRUST COMPANY, Trustee, Shefsky
& Froelich Ltd. Profit Sharing 401(k) Plan
f/b/o Lloyd E. Shefsky
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
SUNDIAL INTERNATIONAL FUND LIMITED
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
ZORN NOMINEES LIMITED
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
[Signature Page No. 2 to Written Consent
of the Holders of the Series B Preferred Stock of IgX Corp.]
-4-
<PAGE>
EXHIBIT "G"
WAIVER OF REGISTRATION RIGHTS
INVESTORS' RIGHTS AGREEMENT
This Waiver (the "Waiver") is effective as of the 28th day of
September, 1998 with respect to the Investors' Rights Agreement made as of the
24th day of December, 1997, by and among IgX Corp., a Delaware corporation (the
"Company"), and NEGF II, L.P., English and Scottish PLC, Henry Venture II
Limited, IX Limited, Morton I. Kamien, Lloyd E. Shefsky and Meriken Nominees
(the "Original Investors"), as supplemented by the Amendment to Stock Purchase
Agreement, effective as of February 1, 1998, by and among the Company, NEGF II,
L.P., English and Scottish PLC, Henry Venture II Limited, Morton I. Kamien,
Lloyd E. Shefsky and Meriken Nominees and Meriken Nominees and NEGF II, L.P., as
additional investors; the Amendments to Stock Purchase Agreement, effective as
of May 12, 1998, between the Company and English and Scottish PLC and Zorn
Nominees Limited, respectively, as additional investors; the Amendment to Stock
Purchase Agreement, effective as of May 13, 1998, between the Company and
Meriken Nominees, as an additional investor; and the Amendment to Stock Purchase
Agreement, effective as of May 14, 1998, between the Company and Sundial
International Fund Limited, as an additional investor (the Original Investors
and the additional investors, collectively the "Investors"; the Investors'
Rights Agreement, as supplemented, the "Agreement"). Terms not otherwise defined
herein shall have the meanings ascribed to them in the Agreement.
R E C I T A L S
WHEREAS, the Investors wish to waive the Investors' registration rights
with respect to the Registrable Securities in connection with the Company's
planned initial public offering (the "IPO") for which Josephthal & Co. Inc. is
to act as lead underwriter, which IPO is expected to be consummated on or before
December 31, 1998;
WHEREAS, the Company wishes to consent to the Waiver;
NOW, THEREFORE, the Investors hereby waive their registration rights
under the Agreement as follows:
1. Provided the IPO is consummated on or before December 31, 1998, the
Investors hereby waive their registration rights under (a) clause (ii) of
Section 1.2.1. of the Agreement during the period beginning on the date six (6)
months after the effective date of the registration statement for the IPO (the
"Effective Date") and ending on the date one (1) year after the Effective Date,
and (b) Section 1.3 of the Agreement during the period beginning on the
Effective Date and ending on the date nine (9) months after the Effective Date.
2. The Investors hereby agree that this Waiver shall apply to any
transferee or assignee of the Investors.
<PAGE>
3. This Waiver shall be governed by and construed under the laws of the
State of Delaware.
4. Except as expressly waived hereby, the terms and conditions of the
Agreement shall remain in full force and effect.
5. This Waiver may be executed in any number of counterparts, and each
of such counterparts shall for all purposes constitute one agreement, binding on
all the parties, notwithstanding that all the parties are not signatories to the
same counterpart.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
2
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Waiver as of the
date first above written.
"Investors:" NEGF II, L.P.
By: New England Partners II, L.P.,
its General Partner
By: NEGF Ventures, Inc.,
its General Partner
By:
------------------------------------------
President
Address: One Boston Place, Suite 2100
Boston, Massachusetts 02108-4406
ENGLISH AND SCOTTISH, PLC
By:
-------------------------------------------
Title:
----------------------------------------
Address:
--------------------------------------
--------------------------------------
HENRY VENTURE II LIMITED
By:
-------------------------------------------
Albert J. Henry, Chairman
Address: 100 Market Street
Douglas
Isle of Man
[SIGNATURE PAGE TO WAIVER]
[SIGNATURES CONTINUE ON NEXT PAGE]
3
<PAGE>
IX LIMITED
By:
------------------------------------------
Title:
---------------------------------------
Address:
-------------------------------------
-------------------------------------
---------------------------------------------
Morton I. Kamien
Address: 1500 Sheridan Road
Wilmette, Illinois 60091
MERIKEN NOMINEES
By:
------------------------------------------
Aiden Dougherty
Address: Alltrust & Banking Company, Ltd.
The Aal Building
4 North Church Street
Georgetown, Grand Caymans
Cayman Islands, British West Indies
EASTERN BANK & TRUST COMPANY,
TRUSTEE SHEFSKY & FROELICH LTD.
PROFIT SHARING 401(k) PLAN F/B/O LLOYD
E. SHEFSKY
By:
------------------------------------------
Address:
[SIGNATURE PAGE TO WAIVER]
[SIGNATURES CONTINUE ON NEXT PAGE]
4
<PAGE>
SUNDIAL INTERNATIONAL FUND LIMITED
By:
------------------------------------------
Address:
ZORN NOMINEES LIMITED
By:
------------------------------------------
Address:
Consent to Waiver: IgX CORP.
By:
------------------------------------------
Albert J. Henry, Chairman
Address: c/o 4370 La Jolla Village Dr., #400
La Jolla, California 92122
[SIGNATURE PAGE TO WAIVER]
5
<PAGE>
[FORM OF REPRESENTATIVE'S WARRANT AGREEMENT]
IgX CORP.
AND
JOSEPHTHAL & CO. INC.
REPRESENTATIVE'S
WARRANT AGREEMENT
Dated as of _________, 1998
<PAGE>
REPRESENTATIVE'S WARRANT AGREEMENT dated as of ________, 1998 by and
between IgX CORP., a Delaware corporation (the "Company"), and JOSEPHTHAL &
CO. INC., (hereinafter referred to variously as the "Holder" or the
"Representative").
WITNESSETH
WHEREAS, the Company proposes to issue to the Representative or their
designees warrants ("Warrants") to purchase up to an aggregate of 230,000
shares of common stock, $.001 par value, of the Company (the "Common Stock");
and
WHEREAS, the Representative has agreed pursuant to the underwriting
agreement (the "Underwriting Agreement") dated as of the date hereof by and
between the Representative, as the Representative of the several Underwriters
named in Schedule A thereto, and the Company to act as the Representative in
connection with the Company's proposed public offering of up to 2,300,000
shares of Common Stock at a public offering price of $_________ per share of
Common Stock (the "Public Offering"); and
WHEREAS, the Warrants to be issued pursuant to this Agreement will be
issued on the Closing Date (as such term is defined in the Underwriting
Agreement) by the Company to the Representative in consideration for, and as
part of the Representative's compensation in connection with, the
Representative acting as the Representative pursuant to the Underwriting
Agreement;
NOW, THEREFORE, in consideration of the premises, the payment by
the Representative to the Company of an aggregate of twenty dollars ($20), the
agreements herein set forth and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Grant. The Holder is hereby granted the right to purchase, at
any time from _________, 1999 [one year from the effective date of the
registration statement] until 5:30 P.M., New York time, on ________, 2003
[five years from the effective date of the registration statement], up to an
aggregate of 230,000 shares of Common Stock (the "Shares") at an initial
exercise price (subject to adjustment as provided in Section 8 hereof) of
$_______ [120% of the public offering price per share] per share of Common
Stock subject to the terms and conditions of this Agreement. Except as
expressly set forth herein, the Shares issuable upon exercise of the Warrants
are in all respects identical to the shares of Common Stock being purchased by
the Underwriters for resale to the public pursuant to the terms and provisions
of the Underwriting Agreement.
2. Warrant Certificates. The warrant certificates (the "Warrant
Certificates") delivered and to be delivered pursuant to this Agreement shall
be in the form set forth in Exhibit A attached hereto and made a part hereof,
with such appropriate insertions, omissions, substitutions, and other
variations as required or permitted by this Agreement.
<PAGE>
3. Exercise of Warrant.
3.1 Method of Exercise. The Warrants initially are
exercisable at an exercise price (subject to adjustment as provided in Section
8 hereof) per share of Common Stock set forth in Section 6 hereof payable by
certified or official bank check in New York Clearing House funds. Upon
surrender of a Warrant Certificate with the annexed Form of Election to
Purchase duly executed, together with payment of the Exercise Price (as
hereinafter defined) for the shares of Common Stock purchased at the Company's
principal offices in Summit, New Jersey (presently located at IgX Corp., One
Springfield Avenue, Summit, New Jersey 07960) the registered holder of a
Warrant Certificate ("Holder" or "Holders") shall be entitled to receive a
certificate or certificates for the shares of Common Stock so purchased. The
purchase rights represented by each Warrant Certificate are exercisable at the
option of the Holder thereof, in whole or in part (but not as to fractional
shares of the Common Stock underlying the Warrants). In the case of the
purchase of less than all the shares of Common Stock purchasable under any
Warrant Certificate, the Company shall cancel said Warrant Certificate upon
the surrender thereof and shall execute and deliver a new Warrant Certificate
of like tenor for the balance of the shares of Common Stock purchasable
thereunder.
3.2 Exercise by Surrender of Warrant. In addition to the
method of payment set forth in Section 3.1 hereof and in lieu of any cash
payment required thereunder, the Holder(s) of the Warrants shall have the
right at any time and from time to time to exercise the Warrants in full or in
part by surrendering the Warrant Certificate in the manner specified in
Section 3.1 in exchange for the number of shares of Common Stock equal to the
product of (x) the number of shares as to which the Warrants are being
exercised multiplied by (y) a fraction, the numerator of which is the Market
Price (as defined below) of the Common Stock less the Exercise Price, and the
denominator of which is such Market Price. Solely for the purposes of this
paragraph, Market Price shall be calculated either (i) on the date which the
form of election attached hereto is deemed to have been sent to the Company
pursuant to Section 13 hereof (the "Notice Date"), or (ii) as the average of
the Market Prices for each of the five trading days immediately preceding the
Notice Date, whichever of (i) or (ii) is greater.
3.3 Definition of Market Price. As used herein, the phrase
"Market Price" at any date shall be deemed to be the last reported sale price,
or, in case no such reported sale takes place on such day, the average of the
last reported sale prices for the last three (3) trading days, in either case
as officially reported by the principal securities exchange on which the
Common Stock is listed or admitted to trading or by NASDAQ, or, if the Common
Stock is not listed or admitted to trading on any national securities exchange
or quoted by NASDAQ, the average closing bid price as furnished by the NASD
through NASDAQ or similar organization if NASDAQ is no longer reporting such
information, or if the Common Stock is not quoted on NASDAQ, as determined in
good faith by resolution of the Board of Directors of the Company, based on
the best information available to it.
-2-
<PAGE>
4. Issuance of Certificates. Upon the exercise of the Warrants, the
issuance of certificates for shares of Common Stock or other securities,
properties or rights underlying such Warrants, shall be made forthwith (and in
any event within five (5) business days thereafter) without charge to the
Holder thereof including, without limitation, any tax which may be payable in
respect of the issuance thereof, and such certificates shall (subject to the
provisions of Sections 5 and 7 hereof) be issued in the name of, or in such
names as may be directed by, the Holder thereof; provided, however, that the
Company shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any such certificates
in a name other than that of the Holder and the Company shall not be required
to issue or deliver such certificates unless or until the person or persons
requesting the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the Company that
such tax has been paid.
The Warrant Certificates and the certificates representing the
Common Stock (and/or other securities, property or rights issuable upon the
exercise of the Warrants) shall be executed on behalf of the Company by the
manual or facsimile signature of the then present Chairman or Vice Chairman of
the Board of Directors or President or Vice President of the Company under its
corporate seal reproduced thereon, attested to by the manual or facsimile
signature of the then present Secretary or Assistant Secretary of the Company.
Warrant Certificates shall be dated the date of execution by the Company upon
initial issuance, division, exchange, substitution or transfer.
5. Restriction On Transfer of Warrants. The Holder of a Warrant
Certificate, by its acceptance thereof, covenants and agrees that the Warrants
are being acquired as an investment and not with a view to the distribution
thereof; and that the Warrants may not be sold, transferred, assigned,
hypothecated or otherwise disposed of, in whole or in part, for a period of
one (1) year from the date hereof, except to officers of the Representative.
6. Exercise Price.
6.1 Initial and Adjusted Exercise Price. Except as otherwise
provided in Section 8 hereof, the initial exercise price of each Warrant shall
be [$_____] [120% of the initial public offering price] per share of Common
Stock. The adjusted exercise price shall be the price which shall result from
time to time from any and all adjustments of the initial exercise price in
accordance with the provisions of Section 8 hereof.
6.2 Exercise Price. The term "Exercise Price" herein shall mean the
initial exercise price or the adjusted exercise price, depending upon the
context.
-3-
<PAGE>
7. Registration Rights.
7.1 Registration Under the Securities Act of 1933. The Warrants,
the Shares and any of the other securities issuable upon exercise of the
Warrants have been registered under the Securities Act of 1933, as amended
(the "Act") pursuant to the Company's Registration Statement on Form S-1
(Registration No. 333-____) (the "Registration Statement"). All of the
representations and warranties of the Company contained in the Underwriting
Agreement relating to the Registration Statement, the Preliminary Prospectus
and Prospectus (as such terms are defined in the Underwriting Agreement) and
made as of the dates provided therein, are hereby incorporated by reference.
The Company agrees and covenants promptly to file post-effective amendments to
such Registration Statement as may be necessary in order to maintain its
effectiveness and otherwise to take such action as may be necessary to
maintain the effectiveness of the Registration Statement as long as any
Warrants are outstanding. In the event that, for any reason, whatsoever, the
Company shall fail to maintain the effectiveness of the Registration
statement, upon exercise, in part or in whole, of the Warrants, certificates
representing the Common Stock underlying the Warrants and any of the other
securities issuable upon exercise of the Warrants (collectively, the "Warrant
Shares") shall bear the following legend:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended
("Act"), and may not be offered or sold except pursuant to
(i) an effective registration statement under the Act, (ii)
to the extent applicable, Rule 144 under the Act (or any
similar rule under such Act relating to the disposition of
securities), or (iii) an opinion of counsel, if such opinion
shall be reasonably satisfactory to counsel to the issuer,
that an exemption from registration under such Act is
available.
7.2 Piggyback Registration. For a period of six (6) years from the
effective date (the "Effective Date") of the Company's Registration Statement,
if the Company proposes to register any of its securities under the Act (other
than in connection with a merger or pursuant to Form S-8) it will give written
notice by registered mail, at least thirty (30) days prior to the filing of
each such registration statement, to the Representative and to all other
Holders of the Warrants and/or the Warrant Shares of its intention to do so.
If the Representative or other Holders of the Warrants and/or Warrant Shares
notify the Company within twenty (20) business days after receipt of any such
notice of its or their desire to include any such securities in such proposed
registration statement, the Company shall afford each of the Representative
and such Holders of the Warrants and/or Warrant Shares the opportunity to have
any such Warrant Shares registered under such registration statement.
Notwithstanding the provisions of this Section 7.2, the Company
shall have the right at any time after it shall have given written notice
pursuant to this Section 7.2 (irrespective of whether a written request for
inclusion of any such securities shall have been made) to elect not to file
any such proposed registration statement, or to withdraw the same after the
filing but prior to the effective date thereof.
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<PAGE>
7.3 Demand Registration.
(a) For a period of five (5) years from the Effective Date,
the Holders of the Warrants and/or Warrant Shares representing a "Majority"
(as hereinafter defined) of such securities (assuming the exercise of all of
the Warrants) shall have the right (which right is in addition to the
registration rights under Section 7.2 hereof), exercisable by written notice
to the Company, to have the Company prepare and file with the Securities and
Exchange Commission (the "Commission"), on one occasion, a registration
statement and such other documents, including a prospectus, as may be
necessary in the opinion of both counsel for the Company and counsel for the
Representative and Holders, in order to comply with the provisions of the Act,
so as to permit a public offering and sale of their respective Warrant Shares
for nine (9) consecutive months by such Holders and any other Holders of the
Warrants and/or Warrant Shares who notify the Company within ten (10) days
after receiving notice from the Company of such request.
(b) The Company covenants and agrees to give written notice
of any registration request under this Section 7.3 by any Holder or Holders to
all other registered Holders of the Warrants and the Warrant Shares within ten
(10) days from the date of the receipt of any such registration request.
(c) In addition to the registration rights under Section 7.2
and subsection (a) of this Section 7.3, for a period of five (5) years from
the Effective Date, any Holder of Warrants and/or Warrant Shares shall have
the right, exercisable by written request to the Company, to have the Company
prepare and file, on one occasion, with the Commission a registration
statement so as to permit a public offering and sale for nine (9) consecutive
months by any such Holder of its Warrant Shares provided, however, that the
provisions of Section 7.4(b) hereof shall not apply to any such registration
request and registration and all costs incident thereto shall be at the
expense of the Holder or Holders making such request.
(d) Notwithstanding anything to the contrary contained
herein, if the Company shall not have filed a registration statement for the
Warrant Shares within the time period specified in Section 7.4(a) hereof
pursuant to the written notice specified in Section 7.3(a) of a Majority of
the Holders of the Warrants and/or Warrant Shares, upon the written notice of
election of a Majority of the Holders of the Warrants and/or Warrant Shares it
shall have the option, to repurchase (i) any and all Warrant Shares at the
higher of the Market Price per share of Common Stock on (x) the date of the
notice sent pursuant to Section 7.3(a) or (y) the expiration of the period
specified in Section 7.4(a), and (ii) any and all Warrants at such Market
Price less the Exercise Price of such Warrant. Such repurchase shall be in
immediately available funds and shall close within two (2) days after the
later of (i) the expiration of the period specified in Section 7.4(a) or (ii)
the delivery of the written notice of election specified in this Section
7.3(d).
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<PAGE>
7.4 Covenants of the Company With Respect to Registration. In
connection with any registration under Section 7.2 or 7.3 hereof, the Company
covenants and agrees as follows:
(a) The Company shall use its best efforts to file a
registration statement within thirty (30) days of receipt of any demand
therefor, shall use its best efforts to have any registration statements
declared effective at the earliest possible time, and shall furnish each
Holder desiring to sell Warrant Shares such number of prospectuses as shall
reasonably be requested.
(b) The Company shall pay all costs (excluding fees and
expenses of Holder(s)' counsel and any underwriting or selling commissions),
fees and expenses in connection with all registration statements filed
pursuant to Sections 7.2 and 7.3(a) hereof including, without limitation, the
Company's legal and accounting fees, printing expenses, blue sky fees and
expenses. The Holder(s) will pay all costs, fees and expenses in connection
with any registration statement filed pursuant to Section 7.3(c). If the
Company shall fail to comply with provisions of Section 7.4(a), the Company
shall, in addition to any other equitable or other relief available to the
Holder(s), be liable for any or all incidental or special damages sustained by
the Holder(s) requesting registration of their Warrant Shares.
(c) The Company will take all necessary action which may be
required in qualifying or registering the Warrant Shares included in a
registration statement for offering and sale under the securities or blue sky
laws of such states as reasonably are requested by the Holder(s), provided
that the Company shall not be obligated to execute or file any general consent
to service of process or to qualify as a foreign corporation to do business
under the laws of any such jurisdiction.
(d) The Company shall indemnify and hold harmless the
Holder(s) of the Warrant Shares to be sold pursuant to any registration
statement and each person, if any, who controls such Holders within the
meaning of Section 15 of the Act or Section 20(a) of the Securities Exchange
Act of 1934, as amended ("Exchange Act"), from and against any and all loss,
claim, damage, expense or liability (including all expenses reasonably
incurred in investigating, preparing or defending against any claim whatsoever
including, without limitation, the fees and expenses of legal counsel) to
which any of them may become subject under the Act, the Exchange Act or
otherwise, arising from such registration statement but only to the same
extent and with the same effect as the provisions pursuant to which the
Company has agreed to indemnify the Representative contained in Section 8 of
the Underwriting Agreement.
(e) The Holder(s) of the Warrant Shares to be sold pursuant
to a registration statement, and their successors and assigns, shall
severally, and not jointly, indemnify the Company, its officers and directors
and each person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, from and against
any and all loss, claim, damage or expense or liability (including all
expenses reasonably incurred in investigating, preparing or defending against
any claim whatsoever) to which they may become subject under the Act, the
Exchange Act or otherwise, arising from information furnished in writing by or
on behalf of such Holders, or their successors or assigns, for specific
inclusion in
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<PAGE>
such registration statement to the same extent and with the same effect as the
provisions contained in Section 8 of the Underwriting Agreement pursuant to
which the Representative has agreed to indemnify the Company.
(f) Nothing contained in this Agreement shall be construed
as requiring the Holder(s) to exercise their Warrants prior to the initial
filing of any registration statement or the effectiveness thereof.
(g) The Company shall not permit the inclusion of any
securities other than the Warrant Shares to be included in any registration
statement filed pursuant to Section 7.3 hereof, or permit any other
registration statement to be or remain effective during the effectiveness of a
registration statement filed pursuant to Section 7.3 hereof, without the prior
written consent of the Holders of the Warrants and Warrant Shares representing
a Majority of such securities.
(h) The Company shall furnish to each Holder participating
in the offering and to each underwriter, if any, a signed counterpart,
addressed to such Holder or underwriter, of (i) an opinion of counsel to the
Company, dated the effective date of such registration statement (and, if such
registration includes an underwritten public offering, an opinion dated the
date of the closing under the underwriting agreement), and (ii) a "cold
comfort" letter dated the effective date of such registration statement (and,
if such registration includes an underwritten public offering, a letter dated
the date of the closing under the underwriting agreement) signed by the
independent public accountants who have issued a report on the Company's
financial statements included in such registration statement, in each case
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of such
accountants' letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer's
counsel and in accountants' letters delivered to underwriters in underwritten
public offerings of securities.
(i) The Company shall as soon as practicable after the
effective date of the registration statement, and in any event within 15
months thereafter, make "generally available to its security holders" (within
the meaning of Rule 158 under the Act) an earnings statement (which need not
be audited) complying with Section 11(a) of the Act and covering a period of
at least 12 consecutive months beginning after the effective date of the
registration statement.
(j) The Company shall deliver promptly to each Holder
participating in the offering requesting the correspondence and memoranda
described below and to the managing underwriters, copies of all correspondence
between the Commission and the Company, its counsel or auditors and all
memoranda relating to discussions with the Commission or its staff with
respect to the registration statement and permit each Holder and underwriters
to do such investigation, upon reasonable advance notice, with respect to
information contained in or omitted from the registration statement as it
deems reasonably necessary to comply with applicable securities laws or the
rules and regulations of the National Association of Securities Dealers, Inc.
("NASD"). Such investigation shall include access to books, records and
properties and opportunities to discuss the business of the Company with its
officers and independent auditors,
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<PAGE>
all to such reasonable extent and at such reasonable times and as often as any
such Holder or underwriter shall reasonably request.
(k) The Company shall enter into an underwriting agreement
with the underwriters selected for such underwriting by the Holders of a
Majority of the Warrant Shares requested to be included in such underwriting,
which may be the Representative. Such agreement shall be satisfactory in form
and substance to the Company, each Holder and such managing underwriters, and
shall contain such representations, warranties and covenants by the Company
and such other terms as are customarily contained in agreements of that type
used by the managing underwriter. The Holders shall be parties to any
underwriting agreement relating to an underwritten sale of their Warrant
Shares and may, at their option, require that any or all the representations,
warranties and covenants of the Company to or for the benefit of such
underwriters shall also be made to and for the benefit of such Holders. Such
Holders shall not be required to make any representations or warranties to or
agreements with the Company or the underwriters except as they may relate to
such Holders and their intended methods of distribution.
(l) In addition to the Warrant Shares, upon the written
request therefor by any Holder(s), the Company shall include in the
registration statement any other securities of the Company held by such
Holder(s) as of the date of filing of such registration statement, including
without limitation restricted shares of Common Stock, options, warrants or any
other securities convertible into shares of Common Stock.
(m) For purposes of this Agreement, the term "Majority" in
reference to the Holders of Warrants or Warrant Shares, shall mean in excess
of fifty percent (50%) of the then outstanding Warrants or Warrant Shares that
(i) are not held by the Company, an affiliate, officer, creditor, employee or
agent thereof or any of their respective affiliates, members of their family,
persons acting as nominees or in conjunction therewith and (ii) have not been
resold to the public.
8. Adjustments to Exercise Price and Number of Securities.
8.1 Subdivision and Combination. In case the Company shall
at any time subdivide or combine the outstanding shares of Common Stock, the
Exercise Price shall forthwith be proportionately decreased in the case of
subdivision or increased in the case of combination.
8.2 Stock Dividends and Distributions. In case the Company
shall pay a dividend in, or make a distribution of, shares of Common Stock or
of the Company's capital stock convertible into Common Stock, the Exercise
Price shall forthwith be proportionately decreased. An adjustment made
pursuant to this Section 8.2 shall be made as of the record date for the
subject stock dividend or distribution.
8.3 Adjustment in Number of Securities. Upon each adjustment
of the Exercise Price pursuant to the provisions of this Section 8, the number
of Securities issuable upon the exercise at the adjusted exercise price of
each Warrant shall be adjusted to the nearest full amount by multiplying a
number equal to the Exercise Price in effect immediately prior to such
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<PAGE>
adjustment by the number of Warrant Shares issuable upon exercise of the
Warrants immediately prior to such adjustment and dividing the product so
obtained by the adjusted Exercise Price.
8.4 Definition of Common Stock. For the purpose of this
Agreement, the term "Common Stock" shall mean (i) the class of stock
designated as Common Stock in the Certificate of Incorporation of the Company
as may be amended as of the date hereof, or (ii) any other class of stock
resulting from successive changes or reclassifications of such Common Stock
consisting solely of changes in par value, or from par value to no par value,
or from no par value to par value. In the event that the Company shall after
the date hereof issue securities with greater or superior voting rights than
the shares of Common Stock outstanding as of the date hereof, the Holder, at
its option, may receive upon exercise of any Warrant either shares of Common
Stock or a like number of such securities with greater or superior voting
rights.
8.5 Merger or Consolidation. In case of any consolidation of
the Company with, or merger of the Company with, or merger of the Company
into, another corporation (other than a consolidation or merger which does not
result in any reclassification or change of the outstanding Common Stock), the
corporation formed by such consolidation or merger shall execute and deliver
to the Holder a supplemental warrant agreement providing that the holder of
each Warrant then outstanding or to be outstanding shall have the right
thereafter (until the expiration of such Warrant) to receive, upon exercise of
such warrant, the kind and amount of shares of stock and other securities and
property receivable upon such consolidation or merger, by a holder of the
number of shares of Common Stock of the Company for which such warrant might
have been exercised immediately prior to such consolidation, merger, sale or
transfer. Such supplemental warrant agreement shall provide for adjustments
which shall be identical to the adjustments provided in Section 8. The above
provision of this subsection shall similarly apply to successive
consolidations or mergers.
8.6 No Adjustment of Exercise Price in Certain Cases. No
adjustment of the Exercise Price shall be made:
(a) Upon the issuance or sale of the Warrants or
the shares of Common Stock issuable upon the exercise of the Warrants; or
(b) If the amount of said adjustment shall be less
than two cents ($0.02) per Warrant Share, provided, however, that in such case
any adjustment that would otherwise be required then to be made shall be
carried forward and shall be made at the time of and together with the next
subsequent adjustment which, together with any adjustment so carried forward,
shall amount to at least two cents ($0.02) per Warrant Share.
9. Exchange and Replacement of Warrant Certificates. Each Warrant
Certificate is exchangeable without expense, upon the surrender thereof by the
registered Holder at the principal executive office of the Company, for a new
Warrant Certificate of like tenor and date representing in the aggregate the
right to purchase the same number of Warrant Shares in such denominations as
shall be designated by the Holder thereof at the time of such surrender.
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<PAGE>
Upon receipt by the Company of evidence reasonably satisfactory to
it of the loss, theft, destruction or mutilation of any Warrant Certificate,
and, in case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to it, and reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
the Warrants, if mutilated, the Company will make and deliver a new Warrant
Certificate of like tenor, in lieu thereof.
10. Elimination of Fractional Interests. The Company shall not be
required to issue certificates representing fractions of shares of Common
Stock upon the exercise of the Warrants, nor shall it be required to issue
scrip or pay cash in lieu of fractional interests, it being the intent of the
parties that all fractional interests shall be eliminated by rounding any
fraction up to the nearest whole number of shares of Common Stock or other
securities, properties or rights.
11. Reservation and Listing of Securities. The Company shall at all
times reserve and keep available out of its authorized shares of Common Stock,
solely for the purpose of issuance upon the exercise of the Warrants, such
number of shares of Common Stock or other securities, properties or rights as
shall be issuable upon the exercise thereof. The Company covenants and agrees
that, upon exercise of the Warrants and payment of the Exercise Price
therefor, all shares of Common Stock and other securities issuable upon such
exercise shall be duly and validly issued, fully paid, non-assessable and not
subject to the preemptive rights of any stockholder. As long as the Warrants
shall be outstanding, the Company shall use its best efforts to cause all
shares of Common Stock issuable upon the exercise of the Warrants to be listed
(subject to official notice of issuance) on all securities exchanges on which
the Common Stock issued to the public in connection herewith may then be
listed and/or quoted on NASDAQ/NM.
12. Notices to Warrant Holders. Nothing contained in this Agreement
shall be construed as conferring upon the Holders the right to vote or to
consent or to receive notice as a stockholder in respect of any meetings of
stockholders for the election of directors or any other matter, or as having
any rights whatsoever as a stockholder of the Company. If, however, at any
time prior to the expiration of the Warrants and their exercise, any of the
following events shall occur:
(a) the Company shall take a record of the holders of its
shares of Common Stock for the purpose of entitling them to receive a dividend
or distribution payable otherwise than in cash, or a cash dividend or
distribution payable otherwise than out of current or retained earnings, as
indicated by the accounting treatment of such dividend or distribution on the
books of the Company; or
(b) the Company shall offer to all the holders of its Common
Stock any additional shares of capital stock of the Company or securities
convertible into or exchangeable for shares of capital stock of the Company,
or any option, right or warrant to subscribe therefor; or
(c) a dissolution, liquidation or winding up of the Company
(other than in connection with a consolidation or merger) or a sale of all or
substantially all of its property, assets and business as an entirety shall be
proposed;
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<PAGE>
then, in any one or more of said events, the Company shall give written notice
of such event at least fifteen (15) days prior to the date fixed as a record
date or the date of closing the transfer books for the determination of the
stockholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, or entitled to vote on such
proposed dissolution, liquidation, winding up or sale. Such notice shall
specify such record date or the date of closing the transfer books, as the
case may be. Failure to give such notice or any defect therein shall not
affect the validity of any action taken in connection with the declaration or
payment of any such dividend, or the issuance of any convertible or
exchangeable securities, or subscription rights, options or warrants, or any
proposed dissolution, liquidation, winding up or sale.
13. Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed to have been
duly made and sent when delivered, or mailed by registered or certified mail,
return receipt requested:
(a) If to the registered Holder of the Warrants, to the
address of such Holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth in Section 3
hereof or to such other address as the Company may designate by notice to the
Holders.
14. Supplements and Amendments. The Company and the Representative
may from time to time supplement or amend this Agreement without the approval
of any Holders of Warrant Certificates (other than the Representative) in
order to cure any ambiguity, to correct or supplement any provision contained
herein which may be defective or inconsistent with any provisions herein, or
to make any other provisions in regard to matters or questions arising
hereunder which the Company and the Representative may deem necessary or
desirable and which the Company and the Representative deem shall not
adversely affect the interests of the Holders of Warrant Certificates.
15. Successors. All the covenants and provisions of this Agreement
shall be binding upon and inure to the benefit of the Company, the Holders and
their respective successors and assigns hereunder.
16. Termination. This Agreement shall terminate at the close of
business on ________, 2004. Notwithstanding the foregoing, the indemnification
provisions of Section 7 shall survive such termination until the close of
business on ________ , 2010.
17. Governing Law: Submission to Jurisdiction. This Agreement and
each Warrant Certificate issued hereunder shall be deemed to be a contract
made under the laws of the State of New York and for all purposes shall be
construed in accordance with the laws of said State without giving effect to
its rules governing the conflicts of laws.
The Company, the Representative and the Holder hereby agree that
any action, proceeding or claim against it arising out of or relating in any
way to, this Agreement shall be brought and enforced in the courts of the
State of New York or of the United States of America
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for the Southern District of New York, and irrevocably submit to such
jurisdiction, which jurisdiction shall be exclusive. The Company, the
Representative and the Holder hereby irrevocably waive any objection to such
exclusive jurisdiction or inconvenient forum. Any such process or summons to
be served upon the Company, the Representative or the Holder (at the option of
the party bringing such action, proceeding or claim) may be served by
transmitting a copy thereof, by registered or certified mail, return receipt
requested, postage prepaid, addressed to it at the address set forth in
Section 13 hereof. Such mailing shall be deemed personal service and shall be
legal and binding upon the party so served in any action, proceeding or claim.
The Company, the Representative and the Holder agree that the prevailing
party(ies) in any such action or proceeding shall be entitled to recover from
the other party(ies) all of its/their reasonable legal costs and expenses
relating to such action or proceeding and/or incurred in connection with the
preparation therefor.
18. Entire Agreement: Modification. This Agreement (including the
Underwriting Agreement to the extent portions thereof are referred to herein)
contains the entire understanding between the parties hereto with respect to
the subject matter hereof and may not be modified or amended except by a
writing duly signed by the party against whom enforcement of the modification
or amendment is sought.
19. Severability. If any provision of this Agreement shall be held
to be invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provision of this Agreement.
20. Captions. The caption headings of the Sections of this
Agreement are for convenience of reference only and are not intended, nor
should they be construed as, a part of this Agreement and shall be given no
substantive effect.
21. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company and the
Representative and any other registered Holder(s) of the Warrant Certificates
or Warrant Shares any legal or equitable right, remedy or claim under this
Agreement; and this Agreement shall be for the sole and exclusive benefit of
the Company, the Representative and the Holder(s) of the Warrant Certificates
or Warrant Shares.
22. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and such counterparts shall together constitute but one and
the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed, as of the day and year first above written.
[SEAL]
IgX CORP.
By:
-------------------------------------
Name:
Title:
Attest:
---------------------
Secretary
JOSEPHTHAL & CO. INC.
By:
-------------------------------------
Name:
Title:
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EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE HEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY
SIMILAR RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR
(iii) AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY
TO COUNSEL FOR THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT
IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT
REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE 5:30 P.M.,
NEW YORK TIME, ___________ , 2003
No. W-_______
WARRANT CERTIFICATE
This Warrant Certificate certifies that ________, or registered assigns, is
the registered holder of _________ Warrants, each Warrant entitling the holder
to purchase initially, at any time from _______ 199_ [one year from the
effective date of the Registration Statement] until 5:30 p.m. New York time on
________, 2003 [five years from the effective date of the Registration
Statement] ("Expiration Date"), one fully-paid and non-assessable share of
common stock, $.001 par value ("Common Stock") of IgX Corp., a Delaware
corporation (the "Company"), at the initial exercise price, subject to
adjustment in certain events (the "Exercise Price"), of $__________ [120% of
the public offering price] per share of Common Stock upon surrender of this
Warrant Certificate and payment of the Exercise Price at an office or agency
of the Company, but subject to the conditions set forth herein and in the
warrant agreement dated as of__________ , 1998 by and between the Company and
JOSEPHTHAL & CO. INC. (the "Warrant Agreement"). Payment of the Exercise Price
shall be made by certified or official bank check in New York Clearing House
funds payable to the order of the Company or by surrender of this Warrant
Certificate.
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No Warrant may be exercised after 5:30 p.m., New York time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, hereby shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of
this instrument and is hereby referred to for a description of the rights,
limitation of rights, obligations, duties and immunities thereunder of the
Company and the holders (the words "holders" or "holder" meaning the
registered holders or registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain events
the Exercise Price and the type and/or number of the Company's securities
issuable thereupon may, subject to certain conditions, be adjusted. In such
event, the Company will, at the request of the holder, issue a new Warrant
Certificate evidencing the adjustment in the Exercise Price and the number
and/or type of securities issuable upon the exercise of the Warrants;
provided, however, that the failure of the Company to issue such new Warrant
Certificates shall not in any way change, alter, or otherwise impair, the
rights of the holder as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate
or Warrant Certificates of like tenor and evidencing in the aggregate a like
number of Warrants shall be issued to the transferee(s) in exchange for this
Warrant Certificate, subject to the limitations provided herein and in the
Warrant Agreement, without any charge except for any tax or other governmental
charge imposed in connection with such transfer.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the
Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
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IN WITNESS WHEREOF the Company has caused this Warrant Certificate to be
duly executed under its corporate seal.
Dated as of __________, 1998
IgX CORP.
[SEAL] By: __________________________________
Name:
Title:
Attest:
___________________________
Secretary
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[FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 3.1]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase _____________ shares of
Common Stock and herewith tenders in payment for such securities a certified
or official bank check payable in New York Clearing House Funds to the order
of IgX Corp. in the amount of $________ , all in accordance with the terms of
Section 3.1 of the Representative's Warrant Agreement dated as of __________,
1998 between IgX Corp. and JOSEPHTHAL & CO. INC. The undersigned requests that
a certificate for such securities be registered in the name of ____________
whose address is _____________________ and that such Certificate be delivered
to _________________ whose address is ________________
Dated:
____________________ Signature ________________________
(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant Certificate.)
__________________________________
(Insert Social Security or Other
Identifying Number of Holder)
-17-
<PAGE>
[FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 3.2]
The undersigned hereby irrevocably elects to exercise the right, represented
by this Warrant Certificate, to purchase _____________ shares of Common Stock
all in accordance with the terms of Section 3.2 of the Representative's
Warrant Agreement dated as of __________ 1998 between IgX Corp. and JOSEPHTHAL
& CO. INC. The undersigned requests that a certificate for such securities be
registered in the name of ______________ whose address is_____________ and
that such Certificate be delivered to ___________ whose address is
Dated:
____________________ Signature ________________________
(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant Certificate.)
__________________________________
(Insert Social Security or Other
Identifying Number of Holder)
-18-
<PAGE>
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED) _____________________ hereby sells, assigns and transfers
unto ________________________________
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _____________ Attorney, to
transfer the within Warrant Certificate on the books of the within-named
Company, with full power of substitution.
Dated:
____________________ Signature ________________________
(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant Certificate.)
__________________________________
(Insert Social Security or Other
Identifying Number of Assignee)
-19-
<PAGE>
PROMISSORY NOTE
$1,000,000.00 Boston, Massachusetts
May 6, 1998
FOR VALUE RECEIVED, IgX Corp., a Delaware corporation (the "Company"),
hereby promises to pay to NEGF II, L.P., or order (in each case, the "Holder"),
in lawful money of the United States at the address of the Holder set forth
below, the principal sum of One Million Dollars ($1,000,000.00), together with
interest on the unpaid principal at the simple rate of nine percent (9%) per
annum, to be computed on the basis of a three hundred sixty-five (365) day year,
actual days elapsed. Unpaid principal together with all accrued interest shall
be due and payable upon the earlier of (i) the initial public offering of the
Company, (ii) a merger, consolidation, reorganization or sale of all or
substantially all of the assets of the Company, (iii) any other liquidity event,
which, in the judgment of the Board of Directors of the Company, would allow the
Company to pay such indebtedness or (iv) May 6, 2008. This Promissory Note (the
"Note") may be prepaid, in whole or in part, at any time without premium or
penalty.
In connection with the issuance of this Note, the Company shall issue
to the Holder a Warrant to Purchase Common Stock for 370,000 shares of Common
Stock of the Company exercisable at $0.01 per share.
If payment on this Note shall become due on a Saturday, Sunday or
public holiday under the laws of the State of Delaware, such payment shall be
made on the next succeeding business day and such extension of time shall be
included in computing interest in connection with such payment.
Immediately upon the occurrence of an "Event of Default" (as defined
below), the holder of this Note may, at its option, declare immediately due and
payable the entire unpaid principal amount of this Note, together with all
interest thereon, plus any other amounts payable at the time of such declaration
pursuant to this Note. An Event of Default shall be defined as each of the
following: (i) failure of the Company to make any payment of interest and/or
principal when due and the failure to cure the same within ten (10) days after
receiving notice thereof; (ii) the Company shall admit in writing its inability
to pay its debts as they become due, shall make a general assignment for the
benefit of creditors or shall file any petition or action for relief under any
bankruptcy, reorganization, insolvency or moratorium law, or any other law or
laws for the relief of, or relating to, debtors; or (iii) an involuntary
petition shall be filed against the Company under any bankruptcy,
reorganization, insolvency or moratorium law, or any other law or laws for the
relief of, or relating to, debtors unless such petition shall be dismissed or
vacated within thirty (30) days of the date thereof.
The Company hereby waives diligence, presentment, protest and demand
and also notice of protest, demand, dishonor and nonpayment of this Note and
expressly agrees that this Note, or any payment hereunder, may be extended from
time to time, all without in any way affecting the liability of the Company.
<PAGE>
If the Holder should institute collection efforts, of any nature
whatsoever, to attempt to collect any and all amounts due hereunder upon the
default of the Company, the Company shall be liable to pay to holder immediately
and without demand all reasonable costs and expenses of collection incurred by
the Holder, including without limitation reasonable attorney's fees, whether or
not suit or other action or proceeding be instituted and specifically including
but not limited to collection efforts that may be made through a bankruptcy
court.
If, for any reason, performance of any provision of the Note, at the
time performance of such provision shall be due, shall involve exceeding the
highest lawful rate of interest prescribed by the law controlling the Note,
then, ipso facto, the obligations to be performed shall be reduced to the
highest lawful rate. If, for any reason, the Holder shall receive as interest an
amount which would exceed the highest lawful rate, such amount which would be
excessive interest shall be applied immediately and automatically to the
reduction of the unpaid balance of the principal amount and not to payment of
interest. The provisions of this paragraph shall control every other provision
of this Note.
The provisions of this Note are intended by the Company to be severable
and divisible and the invalidity or unenforceability of a provision or term
herein shall not invalidate or render unenforceable the remainder of this Note
or any part thereof.
This Note shall be governed by and construed and interpreted in
accordance with the laws of the State of Delaware.
Any notice or other communication, except for payment hereunder,
required or permitted hereunder shall be in writing and shall be deemed to have
been given upon delivery if personally delivered or one day after deposit if
deposited in the United States mail for mailing by certified mail, postage
prepaid, and addressed as follows:
If to the Company: IgX Corp.
c/o Henry & Co.
4370 La Jolla Village Drive, Suite 400
San Diego, California 92122-1251
If to the Holder: NEGF II, L.P.
Attention: John F. Rousseau, Jr.
One Boston Place, Suite 2100
Boston, Massachusetts 02108
Any payment shall be deemed made upon receipt by the Holder. The Holder or the
Company may change their address for purposes of this paragraph by giving to the
other party notice in conformance with this paragraph of such new address.
To the maximum extent permitted by law or by any applicable
governmental authority,
<PAGE>
this Note may be signed and transmitted by facsimile with the same validity as
if it were an ink-signed document, with the original Note to follow immediately
by overnight courier.
-3-
<PAGE>
IN WITNESS WHEREOF, the Company has executed this Note as of the date
first written above.
IgX CORP.
By:/s/ Albert J. Henry
-------------------------------
Albert J. Henry, Chairman
<PAGE>
PROMISSORY NOTE
Dover, Delaware
$3,544,311.77 December 23, 1997
FOR VALUE RECEIVED, IgX Corp., a Delaware corporation (the
"Borrower"), hereby promises to pay to Henry Venture II Limited, an Isle of
Man entity or order (the "Holder"), at such location as the Holder shall
designate from time to time, the principal amount of Three Million Dollars
($3,000,000.00), along with an aggregate of Five Hundred Forty-Four Thousand
Three Hundred Eleven Dollars and Seventy-Seven Cents ($544,311.77) in accrued
and unpaid interest through December 31, 1997, together with additional
interest on the unpaid principal balance at a rate equal to nine percent (9%)
per annum. Interest shall be calculated based on a three hundred sixty-five
(365) day year, actual days elapsed. The principal balance hereof, along with
an aggregate of Five Hundred Forty-Four Thousand Three Hundred Eleven Dollars
and Seventy-Seven Cents ($544,311.77) in accrued and unpaid interest through
December 31, 1997, together with all accrued and unpaid interest, shall be due
and payable in full on December 31, 2001. This Promissory Note (the "Note")
may be prepaid, in whole or in part, at any time without premium or penalty.
The Borrower hereby waives diligence, presentment, protest and demand
and also notice of protest, demand, dishonor and nonpayment of this Note. The
right to plead any and all statutes of limitations as a defense to any demand
on this Note is expressly waived by the Borrower to the fullest extent
permitted by law.
If the Holder should institute collection efforts, of any nature
whatsoever, to attempt to collect any and all amounts due hereunder due to an
Event of Default (as defined below), the Borrower shall be liable to pay to
the Holder immediately and without demand all costs and expenses of collection
incurred by the Holder, including, without limitation, attorney's fees,
whether or not suit or other action or proceeding be instituted and
specifically including, without limitation, collection efforts that may be
made through a bankruptcy court. For purposes of this Note, there shall be an
"Event of Default" if Borrower (i) fails to make any payment of principal
hereunder, (ii) admits in writing its inability to pay its debts as they
become due, or makes a general assignment for the benefit of creditors or
files any petition or action for relief under any bankruptcy, reorganization,
insolvency or moratorium law, or any other law or laws for the relief of, or
relating to, debtors or (iii) an involuntary petition is filed against the
Borrower under any bankruptcy, reorganization, insolvency or moratorium law,
or any other law or laws for the relief of, or relating to, debtors unless
such petition shall be dismissed or vacated within thirty (30) days of the
date thereof.
The provisions of this Note are intended by the Borrower to be
severable and divisible and the invalidity or unenforceability of a provision
or term herein shall not invalidate or render unenforceable the remainder of
this Note or any part thereof. This Note shall be governed by and construed
and interpreted in accordance with the internal laws of the State of Delaware,
as
<PAGE>
applied to contracts between Delaware residents entered into and to be
performed wholly within Delaware.
IN WITNESS WHEREOF, this Note has been executed as of the date first
written above.
IGX CORP.
By:/s/ Albert J. Henry
-----------------------------------------
Albert J. Henry, Chairman
[Signature Page to Promissory Note]
<PAGE>
PROMISSORY NOTE
$328,547.66 Dover, Delaware
December 23, 1997
FOR VALUE RECEIVED, IgX Corp., a Delaware corporation (the
"Borrower"), hereby promises to pay to Henry Venture II Limited, an Isle of
Man entity or order (the "Holder"), at such location as the Holder shall
designate from time to time, the principal amount of Three Hundred
Twenty-Eight Thousand Five Hundred Forty-Seven Dollars and Sixty-Six Cents
($328,547.66), together with additional interest on the unpaid principal
balance at a rate equal to nine percent (9%) per annum. Interest shall be
calculated based on a three hundred sixty-five (365) day year, actual days
elapsed. The entire principal balance hereof, together with all accrued and
unpaid interest, shall be due and payable in full on demand. This Promissory
Note (the "Note") may be prepaid, in whole or in part, at any time without
premium or penalty.
The Borrower hereby waives diligence, presentment, protest and demand
and also notice of protest, demand, dishonor and nonpayment of this Note. The
right to plead any and all statutes of limitations as a defense to any demand
on this Note is expressly waived by the Borrower to the fullest extent
permitted by law.
If the Holder should institute collection efforts, of any nature
whatsoever, to attempt to collect any and all amounts due hereunder due to an
Event of Default (as defined below), the Borrower shall be liable to pay to
the Holder immediately and without demand all costs and expenses of collection
incurred by the Holder, including, without limitation, attorney's fees,
whether or not suit or other action or proceeding be instituted and
specifically including, without limitation, collection efforts that may be
made through a bankruptcy court. For purposes of this Note, there shall be an
"Event of Default" if Borrower (i) fails to make any payment of principal
hereunder, (ii) admits in writing its inability to pay its debts as they
become due, or makes a general assignment for the benefit of creditors or
files any petition or action for relief under any bankruptcy, reorganization,
insolvency or moratorium law, or any other law or laws for the relief of, or
relating to, debtors or (iii) an involuntary petition is filed against the
Borrower under any bankruptcy, reorganization, insolvency or moratorium law,
or any other law or laws for the relief of, or relating to, debtors unless
such petition shall be dismissed or vacated within thirty (30) days of the
date thereof.
The provisions of this Note are intended by the Borrower to be
severable and divisible and the invalidity or unenforceability of a provision
or term herein shall not invalidate or render unenforceable the remainder of
this Note or any part thereof. This Note shall be governed by and construed
and interpreted in accordance with the internal laws of the State of Delaware,
as applied to contracts between Delaware residents entered into and to be
performed wholly within Delaware.
IN WITNESS WHEREOF, this Note has been executed as of the date first
written above.
<PAGE>
IGX CORP.
By:/s/ Albert J. Henry
------------------------------------
Albert J. Henry, Chairman
[Signature Page to Promissory Note]
<PAGE>
UNANIMOUS WRITTEN CONSENT OF
THE BOARD OF DIRECTORS OF IgX CORP.
The undersigned, being all of the directors of IgX Corp., a Delaware
corporation (the "Corporation"), acting pursuant to Section 141 of the
Delaware General Corporation Law and the Article II, Section 11 of the Bylaws
of the Corporation, do hereby adopt the following recitals and resolutions by
unanimous written consent, effective as of August 30, 1996, which shall have
the same force and effect as if unanimously adopted at a duly convened meeting
of the Board of Directors of the Corporation, and a copy of which shall be
filed with the minutes of the Corporation:
1. Conversion of Debt to Equity.
WHEREAS, there exists a short-term, unsecured debt in the sum of
$4,172,191 (the "Debt") due and owing from the Corporation to Henry Venture II
Limited, an Isle of Man corporation ("HV II").
WHEREAS, by mutual agreement among the Corporation, HV II and IgX
Limited, a company incorporated under the laws of Ireland and the sole
stockholder of the Corporation ("IgX Limited"), it is proposed that the Debt
be converted to equity (the "Conversion") on the following terms: (i) HV II
will receive newly-issued, non-voting, non-convertible, redeemable preferred
shares in IgX Limited, which shares would carry a dividend at the rate of 9%
per annum on an accumulative basis; and (ii) the Debt would be extinguished by
IgX Limited as a contribution in capital to the Corporation.
WHEREAS, the Board of Directors deems the Conversion to be in the
best interests of the Corporation and its stockholders.
RESOLVED, that the Corporation shall enter into the Conversion, and
that the officers of the Corporation, and each of them, are authorized and
directed in the name of the Corporation and on its behalf, to prepare, execute
and deliver such agreements, documents and instruments as such officers may
deem necessary and appropriate in effectuating the Conversion, along with any
additional changes or modifications as such officers in their sole discretion
may approve, such approval to be conclusively evidenced by the execution and
delivery thereof.
2. General Authority.
<PAGE>
RESOLVED, that any and all actions, whether previously or
subsequently taken by the officers of the Corporation which are consistent
with the intents and purposes of the foregoing resolutions, shall be, and the
same hereby are, in all respects, ratified, approved and confirmed.
RESOLVED, FURTHER, that the officers of the Corporation, and each of
them, and such persons appointed to act on their behalf pursuant to the
foregoing resolutions, are hereby authorized and directed in the name of the
Corporation and on its behalf, to execute any additional certificates
(including any officer's certificates), agreements, instruments or documents,
or any amendments or supplements thereto, or to do or to cause to be done any
and all other acts as they shall deem necessary, appropriate or in furtherance
of the full effectuation of the purposes of each of the foregoing resolutions
and the transactions contemplated therein.
[Remainder of Page Intentionally Left Blank]
<PAGE>
IN WITNESS WHEREOF, the undersigned directors have executed this
Unanimous Written Consent of the Board of Directors of IgX Corp. effective as
of the date first written above. This instrument may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This instrument may be
executed by facsimile and such facsimile copy shall be conclusive evidence of
the consent and ratification of the matters contained herein by the
undersigned directors.
/s/ Albert J. Henry
---------------------------
Albert J. Henry
/s/ Richard A. Breakie
---------------------------
Richard A. Breakie
/s/ Kenneth D. Polin
---------------------------
Kenneth D. Polin
[Counterpart Signature Page
to Written Consent of the Board of Directors of IgX Corp.]
-3-
<PAGE>
CERTIFICATE OF INCORPORATION
OF
IgX SCIENTIFIC CORP.
ARTICLE I.
The name of the corporation is IgX Scientific Corp.
ARTICLE II.
The address of the registered office of the corporation in the State of
Delaware is 15 East North Street, County of Kent, Dover, Delaware 19903-0899.
The name of its registered agent at such address is Incorporating Services, Ltd.
ARTICLE III.
The name and mailing address of the incorporator is Kenneth D. Polin,
Zevnik Horton Guibord McGovern Palmer & Fognani, L.L.P., 101 West Broadway,
Seventeenth Floor, San Diego, California 92101.
ARTICLE IV.
The nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be organized
under the Delaware General Corporation Law.
ARTICLE V.
A. Classes of Stock. The corporation is authorized to issue two classes
of stock to be designated, respectively, "Common Stock" and "Preferred Stock."
The total number of shares which the corporation is authorized to issue is three
hundred thousand (300,000) shares. Two hundred thousand (200,000) shares shall
be Common Stock, $0.01 par value, and one hundred thousand (100,000) shares
shall be Preferred Stock, $0.01 par value, of which ten thousand (10,000) shares
shall be designated as "Series A Preferred Stock."
B. Rights, Preferences, Privileges and Restrictions of Preferred Stock.
The Preferred Stock authorized by this Certificate of Incorporation may be
issued from time to time in one or more series. The rights, preferences,
privileges and restrictions granted to and imposed on the Series A Preferred
Stock are as set forth below in this Article V, Section B. The Board of
Directors is hereby authorized to fix or alter the rights, preferences,
privileges and restrictions granted to or imposed upon additional series of
Preferred Stock, and the number of shares constituting any such series and the
designation thereof, or of any of them. Subject to compliance with applicable
protective voting rights which have been or may be granted to the Preferred
Stock or series thereof in Certificates of Determination or this Certificate of
Incorporation of the corporation, as may be amended from time to time (the
"Protective Provisions"), but notwithstanding any other rights of the Preferred
Stock or any series thereof, the rights, privileges, preferences and
restrictions of any such additional series may be subordinated to, pari passu
with (including, without limitation, inclusion in provisions with respect to
liquidation and acquisition preferences, redemption and/or approval of matters
by vote or written consent) or senior to any of those of any present or future
class or series of Common Stock or Preferred Stock. Subject to compliance with
the applicable Protective Provisions, the Board of Directors is also authorized
to increase or
<PAGE>
decrease the number of shares of any series (other than the Series A 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.
1. Dividend Provisions. Subject to the rights of series of Preferred
Stock which may from time to time come into existence, the holders of shares of
Series A Preferred Stock shall be entitled to receive dividends, out of any
assets legally available therefor, if and when declared by the Board of
Directors, pari passu with any declaration or payment of any dividend (payable
other than in Common Stock or other securities and rights convertible into or
entitling the holder thereof to receive, directly or indirectly, additional
shares of Common Stock of the corporation) on the Common Stock of the
corporation.
2. Liquidation. In the event of any liquidation, dissolution or winding
up of the corporation, either voluntary or involuntary, including, without
limitation, (i) the acquisition of the corporation by another entity by means of
any transaction or series of related transactions approved by a majority of the
holders of the Series A Preferred Stock (including, without limitation, any
reorganization, merger or consolidation but, excluding any merger effected
exclusively for the purpose of changing the domicile of the corporation) or (ii)
a sale of all or substantially all of the assets of the corporation approved by
a majority of the holders of the Series A Preferred Stock; unless the
stockholders of record of the corporation as constituted immediately prior to
such acquisition or sale will, immediately after such acquisition or sale (by
virtue of securities issued as consideration for the acquisition or sale or
otherwise of the corporation) hold at least fifty percent (50%) of the voting
power of the surviving or acquiring entity, and subject to the rights of series
of Preferred Stock that may from time to time come into existence, each share of
Series A Preferred Stock shall automatically be converted into shares of Common
Stock pursuant to Section 3 below, and the assets of the corporation available
for distribution to stockholders 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 conversion of all such Series A Preferred
Stock).
3. Conversion. The holders of the Series A Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Series A Preferred Stock shall
be convertible, at the option of the holder thereof, at any time after the date
of issuance of such share, at the office of the corporation or any transfer
agent for such stock, into fully paid and nonassessable shares of Common Stock
on a 1:1 basis (the "Conversion Rate"); provided, however, that the Conversion
Rate for the Series A Preferred Stock shall be subject to adjustment as set
forth in Section 3(d) below.
(b) Automatic Conversion. Each share of Series A Preferred Stock
shall automatically be converted into shares of Common Stock at the Conversion
Rate at the time in effect for such Series A Preferred Stock immediately upon
the earlier of (i) except as provided below in Section 3(c), the sale by the
corporation of its Common Stock in a firm commitment underwritten public
offering pursuant to a registration statement under the Securities Act of 1933,
as amended, or (ii) a liquidation event as set forth in Section 2 above.
(c) Mechanics of Conversion. Before any holder of Series A Preferred
Stock shall be entitled to convert the same into shares of Common Stock, he, she
or it shall surrender the certificate or certificates
-2-
<PAGE>
therefor, duly endorsed, at the office of the corporation or of any transfer
agent for the Series A Preferred Stock, and shall give written notice to the
corporation at its principal corporate office, of the election to convert the
same and shall state therein 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 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. Such conversion shall be
deemed to have been made immediately prior to the close of business on the date
of such surrender of the shares of 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. If the conversion is in
connection with an underwritten offering of securities registered pursuant to
the Securities Act of 1933, as amended, the conversion may, at the option of any
holder tendering Series A Preferred Stock for conversion, be conditioned upon
the closing with the underwriters of the sale of securities pursuant to such
offering, in which event the person(s) entitled to receive the Common Stock upon
conversion of the Series A Preferred Stock shall not be deemed to have converted
such Series A Preferred Stock until immediately prior to the closing of such
sale of securities.
(d) Conversion Rate Adjustments for Stock Splits and Stock
Dividends. The Conversion Rate of the Series A Preferred Stock shall be
proportionately increased or decreased to reflect stock splits and stock
dividends with respect to outstanding shares of Common Stock of the corporation.
(e) Other Distributions. In the event the corporation shall declare
a distribution payable in securities of other persons, evidences of indebtedness
issued by the corporation or other persons or other assets (excluding cash
dividends), the holders of the Series A Preferred Stock shall be entitled to a
proportionate share of any such distribution as though they were the holders of
the number of shares of Common Stock of the corporation into which their shares
of Series A Preferred Stock are convertible as of the record date fixed for the
determination of the holders of Common Stock of the corporation entitled to
receive such distribution.
(f) Recapitalizations. If at any time or from time to time there
shall be a recapitalization of the Common Stock (other than a subdivision,
combination or merger or sale of assets transaction provided for elsewhere in
this Section 3 or Section 2 above) provision shall be made so that the holders
of the Series A Preferred Stock shall thereafter be entitled to receive upon
conversion of the Series A Preferred Stock the number of shares of stock or
other securities or property of the corporation or otherwise, to which a holder
of Common Stock deliverable upon conversion would have been entitled on such
recapitalization. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section 3 with respect to the rights of
the holders of the Series A Preferred Stock after the recapitalization to the
end that the provisions of this Section 3 (including adjustment of the
Conversion Rate then in effect and the number of shares purchasable upon
conversion of the Series A Preferred Stock) shall be applicable after that event
as nearly equivalent as may be practicable.
(g) No Impairment. Without the consent of the then outstanding
shares of Preferred Stock, the corporation will not, by amendment of this
Certificate of Incorporation 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 3 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.
-3-
<PAGE>
(h) No Fractional Shares and Certificate as to Adjustments.
(i) No fractional shares shall be issued upon the conversion of
any share or shares of the Series A Preferred Stock, and the number of shares of
Common Stock to be issued shall be rounded to the nearest whole share. Whether
or not fractional shares are issuable upon such conversion shall be determined
on the basis of the total number of shares of Series A Preferred Stock the
holder is at the time converting into Common Stock and the number of shares of
Common Stock issuable upon such aggregate conversion.
(ii) Upon the occurrence of each adjustment or readjustment of
the Conversion Rate of Series A Preferred Stock pursuant to this Section 3, 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
or 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 holder of Series A Preferred Stock, furnish or cause to be furnished
to such holder a like certificate setting forth (i) such adjustment and
readjustment, (ii) the Conversion Rate for such series of Preferred Stock at the
time in effect and (iii) 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 a share of Series A Preferred Stock.
(i) Notices of Record Date. In the event of any taking by the
corporation 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) or other distribution, 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, the corporation
shall mail to each holder of Series A Preferred Stock, at least twenty (20) days
prior to the date specified therein, a notice specifying the date on which any
such record is to be taken for the purpose of such dividend, distribution or
right, and the amount and character of such dividend, distribution or right.
(j) 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 shares 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 then outstanding shares of the Series A
Preferred Stock, in addition to such other remedies as shall be available to the
holder of such 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, including, without limitation, engaging in best
efforts to obtain the requisite stockholder approval of any necessary amendment
to this Certificate of Incorporation.
(k) Notices. Any notice required by the provisions of this Section 3
to be given to the holders of shares 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, her or its address appearing on the books of the
corporation.
4. Voting Rights. 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
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<PAGE>
holders of Common Stock, and shall be entitled, notwithstanding any provision
hereof, 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 available on an as-converted basis (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).
5. Protective Provisions. Subject to the rights of series of Preferred
Stock which may from time to time come into existence, so long as any shares of
Series A Preferred Stock are outstanding, the corporation shall not without
first obtaining the approval (by vote or written consent, as provided by law) of
the holders of at least a majority of the then outstanding shares of Series A
Preferred Stock:
(a) sell, convey or otherwise dispose of or encumber 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 transaction or series of related transactions in which more than
fifty percent (50%) of the voting power of the corporation is disposed of;
(b) increase or decrease (other than by redemption or conversion)
the total number of authorized shares of Common Stock or Series A Preferred
Stock or create any new series or class having rights, privileges or preferences
senior to or pari passu with the Series A Preferred Stock;
(c) redeem, purchase or otherwise acquire (or pay into or set aside
for a sinking fund for such purpose) any share or shares of Common Stock;
provided, however, that this restriction shall not apply to 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 or at cost upon the occurrence of certain events, such as the
termination of employment;
(d) amend the Certificate of Incorporation or bylaws of the
corporation or otherwise alter or change the rights, preferences or privileges
of the shares of Series A Preferred Stock so as to affect adversely the Series A
Preferred Stock;
(e) pay any cash dividends;
(f) issue any security or note or other evidence of indebtedness
which has an equity-type feature, profit participation feature or may be
purchased as a part of an investment unit if such security also ranks on parity
with or is superior to the Series A Preferred Stock in its priority with respect
to distribution of assets in the liquidation, dissolution or winding up of the
corporation, its conversion price or any other right, privilege or preference;
(g) sell or issue any shares of Common Stock or securities
convertible into shares of Common Stock for consideration other than cash except
pursuant to a stock option or similar plan;
(h) make any loans, guaranties, enter into joint ventures or invest
in partially-owned subsidiaries requiring a potential commitment of funds by the
corporation in the aggregate in excess of $250,000 in any twelve (12) month
period;
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<PAGE>
(i) create or purchase any subsidiary;
(j) dispose of more than ten percent (10%) of the assets of the
corporation in any twelve (12) month period (excluding dispositions in the
ordinary course of business);
(k) engage in any business other than those presented in the
corporation's most recent business plan presented to the holders of Series A
Preferred Stock;
(l) repurchase any Common Stock or options with respect thereto
other than those repurchased under repurchase and/or vesting agreements approved
by the Board of Directors;
(m) engage in any transactions with officers, directors,
stockholders or affiliates of the corporation (or a family member of any such
person) which may be considered less than arm's length transactions and that
materially and adversely affect the corporation;
(n) select a certified public accounting firm which will serve as
the auditor for the corporation;
(o) establish or modify an employee stock option, pension, profit-
sharing or similar plan;
(p) pledge, mortgage or hypothecate any or all of the assets of the
corporation with a value in excess of $100,000 in any twelve (12) month period;
or
(q) grant or issue any registration rights with respect to the
capital stock of the corporation or any security convertible thereto.
6. Status of Converted Stock. In the event any shares of Series A
Preferred Stock shall be converted pursuant to Section 3 above, the shares so
converted shall be cancelled and shall not be issuable by the corporation. The
Certificate of Incorporation of the corporation shall be appropriately amended
to effect the corresponding reduction in the authorized capital stock of the
corporation.
C. Common Stock.
1. Dividend Rights. Subject to the prior rights of holders of all
classes of stock at the time outstanding having prior rights as to dividends,
the holders of the Common Stock shall be entitled to receive, when and as
declared by the Board of Directors, out of any assets of the corporation legally
available therefor, such dividends as may be declared from time to time by the
Board of Directors.
2. Liquidation Rights. Upon the liquidation, dissolution or winding
up of the corporation, the assets of the corporation shall be distributed as
provided in Article IV, Section B.2 above.
3. Redemption. The Common Stock is not redeemable.
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<PAGE>
4. Voting Rights. The holder of each share of Common Stock shall
have the right to one vote, and shall be entitled to notice of any stockholders
meeting in accordance with the bylaws of the corporation, and shall be entitled
to vote upon such matters and in such manner as may be provided by law.
ARTICLE VI.
Except as otherwise provided herein, in furtherance and not in
limitation of the powers conferred by statute, the Board of Directors of the
corporation is expressly authorized to make, repeal, alter, amend and rescind
any or all of the bylaws of the corporation, but the stockholders may make
additional bylaws and may repeal, alter, amend or rescind any bylaw whether
adopted by them or otherwise.
ARTICLE VII.
The number of directors of the corporation shall be fixed from time to
time by, or in the manner provided in, the bylaws or amendment thereof duly
adopted by the Board of Directors or by the stockholders.
ARTICLE VIII.
Elections of directors need not be by written ballot except and to the
extent provided in the bylaws of the corporation.
ARTICLE IX.
Meetings of the stockholders may be held within or without the State of
Delaware, as the bylaws may provide. The books of the corporation may be kept
(subject to any provisions contained in applicable statutes) outside the State
of Delaware at such place or places as may be designated from time to time by
the Board of Directors or in the bylaws of the corporation.
ARTICLE X.
Directors and officers of the corporation shall, to the fullest extent
permitted by the Delaware General Corporation Law as it now exists or as it may
hereafter be amended, not be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director or
officer, except for liability (i) for any breach of duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law or (iv) for any transaction
from which the director or officer derived any improper personal benefit. If the
Delaware General Corporation Law is amended after approval by the stockholders
of this Article X to authorize corporate action further eliminating or limiting
the personal liability of directors or officers, then the personal liability of
directors or officers of the corporation shall be further eliminated or limited
to the fullest extent permitted by the Delaware General Corporation Law. Any
repeal or modification of any of the foregoing provisions by the stockholders of
the corporation, or the adoption of any provision hereof inconsistent with this
Article X, shall not adversely affect any right or protection of directors or
officers of the corporation existing at the time of, or increase the liability
of directors and officers of the corporation with respect to any acts or
omissions of such director or officer occurring prior to, such repeal or
modification.
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<PAGE>
ARTICLE XI.
Each person who is or was a director or officer of the corporation
(including the heirs, executors, administrators or estate of such person) shall
be indemnified (including, without limitation, advancement of expenses) by the
corporation as of right, to the fullest extent permitted or authorized by the
Delaware General Corporation Law as it now exists or as it may hereafter be
amended, against any liability, cost or expense asserted against such director
or officer and incurred by such director or officer in any such person's
capacity as a director or officer, or arising out of any such person's status as
a director or officer, in excess of the indemnification and advancement
otherwise permitted by Section 145 of the Delaware General Corporation Law,
subject only to the limits created by applicable Delaware law (whether statutory
or non-statutory) with respect to actions for breach of duty to the corporation,
its stockholders and others. The corporation may, but shall not be obligated to,
maintain insurance, at its expense, to protect itself and any such person
against any such liability, cost or expense. Any repeal or modification of any
of the foregoing provisions by the stockholders of the corporation, or the
adoption of any provision hereof inconsistent with this Article XI, shall not
adversely affect any right or protection of directors or officers of the
corporation existing at the time of, or increase the liability of directors and
officers of the corporation with respect to any acts or omissions of such
director or officer occurring prior to, such repeal or modification.
ARTICLE XII.
The corporation reserves the right to amend, alter, change or repeal
any provision contained herein in the manner now or hereafter prescribed by
statute, and all rights conferred upon stockholders, directors and officers of
the corporation herein are granted subject to such revision.
[Remainder of Page Intentionally Left Blank]
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<PAGE>
IN WITNESS WHEREOF, the undersigned hereby certifies under penalty of
perjury that he has read the foregoing Certificate of Incorporation of IgX
Scientific Corp. and knows the contents thereof, that it is his act and deed and
that the facts stated therein are true.
Dated: August 4, 1998.
-------------------------------------------
Kenneth D. Polin
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<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
IgX SCIENTIFIC CORP.
The undersigned, being the sole incorporator of IgX Scientific Corp., a
corporation organized and existing under and by virtue of the Delaware General
Corporation Law, does hereby certify that:
FIRST: The sole incorporator of the corporation has duly adopted the
following resolution setting forth the amendment to the Certificate of
Incorporation of the corporation:
"RESOLVED, that Article I of the Certificate of Incorporation be and
hereby is amended to read in its entirety as follows:
The name of the corporation is IgX Oxford Hepatitis Corp."
SECOND: The corporation has not received any payment for any of its
stock and that the foregoing amendment was adopted in accordance with the
applicable provisions of Section 241 of the Delaware General Corporation Law.
IN WITNESS WHEREOF, the undersigned hereby certifies under penalty of
perjury that he has read the foregoing Certificate of Amendment of Certificate
of Incorporation of IgX Scientific Corp. and knows the contents thereof, that it
is his act and deed and that the facts stated therein are true.
Dated: August 17, 1998.
------------------------------------------------
Kenneth D. Polin, Sole Incorporator
<PAGE>
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED
WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF
COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS
NOT REQUIRED.
August 17, 1998 Warrant to Purchase
1,000 Shares of Series A Preferred Stock
WARRANT TO PURCHASE SERIES A PREFERRED STOCK
This is to certify that, for value received, Monsanto Company, or a
proper assignee (in each case, the "Holder"), is entitled to purchase, subject
to the provisions of this Warrant to Purchase Series A Preferred Stock (the
"Warrant"), from IgX Oxford Hepatitis Corp., a Delaware corporation (the
"Company"), at any time prior to August 17, 2008 (the "Expiration Date") at
which time this Warrant shall expire and become void, up to one thousand (1,000)
shares (the "Warrant Shares") of the Series A Preferred Stock of the Company
(the "Series A Preferred Stock"), par value $0.01 per share. Except as otherwise
provided herein, this Warrant shall be exercisable at $0.01 per share (the
"Exercise Price"). The number of shares of Series A Preferred Stock to be
received upon exercise of this Warrant and the Exercise Price shall be adjusted
from time to time as set forth in Section 5 below. This Warrant and the Series A
Preferred Stock issuable upon exercise hereof are sometimes referred to
collectively as the "Securities." This Warrant is subject to the following terms
and conditions:
1. Exercise and Payment; Exchange.
(a) This Warrant may be exercised in whole or in part (but
only in minimum increments of one hundred (100) full shares, and not for any
fractional interests) at any time after the date hereof and before the
Expiration Date, but if such date is a day on which federal or state chartered
banking institutions located in the State of Delaware are authorized to close,
then on the next succeeding day which is not such a day. Exercise shall be by
presentation and surrender to the Company at its principal office, or at the
office of any transfer agent designated by the Company (the "Transfer Agent"),
of (i) this Warrant, (ii) the properly executed Form of Exercise attached hereto
as Exhibit "A" and incorporated herein by this reference and (iii) a certified
or official bank check for the aggregate Exercise Price for the number of
Warrant Shares specified in the Form of Exercise; provided, however, that, at
the option of the Holder, the requirement described in this clause (iii) may
instead be satisfied by withholding from those Warrant Shares that would
otherwise be obtained upon such exercise (the "Total Warrant Shares") a number
of Warrant Shares having an aggregate Current Fair Market Value (as defined
below) equal to the aggregate Exercise Price that would otherwise have been
payable for the Total Warrant Shares. If this Warrant is exercised in part only,
the Company or the Transfer Agent shall, upon surrender of this Warrant, execute
and deliver a new Warrant evidencing the rights of the Holder to purchase the
remaining number of Warrant Shares purchasable hereunder. Upon receipt by the
Company of this Warrant and proper Form of Exercise, accompanied by payment as
aforesaid (unless the option described in the foregoing provision is selected by
the Holder), the Holder shall be deemed to be the holder of record of the Series
A Preferred Stock issuable upon such exercise, notwithstanding that the stock
transfer books of the Company shall then be closed or that certificates
representing such Warrant Shares shall not then be actually delivered to the
Holder. If the Holder elects to use the option described in the foregoing
provision to exercise this Warrant by withholding a portion of the Total Warrant
Shares, this Warrant shall be terminated with respect to the number of Total
Warrant Shares withheld.
<PAGE>
(b) This Warrant may be exercisable for all or any portion of
the Warrant Shares upon the reorganization, consolidation or merger of the
Company with another corporation after which the Company is not the surviving
entity, or a sale or other transfer of all or substantially all of the assets of
the Company to another corporation. The Company shall give advance written
notice to the Holder of the effective date of any transaction described in the
preceding sentence in accordance with Section 6 below, in order to permit the
Holder to exercise this Warrant by such date. This Warrant shall be terminated
if not exercised by the Holder on or prior to the effective date of any such
reorganization, merger, consolidation and/or sale or other transfer of assets.
2. Reservation of Shares. The Company shall, at all times until
the expiration of this Warrant, reserve for issuance and delivery upon exercise
of this Warrant a sufficient number of shares of Series A Preferred Stock for
issuance and delivery upon exercise of this Warrant.
3. Fractional Interests; Determination of Current Fair Market
Value.
(a) The Company shall not issue any fractional shares or scrip
representing fractional shares upon the exercise or exchange of this Warrant.
With respect to any fraction of a share resulting from the exercise or exchange
hereof, the Company shall pay to the Holder an amount in cash equal to such
fraction multiplied by the Current Fair Market Value per share of Series A
Preferred Stock.
(b) For the purposes of this Warrant, the "Current Fair Market
Value" of each share of Series A Preferred Stock (or, to the extent all
Preferred Stock of the Company has been converted into Common Stock) shall be
determined as follows:
(1) If listed on a national securities exchange or admitted
to unlisted trading privileges on such an exchange, the Current Fair Market
Value shall be the average of the last reported sale prices on such exchange
based on the last five (5) Business Days (as defined below) prior to the date of
exercise of this Warrant, or, if not so listed or admitted to unlisted trading
privileges on a national securities exchange but is listed on the National
Association of Securities Dealers Automated Quotation System ("NASDAQ"), the
Current Fair Market Value shall be the average of the last reported sale prices
on NASDAQ based on the last five (5) Business Days prior to the date of exercise
of this Warrant.
(2) If is not so listed or admitted to unlisted trading
privileges on a national securities exchange but bid and ask prices are reported
by NASDAQ or the National Quotation Bureau Incorporated ("NQB"), the Current
Fair Market Value shall be the average mean of the last closing bid and asked
prices reported on the last five (5) Business Days prior to the date of exercise
of this Warrant (i) by NASDAQ, or (ii) if reports are unavailable under clause
(i) above, by NQB.
(3) If not so listed or admitted to unlisted trading
privileges on a national securities exchange and bid and asked prices are not so
reported by NASDAQ or NQB, the Current Fair Market Value shall be an amount per
share, not less than book value, determined in such reasonable manner as may
agreed upon by the Board of Directors of the Company and the Holder in good
faith. If the Board of Directors of the Company and the Holder cannot agree, the
"Current Fair Market Value" shall be determined (at the sole expense of the
Holder) by an independent investment banking firm of nationally recognized
standing selected by the Holder and approved by the Company (which approval
shall not be unreasonably withheld).
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<PAGE>
(4) Notwithstanding the foregoing, if this Warrant is being
exercised concurrently with the consummation of an Acquisition Transaction (as
defined below), the Current Fair Market Value shall be the price per share of
the Series A Preferred Stock being paid pursuant to such Acquisition
Transaction. As used herein, "Acquisition Transaction" means any transaction or
series of related transactions pursuant to which fifty percent (50%) or more of
the Series A Preferred Stock of the Company is transferred to one or more
persons unaffiliated with the Company prior to such transaction(s).
(c) As used in this Section 3, "Business Day" means any day
other than a Saturday or Sunday on which the relevant exchange, system or
service is open or available, as the case may be.
4. No Rights as Stockholder. This Warrant shall not entitle the Holder
to any rights as a stockholder of the Company, either at law or in equity. The
rights of the Holder are limited to those expressed in this Warrant and are not
enforceable against the Company except to the extent set forth herein.
5. Adjustments in Number and Exercise Price of Warrant Shares.
(a) The number of shares of Series A Preferred Stock for which
this Warrant may be exercised and the Exercise Price therefor shall be subject
to adjustments as follows:
(1) If the Company is recapitalized through the
subdivision or combination of its outstanding shares of Series A Preferred Stock
into a larger or smaller number of shares, the number of shares of Series A
Preferred Stock for which this Warrant may be exercised shall be increased or
reduced, as of the record date for such recapitalization, in the same proportion
as the increase or decrease in the outstanding shares of Series A Preferred
Stock, and the Exercise Price shall be adjusted so that the aggregate amount
payable for the purchase of all of the Warrant Shares issuable hereunder
immediately after the record date for such recapitalization shall equal the
aggregate amount so payable immediately before such record date.
(2) If the Company declares a dividend on Series A
Preferred Stock payable in Series A Preferred Stock or securities convertible
into Series A Preferred Stock, the number of shares of Series A Preferred Stock
for which this Warrant may be exercised shall be increased as of the record date
for determining which holders of Series A Preferred Stock shall be entitled to
receive such dividend, in proportion to the increase in the number of
outstanding shares (and shares of Series A Preferred Stock issuable upon
conversion of all such securities convertible into Series A Preferred Stock) of
Series A Preferred Stock as a result of such dividend, and the Exercise Price
shall be adjusted so that the aggregate amount payable for the purchase of all
the Warrant Shares issuable hereunder immediately after the record date for such
dividend shall equal the aggregate amount so payable immediately before such
record date.
(3) If the Company distributes to holders of its Series A
Preferred Stock, other than as part of its dissolution or liquidation or the
winding up of its affairs, any shares of its Series A Preferred Stock, any
evidence of indebtedness or any of its assets (other than cash, Series A
Preferred Stock or securities convertible into Series A Preferred Stock), the
Company shall give written notice of any such distribution to the Holder at
least forty-five (45) days prior to the proposed record date in order to permit
the Holder to exercise this Warrant with respect to the Warrant Shares on or
before the record date. There shall be no adjustment in the number of shares of
Series A Preferred Stock for which this Warrant may be exercised, or in the
Exercise Price, by virtue of any such distribution. This Warrant will terminate
upon such dissolution, liquidation or winding up.
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<PAGE>
(4) If the Company at any time or from time to time while
this Warrant is outstanding and unexpired shall pay a dividend with respect to
shares of its Series A Preferred Stock other than in the form of stock, then the
number of Warrant Shares for which this Warrant is exercisable shall be
adjusted, from and after the record date fixed for the determination of holders
of Series A Preferred Stock entitled to receive such dividend or distribution,
to that number of Warrant Shares determined by multiplying the number of Warrant
Shares for which this Warrant is then exercisable by a fraction, the numerator
of which shall be the Current Fair Market Value as of such record date of a
share of Series A Preferred Stock and the denominator of which shall be such
Current Fair Market Value less the amount of such dividend or distribution
applicable to one (1) such share; provided, however, that no such adjustment
shall be made in the event that such dividend per share as so determined,
combined with all other dividends per share declared or paid during the
preceding twelve (12) month period is less than ten percent (10%) of the Current
Fair Market Value per share as of the date of such payment; provided, further,
that if the amount of a dividend that would otherwise require adjustment
pursuant to this Section 5(a)(4) is equal to or greater than such Current Fair
Market Value, then in lieu of the foregoing adjustment, adequate provision shall
be made so that the Holder shall receive a pro rata share of such dividend based
upon the maximum number of shares issuable to such Holder.
(5) If the Company at any time or from time to time while
this Warrant is outstanding and unexpired shall issue or sell additional shares
of Series A Preferred Stock without consideration or for consideration per share
less than the Current Fair Market Value immediately prior to such sale, then the
number of Warrant Shares for which this Warrant is exercisable shall be
adjusted, from and after the date of such issuance or sale, to that number of
Warrant Shares determined by multiplying the number of Warrant Shares for which
this Warrant is then exercisable by a fraction, the numerator of which shall be
the number of shares of Series A Preferred Stock outstanding immediately after
such issuance or sale and the denominator of which shall be the sum of (i) the
number of shares of Series A Preferred Stock outstanding immediately prior to
such issuance or sale and (ii) the number of shares of Series A Preferred Stock
that the aggregate consideration received by the Company for the total number of
shares of Series A Preferred Stock so issued or sold would purchase at the
Current Fair Market Value of such shares; provided, however, that treasury
shares shall not be deemed to be outstanding.
(6) If the event as a result of which an adjustment is
made under Sections 5(a)(1), (2), (4) or (5) above does not occur, then any
adjustments in the Exercise Price or number of shares issuable that were made in
accordance with such Sections 5(a)(1), (2), (4) or (5) shall be adjusted to the
Exercise Price and number of shares as were in effect immediately prior to the
record date for such event.
(b) Whenever the number of Warrant Shares or Exercise Price
shall be adjusted as required by the provisions of this Section 5, the Company
forthwith shall file in the custody of its Secretary or an Assistant Secretary,
at its principal office, an officer's certificate showing the adjusted number of
Warrant Shares and Exercise Price and setting forth in reasonable detail the
circumstances requiring the adjustment. Each such officer's certificate shall be
made available at all reasonable times during reasonable hours for inspection by
the Holder.
6. Notices to Holders. So long as this Warrant shall be outstanding (i)
if the Company shall pay any dividends or make any distribution upon the Series
A Preferred Stock otherwise than in cash or (ii) if there shall be any
reorganization, consolidation or merger of the Company into another corporation
in which the Company is not the surviving entity, sale or other transfer of all
or substantially all of the property and assets of the Company, or voluntary or
involuntary dissolution, liquidation or winding up of the Company, then in such
event, the Company shall cause to be mailed to the Holder, at least forty-five
(45) days prior to the relevant date described below (or such shorter period as
is reasonably possible if forty-five (45) days is not reasonably possible), a
notice containing a description of the proposed action and
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stating the date or expected date on which such action is to take place and, if
applicable, the date or expected date, if any is to be fixed, as of which the
holders of Series A Preferred Stock of record shall be entitled to exchange
their shares of Series A Preferred Stock for securities or other property
deliverable upon such event.
7. Investment Representations. The Holder, by acceptance of this
Warrant, represents and warrants to the Company that:
(a) This Warrant and all shares of Series A Preferred Stock
acquired upon any and all exercises of this Warrant are purchased for the
Holder's own account and for investment, and not with a view to resale or
distribution of either this Warrant or any shares purchasable upon any exercise
hereof. The Holder understands that this Warrant and the underlying shares are
subject to certain restrictions against transfer pursuant to federal securities
laws.
(b) The Holder has been furnished with a copy of that certain
Research Agreement dated August 17, 1998 by and between the Company and IgX
Corp., a Delaware corporation, and has fully read and understands such document.
(c) The Holder is an investor in securities of private
companies and acknowledges that it is able to fend for itself, can bear the
economic risk of its investment and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of the investment in the Securities. The Holder also represents that it
has not been organized for the purpose of acquiring the Series A Preferred Stock
of the Company.
(d) The Holder is an "accredited investor" within the meaning
of Securities and Exchange Commission ("SEC") Rule 501 of Regulation D, as now
in effect.
(e) The Holder understands that the Securities are
characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold, without registration under the Act, only in
certain limited circumstances. In this connection, each Holder represents that
it is familiar with SEC Rule 144, as now in effect, and understands the resale
limitations imposed thereby and by the Act.
(f) Without in any way limiting the representations set forth
above, the Holder further agrees not to make any disposition of all or any
portion of the Securities unless and until it has been established to the
satisfaction of the Company that such transfer will not violate any applicable
federal securities or state securities or blue sky laws and the transferee has
agreed in writing for the benefit of the Company to be bound by the applicable
provisions of this Section 7, and such Holder shall have notified the Company of
the proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and if
reasonably requested by the Company, such Holder shall have furnished the
Company with an opinion of counsel or other evidence reasonably satisfactory to
the Company, that such disposition will not require registration of such
Securities under the Act.
(g) In connection with any underwritten public offering by the
Company of its equity securities pursuant to an effective registration statement
filed under the Securities Act of 1933, as amended (the "Securities Act"),
including the Company's initial public offering, the Holder shall not, without
the prior written consent of the Company's managing underwriter, (i) lend,
offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, or otherwise transfer or dispose of, directly or indirectly, any of
the Securities or any securities convertible into or exercisable or exchangeable
for such Securities
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<PAGE>
(whether such shares or any such securities are then owned by the Holder or are
thereafter acquired) or (ii) enter into any swap or other arrangement that
transfers to another, in whole or in part, any of the economic consequences of
ownership of the Securities, whether any such transaction described in clause
(i) or (ii) above is to be settled by delivery of Securities or such other
securities, in cash or otherwise. Such restriction (the "Market Stand-Off")
shall be in effect for such period of time following the date of the final
prospectus for the offering as may be requested by the Company or such
underwriters. The Market Stand-Off shall in any event terminate one (1) year
after the date of the Company's initial public offering. In the event of the
declaration of a stock dividend, a spin-off, a stock split, an adjustment in
conversion ratio, a recapitalization or a similar transaction affecting the
Company's outstanding securities without receipt of consideration, any new,
substituted or additional securities that are by reason of such transaction
distributed with respect to any Securities subject to the Market Stand-Off, or
into which such Securities thereby become convertible, shall immediately be
subject to the Market Stand-Off. In order to enforce the Market Stand-Off, the
Company may impose stop-transfer instructions with respect to the Securities
until the end of the applicable stand-off period. The Company's underwriters
shall be beneficiaries of the agreement set forth in this Section 7(g). This
Section 7(g) shall not apply to Securities registered in the public offering
under the Securities Act.
8. Legends. It is understood that this Warrant and/or the certificates
evidencing the Series A Preferred Stock issuable upon exercise of this Warrant
may bear one or all of the legends substantially in the form set forth below, as
well as any legend required by applicable state securities laws:
THE SHARES REPRESENTED HEREBY MAY NOT BE SOLD, ASSIGNED, TRANSFERRED,
ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN COMPLIANCE WITH THE
TERMS OF A WRITTEN WARRANT BETWEEN THE COMPANY AND THE REGISTERED
HOLDER OF THE SHARES (OR THE PREDECESSOR IN INTEREST TO THE SHARES).
SUCH AGREEMENT GRANTS TO THE COMPANY CERTAIN RIGHTS OF FIRST REFUSAL
UPON AN ATTEMPTED TRANSFER OF THE SHARES. THE SECRETARY OF THE COMPANY
WILL UPON WRITTEN REQUEST FURNISH A COPY OF SUCH AGREEMENT TO THE
HOLDER HEREOF WITHOUT CHARGE.
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER
SUCH ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS
COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.
9. Right of First Refusal.
(a) Right of First Refusal. In the event that the Holder
proposes to sell, pledge or otherwise transfer to a third-party any of the
Securities, or any interest in such Securities, the Company shall have the Right
of First Refusal with respect to all (or less than all) of such Securities. If
the Holder desires to transfer any of the Securities, the Holder shall give a
written Transfer Notice to the Company describing fully the proposed transfer,
including the number of Securities proposed to be transferred, the proposed
transfer price, the name and address of the proposed Transferee and proof
satisfactory to the Company that the proposed sale or transfer will not violate
any applicable federal or state securities laws. The Transfer Notice shall be
signed both by the Holder and by the proposed Transferee and must constitute a
binding commitment of both parties to the transfer of the Securities. The
Company shall have the right to purchase all, or less than all, of the
Securities on the terms of the proposal described in the Transfer Notice
(subject, however, to any change in such terms permitted under Section 9(b)
below) by delivery of a notice of exercise of the Right of First Refusal within
thirty (30)
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<PAGE>
days after the date when the Transfer Notice was received by the Company. The
Company's rights under this Section 9(a) shall be assignable, in whole or in
part.
(b) Transfer of Securities. If the Company fails to exercise
its Right of First Refusal within thirty (30) days after the date when it
received the Transfer Notice, the Holder may, not later than ninety (90) days
following receipt of the Transfer Notice by the Company, conclude a transfer of
the Securities subject to the Transfer Notice on the terms and conditions
described in the Transfer Notice, provided that any such sale is made in
compliance with applicable federal and state securities laws and not in
violation of any other contractual restrictions to which the Holder is bound.
Any proposed transfer on terms and conditions different from those described in
the Transfer Notice, as well as any subsequent proposed transfer by the Holder,
shall again be subject to the Right of First Refusal and shall require
compliance with the procedure described in Section 9(a) above. If the Company
exercises its Right of First Refusal, the parties shall consummate the sale of
the Securities on the terms set forth in the Transfer Notice within sixty (60)
days after the date when the Company received the Transfer Notice (or within
such longer period as may have been specified in the Transfer Notice); provided,
however, that in the event the Transfer Notice provided that payment for the
Securities was to be made in a form other than cash or cash equivalents paid at
the time of transfer, the Company shall have the option of paying for the
Securities with cash or cash equivalents equal to the present value of the
consideration described in the Transfer Notice.
(c) Additional Shares or Substituted Securities. In the event
of the declaration of a stock dividend, the declaration of an extraordinary
dividend payable in a form other than stock, a spin-off, a stock split, an
adjustment in conversion ratio, a recapitalization or a similar transaction
affecting the Company's outstanding securities without receipt of consideration,
any new, substituted or additional securities or other property (including money
paid other than as an ordinary cash dividend) which are by reason of such
transaction distributed with respect to any Securities subject to this Section 9
or into which such Securities thereby become convertible shall immediately be
subject to this Section 9. Appropriate adjustments to reflect the distribution
of such securities or property shall be made to the number and/or class of
Securities subject to this Section 9.
(d) Termination of Right of First Refusal. The Right of First
Refusal shall lapse upon a firm commitment underwritten public offering,
pursuant to an effective registration statement on Form S-1 or Form SB-2 under
the Securities Act, covering the offer and sale of the Stock. However, the
Market Stand-Off shall continue to remain in full force and effect following the
lapse of the First Refusal Right.
(e) Permitted Transfers. Section 7(g) above and this Section 9
shall not apply to (i) a transfer by beneficiary designation, will or intestate
succession, (ii) a transfer to the Holder's spouse, children or grandchildren or
to a trust established by the Holder for the benefit of the Holder or the
Holder's spouse, children or grandchildren, (iii) a transfer to any Affiliate or
(iv) a transfer to the stockholders of a Holder in a liquidation, dissolution,
reorganization, spin-off or other related transaction, provided in any case that
the Transferee agrees in writing on a form prescribed by the Company to be bound
by all provisions of this Warrant. If the Holder transfers any Securities,
either under this Section 9(e) or after the Company has failed to exercise the
Right of First Refusal, then this Section 9 shall apply to the Transferee to the
same extent as to the Holder.
(f) Termination of Rights as Stockholder. If the Company makes
available, at the time and place and in the amount and form provided in this
Warrant, the consideration for the Securities to be purchased in accordance with
this Section 9, then after such time the person from whom such Securities are to
be purchased shall no longer have any rights as a holder of such Securities
(other than the right to receive payment of such consideration in accordance
with this
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<PAGE>
Warrant). Such Securities shall be deemed to have been purchased in accordance
with the applicable provisions hereof, whether or not the certificate(s)
therefor have been delivered as required by this Warrant.
10. Transfer, Exchange, Assignment or Loss of Warrant.
(a) This Warrant may be transferred, in whole or in part,
subject to the following restrictions. This Warrant and the Warrant Shares or
any other securities ("Other Securities") received upon exercise of this Warrant
shall be subject to restrictions on transferability until registered under the
Act unless an exemption from registration is available. Any transfer of this
Warrant or the Warrant Shares shall be subject to full compliance with Section
7(g) above and Section 9 above and any purported transfer of this Warrant and/or
the Warrant Shares in violation of Section 7(g) above or Section 9 above shall
be null and void ab initio. Until the Warrant and the Warrant Shares are
registered under the Act, the Holder shall reimburse the Company for its
reasonable expenses, including reasonable attorney's fees, incurred in
connection with any transfer or assignment, in whole or in part, of this Warrant
or any Warrant Shares. The restrictions set forth in this Section 10 shall apply
equally to any securities issued or issuable with respect to this Warrant and
the Warrant Shares.
(b) Any transfer permitted hereunder shall be made by
surrender of this Warrant to the Company at its principal office or to the
Transfer Agent at its offices with a duly executed request to transfer the
Warrant, which shall provide adequate information to effect such transfer and
shall be accompanied by funds sufficient to pay any transfer taxes applicable.
Upon satisfaction of all transfer conditions set forth in Section 10(a) above,
the Company or Transfer Agent shall execute and deliver a new Warrant in the
name of the transferee named in such transfer request, and this Warrant promptly
shall be cancelled.
(c) Upon receipt by the Company of evidence satisfactory to it
of loss, theft, destruction or mutilation of this Warrant and, in the case of
loss, theft or destruction, of reasonably satisfactory indemnification and/or
bond, or, in the case of mutilation, upon surrender of this Warrant, the Company
will execute and deliver, or instruct the Transfer Agent to execute and deliver,
a new Warrant of like tenor and date, and any such lost, stolen, destroyed or
mutilated Warrant thereupon shall become void.
11. Impairment. The Company will not, by amendment of its Certificate
of Incorporation, as amended, or otherwise, 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, take all such action as may be necessary or appropriate in
order to protect the rights of the Holder against impairment.
12. Notices. Notices and other communications to be given to the Holder
and/or Company shall be deemed sufficiently given if delivered by hand, or three
(3) business days after mailing if mailed by registered or certified mail,
postage prepaid, addressed in the name and at the address of such party
appearing below.
If to the Company: IgX Oxford Hepatitis Corp.
One Springfield Avenue
Summit, New Jersey 07901
If to the Holder: Monsanto Company
800 North Lindbergh Boulevard
St. Louis, Missouri 63167
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<PAGE>
Either party may change the address to which notices shall be given by notice
pursuant to this Section 11.
13. Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of Delaware.
[Remainder of Page Intentionally Left Blank]
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<PAGE>
IN WITNESS WHEREOF, the Company has executed this Warrant to Purchase
Series A Preferred Stock as of the date first written above.
IgX OXFORD HEPATITIS CORP.,
a Delaware corporation
By:
-------------------------------------------------
Albert J. Henry, Chief Executive Officer
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<PAGE>
Void After August 17, 2008 Exhibit "A"
FORM OF EXERCISE
To: IgX Oxford Hepatitis Corp.
(1) Pursuant to the terms of the attached Warrant, the undersigned
hereby elects to purchase ________________ shares of Series A Preferred Stock of
IgX Oxford Hepatitis Corp. (the "Company"), and (i) tenders herewith payment of
the Exercise Price of such shares in full or (ii) by indicating "cashless
exercise" below, directs that payment of the Exercise Price be made by
cancellation as of the date of exercise of a portion of this Warrant having a
Current Fair Market Value equal to the Exercise Price.
(2) Please issue a certificate or certificates representing said shares
of Series A Preferred Stock, in the name of the undersigned or in such other
name(s) as is/are specified immediately below or, if necessary, on an attachment
hereto:
Name Address
---- -------
(3) In the event of partial exercise, please reissue an appropriate
Warrant exercisable for the remaining shares.
(4) Check here if cashless exercise:_________
Date:
----------------------------------------
-----------------------------------
[Holder]
<PAGE>
EXHIBIT "C"
IgX Corp.
AMENDED AND RESTATED
1993 STOCK OPTION PLAN
ARTICLE 1. PURPOSE OF THE PLAN.
The IgX Corp. Amended and Restated 1993 Stock Option Plan ("Plan") is
intended to promote the interests of IgX Corp., a Delaware corporation
("Company"), by providing incentives to (i) certain key Employees who are
responsible for the management, growth or financial success of the Company and
(ii) certain Outside Directors and Consultants who perform valuable services to
the Company, in order to encourage them to acquire a proprietary interest, or
increase their proprietary interest, in the Company and to continue to perform
services for the Company.
ARTICLE 2. ADMINISTRATION OF THE PLAN.
2.1 General Administration. The Plan and the Options shall be
administered and interpreted by the Committee. Subject to the express provisions
of the Plan, the Committee shall have the unrestricted authority to interpret
the Plan, to prescribe, amend and rescind rules and regulations relating to the
Plan, to determine the terms and provisions of the Option Agreements by which
Options shall be evidenced (which shall not be inconsistent with the terms of
the Plan), and to make all other determinations necessary or advisable for the
administration of the Plan, all of which determinations shall be final, binding
and conclusive.
2.2 Appointment. The Board shall appoint the Committee from among its
members to serve at the pleasure of the Board. The Board from time to time may
remove members from, or add members to, the Committee and shall fill all
vacancies thereon. The Committee at all times shall be composed of two or more
directors who shall meet both of the following requirements:
(a) Non-Employee Directors. Each director serving on the
Committee must be a "non-employee director." To be a non-employee
director, the director must not (i) be an employee or officer of the
Company, (ii) have received compensation directly or indirectly as a
consultant or in any non-director capacity, or have an interest in any
transaction of the Company for which disclosure would be required under
Item 404(a) of Regulation S-K of the Exchange Act, or (iii) have been
engaged through another entity in a business relationship with the
Company for which disclosure would be required under Item 404(b) of
Regulation S-K of the Exchange Act. The requirements of this subsection
are intended to comply with the Securities and Exchange Commission=s
criteria for action by a committee of the Board as specified in Rule
16b-3 under Section 16 of the Exchange Act or any successor rule or
regulation establishing such criteria. This subsection shall be
interpreted and construed in a manner which assures compliance
therewith. To the extent Rule 16b-3 is modified to
<PAGE>
reduce or increase the restrictions on who may serve as a member of the
Committee, the Plan shall be deemed modified in a similar manner.
(b) Outside Directors. No director serving on the Committee
may be a current or former Employee of the Company (or any Company
affiliated with the Company under Code Section 1504) receiving
compensation for prior services (other than benefits under a
tax-qualified retirement plan) during each taxable year during which
the director serves on the Committee. Furthermore, no director serving
on the Committee shall be or have ever been an officer of the Company
(or any Code Section 1504 affiliated Company), or shall be receiving
remuneration (directly or indirectly) from the Company (or any Code
Section 1504 affiliated Company) in any capacity other than as a
director. The requirements of this subsection are intended to comply
with the "outside director" requirements of Treas. Reg. Section
1.162-27(e)(3) or any successor regulation, and shall be interpreted
and construed in a manner which assures compliance with the "outside
director" requirement of Code Section 162(m)(4)(C)(i).
2.3 Organization. The Board or the Committee may select one of the
Committee's members as chairman of the Committee. The Committee shall hold its
meetings at such times, in such manner, and at such places as the Committee or
its chairman shall deem advisable. A majority of the members of the Committee
shall constitute a quorum, and such majority shall determine the Committee's
actions. The Committee shall keep minutes of its proceedings and shall report
the same to the Board at the meeting next succeeding.
2.4 Powers of the Committee. Subject to the provisions of the Plan, the
Committee shall have the authority, in its discretion, among other things:
(a) To determine the Fair Market Value market value of the
Common Stock;
(b) To approve forms of Option Agreement for use under the
Plan;
(c) To determine the terms and conditions, not inconsistent
with the terms of the Plan, of any Option granted hereunder (including, but not
limited to, the price per share and any restriction or limitation, based in each
case on such factors as the Committee shall determine, in its sole discretion);
(d) 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;
(e) To modify or amend each Option (subject to the terms of
the Plan); and
(f) To determine the terms and restrictions applicable to
Options.
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<PAGE>
2.5 Indemnification. In addition to such other rights of
indemnification as they have as directors or as members of the Committee, the
members of the Committee, to the extent permitted by applicable law, shall be
indemnified by the Company against reasonable expenses (including, without
limitation, attorneys' fees) actually and necessarily incurred in connection
with the defense of any action, suit or proceeding, or in connection with any
appeal, to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan or any Option
granted hereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved to the extent required by and in the
manner provided by the certificate of incorporation or the bylaws of the Company
relating to indemnification of directors) or paid by them in satisfaction of a
judgment in any such action, suit or proceeding, except in relation to matters
as to which it shall be adjudged in such action, suit or proceeding that such
Committee member or members did not act in good faith and in a manner he or they
reasonably believed to be in or not opposed to the best interest of the Company.
ARTICLE 3. ELIGIBILITY FOR OPTION GRANTS.
3.1 No Additional Grants. As of the Effective Date of this
amendment and restatement, no additional Options shall be granted under the
Plan.
3.2 Retention 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.
ARTICLE 4. STOCK SUBJECT TO THE PLAN.
4.1 Basic Limitation. The stock issuable under the Plan shall
consist of shares of the Company's authorized but unissued or reacquired Common
Stock. The aggregate number of issuable shares shall not exceed 825,857 shares
of Common Stock subject to adjustment as provided in Section 4.2. Should an
Option be terminated or cancelled without being exercised (in whole or in part),
the shares subject to the portion of the Option not so exercised shall not be
available for subsequent option grants under the Plan.
4.2 Adjustments. In the event any change is made to the Common
Stock issuable under the Plan by reason of any stock split, stock dividend,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without receipt of consideration, then the
Committee may, in its discretion, make appropriate adjustments to (i) the
aggregate number of shares issuable under the Plan and (ii) the number of shares
and price per share of the Common Stock subject to each outstanding Option in
order to prevent the dilution or enlargement of benefits thereunder. The
adjustments determined by the Committee shall be final, binding and conclusive.
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<PAGE>
ARTICLE 5. TERMS AND CONDITIONS OF OPTIONS.
5.1 Option Agreement. Each Option granted under the Plan shall
be evidenced by an Option Agreement that complies with (or incorporates) each of
the terms and conditions of this Article and identifies such Option as either an
option that is intended to comply with the requirements of Section 422 of the
Code ("Incentive Stock Option") or as an option that is intended not to be an
Incentive Stock Option. Individuals who are not Employees of the Company or a
Subsidiary may only be granted options that are not intended to qualify as
Incentive Stock Options.
5.2 Exercise Price.
(a) The Exercise Price per share shall be fixed by
the Committee. In the case of an Incentive Stock Option, the
Exercise Price shall be determined pursuant to Sections 6.2 and 6.3, as
applicable, of the Plan.
(b) The Exercise Price shall be paid upon exercise of
the Option and, subject to the provisions of Article 8 below and the Option
Agreement that evidences the Option, shall be payable in one of the following
alternative forms (as determined by the Committee):
(i) Full payment in cash or cash
equivalents;
(ii) Full payment in shares of Common Stock
having a Fair Market Value on the date of exercise equal to the Exercise
Price;
(iii) Full payment via a promissory note,
which shall be with full recourse against the maker thereof (notwithstanding
the value of any collateral securing such promissory note); or
(iv) A combination of any or all of the
foregoing, equal in the aggregate to the Exercise Price.
5.3 Vesting. Each option granted under the Plan shall be
exercisable at such time or times and during such period as is determined by the
Committee and set forth in the Option Agreement evidencing such Option, provided
that, subject to Section 6.3 hereof, no Incentive Stock Option may have a term
in excess of ten (10) years from the date of its grant. In addition, the
exercisability of Options may, at the discretion of the Committee, be made
contingent upon the passage of time and/or the requirement that the Optionee
have met or exceeded performance standards established by the Committee and/or
the Board of Directors of the Company from time to time.
5.4 Restrictions on Transfer of Options. An Option by its
terms shall not be assignable or transferable by the Optionee other than by will
or by the laws of descent and distribution; during the lifetime of the Optionee,
such Option shall be exercisable only by the
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<PAGE>
Optionee. Options may be exercised by written notice to the Company (on such
terms as the Committee may specify) and payment of the Exercise Price.
5.5 Early Termination. An Option granted under the Plan may,
but need not, provide that the period during which the Option may be exercised
is subject to early termination if the Optionee ceases to be a Director,
Employee or Consultant.
5.6 Restrictions on Transfer. Common Stock issuable upon
exercise of an Option granted under the Plan may be subject to such restrictions
on transfer.
5.7 Agreement by Optionee. If necessary or advisable to comply
with applicable federal or state securities laws, any Option granted under the
Plan may be granted on the condition that the Optionee agrees that the purchase
of shares of Common Stock thereunder is for investment and not with a view to
the resale or distribution of such shares and that such shares shall be disposed
of only in accordance with such laws. As a condition to issuance of any shares
purchased upon the exercise of any Option granted pursuant to the Plan, the
Optionee, his executor, administrator, heir or legatee (as the case may be)
receiving such shares may be required to deliver to the Company an instrument,
in form and substance satisfactory to the Committee and its counsel,
implementing such agreement. Any such condition may be eliminated by the
Committee if the Committee determines it is no longer necessary or advisable.
5.8 Stockholder Rights. No Optionee shall have any of the
rights of a shareholder with respect to any shares covered by an Option until
such Optionee has exercised the Option and been issued a stock certificate for
the purchased shares.
ARTICLE 6. INCENTIVE STOCK OPTIONS.
6.1 Application. The terms and conditions set forth in this
Article shall apply to all Incentive Stock Options granted under the Plan.
Options that are specifically designated as "non-statutory" options when issued
under the Plan shall not be subject to such terms and conditions.
6.2 Exercise Price. In no event shall the Exercise Price per
share be less than one hundred percent (100%) of the Fair Market Value of a
share of Common Stock on the date of the Option grant, subject to Section 6.3,
below. In addition, the aggregate Fair Market Value (determined at the time the
Option is granted) of the shares with respect to which Incentive Stock Options
are exercisable for the first time by such individual during any one calendar
year (under the Plan or another stock option plan(s) of the Company, a Parent or
Subsidiary, or predecessor thereof) shall not exceed $100,000 or such greater
amounts as may be permitted under Section 422 of the Code. To the extent that
the aggregate Fair Market Value of Common Stock with respect to which Incentive
Stock Options are exercisable for the first time by any individual during any
calendar year (under all plans of the Company and its Parent or Subsidiaries)
exceeds $100,000, such options shall be treated as "non-statutory" options, by
taking options into account in the order in which they were granted.
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<PAGE>
6.3 Limitations. If any Employee to whom an Incentive Stock
Option is granted pursuant to the provisions of the Plan is on the date of grant
an owner of stock (as determined under subsection (d) of Section 424 of the
Code) possessing more than 10% of the total combined voting power of all classes
of stock of the Company or a Parent or Subsidiary, then the following special
provisions shall apply to the Incentive Stock Option granted to such Employee:
(a) The Exercise Price per share of the Common Stock subject
to such Incentive Stock Option shall not be less than 110% of the Fair
Market Value of one share of Common Stock on the date of grant.
(b) The Option shall not have a term in excess of five (5)
years from the date of grant.
ARTICLE 7. CORPORATE TRANSACTIONS
In the event of one or more of the following transactions ("Corporate
Transaction"):
(a) a merger, consolidation or acquisition in which the
Company is not the surviving entity, except for a transaction the principal
purpose of which is to change the State of the Company's incorporation;
(b) the sale, transfer or other disposition of all or
substantially all of the assets of the Company; or
(c) any other corporate reorganization or business combination
in which greater than fifty percent (50%) of the Company's outstanding voting
stock is transferred to different holders in a single transaction or a series of
related transactions,
then all Options at the time outstanding under the Plan and not then otherwise
fully exercisable shall, during the five (5) business day period immediately
prior to the specified effective date for the Corporate Transaction, become
fully exercisable for up to the total number of shares of Common Stock
purchasable under such Option and may be exercised for all or any portion of the
shares for which the Option is so accelerated; provided, however, that the
acceleration of any Incentive Stock Options outstanding at the time (that do not
cease to be Incentive Stock Options by amendment or otherwise) will be subject
to the limitations of Section 6.2; and provided further, that if the grant,
exercisability, or exercise of an Option (or any portion of an Option) is
determined by counsel to the Company to be a payment which, when added to other
payments to which Optionee is or becomes entitled, would result in a substantial
risk of any loss of any federal income tax deduction by the Company or the
imposition of an excise tax on the Optionee under Section 280G or Section 4999,
respectively, of the Code, or any successor provision thereto, then Optionee's
rights shall be limited to the extent necessary to preclude the loss of any such
deduction or imposition of any such excise tax, and the Company shall be
relieved of any liability in such event.
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<PAGE>
In no event shall any such acceleration of the exercise dates
occur if the terms of the agreement of any Corporate Transaction require as a
condition to consummation that each such outstanding Option shall either be
assumed by the successor Company or affiliate thereof or be replaced with a
comparable Option to purchase shares of capital stock of the successor company
or affiliate thereof. The determination of such comparability shall be made by
the Committee, in its discretion, and its determination shall be final, binding
and conclusive. Upon consummation of the Corporate Transaction, all outstanding
Options under the Plan shall, to the extent not previously exercised or assumed
by the successor Company or its parent company, terminate and cease to be
exercisable.
The grant of Options under the Plan shall not limit or affect
the right of the Company to adjust, reclassify, reorganize or otherwise change
its capital or business structure or to merge, consolidate, dissolve, liquidate
or sell or transfer all or any part of its business or assets.
ARTICLE 8. CANCELLATION AND NEW GRANT OF OPTIONS.
The Committee shall have the authority to effect, at any time
and from time to time, with the consent of the affected Optionees, the
cancellation of any or all outstanding options under the Plan and to grant in
substitution therefor new options under the Plan covering the same or different
numbers of shares of Common Stock.
ARTICLE 9. AMENDMENT OF THE PLAN AND OPTIONS.
The Board shall have complete and exclusive power and
authority to amend the Plan and the Committee may amend or modify outstanding
Options issued under the Plan in any or all respects whatsoever not inconsistent
with the terms of the Plan; provided, however, that, except to the extent
necessary to qualify Options under the Plan as Incentive Stock Options, no such
amendment shall adversely affect rights and obligations of an Optionee with
respect to Options at the time outstanding under the Plan unless the Optionee
consents to such amendment; and provided, further, that the Board shall not,
without the approval of the Company's stockholders, amend the Plan to (i)
increase the maximum number of shares issuable under the Plan, (ii) materially
increase the benefits accruing to individuals who participate in the Plan, or
(iii) modify the eligibility requirements for the grant of Options under the
Plan.
ARTICLE 10. EFFECTIVE DATE AND TERM OF PLAN
10.1 Effective Date. The effective date of the 1993
Stock Option Plan was May 1, 1993. The effective date of this the Amended and
Restated 1993 Stock Option Plan is September 25, 1998, subject to stockholder
approval.
10.2 Term of the Plan. The Plan shall remain in effect until
it is terminated by the Board under Section 10.3 or terminates automatically
under Section 14.2, except that, subject
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to Article 8, no additional Options may be granted on or after the effective
date of this amendment and restatement.
10.3 Termination by Board. The Board may, at any time and for
any reason, terminate the Plan.
ARTICLE 11. USE OF PROCEEDS.
The proceeds received by the Company from the sale of shares
pursuant to Options granted under the Plan shall be used for general corporate
purposes.
ARTICLE 12. WITHHOLDING.
The Company's obligation to deliver stock certificates upon
the exercise of any Option granted under the Plan shall be subject to the
Optionee's satisfaction of all applicable federal, state and local income and
employment tax withholding requirements.
At the discretion of the Committee, 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 electing to have the
Company withhold from the shares to be issued upon exercise of the Option, if
any, that number of shares having a Fair Market Value equal to the amount
required to be withheld. 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").
All elections by an Optionee to have shares withheld for this
purpose shall be made in writing in a form acceptable to the Committee 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 as to which the election is made; and
(c) All elections shall be subject to the consent or
disapproval of the Committee.
ARTICLE 13. REGULATORY APPROVALS.
The implementation of the Plan, the granting of any Option
under the Plan, and the issuance of Common Stock upon the exercise of any such
Option shall be subject to the Company's procurement of all approvals and
permits required by regulatory authorities having jurisdiction over the Plan,
the Options granted under it, and the Common Stock issued pursuant to it.
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<PAGE>
ARTICLE 14. MISCELLANEOUS PROVISIONS.
14.1 Notices. All notices or other communications by an
Optionee to the Committee pursuant to or in connection with the Plan shall be
deemed to have been duly given when received in the form specified by the
Committee at the location, or by the person, designated by the Committee for the
receipt thereof.
14.2 Automatic Termination of Plan. Subject to the terms of
Article 10, the Plan shall terminate automatically upon the complete exercise or
lapse of the last outstanding Option granted hereunder.
14.3 Governing Law. The Plan shall be governed by and
construed in accordance with the laws of the State of Delaware.
14.4 Plan Document Controls. In the event of any conflict
between the provisions of an Option Agreement and the Plan shall control.
14.5 Gender and Number. Wherever applicable, the masculine
pronoun shall include the feminine pronoun, and the singular shall include the
plural.
14.6 Headings. The titles in this Plan are inserted for
convenience of reference; they constitute no part of the Plan and are not to be
considered in the construction hereof.
14.7 Legal References. Any references in this Plan to a
provision of law which is, subsequent to the effective date of this amendment
and restatement, revised, modified, finalized or redesignated, shall
automatically be deemed a reference to such revised, modified, finalized or
redesignated provision of law.
14.8 Unfunded Arrangement. The Plan shall not be funded, and
except for reserving a sufficient number of authorized shares to the extent
required by law to meet the requirements of the Plan, the Company shall not be
required to establish any special or separate fund or to make any other
segregation of assets to assure the payment of any grant under the Plan.
ARTICLE 15. DEFINITIONS.
The following words and phrases as used in this Plan shall have the
meanings set forth in this Article unless a different meaning is clearly
required by the context:
15.1 "Board" means the Company's Board of Directors, as
constituted from time to time.
15.2 "Code" means the Internal Revenue Code of 1986, as
amended.
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<PAGE>
15.3 "Committee" means the committee of the Board appointed by
the Board to administer and interpret the Plan, as described in Article 2.
15.4 "Common Stock" means the common stock, $.001 par value
per share, of the Company.
15.5 "Company" means IgX Corp., a Delaware corporation.
15.6 "Consultant" means a consultant or adviser who provides
bona fide services to the Company, a Parent, or a Subsidiary as an independent
contractor.
15.7 "Director" means an individual who is serving as a member
of the Board or who is serving as a member of the board of directors of a Parent
or Subsidiary.
15.8 "Employee" means a common-law employee of the Company, a
Parent, or a Subsidiary.
15.9 "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
15.10 "Fair Market Value" of the Common Stock as of a date of
determination shall mean the following:
(a) Stock Listed and Shares Traded. If the Common
Stock is listed and traded on a national securities exchange (as such
term is defined by the Securities Act) or on the NASDAQ National Market
on the date of determination, the Fair Market Value per share shall be
the closing price of a share of the Common Stock on said national
securities exchange or the NASDAQ National Market on the trading date
immediately preceding the date of determination. If the Common Stock is
traded in the over-the-counter market, the Fair Market Value per share
shall be the average of the closing bid and asked prices on the trading
date immediately preceding the date of determination.
(b) Stock Listed But No Shares Traded. If the Common
Stock is listed on a national securities exchange or on the NASDAQ
National Market but no shares of the Common Stock were traded on the
date specified in Section 16.9(a) above but there were shares traded on
a date within a reasonable period before the date of determination, the
Fair Market Value shall be the closing price of the Common Stock on the
most recent date before the date of determination. If the Common Stock
is regularly traded in the over-the-counter market but no shares of the
Common Stock were traded on the date specified in Section 16.9(a) above
(or if records of such trades are unavailable or burdensome to obtain)
but there were shares traded on a date within a reasonable period
before the date of determination, the Fair Market Value shall be
-10-
<PAGE>
the average of the closing bid and asked prices of the Common Stock on
the most recent date before the date of determination.
(c) Stock Not Listed. If the Common Stock is not
listed on a national securities exchange or on the NASDAQ National
Market or is not regularly traded in the over-the-counter market, then
the Committee shall determine the Fair Market Value of the Common Stock
from all relevant available facts, which may include the average of the
closing bid and ask prices reflected in the over-the-counter market on
a date within a reasonable period either before or after the date of
determination or opinions of independent experts as to value and may
take into account any recent sales and purchases of such Common Stock
to the extent they are representative.
The Committee's determination of Fair Market Value, which shall be made
pursuant to the foregoing provisions, shall be final and binding for all
purposes of this Plan.
15.11 "Option" means an incentive stock option or a stock
option not described in Sections 422 and 423 of the Code granted under the Plan
and entitling the holder to purchase shares of Common Stock.
15.12 "Optionee" means an individual who is granted an Option
pursuant to the terms and provisions of this Plan.
15.13 "Option Agreement" means the agreement between the
Company and an Optionee that contains the terms, conditions and restrictions
pertaining to his or her Option.
15.14 "Outside Director" means a member of the Board who is
not an Employee. Service as an Outside Director shall be considered employment
for all purposes of the Plan.
15.15 "Parent" means any corporation (other than the Company)
in an unbroken chain of corporations ending with the Company, if each of the
corporations other than the Company owns stock possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain. A corporation that attains the status of a
Parent on a date after the adoption of the Plan shall be considered a Parent
commencing as of such date.
15.16 "Plan" means this IgX Corp. Amended and Restated 1998
Stock Option Plan, as amended from time to time.
15.17 "Securities Act" means the Securities Act of 1933, as
amended.
15.18 "Subsidiary" means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company, if
each of the corporations other than the last corporation in the unbroken chain
owns stock possessing fifty percent (50%) or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain.
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<PAGE>
A corporation that attains the status of a Subsidiary on a date after the
adoption of the Plan shall be considered a Subsidiary commencing as of such
date.
ARTICLE 16. EXECUTION.
To record the adoption of the Plan by the Board, the Company has caused
its duly authorized officer to execute this document in the name of the Company.
IgX Corp.
By: ______________________________
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<PAGE>
LICENSE AGREEMENT
This Agreement is made this 27th day of May 1992 by and between the Arizona
Board of Regents on behalf of The University of Arizona (LICENSOR) having a
principal office at Administration 601, The University of Arizona, Tucson,
Arizona 85721, and IgX ("IgX"), a Delaware corporation having a principal
address at 17197 N. Laurel Park Drive, Livonia, MI 48152 (hereinafter "IgX").
WITNESS THAT:
WHEREAS, LICENSOR represents that Vitaliano A. Cama, Graduate Student, and
Charles R. Sterling, Ph.D., employees of LICENSOR, are The Inventors who have
disclosed an invention, Hyperimmune Egg Yolks as a Source of
Anti-Cryptosporidium Neutralizing Antibodies Suitable for Passive Immune
Transfer (the INVENTION), to LICENSOR, which disclosure (attached hereto as
Exhibit A) was assigned log number UA1121; and
WHEREAS, LICENSOR has the right to make, use, sell, and grant licenses under
the INVENTION as defined herein; and LICENSOR wishes to have the INVENTION
utilized for the public interest; and
WHEREAS IgX wishes to obtain a license to make, use, sell, and distribute the
INVENTION under the FIELD OF USE (as defined herein) and upon the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and faithful performance of
the covenants contained herein, IT IS AGREED:
1. "DEFINITIONS"
For the purposes of this Agreement, and solely for that purpose, the terms
hereinafter set forth shall be defined as follows:
1.1. "INVENTION" shall mean the invention as described in EXHIBIT A.
1.2. "LICENSED PRODUCT(S)" shall mean hyperimmune hen egg yolks containing
anti-Cryptosporidium antibodies derived from the INVENTION as described in
EXHIBIT A.
1.3. "TECHNICAL INFORMATION" shall mean technical information and know-how
relating to the preparation of LICENSED PRODUCT(S).
<PAGE>
1.4. "REGULATOR" shall mean the government approved regulatory body,
committee, agency, or other organization which by law has the power to approve
the sale of the INVENTION for human or veterinary therapeutic use within each
country in the world.
1.5. "FIELD OF USE" shall mean the use of INVENTION for REGULATOR approved
human therapeutics in the treatment of cryptosporidiosis in patients with
Acquired Immune Deficiency Syndrome (AIDS) and in certain immune competent
patients.
1.6. "FIRST COMMERCIAL SALE" means the initial transfer by IgX or its
Sublicensees of LICENSED PRODUCT(S) in exchange for cash or some equivalent to
which value can be assigned for the purpose of determining NET SALES.
1.7. "NET SALES" means the total gross receipts for sales of LICENSED
PRODUCT(S) by IgX, its Sublicensee(s) or its AFFILIATES, and from leasing,
renting, or otherwise making LICENSED PRODUCT(S) available to others without
sale or other dispositions, whether invoiced or not, less returns and
allowances actually granted, freight out, taxes or excise duties imposed on
the transaction (if separately invoiced), and wholesaler and cash discounts in
amounts customary in the trade. No deductions shall be made for commissions
paid to individuals, whether they be with independent sales agencies or
regularly employed by IgX or its AFFILIATES, and on their payroll, or for the
cost of collections.
1.8. "NET SALES PRICE" means the NET SALES divided by the quantity of
LICENSED PRODUCT(S) sold. In the event that the LICENSED PRODUCT(S) is sold as
part of a kit, or in combination with other products not covered by this
Agreement (such as detection systems), the NET SALES PRICE for such products
which contain the LICENSED PRODUCT(S) will be calculated as B * (A/B); where A
is the gross sales price of an equivalent unit of LICENSED PRODUCT(S) sold
separately, less allowances, and B is the gross sales price of the kit or
combination of products in which the LICENSED PRODUCT(S) is included less
allowances.
1.9. "AFFILIATE" means any corporation or other business entity controlled
by, controlling, or under common control with IgX. For this purpose, "control"
means direct or indirect beneficial ownership of at least fifty (50) percent of
the voting stock, or at least fifty (50) percent interest in the income of such
corporation or other business.
2. LICENSE
2.1. LICENSOR hereby grants to IgX and IgX hereby accepts from LICENSOR,
upon the terms and conditions herein specified, an exclusive, worldwide, and
non-assignable (except as herein specified) License under the INVENTION to test,
evaluate, and develop the LICENSED PRODUCT(S) in the FIELD OF USE covered hereby
and to make, have made, use and sell the LICENSED PRODUCT(S) during the term of
this Agreement, and
2
<PAGE>
during the term of any extension thereof, unless sooner terminated as herein
provided. LICENSOR also grants to IgX under the terms of this License the right
to use the TECHNICAL INFORMATION to test, evaluate, and develop the LICENSED
PRODUCT(S).
2.2. LICENSOR hereby grants to IgX and IgX hereby accepts from LICENSOR,
upon terms and conditions herein specified, the right to extend the License
granted hereunder to its SUBLICENSEE(S). IgX shall promptly notify LICENSOR in
writing at the time of each SUBLICENSEE and shall provide LICENSOR with a copy
of each SUBLICENSE. IgX may negotiate such terms as it chooses for each
SUBLICENSE, provided that LICENSOR shall receive a royalty for all sales made by
SUBLICENSEE(S) at a rate not less than that provided for in this Agreement and
fifty percent (50%) of any additional amounts received by IgX from SUBLICENSEE.
2.3. If IgX shall so notify LICENSOR in advance thereof in writing, any
SUBLICENSEE(S) to whom the License shall have been extended pursuant to
paragraph 2.2 hereof, may make the reports and royalty payments specified in
Paragraph 3.1 hereof, directly to LICENSOR on behalf of IgX; otherwise, such
reports and payments on account of sales by such SUBLICENSEE(S) shall be made by
IgX.
2.4. LICENSOR retains a non-exclusive, royalty-free, irrevocable License
to make, have made and use the INVENTION and LICENSED PRODUCT(S) for its own
use.
2.5. The exclusive License of paragraph 2.1 shall be for a term of twenty
(20) years from FIRST COMMERCIAL SALE, said license shall be renewable for two
ten (10) year periods at the discretion of IgX.
2.6. Outside the scope of the License between LICENSOR and IgX no other,
further, or different license of right, and no further power to sublicense is
hereby granted or implied.
3. ROYALTIES, RECORDS AND REPORTS
3.1. During the term of this Agreement, unless sooner terminated, IgX
shall pay to LICENSOR, in the manner hereinafter provided, earned royalties at
the rate of five percent (5%) of the NET SALES PRICE of all LICENSED PRODUCT(S)
sold by IgX and its SUBLICENSEE(S), anywhere in the world.
3.2. LICENSED PRODUCT(S) shall be considered sold when sold or invoiced,
and if not sold or invoiced, when delivered to a third party.
3.3. IgX shall be responsible for the performance hereunder of all
obligations including payment of royalties, keeping of records, and reporting
by IgX and any
3
<PAGE>
SUBLICENSEE(S) to whom the License shall have been extended pursuant to this
Agreement.
3.4. So long as this Agreement remains in force, IgX shall deliver to
LICENSOR, within sixty (60) days after the first day of January, April, July
and October of each year, a true and accurate report, giving such particulars
of the business conduct by IgX and its SUBLICENSEE(S) during preceding three (3)
months under this Agreement as are necessary to accurately account for sales
subject to royalties under this Agreement. Each report shall include, but not be
limited to, information about production, inventory on hand, marketing efforts
and sales.
3.5. Simultaneously with the delivery of each report required by the
preceding paragraph 3.4, IgX shall pay to LICENSOR the net royalties and any
other such payment due under this Agreement for the period covered by such
report. If no royalties are due, it shall be so reported.
3.6. All payments from IgX to LICENSOR shall be in U.S. dollars. The rates
of exchange for such payments shall be midpoint between the buying and selling
rates for U.S. dollars as quoted by the Chase Manhattan Bank in New York, New
York at the close of business on the last business day preceding the date
payment is due.
3.7. In case of any delay in payment by IgX to LICENSOR not occasioned by
force majeure, interest at the rate of one percent (1%) per month, assessed from
the thirty-first (31st) day after the due date of said payment, shall be due by
IgX without special notice.
3.8. Royalties shall accrue in accordance with this Agreement, upon the
FIRST COMMERCIAL SALE.
3.9. Royalties payable in connection with the sale of a LICENSED PRODUCT(S)
under Paragraph 2.2 and Paragraph 3.1 shall be reduced by an amount of royalties
actually paid by IgX or such SUBLICENSEE(S) to any non-affiliated third party in
connection with the licensing of additional patent rights or know-how necessary
to make, use, or sell LICENSED PRODUCT(S); provided, however, that in no event
shall the Royalties payable to LICENSOR be less than three percent (3%) of the
net sales of such LICENSED PRODUCT(S).
3.10. IgX shall keep full, true and accurate books of account containing
all particulars which may be necessary for the purpose of showing the amount
payable to LICENSOR by way of royalty as aforesaid or by way of any other
provision hereunder. Said books of account shall be kept at IgX's principal
place of business. Said books and supporting data shall be open at all
reasonable times, for three (3) years following the end of the calendar year to
which they pertain, to inspection by LICENSOR for the purpose of verifying IgX's
royalty statements, or IgX's compliance in other respects with this Agreement.
4
<PAGE>
3.11. IgX also agrees to make a written report to LICENSOR within ninety
(90) days after the date of termination of this agreement, stating in such
report the number, description, and NET SALES of all products made, sold, or
otherwise disposed of and upon which royalties are payable hereunder but which
were not previously reported to LICENSOR. IgX shall also continue to make
quarterly reports pursuant to the provisions of paragraph 3.4 of all gross
income received from leasing, renting, or otherwise making products available to
others without sale or other disposition transferring title in the case of
transactions entered into prior to such termination.
4. PERFORMANCE
4.1. IgX shall use its best efforts to commence and maintain regular
commercial production and sale of LICENSED PRODUCT(S) in the FIELD OF USE and
shall report such efforts in accordance with the provisions of Paragraph 3.4.
The licensee agrees to support the attached research plan and budget, Exhibit
"B", which describes the work yet to be done by the LICENSOR between May 25,
1992 and June 1, 1993 to further develop the invention for IgX, so that IgX
might identify further actions which may be necessary to achieve regulatory
submission and approval to make the first commercial sale. At the end of this
period, but no later than eighteen (18) months from the date of this agreement,
LICENSEE will provide a milestone schedule of development and licensed products
and regulatory submission. This time period may be extended by mutual agreement
of both parties.
4.2. IgX and LICENSOR agree to cooperate to ensure the quality of LICENSED
PRODUCT(S) before LICENSED PRODUCT(S) are first offered for sale in a commercial
transaction and periodically thereafter. IgX shall provide samples of LICENSED
PRODUCT(S) so that LICENSOR can determine through mutually agreed upon
laboratory protocols the activity of LICENSED PRODUCT(S). In the event LICENSED
PRODUCT(S) supplied by IgX are not active or are otherwise defective, IgX and
LICENSOR will cooperate to produce active LICENSED PRODUCT(S) and/or to correct
any defects in the LICENSED PRODUCT(S). If for any reason IgX does not maintain
activity and/or correct defects in LICENSED PRODUCT(S), LICENSOR has the right
to take action under the provisions of Paragraph 5.2 of this Agreement.
5. TERMINATION
5.1. If IgX shall become bankrupt or insolvent and/or if the business of
IgX shall be placed in the hands of a Receiver, Assignee, or Trusteee, whether
by voluntary act of IgX or otherwise, this License will be deemed to have
automatically terminated as of a date seven (7) days prior to that event,
provided, however, that such termination shall not terminate any obligations
which may have accrued prior thereto.
5
<PAGE>
5.2. Notwithstanding the provisions of Article 5.1, upon any breach or
default under this Agreement by IgX, LICENSOR may terminate this License by
ninety (90) days written notice by registered mail to IgX. Said notice shall
become effective at the end of said period, unless during said period IgX shall
cure any breach or default and notify LICENSOR thereof.
5.3. IgX may terminate this license at any time upon ninety (90) days
written notice by registered mail to LICENSOR.
5.4. Upon termination of this License for any reason, all rights granted
hereunder shall revert to LICENSOR for the sole benefit of LICENSOR.
5.5. Termination of this License shall terminate all SUBLICENSEE(S) made
by IgX hereunder, at the option of LICENSOR.
5.6. IgX's responsibilities and obligations to report to LICENSOR and pay
royalties to LICENSOR as to any LICENSED PRODUCT(S) produced or sold by IgX or
its SUBLICENSEE(S) under this Agreement prior to termination or expiration
hereof shall survive such termination or expiration.
6. ASSIGNMENT
6.1. This Agreement may be assigned by LICENSOR. This Agreement may be
assigned by IgX to the successor of its entire business, or to any wholly-owned
subsidiary, but shall not be otherwise assignable by IgX without the written
consent of LICENSOR.
6.2. Successors and Assigns: All of the terms, covenants and conditions of
this Agreement shall be binding upon and inure to the benefit of and shall apply
to the respective heirs, executors, administrators, successors, assigns and
legal representation of the parties, except as provided for in Paragraph 5.1.
7. SEVERABILITY
7.1. Should any part or provision of this Agreement be unenforceable or
otherwise in conflict with or in violation of the law of any jurisdiction, the
remainder of this Agreement shall remain binding upon the parties.
8. NEGATION OF WARRANTIES
8.1. Nothing in this Agreement shall be construed as a warranty or
representation
6
<PAGE>
that anything made, used, sold or otherwise disposed of under any license
granted in this Agreement is or will be free from infringement of patents of
third parties; or
8.2. LICENSOR makes no representation other than those specified in
this
Agreement. LICENSOR makes no express or implied warranties of merchantability
or fitness for any particular purpose of LICENSED PRODUCT(S).
9. ARBITRATION
9.1. Any controversy arising under or related to this Agreement, and any
disputed claim by either party against the other under this Agreement, shall be
settled by arbitration in accordance with the Licensing Agreement Arbitration
Rules of the American Arbitration Association. Upon request of either party,
arbitration will be by:
(a) A third party arbitrator mutually agreed upon in writing by
IgX and LICENSOR within thirty (30) days of arbitration request; or
(b) A member of the American Arbitration Association.
9.2. Any arbitration under Section 9.1 shall be held in such a place as
may be mutually agreed upon in writing between the parties and judgment upon the
award rendered by the arbitrator may be entered by any court having jurisdiction
thereof.
10. INDEMNIFICATION
10.1. IgX agrees to indemnify and hold harmless the LICENSOR, LICENSOR's
employees or agents from and against any and all claims, damages and liabilities
asserted by third parties, both government and private, arising from COMPANY's
sale of LICENSED PRODUCT(S) to ultimate consumers and their use thereof, except
that IgX shall not indemnify LICENSOR, LICENSOR's employees or agents for any
claims, damages or liability resulting from the negligence of any of them.
11. NONDISCRIMINATION
11.1. The parties agree to be bound by applicable state and federal rules
governing equal employment opportunity and nondiscrimination.
12. STATE OBLIGATION
12.1. The parties recognize that the performance by the Arizona Board of
Regents
7
<PAGE>
for and on behalf of the University of Arizona may be dependent upon the
appropriation of funds by the State Legislature of Arizona. Should the
Legislature fail to appropriate the necessary funds, the Board of Regents may
cancel this Agreement without further duty or obligation. The Board agrees to
notify other party(ies) as soon as reasonably possible after the unavailability
of said funds comes to the Board's attention.
13. CONFLICT OF INTEREST
13.1. This Agreement is subject to the provisions of A.R.S. (Section)
15-1635.01 and A.R.S. (Section) 38-511. The Governor or the State of Arizona may
cancel this Agreement by written notice to the parties if any person
substantially involved in obtaining, drafting or procuring this Agreement for or
on behalf of the Arizona Board of Regents becomes an employee or consultant in
any capacity of IgX, unless all requirements stipulated in A.R.S. Section
15-1635.01 have been met.
14. GENERAL
14.1. IgX shall not use the name of The Inventors, or any institution with
which they have been or are connected, or the adaptation of any of them, in any
advertising, promotional or sales literature, without prior written consent
obtained from LICENSOR in each case.
14.2. Any notice required or permitted to be given by this Agreement shall be
given postpaid first class certified mail; unless otherwise stated:
TO IgX: Albert J. Henry, Chairman
IgX Corporation
c/o Henry & Co.
9191 Towne Center Drive
San Diego, CA 92122
TO LICENSOR: Vice President for Research
Administration 601
The University of Arizona
Tucson, Arizona 85721
with a copy to:
Rita C. Manak, Ph.D.
Director
Office of Technology Transfer
University of Arizona
1430 East Fort Lowell, Suite 200
8
<PAGE>
Tucson, Arizona 85719
Such addresses may be altered by written notice. If no time limit is specified
for a notice required or permitted to be given under this Agreement, the time
limit shall be twenty (20) full business days, not including the day of
mailing.
14.3. This Agreement, and its effect, is subject to and shall be construed in
accordance with the laws of the State of Arizona.
14.4. The parties to this Agreement recognize and agree that each is
operating an independent contractor and not as an agent of the other.
14.5. The captions herein are for convenience only and shall not be deemed
to limit or otherwise affect the construction thereof.
14.6. Any waiver by either party of the breach of any term or condition of
this Agreement will not be considered as a waiver of any subsequent breach of
the same or any other term or condition hereof.
14.7. The Inventors may freely publish and disseminate the TECHNICAL
INFORMATION in any manner they may choose and may furnish LICENSED PRODUCT(S)
to interested other parties for non-commercial, research oriented purposes.
The Inventors will inform any such other party that LICENSOR has a
co-exclusive Agreement with IgX and with one other party under which The
Inventors furnish hybridomas for commercial purposes.
15. ENTIRE AGREEMENT
15.1. This Agreement sets forth the entire Agreement and understanding
between the parties as to the subject matter of this Agreement, and merges all
prior discussions between them. Neither of the parties shall be bound by any
conditions, definitions, warranties, or representations with respect to the
subject matter of this Agreement or as duly set forth on or subsequent to the
date hereof in writing unless signed by the proper and duly authorized
representative of the party to be bound thereby.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and duly
executed this Agreement as of the day and the year first above written.
Arizona Board of Regents
on behalf of
University of Arizona
By [illegible]
--------------------------------
Title
------------------------------
Date
-------------------------------
IgX
By /s/ Albert J. Henry
--------------------------------
Title Chairman
------------------------------
Date May 27, 1992
-------------------------------
Inventors have read and understood the terms and conditions of this Agreement
and by their signatures below accept said terms and conditions.
/s/ Vitaliano A. Cama /s/ Charles R. Sterling
- ----------------------------------------- ---------------------------------
Vitaliano A. Cama Charles R. Sterling
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<PAGE>
FIRST AMENDMENT TO LICENSE AGREEMENT
This FIRST AMENDMENT TO LICENSE AGREEMENT (the "Amendment") is
entered into effective this ___ day of May 1993, by and between the Arizona
Board of Regents on behalf of The University of Arizona ("Licensor") having a
principal office at Administration 601, The University of Arizona, Tucson,
Arizona 85721, and IgX Corp. ("IgX") a Delaware corporation, having a
principal address at 17197 North Laurel Park Drive, Suite 540, Livonia,
Michigan 48152, who hereby agree to amend that certain License Agreement dated
May 27, 1992 (the "License Agreement") as follows:
1. Section 1.1 of the License Agreement is hereby amended to add
the following:
"Inventions shall be defined to also include that certain
Patent Application referenced on Exhibit "A" attached hereto and
incorporated herein by this reference (the subject matter of which is
described on the Abstract attached thereto) filed by Igx in the names
of Charles R. Sterling and Vitaliano A. Cama, as well as any and all
rights, modifications, derivatives and/or enhancements arising
therefrom or relating thereto (collectively the "Patent Rights")."
2. Section 1.2 of the License Agreement is hereby amended to add
the following:
"Licensed Products shall be defined to also include any and
all products derived from the Patent Rights."
3. Section 1.5 of the License Agreement is hereby amended to add
the following:
"Field of Use shall be defined to also include any and all
proposed uses derived from and/or relating to the Patent Rights."
4. Except as expressly amended hereby, the License Agreement
shall remain in full force and effect.
IN WITNESS WHEREOF, this First Amendment to License Agreement is
executed effective as of the first date written above.
<PAGE>
"Licensor" ARIZONA BOARD OF REGENTS on behalf of
THE UNIVERSITY OF ARIZONA
By: /s/ Charles A. Geoffrion
-----------------------------
Its: Associate Vice President for Research
-------------------------------------
"IgX" IgX CORP.,
a Delaware corporation
By:/s/ Albert J. Henry
------------------------------
Albert J. Henry, Chairman
The Inventors have read and understood the terms and conditions of this First
Amendment and by their signatures below accept said terms and conditions.
Dated: August 9, 1993 /s/ Vitaliano A. Cama
---------------------
Vitaliano A. Cama
Dated: August 9, 1993 /s/ Charles R. Sterling
-----------------------
Charles R. Sterling
[Signature Page No. 2 to
First Amendment to License Agreement]
<PAGE>
SECOND AMENDMENT TO MAY 27, 1992 LICENSE AGREEMENT
This Second Amendment to May 27, 1992 License Agreement (the
"Amendment") is entered into effective as of the 18th day of September, 1998 by
and between the Arizona Board of Regents for The University of Arizona (the
"University") and IgX Corp., a Delaware corporation having a principal place of
business at One Springfield Avenue, Summit, New Jersey 07901 (the "Company").
WHEREAS, the parties hereto have previously entered into that certain
License Agreement dated May 27, 1992 (the "Original License Agreement"),
pursuant to which the Company was granted an exclusive, worldwide license for
use in humans in and to that certain Invention Disclosure entitled "Hyperimmune
Egg Yolks as a Source of Anti-Cryptosporidium Neutralizing Antibodies Suitable
for Passive Immune Transfer" (UA 1121).
WHEREAS, the parties hereto have previously entered into that certain
First Amendment to License Agreement dated August 9, 1993 (the "First
Amendment").
WHEREAS, the parties hereto now desire to amend the Original License
Agreement, as amended by the First Amendment, as set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which are acknowledged by each signatory hereto, it is agreed as
follows:
1. Section 1.1 of the License Agreement, as amended by the First
Amendment, is hereby amended to include the following:
"INVENTIONS" shall be defined to also include that certain Invention
Disclosure entitled "Reduced Lipid Formulation of Hyperimmune Egg Yolk for
Treatment of Cryptosporidium Parvum" (UA 1765).
2. All capitalized terms used in this Amendment and not otherwise
defined shall have the meaning given such terms in the Original License
Agreement, as amended by the First Amendment. Except as expressly modified
hereby, all other terms and conditions of the Original License Agreement, as
amended by the First Amendment, shall remain in full force and effect in
accordance with the respective terms thereof. In the event of a conflict between
the terms and conditions contained in this Amendment and the terms and
conditions of the Original License Agreement, as amended by the First Amendment,
the terms and conditions of this Amendment shall prevail.
3. This Amendment may be executed in one or more counterparts,
all of which when fully-executed and delivered by all parties hereto and taken
together shall constitute a single agreement, binding against each of the
parties. To the maximum extent permitted by law or by any applicable
governmental authority, this Amendment may be signed and transmitted by
<PAGE>
facsimile with the same validity as if it were an ink-signed document. Each
signatory below represents and warrants by his or her signature that he or she
is duly authorized (on behalf of the respective entity for which such signatory
has acted) to execute and deliver this instrument and any other document related
to this transaction, thereby fully binding each such respective entity.
[Remainder of Page Intentionally Left Blank]
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<PAGE>
IN WITNESS WHEREOF, this Amendment is executed effective as of the
first date written above.
University THE ARIZONA BOARD OF REGENTS
ON BEHALF OF THE UNIVERSITY OF ARIZONA
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
Company IGX CORP., a Delaware corporation
By:
------------------------------------------
Albert J. Henry, Chairman
I have read this Amendment, and understand the obligations placed on me
and my laboratory and other University employees under my supervision, and agree
to be bound by it.
---------------------------------------------
Charles R. Sterling
---------------------------------------------
Vitaliano A. Cama
[Signature Page to Second Amendment to May 27, 1992 License Agreement]
-3-
<PAGE>
LICENSE AGREEMENT
This Agreement is made this 14th day of ________ 1992 by and between the
Arizona Board of Regents on behalf of The University of Arizona (LICENSOR)
having a principal office at Administration 601, The University of Arizona,
Tucson, Arizona 85721, and IgX ("IgX"), a Delaware corporation having a
principal address at 17197 N. Laurel Park Drive, Livonia, MI 48152
(hereinafter "IgX").
WITNESS THAT:
WHEREAS, LICENSOR represents that F. Javier Enriquez, M.D., Ph.D., and Charles
R. Sterling, Ph.D., employees of LICENSOR, are The Inventors who have
disclosed an invention, Anti-Cryptosporidium parvum Sporozoite IgA Monoclonal
Antibody, (the INVENTION), to LICENSOR, which disclosure (attached hereto as
Exhibit A) was assigned log number UA1176; and
WHEREAS, LICENSOR has the right to make, use, sell, and grant licenses under
the INVENTION as defined herein; and LICENSOR wishes to have the INVENTION
utilized for the public interest; and
WHEREAS IgX wishes to obtain a license to make, use, sell, and distribute the
INVENTION under the FIELD OF USE (as defined herein) and upon the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and faithful performance of
the covenants contained herein, IT IS AGREED:
1. "DEFINITIONS"
For the purposes of this Agreement, and solely for that purpose, the terms
hereinafter set forth shall be defined as follows:
1.1 "INVENTION" shall mean the invention as described in EXHIBIT A.
1.2 "LICENSED PRODUCT(S)" shall mean Anti-Cryptosporidium parvum Sporozoite IgA
Monoclonal Antibody, derived from the INVENTION as described in EXHIBIT A.
1.3 "TECHNICAL INFORMATION" shall mean technical information and know-how
relating to the preparation of LICENSED PRODUCT(S).
<PAGE>
1.4 "REGULATOR" shall mean the government approved regulatory body, committee,
agency, or other organization which by law has the power to approve the sale
of the INVENTION for human or veterinary therapeutic use within each country
in world.
1.5 "FIELD OF USE" shall mean the use of INVENTION for REGULATOR approved
human therapeutics in the treatment of cryptosporidiosis in patients with
Acquired Immune Deficiency Syndrome (AIDS) and in certain immune competent
patients.
1.6 "FIRST COMMERCIAL SALE" means the initial transfer by IgX or its
Sublicensees of LICENSED PRODUCT(S) in exchange for cash or some equivalent to
which value can be assigned for the purpose of determining NET SALES.
1.7 "NET SALES" means the total gross receipts for sales of LICENSED
PRODUCT(S) by IgX, its Sublicensee(s) or its AFFILIATES, and from leasing,
renting, or otherwise making LICENSED PRODUCT(S) available to others without
sale or other dispositions, whether invoiced or not, less returns and
allowances actually granted, freight out, taxes or excise duties imposed on
the transaction (if separately invoiced), and wholesaler and cash discounts in
amounts customary in the trade. No deductions shall be made for commissions
paid to individuals, whether they be with independent sales agencies or
regularly employed by IgX or its AFFILIATES, and on their payroll, or for the
cost of collections.
1.8 "NET SALES PRICE" means the NET SALES divided by the quantity of LICENSED
PRODUCT(S) sold. In the event that the LICENSED PRODUCT(S) is sold as part of
a kit, or in combination with other products not covered by this Agreement
(such as detection systems), the NET SALES PRICE for such products which
contain the LICENSED PRODUCT(S) will be calculated as B* (A/B); where A is the
gross sales price of an equivalent unit of LICENSED PRODUCT(S) sold separately,
less allowances, and B is the gross sales price of the kit or combination of
products in which the LICENSED PRODUCT(S) is included less allowances.
1.9 "AFFILATE" means any corporation or other business entity controlled by,
controlling, or under common control with IgX. For this purpose, "control"
means direct or indirect beneficial ownership of at least fifty (50) percent of
the voting stock, or at least fifty (50) percent interest in the income of
such corporation or other business.
2. LICENSE
2.1 LICENSOR hereby grants to IgX and IgX hereby accepts from LICENSOR, upon
the terms and conditions herein specified, an exclusive, worldwide, and
non-assignable (except as herein specified) License under the INVENTION to
test, evaluate, and develop the LICENSED PRODUCT(S) in the FIELD OF USE
covered hereby and to make, have made, use and sell the LICENSED PRODUCT(S)
during the term of this Agreement, and during the term of any extension
thereof, unless sooner terminated as herein provided. LICENSOR also grants to
IgX under the terms of this License the right to use the TECHNICAL INFORMATION
to
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<PAGE>
test, evaluate, and develop the LICENSED PRODUCT(S).
2.2 LICENSOR hereby grants to IgX and IgX hereby accepts from LICENSOR, upon
terms and conditions herein specified, the right to extend the License granted
hereunder to its SUBLICENSEE(S). IgX shall promptly notify LICENSOR in
writing at the time of each SUBLICENSEE and provide LICENSOR with a copy of
each SUBLICENSE. IgX may negotiate such terms as it chooses for each
SUBLICENSE, provided that LICENSOR shall receive a royalty for all sales made
by SUBLICENSEE(S) at a rate not less than that provided for in this Agreement
and fifty percent (50%) of any additional amounts received by IgX from
SUBLICENSEE.
2.3 If IgX shall so notify LICENSOR in advance thereof in writing, any
SUBLICENSEE(S) to whom the License shall have been extended pursuant to
paragraph 2.2 hereof, may make the reports and royalty payments specified in
Paragraph 3.1 hereof, directly to LICENSOR on behalf of IgX; otherwise, such
reports and payments on account of sales by such SUBLICENSEE(S) shall be made
by IgX.
2.4 LICENSOR retains a non-exclusive, royalty-free, irrevocable License to
make, have made and use the INVENTION and LICENSED PRODUCT(S) for its own use.
2.5 The exclusive License of paragraph 2.1 shall be for a term of twenty (20)
years from FIRST COMMERCIAL SALE, said license shall be renewable for two ten
(10) year periods at the discretion of IgX.
2.6 Outside the scope of the License between LICENSOR and IgX no other,
further, or different license of right, and no further power to sublicense is
hereby granted or implied.
3. ROYALTIES, RECORDS AND REPORTS
3.1 During the term of this Agreement, unless sooner terminated, IgX shall pay
to LICENSOR, in the manner hereinafter provided, earned royalties at the rate
of five percent (5%) of the NET SALES PRICE of all LICENSED PRODUCT(S) sold by
IgX and its SUBLICENSEE(S), anywhere in the world.
3.2 LICENSED PRODUCT(S) shall be considered sold when sold or invoiced, and if
not sold or invoiced, when delivered to a third party.
3.3 IgX shall be responsible for the performance hereunder of all obligations
including payment of royalties, keeping of records, and reporting by IgX and
any SUBLICENSEE(S) to whom the License shall have been extended pursuant to
this Agreement.
3.4 So long as this Agreement remains in force, IgX shall deliver to LICENSOR,
within sixty (60) days after the first day of January, April, July and October
of each year, a true
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<PAGE>
and accurate report, giving such particulars of the business conduct by IgX and
its SUBLICENSEE(S) during preceding three (3) months under this Agreement as are
necessary to accurately account for sales subject to royalties under this
Agreement. Each report shall include, but not limited to, information about
production, inventory on hand, marketing efforts and sales.
3.5 Simultaneously with the delivery of each report required by the preceding
paragraph 3.4, IgX shall pay to LICENSOR the net royalties and any other such
payment due under this Agreement for the period covered by such report. If no
royalties are due, it shall be so reported.
3.6 All payments from IgX to LICENSOR shall be in U.S. dollars. The rates of
exchange for such payments shall be midpoint between the buying and selling
rates for U.S. dollars as quoted by the Chase Manhattan Bank in New York, New
York at the close of business on the last business day preceding the date
payment is due.
3.7 In the case of any delay in payment by IgX to LICENSOR not occasioned by
force majeure, interest at the rate of one percent (1%) per month, assessed
from the thirty-first (31st) day after the due date of said payment, shall be
due by IgX without special notice.
3.8 Royalties shall accrue in accordance with this Agreement, upon the
FIRST COMMERCIAL SALE.
3.9 Royalties payable in connection with the sale of a LICENSED PRODUCT(S)
under Paragraph 2.2 and Paragraph 3.1 shall be reduced by an amount of
royalties actually paid by IgX or such SUBLICENSEE(S) to any non-affiliated
third party in connection with the licensing of additional patent rights or
know-how necessary to make, use, or sell LICENSED PRODUCT(S); provided,
however, that in no event shall the Royalties payable to LICENSOR be less than
three percent (3%) of the net sales of such LICENSED PRODUCT(S).
3.10 IgX shall keep full, true and accurate books of account containing all
particulars which may be necessary for the purpose of showing the amount
payable to LICENSOR by way of royalty as aforesaid or by way of any other
provision hereunder. Said books of account shall be kept at IgX's principal
place of business. Said books and supporting data shall be open at all
reasonable times, for three (3) years following the end of the calendar year
to which they pertain, to inspection by LICENSOR for the purpose of verifying
IgX's royalty statements, or IgX's compliance in other respects with this
Agreement.
3.11 IgX also agrees to make a written report to LICENSOR within ninety (90)
days after the date of termination of this agreement, stating in such report
the number, description, and NET SALES of all products made, sold, or
otherwise disposed of and upon which royalties are payable hereunder but which
were not previously reported to LICENSOR. IgX shall also continue to make
quarterly reports pursuant to the provisions of paragraph 3.4 of all gross
income received form leasing, renting, or otherwise making products available
to others without
4
<PAGE>
sale or other disposition transferring title in the case of transactions
entered into prior to such termination.
4. PERFORMANCE
4.1 IgX shall use its best efforts to commence and maintain regular
commercial production and sale of LICENSED PRODUCT(S) in the FIELD OF USE and
shall report such efforts in accordance with the provisions of Paragraph 3.4.
The licensee agrees to support the attached research plan and budget, Exhibit
"B", which describes the work yet to be done by the LICENSOR between May 25,
1992 and June 1, 1993 to further develop the invention for IgX, so that IgX
might identify further actions which may be necessary to achieve regulatory
submission and approval to make the first commercial sale. At the end of this
period, but no later than eighteen (18) months from the date of this
agreement, LICENSEE will provide a milestone schedule of development and
licensed products) and regulatory submission. This time period may be
extended by mutual agreement of both parties.
4.2 IgX and LICENSOR agree to cooperate to ensure the quality of LICENSED
PRODUCT(S) before LICENSED PRODUCT(S) are first offered for sale in a
commercial transaction and periodically thereafter. IgX shall provide samples
of LICENSED PRODUCT(S) so that LICENSOR can determine through mutually agreed
upon laboratory protocols the activity of LICENSED PRODUCT(S). In the event
LICENSED PRODUCT(S) supplied by IgX are not active or are otherwise defective,
IgX and LICENSOR will cooperate to produce active LICENSED PRODUCT(S) and/or to
correct any defects in the LICENSED PRODUCTS. If for any reason IgX does not
maintain activity and/or correct defects in LICENSED PRODUCT(S), LICENSOR has
the right to take action under the provisions of Paragraph 5.2 of this
Agreement.
5. TERMINATION
5.1 If IgX shall become bankrupt or insolvent and/or if the business of IgX
shall be placed in the hands of a Receiver, Assignee, or Trustee, whether by
voluntary act of IgX or otherwise, this License will be deemed to have
automatically terminated as of a date seven (7) days prior to that event,
provided, however, that such termination shall not terminate any obligations
which may have accrued prior thereto.
5.2 Notwithstanding the provisions of Article 5.1, upon any breach or default
under this Agreement by IgX, LICENSOR may terminate this License by ninety
(90) days written notice by registered mail to IgX. Said notice shall become
effective at the end of said period, unless during said period IgX shall cure
any breach or default and notify LICENSOR thereof.
5.3 IgX may terminate this license at any time upon ninety (90) days written
notice
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<PAGE>
by registered mail to LICENSOR.
5.4 Upon termination of this License for any reason, all rights granted
hereunder shall revert to LICENSOR for the sole benefit of LICENSOR.
5.5 Termination of this License shall terminate all SUBLICENSEE(S) made by IgX
hereunder, at the option of LICENSOR.
5.6 IgX's responsibilities and obligations to report to LICENSOR and pay
royalties to LICENSOR as to any LICENSED PRODUCTS produced or sold by IgX or its
SUBLICENSEE(S) under this Agreement prior to termination or expiration hereof
shall survive such termination or expiration.
6. ASSIGNMENT
6.1 This Agreement may be assigned by LICENSOR. This Agreement may be assigned
by IgX to the successor of its entire business, or to any wholly-owned
subsidiary, but shall not be otherwise assignable by IgX without the written
consent of LICENSOR.
6.2 Successors and Assigns: All of the terms, covenants and conditions of this
Agreement shall be binding upon and inure to the benefit of and shall apply to
the respective heirs, executors, administrators, successors, assigns and legal
representation of the parties, except as provided for in Paragraph 5.1.
7. SEVERABILITY
7.1 Should any part or provision of this Agreement be unenforceable or
otherwise in conflict with or in violation of the law of any jurisdiction, the
remainder of this Agreement shall remain binding upon the parties.
8. NEGATION OF WARRANTIES
8.1 Nothing in this Agreement shall be construed as a warranty or
representation that anything made, used, sold or otherwise disposed of under
any license granted in this Agreement is or will be free from infringement of
patents of third parties; or
8.2 LICENSOR makes no representation other than those specified in this
Agreement. LICENSOR makes no express or implied warranties of merchantability
or fitness for any particular purpose of LICENSED PRODDUCT(S).
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<PAGE>
9. ARBITRATION
9.1. Any controversy arising under or related to this Agreement, and any
disputed claim by either party against the other under this Agreement, shall
be settled by arbitration in accordance with the Licensing Agreement
Arbitration Rules of the American Arbitration Association. Upon request of
either party, arbitration will be by:
(a) A third party arbitrator mutually agreed upon in writing by
IgX and LICENSOR within thirty (30) days of arbitration
request; or
(b) A member of the American Arbitration Association.
9.2 Any arbitration under Section 9.1 shall be held in such place as may be
mutually agreed upon in writing between the parties and judgment upon the
award rendered by the arbitrator may be entered by any court having
jurisdiction thereof.
10. INDEMNIFICAITON
10.1 IgX agrees to indemnify and hold harmless the LICENSOR, LICENSOR's
employees or agents from and against any and all claims, damages and
liabilities asserted by third parties, both government and private, arising
from COMPANY's sale of LICENSED PRODUCT(S) to ultimate consumers and their use
thereof, except that IgX shall not indemnify LICENSOR, LICENSOR's employees or
agents for any claims, damages or liability resulting from the negligence of any
of them.
11. NONDISCRIMINATION
11.1 The parties agree to be bound by applicable state and federal rules
governing equal employment opportunity and nondiscrimination.
12. STATE OBLIGATION
12.1 The parties recognize that performance by the Arizona Board of Regents
for and behalf of the University of Arizona may be dependent upon the
appropriation of funds by the State Legislature of Arizona. Should the
Legislature fail to appropriate the necessary funds, the Board of Regents may
cancel this Agreement without further duty or obligation. The Board agrees to
notify other party(ies) as soon as reasonably possible after the unavailability
of said funds comes to the Board's attention.
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<PAGE>
13. CONFLICT OF INTEREST
13.1 This Agreement is subject to the provisions of A.R.S. Section 15-1635.01
and A.R.S. Section 38-511. The Governor or the state of Arizona my cancel this
Agreement by written notice to the parties if any person substantially
involved in obtaining, drafting or procuring this Agreement for or on behalf
on the Arizona Board of Regents becomes an employee or consultant in any
capacity of IgX, unless all requirenments stipulated in A.R.S. Section
15-1635.01 have been met.
14. GENERAL
14.1 IgX shall not use the name of the Inventors, or any institution with
which they have been or are connected, or the adaptation of any of them, in
any advertising, promotional or sales literature, without prior or written
consent obtained from LICENSOR in each case.
14.2 Any notice required or permitted to be given by this Agreement shall be
given postpaid first class certified mail; unless otherwise stated:
TO IgX: Albert J. Henry, Chairman
IgX Corporation
c/o Henry & Co.
9191 Towne Center Drive
San Diego, CA 92122
TO LICENSOR: Vice President for Research
Administration 601
The University of Arizona
Tuscon, Arizona 85721
With a copy to:
Rita C. Manak, Ph.D.
Director
Office of Technology Transfer
University of Arizona
1430 East Fort Lowell, Suite 200
Tuscon, Arizona 85719
Such addresses may be altered by written notice. If no time limit is specified
for a notice required or permitted to be given under this Agreement, the time
limit shall be twenty (20) full business days, not including the day of
mailing.
14.3 This Agreement, and its effect, is subject to and shall be construed in
accordance with the laws of the State of Arizona.
14. 4 The parties to this Agreement recognize and agree that each is
operating an
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independent contractor and not and an agent of the other.
14.5 The captions herein are for convenience only and shall not be deemed to
limit or otherwise affect the construction therof.
14.6 Any waiver by either party of the breach of any term or condition of this
Agreement will not be considered as a waiver of any subsequent breach of the
same or any other term or condition hereof.
14.7 The Inventors may freely publish and disseminate the TECHNICAL
INFORMATION in any manner they may choose and may furnish LICENSED PRODUCT(S)
to interested other parties for non-commercial, research oriented purposes.
The Inventors will inform any such other party that LICENSOR has a
co-exclusive Agreement with IgX and with one other party under which The
Inventors furnish hybridomas for commercial purposes.
15. ENTIRE AGREEMENT
15.1 This Agreement sets forth the entire Agreement and understanding between
the parties as to the subject matter of this Agreement, and merges all prior
discussions between them. Neither of the parties shall be bound by any
conditions, definitions, warranties, or representations with respect to the
subject matter of this Agreement or as duly set forth on or subsequent to the
date hereof in writing unless signed by the proper and duly authorized
representative of the party to be bound thereby.
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<PAGE>
IN WITNESS WHEROF, the parties hereto have hereunto set their hands and duly
executed this Agreement as of the day and the year first above written.
Arizona Board of Regents
On behalf of
University of Arizona
By /s/ Illegible
- ------------------------------------------
Title Interim Vice President for Research
- ------------------------------------------
Date: June 19, 1992
- ------------------------------------------
IgX
By /s/ Albert J. Henry
- ------------------------------------------
Title Chairman
- ------------------------------------------
Date June 15, 1992
- ------------------------------------------
Inventors have read and understood the terms and conditions of this Agreement
and by their signatures below accept said terms and conditions.
/s/ F. Javier Enriquez /s/ Charles R. Sterling
- ---------------------------- -----------------------------
F. Javier Enqriquez Charles R. Sterling
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<PAGE>
Exhibit A
INVENTION Description, as set forth in the University of Arizona Invention
Disclosure UA1176 attached hereto and made part of this Agreement.
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LICENSE AGREEMENT
This LICENSE AGREEMENT (the "Agreement") is made as of the 1st day of
July, 1996, by and between the Arizona Board of Regents acting for and on
behalf of The University of Arizona, Tucson, Arizona 85721 ("LICENSOR") and
IgX Corp., a Delaware corporation ("IgX"), having a principal address at 17197
North Laurel Park Drive, Suite 540, Livonia, Michigan 48152.
WHEREAS, LICENSOR represents that Michael W. Riggs, DVM, Ph.D.,
employee of LICENSOR, is the Inventor who has submitted a disclosure,
Monoclonal Antibodies Reactive with Multiple Neutralization-Sensitive Surface
Epitopes as a Source of Treatment of Enteric Cryptosporidiosis in Humans (a
portion of which constitutes the "INVENTION" as defined in Exhibit "A" of the
accompanying Research Agreement), to LICENSOR, which disclosure (attached
hereto as Exhibit "A") was assigned log number UA1411;
WHEREAS, LICENSOR has the right to make, use, sell and grant licenses
under the INVENTION as defined herein; and LICENSOR wishes to have the
INVENTION utilized for the public interest; and
WHEREAS, IgX wishes to obtain a license to make, use, sell and
distribute the INVENTION under the FIELD OF USE (as defined herein) and upon
the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, IgX and LICENSOR agree as follows:
1. DEFINITIONS
For the purposes of this Agreement, and solely for that purpose, the
terms hereinafter set forth shall be defined as follows:
1.1. "INVENTION" shall mean the invention as described in Exhibit
"A." INVENTION shall be defined to also include that certain Patent
Application referenced on Exhibit "A" attached hereto and incorporated herein
by this reference (the subject matter of which is described on the Abstract
attached thereto) filed (or to be filed) by IgX in the name of Michael W.
Riggs, as well as any and all rights, modifications, derivatives and/or
enhancements arising therefrom or relating thereto (collectively the "Patent
Rights"). INVENTION(S) hereunder shall be limited to devices, processes,
compositions or products for treatment of human patients, and shall
specifically exclude any devices, processes, compositions or products for
treatment of animals within the field of veterinary science.
1.2. "LICENSED PRODUCT(S)" shall mean monoclonal antibodies or
treatments derived from the INVENTION as described in Exhibit "A" that are
within the FIELD OF USE, as defined in Paragraph 1.5.
1.3. "TECHNICAL INFORMATION" shall mean technical information and
know-how relating to the preparation of LICENSED PRODUCT(S).
<PAGE>
1.4. "REGULATOR" shall mean the government-approved regulatory body,
committee, agency or other organization which by law has the power to approve
the sale of the INVENTION for human therapeutic use within each country in the
world.
1.5. "FIELD OF USE" shall mean the use of INVENTION for
REGULATOR-approved human therapeutics in the treatment of cryptosporidiosis in
patients with Acquired Immune Deficiency Syndrome (AIDS) and in certain immune
competent human patients. FIELD OF USE shall be defined to also include any
and all proposed uses derived from and/or relating to the Patent Rights.
Notwithstanding the foregoing, the FIELD OF USE hereunder shall be limited to
devices, processes, compositions or products for treatment of human patients,
and shall specifically exclude any devices, processes, compositions or
products for treatment of animals within the field of veterinary science.
1.6. "FIRST COMMERCIAL SALE" means the initial transfer by IgX or its
SUBLICENSEE(S) of LICENSED PRODUCT(S) in exchange for cash or some equivalent
to which value can be assigned for the purpose of determining NET SALES.
1.7. "NET SALES" means the total gross receipts for sales of LICENSED
PRODUCT(S) by IgX, its SUBLICENSEE(S) or its AFFILIATES, and from leasing,
renting or otherwise making LICENSED PRODUCT(S) available to others without
sale or other dispositions, whether invoiced or not, less returns and
allowances actually granted, freight out, taxes or excise duties imposed on
the transaction (if separately invoiced) and wholesaler and cash discounts in
amounts customary in the trade. No deductions shall be made for commissions
paid to individuals, whether they be with independent sales agencies or
regularly employed by IgX or its AFFILIATES, and on their payroll, or for the
cost of collections.
1.8. "NET SALES PRICE" means the NET SALES divided by the quantity of
LICENSED PRODUCT(S) sold. In the event the LICENSED PRODUCT(S) is sold as part
of a kit, or in combination with other products not covered by this Agreement
(such as detection systems), the NET SALES PRICE for such products which
contain the LICENSED PRODUCT(S) will be calculated as B * (A/B); where A is
the gross sales price of an equivalent unit of LICENSED PRODUCT(S) sold
separately, less allowances, and B is the gross sales price of the kit or
combination of products in which the LICENSED PRODUCT(S) is included less
allowances.
1.9. "AFFILIATE" means any corporation or other business entity
controlled by, controlling or under common control with IgX. For this purpose,
"control" means direct or indirect beneficial ownership of at least fifty
percent (50%) of the voting stock, or at least fifty percent (50%) interest in
the income of such corporation or other business.
2. LICENSE
2.1. LICENSOR hereby grants to IgX and IgX hereby accepts from
LICENSOR, upon the terms and conditions herein specified, an exclusive,
worldwide and non-assignable (except as herein specified) License under the
INVENTION to test, evaluate and develop the LICENSED PRODUCT(S) in the FIELD
OF USE covered hereby and to make, have made,
<PAGE>
use and sell the LICENSED PRODUCT(S) during the term of this Agreement, and
during the term of any extension thereof, unless sooner terminated as herein
provided. LICENSOR also grants to IgX under the terms of this License the
right to use the TECHNICAL INFORMATION to test, evaluate and develop the
LICENSED PRODUCT(S).
2.2. LICENSOR hereby grants to IgX and IgX hereby accepts from
LICENSOR, upon terms and conditions herein specified, the right to extend the
License granted hereunder to its sublicensee(s) ("SUBLICENSEE(S)"). IgX shall
promptly notify LICENSOR in writing at the time of each sublicense
("SUBLICENSE") and shall provide LICENSOR with a copy of each SUBLICENSE. IgX
may negotiate such terms as it chooses for each SUBLICENSE, provided that
LICENSOR shall receive a royalty for all sales made by SUBLICENSEE(S) as
provided for in Section 3.1 below.
2.3. If IgX shall so notify LICENSOR in advance thereof in writing,
any SUBLICENSEE(S) to whom the License shall have been extended pursuant to
Paragraph 2.2 hereof may make the reports and royalty payments specified in
Paragraph 3.1 hereof directly to LICENSOR on behalf of IgX; otherwise, such
reports and payments on account of sales by such SUBLICENSEE(S) shall be made
by IgX.
2.4. LICENSOR retains a non-exclusive, royalty-free, irrevocable
License to make, have made and use the INVENTION and LICENSED PRODUCT(S) for
its own use.
2.5. The exclusive License of Paragraph 2.1 shall be effective as of
the execution of this Agreement, and shall be for an initial term of twenty
(20) years from the date of the FIRST COMMERCIAL SALE, and said License shall
be renewable for two additional ten (10) year periods at the discretion of
IgX, subject to the provisions of Articles 4 and 5 of this Agreement.
2.6. Outside the scope of the License between LICENSOR and IgX, no
other, further or different license of right, and no further power to
sublicense, is hereby granted or implied.
3. ROYALTIES, RECORDS AND REPORTS
3.1. During the term of this Agreement, unless sooner terminated, IgX
shall pay to LICENSOR, in the manner hereinafter provided, earned royalties at
the rate of five percent (5%) of the NET SALES PRICE of all LICENSED
PRODUCT(S) sold by IgX and its SUBLICENSEE(S), anywhere in the world.
3.2. LICENSED PRODUCT(S) shall be considered sold when sold or
invoiced, and if not sold or invoiced, when delivered to a third party.
3.3. IgX shall be responsible for the performance hereunder of all
obligations including payment of royalties, keeping of records and reporting
by IgX and any SUBLICENSEE(S) to whom the License shall have been extended
pursuant to this Agreement.
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<PAGE>
3.4. So long as this Agreement remains in force, IgX shall deliver to
LICENSOR, within sixty (60) days after the first day of January, April, July
and October of each year, a true and accurate report, giving such particulars
of the business conduct by IgX and its SUBLICENSEE(S) during preceding three
(3) months under this Agreement as are necessary to accurately account for
sale subject to royalties under this Agreement. Each report shall include, but
not be limited to, information about production, inventory on hand, marketing
efforts and sales.
3.5. Simultaneously with the delivery of each report required by the
preceding Paragraph 3.4, IgX shall pay to LICENSOR the net royalties and any
other such payment due under this Agreement for the period covered by such
report. If no royalties are due, it shall be so reported.
3.6. All payments from IgX to LICENSOR shall be in U.S. dollars. The
rates of exchange for such payments shall be midpoint between the buying and
selling rates for U.S. dollars as quoted by the Chase Manhattan Bank in New
York, New York at the close of business on the last business day preceding the
date payment is due.
3.7. In case of any delay in payment by IgX to LICENSOR not
occasioned by force majeure, interest at the rate of one percent (1%) per
month, assessed from the thirty-first (31st) day after the due date of said
payment, shall be due by IgX without special notice.
3.8. Royalties shall accrue in accordance with this Agreement, upon
the FIRST COMMERCIAL SALE.
3.9. Royalties payable in connection with the sale of a LICENSED
PRODUCT(S) under Paragraph 2.2 and Paragraph 3.1 shall be reduced by an amount
of royalties actually paid by IgX or such SUBLICENSEE(S) to any non-affiliated
third party in connection with the licensing of additional patent rights or
know-how necessary to make, use or sell LICENSED PRODUCT(S); provided,
however, that in no event shall the royalties payable to LICENSOR be less that
three percent (3%) of the net sales of such LICENSED PRODUCT(S).
3.10. IgX shall keep full, true and accurate books of account
containing all particulars which may be necessary for the purpose of showing
the amount payable to LICENSOR by way of royalty as aforesaid or by way of any
other provision hereunder. Said books of account shall be kept at IgX's
principal place of business. Said books and supporting data shall be open at
all reasonable times, for three (3) years following the end of the calendar
year to which they pertain, to inspection by LICENSOR for the purpose of
verifying IgX's royalty statements, or IgX's compliance in other respects with
this Agreement.
3.11. IgX also agrees to make a written report to LICENSOR within
ninety (90) days after the date of termination of this Agreement, stating in
such report the number, description and NET SALES of all products made, sold
or otherwise disposed of and upon which royalties are payable hereunder but
which were not previously reported to LICENSOR. IgX shall also
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<PAGE>
continue to make quarterly reports pursuant to the provisions of Paragraph
3.4 of all gross income received from leasing, renting or otherwise making
products available to others without sale or other disposition transferring
title in the case of transactions entered into prior to such termination.
4. PERFORMANCE
4.1. IgX shall use its best efforts to commence and maintain regular
commercial production and sale of LICENSED PRODUCTS(S) in the FIELD OF USE and
shall report such efforts in accordance with the provisions of Paragraph 3.4.
IgX agrees to support the Research Plan attached hereto as Exhibit "B," which
describes the work yet to be done by LICENSOR to further develop the INVENTION
for IgX, so that IgX might identify further actions which may be necessary to
achieve regulatory submission and approval to make the FIRST COMMERCIAL SALE.
At the end of this period, but no later than eighteen (18) months from the
date of this Agreement, IgX will provide a milestone schedule of development
and licensed products and regulatory submission. This time period may be
extended by mutual agreement of both parties.
4.2. IgX and LICENSOR agree to cooperate to ensure the quality of
LICENSED PRODUCT(S) before LICENSED PRODUCTS(S) are first offered for sale in
a commercial transaction and periodically thereafter. IgX shall provide
samples of LICENSED PRODUCT(S) so that LICENSOR can determine through mutually
agreed upon laboratory protocols the activity of LICENSED PRODUCT(S). In the
event LICENSED PRODUCT(S) supplied by IgX are not active or are otherwise
defective, IgX and LICENSOR will cooperate to produce active LICENSED
PRODUCT(S) and/or to correct any defects in the LICENSED PRODUCT(S). If for
any reason IgX does not maintain activity and/or correct defects in LICENSED
PRODUCT(S), LICENSOR has the right to take action under the provisions of
Paragraph 5.2 of this Agreement.
5. TERMINATION
5.1. If IgX shall become bankrupt or insolvent and/or if the business
of IgX shall be placed in the hands of a receiver, assignee or trustee,
whether by voluntary act of IgX or otherwise, this License will be deemed to
have automatically terminated as of a date seven (7) days prior to that event;
provided, however, that such termination shall not terminate any obligations
which may have accrued prior thereto.
5.2. Notwithstanding the provisions of Paragraph 5.1, upon any breach
or default under this Agreement by IgX, LICENSOR may terminate this License by
ninety (90) days written notice by registered mail to IgX. Said notice shall
become effective at the end of said period, unless during said period IgX
shall cure any breach or default and notify LICENSOR thereof.
5.3. IgX may terminate this license at any time upon ninety (90) days
written notice by registered mail to LICENSOR.
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<PAGE>
5.4. Upon termination of this License for any reason, all rights
granted hereunder shall revert to LICENSOR for the sole benefit of LICENSOR.
5.5. Termination of this License shall terminate all SUBLICENSE(S)
made by IgX hereunder, at the option of LICENSOR.
5.6. IgX's responsibilities and obligations to report to LICENSOR and
pay royalties to LICENSOR as to any LICENSED PRODUCT(S) produced or sold by
IgX or its SUBLICENSEE(S) under this Agreement prior to termination or
expiration hereof shall survive such termination or expiration.
6. ASSIGNMENT
6.1. This Agreement may not be assigned by either party without the
prior written consent of the other party; provided, however, that IgX may
assign this Agreement to any AFFILIATE of IgX, or to any purchaser or
transferee of all or substantially all of IgX's business upon prior written
notice to LICENSOR. LICENSOR agrees not to assign any of its rights or
obligations under this Agreement to any other party without first obtaining
IgX's written approval.
6.2. All of the terms, covenants and conditions of this Agreement
shall be binding upon and inure to the benefit of and shall apply to the
respective heirs, executors, administrators, successors, assigns and legal
representatives of the parties, except as provided for in Paragraph 5.1.
7. SEVERABILITY
7.1. Should any part or provision of this Agreement be unenforceable
or otherwise in conflict with or in violation of the law of any jurisdiction,
the remainder of this Agreement shall remain binding upon the parties.
8. NEGATION OF WARRANTIES
8.1. Nothing in this Agreement shall be construed as a warranty or
representation that anything made, used, sold or otherwise disposed of under
any license granted in this Agreement is or will be free from infringement of
patents of third parties.
8.2. LICENSOR makes no representation other than those specified in
this Agreement. LICENSOR makes no express or implied warranties of
merchantability or fitness for any particular purpose of LICENSED PRODUCT(S).
9. ARBITRATION
9.1. The parties agree that any dispute arising under this Agreement
involving the sum of Thirty Thousand Dollars ($30,000) or less in money
damages only shall be resolved by
6
<PAGE>
arbitration pursuant to the Arizona Uniform Rules of Procedure for
Arbitration. The decision of the arbitrator(s) shall be final.
10. INDEMNIFICATION
10.1. IgX agrees to indemnify and hold harmless LICENSOR, LICENSOR's
employees or agents from and against any and all claims, damages and
liabilities asserted by third parties, both government and private, arising
from IgX's sale of LICENSED PRODUCT(S) to ultimate consumers and their use
thereof, except that IgX shall not indemnify LICENSOR, LICENSOR's employees or
agents for any claims, damages or liability resulting from the negligence of
any of them.
11. NONDISCRIMINATION
11.1. The parties agree to be bound by applicable state and federal
rules governing equal employment opportunity and nondiscrimination.
12. STATE OBLIGATION
12.1. The parties recognize that the performance by the Arizona Board
of Regents for and on behalf of LICENSOR may be dependent upon the
appropriation of funds by the State Legislature of Arizona. Should the
Legislature fail to appropriate the necessary funds or if LICENSOR's
appropriation is reduced during the fiscal year, the Board of Regents may
reduce the scope of this Agreement if appropriate or cancel this Agreement
without further duty or obligation. The Board agrees to notify other
party(ies) as soon as reasonably possible after the unavailability of said
funds comes to the Board's attention.
13. CONFLICT OF INTEREST
13.1. This Agreement is subject to Arizona Revised Statutes ' 38-511
and the State of Arizona may cancel this Agreement if any person significantly
involved in negotiating, drafting, securing or obtaining this Agreement for or
on behalf of the Arizona Board of Regents becomes an employee in any capacity
of any other party or a consultant to any other party with reference to the
subject matter of this Agreement while the Agreement or any extension hereof
is in effect.
14. GENERAL
14.1. IgX shall not use the name of the Inventor, or any institution
with which he has been or is connected, or the adaption of any of them, in any
advertising, promotional or sale literature, without prior written consent
obtained from LICENSOR in each case.
14.2. Any notice required or permitted to be given by this Agreement
shall be given postpaid first class certified mail, unless otherwise stated:
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<PAGE>
To IgX: Albert J. Henry, Chairman
IgX Corp.
17197 North Laurel Park Drive, Suite 540
Livonia, Michigan 48152
With a copy to: June Knaudt
IgX Corp.
c/o: Henry & Co.
4370 La Jolla Village Drive, Suite 400
San Diego, California 92122
To LICENSOR: Janet M. Hornung, Director
Sponsored Projects Services
The University of Arizona
888 North Euclid Avenue, 510
P.O. Box 210158
Tucson, Arizona 85721
With a copy to: Rita C. Manak, Ph.D., Director
Office of Technology Transfer
The University of Arizona
888 North Euclid Avenue, 515
P.O. Box 210158
Tucson, Arizona 85721
and Michael W. Riggs, DVM, Ph.D., Associate Professor
The University of Arizona
Department of Veterinary Science
Administration Office 202, Building 90
Tucson, Arizona 85721
Such addresses may be altered by written notice. If no time limit is specified
for a notice required or permitted to be given under this Agreement, the time
limit shall be twenty (20) full business days, not including the day of
mailing.
14.3. This Agreement, and its effect, is subject to and shall be
construed in accordance with the laws of the State of Arizona.
14.4. The parties to this Agreement recognize and agree that each is
operating as an independent contractor and not as an agent of the other.
14.5. The captions herein are for convenience only and shall not be
deemed to limit or otherwise affect the construction thereof.
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<PAGE>
14.6. Any waiver by either party of the breach of any term or
condition of this Agreement will not be considered as a waiver of any
subsequent breach of the same or any other term or condition hereof.
14.7. The Inventor may freely publish and disseminate the TECHNICAL
INFORMATION in any manner he may choose and may furnish LICENSED PRODUCT(S) to
interested other parties for non-commercial, research oriented purposes. The
Inventor will inform any such other party that LICENSOR has an exclusive
Agreement with IgX.
14.8. This Agreement may be executed in more than one counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. This Agreement may be executed by
facsimile and such facsimile copy shall be conclusive evidence of the consent
and ratification of the matters contained herein by the undersigned.
15. ENTIRE AGREEMENT
15.1. This Agreement sets forth the entire Agreement and
understanding between the parties as to the subject matter of this Agreement,
and merges all prior discussions between them. Neither of the parties shall be
bound by any conditions, definitions, warranties or representations with
respect to the subject matter of this Agreement or as duly set forth on or
subsequent to the date hereof in writing unless signed by the proper and duly
authorized representative of the party to be bound thereby.
[The Remainder of This Page Intentionally Left Blank]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
and duly executed this Agreement as of the day and the year first written
above.
LICENSOR: Arizona Board of Regents,
on behalf of The University of Arizona
By:/s/ James T. Wheeler
----------------------------------------
Print Name:
Title:
IgX: IgX Corp.,
a Delaware corporation
By:/s/ Albert J. Henry
----------------------------------------
Albert J. Henry, Chairman
The Inventor has read and understands the terms and conditions of this
Agreement and by his signature below accepts said terms and conditions.
/s/ Michael W. Riggs
-----------------------------------------
Michael W. Riggs, DVM, Ph.D
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<PAGE>
EXHIBIT "A"
INVENTION
A-1
<PAGE>
EXHIBIT "B"
RESEARCH PLAN
B-1
<PAGE>
FIRST AMENDMENT TO JULY 1, 1996 LICENSE AGRFEMFNT
This First Amendment to July 1, 1996 License Agreement (the
"Amendment") is entered into effective as of the 18th day of September, 1998 by
and between the Arizona Board of Regents for The University of Arizona (the
"University") and IgX Corp., a Delaware corporation having a principal place of
business at One Springfield Avenue, Summit, New Jersey 07901 (the "Company").
WHEREAS, the parties hereto have previously entered into that certain
License Agreement dated July 1, 1996 (the "Original License Agreement"),
pursuant to which the Company was granted an exclusive, worldwide license in and
to that certain Invention Disclosure entitled "Monoclonal Antibodies Reactive
with Multiple Neutralization-Sensitive Surface Epitopes as a Source of Treatment
of Enteric Cryptosporidiosis in Humans" (UA1411).
WHEREAS, the parties hereto now desire to amend the Original License
Agreement as set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which are acknowledged by each signatory hereto, it is agreed as
follows:
1. Section 1.1 of the License Agreement is hereby amended as follows:
"INVENTIONS" shall be defined to also include (i) that certain
Invention Disclosure entitled "Monoclonal Antibody Formulations Targeting
Functionally Defined Sporozoite and Merozoite Epitopes of Cryptosporidium
Parvum for Prevention or Treatment of Cryptosporidiosis" (UA 1773) and (ii)
that certain Invention Disclosure entitled "Combined Monoclonal Antibody and Hen
Polyclonal Antibody Formulations Targeting Sporozoite and Merozoite Epitopes of
Cryptosporidium Parvum for Prevention or Treatment of Cryptosporidiosis" (UA
1774). INVENTION(S) hereunder shall be limited to devices, processes,
compositions or products for treatment of human patients, and shall specifically
exclude any devices, processes, compositions or products for treatment of
animals within the field of veterinary science.
2. Within ninety (90) days of the execution of this Agreement, the
Company shall submit to the University a list of specifically-defined monoclonal
antibodies, such list not to exceed ten (10) such antibodies as defined in the
Research Plan that is Exhibit "A" to the Original License Agreement, that shall
be subject to the provisions of the Original License Agreement, as amended
hereby. All rights to antibodies that are INVENTIONS and are not so listed shall
revert back to the University.
3. All capitalized terms used in this Amendment and not otherwise
defined shall have the meaning given such terms in the Original License
Agreement. Except as expressly modified hereby, all other terms and conditions
of the Original License Agreement shall remain in full force and effect in
accordance with the respective terms thereof. In the event of a conflict
<PAGE>
between the terms and conditions contained in this Amendment and the terms and
conditions of the Original License Agreement, the terms and conditions of this
Amendment shall prevail.
4. This Amendment may be executed in one or more counterparts, all of
which when fully-executed and delivered by all parties hereto and taken together
shall constitute a single agreement, binding against each of the parties. To the
maximum extent permitted by law or by any applicable governmental authority,
this Amendment may be signed and transmitted by facsimile with the same validity
as if it were an ink-signed document. Each signatory below represents and
warrants by his or her signature that he or she is duly authorized (on behalf of
the respective entity for which such signatory has acted) to execute and deliver
this instrument and any other document related to this transaction, thereby
ftilly binding each such respective entity.
[Remainder of Page Intentionally Left Blank]
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<PAGE>
IN WITNESS WHEREOF, this Amendment is executed effective as of the
first date written above.
University THE ARIZONA BOARD OF REGENTS
ON BEHALF OF THE UNIVERSITY OF ARIZONA
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Company IGX CORP., a Delaware corporation
By: /s/ Albert J. Henry
--------------------------------------
Albert J. Henry, Chairman
I have read this Amendment, and understand the obligations placed on me
and my laboratory and other University employees under my supervision, and agree
to be bound by it.
-----------------------------------------
Michael W. Riggs
[Signature Page to First Amendment to July 1, 1996 License Agreement]
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<PAGE>
IN WITNESS WHEREOF, this Amendment is executed effective as of the
first date written above.
University THE ARIZONA BOARD OF REGENTS
ON BEHALF OF THE UNIVERSITY OF ARIZONA
By:/s/ Richard A. Haney, Jr.
--------------------------------------
Name: Richard A. Haney, Jr.
Title: Specialist,
Intellectual Property Management
Company IGX CORP., a Delaware corporation
By: /s/ Albert J. Henry
--------------------------------------
I have read this Amendment, and understand the obligations placed on me
and my laboratory and other University employees under my supervision, and agree
to be bound by it.
/s/ Michael W. Riggs
-----------------------------------------
Michael W. Riggs
[Signature Page to First Amendment to July 1, 1996 License Agreement]
<PAGE>
LICENSE AGREEMENT
This LICENSE AGREEMENT (the "Agreement") is made as of this 1st day of
November, 1996, by and between the Arizona Board of Regents, acting for and on
behalf of The University of Arizona, Tucson, Arizona 85721 ("LICENSOR"), and
IgX Corp., a Delaware corporation having a principal address at 17197 North
Laurel Park Drive, Suite 540, Livonia, Michigan 48152 ("IgX").
WHEREAS, LICENSOR represents that F. Javier Enriquez, M.D., Ph.D., an
employee of LICENSOR, is the inventor (the "Inventor") who has submitted to
LICENSOR the following disclosures (each of which are attached as Exhibit "A"
hereto and a portion of which constitute the "INVENTION" as defined in Exhibit
"A"): (i) UA1524, Therapeutic Monoclonal IgA Antibodies to Cryptosporidium
Antigens of 500KDa and Less Than 1,000KDa; (ii) UA1525, Anti-GP23 Antigen
Monoclonal IgA Antibodies for Treatment of Cryptosporidiosis, G9H4 and H8H2
and (iii) UA1526, Monoclonal IgA Antibody 1B8 Directed to Cryptosporidium
200KDa Antigen;
WHEREAS, LICENSOR has the right to make, use, sell and grant licenses
under the INVENTION as defined herein, and LICENSOR wishes to have the
INVENTION utilized for the public interest; and
WHEREAS, IgX wishes to obtain a license to make, use, sell and distribute
the INVENTION under the FIELD OF USE (as defined herein) and upon the terms
and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, IgX and LICENSOR agree as follows:
1. DEFINITIONS
For the purposes of this Agreement, and solely for that purpose, the
terms hereinafter set forth shall be defined as follows:
1.1. "INVENTION" shall mean the invention as described in Exhibit "A."
INVENTION shall be defined to also include any patent applications filed by
IgX in the name of F. Javier Enriquez, M.D., Ph.D., as well as any and all
rights, modifications, derivatives and/or enhancements arising therefrom or
relating thereto (collectively, the "Patent Rights"). INVENTION(S) hereunder
shall be limited to devices, processes, compositions or products for treatment
of human patients, and shall specifically exclude any devices, processes,
compositions or products for treatment of animals within the field of
veterinary science.
<PAGE>
1.2. "LICENSED PRODUCT(S)" shall mean monoclonal antibodies or treatments
derived from the INVENTION as described in Exhibit "A" that are within the
FIELD OF USE, as defined in Paragraph 1.5.
1.3. "TECHNICAL INFORMATION" shall mean technical information and
know-how relating to the preparation of LICENSED PRODUCT(S).
1.4. "REGULATOR" shall mean the government-approved regulatory body,
committee, agency or other organization which by law has the power to approve
the sale of the INVENTION for human therapeutic use within each country in the
world.
1.5. "FIELD OF USE" shall mean the use of the INVENTION for
REGULATOR-approved human therapeutics in the treatment of cryptosporidiosis in
humans. FIELD OF USE shall be defined to also include any and all proposed
uses derived from and/or relating to the Patent Rights. Notwithstanding the
foregoing, the FIELD OF USE hereunder shall be limited to devices, processes,
compositions or products for treatment of human patients, and shall
specifically exclude any devices, processes, compositions or products for
treatment of animals within the field of veterinary science.
1.6. "FIRST COMMERCIAL SALE" means the initial transfer by IgX or its
SUBLICENSEE(S) of LICENSED PRODUCT(S) in exchange for cash or some equivalent
to which value can be assigned for the purpose of determining NET SALES.
1.7. "NET SALES" means the total gross receipts for sales of LICENSED
PRODUCT(S) by IgX, its SUBLICENSEE(S) or its AFFILIATES, and from leasing,
renting or otherwise making LICENSED PRODUCT(S) available to others without
sale or other dispositions, whether invoiced or not, less returns and
allowances actually granted, freight out, taxes or excise duties imposed on
the transaction (if separately invoiced) and wholesaler and cash discounts in
amounts customary in the trade. No deductions shall be made for commissions
paid to individuals, whether they be with independent sales agencies or
regularly employed by IgX or its AFFILIATES, and on their payroll, or for the
cost of collections.
1.8. "NET SALES PRICE" means the NET SALES divided by the quantity of
LICENSED PRODUCT(S) sold. In the event the LICENSED PRODUCT(S) is sold as part
of a kit, or in combination with other products not covered by this Agreement
(such as detection systems), the NET SALES PRICE for such products which
contain the LICENSED PRODUCT(S) will be calculated as B * (A/B), where A is
the gross sales price of an equivalent unit of LICENSED PRODUCT(S) sold
separately, less allowances, and B is the gross sales price of the kit or
combination of products in which the LICENSED PRODUCT(S) is included less
allowances.
1.9. "AFFILIATE" means any corporation or other business entity
controlled by, controlling or under common control with IgX. For this purpose,
"control" means direct
<PAGE>
or indirect beneficial ownership of at least fifty percent (50%) of the voting
stock, or at least fifty percent (50%) interest in the income of such
corporation or other business.
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<PAGE>
2. LICENSE
2.1. LICENSOR hereby grants to IgX and IgX hereby accepts from LICENSOR,
upon the terms and conditions herein specified, an exclusive, worldwide and
non-assignable (except as herein specified) license under the INVENTION to
test, evaluate and develop the LICENSED PRODUCT(S) in the FIELD OF USE covered
hereby and to make, have made, use and sell the LICENSED PRODUCT(S) during the
term of this Agreement, and during the term of any extension thereof, unless
sooner terminated as herein provided (the "License"). LICENSOR also grants to
IgX under the terms of the License the right to use the TECHNICAL INFORMATION
to test, evaluate and develop the LICENSED PRODUCT(S).
2.2. LICENSOR hereby grants to IgX and IgX hereby accepts from LICENSOR,
upon terms and conditions herein specified, the right to extend the License
granted hereunder to its sublicensee(s) ("SUBLICENSEE(S)"). IgX shall promptly
notify LICENSOR in writing at the time of each sublicense ("SUBLICENSE") and
shall provide LICENSOR with a copy of each SUBLICENSE. IgX may negotiate such
terms as it chooses for each SUBLICENSE, provided that LICENSOR shall receive
a royalty for all sales made by SUBLICENSEE(S) as provided for in Section 3.1
below.
2.3. If IgX shall so notify LICENSOR in advance thereof in writing, any
SUBLICENSEE(S) to whom the License shall have been extended pursuant to
Paragraph 2.2 hereof may make the reports and royalty payments specified in
Paragraph 3.1 hereof directly to LICENSOR on behalf of IgX; otherwise, such
reports and payments on account of sales by such SUBLICENSEE(S) shall be made
by IgX.
2.4. LICENSOR retains a non-exclusive, royalty-free, irrevocable license
to make, have made and use the INVENTION and LICENSED PRODUCT(S) for its own
use.
2.5. The exclusive License of Paragraph 2.1 shall be effective as of the
execution of this Agreement, and shall be for an initial term of twenty (20)
years from the date of the FIRST COMMERCIAL SALE, and said License shall be
renewable for two additional ten (10) year periods at the discretion of IgX,
subject to the provisions of Articles 4 and 5 of this Agreement.
2.6. Outside the scope of the License between LICENSOR and IgX, no other,
further or different license of right, and no further power to sublicense, is
hereby granted or implied.
3. ROYALTIES, RECORDS AND REPORTS
3.1. During the term of this Agreement, unless sooner terminated, IgX
shall pay to LICENSOR, in the manner hereinafter provided, earned royalties at
the rate of five
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<PAGE>
percent (5%) of the NET SALES PRICE of all LICENSED PRODUCT(S) sold by IgX and
its SUBLICENSEE(S), anywhere in the world.
3.2. LICENSED PRODUCT(S) shall be considered sold when sold or invoiced,
and if not sold or invoiced, when delivered to a third party.
3.3. IgX shall be responsible for the performance hereunder of all
obligations including payment of royalties, keeping of records and reporting
by IgX and any SUBLICENSEE(S) to whom the License shall have been extended
pursuant to this Agreement.
3.4. So long as this Agreement remains in force, IgX shall deliver to
LICENSOR, within sixty (60) days after the first day of January, April, July
and October of each year, a true and accurate report, giving such particulars
of the business conduct by IgX and its SUBLICENSEE(S) during preceding three
(3) months under this Agreement as are necessary to accurately account for
sale subject to royalties under this Agreement. Each report shall include, but
not be limited to, information about production, inventory on hand, marketing
efforts and sales.
3.5. Simultaneously with the delivery of each report required by the
preceding Paragraph 3.4, IgX shall pay to LICENSOR the net royalties and any
other such payment due under this Agreement for the period covered by such
report. If no royalties are due, it shall be so reported.
3.6. All payments from IgX to LICENSOR shall be in U.S. dollars. The
rates of exchange for such payments shall be midpoint between the buying and
selling rates for U.S. dollars as quoted by the Chase Manhattan Bank in New
York, New York at the close of business on the last business day preceding the
date payment is due.
3.7. In case of any delay in payment by IgX to LICENSOR not occasioned by
force majeure, interest at the rate of one percent (1%) per month, assessed
from the thirty-first (31st) day after the due date of said payment, shall be
due by IgX without special notice.
3.8. Royalties shall accrue in accordance with this Agreement, upon the
FIRST COMMERCIAL SALE.
3.9. Royalties payable in connection with the sale of a LICENSED
PRODUCT(S) under Paragraph 2.2 and Paragraph 3.1 shall be reduced by an amount
of royalties actually paid by IgX or such SUBLICENSEE(S) to any non-affiliated
third party in connection with the licensing of additional patent rights or
know-how necessary to make, use or sell LICENSED PRODUCT(S); provided,
however, that in no event shall the royalties payable to LICENSOR be less that
three percent (3%) of the net sales of such LICENSED PRODUCT(S).
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<PAGE>
3.10. IgX shall keep full, true and accurate books of account containing
all particulars which may be necessary for the purpose of showing the amount
payable to LICENSOR by way of royalty as aforesaid or by way of any other
provision hereunder. Said books of account shall be kept at IgX's principal
place of business. Said books and supporting data shall be open at all
reasonable times, for three (3) years following the end of the calendar year
to which they pertain, to inspection by LICENSOR for the purpose of verifying
IgX's royalty statements, or IgX's compliance in other respects with this
Agreement.
3.11. IgX also agrees to make a written report to LICENSOR within ninety
(90) days after the date of termination of this Agreement, stating in such
report the number, description and NET SALES of all products made, sold or
otherwise disposed of and upon which royalties are payable hereunder but which
were not previously reported to LICENSOR. IgX shall also continue to make
quarterly reports pursuant to the provisions of Paragraph 3.4 of all gross
income received from leasing, renting or otherwise making products available
to others without sale or other disposition transferring title in the case of
transactions entered into prior to such termination.
4. PERFORMANCE
4.1. IgX shall use its best efforts to commence and maintain regular
commercial production and sale of LICENSED PRODUCTS(S) in the FIELD OF USE and
shall report such efforts in accordance with the provisions of Paragraph 3.4.
IgX agrees to support the Research Plan attached hereto as Exhibit "B," which
describes the work yet to be done by LICENSOR to further develop the INVENTION
for IgX, so that IgX might identify further actions which may be necessary to
achieve regulatory submission and approval to make the FIRST COMMERCIAL SALE.
At the end of this period, but no later than eighteen (18) months from the
date of this Agreement, IgX will provide a milestone schedule of development
and licensed products and regulatory submission. This time period may be
extended by mutual agreement of both parties.
4.2. IgX and LICENSOR agree to cooperate to ensure the quality of
LICENSED PRODUCT(S) before LICENSED PRODUCTS(S) are first offered for sale in
a commercial transaction and periodically thereafter. IgX shall provide
samples of LICENSED PRODUCT(S) so that LICENSOR can determine through mutually
agreed upon laboratory protocols the activity of LICENSED PRODUCT(S). In the
event LICENSED PRODUCT(S) supplied by IgX are not active or are otherwise
defective, IgX and LICENSOR will cooperate to produce active LICENSED
PRODUCT(S) and/or to correct any defects in the LICENSED PRODUCT(S). If for
any reason IgX does not maintain activity and/or correct defects in LICENSED
PRODUCT(S), LICENSOR has the right to take action under the provisions of
Paragraph 5.2 of this Agreement.
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<PAGE>
5. TERMINATION
5.1. If IgX shall become bankrupt or insolvent and/or if the business of
IgX shall be placed in the hands of a receiver, assignee or trustee, whether
by voluntary act of IgX or otherwise, this License will be deemed to have
automatically terminated as of a date seven (7) days prior to that event;
provided, however, that such termination shall not terminate any obligations
which may have accrued prior thereto.
5.2. Notwithstanding the provisions of Paragraph 5.1, upon any breach or
default under this Agreement by IgX, LICENSOR may terminate this License by
ninety (90) days written notice by registered mail to IgX. Said notice shall
become effective at the end of said period, unless during said period IgX
shall cure any breach or default and notify LICENSOR thereof.
5.3. IgX may terminate this license at any time upon ninety (90) days
written notice by registered mail to LICENSOR.
5.4. Upon termination of this License for any reason, all rights granted
hereunder shall revert to LICENSOR for the sole benefit of LICENSOR.
5.5. Termination of this License shall terminate all SUBLICENSE(S) made
by IgX hereunder, at the option of LICENSOR.
5.6. IgX's responsibilities and obligations to report to LICENSOR and pay
royalties to LICENSOR as to any LICENSED PRODUCT(S) produced or sold by IgX or
its SUBLICENSEE(S) under this Agreement prior to termination or expiration
hereof shall survive such termination or expiration.
6. ASSIGNMENT
6.1. This Agreement may not be assigned by either party without the prior
written consent of the other party; provided, however, that IgX may assign
this Agreement to any AFFILIATE of IgX, or to any purchaser or transferee of
all or substantially all of IgX's business upon prior written notice to
LICENSOR. LICENSOR agrees not to assign any of its rights or obligations under
this Agreement to any other party without first obtaining IgX's written
approval.
6.2. All of the terms, covenants and conditions of this Agreement shall
be binding upon and inure to the benefit of and shall apply to the respective
heirs, executors, administrators, successors, assigns and legal
representatives of the parties, except as provided for in Paragraph 5.1.
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<PAGE>
7. SEVERABILITY
7.1. Should any part or provision of this Agreement be unenforceable or
otherwise in conflict with or in violation of the law of any jurisdiction, the
remainder of this Agreement shall remain binding upon the parties.
8. NEGATION OF WARRANTIES
8.1. Nothing in this Agreement shall be construed as a warranty or
representation that anything made, used, sold or otherwise disposed of under
any license granted in this Agreement is or will be free from infringement of
patents of third parties.
8.2. LICENSOR makes no representation other than those specified in this
Agreement. LICENSOR makes no express or implied warranties of merchantability
or fitness for any particular purpose of LICENSED PRODUCT(S).
9. ARBITRATION
9.1. The parties agree that any dispute arising under this Agreement
involving the sum of Thirty Thousand Dollars ($30,000) or less in money
damages only shall be resolved by arbitration pursuant to the Arizona Uniform
Rules of Procedure for Arbitration. The decision of the arbitrator(s) shall be
final.
10. INDEMNIFICATION
10.1. IgX agrees to indemnify and hold harmless LICENSOR, LICENSOR's
employees or agents from and against any and all claims, damages and
liabilities asserted by third parties, both government and private, arising
from IgX's sale of LICENSED PRODUCT(S) to ultimate consumers and their use
thereof, except that IgX shall not indemnify LICENSOR, LICENSOR's employees or
agents for any claims, damages or liability resulting from the negligence of
any of them.
11. NONDISCRIMINATION
11.1. The parties agree to be bound by applicable state and federal rules
governing equal employment opportunity and nondiscrimination.
12. STATE OBLIGATION
12.1. The parties recognize that the performance by the Arizona Board
of Regents for and on behalf of LICENSOR may be dependent upon the
appropriation of funds by the State Legislature of Arizona. Should the
Legislature fail to appropriate the necessary funds or if LICENSOR's
appropriation is reduced during the fiscal year, the Arizona
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<PAGE>
Board of Regents may reduce the scope of this Agreement if appropriate or
cancel this Agreement without further duty or obligation. The Arizona Board of
Regents agrees to notify other party(ies) as soon as reasonably possible after
the unavailability of said funds comes to its attention.
13. CONFLICT OF INTEREST
13.1. This Agreement is subject to Arizona Revised Statutes ' 38-511 and
the State of Arizona may cancel this Agreement if any person significantly
involved in negotiating, drafting, securing or obtaining this Agreement for or
on behalf of the Arizona Board of Regents becomes an employee in any capacity
of any other party or a consultant to any other party with reference to the
subject matter of this Agreement while the Agreement or any extension hereof
is in effect.
14. GENERAL
14.1. IgX shall not use the name of the Inventor, or any institution with
which he has been or is connected, or the adaption of any of them, in any
advertising, promotional or sale literature, without prior written consent
obtained from LICENSOR in each case.
14.2. Any notice required or permitted to be given by this Agreement
shall be given postpaid first class certified mail, unless otherwise stated:
To IgX: Albert J. Henry, Chairman
IgX Corp.
17197 North Laurel Park Drive, Suite 540
Livonia, Michigan 48152
With a copy to: June Knaudt
IgX Corp.
c/o: Henry & Co.
4370 La Jolla Village Drive, Suite 400
San Diego, California 92122
To LICENSOR: Janet M. Hornung, Director
Sponsored Projects Services
The University of Arizona
888 North Euclid Avenue, #510
P.O. Box 210158
Tucson, Arizona 85721-0158
With a copy to: Rita C. Manak, Ph.D., Director
Office of Technology Transfer
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<PAGE>
The University of Arizona
888 North Euclid Avenue, #515
P.O. Box 210158
Tucson, Arizona 85721-0158
and F. Javier Enriquez, M.D., Ph.D.
Associate Professor
Department of Veterinary Science
The University of Arizona
Building 90, Room 202
Tucson, Arizona 85721
Such addresses may be altered by written notice. If no time limit is specified
for a notice required or permitted to be given under this Agreement, the time
limit shall be twenty (20) full business days, not including the day of
mailing.
14.3. This Agreement, and its effect, is subject to and shall be
construed in accordance with the laws of the State of Arizona.
14.4. The parties to this Agreement recognize and agree that each is
operating as an independent contractor and not as an agent of the other.
14.5. The captions herein are for convenience only and shall not be
deemed to limit or otherwise affect the construction thereof.
14.6. Any waiver by either party of the breach of any term or condition
of this Agreement will not be considered as a waiver of any subsequent breach
of the same or any other term or condition hereof.
14.7. The Inventor may freely publish and disseminate the TECHNICAL
INFORMATION in any manner he may choose and may furnish LICENSED PRODUCT(S) to
interested other parties for non-commercial, research oriented purposes. The
Inventor will inform any such other party that LICENSOR has an exclusive
Agreement with IgX.
14.8. This Agreement may be executed in more than one counterparts, each
of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. This Agreement may be executed by
facsimile and such facsimile copy shall be conclusive evidence of the consent
and ratification of the matters contained herein by the undersigned.
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<PAGE>
150 ENTIRE AGREEMENT
15.1. This Agreement sets forth the entire agreement and understanding
between the parties as to the subject matter of this Agreement, and supersedes
all prior discussions between them. Neither of the parties shall be bound by
any conditions, definitions, warranties or representations with respect to the
subject matter of this Agreement or as duly set forth on or subsequent to the
date hereof in writing unless signed by the proper and duly authorized
representative of the party to be bound thereby.
[Remainder of Page Intentionally Left Blank]
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives as of the day and the year first
written above.
LICENSOR: Arizona Board of Regents, acting for and
on behalf of The University of Arizona
By:/s/ James T. Wheeler
------------------------------
Name:
----------------------------
Title: Director
--------------------------
IgX: IgX Corp.,
a Delaware corporation
By:/s/ Albert J. Henry
------------------------------
Albert J. Henry, Chairman
The undersigned has read and understands the terms and conditions of this
Agreement, and by his signature below accepts and will abide by said terms and
conditions.
/s/ F. Javier Enriquez, M.D., Ph.D.
------------------------------------
F. Javier Enriquez, M.D., Ph.D.
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<PAGE>
EXHIBIT "A"
INVENTION
<PAGE>
EXHIBIT "B"
RESEARCH PLAN
<PAGE>
LICENSE AGREEMENT
This License Agreement (the "Agreement") is made as of the 25th day
of August, 1998 by and between the Arizona Board of Regents (the "ABOR") for
The University of Arizona (the "University") and IgX Corp., a Delaware
corporation having a principal place of business at One Springfield Avenue,
Summit, New Jersey 07901 (the "Company").
WHEREAS, the University represents that J. Glenn Songer, an employee
of the University (the "Inventor"), has submitted to the University a
disclosure entitled "Treatment and Prevention of Helicobacter Pylori Infection
with Hyperimmune Hen Egg Yolk Antibodies" (the "Invention").
WHEREAS, the University has the right to make, use, sell and grant
licenses under the Invention as defined herein, and the University wishes to
have the Invention utilized for the public interest.
WHEREAS, the Company wishes to obtain a license to make, use, sell
and distribute the Invention under the Field of Use (as defined herein) and
upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, the Company and the University agree as follows:
1. Definitions.
For the purposes of this Agreement, and solely for that purpose, the
terms hereinafter set forth shall be defined as follows:
1.1. "Affiliate" shall mean any corporation or other business entity
controlled by, controlling or under common control with the Company. For this
purpose, "control" means direct or indirect beneficial ownership of at least
fifty percent (50%) of the voting stock, or at least fifty percent (50%)
interest in the income of such corporation or other business.
1.2. "Field of Use" shall mean the use of Invention for Regulator (as
defined below)-approved human therapeutics in the treatment of Helicobacter
Pylori. Field of Use shall be defined to also include any and all proposed
uses derived from and/or relating to the Patent Rights (as defined below).
1.3. "First Commercial Sale" shall mean the initial transfer by the
Company or its Sublicensee(s) (as defined below) of Licensed Product(s) (as
defined below) in exchange for cash or some equivalent to which value can be
assigned for the purpose of determining Net Sales (as defined below).
<PAGE>
1.4. "Invention" shall mean the invention and that certain patent
application as described on Exhibit "A" attached hereto and incorporated
herein by this reference (the subject matter of which is described on the
abstract attached thereto) filed (or to be filed) by the Company in the name
of J. Glenn Songer and Vitaliano A Cama, as well as any and all rights,
modifications, derivatives and/or enhancements arising therefrom or relating
thereto (collectively, the "Patent Rights").
1.5. "Licensed Product(s)" shall mean products derived from the
Invention as described in Exhibit "A" that are within the Field of Use.
1.6. "Net Sales" shall mean the total gross receipts for sales of
Licensed Product(s) by the Company, its Sublicensee(s) or its Affiliates, and
from leasing, renting or otherwise making Licensed Product(s) available to
others without sale or other dispositions, whether invoiced or not, less
returns and allowances actually granted, freight out, taxes or excise duties
imposed on the transaction (if separately invoiced) and wholesaler and cash
discounts in amounts customary in the trade. No deductions shall be made for
commissions paid to individuals, whether they be with independent sales
agencies or regularly employed by the Company or its Affiliates, and on their
payroll, or for the cost of collections.
1.7. "Net Sales Price" shall mean the Net Sales divided by the
quantity of Licensed Product(s) sold. In the event the Licensed Product(s) is
sold as part of a kit, or in combination with other products not covered by
this Agreement (such as detection systems), the Net Sales Price for such
products which contain the Licensed Product(s) will be calculated as B *
(A/B), where A is the gross sales price of an equivalent unit of Licensed
Product(s) sold separately, less allowances, and B is the gross sales price of
the kit or combination of products in which the Licensed Product(s) is
included less allowances.
1.8. "Regulator" shall mean the government-approved regulatory body,
committee, agency or other organization which by law has the power to approve
the sale of the Invention for human therapeutic use within each country in the
world.
1.9. "Technical Information" shall mean technical information and
know-how relating to the preparation of Licensed Product(s).
2. License.
2.1. The University hereby grants to the Company and the Company
hereby accepts from the University, upon the terms and conditions herein
specified, an exclusive, worldwide and non-assignable (except as herein
specified) license (the "License") under the Invention to test, evaluate and
develop the Licensed Product(s) in the Field of Use covered hereby and to
make, have made, use and sell the Licensed Product(s) during the term of this
Agreement, and during the term of any extension thereof, unless sooner
terminated as herein provided. The University also grants to the Company under
the terms of this License the right to use the Technical
<PAGE>
Information to test, evaluate and develop the Licensed Product(s).
2.2. The University hereby grants to the Company and the Company
hereby accepts from the University, upon terms and conditions herein
specified, the right to extend the License granted hereunder to its
sublicensee(s) ("Sublicensee(s)"). The Company shall promptly notify the
University in writing at the time of each sublicense ("Sublicense") and shall
provide the University with a copy of each Sublicense. The Company may
negotiate such terms as it chooses for each Sublicense, provided that the
University shall receive a royalty for all sales made by Sublicensee(s) as
provided for in Section 3.1 below.
2.3. If the Company shall so notify the University in advance thereof
in writing, any Sublicensee(s) to whom the License shall have been extended
pursuant to Section 2.2 above may make the reports and royalty payments
specified in Section 3.1 below directly to the University on behalf of the
Company; otherwise, such reports and payments on account of sales by such
Sublicensee(s) shall be made by the Company.
2.4. The University retains a non-exclusive, royalty-free,
irrevocable License to make, have made and use the Invention and Licensed
Product(s) for its own use.
2.5. The exclusive License granted under Section 2.1 above shall be
effective as of the execution of this Agreement, and shall be for an initial
term of twenty (20) years from the date of the First Commercial Sale, and said
License shall be renewable for two additional ten (10) year periods at the
discretion of the Company, subject to the provisions of Articles 4 and 5
below.
2.6. Outside the scope of the License between the University and the
Company, no other, further or different license of right, and no further power
to sublicense, is hereby granted or implied.
3. Royalties, Records and Reports.
3.1. During the term of this Agreement, unless sooner terminated, the
Company shall pay to the University, in the manner hereinafter provided,
earned royalties at the rate of five percent (5%) of the Net Sales Price of
all Licensed Product(s) sold by the Company and its Sublicensee(s), anywhere
in the world.
3.2. Licensed Product(s) shall be considered sold when sold or
invoiced, and if not sold or invoiced, when delivered to a third-party.
3.3. The Company shall be responsible for the performance hereunder
of all obligations including payment of royalties, keeping of records and
reporting by the Company and any Sublicensee(s) to whom the License shall have
been extended pursuant to this Agreement.
3.4. So long as this Agreement remains in force, the Company shall
deliver to the
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<PAGE>
University, within sixty (60) days after the first day of January, April, July
and October of each year, a true and accurate report, giving such particulars
of the business conduct by the Company and its Sublicensee(s) during preceding
three (3) months under this Agreement as are necessary to accurately account
for sale subject to royalties under this Agreement. Each report shall include,
without limitation, information about production, inventory on hand, marketing
efforts and sales.
3.5. Simultaneously with the delivery of each report required by the
preceding Section 3.4 above, the Company shall pay to the University the net
royalties and any other such payment due under this Agreement for the period
covered by such report. If no royalties are due, it shall be so reported.
3.6. All payments from the Company to the University shall be in U.S.
dollars. The rates of exchange for such payments shall be midpoint between the
buying and selling rates for U.S. dollars as quoted by the Chase Manhattan
Bank in New York, New York at the close of business on the last business day
preceding the date payment is due.
3.7. In case of any delay in payment by the Company to the University
not occasioned by force majeure, interest at the rate of one percent (1%) per
month, assessed from the thirty-first (31st) day after the due date of said
payment, shall be due by the Company without special notice.
3.8. Royalties shall accrue in accordance with this Agreement, upon
the First Commercial Sale.
3.9. Royalties payable in connection with the sale of a Licensed
Product(s) under Section 2.2 above and Section 3.1 above shall be reduced by
an amount of royalties actually paid by the Company or such Sublicensee(s) to
any non-affiliated third party in connection with the licensing of additional
patent rights or know-how necessary to make, use or sell Licensed Product(s);
provided, however, that in no event shall the royalties payable to the
University be less that three percent (3%) of the net sales of such Licensed
Product(s).
3.10. The Company shall keep full, true and accurate books of account
containing all particulars which may be necessary for the purpose of showing
the amount payable to the University by way of royalty as aforesaid or by way
of any other provision hereunder. Said books of account shall be kept at the
Company's principal place of business. Said books and supporting data shall be
open at all reasonable times, for three (3) years following the end of the
calendar year to which they pertain, to inspection by the University for the
purpose of verifying the Company's royalty statements, or the Company's
compliance in other respects with this Agreement.
3.11. The Company also agrees to make a written report to the
University within ninety (90) days after the date of termination of this
Agreement, stating in such report the number, description and Net Sales of all
products made, sold or otherwise disposed of and upon which
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<PAGE>
royalties are payable hereunder but which were not previously reported to the
University. The Company shall also continue to make quarterly reports pursuant
to the provisions of Section 3.4 above of all gross income received from
leasing, renting or otherwise making products available to others without sale
or other disposition transferring title in the case of transactions entered
into prior to such termination.
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<PAGE>
4. Performance.
4.1. The Company shall use its best efforts to commence and maintain
regular commercial production and sale of Licensed Product(s) in the Field of
Use and shall report such efforts in accordance with the provisions of Section
3.4 above. The Company agrees to support the Research Plan attached hereto as
Exhibit "B" and incorporated herein by this reference, which describes the
work yet to be done by the University to further develop the Invention for the
Company, so that the Company might identify further actions which may be
necessary to achieve regulatory submission and approval to make the First
Commercial Sale. At the end of this period, but no later than eighteen (18)
months from the date of this Agreement, the Company will provide a milestone
schedule of development and licensed products and regulatory submission.
This time period may be extended by mutual agreement of both parties.
4.2. The Company and the University agree to cooperate to ensure the
quality of Licensed Product(s) before Licensed Product(s) are first offered
for sale in a commercial transaction and periodically thereafter. The Company
shall provide samples of Licensed Product(s) so that the University can
determine through mutually agreed upon laboratory protocols the activity of
Licensed Product(s). In the event Licensed Product(s) supplied by the Company
are not active or are otherwise defective, the Company and the University will
cooperate to produce active Licensed Product(s) and/or to correct any defects
in the Licensed Product(s). If for any reason the Company does not maintain
activity and/or correct defects in Licensed Product(s), the University has the
right to take action under the provisions of Section 5.2 below.
5. Termination.
5.1. If the Company shall become bankrupt or insolvent and/or if the
business of the Company shall be placed in the hands of a receiver, assignee
or trustee, whether by voluntary act of the Company or otherwise, this License
will be deemed to have automatically terminated as of a date seven (7) days
prior to that event; provided, however, that such termination shall not
terminate any obligations which may have accrued prior thereto.
5.2. Notwithstanding the provisions of Section 5.1 above, upon any
breach or default under this Agreement by the Company, the University may
terminate this License by ninety (90) days written notice by registered mail
to the Company. Said notice shall become effective at the end of said period,
unless during said period the Company shall cure any breach or default and
notify the University thereof.
5.3. The Company may terminate this license at any time upon ninety
(90) days written notice by registered mail to the University.
5.4. Upon termination of this License for any reason, all rights
granted hereunder shall revert to the University for the sole benefit of the
University.
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<PAGE>
5.5. Termination of this License shall terminate all Sublicense(s)
made by the Company hereunder, at the option of the University.
5.6. The Company's responsibilities and obligations to report to the
University and pay royalties to the University as to any Licensed Product(s)
produced or sold by the Company or its Sublicensee(s) under this Agreement
prior to termination or expiration hereof shall survive such termination or
expiration.
6. Assignment.
6.1. This Agreement may not be assigned by either party without the
prior written consent of the other party; provided, however, that the Company
may assign this Agreement to any Affiliate of the Company, or to any purchaser
or transferee of all or substantially all of the Company's business upon prior
written notice to the University. The University agrees not to assign any of
its rights or obligations under this Agreement to any other party without
first obtaining the Company's written approval.
6.2. All of the terms, covenants and conditions of this Agreement
shall be binding upon and inure to the benefit of and shall apply to the
respective heirs, executors, administrators, successors, assigns and legal
representatives of the parties, except as provided for in Paragraph 5.1.
7. Severability.
7.1. Should any part or provision of this Agreement be unenforceable
or otherwise in conflict with or in violation of the law of any jurisdiction,
the remainder of this Agreement shall remain binding upon the parties.
8. Negation of Warranties.
8.1. Nothing in this Agreement shall be construed as a warranty or
representation that anything made, used, sold or otherwise disposed of under
any license granted in this Agreement is or will be free from infringement of
patents of third-parties.
8.2. The University makes no representation other than those
specified in this Agreement. The University makes no express or implied
warranties of merchantability or fitness for any particular purpose of
Licensed Product(s).
9. Arbitration.
9.1. The parties agree that any dispute arising under this Agreement
involving the sum of Thirty Thousand Dollars ($30,000) or less in money
damages only shall be resolved by arbitration pursuant to the Arizona Uniform
Rules of Procedure for Arbitration. The decision of
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<PAGE>
the arbitrator(s) shall be final.
10. Indemnification.
10.1. The Company agrees to indemnify and hold harmless the
University, the University's employees or agents from and against any and all
claims, damages and liabilities asserted by third-parties, both government and
private, arising from the Company's sale of Licensed Product(s) to ultimate
consumers and their use thereof, except that the Company shall not indemnify
the University, the University's employees or agents for any claims, damages
or liability resulting from the negligence of any of them.
11. Nondiscrimination.
11.1. The parties agree to be bound by applicable state and federal
rules governing equal employment opportunity and nondiscrimination.
12. State Obligation.
12.1. The parties recognize that the performance by the ABOR for and
on behalf of the University may be dependent upon the appropriation of funds
by the State Legislature of Arizona. Should the State Legislature of Arizona
fail to appropriate the necessary funds or if the University's appropriation
is reduced during the fiscal year, the ABOR may reduce the scope of this
Agreement if appropriate or cancel this Agreement without further duty or
obligation. The ABOR agrees to notify other party(ies) as soon as reasonably
possible after the unavailability of said funds comes to the ABOR's attention.
13. Conflict of Interest.
13.1. This Agreement is subject to A.R.S. 38-511 and the State of
Arizona may cancel this Agreement if any person significantly involved in
negotiating, drafting, securing or obtaining this Agreement for or on behalf
of the ABOR becomes an employee in any capacity of any other party or a
consultant to any other party with reference to the subject matter of this
Agreement while the Agreement or any extension hereof is in effect.
14. General.
14.1. The Company shall not use the name of the Inventor, or any
institution with which he has been or is connected, or the adaption of any of
them, in any advertising, promotional or sale literature, without prior
written consent obtained from the University in each case.
14.2. Any notice required or permitted to be given by this Agreement
shall be given postpaid first class certified mail, unless otherwise stated:
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<PAGE>
If to the Company: IgX Corp.
Attention: Albert J. Henry
One Springfield Avenue
Summit, New Jersey 07901
If to the University: Janet M. Hornung, Director
Sponsored Projects Services
The University of Arizona
P.O. Box 3308
888 North Euclid Avenue, #510
Tucson, Arizona 85722
With a required copy to: Rita C. Manak, Ph.D., Director
Office of Technology Transfer
The University of Arizona
P.O. Box 210158
888 North Euclid Avenue, #515
Tucson, Arizona 85721-0158
Such addresses may be altered by written notice. If no time limit is specified
for a notice required or permitted to be given under this Agreement, the time
limit shall be twenty (20) full business days, not including the day of
mailing.
14.3. This Agreement, and its effect, is subject to and shall be
construed in accordance with the laws of the State of Arizona.
14.4. The parties to this Agreement recognize and agree that each is
operating as an independent contractor and not as an agent of the other.
14.5. The captions herein are for convenience only and shall not be
deemed to limit or otherwise affect the construction thereof.
14.6. Any waiver by either party of the breach of any term or
condition of this Agreement will not be considered as a waiver of any
subsequent breach of the same or any other term or condition hereof.
14.7. The Inventor may freely publish and disseminate the Technical
Information in any manner he may choose and may furnish Licensed Product(s) to
interested other parties for non-commercial, research oriented purposes. The
Inventor will inform any such other party that the University has an exclusive
Agreement with the Company.
14.8. This Agreement may be executed in more than one counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same
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<PAGE>
instrument. This Agreement may be executed by facsimile and such facsimile copy
shall be conclusive evidence of the consent and ratification of the matters
contained herein by the undersigned.
150 Entire Agreement.
15.1. This Agreement sets forth the entire Agreement and
understanding between the parties as to the subject matter of this Agreement,
and merges all prior discussions between them. Neither of the parties shall be
bound by any conditions, definitions, warranties or representations with
respect to the subject matter of this Agreement or as duly set forth on or
subsequent to the date hereof in writing unless signed by the proper and duly
authorized representative of the party to be bound thereby.
[Remainder of Page Intentionally Left Blank]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
and duly executed this Agreement as of the day and the year first written
above.
University THE ARIZONA BOARD OF REGENTS
ON BEHALF OF THE UNIVERSITY OF ARIZONA
By:
------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
Company IGX CORP., a Delaware corporation
By:
------------------------------------------
Albert J. Henry, Chairman
I have read this Agreement, and understand the obligations placed on
me and my laboratory and other University employees under my supervision, and
agree to be bound by it.
---------------------------------------------
J. Glenn Songer
[Signature Page to License Agreement]
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<PAGE>
EXHIBIT "A"
INVENTION
<PAGE>
EXHIBIT "B"
RESEARCH PLAN
<PAGE>
LICENSE AGREEMENT
This License Agreement (the "Agreement") is made as of the 18th day of
September, 1998 by and between the Arizona Board of Regents (the "ABOR") for The
University of Arizona (the "University") and IgX Corp., a Delaware corporation
having a principal place of business at One Springfield Avenue, Summit, New
Jersey 07901 (the "Company").
WHEREAS, the University represents that Charles R. Sterling, Vitaliano
A. Cama, J. Glenn Songer, B. Helen Jost and Sabrina Simon, employees of the
University, have submitted to the University a disclosure entitled "Hen Yolk
Antibodies to Clostridium Difficile and Methods of Use" (the "Invention").
WHEREAS, the University has the right to make, use, sell and grant
licenses under the Invention as defined herein, and the University wishes to
have the Invention utilized for the public interest.
WHEREAS, the Company wishes to obtain a license to make, use, sell and
distribute the Invention under the Field of Use (as defined herein) and upon the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, the Company and the University agree as follows:
1. Definitions.
For the purposes of this Agreement, and solely for that purpose, the
terms hereinafter set forth shall be defined as follows:
1.1. "Affiliate" shall mean any corporation or other business entity
controlled by, controlling or under common control with the Company. For this
purpose, "control" means direct or indirect beneficial ownership of at least
fifty percent (50%) of the voting stock, or at least fifty percent (50%)
interest in the income of such corporation or other business.
1.2. "Field of Use" shall mean the use of Invention for Regulator (as
defined below)- approved human therapeutics in the treatment of Clostridium
difficile. Field of Use shall be defined to also include any and all proposed
uses derived from and/or relating to the Patent Rights (as defined below) for
Regulator-approved human therapeutics in the treatment of Clostridium difficile.
Field of Use shall be limited to the treatment of human patients, and shall
specifically exclude the treatment of animals within the field of veterinary
science.
1.3. "First Commercial Sale" shall mean the initial transfer by the
Company or its Sublicensee(s) (as defined below) of Licensed Product(s) (as
defined below) in exchange for cash or some equivalent to which value can be
assigned for the purpose of determining Net Sales (as defined below).
<PAGE>
1.4. "Invention" shall mean the invention and that certain patent
application as described on Exhibit "A" attached hereto and incorporated herein
by this reference (the subject matter of which is described on the abstract
attached thereto) filed (or to be filed) by the Company in the name of Charles
R. Sterling, Vitaliano A. Cama and J. Glenn Songer, as well as any and all
rights, modifications, derivatives and/or enhancements arising therefrom or
relating thereto (collectively, the "Patent Rights").
1.5. "Licensed Product(s)" shall mean products derived from the
Invention as described in Exhibit "A" that are within the Field of Use.
1.6. "Net Sales" shall mean the total gross receipts for sales of
Licensed Product(s) by the Company, its Sublicensee(s) or its Affiliates, and
from leasing, renting or otherwise making Licensed Product(s) available to
others without sale or other dispositions, whether invoiced or not, less returns
and allowances actually granted, freight out, taxes or excise duties imposed on
the transaction (if separately invoiced) and wholesaler and cash discounts in
amounts customary in the trade. No deductions shall be made for commissions paid
to individuals, whether they be with independent sales agencies or regularly
employed by the Company or its Affiliates, and on their payroll, or for the cost
of collections.
1.7. "Net Sales Price" shall mean the Net Sales divided by the quantity
of Licensed Product(s) sold. In the event the Licensed Product(s) is sold as
part of a kit, or in combination with other products not covered by this
Agreement (such as detection systems), the Net Sales Price for such products
which contain the Licensed Product(s) will be calculated as B * (A/B), where A
is the gross sales price of an equivalent unit of Licensed Product(s) sold
separately, less allowances, and B is the gross sales price of the kit or
combination of products in which the Licensed Product(s) is included less
allowances.
1.8. "Regulator" shall mean the government-approved regulatory body,
committee, agency or other organization which by law has the power to approve
the sale of the Invention for human therapeutic use within each country in the
world.
1.9. "Technical Information" shall mean technical information and
know-how relating to the preparation of Licensed Product(s).
2. License.
2.1. The University hereby grants to the Company and the Company hereby
accepts from the University, upon the terms and conditions herein specified, an
exclusive, worldwide and non-assignable (except as herein specified) license
(the "License") under the Invention to test, evaluate and develop the Licensed
Product(s) in the Field of Use covered hereby and to make, have made, use and
sell the Licensed Product(s) during the term of this Agreement, and during the
term of any extension thereof, unless sooner terminated as herein provided. The
University also grants to the Company under the terms of this License the right
to use the Technical
-2-
<PAGE>
Information to test, evaluate and develop the Licensed Product(s).
2.2. The University hereby grants to the Company and the Company hereby
accepts from the University, upon terms and conditions herein specified, the
right to extend the License granted hereunder to its sublicensee(s)
("Sublicensee(s)"). The Company shall promptly notify the University in writing
at the time of each sublicense ("Sublicense") and shall provide the University
with a copy of each Sublicense. The Company may negotiate such terms as it
chooses for each Sublicense, provided that the University shall receive a
royalty for all sales made by Sublicensee(s) as provided for in Section 3.1
below.
2.3. If the Company shall so notify the University in advance thereof
in writing, any Sublicensee(s) to whom the License shall have been extended
pursuant to Section 2.2 above may make the reports and royalty payments
specified in Section 3.1 below directly to the University on behalf of the
Company; otherwise, such reports and payments on account of sales by such
Sublicensee(s) shall be made by the Company.
2.4. The University retains a non-exclusive, royalty-free, irrevocable
License to make, have made and use the Invention and Licensed Product(s) for its
own use.
2.5. The exclusive License granted under Section 2.1 above shall be
effective as of the execution of this Agreement, and shall be for an initial
term of twenty (20) years from the date of the First Commercial Sale, and said
License shall be renewable for two additional ten (10) year periods at the
discretion of the Company, subject to the provisions of Articles 4 and 5 below.
2.6. Outside the scope of the License between the University and the
Company, no other, further or different license of right, and no further power
to sublicense, is hereby granted or implied.
3. Royalties, Records and Reports.
3.1. During the term of this Agreement, unless sooner terminated, the
Company shall pay to the University, in the manner hereinafter provided, earned
royalties at the rate of five percent (5%) of the Net Sales Price of all
Licensed Product(s) sold by the Company and its Sublicensee(s), anywhere in the
world. Commencing with the calendar year of the First Commercial Sale by the
Company, the Company shall pay to the University a minimum royalty under this
Section 3.1 of $10,000 in the first calendar year, $20,000 in the second
calendar year and $30,000 in the third calendar year and every year thereafter,
to the extent that this Agreement remains in effect and has not been terminated
in accordance with the terms hereof.
3.2. Licensed Product(s) shall be considered sold when sold or
invoiced, and if not sold or invoiced, when delivered to a third-party.
3.3. The Company shall be responsible for the performance hereunder of
all
-3-
<PAGE>
obligations including payment of royalties, keeping of records and reporting by
the Company and any Sublicensee(s) to whom the License shall have been extended
pursuant to this Agreement.
3.4. So long as this Agreement remains in force, the Company shall
deliver to the University, within sixty (60) days after the first day of
January, April, July and October of each year, a true and accurate report,
giving such particulars of the business conduct by the Company and its
Sublicensee(s) during preceding three (3) months under this Agreement as are
necessary to accurately account for sale subject to royalties under this
Agreement. Each report shall include, without limitation, information about
production, inventory on hand, marketing efforts and sales.
3.5. Simultaneously with the delivery of each report required by the
preceding Section 3.4 above, the Company shall pay to the University the net
royalties and any other such payment due under this Agreement for the period
covered by such report. If no royalties are due, it shall be so reported.
3.6. All payments from the Company to the University shall be in U.S.
dollars. The rates of exchange for such payments shall be midpoint between the
buying and selling rates for U.S. dollars as quoted by the Chase Manhattan Bank
in New York, New York at the close of business on the last business day
preceding the date payment is due.
3.7. In case of any delay in payment by the Company to the University
not occasioned by force majeure, interest at the rate of one percent (1%) per
month, assessed from the thirty-first (31st) day after the due date of said
payment, shall be due by the Company without special notice.
3.8. Royalties shall accrue in accordance with this Agreement, upon the
First Commercial Sale.
3.9. Royalties payable in connection with the sale of a Licensed
Product(s) under Section 2.2 above and Section 3.1 above shall be reduced by an
amount of royalties actually paid by the Company or such Sublicensee(s) to any
non-affiliated third party in connection with the licensing of additional patent
rights or know-how necessary to make, use or sell Licensed Product(s); provided,
however, that in no event shall the royalties payable to the University be less
that three percent (3%) of the net sales of such Licensed Product(s).
3.10. The Company shall keep full, true and accurate books of account
containing all particulars which may be necessary for the purpose of showing the
amount payable to the University by way of royalty as aforesaid or by way of any
other provision hereunder. Said books of account shall be kept at the Company's
principal place of business. Said books and supporting data shall be open at all
reasonable times, for three (3) years following the end of the calendar year to
which they pertain, to inspection by the University for the purpose of verifying
the Company's royalty statements, or the Company's compliance in other respects
with this
-4-
<PAGE>
Agreement.
3.11. The Company also agrees to make a written report to the
University within ninety (90) days after the date of termination of this
Agreement, stating in such report the number, description and Net Sales of all
products made, sold or otherwise disposed of and upon which royalties are
payable hereunder but which were not previously reported to the University. The
Company shall also continue to make quarterly reports pursuant to the provisions
of Section 3.4 above of all gross income received from leasing, renting or
otherwise making products available to others without sale or other disposition
transferring title in the case of transactions entered into prior to such
termination.
4. Performance.
4.1. The Company shall use its best efforts to commence and maintain
regular commercial production and sale of Licensed Product(s) in the Field of
Use and shall report such efforts in accordance with the provisions of Section
3.4 above. The Company agrees to support the Research Plan attached hereto as
Exhibit "B" and incorporated herein by this reference, which describes the work
yet to be done by the University to further develop the Invention for the
Company, so that the Company might identify further actions which may be
necessary to achieve regulatory submission and approval to make the First
Commercial Sale. At the end of this period, but no later than eighteen (18)
months from the date of this Agreement, the Company will provide a milestone
schedule of development and Licensed Products and regulatory submission, and
such milestone schedule shall be subject to the reasonable approval of the
University. This time period may be extended by mutual agreement of both
parties.
4.2. The Company and the University agree to cooperate to ensure the
quality of Licensed Product(s) before Licensed Product(s) are first offered for
sale in a commercial transaction and periodically thereafter. The Company shall
provide samples of Licensed Product(s) so that the University can determine
through mutually agreed upon laboratory protocols the activity of Licensed
Product(s). In the event Licensed Product(s) supplied by the Company are not
active or are otherwise defective, the Company and the University will cooperate
to produce active Licensed Product(s) and/or to correct any defects in the
Licensed Product(s). If for any reason the Company does not maintain activity
and/or correct defects in Licensed Product(s), the University has the right to
take action under the provisions of Section 5.2 below.
5. Termination.
5.1. If the Company shall become bankrupt or insolvent and/or if the
business of the Company shall be placed in the hands of a receiver, assignee or
trustee, whether by voluntary act of the Company or otherwise, this License will
be deemed to have automatically terminated as of a date seven (7) days prior to
that event; provided, however, that such termination shall not terminate any
obligations which may have accrued prior thereto.
-5-
<PAGE>
5.2. Notwithstanding the provisions of Section 5.1 above, upon any
breach or default under this Agreement by the Company, the University may
terminate this License by ninety (90) days written notice by registered mail to
the Company. Said notice shall become effective at the end of said period,
unless during said period the Company shall cure any breach or default and
notify the University thereof.
5.3. The Company may terminate this license at any time upon ninety
(90) days written notice by registered mail to the University.
5.4. Upon termination of this License for any reason, all rights
granted hereunder shall revert to the University for the sole benefit of the
University.
5.5. Termination of this License shall terminate all Sublicense(s) made
by the Company hereunder, at the option of the University.
5.6. The Company's responsibilities and obligations to report to the
University and pay royalties to the University as to any Licensed Product(s)
produced or sold by the Company or its Sublicensee(s) under this Agreement prior
to termination or expiration hereof shall survive such termination or
expiration.
6. Assignment.
6.1. This Agreement may not be assigned by either party without the
prior written consent of the other party; provided, however, that the Company
may assign this Agreement to any Affiliate of the Company, or to any purchaser
or transferee of all or substantially all of the Company's business upon prior
written notice to the University. The University agrees not to assign any of its
rights or obligations under this Agreement to any other party without first
obtaining the Company's written approval.
6.2. All of the terms, covenants and conditions of this Agreement shall
be binding upon and inure to the benefit of and shall apply to the respective
heirs, executors, administrators, successors, assigns and legal representatives
of the parties, except as provided for in Paragraph 5.1.
7. Severability.
7.1. Should any part or provision of this Agreement be unenforceable or
otherwise in conflict with or in violation of the law of any jurisdiction, the
remainder of this Agreement shall remain binding upon the parties.
8. Negation of Warranties.
8.1. Nothing in this Agreement shall be construed as a warranty or
representation that
-6-
<PAGE>
anything made, used, sold or otherwise disposed of under any license granted in
this Agreement is or will be free from infringement of patents of third-parties.
8.2. The University makes no representation other than those specified
in this Agreement. The University makes no express or implied warranties of
merchantability or fitness for any particular purpose of Licensed Product(s).
-7-
<PAGE>
9. Arbitration.
9.1. The parties agree that any dispute arising under this Agreement
involving the sum of Thirty Thousand Dollars ($30,000) or less in money damages
only shall be resolved by arbitration pursuant to the Arizona Uniform Rules of
Procedure for Arbitration. The decision of the arbitrator(s) shall be final.
10. Indemnification.
10.1. The Company agrees to indemnify and hold harmless the University,
the University's employees or agents from and against any and all claims,
damages and liabilities asserted by third-parties, both government and private,
arising from the Company's sale of Licensed Product(s) to ultimate consumers and
their use thereof, except that the Company shall not indemnify the University,
the University's employees or agents for any claims, damages or liability
resulting from the negligence of any of them.
11. Nondiscrimination.
11.1. The parties agree to be bound by applicable state and federal
rules governing equal employment opportunity and nondiscrimination.
12. State Obligation.
12.1. The parties recognize that the performance by the ABOR for and on
behalf of the University may be dependent upon the appropriation of funds by the
State Legislature of Arizona. Should the State Legislature of Arizona fail to
appropriate the necessary funds or if the University's appropriation is reduced
during the fiscal year, the ABOR may reduce the scope of this Agreement if
appropriate or cancel this Agreement without further duty or obligation. The
ABOR agrees to notify other party(ies) as soon as reasonably possible after the
unavailability of said funds comes to the ABOR's attention.
13. Conflict of Interest.
13.1. This Agreement is subject to A.R.S. 38-511 and the State of
Arizona may cancel this Agreement if any person significantly involved in
negotiating, drafting, securing or obtaining this Agreement for or on behalf of
the ABOR becomes an employee in any capacity of any other party or a consultant
to any other party with reference to the subject matter of this Agreement while
the Agreement or any extension hereof is in effect.
14. General.
14.1. The Company shall not use the name of the Inventor, or any
institution with which he has been or is connected, or the adaption of any of
them, in any advertising, promotional or
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<PAGE>
sale literature, without prior written consent obtained from the University in
each case.
14.2. Any notice required or permitted to be given by this Agreement
shall be given postpaid first class certified mail, unless otherwise stated:
If to the Company: IgX Corp.
Attention: Albert J. Henry
One Springfield Avenue
Summit, New Jersey 07901
If to the University: Janet M. Hornung, Director
Sponsored Projects Services
The University of Arizona
P.O. Box 3308
888 North Euclid Avenue, #510
Tucson, Arizona 85722
With a required copy to: Rita C. Manak, Ph.D., Director
Office of Technology Transfer
The University of Arizona
P.O. Box 210158
888 North Euclid Avenue, #515
Tucson, Arizona 85721-0158
Such addresses may be altered by written notice. If no time limit is specified
for a notice required or permitted to be given under this Agreement, the time
limit shall be twenty (20) full business days, not including the day of mailing.
14.3. This Agreement, and its effect, is subject to and shall be
construed in accordance with the laws of the State of Arizona.
14.4. The parties to this Agreement recognize and agree that each is
operating as an independent contractor and not as an agent of the other.
14.5. The captions herein are for convenience only and shall not be
deemed to limit or otherwise affect the construction thereof.
14.6. Any waiver by either party of the breach of any term or condition
of this Agreement will not be considered as a waiver of any subsequent breach of
the same or any other term or condition hereof.
14.7. The Inventor may freely publish and disseminate the Technical
Information in any manner he may choose and may furnish Licensed Product(s) to
interested other parties for non-
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<PAGE>
commercial, research oriented purposes. The Inventor will inform any such other
party that the University has an exclusive Agreement with the Company.
-10-
<PAGE>
14.8. This Agreement may be executed in more than one counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. This Agreement may be executed by
facsimile and such facsimile copy shall be conclusive evidence of the consent
and ratification of the matters contained herein by the undersigned.
15. Entire Agreement.
15.1. This Agreement sets forth the entire Agreement and understanding
between the parties as to the subject matter of this Agreement, and merges all
prior discussions between them. Neither of the parties shall be bound by any
conditions, definitions, warranties or representations with respect to the
subject matter of this Agreement or as duly set forth on or subsequent to the
date hereof in writing unless signed by the proper and duly authorized
representative of the party to be bound thereby.
[Remainder of Page Intentionally Left Blank]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
and duly executed this Agreement as of the day and the year first written above.
University THE ARIZONA BOARD OF REGENTS
ON BEHALF OF THE UNIVERSITY OF ARIZONA
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
Company IGX CORP., a Delaware corporation
By:
-----------------------------------------
Albert J. Henry, Chairman
I have read this Agreement, and understand the obligations placed on me
and my laboratory and other University employees under my supervision, and agree
to be bound by it.
-----------------------------------------------
Charles R. Sterling
-----------------------------------------------
Vitaliano A. Cama
-----------------------------------------------
J. Glenn Songer
[Signature Page to License Agreement]
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<PAGE>
EXHIBIT "A"
INVENTION
<PAGE>
EXHIBIT "B"
RESEARCH PLAN
<PAGE>
IgX Corp.
One Springfield Avenue
Summit, New Jersey 07901
September 18, 1998
Rita C. Manak, Director
Office of Technology Transfer
The University of Arizona
P.O. Box 210158
888 North Euclid Avenue, #515
Tucson, Arizona 85721-0158
Charles R. Sterling
Vitaliano A. Cama
Michael W. Riggs
J. Glenn Songer
Department of Veterinary Science/Microbiology
The University of Arizona
P.O. Box 210090
Building 90, Room 201
Tucson, Arizona 85721-0090
Ladies and Gentlemen:
In line with our recent discussions, this letter agreement (the
"Ageement") will set forth the mutual understanding of the parties hereto with
respect to the following:
Background
1. Since 1992, IgX Corp., a Delaware corporation ("IgX"), has entered
into a series of research commitments with the Arizona Board of Regents, on
behalf of the University of Arizona (the "University"), pursuant to which IgX
has provided funding for research conducted by certain principal investigators
at the University. For each of such research commitments, IgX and the University
have entered into a Research Agreement (collectively, the "Research Agreements")
setting forth the terms and conditions of the sponsored research, including the
intellectual property rights of IgX and the University with respect to any
INVENTIONS arising out of the sponsored research, and granting to IgX an option
to obtain an exclusive, worldwide license with respect to any INVENTIONS arising
out of the sponsored research.
2. The current status of each of the IgX-sponsored research
commitments with the University under the Research Agreements is fully set forth
on Exhibit "A" attached hereto and
<PAGE>
incorporated herein by this reference. The parties hereto acknowledge and agree
that they have proceeded in substantive, if not procedural, compliance with the
tenns and conditions of the Research Agreements, and that this Agreement shall
serve merely as a perfection, ratification and acknowledgment of and agreement
with the terms and conditions thereof.
Hyperimmune Egg Yolk Antibodies Research (Sterling and Cama)
3. The parties hereto acknowledge and agree that the first horizontal
column dated June 1, 1992 on the attached Exhibit "A" accurately reflects the
current status of the research commitment between IgX and the University for the
IgX-sponsored research of Charles R. Sterling and Vitaliano A. Cama relating to
the method of use of hyperimmune egg yolk antibodies for the enteric treatment
of Cryptosporidium parvum infections.
4. The parties acknowledge and agree that Charles R. Sterling and
Vitaliano A. Cama have previously provided the University with an Invention
Disclosure relating to the INVENTION entitled "Reduced Lipid Formulation of
Hyperimmune Egg Yolk for Treatment of Cryptosporidium Parvum" (UA 1765). The
University acknowledges and agrees that the University shall be deemed to have
provided IgX with proper notice of such INVENTION as a UNIVERSITY INVENTION, and
IgX shall be deemed to have provided the University with proper notice of its
intention to exercise its option to obtain an exclusive, worldwide license with
respect to such INVENTION. Accordingly, IgX and the University shall enter into
that certain Second Amendment to License Agreement, substantially in the form
attached hereto as Exhibit "B" and incorporated herein by this reference, for
the granting to IgX of an exclusive, worldwide license with respect to such
INVENTION.
Clostridium Difficile Research (Sterling, Cama and Songer, Jost and
Simon)
5. The parties hereto acknowledge and agree that the horizontal column
dated March 12, 1993 on the attached Exhibit "A" accurately reflects the current
status of the research commitment between IgX and the University for the
IgX-sponsored research of Charles R. Sterling, Vitaliano A. Cama, J. Glenn
Songer, B. Helen Jost and Sabrina Simon relating to Clostridium difficile.
6. Charles R. Sterling, Vitaliano A. Cama, J. Glenn Songer, B. Helen
Jost and Sabrina Simon agree to promptly provide the University with an
Invention Disclosure relating to the INVENTION entitled "Hen Yolk Antibodies to
Clostridium Difficile and Methods of Use." Upon receipt of such Invention
Disclosure, the University hereby acknowledges and agrees that the University
shall be deemed to have provided IgX with proper notice of such INVENTION as a
UNIVERSITY INVENTION, and IgX shall be deemed to have provided the University
with proper notice of its intention to exercise its option to obtain an
exclusive, worldwide license with respect to such INVENTION. Accordingly, IgX
and the University shall enter into that certain License Agreement,
substantially in the form attached hereto as Exhibit "C" and incorporated herein
by this reference, for the granting to IgX of an exclusive, worldwide license
with respect to such INVENTION.
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<PAGE>
Cryptosporidium Parvum Research (Riggs)
7. The parties hereto acknowledge and agree that the horizontal column
dated July 1, 1996 on the attached Exhibit "A" accurately reflects the current
status of the research commitment between IgX and the University for the
IgX-sponsored research of Michael W. Riggs relating to Cryptosporidium Parvum.
8. The parties acknowledge and agree that Michael W. Riggs has
previously provided the University with (i) an Invention Disclosure relating to
the INVENTION entitled "Monoclonal Antibody Formulations Targeting Functionally
Defined Sporozoite and Merozoite Epitopes of Cryptosporidium Parvum for
Prevention or Treatment of Cryptosporidiosis" (UA 1773) and (ii) an Invention
Disclosure relating to the INVENTION entitled "Combined Monoclonal Antibody and
Hen Polyclonal Antibody Formulations Targeting Sporozoite and Merozoite Epitopes
of Cryptosporidium Parvum for Prevention or Treatment of Cryptosporidiosis" (UA
1774). The University acknowledges and agrees that the University shall be
deemed to have provided IgX with proper notice of such INVENTIONS as UNIVERSITY
INVENTIONS, and IgX shall be deemed to have provided the University with proper
notice of its intention to exercise its option to obtain an exclusive, worldwide
license with respect to such INVENTIONS. Accordingly, IgX and the University
shall enter into that certain First Amendment to License Agreement,
substantially in the form attached hereto as Exhibit "D" and incorporated herein
by this reference, for the granting to IgX of an exclusive, worldwide license
with respect to such INVENTIONS.
Helicobacter Pylori Research (Songer)
9. The parties hereto acknowledge and agree that the horizontal column
dated May 15, 1998 on the attached Exhibit "A" accurately reflects the current
status of the research commitment between IgX and the University for the
IgX-sponsored research of J. Glenn Songer relating to Helicobacter Pylori.
10. J. Glenn Songer agrees to promptly provide the University with an
Invention Disclosure relating to the INVENTION entitled "Treatment and
Prevention of Helicobacter Pylori Infection with Hyperimmune Hen Egg Yolk
Antibodies."
General Provisions
11. Each of IgX and the University acknowledges and agrees that (i)
each INVENTION arising out of the Research Agreements to date is properly
characterized as a UNIVERSITY INVENTION, and, as such, shall remain the sole and
exclusive property of the University, (ii) under the Research Agreements, the
University has a right of first refusal with respect to the filing and
prosecuting of patents and patent applications relating to such UNIVERSITY
INVENTIONS, (iii) to date, the University has not exercised any such rights with
respect to any such UNIVERSITY INVENTIONS and (iv) to date, IgX has filed, and
is currently maintaining and prosecuting, all at its own expense, the patents
and patent applications set forth on Exhibit "A" attached hereto. Accordingly,
the University hereby waives its right of first
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<PAGE>
refusal with respect to the filing and prosecuting of patents and patent
applications relating solely to such UNIVERSITY INVENTIONS and hereby ratifies
the actions taken by IgX to date with respect to filing, maintaining and
prosecuting the patents and patent applications set forth on Exhibit "A"
attached hereto. If IgX elects to either abandon any claims or terminate its
prosecution and/or management of any patents or patent applications relating to
any INVENTION(S), IgX shall notify the University sixty (60) days in advance of
its intent to do so, and the University shall regain full control of the patents
and patent applications relating to such INVENTION(S).
12. The University acknowledges and agrees that with respect to the
filing, maintaining and prosecuting of the patents and patent applications set
forth on Exhibit "A" attached hereto, as well as any future patents and patent
applications arising out of the Research Agreements for which the University
does not exercise its right of first refusal, IgX shall have the right (but not
the obligation) at IgX's sole expense and discretion to (i) control and to file,
maintain and prosecute such patents and patent applications and to select all
patent counsel or other professionals to advise, represent or act for it in all
matters relating to such INVENTIONS and (ii) take whatever action it deems
appropriate in its own name, or if required by law, in the name of the
University, to enforce the patent rights to such UNIVERSITY INVENTIONS, with any
and all monies recovered upon final judgment or settlement of any lawsuit to
enforce such rights to be retained by IgX; provided, however, that IgX hereby
agrees to inform the University at reasonable intervals, or upon reasonable
request of the University, as to the status of any such patent or patent
application; provided, further, that any such patent or patent application shall
at all times remain the sole and exclusive property of the University in
accordance with the terms and conditions of the applicable Research Agreement.
13. Each of IgX and the University acknowledges and agrees that the
Research Agreements require IgX to provide written notice of the exercise of its
option to obtain an exclusive, worldwide license with respect to any INVENTION
within six (6) months of receiving, notice of the existence of such INVENTION
from the University. To the extent that such six (6) month notice of exercise
requirement has not been complied with to date, the University hereby waives
such six (6) month notice of exercise requirement and ratifies the grant to IgX
of each of the licenses set forth on Exhibit "A" attached hereto, as well as
each of the licenses to be granted pursuant to the terms and conditions of this
Agreement (and the exhibits hereto).
14. The University acknowledges and agrees that the definition of
INVENTION under the written agreements for each of the licenses granted to IgX
set forth on Exhibit "A" attached hereto, as well as each of the licenses to be
granted pursuant to the terms and conditions of this Agreement (and the exhibits
hereto), shall be deemed to include any and all rights, modifications,
derivatives and/or enhancements arising from or relating to such INVENTION and
developed under IgX sponsorship, except to the extent that such licenses by
their terms limit their applicability to devices, processes, compositions or
products for treatment of human patients, and specifically exclude any devices,
processes, compositions or products for treatment of animals within the field of
veterinary science.
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<PAGE>
15. Each of IgX and the University acknowledges and agrees that
written agreements for each of the licenses granted to IgX set forth on Exhibit
"A" attached hereto, as well as each of the licenses to be granted pursuant to
the terms and conditions of this Agreement (and the exhibits hereto), require
IgX to provide to the University a milestone schedule mutually agreeable to IgX
and the University of development and licensed products and regulatory
submission with respect to each INVENTION, such schedule to be provided within
eighteen (18) months from the date of such agreement, subject to extension by
mutual agreement of both parties. Each of IgX and the University hereby agrees
to a mutual extension of such deadline to permit IgX to provide to the
University a written milestone schedule with respect to each licensed INVENTION
within sixty (60) days of the date hereof.
16. All capitalized terms used in this Agreement and not otherwise
defined shall have the meaning given such terms in the Research Agreements, and
the exhibits attached thereto. Except as expressly modified hereby, all other
terms and conditions of the Research Agreements, and the exhibits attached
thereto, shall remain in full force and effect in accordance with the respective
terms thereof. In the event of a conflict between the terms ands conditions
contained in this Agreement and the terms and conditions of the Research
Agreements, the terms and conditions of this Agreement shall prevail.
17. This Agreement may be executed in one or more counterparts, all of
which when fully-executed and delivered by all parties hereto and taken together
shall constitute a single agreement, binding against each of the parties. To the
maximum extent permitted by law or by any applicable governmental authority,
this Agreement may be signed and transmitted by facsimile with the same validity
as if it were an ink-signed document. Each signatory below represents and
warrants by his or her signature that he or she is duly authorized (on behalf of
the respective entity for which such signatory has acted) to execute and deliver
this instrument and any other document related to this transaction, thereby
fully binding each such respective entity.
* * *
Please indicate your acknowledgment of and agreement to the terms and
conditions contained in this Agreement by executing the acknowledgment clause
below in the appropriate place and returning the signature page to our attention
at your earliest convenience. We will promptly provide each of you with a
fully-executed copy of this Agreement upon execution by all the parties hereto.
Very truly yours,
IGX CORP.,
a Delaware corporation
By: /s/ Albert J. Henry
-------------------------------
Albert J. Henry, Chairman
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ACKNOWLEDGMENT
The undersigned parties hereby acknowledge and agree to all of the
terms and conditions set forth above in this Agreement as of the date first
written above.
ARIZONA BOARD OF REGENTS,
on behalf of the University of Arizona
By: /s/ Richard A. Haney Jr.
----------------------------------------
Name: Richard A. Haney Jr.
Title: Specialist,
Intellectual Property Management
/s/ Charles R. Sterling
-------------------------------------------
Charles R. Sterling
/s/ Vitaliano A. Cama
-------------------------------------------
Vitaliano A. Cama
/s/ Michael W. Riggs
-------------------------------------------
Michael W. Riggs
/s/ J. Glenn Songer
-------------------------------------------
J. Glenn Songer
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EXHIBIT "A"
RESEARCH COMMITMENTS
<PAGE>
RESEARCH AGREEMENT
This RESEARCH AGREEMENT (the "Agreement") is made effective as of the
1st day of July, 1996 by and between the Arizona Board of Regents acting for
and on behalf of The University of Arizona, Tucson, Arizona 85721 (hereinafter
"UNIVERSITY") and IgX Corp., a Delaware corporation (hereinafter "IgX"),
having a principal address at 17197 North Laurel Park Drive, Suite 540,
Livonia, Michigan 48152.
WHEREAS, IgX desires UNIVERSITY to perform certain research work as
summarized in the abstract appended hereto as Exhibit "A" and made part
hereof, Preclinical Evaluation of Anti-Cryptosporidium parvum Monoclonal
Antibodies for Passive Immunotherapy of Cryptosporidiosis in Humans (the
"Research Plan" hereafter), based in part on University of Arizona Invention
Disclosure UA1411, Monoclonal Antibodies Reactive with Multiple
Neutralization-Sensitive Surface Epitopes as a Source of Treatment of Enteric
Cryptosporidiosis in Humans disclosed by Michael W. Riggs, DVM, Ph.D. (the
"Disclosure" hereafter) and is willing to advance funds to sponsor such
research;
WHEREAS, IgX desires to obtain certain rights to intellectual
property that may be developed during the course of the Research Plan;
WHEREAS, UNIVERSITY is willing to undertake such Research Plan and to
grant IgX an option to obtain rights to such intellectual property;
WHEREAS, the research leading to the Disclosure was supported by the
following grants: National Institutes of Health AI30223 and U.S. Department of
Agriculture NRI 94-37204-0496;
WHEREAS, UNIVERSITY, if applicable, has requested title to the
Disclosure pursuant to Public Law 96-517, applicable regulations relating
thereto as from time to time amended and institutional agreements between
itself and agencies of the U.S. Government;
WHEREAS, UNIVERSITY will acquire title, if any there be, to all
improvements to the Disclosure made using UNIVERSITY facilities by virtue of
Arizona Board of Regents (ABOR) Patent Policy and said Public law, regulations
and agreements; and
WHEREAS, UNIVERSITY is granting to IgX the option to acquire certain
rights to intellectual property related to the FIELD OF RESEARCH (as defined
herein) under the terms and conditions of the License Agreement attached as
Exhibit "B;"
NOW, THEREFORE, in consideration of the mutual covenants and promises
herein contained, IgX and UNIVERSITY agree as follows:
ARTICLE 1. Definitions
1.1 Terms in this Agreement (other than names of the parties and
Article headings) which are set forth in upper case letters have the meaning
established for such terms in the succeeding paragraphs of this Article 1.
1.2 "FIELD OF RESEARCH" shall mean the study of the production of
monoclonal antibodies reactive with multiple neutralization-sensitive surface
epitopes on infective sporozoite and
<PAGE>
merozoite stages for the treatment of enteric cryptosporidiosis in immune
compromised human patients and in certain immune competent human patients.
1.3 "SPONSORED RESEARCH" shall mean those research activities to be
performed by UNIVERSITY within the FIELD OF RESEARCH, and in accordance with
the Research Plan as summarized in the attached Exhibit "A."
1.4 "PRINCIPAL INVESTIGATOR" shall mean Michael W. Riggs, DVM, Ph.D.,
who is employed by UNIVERSITY, and who will have the primary responsibility
for performing and/or supervising the SPONSORED RESEARCH.
1.5 "UNIVERSITY" as used herein shall include, without restriction or
limitation, UNIVERSITY and the PRINCIPAL INVESTIGATOR, and any other employee,
representative or agent of The University of Arizona participating in the
SPONSORED RESEARCH pursuant to this Agreement.
1.6 "INVENTION(S)" as used herein shall include, without restriction
or limitation, any and all devices, processes (including without limitation
processes of using devices or of manufacturing such devices), compositions or
products whether patentable or unpatentable, which are conceived or reduced to
practice during the term of the Agreement and for ninety (90) days after it
expires, which is/are developed as a result of conducting the SPONSORED
RESEARCH for IgX, and which are within the FIELD OF RESEARCH. INVENTION(S)
hereunder shall be limited to devices, processes, compositions or products for
treatment of human patients, and shall specifically exclude any devices,
processes, compositions or products for treatment of animals in connection in
the field of veterinary science.
1.7 "IgX's INVENTION(S)" shall mean those INVENTION(S) independently
conceived or reduced to practice by IgX, with "independently" meaning for the
purpose of this Agreement, the lack of involvement by UNIVERSITY in assisting
or contributing to the conception or reduction to practice of such
INVENTION(S).
1.8 "UNIVERSITY's INVENTION(S)" shall mean all INVENTION(S) made by
UNIVERSITY, PRINCIPAL INVESTIGATOR and other UNIVERSITY employees in direct
performance of the SPONSORED RESEARCH.
1.9 "JOINT INVENTION(S)" shall mean those INVENTION(S) not coming
within the definitions for IgX's INVENTION(S) or UNIVERSITY's INVENTION(S).
ARTICLE 2. Research Activity
2.1 Research Program. The research program which is contemplated by
the Agreement is set forth in the Research Plan attached as Exhibit "A." This
Research Plan sets forth the research tasks and objectives to be performed by
UNIVERSITY and the amount of funding to be provided by IgX. UNIVERSITY agrees
to conduct the SPONSORED RESEARCH in accordance with the Research Plan of
Exhibit "A." The PRINCIPAL INVESTIGATOR may select other employees,
representatives and/or agents of UNIVERSITY to assist with the Research Plan,
provided that such individuals are
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made aware of this Agreement, and in particular, have agreed to be bound by
the terms of this Agreement.
2.2 Independent Contractor. UNIVERSITY, for the purposes of this
Agreement, and for all services to be provided hereunder, shall be deemed to
be an independent contractor and neither the agent nor the employee of IgX.
UNIVERSITY shall not have authority to make any statements, representations or
commitments of any kind, or to take any action, which shall be binding upon
IgX except as provided for herein or authorized in writing by IgX.
2.3 Funding. A budget covering expected costs of the SPONSORED
RESEARCH is included in the attached Exhibit "A." UNIVERSITY agrees that this
budget represents the expected funding for conducting the SPONSORED RESEARCH
pursuant to this Agreement. The SPONSORED RESEARCH is to be funded as the work
is completed based on invoices (in triplicate) submitted by UNIVERSITY. Timely
payment by IgX shall be made upon receipt of such invoices sent to the
following address. Checks should be made payable to The University of Arizona
and should identify the UA account no. 434200.
Sponsored Projects Services
The University of Arizona
888 North Euclid Avenue, 510
P.O. Box 210158
Tucson, Arizona 85721
2.4 Exclusivity of Research. IgX understands that UNIVERSITY may be
involved in similar research through other researchers on behalf of itself and
others. UNIVERSITY shall be free to continue such research provided that it is
conducted separately under funding separate from the Research Plan of Exhibit
"A" and IgX shall not gain any rights via this Agreement to such other
research.
2.5 Personnel Agreements. UNIVERSITY represents that the covenants
set forth in this Agreement shall apply and are binding on any individual
employed to perform the SPONSORED RESEARCH under this Agreement, and
additionally represents that it has agreements with any such individuals
sufficient to satisfy the terms and conditions of this Agreement.
2.6 Compliance with Laws. The PRINCIPAL INVESTIGATOR agrees to comply
with all national and local laws of the jurisdiction wherein he conducts
business, including compliance at all times with Good Laboratory Practice
guidelines as established by the Food and Drug Administration. UNIVERSITY
further agrees that any compensation it receives under this Agreement shall
not be disbursed for any purpose which is unlawful or unethical under those
laws.
2.7 Equipment and Supplies. Any equipment and supplies purchased
under this Agreement to conduct the Research Plan remaining at the end of the
Research Plan shall belong to UNIVERSITY.
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<PAGE>
ARTICLE 3. Property Rights
3.1 Property Rights. The parties agree that the following provisions
apply to IgX's INVENTION(S), UNIVERSITY's INVENTION(S) and JOINT INVENTION(S).
a. IgX's INVENTION(S): IgX's INVENTION(S) shall remain the
sole and exclusive property of IgX and UNIVERSITY shall have no title or claim
to such INVENTION(S). IgX shall bear sole responsibility and expense for the
filing and prosecuting of any patent applications concerning such
INVENTION(S).
b. UNIVERSITY's INVENTION(S): UNIVERSITY's INVENTION(S)
shall remain the sole and exclusive property of UNIVERSITY.
i. UNIVERSITY shall bear the sole responsibility and expense
for the filing and prosecuting of any patent application concerning
such INVENTIONS(S). If IgX elects to exercise the option pursuant
to Article 3.1(b)(iii), IgX will reimburse UNIVERSITY for
out-of-pocket costs of filing and prosecuting patent applications
covering UNIVERSITY's INVENTION(S).
ii. If UNIVERSITY declines to file a patent application on
such INVENTION(S), including filing a patent application in a
particular country, then IgX may elect, at its own discretion and
expense, to file and prosecute such patent application, provided,
that such application and any resulting patent shall remain the
sole and exclusive property of UNIVERSITY. In the event that IgX
prepares and files such an application UNIVERSITY hereby agrees to
execute any necessary papers to accomplish preparing, filing and
prosecuting the application.
iii. UNIVERSITY further agrees to grant and hereby grants to
IgX a right of first refusal with respect to UNIVERSITY's
INVENTION(S). To that end, UNIVERSITY agrees to grant and hereby
grants to IgX an exclusive option to acquire a royalty-bearing
exclusive license in any and all UNIVERSITY INVENTION(S) pursuant
to the terms and conditions of the License Agreement substantially
in the form attached hereto as Exhibit "B" to this Agreement. Said
exclusive option shall be exercised in writing by IgX within six
(6) months after notification of such UNIVERSITY INVENTION(S) has
been communicated to IgX pursuant to Section 3.2 below.
c. JOINT INVENTION(S): JOINT INVENTION(S) shall be owned
jointly by IgX and UNIVERSITY, with each party having the full right to
practice the INVENTION(S) subject only to similar rights of the other party.
i. UNIVERSITY and IgX shall mutually agree upon the filing,
including the selection of appropriate countries in which to file,
of patent applications for such JOINT INVENTION(S). The expense for
filing and prosecution of such mutually agreed upon patent
applications shall be shared equally by UNIVERSITY and IgX. If the
parties do not agree upon the filing of a patent application, or do
not agree upon filing an application in a specific country, for a
particular JOINT INVENTION(S), then the party desiring to file such
patent
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<PAGE>
application, including the filing in a specific country, may
file at its own expense, provided that any resulting patent shall
become the exclusive property of the filing party free of any
royalty or other payment obligation to the non-filing party.
UNIVERSITY and IgX also agree to equally share in the expense of
maintaining any patent for JOINT INVENTION(S). In the event one
party elects not to pay its share of maintenance costs, then the
other party may at its own expense continue such maintenance,
provided that such patent will become the exclusive property of
that party free of any royalty or other payment obligations to the
other.
ii. In the event that a patent application is prepared, or a
patent is maintained concerning a JOINT INVENTION(S) by one of the
parties pursuant to Article 3.1(c)(i), then the other party hereby
agrees to execute any necessary papers to transfer its interest in
such application or patent to the other party.
iii. Neither IgX nor UNIVERSITY shall have the right to
transfer any interest in such JOINT INVENTION(S) without the prior
written approval of the other party, with such approval not being
unreasonably withheld by either party, except for the interest of
the filing party in a patent application filed by that party
pursuant to Article 3.1(c)(i).
iv. UNIVERSITY further agrees to grant, and hereby grants to
IgX an exclusive option to acquire a royalty-bearing exclusive
license to UNIVERSITY'S interest in any and all JOINT INVENTION(S)
pursuant to the terms and conditions of the License Agreement
substantially in the form attached hereto as Exhibit "B" to this
Agreement. Said exclusive option shall be exercised in writing by
IgX within six (6) months after notification of such JOINT
INVENTION(S) has been communicated to IgX pursuant to Section 3.2
below.
3.2 Disclosure of INVENTION(S). UNIVERSITY agrees to disclose through
its Office of Technology Transfer to IgX each such UNIVERSITY's INVENTION(S)
and JOINT INVENTION(S) within thirty (30) days of determining the existence of
such INVENTIONS(S). UNIVERSITY further agrees to notify IgX within ninety (90)
days of disclosure of each UNIVERSITY's INVENTION(S) of its decision on filing
of an appropriate patent application, whereupon IgX may, if UNIVERSITY
declines to file an application or fails to properly notify IgX, elect to file
such an application pursuant to Article 3.1(b)(ii).
ARTICLE 4. Publication
4.1 UNIVERSITY and the PRINCIPAL INVESTIGATOR have the right to
publish or otherwise publicly disclose information gained in pursuing the
Research Plan supported by this Agreement. In order to avoid loss of patent
protection as a result of public disclosure on information developed during
the Research Plan, UNIVERSITY will submit any materials to IgX for review at
least thirty (30) days before submission of materials for publication or
before making presentations. IgX shall notify UNIVERSITY within sixty (60)
days of receipt of such materials:
a. Whether IgX desires to file patent applications on any
intellectual property contained in the materials that may be subject to patent
protection; or
b. Whether such materials contain information the public
disclosure of which
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would be commercially prejudicial to IgX.
4.2 IgX shall have the right to request that any commercially
prejudicial information be deleted from the materials submitted or the
portions thereof be rewritten to be less prejudicial; provided, however, that
the PRINCIPAL INVESTIGATOR shall have final authority to determine the scope
and content of any publication.
ARTICLE 5. Confidential Information
5.1 IgX and UNIVERSITY may wish, from time to time, in connection
with work contemplated under this Agreement, to disclose confidential
information to each other. IgX and UNIVERSITY shall use reasonable efforts to
prevent the disclosure of any confidential information belonging to the other
to third parties, and use such information only for the purposes expressed in
this Agreement and for a period of three (3) years thereafter, provided that
the receiving party's obligation hereunder shall not apply to information
that:
a. Is already in the receiving party's possession at the time
of disclosure thereof;
b. Is or later becomes part of the public domain through no
fault of the receiving party;
c. Is received from a third party having no obligation of
confidentiality to the disclosing party;
d. Was prior to disclosure independently developed by the
receiving party; or
e. Is required to be disclosed by law or under regulation.
ARTICLE 6. Publicity
6.1 Except as required by law, no press release or other written
statements in connection with work performed under this Agreement intended for
use in the public media, having or containing any reference to IgX or
UNIVERSITY shall be made by either party without approval of the other party,
which approval shall not be unreasonably withheld. UNIVERSITY, however, shall
acknowledge IgX's support of the Research Plan under this Agreement in
scientific publications and other scientific communications. In any other
statements, the parties shall describe the scope and nature of their
participation accurately and appropriately.
ARTICLE 7. Arbitration
7.1 The parties agree that any dispute arising under this Agreement
involving the sum of Thirty Thousand Dollars ($30,000) or less in money
damages only shall be resolved by arbitration pursuant to the Arizona Uniform
Rules of Procedure for Arbitration. The decision of the arbitrator(s) shall be
final.
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ARTICLE 8. Term and Termination of Agreement
8.1 The Research Plan shall be commenced by UNIVERSITY on or about
July 1, 1996 and shall continue for an initial period of eighteen (18) months.
Extensions of this initial eighteen-month period shall be as mutually agreed
to in writing signed by the parties.
8.2 Notwithstanding the foregoing, performance under this Agreement
may be terminated by IgX upon sixty (60) days written notice; performance may
be terminated by UNIVERSITY if circumstances beyond its control preclude
continuation of the Research Plan. Upon receipt of notice of termination from
IgX, UNIVERSITY will proceed in an orderly fashion to terminate any
outstanding commitments and to close down the Research Plan. In the event that
this Agreement is terminated by IgX, all costs associated with termination
will be reimbursable to UNIVERSITY including costs incurred prior to the
receipt of notice of termination but which have not yet been reimbursed, and
commitments existing at the time notice of termination is received which
cannot be canceled. IgX shall not reimburse UNIVERSITY for costs associated
with termination of this Agreement by UNIVERSITY. In the event of termination,
UNIVERSITY will provide IgX with a final report within ninety (90) days after
the effective date of termination of all costs incurred and all funds
received; in the event that this Agreement is terminated by UNIVERSITY,
expenses associated with termination shall not be included in UNIVERSITY's
calculation of costs incurred. The report will be accompanied by a check in
the amount of any excess of funds advanced over costs incurred, or by final
invoice for amounts due. UNIVERSITY will also provide IgX with a report
summarizing the Research Plan results through the date of termination.
8.3 Termination of this Agreement shall not relieve UNIVERSITY and
the PRINCIPAL INVESTIGATOR of any obligations of confidentiality provided for
in Article 5 of this Agreement.
ARTICLE 9. General Provisions
9.1 Any notices permitted or required hereunder shall be deemed
effective if made in writing and sent, postage prepaid as follows:
To IgX: Albert J. Henry, Chairman
IgX Corp.
17197 North Laurel Park Drive, Suite 540
Livonia, Michigan 48152
With a copy to: June Knaudt
IgX Corp.
c/o: Henry & Co.
4370 La Jolla Village Drive, Suite 400
San Diego, California 92122
[Addresses Continued on Next Page]
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<PAGE>
To UNIVERSITY: Janet M. Hornung, Director
Sponsored Projects Services
The University of Arizona
888 North Euclid Avenue, 510
P.O. Box 210158
Tucson, Arizona 85721
With a copy to: Rita C. Manak, Ph.D., Director
Office of Technology Transfer
The University of Arizona
888 North Euclid Avenue, 515
P.O. Box 210158
Tucson, Arizona 85721
and Michael W. Riggs, DVM, Ph.D.,
Associate Professor
Department of Veterinary Science
The University of Arizona
Administration Office 202, Building 90
Tucson, Arizona 85721
9.2 This Agreement embodies the entire understanding of the parties
and supersedes any other agreement of understanding between or among the
parties relating to the subject matter hereof. No waiver, amendment or
modification of this Agreement shall be valid or binding upon the parties
unless made in writing and signed on behalf of each party by their respective
property officers who are duly authorized to do so.
9.3 This Agreement may not be assigned by either party without the
prior written consent of the other party; provided, however, that IgX may
assign this Agreement to any affiliate of IgX, or to any purchaser or
transferee of all or substantially all of IgX's business upon prior written
notice to UNIVERSITY. UNIVERSITY agrees not to assign any of its rights or
obligations under this Agreement to any other party without first obtaining
IgX's written approval.
9.4 IgX agrees that this Agreement shall be binding upon and inure to
the benefit of its respective successors and assigns.
9.5 Waiver by either party of any breach or default of any clause of
this Agreement by the other party shall not operate as a waiver of any
previous or future default or breach of the same or different clause of this
Agreement.
9.6 This Agreement shall in all respects be interpreted and construed
in accordance with laws of the State of Arizona.
9.7 The headings of the several sections are inserted for convenience
of reference only and are not intended to be a part of or to affect the
meaning or interpretation of the Agreement.
9.8 If any of the provisions of this Agreement are held void or
unenforceable, the
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<PAGE>
remaining provisions shall nevertheless be effective, the intent being to
effectuate this Agreement to the fullest extent possible.
9.9 The parties agree to be bound by applicable state and federal
rules governing equal employment opportunity and non-discrimination.
9.10 The parties recognize that the performance by the Arizona Board
of Regents for and on behalf of UNIVERSITY may be dependent upon the
appropriation of funds by the State Legislature of Arizona. Should the
Legislature fail to appropriate the necessary funds or if UNIVERSITY's
appropriation is reduced during the fiscal year, the Board of Regents may
reduce the scope of this Agreement if appropriate or cancel this Agreement
without further duty or obligation. The Board agrees to notify other
party(ies) as soon as reasonably possible after the unavailability of said
funds comes to the Board's attention.
9.11 This Agreement is subject to Arizona Revised Statutes ? 38-511
and the State of Arizona may cancel this Agreement if any person significantly
involved in negotiating, drafting, securing or obtaining this Agreement for or
on behalf of the Arizona Board of Regents becomes an employee in any capacity
of any other party or a consultant to any other party with reference to the
subject matter of this Agreement while the Agreement or any extension hereof
is in effect.
9.12 UNIVERSITY reserves unto itself a nonexclusive free-of-charge
right to use UNIVERSITY's INVENTIONS and JOINT INVENTIONS(S) solely in
connection with its teaching and research functions.
9.13 IgX shall not incur any liability for any act or failure to act
by employees of UNIVERSITY as a result of the performance of the SPONSORED
RESEARCH and UNIVERSITY shall not accept any liability for any act or failure
to act by employees of IgX as a result of the performance of the SPONSORED
RESEARCH.
9.14 Exhibit "A" is made part hereof for all purposes.
9.15 This Agreement may be executed in more than one counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. This Agreement may be executed by
facsimile and such facsimile copy shall be conclusive evidence of the consent
and ratification of the matters contained herein by the undersigned.
[The Remainder of This Page Intentionally Left Blank]
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<PAGE>
IN WITNESS THEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
UNIVERSITY: Arizona Board of Regents,
on behalf of The University of Arizona
By:
-------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
IgX: IgX Corp.,
a Delaware corporation
By:
----------------------------------------
Albert J. Henry, Chairman
I have read this Agreement. I understand, accept and will abide by the terms
and conditions of this Agreement.
-----------------------------------------
Michael W. Riggs, DVM, Ph.D
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<PAGE>
EXHIBIT "A"
RESEARCH PLAN
A-1
<PAGE>
EXHIBIT "B"
LICENSE AGREEMENT
This LICENSE AGREEMENT (the "Agreement") is made as of the 1st day of
July, 1996, by and between the Arizona Board of Regents acting for and on
behalf of The University of Arizona, Tucson, Arizona 85721 ("LICENSOR") and
IgX Corp., a Delaware corporation ("IgX"), having a principal address at 17197
North Laurel Park Drive, Suite 540, Livonia, Michigan 48152.
WHEREAS, LICENSOR represents that Michael W. Riggs, DVM, Ph.D.,
employee of LICENSOR, is the Inventor who has submitted a disclosure,
Monoclonal Antibodies Reactive with Multiple Neutralization-Sensitive Surface
Epitopes as a Source of Treatment of Enteric Cryptosporidiosis in Humans (a
portion of which constitutes the "INVENTION" as defined in Exhibit "A" of the
accompanying Research Agreement), to LICENSOR, which disclosure (attached
hereto as Exhibit "A") was assigned log number UA1411;
WHEREAS, LICENSOR has the right to make, use, sell and grant licenses
under the INVENTION as defined herein; and LICENSOR wishes to have the
INVENTION utilized for the public interest; and
WHEREAS, IgX wishes to obtain a license to make, use, sell and
distribute the INVENTION under the FIELD OF USE (as defined herein) and upon
the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, IgX and LICENSOR agree as follows:
1. DEFINITIONS
For the purposes of this Agreement, and solely for that purpose, the
terms hereinafter set forth shall be defined as follows:
1.1. "INVENTION" shall mean the invention as described in Exhibit
"A." INVENTION shall be defined to also include that certain Patent
Application referenced on Exhibit "A" attached hereto and incorporated herein
by this reference (the subject matter of which is described on the Abstract
attached thereto) filed (or to be filed) by IgX in the name of Michael W.
Riggs, as well as any and all rights, modifications, derivatives and/or
enhancements arising therefrom or relating thereto (collectively the "Patent
Rights"). INVENTION(S) hereunder shall be limited to devices, processes,
compositions or products for treatment of human patients, and shall
specifically exclude any devices, processes, compositions or products for
treatment of animals within the field of veterinary science.
1.2. "LICENSED PRODUCT(S)" shall mean monoclonal antibodies or
treatments derived from the INVENTION as described in Exhibit "A" that are
within the FIELD OF USE, as defined in Paragraph 1.5.
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<PAGE>
1.3. "TECHNICAL INFORMATION" shall mean technical information and
know-how relating to the preparation of LICENSED PRODUCT(S).
1.4. "REGULATOR" shall mean the government-approved regulatory body,
committee, agency or other organization which by law has the power to approve
the sale of the INVENTION for human therapeutic use within each country in the
world.
1.5. "FIELD OF USE" shall mean the use of INVENTION for
REGULATOR-approved human therapeutics in the treatment of cryptosporidiosis in
patients with Acquired Immune Deficiency Syndrome (AIDS) and in certain immune
competent human patients. FIELD OF USE shall be defined to also include any
and all proposed uses derived from and/or relating to the Patent Rights.
Notwithstanding the foregoing, the FIELD OF USE hereunder shall be limited to
devices, processes, compositions or products for treatment of human patients,
and shall specifically exclude any devices, processes, compositions or
products for treatment of animals within the field of veterinary science.
1.6. "FIRST COMMERCIAL SALE" means the initial transfer by IgX or its
SUBLICENSEE(S) of LICENSED PRODUCT(S) in exchange for cash or some equivalent
to which value can be assigned for the purpose of determining NET SALES.
1.7. "NET SALES" means the total gross receipts for sales of LICENSED
PRODUCT(S) by IgX, its SUBLICENSEE(S) or its AFFILIATES, and from leasing,
renting or otherwise making LICENSED PRODUCT(S) available to others without
sale or other dispositions, whether invoiced or not, less returns and
allowances actually granted, freight out, taxes or excise duties imposed on
the transaction (if separately invoiced) and wholesaler and cash discounts in
amounts customary in the trade. No deductions shall be made for commissions
paid to individuals, whether they be with independent sales agencies or
regularly employed by IgX or its AFFILIATES, and on their payroll, or for the
cost of collections.
1.8. "NET SALES PRICE" means the NET SALES divided by the quantity of
LICENSED PRODUCT(S) sold. In the event the LICENSED PRODUCT(S) is sold as part
of a kit, or in combination with other products not covered by this Agreement
(such as detection systems), the NET SALES PRICE for such products which
contain the LICENSED PRODUCT(S) will be calculated as B * (A/B); where A is
the gross sales price of an equivalent unit of LICENSED PRODUCT(S) sold
separately, less allowances, and B is the gross sales price of the kit or
combination of products in which the LICENSED PRODUCT(S) is included less
allowances.
1.9. "AFFILIATE" means any corporation or other business entity
controlled by, controlling or under common control with IgX. For this purpose,
"control" means direct or indirect beneficial ownership of at least fifty
percent (50%) of the voting stock, or at least fifty percent (50%) interest in
the income of such corporation or other business.
2. LICENSE
2.1. LICENSOR hereby grants to IgX and IgX hereby accepts from
LICENSOR, upon the terms and conditions herein specified, an exclusive,
worldwide and non-assignable (except as herein
B-2
<PAGE>
specified) License under the INVENTION to test, evaluate and develop
the LICENSED PRODUCT(S) in the FIELD OF USE covered hereby and to make, have
made, use and sell the LICENSED PRODUCT(S) during the term of this Agreement,
and during the term of any extension thereof, unless sooner terminated as
herein provided. LICENSOR also grants to IgX under the terms of this License
the right to use the TECHNICAL INFORMATION to test, evaluate and develop the
LICENSED PRODUCT(S).
2.2. LICENSOR hereby grants to IgX and IgX hereby accepts from
LICENSOR, upon terms and conditions herein specified, the right to extend the
License granted hereunder to its sublicensee(s) ("SUBLICENSEE(S)"). IgX shall
promptly notify LICENSOR in writing at the time of each sublicense
("SUBLICENSE") and shall provide LICENSOR with a copy of each SUBLICENSE. IgX
may negotiate such terms as it chooses for each SUBLICENSE, provided that
LICENSOR shall receive a royalty for all sales made by SUBLICENSEE(S) as
provided for in Section 3.1 below.
2.3. If IgX shall so notify LICENSOR in advance thereof in writing,
any SUBLICENSEE(S) to whom the License shall have been extended pursuant to
Paragraph 2.2 hereof may make the reports and royalty payments specified in
Paragraph 3.1 hereof directly to LICENSOR on behalf of IgX; otherwise, such
reports and payments on account of sales by such SUBLICENSEE(S) shall be made
by IgX.
2.4. LICENSOR retains a non-exclusive, royalty-free, irrevocable
License to make, have made and use the INVENTION and LICENSED PRODUCT(S) for
its own use.
2.5. The exclusive License of Paragraph 2.1 shall be effective as of
the execution of this Agreement, and shall be for an initial term of twenty
(20) years from the date of the FIRST COMMERCIAL SALE, and said License shall
be renewable for two additional ten (10) year periods at the discretion of
IgX, subject to the provisions of Articles 4 and 5 of this Agreement.
2.6. Outside the scope of the License between LICENSOR and IgX, no
other, further or different license of right, and no further power to
sublicense, is hereby granted or implied.
3. ROYALTIES, RECORDS AND REPORTS
3.1. During the term of this Agreement, unless sooner terminated, IgX
shall pay to LICENSOR, in the manner hereinafter provided, earned royalties at
the rate of five percent (5%) of the NET SALES PRICE of all LICENSED
PRODUCT(S) sold by IgX and its SUBLICENSEE(S), anywhere in the world.
3.2. LICENSED PRODUCT(S) shall be considered sold when sold or
invoiced, and if not sold or invoiced, when delivered to a third party.
3.3. IgX shall be responsible for the performance hereunder of all
obligations including payment of royalties, keeping of records and reporting
by IgX and any SUBLICENSEE(S) to whom the License shall have been extended
pursuant to this Agreement.
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<PAGE>
3.4. So long as this Agreement remains in force, IgX shall deliver to
LICENSOR, within sixty (60) days after the first day of January, April, July
and October of each year, a true and accurate report, giving such particulars
of the business conduct by IgX and its SUBLICENSEE(S) during preceding three
(3) months under this Agreement as are necessary to accurately account for
sale subject to royalties under this Agreement. Each report shall include, but
not be limited to, information about production, inventory on hand, marketing
efforts and sales.
3.5. Simultaneously with the delivery of each report required by the
preceding Paragraph 3.4, IgX shall pay to LICENSOR the net royalties and any
other such payment due under this Agreement for the period covered by such
report. If no royalties are due, it shall be so reported.
3.6. All payments from IgX to LICENSOR shall be in U.S. dollars. The
rates of exchange for such payments shall be midpoint between the buying and
selling rates for U.S. dollars as quoted by the Chase Manhattan Bank in New
York, New York at the close of business on the last business day preceding the
date payment is due.
3.7. In case of any delay in payment by IgX to LICENSOR not
occasioned by force majeure, interest at the rate of one percent (1%) per
month, assessed from the thirty-first (31st) day after the due date of said
payment, shall be due by IgX without special notice.
3.8. Royalties shall accrue in accordance with this Agreement, upon
the FIRST COMMERCIAL SALE.
3.9. Royalties payable in connection with the sale of a LICENSED
PRODUCT(S) under Paragraph 2.2 and Paragraph 3.1 shall be reduced by an amount
of royalties actually paid by IgX or such SUBLICENSEE(S) to any non-affiliated
third party in connection with the licensing of additional patent rights or
know-how necessary to make, use or sell LICENSED PRODUCT(S); provided,
however, that in no event shall the royalties payable to LICENSOR be less that
three percent (3%) of the net sales of such LICENSED PRODUCT(S).
3.10. IgX shall keep full, true and accurate books of account
containing all particulars which may be necessary for the purpose of showing
the amount payable to LICENSOR by way of royalty as aforesaid or by way of any
other provision hereunder. Said books of account shall be kept at IgX's
principal place of business. Said books and supporting data shall be open at
all reasonable times, for three (3) years following the end of the calendar
year to which they pertain, to inspection by LICENSOR for the purpose of
verifying IgX's royalty statements, or IgX's compliance in other respects with
this Agreement.
3.11. IgX also agrees to make a written report to LICENSOR within
ninety (90) days after the date of termination of this Agreement, stating in
such report the number, description and NET SALES of all products made, sold
or otherwise disposed of and upon which royalties are payable hereunder but
which were not previously reported to LICENSOR. IgX shall also continue to
make quarterly reports pursuant to the provisions of Paragraph 3.4 of all
gross income received from leasing, renting or otherwise making products
available to others without sale or other disposition transferring title in
the case of transactions entered into prior to such termination.
B-4
<PAGE>
4. PERFORMANCE
4.1. IgX shall use its best efforts to commence and maintain regular
commercial production and sale of LICENSED PRODUCTS(S) in the FIELD OF USE and
shall report such efforts in accordance with the provisions of Paragraph 3.4.
IgX agrees to support the Research Plan attached hereto as Exhibit "B," which
describes the work yet to be done by LICENSOR to further develop the INVENTION
for IgX, so that IgX might identify further actions which may be necessary to
achieve regulatory submission and approval to make the FIRST COMMERCIAL SALE.
At the end of this period, but no later than eighteen (18) months from the
date of this Agreement, IgX will provide a milestone schedule of development
and licensed products and regulatory submission. This time period may be
extended by mutual agreement of both parties.
4.2. IgX and LICENSOR agree to cooperate to ensure the quality of
LICENSED PRODUCT(S) before LICENSED PRODUCTS(S) are first offered for sale in
a commercial transaction and periodically thereafter. IgX shall provide
samples of LICENSED PRODUCT(S) so that LICENSOR can determine through mutually
agreed upon laboratory protocols the activity of LICENSED PRODUCT(S). In the
event LICENSED PRODUCT(S) supplied by IgX are not active or are otherwise
defective, IgX and LICENSOR will cooperate to produce active LICENSED
PRODUCT(S) and/or to correct any defects in the LICENSED PRODUCT(S). If for
any reason IgX does not maintain activity and/or correct defects in LICENSED
PRODUCT(S), LICENSOR has the right to take action under the provisions of
Paragraph 5.2 of this Agreement.
5. TERMINATION
5.1. If IgX shall become bankrupt or insolvent and/or if the business
of IgX shall be placed in the hands of a receiver, assignee or trustee,
whether by voluntary act of IgX or otherwise, this License will be deemed to
have automatically terminated as of a date seven (7) days prior to that event;
provided, however, that such termination shall not terminate any obligations
which may have accrued prior thereto.
5.2. Notwithstanding the provisions of Paragraph 5.1, upon any breach
or default under this Agreement by IgX, LICENSOR may terminate this License by
ninety (90) days written notice by registered mail to IgX. Said notice shall
become effective at the end of said period, unless during said period IgX
shall cure any breach or default and notify LICENSOR thereof.
5.3. IgX may terminate this license at any time upon ninety (90) days
written notice by registered mail to LICENSOR.
5.4. Upon termination of this License for any reason, all rights
granted hereunder shall revert to LICENSOR for the sole benefit of LICENSOR.
5.5. Termination of this License shall terminate all SUBLICENSE(S)
made by IgX hereunder, at the option of LICENSOR.
5.6. IgX's responsibilities and obligations to report to LICENSOR and
pay royalties to LICENSOR as to any LICENSED PRODUCT(S) produced or sold by
IgX or its SUBLICENSEE(S)
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<PAGE>
under this Agreement prior to termination or expiration hereof shall survive
such termination or expiration.
6. ASSIGNMENT
6.1. This Agreement may not be assigned by either party without the
prior written consent of the other party; provided, however, that IgX may
assign this Agreement to any purchaser or transferee of all or substantially
all of IgX's business upon prior written notice to LICENSOR. LICENSOR agrees
not to assign any of its rights or obligations under this Agreement to any
other party without first obtaining IgX's written approval.
6.2. All of the terms, covenants and conditions of this Agreement
shall be binding upon and inure to the benefit of and shall apply to the
respective heirs, executors, administrators, successors, assigns and legal
representatives of the parties, except as provided for in Paragraph 5.1.
7. SEVERABILITY
7.1. Should any part or provision of this Agreement be unenforceable
or otherwise in conflict with or in violation of the law of any jurisdiction,
the remainder of this Agreement shall remain binding upon the parties.
8. NEGATION OF WARRANTIES
8.1. Nothing in this Agreement shall be construed as a warranty or
representation that anything made, used, sold or otherwise disposed of under
any license granted in this Agreement is or will be free from infringement of
patents of third parties.
8.2. LICENSOR makes no representation other than those specified in
this Agreement. LICENSOR makes no express or implied warranties of
merchantability or fitness for any particular purpose of LICENSED PRODUCT(S).
9. ARBITRATION
9.1. The parties agree that any dispute arising under this Agreement
involving the sum of Thirty Thousand Dollars ($30,000) or less in money
damages only shall be resolved by arbitration pursuant to the Arizona Uniform
Rules of Procedure for Arbitration. The decision of the arbitrator(s) shall be
final.
10. INDEMNIFICATION
10.1. IgX agrees to indemnify and hold harmless LICENSOR, LICENSOR's
employees or agents from and against any and all claims, damages and
liabilities asserted by third parties, both government and private, arising
from IgX's sale of LICENSED PRODUCT(S) to ultimate consumers and their use
thereof, except that IgX shall not indemnify LICENSOR, LICENSOR's employees or
agents for any claims, damages or liability resulting from the negligence of
any of them.
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<PAGE>
11. NONDISCRIMINATION
11.1. The parties agree to be bound by applicable state and federal
rules governing equal employment opportunity and nondiscrimination.
12. STATE OBLIGATION
12.1. The parties recognize that the performance by the Arizona Board
of Regents for and on behalf of LICENSOR may be dependent upon the
appropriation of funds by the State Legislature of Arizona. Should the
Legislature fail to appropriate the necessary funds or if LICENSOR's
appropriation is reduced during the fiscal year, the Board of Regents may
reduce the scope of this Agreement if appropriate or cancel this Agreement
without further duty or obligation. The Board agrees to notify other
party(ies) as soon as reasonably possible after the unavailability of said
funds comes to the Board's attention.
13. CONFLICT OF INTEREST
13.1. This Agreement is subject to Arizona Revised Statutes |_| 38-511
and the State of Arizona may cancel this Agreement if any person significantly
involved in negotiating, drafting, securing or obtaining this Agreement for or
on behalf of the Arizona Board of Regents becomes an employee in any capacity
of any other party or a consultant to any other party with reference to the
subject matter of this Agreement while the Agreement or any extension hereof
is in effect.
14. GENERAL
14.1. IgX shall not use the name of the Inventor, or any institution
with which he has been or is connected, or the adaption of any of them, in any
advertising, promotional or sale literature, without prior written consent
obtained from LICENSOR in each case.
14.2. Any notice required or permitted to be given by this Agreement
shall be given postpaid first class certified mail, unless otherwise stated:
To IgX: Albert J. Henry, Chairman
IgX Corp.
17197 North Laurel Park Drive, Suite 540
Livonia, Michigan 48152
With a copy to: June Knaudt
IgX Corp.
c/o: Henry & Co.
4370 La Jolla Village Drive, Suite 400
San Diego, California 92122
To LICENSOR: Janet M. Hornung, Director
Sponsored Projects Services
B-7
<PAGE>
The University of Arizona
888 North Euclid Avenue, 510
P.O. Box 210158
Tucson, Arizona 85721
With a copy to: Rita C. Manak, Ph.D., Director
Office of Technology Transfer
The University of Arizona
888 North Euclid Avenue, 515
P.O. Box 210158
Tucson, Arizona 85721
and Michael W. Riggs, DVM, Ph.D., Associate Professor
The University of Arizona
Department of Veterinary Science
Administration Office 202, Building 90
Tucson, Arizona 85721
Such addresses may be altered by written notice. If no time limit is specified
for a notice required or permitted to be given under this Agreement, the time
limit shall be twenty (20) full business days, not including the day of
mailing.
14.3. This Agreement, and its effect, is subject to and shall be
construed in accordance with the laws of the State of Arizona.
14.4. The parties to this Agreement recognize and agree that each is
operating as an independent contractor and not as an agent of the other.
14.5. The captions herein are for convenience only and shall not be
deemed to limit or otherwise affect the construction thereof.
14.6. Any waiver by either party of the breach of any term or
condition of this Agreement will not be considered as a waiver of any
subsequent breach of the same or any other term or condition hereof.
14.7. The Inventor may freely publish and disseminate the TECHNICAL
INFORMATION in any manner he may choose and may furnish LICENSED PRODUCT(S) to
interested other parties for non-commercial, research oriented purposes. The
Inventor will inform any such other party that LICENSOR has an exclusive
Agreement with IgX.
14.8. This Agreement may be executed in more than one counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. This Agreement may be executed by
facsimile and such facsimile copy shall be conclusive evidence of the consent
and ratification of the matters contained herein by the undersigned.
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15. ENTIRE AGREEMENT
15.1. This Agreement sets forth the entire Agreement and
understanding between the parties as to the subject matter of this Agreement,
and merges all prior discussions between them. Neither of the parties shall be
bound by any conditions, definitions, warranties or representations with
respect to the subject matter of this Agreement or as duly set forth on or
subsequent to the date hereof in writing unless signed by the proper and duly
authorized representative of the party to be bound thereby.
[The Remainder of This Page Intentionally Left Blank]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
and duly executed this Agreement as of the day and the year first written
above.
LICENSOR: Arizona Board of Regents,
on behalf of The University of Arizona
By:
-------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
IgX: IgX Corp.,
a Delaware corporation
By:
----------------------------------------
Albert J. Henry, Chairman
The Inventor has read and understands the terms and conditions of this
Agreement and by his signature below accepts said terms and conditions.
----------------------------------------
Michael W. Riggs, DVM, Ph.D
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<PAGE>
EXHIBIT "A"
INVENTION
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<PAGE>
EXHIBIT "B"
RESEARCH PLAN
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<PAGE>
RESEARCH AGREEMENT
This RESEARCH AGREEMENT (the "Agreement") is made effective as of
this 1st day of November, 1996 by and between the Arizona Board of Regents,
acting for and on behalf of The University of Arizona, Tucson, Arizona 85721
("UNIVERSITY"), and IgX Corp., a Delaware corporation having a principal
address at 17197 North Laurel Park Drive, Suite 540, Livonia, Michigan 48152
("IgX").
WHEREAS, IgX desires UNIVERSITY to perform certain research work (and
is willing to advance funds to sponsor such research) as summarized in the
abstract appended hereto as Exhibit "A" and made part hereof, Expansion of
Defined Anti-Cryptosporidium IgA Monoclonal Antibodies and Assessment of
Efficacy During Intestinal Infection (the "Research Plan"), based in part on
the following University of Arizona invention disclosures by F. Javier
Enriquez, M.D., Ph.D. (the "Disclosures"): (i) UA1524, Therapeutic Monoclonal
IgA Antibodies to Cryptosporidium Antigens of 500KDa and Less Than 1,000KDa;
(ii) UA1525, Anti-GP23 Antigen Monoclonal IgA Antibodies for Treatment of
Cryptosporidiosis, G9H4 and H8H2 and (iii) UA1526, Monoclonal IgA Antibody 1B8
Directed to Cryptosporidium 200KDa Antigen;
WHEREAS, IgX desires to obtain certain rights to intellectual
property that may be developed during the course of the Research Plan;
WHEREAS, UNIVERSITY is willing to undertake such Research Plan and to
grant IgX an option to obtain rights to such intellectual property;
WHEREAS, the research leading to the Disclosures was supported by
National Institutes of Health Grant AI 30223;
WHEREAS, UNIVERSITY, if applicable, has requested title to the
Disclosures pursuant to Public Law 96-517, applicable regulations relating
thereto, as from time to time amended, and institutional agreements between
itself and agencies of the U.S. Government;
WHEREAS, UNIVERSITY will acquire title, if any there be, to all
improvements to the Disclosures made by Dr. Enriquez using UNIVERSITY
facilities by virtue of Arizona Board of Regents (ABOR) Patent Policy and said
Public law, regulations and agreements; and
WHEREAS, UNIVERSITY is granting to IgX the option to acquire certain
rights to intellectual property in the FIELD OF RESEARCH (as defined herein)
under the terms and conditions of the License Agreement attached as Exhibit
"B;"
NOW, THEREFORE, in consideration of the mutual covenants and promises
herein contained, IgX and UNIVERSITY agree as follows:
<PAGE>
ARTICLE 1. Definitions
1.1 Terms in this Agreement (other than names of the parties and
Article headings) which are set forth in upper case letters have the meaning
established for such terms in the succeeding paragraphs of this Article 1.
1.2 "FIELD OF RESEARCH" shall mean (i) the examination and selection
of IgA monoclonal antibodies (expanded in ascites) against intestinal,
hepatobiliary and liver infections, (ii) the expansion of IgA antibodies in
serum-free bioreactors and (iii) the evaluation of bioreactor-derived IgA
monoclonal antibodies in Cryptosporidium infections, first during acute
infection in neonatal mice and then in chronic infection in immunodeficient
adult mice.
1.3 "SPONSORED RESEARCH" shall mean those research activities to be
performed by UNIVERSITY within the FIELD OF RESEARCH, and in accordance with
the Research Plan as summarized in the attached Exhibit "A."
1.4 "PRINCIPAL INVESTIGATOR" shall mean F. Javier Enriquez, M.D.,
Ph.D., who is employed by UNIVERSITY, and who will have the primary
responsibility for performing and/or supervising the SPONSORED RESEARCH.
1.5 "UNIVERSITY" as used herein shall include, without restriction or
limitation, UNIVERSITY and the PRINCIPAL INVESTIGATOR, and any other employee,
representative or agent of The University of Arizona participating in the
SPONSORED RESEARCH pursuant to this Agreement.
1.6 "INVENTION(S)" as used herein shall include, without restriction
or limitation, any and all devices, processes (including without limitation
processes of using devices or of manufacturing such devices), compositions or
products whether patentable or unpatentable, which are conceived or reduced to
practice during the term of the Agreement and for ninety (90) days after it
expires, which is/are developed as a result of conducting the SPONSORED
RESEARCH for IgX, and which are within the FIELD OF RESEARCH. INVENTION(S)
hereunder shall be limited to devices, processes, compositions or products for
treatment of human patients, and shall specifically exclude any devices,
processes, compositions or products for treatment of animals in the field of
veterinary science.
1.7 "IgX's INVENTION(S)" shall mean those INVENTION(S) independently
conceived or reduced to practice by IgX, with "independently" meaning for the
purpose of this Agreement, the lack of involvement by UNIVERSITY in assisting
or contributing to the conception or reduction to practice of such
INVENTION(S).
1.8 "UNIVERSITY's INVENTION(S)" shall mean all INVENTION(S) made by
UNIVERSITY, PRINCIPAL INVESTIGATOR and other UNIVERSITY employees in direct
performance of the SPONSORED RESEARCH.
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1.9 "JOINT INVENTION(S)" shall mean those INVENTION(S) not coming
within the definitions for IgX's INVENTION(S) or UNIVERSITY's INVENTION(S).
1.10 "AFFILIATE" means any corporation or other business entity
controlled by, controlling or under common control with IgX. For this purpose,
"control" means direct or indirect beneficial ownership of at least fifty
percent (50%) of the voting stock, or at least fifty percent (50%) interest in
the income of such corporation or other business.
ARTICLE 2. Research Activity
2.1 Research Program. The research program which is contemplated by
the Agreement is set forth in the Research Plan attached as Exhibit "A." This
Research Plan sets forth the research tasks and objectives to be performed by
UNIVERSITY and the amount of funding to be provided by IgX. UNIVERSITY agrees
to conduct the SPONSORED RESEARCH in accordance with the Research Plan of
Exhibit "A." The PRINCIPAL INVESTIGATOR may select other employees,
representatives and/or agents of UNIVERSITY to assist with the Research Plan,
provided that such individuals are made aware of this Agreement, and in
particular, have agreed to be bound by the terms of this Agreement.
2.2 Independent Contractor. UNIVERSITY, for the purposes of this
Agreement, and for all services to be provided hereunder, shall be deemed to
be an independent contractor and neither the agent nor the employee of IgX.
UNIVERSITY shall not have authority to make any statements, representations or
commitments of any kind, or to take any action, which shall be binding upon
IgX except as provided for herein or authorized in writing by IgX.
2.3 Funding. A budget covering expected costs of the SPONSORED
RESEARCH is included in the attached Exhibit "A." UNIVERSITY agrees that this
budget represents the expected funding for conducting the SPONSORED RESEARCH
pursuant to this Agreement. The SPONSORED RESEARCH is to be funded as the work
is completed based on invoices (in triplicate) submitted by UNIVERSITY. Timely
payment by IgX shall be made upon receipt of such invoices and sent to the
following address. Checks should be made payable to The University of Arizona
and should identify the UA account no. 434200.
Sponsored Projects Services
The University of Arizona
888 North Euclid Avenue, #510
P.O. Box 210158
Tucson, Arizona 85721-0158
2.4 Exclusivity of Research. IgX understands that UNIVERSITY may be
involved in similar research through other researchers on behalf of itself and
others. UNIVERSITY shall be free to continue such research provided that it is
conducted separately under funding separate
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<PAGE>
from the Research Plan of Exhibit "A" and IgX shall not gain any rights via
this Agreement to such other research.
2.5 Personnel Agreements. UNIVERSITY represents that the covenants
set forth in this Agreement shall apply and are binding on any individual
employed to perform the SPONSORED RESEARCH under this Agreement, and
additionally represents that it has agreements with any such individuals
sufficient to satisfy the terms and conditions of this Agreement.
2.6 Compliance with Laws. The PRINCIPAL INVESTIGATOR agrees to comply
with all national and local laws of the jurisdiction wherein he conducts
business, including compliance at all times with Good Laboratory Practice
guidelines as established by the Food and Drug Administration. UNIVERSITY
further agrees that any compensation it receives under this Agreement shall
not be disbursed for any purpose which is unlawful or unethical under those
laws.
2.7 Equipment and Supplies. Any equipment and supplies purchased
under this Agreement to conduct the Research Plan remaining at the end of the
Research Plan shall belong to UNIVERSITY.
ARTICLE 3. Property Rights
3.1 Property Rights. The parties agree that the following provisions
apply to IgX's INVENTION(S), UNIVERSITY's INVENTION(S) and JOINT INVENTION(S).
a. IgX's INVENTION(S): IgX's INVENTION(S) shall remain the
sole and exclusive property of IgX and UNIVERSITY shall have no title or claim
to such INVENTION(S). IgX shall bear sole responsibility and expense for the
filing and prosecuting of any patent applications concerning such
INVENTION(S).
b. UNIVERSITY's INVENTION(S): UNIVERSITY's INVENTION(S)
shall remain the sole and exclusive property of UNIVERSITY.
i. UNIVERSITY shall bear the sole responsibility and
expense for the filing and prosecuting of any patent application concerning
such INVENTIONS(S). If IgX elects to exercise the option pursuant to Article
3.1(b)(iii), IgX will reimburse UNIVERSITY for out-of-pocket costs of filing
and prosecuting patent applications covering UNIVERSITY's INVENTION(S).
ii. If UNIVERSITY declines to file a patent
application on such INVENTION(S), including filing a patent application in a
particular country, then IgX may elect, at its own discretion and expense, to
file and prosecute such patent application, provided that such application and
any resulting patent shall remain the sole and exclusive property of
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<PAGE>
UNIVERSITY. In the event that IgX prepares and files such an application
UNIVERSITY hereby agrees to execute any necessary papers to accomplish
preparing, filing and prosecuting the application.
iii. UNIVERSITY further agrees to grant and hereby
grants to IgX a right of first refusal with respect to UNIVERSITY's
INVENTION(S). To that end, UNIVERSITY agrees to grant and hereby grants to IgX
an exclusive option to acquire a royalty-bearing exclusive license in any and
all UNIVERSITY INVENTION(S) pursuant to the terms and conditions of the License
Agreement substantially in the form attached hereto as Exhibit "B" to this
Agreement. Said exclusive option shall be exercised in writing by IgX within six
(6) months after notification of such UNIVERSITY INVENTION(S) has been
communicated to IgX pursuant to Section 3.2 below.
c. JOINT INVENTION(S): JOINT INVENTION(S) shall be owned
jointly by IgX and UNIVERSITY, with each party having the full right to
practice the INVENTION(S) subject only to similar rights of the other party.
i. UNIVERSITY and IgX shall mutually agree upon the
filing, including the selection of appropriate countries in which to file, of
patent applications for such JOINT INVENTION(S). The expense for filing and
prosecution of such mutually agreed upon patent applications shall be shared
equally by UNIVERSITY and IgX. If the parties do not agree upon the filing of a
patent application, or do not agree upon filing an application in a specific
country for a particular JOINT INVENTION(S), then the party desiring to file
such patent application, including the filing in a specific country, may file
at its own expense, provided that any resulting patent shall become the
exclusive property of the filing party free of any royalty or other payment
obligation to the non-filing party. UNIVERSITY and IgX also agree to equally
share in the expense of maintaining any patent for JOINT INVENTION(S). In the
event one party elects not to pay its share of maintenance costs, then the
other party may at its own expense continue such maintenance, provided that
such patent will become the exclusive property of that party free of any
royalty or other payment obligations to the other.
ii. In the event that a patent application is
prepared, or a patent is maintained concerning a JOINT INVENTION(S) by one of
the parties pursuant to Article 3.1(c)(i), then the other party hereby agrees
to execute any necessary papers to transfer its interest in such application or
patent to the other party.
iii. Neither IgX nor UNIVERSITY shall have the right
to transfer any interest in such JOINT INVENTION(S) without the prior written
approval of the other party, with such approval not being unreasonably withheld
by either party, except for the interest of the filing party in a patent
application filed by that party pursuant to Article 3.1(c)(i).
iv. UNIVERSITY further agrees to grant, and hereby
grants to IgX an exclusive option to acquire a royalty-bearing exclusive
license to UNIVERSITY'S interest in any
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<PAGE>
and all JOINT INVENTION(S) pursuant to the terms and conditions of the License
Agreement substantially in the form attached hereto as Exhibit "B" to this
Agreement. Said exclusive option shall be exercised in writing by IgX within
six (6) months after notification of such JOINT INVENTION(S) has been
communicated to IgX pursuant to Section 3.2 below.
3.2 Disclosure of INVENTION(S). UNIVERSITY agrees to disclose through
its Office of Technology Transfer to IgX each such UNIVERSITY's INVENTION(S)
and JOINT INVENTION(S) within thirty (30) days of determining the existence of
such INVENTIONS(S). UNIVERSITY further agrees to notify IgX within ninety (90)
days of disclosure of each UNIVERSITY's INVENTION(S) of its decision on filing
of an appropriate patent application, whereupon IgX may, if UNIVERSITY
declines to file an application or fails to properly notify IgX, elect to file
such an application pursuant to Article 3.1(b)(ii).
ARTICLE 4. Publication
4.1 UNIVERSITY and the PRINCIPAL INVESTIGATOR have the right to
publish or otherwise publicly disclose information gained in pursuing the
Research Plan supported by this Agreement. In order to avoid loss of patent
protection as a result of public disclosure on information developed during
the Research Plan, UNIVERSITY will submit any materials to IgX for review at
least thirty (30) days before submission of materials for publication or
before making presentations. IgX shall notify UNIVERSITY within sixty (60)
days of receipt of such materials:
a. whether IgX desires to file patent applications on any
intellectual property contained in the materials that may be subject to patent
protection; or
b. whether such materials contain information the public
disclosure of which would be commercially prejudicial to IgX.
4.2 IgX shall have the right to request that any commercially
prejudicial information be deleted from the materials submitted or the
portions thereof be rewritten to be less prejudicial; provided, however, that
the PRINCIPAL INVESTIGATOR shall have final authority to determine the scope
and content of any publication.
ARTICLE 5. Confidential Information
5.1 IgX and UNIVERSITY may wish, from time to time, in connection
with work contemplated under this Agreement, to disclose confidential
information to each other. IgX and UNIVERSITY shall use reasonable efforts to
prevent the disclosure of any confidential information belonging to the other
to third parties, and use such information only for the purposes expressed in
this Agreement and for a period of three (3) years thereafter, provided that
the receiving party's obligation hereunder shall not apply to information
that:
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<PAGE>
a. is already in the receiving party's possession at the time
of disclosure thereof;
b. is or later becomes part of the public domain through no
fault of the receiving party;
c. is received from a third party having no obligation of
confidentiality to the disclosing party;
d. was prior to disclosure independently developed by the
receiving party; or
e. is required to be disclosed by law or under regulation.
ARTICLE 6. Publicity
6.1 Except as required by law, no press release or other written
statements in connection with work performed under this Agreement intended for
use in the public media, having or containing any reference to IgX or
UNIVERSITY shall be made by either party without approval of the other party,
which approval shall not be unreasonably withheld. UNIVERSITY, however, shall
acknowledge IgX's support of the Research Plan under this Agreement in
scientific publications and other scientific communications. In any other
statements, the parties shall describe the scope and nature of their
participation accurately and appropriately.
ARTICLE 7. Arbitration
7.1 The parties agree that any dispute arising under this Agreement
involving the sum of Thirty Thousand Dollars ($30,000) or less in money
damages only shall be resolved by arbitration pursuant to the Arizona Uniform
Rules of Procedure for Arbitration. The decision of the arbitrator(s) shall be
final.
ARTICLE 8. Term and Termination of Agreement
8.1 The Research Plan shall be commenced by UNIVERSITY on or about
November 1, 1996 and shall continue for an initial period of eighteen (18)
months. Extensions of this initial eighteen (18) month period shall be as
mutually agreed to in writing signed by the parties.
8.2 Notwithstanding the foregoing, performance under this Agreement
may be terminated by IgX upon sixty (60) days written notice; performance may
be terminated by UNIVERSITY if circumstances beyond its control preclude
continuation of the Research Plan. Upon receipt of notice of termination from
IgX, UNIVERSITY will proceed in an orderly fashion to terminate any
outstanding commitments and to close down the Research Plan. In the event that
this Agreement is terminated by IgX, all costs associated with termination
will be
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<PAGE>
reimbursable to UNIVERSITY including costs incurred prior to the receipt of
notice of termination but which have not yet been reimbursed, and commitments
existing at the time notice of termination is received which cannot be canceled.
IgX shall not reimburse UNIVERSITY for costs associated with termination of this
Agreement by UNIVERSITY. In the event of termination, UNIVERSITY will provide
IgX with a final report within ninety (90) days after the effective date of
termination of all costs incurred and all funds received; in the event that this
Agreement is terminated by UNIVERSITY, expenses associated with termination
shall not be included in UNIVERSITY's calculation of costs incurred. The report
will be accompanied by a check in the amount of any excess of funds advanced
over costs incurred, or by final invoice for amounts due. UNIVERSITY will also
provide IgX with a report summarizing the Research Plan results through the date
of termination.
8.3 Termination of this Agreement shall not relieve UNIVERSITY and
the PRINCIPAL INVESTIGATOR of any obligations of confidentiality provided for
in Article 5 of this Agreement.
ARTICLE 9. General Provisions
9.1 Any notices permitted or required hereunder shall be deemed
effective if made in writing and sent, postage prepaid as follows:
To IgX: Albert J. Henry, Chairman
IgX Corp.
17197 North Laurel Park Drive, Suite 540
Livonia, Michigan 48152
With a copy to: June Knaudt
IgX Corp.
c/o: Henry & Co.
4370 La Jolla Village Drive, Suite 400
San Diego, California 92122
To UNIVERSITY: Janet M. Hornung, Director
Sponsored Projects Services
The University of Arizona
888 North Euclid Avenue, #510
P.O. Box 210158
Tucson, Arizona 85721-0158
With a copy to: Rita C. Manak, Ph.D., Director
Office of Technology Transfer
The University of Arizona
888 North Euclid Avenue, #515
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<PAGE>
P.O. Box 210158
Tucson, Arizona 85721-0158
and F. Javier Enriquez, M.D., Ph.D.
Associate Professor
Department of Veterinary Science and Microbiology
The University of Arizona
Building 90, Room 202
Tucson, Arizona 85721
9.2 This Agreement embodies the entire understanding of the parties
and supersedes any other agreement of understanding between or among the
parties relating to the subject matter hereof. No waiver, amendment or
modification of this Agreement shall be valid or binding upon the parties
unless made in writing and signed on behalf of each party by their respective
property officers who are duly authorized to do so.
9.3 This Agreement may not be assigned by either party without the
prior written consent of the other party; provided, however, that IgX may
assign this Agreement to any AFFILIATE of IgX, or to any purchaser or
transferee of all or substantially all of IgX's business upon prior written
notice to UNIVERSITY. UNIVERSITY agrees not to assign any of its rights or
obligations under this Agreement to any other party without first obtaining
IgX's written approval.
9.4 IgX agrees that this Agreement shall be binding upon and inure to
the benefit of its respective successors and assigns.
9.5 Waiver by either party of any breach or default of any clause of
this Agreement by the other party shall not operate as a waiver of any
previous or future default or breach of the same or different clause of this
Agreement.
9.6 This Agreement shall in all respects be interpreted and construed
in accordance with laws of the State of Arizona.
9.7 The headings of the several sections are inserted for convenience
of reference only and are not intended to be a part of or to affect the
meaning or interpretation of the Agreement.
9.8 If any of the provisions of this Agreement are held void or
unenforceable, the remaining provisions shall nevertheless be effective, the
intent being to effectuate this Agreement to the fullest extent possible.
9.9 The parties agree to be bound by applicable state and federal
rules governing equal employment opportunity and non-discrimination.
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<PAGE>
9.10 The parties recognize that the performance by the Arizona Board
of Regents for and on behalf of UNIVERSITY may be dependent upon the
appropriation of funds by the State Legislature of Arizona. Should the
Legislature fail to appropriate the necessary funds or if UNIVERSITY's
appropriation is reduced during the fiscal year, the Board of Regents may
reduce the scope of this Agreement if appropriate or cancel this Agreement
without further duty or obligation. The Board agrees to notify other
party(ies) as soon as reasonably possible after the unavailability of said
funds comes to the Board's attention.
9.11 This Agreement is subject to Arizona Revised Statutes ? 38-511
and the State of Arizona may cancel this Agreement if any person significantly
involved in negotiating, drafting, securing or obtaining this Agreement for or
on behalf of the Arizona Board of Regents becomes an employee in any capacity
of any other party or a consultant to any other party with reference to the
subject matter of this Agreement while the Agreement or any extension hereof
is in effect.
9.12 UNIVERSITY reserves unto itself a nonexclusive free-of-charge
right to use UNIVERSITY's INVENTIONS and JOINT INVENTIONS(S) solely in
connection with its teaching and research functions.
9.13 IgX shall not incur any liability for any act or failure to act
by employees of UNIVERSITY as a result of the performance of the SPONSORED
RESEARCH and UNIVERSITY shall not accept any liability for any act or failure
to act by employees of IgX as a result of the performance of the SPONSORED
RESEARCH.
9.14 Exhibit "A" is made part hereof for all purposes.
9.15 This Agreement may be executed in more than one counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. This Agreement may be executed by
facsimile and such facsimile copy shall be conclusive evidence of the consent
and ratification of the matters contained herein by the undersigned.
[Remainder of Page Intentionally Left Blank]
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<PAGE>
IN WITNESS THEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
UNIVERSITY: Arizona Board of Regents, acting for and on behalf of The
University of Arizona
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
IgX: IgX Corp., a Delaware corporation
By:
----------------------------------------
Albert J. Henry, Chairman
The undersigned has read and understands the terms and conditions of this
Agreement, and by his signature below accepts and will abide by said terms and
conditions.
------------------------------------------
F. Javier Enriquez, M.D., Ph.D.
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<PAGE>
EXHIBIT "A"
RESEARCH PLAN
<PAGE>
EXHIBIT "B"
LICENSE AGREEMENT
<PAGE>
RESEARCH AGREEMENT
This Research Agreement (the "Agreement") is dated effective as of
the 17th day of August, 1998 by and between IgX Oxford Hepatitis Corp., a
Delaware corporation ("IgX Oxford"), and IgX Corp., a Delaware corporation
("IgX"), with respect to the following facts:
WHEREAS, IgX Oxford has entered into Research Agreements with Oxford
University ("Oxford") and Thomas Jefferson University ("TJU") for the
performance of certain research work (the "Sponsored Research") as set forth
on the Research Plan attached hereto as Exhibit "A" and incorporated herein by
this reference (the "Research Plan"), relating to the development of a
compound for the treatment of Hepatitis B and certain preclinical studies and
regulatory activities in connection therewith.
WHEREAS, the Sponsored Research will be managed and administered by
IgX Oxford and will be performed, in part, by IgX Oxford, and, in part, by
Oxford, TJU and such other third-parties as may be designated in the
discretion of IgX Oxford (collectively, the "Research Providers") in
accordance with the Research Plan.
WHEREAS, IgX owns approximately sixty percent (60%) of the
outstanding capital stock of IgX Oxford, and therefore deems it to be in the
mutual best interests of IgX and IgX Oxford for IgX to provide funding for the
Sponsored Research on an as-needed basis and in accordance with the budget set
forth in the Research Plan (the "Budget").
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which are acknowledged by each signatory hereto, it is agreed
as follows:
Article 1
Research Activity
1.1 Sponsored Research. The Research Plan sets forth the basic tasks
and objectives of the Sponsored Research and the amount and timing of the
funding to be provided to IgX Oxford by IgX. IgX Oxford agrees to conduct, and
to direct the Research Providers to conduct, the Sponsored Research in
accordance with the Research Plan.
1.2 Independent Contractor. Each of IgX Oxford and the Research
Providers, for the purposes of this Agreement, and for all services to be
provided by such parties hereunder, shall be deemed to be independent
contractors of IgX and neither an agent nor an employee of IgX. Neither IgX
Oxford nor any Research Provider shall have the authority to make any
statements, representations or commitments of any kind, or to take any action,
which shall be binding upon IgX except as authorized in a prior writing by
IgX.
1.3 Funding. The parties acknowledge and agree that the Budget sets
forth the anticipated and projected funding for the conduct and completion of
the Sponsored Research
<PAGE>
pursuant to this Agreement, which amount shall in no event exceed $2,045,693
in the aggregate. The funding for all of the Sponsored Research, whether
performed by IgX Oxford of by any of the Research Providers, shall be provided
by IgX directly to IgX Oxford (to be disbursed by IgX Oxford as necessary) as
the work is completed based on invoices submitted to IgX by IgX Oxford. Timely
payment by IgX shall be made upon receipt of such invoices sent to the address
for IgX Oxford set forth on the signature page hereto.
1.4 Personnel Agreements. IgX Oxford represents that the covenants
set forth in this Agreement shall apply and are binding on any individuals
and/or entities employed to perform the Sponsored Research under this
Agreement, including, without limitation, the Research Providers, and
additionally represents that it has or will have in place agreements with any
such individuals and/or entities sufficient to satisfy the terms and
conditions of this Agreement.
1.5 Compliance with Laws. IgX Oxford agrees to comply, and agrees to
direct each of the Research Providers to comply, with all foreign, national
and local laws of the jurisdiction wherein they conduct business, including
compliance at all times with Good Laboratory Practice guidelines as
established by the United States Food and Drug Administration. IgX Oxford
further agrees that any funding it receives from IgX under this Agreement
shall not be disbursed for any purpose which is unlawful or unethical under
such laws.
1.6 Equipment and Supplies. Any equipment and supplies purchased
under this Agreement, whether for the benefit of activities performed under
the Research Plan by IgX Oxford or any Research Provider, that are remaining
at the end of the Research Plan shall belong solely to IgX Oxford.
Article 2
Property Rights
2.1 The parties hereby agree that any and all Inventions (as defined
below) arising out or related to the Sponsored Research shall be the sole and
exclusive property of IgX Oxford and IgX shall have no title or claim with
respect thereto. IgX Oxford shall bear sole responsibility and expense for the
filing and prosecuting of any patent applications concerning any such
Inventions. For purposes of this Agreement, "Inventions" shall include,
without limitation, any and all devices, processes (including, without
limitation, processes of using devices or of manufacturing such devices),
compositions or products whether patentable or unpatentable, which are
conceived or reduced to practice during the term of the Agreement and for
ninety (90) days after it expires, which is/are developed as a result of
conducting the Sponsored Research.
Article 3
Term and Termination of Agreement
3.1 This Agreement shall commence on the date hereof and shall remain
in effect for an initial period ending December 31, 2000. Extensions of this
initial period shall be as mutually
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<PAGE>
agreed to in writing signed by the parties. The term of the Sponsored Research
shall be in accordance with the Research Plan.
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<PAGE>
Article 4
General Provisions
4.1 Any notices permitted or required hereunder shall be deemed
effective if made in writing and sent via facsimile or the United States mail
to the addresses for each of the parties as set forth on the signature page
hereto.
4.2 This Agreement embodies the entire understanding of the parties
and supersedes any other agreement of understanding between or among the
parties relating to the subject matter hereof. No waiver, amendment or
modification of this Agreement shall be valid or binding upon the parties
unless made in writing and signed on behalf of each party by their respective
property officers who are duly authorized to do so.
4.3 This Agreement may not be assigned by either party without the
prior written consent of the other party; provided, however, that either party
may assign this Agreement to any parent, subsidiary, affiliate or other
related entity, or to any purchaser or transferee of all or substantially all
of such party's business upon prior written notice to the other party.
4.4 The parties hereby agree that this Agreement shall be binding
upon and inure to the benefit of their respective successors and assigns.
4.5 Waiver by either party of any breach or default of any clause of
this Agreement by the other party shall not operate as a waiver of any
previous or future default or breach of the same or different clause of this
Agreement.
4.6 This Agreement shall in all respects be interpreted and construed
in accordance with laws of the State of Delaware.
4.7 The headings of the several sections are inserted for convenience
of reference only and are not intended to be a part of or to affect the
meaning or interpretation of the Agreement.
4.8 If any of the provisions of this Agreement are held void or
unenforceable, the remaining provisions shall nevertheless be effective, the
intent being to effectuate this Agreement to the fullest extent possible.
4.9 This Agreement may be executed in more than one counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. This Agreement may be executed by
facsimile and such facsimile copy shall be conclusive evidence of the consent
and ratification of the matters contained herein by the undersigned.
[Remainder of Page Intentionally Left Blank]
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
IgX Oxford IGX OXFORD HEPATITIS CORP.,
a Delaware corporation
By:
-----------------------------------
Albert J. Henry, Chairman
Address: One Springfield Avenue
Summit, New Jersey 07901
Facsimile: (908) 598-4673
IgX IGX CORP.,
a Delaware corporation
By:
-----------------------------------
Albert J. Henry, Chairman
Address: One Springfield Avenue
Summit, New Jersey 07901
Facsimile: (908) 598-4673
[Signature Page to Research Agreement]
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<PAGE>
EXHIBIT "A"
RESEARCH PLAN
<PAGE>
HEADS OF AGREEMENT
Through the agency of this private instrument herein called HEADS OF
AGREEMENT, efforts are systemized aiming at the incorporation of a joint
venture between the companies ahead designated and qualified:
IgX Corp., a company lawfully incorporated pursuant to the laws of the State
of Delaware, United States of America, with it main office and venue at One
Springfield Avenue, City of Summit, State of New Jersey, zip code 07901,
United States of America, hereinafter simply called IgX, hereby represented by
its President-Director (Chairman), Mr. Albert Joseph Henry, an American
citizen, divorced, an industrialist, bearer of the US passport no. CA
033134956, by his lawful attorney to be qualified and by the Executive Vice
President Director, Carroll W. Allen, an American citizen, divorced, an
industrialist, bearer of the US passport no. 110316617, both domiciled at the
same above address;
Laboratorios Sintofarma S.A., a company incorporate pursuant to the laws of
the Federative Republic of Brazil, NIRC No. 035.300.019.491, General
Taxpayer's Registry with the Ministry of Finance under No. 60.499.639/0001-95,
State Registry under No. 675.025.725.111, with a head office and venue at Rua
Salvador Branco de Andrade no. 93, Jardim Sao Miguel, city and Region of
Taboao da Serra, CEP-06760-100, Federate State of Sao Paulo, Federative
Republic of Brazil, hereinafter simply called Sintofarma, hereby represented
pursuant to its articles of association by its President-Director, Mr. Jose
Fernando Leme Megalhaes, Brazilian, married, a chemist, Individual Taxpayer's
Registry under No. 066.356.848-08, bearer of the identity card number RG
8.832.136-8, domiciled at the same above address, and by its Vice-President
Director, Mr. Luis Felipe Gontier, Brazilian, married, an industry officer,
Individual Taxpayer's Registry under No. 134,869.468-89, bearer of the
identity card number RG 11.658.447-6, domiciled at the same above address,
hereinafter both companies to be generally named the undersigned, what they
enter into to the best form required by law and pursuant to the following
clauses and conditions:
I. OBJECT OF THESE HEADS OF AGREEMENT
1. The undersigned decide in mutual consent to enter into the present
HEADS OF AGREEMENT, aiming at disciplining and integrating the
procedures required for implantation of a joint venture, by means of
the incorporation of one or more companies, with their equity
interest wholly-owned by each one of them, in association of one
undersigned with the other, with fully-owned and or third-party owned
associated companies.
2. The joint venture company is to be provisionally named IgX/Sintofarma
until both undersigned define the ultimate corporate name of each of
the companies.
3. The joint venture object is to grant the use of IgX's technology by
Sintofarma for the
<PAGE>
production of products developed by IgX, either pending or already
patented, rendering of technical and scientific assistance that
provide Sintofarma with the means for the development and production
of new products comprised by the chemical-pharmaceutical and
biotechnology sectors.
First Paragraph - The use of this technology will be accomplished at
IgX's option, inspection and management, be it upon the provision of
studies and scientific research results, either patented or not, be
it by the provision of research-oriented labor with a goal at the
development of new products.
Second Paragraph - (Confidentiality) The undersigned shall keep the
secrets of developed processes, be it at a scientific, technical and
or commercial level, being it understood that the patents shall
always be registered on IgX's name, except for the possibility of a
different decision that excludes some particular product.
Third Paragraph - Sintofarma will be in charge of the production and
marketing in the Brazilian territory of the products developed by
IgX, as well as their exportations to any and all countries, upon
IgX's prior approval.
Fourth Paragraph - (Disclosure) - The disclosure of this instrument
depends on the undersigned's previous, joint and written approval.
Fifth Paragraph - The effectiveness of this instrument is subject to
the reciprocal compliance with the obligations undertaken and the
import and export laws in force.
II. PRODUCTS: DEVELOPMENT AND PATENTS
The undersigned will initially conduct studies, experiments and scientific and
clinical assays towards the development and fabrication of the products ahead
specified, what they will carry out in bulk, semi-finished, finished or for
export, all in accordance with the rules set forth in the subsequent clauses,
being it understood that all operating expenses will be borne by Sintofarma
once it will not be required to effect prior payment for the manufacturing
license.
WITH RESPECT TO THE C. PARVUM AND C. DIFFICILE
4.1. Disease incidence work during 1 (one) year upon the use of a protocol
used by both IgX and its advisors, by using at this instance a
diagnosis kit made by Genzyme and supplied by IgX, free of charge, to
the oncoming joint venture or to Sintofarma.
4.2. Phase I/II clinical work (if required), and or a Phase III work on
children and sucklings with normal immunity, and a Phase III work on
adults (a pathology caused by the organism Cristoporum parvum), in
accordance with the rules set forth by the Food and Drugs
Administration - FDA, an entity with jurisdiction under the United
States Government;
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4.3. Part of an international Phase III clinical study on the pathology
caused by the organism Clostridium difficile;
4.4. Part of the International Phase III clinical study on the disease
caused by the organism Helicobacter pylori, in the peptic ulcer;
4.5. All studies, clinical and scientific works resulting from this
instrument will be both IgX's and Sintofarma's joint property, not
being allowed their use by third parties without the undersigned's
express and joint consent. Such consent will be not withheld without
strong commercial and equity reasons.
5. IgX will develop the protocols for the foregoing mentioned clinical
works, by providing the materials necessary for their performance and
allowing Sintofarma, upon proper technology transfer and technical
assistance, the means necessary for the manufacture of the products
mentioned and described in the foregoing clause (4), be it directly
from its main office (headquarters), or, whether it elects, from
associated or wholly-owned companies, already incorporated or under
incorporation, with headquarters in Brazil or in any other country.
Sole Paragraph - Upon the non-performance of the purposes provided
for in this instrument, Sintofarma shall return to IgX, and this to
the former, all studies and materials already made available.
6. The undersigned agree that the costs referring to the operating
expenses, study, experience and clinical assay and scientific
expenses will be authorized and approved in advance by Sintofarma,
which will do it on a timely basis, waiving any refusal without
express technical and or legal reasons.
III. ON THE TERMS OF PAYMENT
7. No licensing down payments will be required for the products
addressed to the pathologies caused by the Cristoporum parvum and
Clostridium difficile, such products already developed by IgX.
However, the payments will be negotiated in accordance with the
subsequent clause, for each new developed product, as soon as the
same is taken out for registration with the competent authorities in
the country of origin or first registration (IND).
8. For each new product developed by IgX, Sintofarma shall pay the
associated, wholly-owned subsidiary companies which are appointed or
to IgX itself, as royalties, technical assistance, scientific support
and personnel, a percentage on the net sales amount, that will be 10%
(ten) percent at least and not exceeding 16.6% (sixteen wholes and
six tenths percent).
Sole Paragraph - The undersigned define as NET SALES AMOUNT the final
proceeds resulting from the gross sales amount net of the entries
ahead mentioned:
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a) Freight expenses, inclusively insurance;
b) Tributes of all kinds, charges, contributions and or taxes
levied on the licensed product sales;
c) Routine discounts based on acquired volumes, or eventual
allowances resulting in financial set offs;
d) Credits for returns or price reductions arising out of
bidding process or allowances granted to special customers;
e) Allowances granted to government entities, inclusively
military organizations.
IV. PROCEDURES FOR REGISTRATION
9. The undersigned jointly and severally, but by mutual consent, will
enter upon procedures for development of the manufactured products
market, securing in this way the registration of same with the proper
authorities and their successful marketing.
V. BRANDS, REGISTRIES AND PATENTS
10. Title to the brands will be shared by the undersigned in the
territorial space set forth in clause three (3), of PARAGRAPH THREE
and, pursuant to the Brazilian legislation, the registries with the
Ministry of Health will be applied on Sintofarma's behalf.
SOLE PARAGRAPH - In case the marketing of any product is not
successful in one or more countries among those mentioned, it is
promptly assured to IgX the direct marketing from the headquarters of
any associated or fully-owned company, regardless of encumbrances of
any kind for any of the undersigned.
VI. ADVISORY AND COORDINATING COUNCIL
11. The undersigned will cause an ADVISORY AND COORDINATING COUNCIL to be
constituted, each one appointing the same number of representatives,
residing or not in Brazil, with or without compensation, that will
meet from time to time, in accordance with a calendar they will cause
to be prepared, aiming at supervising the purposes of this instrument
and others that may be entered into, following up the bureaucratic
negotiations in regard to the product registrations, clinical works,
marketing and distribution of products.
VII. CHANGE IN EQUITY HOLDING
12. In case the equity holding of any or both of the undersigned takes
place, be it by direct negotiation, partial or total assignment of
stocks, even whether arising out of an hostile bid, the present HEADS
OF AGREEMENT will immediately result rescinded, regardless of a prior
judicial or extrajudicial notification, opportunity at which an
undersigned will not claim on the other any kind of indemnification
under whatever pretense.
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VIII. DEFENSE OF PROCESSES, PATENTS AND TERMS
13. In case of any damage to the rights pertaining to the processes,
products and registered patents, as well as to other inherent rights,
under or arising out of these HEADS OF AGREEMENT, either in Brazil or
in any other country in the territorial space as established, the
undersigned will upon a mutual consent, set forth the most adequate
approach for defense of their interests.
14. This instrument will be effective as of the current date up to the
expiration of the last patent, product or processes developed by IgX
or by the joint venture.
IX. MANUFACTURING
15. Products manufacture will be carried out by a company jointly
incorporated by the undersigned (IgX/Sintofarma joint venture), in
which IgX will have a 40% (forty percent) equity interest, being 60%
(sixty percent) interest granted to Sintofarma, and that will adopt
the following procedures with priority:
a) contracting of eggs production in poultry farms specifically
engaged in such business;
b) IgX will supply to the company so incorporated into a joint
venture, upon payment and refund of products and services,
the antibodies (this should be changed to antigens as per
the original Portuguese language)for the birds inoculation,
being the latter inoculated by IgX technical team whenever
it is needed;
c) Transformation of egg yolks into a bulk active product, in
compliance with the quality rules and processes approved and
established by the Food and Drugs Administration - FDA;
d) Active products will be sold to Sintofarma for the
production of finished and semi-finished products for
exportation, upon a price that will be set forth by the
undersigned in mutual consent;
e) Where needed and technically advisable, some services and
components can be severally provided by any of the
undersigned, being the resulting remuneration previously set
forth in mutual consent in accordance with the
pharmaceutical industry routine practices and included into
the production costs.
16. The company that will implement the IgX/Sintofarma joint venture will
be incorporated in compliance with the Brazilian laws, in Brazil,
with the equity interests already established in the foregoing
clause, being it allowed to apply for loans, fiscal and credit
incentives, government or not, be it arising out of the activities
committed to the research, manufacture, be it out of the incentive to
the exportation of high technology products.
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X. COURT OF LAW
17. The Soa Paulo Central District Court, in the Federate State of Sao
Paulo, is elected as the competent court for the settlement of doubts
and interpretation of this instrument, and the undersigned waive all
other courts, no matter how privileged they may be, resolving the
parties, in full and joint agreement to vest in the same legal status
to the original Portuguese rendition and to the public sworn
translation into English. Now, therefore, for being lawfully bound
and agreed, they enter into the present HEADS OF AGREEMENT in 5
(five) counterparts for a sole purpose, in the presence of the
undersigned and qualified witnesses.
Sao Paulo, SP, August 6th, 1998
IgX Corporation
Carroll W. Allen
Vice President Executive Director by himself
And by Albert Joseph Henry
President Director
Laboratorios Sintofarma S.A.
Jose Fernando Leme Magalhaes
President Director
Luis Felipe Gontier
Vice President Director
Jorge Horacio Alessandri
Individual Taxpayer's Registry No. 985.140.677-53
RNE Registry: W636610-Y
Witness
Daniele Remoaldo Pegoraro
Individual Taxpayer's Rgistry No. 174.342.558-97
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Razilian Bar Association/SP No. 153887
Witness
OK: Adeodato Argelo Gomes Dantas
Brazilian Bar Association/RJ No. 1,151-B
(C: SP IgX Limited/. Protocol/ August 2nd 1998)
Adeodato Gomes - Attorney at law
Rua Colombia, no. 549, Quitandinha, 22650-040
Petropolis, Rio de Janeiro, Brazil
Phone No.: (024) 243-9541 - Facsimile: (024) 231-1705
Cell Phone No.: (021) 9972-3109
E-mail:[email protected]
Translator's remarks: The document is duly signed and initialed.
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HEADS OF A LICENSE AND SUPPLY AGREEMENT
between
IgX Corporation a company existing and organized under the law of the State of
Delaware, having an office at One Springfield Avenue, Summit NJ 07901, U.S.A.
(hereinafter referred to as IgX)
and
GADOR S.A., a company existing and organized under the laws of Argentina, having
an office at Darwin 429, 1414 Buenos Aires, Republica Argentina (hereinafter
referred to as GADOR)
WHEREAS
IgX has applied for and was granted by the US Patent and Trade Mark Office (PTO)
a Patent related to the Treatment of Intestinal Parasitosis by Enteral
Administration of Hen Egg Yolk Antibodies, namely US Patent 5,753,228, covering
a method for treating Cryptosporidium parvum;
IgX filed a continuation application to said Patent, presenting remaining groups
of Claims to the hen egg yolk antibodies of the invention; Methods for making
the hen egg yolk antibodies; and Pharmaceutical formulations;
IgX filed a continuation-in-part application to said Patent disclosing a reduced
lipid formulation of egg yolks having antibodies to Cryptosporidium parvum;
IgX filed a US Patent provisional application, completed by a utility
application covering an Anti-Cryptosporidium parvum Preparation, disclosing
monoclonal antibody preparations that can neutralize Cryptosporidium parvum
organisms;
IgX filed a US Patent applications covering Hyperimmune Hen Egg Yolk Antibodies
to Clostridium difficile and Methods for its Use disclosing preparation of hen
egg yolks from hens that are hyperimmunized to Clostridium difficile and methods
for their use in treating Clostridium difficile infections;
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GADOR carries on the business of manufacturing and selling pharmaceutical
products;
IgX wishes to provide GADOR, IgX's technology and all other information and know
how related to the treatment of Cryptosporidium parvum and Clostridium difficile
infections in order to enable GADOR to manufacture finished pharmaceutical
products with said indications;
IgX wishes to supply GADOR with the bulk active ingredient necessary to
manufacture the finished pharmaceutical products;
Furthermore, Igx wishes to grant GADOR a license to use, manufacture, have
manufactured and sell the finished pharmaceutical products, using the bulk
active ingredient and the technology provided by IgX for any and all aspects of
the manufacturing, registration, marketing and commercialization of the finished
pharmaceutical products;
GADOR wishes to obtain from IgX the license and wishes to source itself of the
bulk active ingredient from IgX;
THEREFORE IgX and GADOR agree as follows:
DEFINITIONS: In this Agreement hereinunder the following terms will have the
meanings set out below:
Affiliate: shall mean in the case of either Party any legal entity controlling,
controlled by or under common control with that Party. A legal entity shall be
deemed to control another legal entity if it has the power directly or
indirectly to control the management or policies of the other entity.
BAI: shall mean Bulk Active Ingredient manufactured and supplied to GADOR by IgX
or IgX's designee and serving as active substance for the Products, in
accordance with the standards, specifications and formulae established in
Exhibit A for said Bulk Active Ingredient.
GADOR's designee: shall mean GADOR'S sub-licensees or sub-distributors in the
Territory that may be or may be not GADOR's Affiliate.
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IgX's designee: shall mean alternative supplier of the BAI designated by IgX,
that may be or may be not IgX's Affiliate.
License: shall mean license granted by IgX to GADOR or GADOR's Affiliate to use,
manufacture, have manufactured and sell the Products, using the Patented
Technology as well as the BAI for any and all aspects of the manufacturing,
registration, marketing and commercialization of the Products.
Patented Technology: shall mean Technology covered by Patents.
Patents: shall mean IgX's Patents issued in the Territory.
Products: shall mean finished pharmaceutical products for the indications of
Cryptosporidium parvum and Clostridium difficile infections manufactured by
GADOR under the License and using the BAI as active substance.
Technology: shall mean all scientific and/or medical and/or technical
data, information and know how, including those referred to in IgX's US
Patents and Patent applications related to the treatment of Clostridium
difficile infections and procedures, methods, techniques and materials,
including the BAI as hereinabove defined, related to the manufacture of
fit and merchantable pharmaceutical products with said indications.
Territory: shall mean Mexico and all countries of Central America and South
America, with the exception of Brazil.
1. GRANT.
IgX hereby grants to GADOR the License and GADOR hereby accepts it upon
the terms hereinafter set out. License shall be exclusive for the Territory.
2. PRODUCTS REGISTRATION AND LAUNCHINGS. TRADE MARKS.
2.1 GADOR shall handle all registration work and other contacts with
governmental authorities of the Territory in order to obtain all regulatory
clearances and approvals necessary for the free sale of the Products. IgX shall
promptly and adequately deal with scientific, technical and medical queries
raised by GADOR or
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by the health authorities of the Territory and shall supply the BAI free of
charges in such reasonable quantities that may be necessary for the conducting
of all of the studies related to such authorizations. IgX shall perform Phase I,
Phase II and Phase III registration studies and shall bear all costs related to
such studies. Additional registration studies required by regulatory
authorities in the Territory as part of the registration process shall be
performed by GADOR at GADOR'S expense but IgX shall supply the BAI required for
said studies, free of charge as provided hereinabove. Expenses and official fees
charged for the registration application shall be borne by GADOR. GADOR shall
operate in all matters related to the registration processes with the same
diligence and under the same conditions as it would apply to its own products.
2.1.1 Pursuant to IgX's obligation as set in sub-Article 2.1 hereinabove, IgX
will at its cost:
2.1.1.1 Furnish to GADOR in a timely manner the documentation and information
referred to in sub-Article 2.2.1 hereinunder, including the Phase I, Phase II
and Phase III related studies and the Drug Master File (DMF) of the BAI, in
order to enable GADOR to build the registration dossier mentioned in said
sub-Article and any other information GADOR may reasonably require for the
grant, maintenance, variation or renewal of the Products' registration.
2.1.1.2 Meet requisitions made upon it from regulatory authorities in relation
to the BAI or the Products in the Territory in a timely manner but after full
disclosure and consultation with GADOR.
2.1.1.3 Promptly assist GADOR, when reasonably required by GADOR to do so, to
meet requisitions made of GADOR from regulatory authorities in relations to the
BAI or the Products in the Territory in a timely manner, but in any event,
before expiration of any time set by the regulatory authority.
2.1.1.4 Reimburse GADOR for payment of any consultant's fee any charges made by
the relevant regulatory authority which are incurred as a result of IgX's
failure to fulfil its registration related obligations as set hereinabove.
2.1.2 IgX warrants that all information to be supplied to GADOR in relation with
the BAI and the Products shall be true and ascertainable and that IgX is
legally entitled
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to supply said information.
2.2 Pursuant to sub-Article 2.1. GADOR or GADOR'S designee shall:
2.2.1 Submit to the health authorities of Argentina an application for the
Products' registration within 180 days as from the date GADOR is in possession
of all pertaining information to the extent reasonably available, necessary to
build a registration dossier for an Abbreviated New Drug Application (ANDA),
duly translated. Said information shall include due copies of regulatory
approvals of the Products (Free Sales Certificates) in any of the following
countries: (I) USA, (ii) Japan, or EC countries.
2.2.2 Launch the Products in the Argentine market within 180 days as from the
date Free Sales Certificate for the Products and all other material clearances
set by the regulatory authorities or governmental agencies of Argentina are
granted.
2.2.3 Submit registration applications for the Products in all other countries
of the Territory within 270 days as from the earliest date GADOR is in position
to deliver material evidence that the Products are being marketed in Argentina.
(Proof of Marketing)
2.2.4 Launch the Products in each of the countries referred to in sub-Article
2.2.3 hereinabove within 180 days as from the date Free Sales Certificates for
the Products and all other material clearances set by the regulatory authorities
or governmental agencies of said countries are granted.
2.3 Wherever legal and possible, registrations for the Products shall be applied
for in the name and on behalf of IgX. In those countries where due to mandatory
regulations the registrations shall be applied for in GADOR'S or GADOR's local
designee's name, GADOR irrevocably agrees to immediately transfer or to cause
its local designee to immediately transfer such registrations to IgX or to IgX's
designee, at the expiration or termination of this Agreement.
2.4 License agreed upon in this Agreement includes the use by GADOR while this
Agreement is in force, free of charge, of the Product Registration and Free
Sales Certificates in the Territory for any and all purposes related to the
scope of the License as defined hereinabove.
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2.5 Products shall be marketed and sold under GADOR's trademarks.
IgX acknowledges it will obtain no proprietary interest in such
trademarks. Notwithstanding the foregoing, on the packaging or package
inserts or literature of the Products, where appropriate, it shall be
clearly and distinctively stated that the Products are of IgX
Corporation's research.
3. EARLY TERMINATION.
IgX shall be entitled to terminate this Agreement in case that
due to GADOR's fault GADOR shall fail to perform its obligations as set
in sub-Articles 2.2.1. to 2.2.4. hereinabove and does not remedy such
failure within ninety (90) days of notice given by IgX to GADOR.
4. EXCLUSIVITY. REVOCATION OF EXCLUSIVITY.
4.1 License granted to GADOR shall be exclusive in the Territory.
4.2 Exclusivity so granted shall be conditional and therefore shall be
revocable by IgX pursuant to the provisions agreed upon in sub-Article
4.3. hereunder.
4.3 Notwithstanding GADOR's performance of its obligatiions as set in
sub-Articles 2.2.1 to 2.2.4 hereinabove, IgX shall have the option to
revoke exclusivity granted to GADOR in each of the affected countries of
the Territory, provided that all of the following concurrent conditions
take place:
4.3.1 That said option is exercised only once during the term of the
Agreement in the affected country of the Territory.
4.3.2 That said option is exercised not before five (5) years as from
the date of launching of the Products in the affected country of the
Territory, nor later than six (6) years as from the aforesaid launching
date.
4.3.3 That during the period elapsed as from the launching of the
Products and due to GADOR'S fault, a substantial sales operation of the
Products to the reasonable extent that local market may permit and based
on Product's diligent promotion and distribution, has not been achieved
by GADOR in the affected country of the
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Territory.
4.3.4 That IgX adequately substantiates having a firm offer in writing to
commercialize the Products in the affected country of the Territory, by a
serious and reputable pharmaceutical company, on basis of terms similar to those
granted to GADOR, but warranting a significant incremental of sale performance
with a minimum product sale guarantee.
4.4 As from the date of revocation by IgX of the exclusivity granted to GADOR
pursuant to provisions of sub-Article 4.3 hereinabove, GADOR shall perform its
obligations in the affected country of the Territory as a most favored
non-exclusive licensee and only 50% (fifty per cent) of due royalties shall be
payable by GADOR.
4.5 As from the date of revocation of the exclusivity granted to GADOR pursuant
to provisions of sub-Article 4.3 hereinabove and without prejudice of its own
forthgoing activities as a non-exclusive licensee, GADOR shall act as sole and
exclusive supplier of the Products to any other non-exclusive licensee which may
be appointed by IgX in the Territory. GADOR and the non-exclusive licensee
appointed by IgX shall agree on the terms for the provision of the Products and
Products shall be commercialized in the respective markets of the Territory by
GADOR and the non-exclusive licensee under conditions similar to those of a
co-marketing agreement.
5. PATENT PROTECTION.
5.1 IgX shall protect the licensed Technology, duly applying for and obtaining
patents in the Territory covering IgX relevant patentable materials, devices and
procedures related to the Technology.
5.1.1. During the term agreed upon in sub-Article 8.1 hereinduer, Patents'
maintenance and Patents' defense in the Territory, including costs, shall be of
IgX exclusive responsibility.
5.2 IgX warrants that to the best of its knowledge all Patents shall be genuine,
valid and fit and that IgX has sole title to them. Nevertheless, IgX shall be
liable and therefore shall hold GADOR harmless from and against any and all
loss, liability, damage, fees, costs, judgment and prosecution resulting from
the infringement of the Technology and of the Patented Technology of
Intellectual Property rights of a
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third Party.
5.3 In the event of a suspected infringement of IgX's patent rights in the
Territory by third Parties with respect to any and all aspects of the Patented
Technology, both Parties will consult with each other to determine the
appropriate strategy to attempt to prevent such infringement.
5.4 License shall be comprehensive of all and any improvement made on behalf of
IgX in the patented Technology.
6. SUPPLY OF THE INGREDIENTS.
6.1 IgX or IgX's designee shall supply the BAI in bulk in the form of
lyophilized or air dried product suitable for formulation, unless otherwise
agreed by the Parties.
6.2 BAI will be manufactured in conformity with the codes of Good Manufacturing
Practice (GMP) applicable in the USA and in the countries comprising the
Territory; will be of merchantable or satisfactory quality; will conform with
the requirements of the Products registrations granted in the USA or within the
Territory; will meet any other pharmacopeial or regulatory requirements of the
relevant regulatory authorities in the Territory and will conform in all
respects with the standards, specifications and formulae set in Exhibit A and
the corresponding Quality Specifications.
6.3 Purchase procedures, forecast of estimated requirements, term for the
delivery, liabilities and all other conditions related to the supply shall
comply with the following provisions:
6.3.1 GADOR will annually provide IgX with a forecast of its anticipated
requirements for the BAI for each calendar year and will update that forecast on
a six (6) monthly basis.
6.3.2 GADOR will by written notice place purchase orders for the BAI with IgX
specifying quantities and delivery dates. Delivery dates shall be in the range
of thirty (30) to ninety (90) days as from the receipt of the order by IgX. IgX
will confirm the purchase orders within seven (7) days of their receipt. IgX
will supply the ordered quantities of the BAI by the confirmed delivery dates
provided that the ordered
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quantities are less than or equal to 1.5 times the anticipated requirements
under sub-Article 6.3.1 hereinabove.
6.3.3 Shipment of the BAI shall be via airfreight and will be based on one of
the appropriate INCOTERMS (1990 edition) chosen by GADOR.
6.3.4 Supplies of the BAI shall conform in all respects with the provision of
sub-Article 6.2 hereinabove and BAI supplied pursuant to any single purchase
order will be sourced preferably from a single production lot. With each
delivery of the BAI, IgX shall supply the appropriate Protocol of Analysis. BAI
not complying with said conditions will be deemed to have a defect. IgX assumes
all risk of loss and indenmities and will hold harmless GADOR form and against
any loss, liability, damage, fees, costs, expenses, suits, claims, judgement
and/or prosecution directly or indirectly arising or resulting from any defect
of the BAI, save and except to the extent that any defect is due to the
negligence of GADOR. Said warranty shall apply to the event of voluntary or
mandatory recall of the Products which is materially attributable to the BAI or
which results from any act or omission of IgX. Reciprocally GADOR shall hold
harmless and indemnify IgX on the same conditions if the recall of the Products
is not materially attributable to the BAI or which has not resulted from any act
or omission of IgX. GADOR shall be entitled to ascertain whether the BAI
conforms to the above set requirements and may reject the BAI giving IgX written
notice of its rejection within thirty (30) days of the BAI's receipt at GADOR's
primises. Supplies not objected within thirty (30) days of their receipt shall
be deemed definitively accepted.
6.3.5 IgX or its Affiliates will procure at their own expense from a mutually
acceptable insurer, and maintain in full force and effect as from the launching
of the Products in the Territory throughout the continuance of this Agreement
and for five (5) years thereafter a product liability insurance with a single
limit liability of not less that US$5,0 million in one claim and in the
aggregate noting the interest of GADOR under this Agreement in the policy.
6.3.6 GADOR and IgX, from time to time, shall modify or further precise in good
faith provisions set in Article 6. hereinabove if conditions related to the
manufacture, marketing and sale of the Products in the Territory should so
require.
6.4 Pursuant to the exclusivity granted to GADOR in Article 4. hereinabove, IgX
shall supply the BAI in exclusivity to GADOR in the Territory and GADOR shall
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avail itself of the BAI in exclusivity from IgX.
7. PRICE AND ROYALTIES.
7.1 Price of the BAI shall be of up-to twenty percent (20%) of the net sales of
the Products. Said price and payment conditions are agreed on separately. Net
sales shall mean Gross sales (ex-factory sales) less deduction for the following
to the extent actually paid or allowed and not reimbursed by any Party:
(a) transportation charges including insurance.
(b) sales and excise taxes and duties paid or allowed and any other sales
or government charges imposed on the sale of the Products.
(c) normal and customary trade, quantity and cash discounts allowed.
(d) allowances, charge backs, and credits to customers on account of return
of the Product or on account of retroactive price reductions affecting the
Products.
7.2 GADOR shall pay IgX a royalty of up to ten percent (10%) of the net sales
of the Products, as defined hereinabove in sub-Article 7.1 for the license of
the Patented Technology in the Territory. Said royalty and payment conditions
are agreed on separately.
7.3 No other down-payments, up-front license fees nor milestone payments shall
be required from GADOR by IgX for the performance of IgX obligations as agreed
hereupon related to the license and supply of BAI for the use, manufacture and
sale of the Products.
8. TERM OF THE AGREEMENT.
8.1 The term for this Agreement shall be from the effective date of the
Agreement until the expiration of the last to expire of any of the patent rights
of which but for this license GADOR would infringe by any activity permitted
under this license in the Territory.
8.2 Notwithstanding the foregoing, GADOR shall be entitled to extend the term
of this Agreement beyond the life of the Patents. Extension shall be effective
whilst sales operations subsist in any or all of countries of the Territory.
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8.3 In case GADOR makes use of the entitlement referred to hereinabove in
sub-Article 8.2, only provisions of this Agreement related to the supply of the
BAI shall survive. Therefore no royalties at all shall be payable by GADOR to
IgX nor shall IgX be liable for any further patent protection of the Technology
in the Territory.
9. BOOKS AND RECORDS.
GADOR and GADOR'S designees shall keep full, and accurate books of account
and other records in accordance with local guidelines of generally accepted
accounting principles containing all particulars which may be necessary to
ascertain the discharge by GADOR of all obligations undertaken in this Agreement
including the payment of the price of the BAI and royalties, for a period of
five years after the end of the period of time to which they relate. These books
shall be avaliable for inspection as to those portions relevant to this
Agreement by an independent certified public accountant appointed by IgX, during
normal business hours.
10. PACKING AND DISTRIBUTION.
GADOR shall provide IgX with drafts and samples of the proposed materials
related to the packaging of the Products as well as of the package inserts.
Distribution of the Products shall be sole responsiblity of GADOR.
11. COMMITTEE. NOTICES.
A Committee comprised on GADOR'S behalf by its Executive Directors Messrs.
Aldo Fabbri and Alberto Alvarez Saavedra and on IgX behalf by its President and
Chief Executive Officer Mr. Henry and its Senior Vice President Mr. Carroll
Allen shall serve as a conduit for communications between the Parties. Said
members shall meet whenever necessary and all relevant notifications and or
communications between Parties related to this Agreement shall be delivered to
the attention of the respective member of the Committee and shall be dealt with
by said members.
Said notice shall be made and sent by registered airmail postage prepaid, or
by prepaid cable, telex or facsimile with simultaneous mailing of a copy
thereof by prepaid courier, registered mail or registered express postage, to
the addresses of the Parties stated above or to such other address as shall be
designated by the Parties in
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written notice to the other Party, complying as to delivery with the terms of
this Article.
12. RELATIONSHIP OF THE PARTIES.
This Agreement shall not constitute any of the Parties the agent, or legal
representative of the other Party. This Agreement creates no relationship of
joint adventures, partners, associates, or of principal and agents between the
Parties, for both Parties are acting as principals.
13. ASSIGNMENT.
Neither Party shall be entitled to assign its rights or obligations
hereunder or any part thereof to any third Party without the consent in writing
of the other. Such consent shall not be unreasonably withheld, especially when
assignment of rights does not entail declination of obligations hereunder.
Nothwithstanding the foregoing, GADOR may designate sub-licensees and
sub-distributors of the Products in the Territory that may be or may be not
GADORS's Affiliates and IgX may designate an alternative supplier of the BAI,
that may be or may be not IgX Affiliate.
14. FIRST REFUSAL RIGHT.
IgX grants hereunder to GADOR a first refusal right related to licenses of
pharmaceutical products IgX is in course of developing or may develop in the
future and which IgX may wish to license and/or supply in the Territory.
15. FORCE MAJEURE.
Neither Party shall be liable to the other for any failure or delay on its
part in fulfilling its obligations hereunder to the extent that such failure or
delay is due to circumstances beyond its control which it could not have avoided
by the exercise of reasonable diligence (hereinafter referred to as "force
majeure"). The Party affected by force majeure shall give notice thereof to the
other as soon as practicable, at the same time indicating the anticipated
duration thereof, and shall use all commercially reasonable efforts to resume
performance of its obligations as soon as possible.
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16. CONFIDENTIALITY.
16.1 The Parties undertake to keep strictly confidential and take all
applicable measures to ensure that their employees will keep strictly
confidential all information that the Parties may have or may acquire hereunder,
and which has not been previously published. Confidential Information shall mean
all technical information and data including those related to markets and sales,
market research, pricing and profitability, made available directly or
indirectly by one Party to the other Party concerned in oral, written, graphic
or machine readable form.
16.2 Those Parties shall disclose Confidential Information only to those
employees and their agents who need to know the Confidential Information for
purposes mentioned in this Agreement. The Parties warrant they will arrange
agreements with those of its employees or agents having access to Confidential
Information, prohibiting unauthorized disclosure or use of the Confidential
Information. The disclosure to clinicians, government officials and governmental
agencies shall be allowed insofar as such disclosure is specifically required
for the due performance of this Agreement and such disclosure is limited to
reasonable extent.
16.3 The obligation arising from this Article shall survive ten (10) years the
termination of this Agreement.
17. EXTRAORDINARY TERMINATION.
17.1 One of the Parties shall be entitled to extraordinary termination of
this Agreement at any time in either of the following events:
17.1.1 if the other Party should commit a material breach of this Agreement and
should fail or be unable to rectify that breach within ninety (90) days of the
receipt of notice specifying the breach; or
17.1.2 if the other Party should go into liquidation otherwise than for the
purpose of merging or amalgamation; or have a petition presented for bankruptcy
or winding up which is not dismissed within ninety (90) days of presentation; or
have a receiver appointed of any of its assets; or entered into any composition
or similar arrangement with its creditors; or
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17.1.3 If a Force Majeure situation prevents a Party from performing its
obligations under this Agreement and said situation continues for more than
six (6) months. Notice of the termination shall be given to the other Party with
an anticipation of at least thirty (30) days to the effective date of
termination.
18. EFFECTS UPON TERMINATION AND EXPIRATION.
18.1 Termination and expiration of this Agreement shall be without prejudice to
all rights and obligations of the Parties arising or having effect following
termination.
18.2 Upon termination of this Agreement if the registration of the Products has
not yet been granted GADOR shall transfer to IgX or to IgX's designee, free of
any charge, the right to the full dossier and to all data submitted to the
regulatory Authorities.
19. SEVERABILITY.
If any or more of the provisions of this Agreement shall be held
to be invalid, illegal or unenforceable it shall be deleted herefrom
without affecting the validity, legality or enforceability of the
remaining provisions hereof unless the effect of such deletion would be
to prejudice significantly the interest of either Party, in which event
this Agreement shall automatically terminate unless the Parties
otherwise agree. The Parties shall use their best efforts to substitute
for the deleted provision, a valid, legal and enforceable provision
which implements the purpose hereof.
20. EFFECTIVE DATE.
This Agreement shall come into full force and effect as from the
date below written.
21. GOVERNING LAW.
The validity of this Agreement, the rights and obligations of the
Parties hereunder shall be construed and determined under the laws of
the State of New York.
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22. ARBITRATION.
All disputes arising in connection with this Agreement shall be finally
settled under the Rules of Conciliation and Arbitration of the International
Chamber of Commerce by one (1) or three (3) arbitrators appointed in accordance
with the said rules. The language of the arbitration shall be English. Place of
arbitration shall be the country of the defendant Party.
IN WITNESS WHEREOF the Parties hereto have caused this Agreement to be executed
in duplicate by their duly authorized representative as of the date duly written
below.
GADOR S.A. IgX CORPORATION
Buenos Aires, 7th. of August of 1998. Buenos Aires, 7th. of August of 1998.
- --------------------------------- --------------------------------------
by: Alberto Alvarez Saavedra On authorization of Albert Henry
title: Executive Director title: President and CEO
by: Carroll Allen
title: Senior Vice President
- ---------------------------------
by: Aldo Fabbri
title: Executive Director --------------------------------------
by Carroll Allen
title: Senior Vice President
FIRMAS CERTIFICADAS DE LOS SRES. ALVAREZ SAAVEDRA, FABBRI y ALLEN -- en SELLO DE
ACTUACION NOTARIAL numero C 005619810.-- DE ESTA CERTIFICACION SE EXPIDE EL
ANEXO No. C 003524383.-- BS.AS.7/08/1998.-- CONSTE.--
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EXHIBIT "D"
IgX Corp.
1998 STOCK OPTION PLAN
ARTICLE 1. PURPOSE.
1.1 General Purpose. The purpose of the Plan is to promote the
long-term success of the Company and the creation of stockholder value by (a)
encouraging Employees, Outside Directors and Consultants to focus on critical
long-range objectives, (b) encouraging the attraction and retention of
Employees, Outside Directors and Consultants with exceptional qualifications and
(c) linking Employees, Outside Directors and Consultants directly to stockholder
interests through increased stock ownership. The Plan seeks to achieve this
purpose by providing for Awards in the form of Options (which may constitute
incentive stock options or non-qualified stock options).
1.2 Intended Tax Effects of Options. It is intended that part of the
Plan qualify as an ISO plan and that any option granted in accordance with such
portion of the Plan qualify as an ISO, all within the meaning of Code Section
422. The tax effects of any NQSO granted hereunder shall be determined under
Code Section 83.
ARTICLE 2. ADMINISTRATION.
2.1 General Administration. The Plan shall be administered and
interpreted by the Committee. Subject to the express provisions of the Plan, the
Committee shall have the unrestricted authority to interpret the Plan, to
prescribe, amend and rescind rules and regulations relating to the Plan, to
determine the terms and provisions of the Option Agreements by which Options
shall be evidenced (which shall not be inconsistent with the terms of the Plan),
and to make all other determinations necessary or advisable for the
administration of the Plan, all of which determinations shall be final, binding
and conclusive.
2.2 Appointment. The Board shall appoint the Committee from among its
members to serve at the pleasure of the Board. The Board from time to time may
remove members from, or add members to, the Committee and shall fill all
vacancies thereon. The Committee at all times shall be composed of two or more
directors who shall meet both of the following requirements:
(a) Non-Employee Directors. Each director serving on the
Committee must be a "non-employee director." To be a non-employee
director, the director must not (i) be an employee or officer of the
Company, (ii) have received compensation directly or indirectly as a
consultant or in any non-director capacity, or have an interest in any
transaction of the Company for which disclosure would be required under
Item 404(a) of Regulation S-K of the Exchange Act, or (iii) have been
engaged through another entity in a business relationship with the
Company for which disclosure would be required under Item 404(b) of
Regulation
<PAGE>
S-K of the Exchange Act. The requirements of this subsection are
intended to comply with the Securities and Exchange Commission's
criteria for action by a committee of the Board as specified in Rule
16b-3 under Section 16 of the Exchange Act or any successor rule or
regulation establishing such criteria. This subsection shall be
interpreted and construed in a manner which assures compliance
therewith. To the extent Rule 16b-3 is modified to reduce or increase
the restrictions on who may serve as a member of the Committee, the
Plan shall be deemed modified in a similar manner.
(b) Outside Directors. No director serving on the Committee
may be a current or former Employee of the Company (or any corporation
affiliated with the Company under Code Section 1504) receiving
compensation for prior services (other than benefits under a
tax-qualified retirement plan) during each taxable year during which
the director serves on the Committee. Furthermore, no director serving
on the Committee shall be or have ever been an officer of the Company
(or any Code Section 1504 affiliated corporation), or shall be
receiving remuneration (directly or indirectly) from the Company (or
any Code Section 1504 affiliated corporation) in any capacity other
than as a director. The requirements of this subsection are intended to
comply with the "outside director" requirements of Treas. Reg. Section
1.162-27(e)(3) or any successor regulation, and shall be interpreted
and construed in a manner which assures compliance with the "outside
director" requirement of Code Section 162(m)(4)(C)(i).
2.3 Organization. The Board or the Committee may select one of the
Committee's members as chairman of the Committee. The Committee shall hold its
meetings at such times, in such manner, and at such places as the Committee or
its chairman shall deem advisable. A majority of the members of the Committee
shall constitute a quorum, and such majority shall determine the Committee's
actions. The Committee shall keep minutes of its proceedings and shall report
the same to the Board at the meeting next succeeding.
2.4 Indemnification. In addition to such other rights of
indemnification as they have as directors or as members of the Committee, the
members of the Committee, to the extent permitted by applicable law, shall be
indemnified by the Company against reasonable expenses (including, without
limitation, attorneys' fees) actually and necessarily incurred in connection
with the defense of any action, suit or proceeding, or in connection with any
appeal, to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan or any Options
granted hereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved to the extent required by and in the
manner provided by the certificate of incorporation or the bylaws of the Company
relating to indemnification of directors) or paid by them in satisfaction of a
judgment in any such action, suit or proceeding, except in relation to matters
as to which it shall be adjudged in such action, suit or proceeding that such
Committee member or members did not act in good faith and in a manner he or they
reasonably believed to be in or not opposed to the best interest of the Company.
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ARTICLE 3. SHARES AVAILABLE FOR GRANTS.
Shares of Common Stock issued pursuant to the Plan may be authorized
but unissued shares or treasury shares. The aggregate number of shares of Common
Stock as to which Options may be granted under the Plan shall not exceed, Six
Hundred Thousand (600,000) shares, subject to adjustment pursuant to Article
8. If Options are forfeited or terminate for any other reason before being
exercised or if shares of Common Stock issued upon the exercise of Options are
forfeited, then the corresponding number of shares of Common Stock shall again
become available for the grant of Options under the Plan.
ARTICLE 4. ELIGIBILITY.
4.1 Non-Qualified Stock Options. Only Employees, Outside Directors and
Consultants shall be eligible for the grant of NQSOs .
4.2 Incentive Stock Options. Only Employees who are common-law
employees of the Company, a Parent or a Subsidiary shall be eligible for the
grant of ISOs. In addition, an Employee who owns more than ten percent (10%) of
the total combined voting power of all classes of outstanding stock of the
Company or any of its Parent or Subsidiaries shall not be eligible for the grant
of an ISO unless the requirements set forth in Section 422(c)(6) of the Code are
satisfied.
ARTICLE 5. GRANT OF OPTIONS.
5.1 Grants of Options. Subject to the provisions of the Plan, the
Committee or the Board shall have the authority and sole discretion to determine
and designate, from time to time, those individuals (from among the individuals
eligible for a grant of Options under the Plan pursuant to Article 4 above) to
whom Options will actually be granted, the Option Price of the shares covered by
any Options granted, the manner in and conditions under which Options are
exercisable (including, without limitation, any limitations or restrictions
thereon), and the time or times at which Options shall be granted. In making
such determinations, the Committee may take into account the nature of the
services rendered or to be rendered by the respective individuals to whom
Options may be granted, their present and potential contributions to the
Company's success and such other factors as the Committee, in its sole
discretion, shall deem relevant. In its authorization of the granting of an
Option hereunder, the Committee shall specify the name of the Optionee, the
number of shares of stock subject to such Option and whether such Option is an
ISO or a NQSO. The Committee may grant, at any time, new Options to an Optionee
who previously has received Options, whether such prior Options include Options
that still are outstanding, previously have been exercised in whole or in part,
have expired or are canceled in connection with the issuance of new Options. No
individual shall have any claim or right to be granted Options under the Plan.
5.2 Restriction on Grant of Options. Options granted to any Optionee in
a single fiscal year of the Company shall not cover more than One Hundred Fifty
Thousand (150,000) shares of Common Stock, subject to adjustment pursuant to
Article 8 of the Plan.
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5.3 Limitation on Exercisability of ISOs. Notwithstanding anything
herein to the contrary, the aggregate Fair Market Value of ISOs which are
granted to any Employee under the Plan or any other stock option plan adopted by
the Company that are first exercisable in any one calendar year shall not exceed
$100,000. The Committee shall interpret and administer the limitations set forth
in this Section in accordance with Code Section 422(d).
ARTICLE 6. OPTIONS.
6.1 Requirement of Option Agreement. Each grant of an Option under the
Plan shall be evidenced by an Option Agreement between the Optionee and the
Company. Such Option shall be subject to all applicable terms of the Plan and
may be subject to any other terms that are not inconsistent with the Plan. The
provisions of the various Option Agreements entered into under the Plan need not
be identical. Options may be granted in consideration of a reduction in the
Optionee's other compensation. An Option Agreement may provide that a new Option
(a "reload option") will be granted automatically to the Optionee when he or she
exercises a prior Option and pays the Exercise Price in the form of previously
owned shares of Common Stock.
6.2 General. Each Option Agreement shall specify the name of the
Optionee, the number of shares of Common Stock subject to the Option, the
Exercise Price, the Beneficiary of the Optionee, and the date on which the
Option was granted under the Plan.
6.3 Vesting. Each Option shall vest and become exercisable at a rate
specified by the Committee at or subsequent to grant.
6.4 Exercise Price. The Exercise Price per share of Common Stock
purchasable under an Option shall be determined by the Committee. However, the
Exercise Price of an ISO shall in no event be less than one hundred percent
(100%) (one hundred ten percent (110%) in the case of ISOs of Optionees who own
more than ten percent (10%) of the voting power of all classes of stock of
either the Company or any Parent or Subsidiary) of the Fair Market Value of a
share of Common Stock on the date of grant and the Exercise Price of an NQSO
shall in no event be less than eighty-five percent (85%) of the Fair Market
Value of a share of Common Stock on the date of grant. In the case of an NQSO,
the Exercise Price may vary in accordance with a predetermined formula while the
NQSO is outstanding.
6.5 Term. Terms of Options granted under the Plan shall commence on the
date of grant and shall expire on such date as the Committee may determine for
each Option; provided that the term of an ISO shall in no event exceed ten (10)
years (five (5) years in the case of ISOs granted to Optionees who own more than
ten percent (10%) of the voting power of all classes of stock of either the
Company or any Parent or Subsidiary) from the date of grant.
6.6 Terms of Exercise. The exercise of an Option may be for less than
the full number of shares of Common Stock subject to such Option, but such
exercise shall not be made for less than (i) one hundred (100) shares or (ii)
the total remaining shares subject to the Option, if such total is
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less than one hundred (100) shares. Subject to the other restrictions on
exercise set forth herein, the unexercised portion of an Option may be exercised
at a later date by the Optionee.
6.7 Method of Exercise. All Options granted hereunder shall be
exercised by written notice directed to the Secretary of the Company at its
principal place of business or to such other person as the Committee may direct.
Each notice of exercise shall identify the Option which the Optionee is
exercising (in whole or in part) and shall be accompanied by payment of the
Exercise Price for the number of shares specified in such notice and by any
documents required by Section 9.1. The Company shall make delivery of the shares
purchased within a reasonable period of time; provided, however, that if any law
or regulation requires the Company to take any action (including, but not
limited to, the filing of a registration statement under the Securities Act and
causing such registration statement to become effective) with respect to the
shares specified in such notice before the issuance thereof, then the date of
delivery of such shares shall be extended for the period necessary to take such
action. For Options which are ISOs, written statements shall be furnished to the
Optionee in accordance with Code Section 6039 on or before January 31 of the
year following the year in which the Option was exercised.
6.8 Effect of Termination of Employment, Disability or Death. Except as
provided in subsections (a), (b), (c) and (d) below, no Option shall be
exercisable unless the Optionee shall have been an Employee, Director or
Consultant from the date of the granting of the Option until the date of
exercise; provided that the Committee, in its sole discretion, may waive the
application of this Section with respect to any NQSOs granted hereunder and,
instead, may provide a different expiration date or dates in a NQSO Option
Agreement.
(a) Termination of Employment. In the event an Optionee ceases
to be an Employee, Director or Consultant for any reason other than
death, Disability or termination by the Company, a Parent, Subsidiary
or Affiliate without Cause of the Optionee's service as Employee,
Director or Consultant, any Option or unexercised portion thereof
granted to him shall terminate on and shall not be exercisable after
the earliest to occur of (i) the expiration date of Option, or (ii) the
date on which the Optionee ceases to be an Employee, Director or
Consultant or (iii) the date on which the Company, a Parent, Subsidiary
or Affiliate gives notice to such Optionee of termination of service as
Employee, Director or Consultant if such service is terminated by the
Company, a Parent, Subsidiary or Affiliate for Cause (an Optionee's
resignation of such service in anticipation of such termination of
service for Cause shall constitute a notice of termination); provided
that the Committee may provide in the Option Agreement that such Option
or any unexercised portion thereof shall terminate sooner. Prior to
termination of the Option pursuant to this subsection (a), the Option
shall be exercisable only in accordance with its terms and only for the
number of shares exercisable on the date of termination of service. The
question of whether an authorized leave of absence or absence for
military or government service or for any other reason shall constitute
a termination of service for purposes of the Plan shall be determined
by the Committee, which determination shall be final and conclusive.
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<PAGE>
(b) Termination of Employment by Company, a Parent, Subsidiary
or Affiliate Without Cause. In the event that the Company, a Parent,
Subsidiary or Affiliate terminates an Optionee's service as Employee,
Director or Consultant without Cause, any Option or unexercised portion
thereof granted to him shall terminate and not be exercisable after the
earlier to occur of (i) the expiration date of such option or (ii)
three (3) months after the date the Optionee ceases to be an Employee,
Director or Consultant; provided that the Committee may provide in the
Option Agreement that such Option or any unexercised portion thereof
shall terminate sooner. Prior to such termination, the Option shall be
exercisable only in accordance with its terms and only for the number
of shares exercisable on the date the Optionee's service is terminated
by the Company, a Parent, Subsidiary or Affiliate without Cause.
(c) Disability. Upon the termination of an Optionee's service
as Employee, Director or Consultant due to Disability, any Option or
unexercised portion thereof granted to him which is otherwise
exercisable shall terminate on and shall not be exercisable after the
earlier to occur of (i) the expiration date of such Option or (ii) one
(1) year after the date on which such Optionee ceases to be an
Employee, Director or Consultant due to Disability; provided that the
Committee may provide in the Option Agreement that such Option or any
unexercised portion thereof shall terminate sooner. Prior to such
termination, the Option shall be exercisable only in accordance with
its terms and only for the number of shares exercisable on the date the
Optionee's service ceased due to Disability.
(d) Death. In the event of the death of the Optionee while he
is an Employee, Director or Consultant, any Option or unexercised
portion thereof granted to him which is otherwise exercisable may be
exercised by his Beneficiary at any time prior to the expiration of one
(1) year from the date of death of such Optionee, but in no event later
than the date of expiration of the option period; provided that the
Committee may provide in the Option Agreement that such Option or any
unexercised portion thereof shall terminate sooner. Such exercise shall
be effected pursuant to the terms of this subsection as if the
Beneficiary were the named Optionee.
6.9 Restrictions on Transfer and Exercise of Options. No Option shall
be assignable or transferable by the Optionee except by transfer to a
Beneficiary upon the death of the Optionee, and any purported transfer (other
than as excepted above) shall be null and void. After the death of an Optionee
and upon the death of the Optionee's Beneficiary, an Option shall be transferred
only by will or by the laws of descent and distribution. During the lifetime of
an Optionee, the Option shall be exercisable only by him; provided, however,
that in the event the Optionee is incapacitated and unable to exercise Options,
such Options may be exercised by such Optionee's legal guardian, legal
representative, fiduciary or other representative whom the Committee deems
appropriate based on applicable facts and circumstances.
6.10 No Obligation to Exercise Option. The granting of an Option shall
impose no obligation upon the Optionee to exercise such Option.
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6.11 Acceleration. The Committee shall at all times have the power to
accelerate the vesting date of Options previously granted under this Plan.
6.12 Designation of Option as ISO or NQSO. Subject to the provisions of
this Article, each Option granted under the Plan shall be designated either as
an ISO or a NQSO. An Option Agreement evidencing both an ISO and a NQSO shall
identify clearly the status and terms of each Option.
6.13 ISOs Converted to NQSOs. In the event any part or all of an Option
granted under the Plan which is intended to be an ISO at any time fails to
satisfy all of the requirements of an ISO, then such ISO shall be split into an
ISO and NQSO so that the portion of the Option, if any, that still qualifies as
an ISO shall remain an ISO and the portion that does not qualify as an ISO shall
become a NQSO. Such split of an Option into an ISO portion and a NQSO portion
shall be evidenced by one or more Option Agreements, as long as each Option is
identified clearly as to its status as an ISO or NQSO.
6.14 Effect of Change in Control. The Committee may determine, at the
time of granting an Option or thereafter, that such Option shall become
immediately vested and exercisable as to all or part of the shares of Common
Stock subject to such Option in the event that a Change in Control occurs with
respect to the Company, subject to the following limitations:
(a) In the case of an ISO, the acceleration of exercisability
shall not occur without the Optionee's written consent.
(b) If the Company and the other party to the transaction
constituting a Change in Control agree that such transaction is to be treated as
a "pooling of interests" for financial reporting purposes, and if such
transaction in fact is so treated, then the acceleration of exercisability shall
not occur to the extent that the Company's independent accountants and such
other party's independent accountants each determine in good faith that such
acceleration would preclude the use of "pooling of interests" accounting.
6.15 Modification or Assumption of Options. Within the limitations of
the Plan, the Committee may modify, extend or assume outstanding Options or may
accept the cancellation of outstanding Options (whether granted by the Company
or by another issuer) in return for the grant of new Options for the same or a
different number of shares and at the same or a different Exercise Price. The
foregoing notwithstanding, no modification of an Option shall, without the
consent of the Optionee, materially adversely alter or impair his or her rights
or obligations under such Option.
6.16 Payment for Option Shares.
(a) General Rule. The entire Exercise Price of shares of
Common Stock issued upon exercise of Options shall be payable by the Optionee
(or his Beneficiary) in cash or cash equivalents at the time when such shares of
Common Stock are purchased, except as follows:
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(i) In the case of an ISO granted under the Plan,
payment shall be made only pursuant to the express provisions
of the applicable Option Agreement, which may include the
form(s) described in Section 6.16(c) through (g).
(ii) In the case of an NQSO, the Exercise Price may
be paid, at the election of the Optionee (or his Beneficiary)
in any form(s) described in Section 6.16(c) through (g).
(b) Withholding Tax. In addition to the payment of the
Exercise Price of the shares of Common Stock then being purchased, an Optionee
also shall pay in cash (or have withheld from his normal pay), an amount equal
to the amount, if any, which the Company at the time of exercise is required to
withhold under the income tax or Federal Insurance Contribution Act tax
withholding provisions of the Code, of the income tax laws of the state of the
Optionee's residence, and of any other applicable law.
(c) Surrender of Stock. All or any part of the Exercise Price
may be paid by surrendering, or attesting to the ownership of, shares of Common
Stock that are already owned by the Optionee. Such shares of Common Stock shall
be valued at their Fair Market Value as of the date of exercise of the Option.
The Optionee shall not surrender, or attest to the ownership of, shares of
Common Stock in payment of the Exercise Price if such action would cause the
Company to recognize compensation expense (or additional compensation expense)
with respect to the Option for financial reporting purposes. If the Optionee
delivers shares of Common Stock with a value that is less than the total
Exercise Price, then such Optionee shall pay the balance of the total Exercise
Price in cash or cash equivalents.
(d) Withholding of Stock. All or any part of the Exercise
Price may be paid by the Optionee's (or his Beneficiary's) instructing the
Company to retain shares of Common Stock upon the exercise of the Option with a
Fair Market Value equal to the Exercise Price as payment.
(e) Exercise/Sale. All or any part of the Exercise Price and
any withholding taxes may be paid by delivering (on a form prescribed by the
Company) an irrevocable direction to a securities broker approved by the Company
to sell all or part of the shares of Common Stock being purchased under the Plan
and to deliver all or part of the sales proceeds to the Company with the balance
of the shares of Common Stock, if any, being delivered to the Optionee.
(f) Exercise/Pledge. Subject to applicable margin regulations,
all or any part of the Exercise Price and any withholding taxes may be paid by
delivering (on a form prescribed by the Company) an irrevocable direction to
pledge all or part of the shares of Common Stock being purchased under the Plan
to a securities broker or lender approved by the Company, as security for a
loan, and to deliver all or part of the loan proceeds to the Company with the
balance of the proceeds being delivered to the Optionee.
(g) Other Forms of Payment. The Board or the Committee may, at
the time of grant or exercise, authorize payment of all or any part of the
Exercise Price and any withholding
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taxes in any other form, including delivery (on a form prescribed by the
Company) an unsecured, full recourse promissory note, that is consistent with
applicable laws, regulations and rules.
ARTICLE 7. OPTION GRANTS TO OUTSIDE DIRECTORS.
7.1 Grants. The Board may in its sole discretion grant NQSOs to Outside
Directors from time to time.
7.2 Vesting. Each NQSO shall vest and become exercisable at a rate
determined by the Committee at or subsequent to grant.
7.3 Accelerated Exercisability. All NQSOs granted to an Outside
Director under this Article 7 shall become exercisable in full in the event of:
(a) The termination of such Outside Director's service because
of death, Disability or retirement at or after age 65; or
(b) A Change in Control with respect to the Company, except as
provided in the next following sentence.
If the Company and the other party to the transaction constituting a
Change in Control agree that such transaction is to be treated as a "pooling of
interests" for financial reporting purposes, and if such transaction in fact is
so treated, then the acceleration of exercisability shall not occur to the
extent that the Company's independent accountants and such other party's
independent accountants each determine in good faith that such acceleration
would preclude the use of "pooling of interests" accounting.
7.4 Exercise Price. The Exercise Price under all NQSOs granted to an
Outside Director under this Article 7 shall be equal to one hundred percent
(100%) of the Fair Market Value of a share of Common Stock on the date of grant,
payable in one of the forms described in Section 6.17(c) to (g) hereof.
7.5 Term. All NQSOs granted to an Outside Director under this Article 7
shall terminate on the earliest of (a) the tenth anniversary of the date of
grant, (b) the date three (3) months after the termination of such Outside
Director's service for any reason other than Cause, death or Disability, (c) the
date twelve (12) months after the termination of such Outside Director's service
because of death or Disability or (d) the termination of such Outside Director's
service for Cause.
ARTICLE 8. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
8.1 Recapitalization. In the event of a stock split of the outstanding
shares of Common Stock, a declaration of a dividend payable in shares of Common
Stock, a declaration of a stock dividend payable in a form other than shares of
Common Stock, a combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise) into a lesser number of
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<PAGE>
shares of Common Stock, a recapitalization, a spin-off or a similar occurrence,
the Committee shall make such adjustments as it, in its sole discretion, deems
appropriate in one or more of:
(a) The number of Options available for future Awards under
Article 3;
(b) The number of shares of Common Stock covered by each
outstanding Option; or
(c) The Exercise Price of each outstanding Option.
Except as provided in this Article 8, an Optionee shall have no rights
by reason of any issue by the Company of stock of any class or securities
convertible into stock of any class, any subdivision or consolidation of shares
of stock of any class, the payment of any stock dividend or any other increase
or decrease in the number of shares of stock of any class.
8.2 Dissolution or Liquidation. If the Board adopts a plan of
dissolution and liquidation that is approved by the stockholders of the Company,
the Committee shall give each Optionee written notice of such event at least ten
(10) days prior to its effective date, and the rights of all Optionees shall
become immediately nonforfeitable and fully exercisable or vested (to the extent
permitted under federal or state securities laws).
8.3 Reorganizations. Subject to any required action by the
stockholders, in the event that the Company is a party to a merger,
consolidation, acquisition of the stock or assets of the Company which does not
constitute a Change of Control, or other reorganization, outstanding Options
shall be subject to the agreement of reorganization. The Committee, in its
discretion may declare that:
(a) The outstanding Awards shall continue if the Company is a
surviving corporation;
(b) The outstanding Awards shall be assumed by the surviving
corporation or its parent or subsidiary with appropriate adjustment as
determined by the Committee;
(c) The surviving corporation or its parent or subsidiary
shall substitute its own awards for the outstanding Awards;
(d) Any or all outstanding Options granted hereunder shall
become immediately and fully exercisable (to the extent permitted under
federal or state securities laws); and/or
(e) Any or all Options granted hereunder shall become
immediately fully exercisable (to the extent permitted under federal or
state securities laws) and shall terminate on a date at least thirty
(30) days subsequent to notice to the Optionees.
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<PAGE>
8.4 Limits on Adjustments. Any issuance by the Company of stock of any
class, or securities convertible into shares of stock of any class, shall not
affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of shares of the Common Stock subject to any Option, except as
specifically provided otherwise in this Article. The grant of Options pursuant
to the Plan shall not affect in any way the right or power of the Company to
make adjustments, reclassifications, reorganizations or changes of its capital
or business structure or to merge, consolidate or dissolve, or to liquidate,
sell or transfer all or any part of its business or assets. All adjustments the
Committee makes under this Article shall be conclusive.
ARTICLE 9. AGREEMENT BY OPTIONEE AND SECURITIES REGISTRATION
9.1 Agreement. If, in the opinion of counsel to the Company, such
action is necessary or desirable, no Options shall be granted to any Optionee,
and no Option shall be exercisable, unless, at the time of grant or exercise, as
applicable, such Optionee (i) represents and warrants that he will acquire the
Common Stock for investment only and not for purposes of resale or distribution,
and (ii) makes such further representations and warranties as are deemed
necessary or desirable by counsel to the Company with regard to holding and
resale of the Common Stock. The Optionee shall, upon the request of the
Committee, execute and deliver to the Company an agreement or affidavit to such
effect. Should the Committee have reasonable cause to believe that such Optionee
did not execute such agreement or affidavit in good faith, the Company shall not
be bound by the grant of the Option or by the exercise of the Option. All
certificates representing shares of Common Stock issued pursuant to the Plan
shall be marked with the following restrictive legend or similar legend, if such
marking, in the opinion of counsel to the Company, is necessary or desirable:
The shares represented by this certificate [have not been registered
under the Securities Act of 1933, as amended, or the securities laws of
any state] [and] [are held by an "affiliate" (as such term is defined
in Rule 144 promulgated by the Securities and Exchange Commission under
the Securities Act of 1933, as amended) of the Corporation].
Accordingly, these shares may not be sold, hypothecated, pledged or
otherwise transferred except (i) pursuant to an effective registration
statement under the Securities Act of 1933, as amended, and any
applicable securities laws or regulations of any state with respect to
such shares, (ii) in accordance with Securities and Exchange Commission
Rule 144, or (iii) upon the issuance to the Corporation of a favorable
opinion of counsel or the submission to the Corporation of such other
evidence as may be satisfactory to the Corporation that such proposed
sale, assignment, encumbrance or other transfer will not be in
violation of the Securities Act of 1933, as amended, or any applicable
securities laws of any state or any rules or regulations thereunder.
Any attempted transfer of this certificate or the shares represented
hereby which is in violation of the preceding restrictions will not be
recognized by the Corporation, nor will any transferee be recognized as
the owner thereof by the Corporation.
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<PAGE>
If the Common Stock is (A) held by an Optionee who is not an
"affiliate," as that term is defined in Rule 144 of the Securities Act, or who
ceases to be an "affiliate," or (B) registered under the Securities Act and all
applicable state securities laws and regulations, the Committee, in its
discretion and with the advice of counsel, may dispense with or authorize the
removal of the restrictive legend set forth above or the portion thereof which
is inapplicable.
9.2 Registration. In the event that the Company in its sole discretion
shall deem it necessary or advisable to register, under the Securities Act or
any state securities laws or regulations, any shares with respect to which
Options have been granted hereunder, then the Company shall take such action at
its own expense before or, if appropriate and upon the advice of legal counsel,
after delivery of the certificates representing such shares to an Optionee. In
such event, and if the shares of Common Stock of the Company shall be listed on
any national securities exchange or on The NASDAQ National Market at the time of
the exercise of any Option, the Company shall make prompt application at its own
expense for the listing on such stock exchange or The NASDAQ National Market of
the shares of Common Stock to be issued.
ARTICLE 10. LIMITATION ON RIGHTS.
10.1 Retention Rights. Neither the Plan nor any Award granted under the
Plan shall be deemed to give any individual a right to remain an Employee,
Outside Director or Consultant. The Company and its Parents, Subsidiaries and
Affiliates reserve the right to terminate the service of any Employee, Outside
Director and Consultant at any time, with or without cause.
10.2 Stockholders' Rights. An Optionee shall have no dividend rights,
voting rights or other rights as a stockholder with respect to any shares of
Common Stock covered by his or her Option prior to the time when he or she
becomes entitled to receive such shares of Common Stock by filing a notice of
exercise and paying the Exercise Price. No adjustment shall be made for cash
dividends or other rights for which the record dates is prior to such time,
except as expressly provided in the Plan.
10.3 Regulatory Requirements. Any other provision of the Plan
notwithstanding, the obligation of the Company to issue shares of Common Stock
under the Plan shall be subject to all applicable laws, rules and regulations
and such approval by any regulatory body as may be required. The Company
reserves the right to restrict, in whole or in part, the delivery of shares of
Common Stock pursuant to the exercise of any Option prior to the satisfaction of
all legal requirements relating to the issuance of such shares of Common Stock,
to their registration, qualification or listing or to an exemption from
registration, qualification or listing.
ARTICLE 11. WITHHOLDING TAXES.
11.1 General. To the extent required by applicable federal, state,
local or foreign law, an Optionee or his or her successor shall make
arrangements satisfactory to the Company for the satisfaction of any withholding
tax obligations that arise in connection with the Plan. The Company
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<PAGE>
shall not be required to issue any shares of Common Stock under the Plan until
such obligations are satisfied.
11.2 Share Withholding. The Committee may permit an Optionee to satisfy
all or part of his or her withholding or income tax obligations by having the
Company withhold all or a portion of any shares of Common Stock that otherwise
would be issued to him or her or by surrendering all or a portion of any shares
of Common Stock that he or she previously acquired. Such shares of Common Stock
shall be valued at their Fair Market Value on the date when taxes otherwise
would be withheld in cash.
ARTICLE 12. TERM OF THE PLAN.
12.1 Term of the Plan. The Plan, as set forth herein, shall become
effective as of the Effective Date, and no Options shall be granted hereunder
prior to that time. Subject to Article 3, Options may be granted under the Plan
until the later of (i) termination of the ability to make further grants by the
Board under Section 12.2 or (ii) the tenth anniversary of the Effective Date.
12.2 Amendment or Termination. The Board may, at any time and for any
reason, amend the Plan, terminate the ability to grant additional Options under
the Plan, or terminate the Plan. An amendment of the Plan shall be subject to
the approval of the Company's stockholders only to the extent required by
applicable laws, regulations or rules. The termination of the Plan, or any
amendment thereof, shall not materially adversely affect any Option previously
granted under the Plan without the consent of the Optionee.
12.3 Term of Plan. If not previously terminated by the Board under
Section 12.2, the Plan shall terminate automatically upon the later of (i) the
complete exercise or lapse of the last outstanding Option, or (ii) the last date
upon which Awards may be granted hereunder.
ARTICLE 13. MISCELLANEOUS PROVISIONS.
13.1 Application of Funds. The proceeds received by the Company from
the sale of the Common Stock subject to the Options granted hereunder will be
used for general corporate purposes.
13.2 Notices. All notices or other communications by an Optionee to the
Committee pursuant to or in connection with the Plan shall be deemed to have
been duly given when received in the form specified by the Committee at the
location, or by the person, designated by the Committee for the receipt thereof.
13.3 Governing Law. The Plan shall be governed by and construed in
accordance with the laws of the State of Delaware.
13.4 Additional Provisions By Committee. The Option Agreements
authorized under the Plan may contain such other provisions, including, without
limitation, restrictions upon the exercise of an Option, as the Committee shall
deem advisable.
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<PAGE>
13.5 Plan Document Controls. In the event of any conflict between the
provisions of an Option Agreement and the Plan, the Plan shall control.
13.6 Gender and Number. Wherever applicable, the masculine pronoun
shall include the feminine pronoun, and the singular shall include the plural.
13.7 Headings. The titles in this Plan are inserted for convenience of
reference; they constitute no part of the Plan and are not to be considered in
the construction hereof.
13.8 Legal References. Any references in this Plan to a provision of
law which is, subsequent to the Effective Date of this Plan, revised, modified,
finalized or redesignated, shall automatically be deemed a reference to such
revised, modified, finalized or redesignated provision of law.
13.9 Unfunded Arrangement. The Plan shall not be funded, and except for
reserving a sufficient number of authorized shares to the extent required by law
to meet the requirements of the Plan, the Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the payment of any grant under the Plan.
ARTICLE 14. DEFINITIONS.
The following words and phrases as used in this Plan shall have the
meanings set forth in this Article unless a different meaning is clearly
required by the context:
14.1 "Affiliate" means a person that directly, or indirectly through
one or more intermediaries controls, or is controlled by, or is under common
control with the Company.
14.2 "Award" means any award of an Option under the Plan.
14.3 "Beneficiary" means, with respect to an Optionee, the individual
or individuals to whom the Optionee's Options shall be transferred upon the
Optionee's death.
(a) Designation of Beneficiary. An Optionee's Beneficiary
shall be the individual who is last designated in writing by the
Optionee as such Optionee's Beneficiary hereunder. An Optionee shall
designate his or her original Beneficiary in writing in his or her
Option Agreement. Any subsequent modification of the Optionee's
Beneficiary shall be in a written, executed and notarized letter
addressed to the Company and shall be effective when it is received and
accepted by the Committee, as determined in the Committee's sole
discretion.
(b) No Designated Beneficiary. If, at any time, no Beneficiary
has been validly designated by an Optionee, or the Beneficiary
designated by the Optionee is no longer living at the time of the
Optionee's death, then the Optionee's Beneficiary shall be deemed to be
the individual or individuals in the first of the following classes of
individuals with one or
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<PAGE>
more members of such class surviving or in existence as of the
Optionee's death, and in the absence thereof, the Optionee's estate:
(i) the Optionee's surviving spouse; or (ii) the Optionee's then living
lineal descendants, per stirpes.
(c) Designation of Multiple Beneficiaries. An Optionee may not
designate more than one individual as a Beneficiary. To the extent that
a designation purports to designate more than one individual as a
Beneficiary, the designation shall be null and void.
(d) Contingent Beneficiaries. An Optionee may designate a
contingent Beneficiary to receive the Optionee's Option in the event
that the Optionee's original Beneficiary should predecease the
Optionee; otherwise, in the event a Beneficiary predeceases the
Optionee, then the individual or individuals specified in subsection
(b) above shall be the Optionee's Beneficiary.
14.4 "Board" means the Company's Board of Directors, as constituted
from time to time.
14.5 "Cause" means an act or acts by an individual involving the
commission of a felony, willful misconduct, fraud, embezzlement, dishonesty,
breach of fiduciary duty or violation or breach of a written employment or
consulting agreement or of Company policy as described in a Company employee
handbook, any of which acts cause the Company material damage, as determined by
the Committee in its sole discretion.
14.6 "Change in Control" means:
(a) The consummation of a merger or consolidation of the
Company with or into another entity or any other corporate reorganization, if
more than fifty percent (50%) of the combined voting power of the continuing or
surviving entity's securities outstanding immediately after such merger,
consolidation or other reorganization is owned by persons who are not
stockholders of the Company immediately prior to such merger, consolidation or
other reorganization;
(b) The sale, transfer or other disposition of all or
substantially all of the Company's assets, whether through one event or a series
of related events, without being approved by the Continuing Directors;
(c) A change in the composition of the Board, as a result of
which fewer than a majority of the incumbent directors are directors who either
(i) were directors of the Company on the Effective Date (the "original
directors") or (ii) were elected, or nominated for election, to the Board with
the affirmative votes of at least a majority of the aggregate of the original
directors who were still in office at the time of the election or nomination and
the directors whose election or nomination was previously so approved
(collectively, the "Continuing Directors"); or
(d) Any transaction as a result of which any person is the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company
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<PAGE>
representing at least thirty percent (30%) of the total voting power represented
by the Company's then outstanding voting securities. For purposes of this
Subsection (d), the term "person" shall have the same meaning as when used in
Sections 13(d) and 14(d) of the Exchange Act but shall exclude (i) a trustee or
other fiduciary holding securities under an employee benefit plan of the Company
or of a Parent or Subsidiary and (ii) a corporation owned directly or indirectly
by the stockholders of the Company in substantially the same proportions as
their ownership of the Common Stock of the Company.
A transaction shall not constitute a Change in Control if its sole
purpose is to change the state of the Company's incorporation or to create a
holding company that will be owned in substantially the same proportions by the
persons who held the Company's securities immediately before such transaction.
14.7 "Code" means the Internal Revenue Code of 1986, as amended.
14.8 "Committee" means the committee of the Board appointed by the
Board to administer and interpret the Plan, as described in Article 2.
14.9 "Common Stock" means the common stock, $.001 par value per share,
of the Company.
14.10 "Company" means IgX Corp., a Delaware corporation.
14.11 "Consultant" means a consultant or adviser who provides bona fide
services to the Company, a Parent, a Subsidiary or an Affiliate as an
independent contractor. Service as a Consultant shall be considered employment
for all purposes of the Plan, except as provided in Section 4.2.
14.12 "Director" means an individual who is serving as a member of the
Board or who is serving as a member of the board of directors of a Parent or
Subsidiary.
14.13 "Disability" or "Disabled" means, with respect to an individual,
the total and permanent disability of such individual as determined by the
Committee in its sole discretion.
14.14 "Effective Date" means the date on which this Plan is adopted by
the Board, subject to stockholder approval.
14.15 "Employee" means a common-law employee of the Company, a Parent,
a Subsidiary or an Affiliate.
14.16 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
14.17 "Fair MarkeIt Value" of the Common Stock as of a date of
determination shall mean the following:
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<PAGE>
(a) Stock Listed and Shares Traded. If the Common Stock is
listed and traded on a national securities exchange (as such term is
defined by the Securities Act) or on the NASDAQ National Market on the
date of determination, the Fair Market Value per share shall be the
closing price of a share of the Common Stock on said national
securities exchange or the NASDAQ National Market on the trading date
immediately preceding the date of determination. If the Common Stock is
traded in the over-the-counter market, the Fair Market Value per share
shall be the average of the closing bid and asked prices on the trading
date immediately preceding the date of determination.
(b) Stock Listed But No Shares Traded. If the Common Stock is
listed on a national securities exchange or on the NASDAQ National
Market but no shares of the Common Stock were traded on the date
specified in Section 14.17(a) above but there were shares traded on a
date within a reasonable period before the date of determination, the
Fair Market Value shall be the closing price of the Common Stock on the
most recent date before the date of determination. If the Common Stock
is regularly traded in the over-the-counter market but no shares of the
Common Stock were traded on the date specified in Section 14.17(a)
above (or if records of such trades are unavailable or burdensome to
obtain) but there were shares traded on a date within a reasonable
period before the date of determination, the Fair Market Value shall be
the average of the closing bid and asked prices of the Common Stock on
the most recent date before the date of determination.
(c) Stock Not Listed. If the Common Stock is not listed on a
national securities exchange or on the NASDAQ National Market or is not
regularly traded in the over-the-counter market, then the Committee
shall determine the Fair Market Value of the Common Stock from all
relevant available facts, which may include the average of the closing
bid and ask prices reflected in the over-the-counter market on a date
within a reasonable period either before or after the date of
determination or opinions of independent experts as to value and may
take into account any recent sales and purchases of such Common Stock
to the extent they are representative.
The Committee's determination of Fair Market Value, which shall be made
pursuant to the foregoing provisions, shall be final and binding for all
purposes of this Plan.
14.18 "ISO" means an incentive stock option within the meaning of
Section 422(b) of the Code.
14.19 "NQSO" means a stock option not described in Sections 422 or 423
of the Code.
14.20 "Option" means an ISO or NQSO granted under the Plan and
entitling the holder to purchase shares of Common Stock.
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<PAGE>
14.21 "Optionee" means an individual who is granted an Option pursuant
to the terms and provisions of this Plan.
14.22 "Option Agreement" means the agreement between the Company and an
Optionee that contains the terms, conditions and restrictions pertaining to his
or her Option.
14.23 "Outside Director" means a member of the Board who is not an
Employee. Service as an Outside Director shall be considered employment for all
purposes of the Plan, except as provided in Section 4.2.
14.24 "Parent" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, if each of the
corporations other than the Company owns stock possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain. A corporation that attains the status of a
Parent on a date after the adoption of the Plan shall be considered a Parent
commencing as of such date.
14.25 "Person" means any individual, organization, corporation,
partnership or entity.
14.26 "Plan" means this IgX Corp. 1998 Stock Option Plan, as amended
from time to time.
14.27 "Securities Act" means the Securities Act of 1933, as amended.
14.28 "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain. A corporation
that attains the status of a Subsidiary on a date after the adoption of the Plan
shall be considered a Subsidiary commencing as of such date.
ARTICLE 15. EXECUTION.
To record the adoption of the Plan by the Board, as of September 25,
1998, the Company has caused its duly authorized officer to execute this
document in the name of the Company.
IgX Corp.
By: __________________________
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<PAGE>
DEVELOPMENT AND LICENSE AGREEMENT BETWEEN MONSANTO COMPANY
AND
IgX OXFORD HEPATITIS CORP.
As of September 1, 1998
SDM&C
SOKOLOW. DUNALJD. MERCADIER & CARRERAS
55 avenue Kleber
75116 Paris
<PAGE>
TABLE OF CONTENTS
Pages
-----
Article 1 - Definitions 2
Affiliate 2
Combination Product 3
Compound
Compounds 3
Date of First Commercial Sale 3
Development Program 4
Drug Development Committee 4
Effective Date 4
Entity 4
Field 4
Funding Agreement 4
IND 5
Know-How 5
Licensee Development Costs 5
Licensee Transfer of Rights 5
Major Markets 5
Mono Products 6
Monsanto Development Costs 6
Monsanto Intellectual Property 6
Monsanto Manufacturing Information 6
Monsanto Patents 7
Net Sales 7
Patents 7
Product 8
Regulatory Agency 8
Regulatory Delay 8
Territory 8
Third Party Transfer Compensation 8
Article 2 - Licences 8
Grant 8
Sublicenses 9
Option
No other rights 10
Article 3 - Development
Access to the MONSANTO Know-How 10
Development Program 11
Development Program Charges 11
Development Program Management 12
Source of the Compound 13
Reversion and Conveyance of Rights 14
<PAGE>
2
Pages
-----
Article 4 - MONSANTO Rights of First Refusal
Rights in the Field 15
Second Right of First Refusal 16
Rights Outside the Field 18
Article 5 - Royalties 18
Article 6 - Representations and Warranties 20
Article 7 - Infringement and Indemnification 23
Infringement Claims 23
Indemnification 24
Article 8 - Confidentiality 27
Article 9 - Intellectual Property - Improvements 30
Article 10 - Limitations on liability 32
No Warranties 32
Force Majeure 32
Article 11- Non-use of Names 33
Article 12-Publicity 33
Article 13 - Term and Termination 34
Term 34
Events of Default 34
Termination 35
Consequences of Termination 37
Article 14 - Miscellaneous
Notices 38
Arbitration 40
Amendments 41
No waiver - Remedies 41
Successors and Assigns 41
Relationship of Parties 42
Expenses 42
Entire Agreement 42
Severability 42
Counterparts 43
Governing Law 43
<PAGE>
3
Appendix A
MONSANTO Patents
Appendix B
Development Program
Appendix C
Funding Agreement
<PAGE>
DEVELOPMENT AND LICENSE AGREEMENT
This DEVELOPMENT AND LICENSE AGREEMENT (the "Agreement") is entered into as of
September 1, 1998 by and between MONSANTO COMPANY, a Delaware corporation having
its principal place of business at 800 North Lindbergh Boulevard, Saint Louis,
Missouri, 63167, acting on behalf of itself and on behalf of its wholly owned
subsidiary G.D. Searle & Co. (hereinafter collectively "MONSANTO") and IgX
Oxford Hepatitis Corp., a Delaware corporation having its principal place of
business at One Springfield Avenue, Summit, New Jersey 07901.
(hereinafter "LICENSEE")
WITNESSETH:
WHEREAS, MONSANTO is the owner of patents and patent applications relating to
the use of N-nonyl DNJ (the "Compound") or a novel congener thereof
(collectively the "Compounds") for the treatment of Hepatitis B as a
mono-therapy or in a combination therapy.
<PAGE>
2
WHEREAS, MONSANTO is the owner of certain intellectual property relating to the
Compound; and
WHEREAS, subject to the terms and conditions of this Agreement, MONSANTO wishes
to grant to LICENSEE and LICENSEE desires to obtain, an exclusive world-wide
license, with the right to sublicense. under the aforesaid patents to use,
develop, register and sell one or more of the COMPOUNDS for treatment of
Hepatitis B as a mono-therapy and/or in a combination therapy; and
WHEREAS, in connection with such license MONSANTO is willing to grant to
LICENSEE licenses to the aforesaid intellectual property as reasonably available
and accessible to MONSANTO.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the parties hereto agree as follows:
Article 1 - Definitions
As used in this Agreement, the following terms shall have the meanings
specified:
1.1 "Affiliate" means any other legal Entity that directly or indirectly
through one or more intermediaries, controls or is controlled by or is
under common control with such legal Entity. For purposes hereof, the term
"control" (including with its correlative meanings,
<PAGE>
3
the terms "controlled by" and "under common control with"), means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Entity (whether through
the ownership of voting securities, by contract or otherwise).
1.2 "Combination Product" means a Product suitable for commercialization for
use in the Field having as its active ingredients one or more of the
Compounds and any other active ingredients.
1.3 "Compound" means N-nonyl DNJ referred to by MONSANTO as SC-48578 and
described in the MONSANTO Patents listed in Appendix A hereto.
1.4 "Compounds" means the Compound or a novel congener thereof described in the
MONSANTO Patents, wherein the term "novel" refers to specific congeners
which are structurally new after 12 February, 1997.
1.5 "Date of First Commercial Sale" shall mean the earliest date on which
LICENSEE shall have sold commercially a Product for therapeutic use in the
Field in any country or jurisdiction after having obtained all necessary
approvals for such therapeutic use in the Field in such country or
jurisdiction.
1.6 Development Program" means the program of activities and timelines for the
pre-clinical and clinical development of one or more of the Compounds for
use in the Field (including but not limited to those pre-clinical
activities and timelines set forth in
<PAGE>
4
Appendix B hereto) and activities and timelines to be agreed by the parties
at a later date for the development of one or more of the Compounds for
which approval will be sought from a Regulatory Agency for
commercialization of one or more of the Products for use in the Field.
1.7 "Drug Development Committee" means the committee described in Article 3.4
hereof.
1.8 "Effective Date" means the earlier of (i) the date upon which the animal
studies set forth in Appendix (B) commence or (ii) October 31, 1998.
1.9 "Entity" means any individual, estate, trust, corporation, partnership,
joint venture, association, firm or company, or government body, agency or
official or any other legal entity.
1.10 "Field" shall mean the treatment of Hepatitis B.
1.11 "Funding Agreement" means the Research Agreement, dated as of the 17th day
of August, 1998 between LICENSEE and IgX Corp., a Delaware Corporation,
attached hereto and made a part hereof as Appendix C.
1.12 "IND" means an application and dossier covering an Investigational New Drug
filed or fileable with the United State Food & Drug Administration.
<PAGE>
5
1.13 "Know-How" means any and all technology, experience, know-how, show-how,
techniques, discoveries, improvements, processes, formulae, data (including
but not limited to all formulation characterization data), structure
activity relationships,. trade secrets, technical reports, in vitro and
animal studies, clinical data, dosage information, product formulations,
metabolic studies and toxicological data relating to the Compound and its
use in the Field in Monsanto's possession or control, or to which Monsanto
has grantable rights at the date of this Agreement.
1.14 LICENSEE Development Costs" shall mean expenses in the form of cash outlays
to non-Affiliates of LICENSEE and other out-of-pocket costs, including
employee compensation and benefits paid to or incurred on behalf of
scientific employees, which LICENSEE incurs in, and which are attributable
to, LICENSEE's development of Product, including all costs relating to
process research, process development, and regulatory approvals for use of
such Products.
l.15" LICENSEE Transfer of Rights" shall mean and include any of the following:
(i) any sublicense granted under the authority of Articles 2.3 hereof; and
(ii) any assignment of this Agreement.
1.16 "Major Markets" means the United States, the European Union (as defined by
the European Patent Convention), Japan, and the Peoples Republic of China.
1.17 "Mono Product" means a Product suitable for commercialization for use in
the Field having as its sole active ingredient one of the Compounds.
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6
1.18 "MONSANTO Development Costs" shall mean expenses in the form of cash
outlays for MONSANTO in-house activities and other variable costs which
MONSANTO has incurred in and which are directly attributable to MONSANTO's
development of the Compound for use in the Field including all costs
relating to research, development, toxicology, pharmacokinetics and
structure-activity relationships, but not including: (i) any capital
investment in, lease of, or operating costs of any commercial
manufacturing, warehousing or storage facility; (ii) any expenses relating
to the design or construction, or startup of any such facility, (iii) any
investment or expense relating to the acquisition, rent or lease of land
for any such facility; (iv) any general administrative expense; (v) any
legal expenses except those related to the filing and prosecution of
Patents in the Major Markets or (vi) any overhead cost associated with
MONSANTO's business or any part, function or activity thereof.
1.19 "MONSANTO Intellectual Property" means the MONSANTO Patents, Know-How and
MONSANTO Manufacturing Information.
1.20 "MONSANTO Manufacturing Information" means any and all information owned by
and in the possession of MONSANTO relating to Compound manufacturing
process descriptions, technical reports, manufacturing process research
data, animal studies, dosage information, product formulation, metabolic
studies and toxicological data related to such manufacturing information.
<PAGE>
7
1.21 MONSANTO Patents" means the Patents or Patent Applications listed in
Appendix A hereto.
1.22 "Net Sales" shall mean the gross amount invoiced on sales of a Product by
LICENSEE, or its sublicensee, in any country in the Territory to
independent unrelated third parties less (a) trade, cash and promotional
discounts actually allowed and taken; (b) excise, sales taxes or
value-added taxes imposed upon and paid with respect to such sales
(excluding national, state or local taxes based on income) as adjusted for
rebates or refunds; (c) freight, insurance and other transportation charges
invoiced to third parties; (d) amounts repaid or credited by reason of
rejections, defects, recalls or returns; and (e) rebates (including
pursuant to medicaid or other similar governmental rebate, discount or
charge back programs).
1.23 "Patent" means (i) unexpired letters patent (including inventor's
certificates) including without limitation any substitutions, extensions,
registrations, confirmations, supplementary protection certificates,
reissues, re-examinations, renewals, continuations, divisionals,
continuations-in-part or any like filing thereof, and (ii) pending
applications for letters patent, including without limitation any
continuations, divisions or continuations-in-part thereof and any
provisional applications.
1.24 "Product" means either a Combination-Product or a Mono-Product which is
sold for use in the Field.
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8
1.25 "Regulatory Agency" means the United States Food and Drug Administration
(FDA) or any successor agency performing a similar function or an
equivalent ex-US regulatory agency.
1.26 "Regulatory Delay" means a delay in any milestone date or other date on or
before which a specific event mentioned herein or in any Annex hereto must
occur which delay is caused by any action, request, requirement or failure
to act of a Regulatory Agency in a country of a Major Market.
1.27 "Territory" means all countries in the world.
1.28 "Third Party Transfer Compensation" shall mean funds paid or other
compensation made to LICENSEE, other than royalties measured by Net Sales
of a Product, as consideration for any LICENSEE Transfer of Rights under
this Agreement.
Article 2 - Licenses
2.1 Grant. Subject to the terms and conditions of this Agreement and in
consideration of the payments to be made hereunder, MONSANTO hereby grants
an exclusive, world-wide license, with right to sublicense, under the
MONSANTO Patents and Know-How to develop, use, import, register, offer for
sale and sell one or more Products as a mono-therapy and/or as a
combination therapy for use in the Field, wherein:
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9
(a) said license shall be exclusive under the MONSANTO Patents; and
(b) said license shall be exclusive under the Know-How to the extent said
Know-How relates exclusively to Compounds for use in the Field and
said license shall otherwise be non-exclusive; provided that said
non-exclusive Know-How license shall be grantable only to the extent
that exclusive rights have not been granted to another party prior to
the date of this Agreement.
2.2 MONSANTO further grants to LICENSEE an option to obtain a non-exclusive
world-wide license under the MONSANTO Manufacturing Information to make,
have made, use and sell one or more of the Products for use in the Field.
2.3 Sublicenses. LICENSEE shall have the right to enter into sub-licensing
agreements with respect to any of the rights, privileges and licenses
granted hereunder, to the extent sub-licensing rights have been granted by
MONSANTO to LICENSEE and subject to the terms and conditions hereof. Such
sublicense(s) shall terminate upon the termination of this Agreement.
LICENSEE agrees that any sublicense granted by it hereunder shall provide
that all of the obligations to MONSANTO pursuant to this Agreement shall be
binding upon the sublicensee(s) as if they were a party to this Agreement.
2.4 Option. MONSANTO hereby grants to LICENSEE an option to be granted a
non-exclusive license under US. Patent No. 5,602913, US. Patent No.
5,610,039, and worldwide counterparts thereof (the "Compound Manufacturing
Patents"), to make or
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10
have made the Compounds. LICENSEE may exercise such option at any time
during the term of this Agreement on thirty (30) days prior written
notice. Upon such exercise, LICENSEE shall negotiate in good faith with
MONSANTO a license agreement with terms and conditions customary and
usual for such non-exclusive manufacturing rights, including lump-sum
payments and royalties payable by the LICENSEE to MONSANTO in an amount
which shall be no more onerous, when considering all terms and conditions
of the license, in the aggregate, as to both amount and type of
compensation, as that paid by the most favored of MONSANTO's other
licensees under the Compound Manufacturing Patents.
2.5 No other Rights. The license granted hereunder and the option to be granted
a license hereunder shall not be construed to confer any rights on LICENSEE
(by implication, estoppel, or otherwise) as to any technology, trade
secrets or other proprietary rights of MONSANTO, except as expressly set
forth herein.
Article 3 - Development
3.1 Access to the MONSANTO Know-How. Within thirty (30) days after the date of
this Agreement, MONSANTO shall diligently begin to provide LICENSEE with
full access, to all of the MONSANTO Know-How, which is reasonably
accessible to and grantable by MONSANTO for the purpose of the development
of the Compounds for use in the Field.
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11
3.2 Development Program. LICENSEE shall use its best commercially reasonable
efforts to pursue the development of one or more of the Compounds for use
in the Field. Appendix B hereto sets forth a near term development plan
(the "Near Term Development Plan") with timelines set forth therein. The
parties acknowledge that time is of the essence in completing the Near Term
Development Plan. Upon successful completion, to the satisfaction of
LICENSEE and the Drug Development Committee, of paragraphs (a), (b) and (c)
of the Near Term Development Plan and during the six (6) month period set
forth in paragraph (d) of the Near Term Development Plan, LICENSEE shall
provide to MONSANTO for MONSANTO's approval, which approval shall not be
unreasonably withheld or delayed, a development plan (the "Development
Plan") containing milestone events and timelines for the clinical
development and registration with a Regulatory Agency in each of the Major
Markets of one or more Products for sale for use in the Field. MONSANTO
acknowledges and agrees that the LICENSEE may use one or more contractors
to perform the Near Term Development Plan and/or the Development Plan and
hereby authorizes the LICENSEE to make available to such contractor(s) any
of the MONSANTO Know-How or MONSANTO Intellectual Property provided
hereunder, subject to such contractor(s) agreeing to be bound by the
confidentiality obligations set forth in Article 8. hereof
3.3 Development Program Charges. All costs incurred by LICENSEE in the Near
Term Development Plan and the Development Plan, including, without
limitation, payments for clinical trials and other studies, tests and all
filings and applications and other actions necessary for achieving the
approval of any Regulatory Agency for marketing
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12
one or more of the Compounds for use in the Field shall be the sole
responsibility of LICENSEE.
3.4 Development Program Management.
(a) The Development Program shall be managed by the Drug Development Committee
which shall administer and be responsible for (i) oversight of the research
and development program to be carried out and (ii) setting and approving
budgets, releasing funds, approving charges to the Near Term Development
Plan or the Development Plan and in general approving all tasks and the
timetable for completion of such task in the development of one or more
Compounds for use in the Field.
(b) The Drug Development Committee shall include a designee of LICENSEE,
Professor Raymond A. Dwek of Oxford University, and until such time as
MONSANTO shall have declined all of its Rights of First Refusal as set
forth in Article 4 hereof, or having exercised such rights failed to
negotiate a definitive license agreement with LICENSEE, a designee of
MONSANTO. Professor Dwek shall serve as Chairman of the Committee. All
decisions taken by the Drug Development Committee shall be by consensus;
provided, however, that until such time as MONSANTO shall have exercised
its Rights of First Refusal pursuant to Article 4.1 hereof and entered into
either the Development and License Agreement or the Marketing Agreement, as
therein specified, MONSANTO shall have an advisory role but no vote on
decisions relating to setting and approving budgets or releasing funds.
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13
(c) The Drug Development Committee shall meet at least quarterly to review and
revise, if necessary, the Drug Development Program. Written minutes of all
decisions taken by the Drug Development Committee shall be signed by all
members of the Drug Development Committee. The Drug Development Committee
shall provide MONSANTO with detailed quarterly reports describing progress
of the development of the Compound(s) for use in the Field including any
information with respect to side effects or contraindications noted.
3.5 Source of the Compound
MONSANTO shall provide to LICENSEE, at no additional cost, and as available in
storage to MONSANTO for use in the Development Program a sample of SC-48578 in
an amount of approximately 100 grams. If requested by LICENSEE, MONSANTO shall
provide to LICENSEE at no additional cost, and as available in storage to
MONSANTO reasonable amounts of samples of synthesis intermediates.
The Compound or synthesis intermediates to be provided hereunder shall be
delivered to LICENSEE or as LICENSEE directs as soon as practicable after a
written request for such Compound or intermediates is received by MONSANTO from
LICENSEE. MONSANTO shall ship these materials by a suitable carrier in packaging
appropriate for the materials, and shall provide a Material Safety and Data
Sheet and certificate of weight and analysis for each shipment as available to
MONSANTO. MONSANTO shall not be required to warrant that the material contained
in each shipment shall conform to the certificate of analysis provided
therefor. LICENSEE shall bear all costs and responsibility for acquiring
appropriate import
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14
and export approvals and certificates related to shipment of Compound and/or
synthesis intermediates.
3.6 Reversion and Conveyance of Rights. If LICENSEE or its sub-licensee shall
cease development efforts of a Compound for use in the Field, or shall have
failed to achieve a mutually-agreed milestone in the development of a Compound
in the time period agreed upon, or if the License Agreement is for any reason
terminated prior to registration of a Compound, then all rights, licenses and
options granted under this Agreement in any MONSANTO Intellectual Property shall
immediately revert to MONSANTO without compensation to any other party, and all
right, title and interest in and to any intellectual property generated during
the Development program, including all Know-How and data acquired by LICENSEE by
conveyance, grant or transfer under Article. 6.3 hereof, related to the use of
the Compound in the Field shall be conveyed to MONSANTO without compensation to
any other party. These obligations of reversion and conveyance of rights shall
be assumed by all licensees and/or assignees of LICENSEE. If LICENSEE fails or
ceases to commercialize a Compound in any country other than a country of a
Major Market, then all rights in such Compound in such country shall revert to
MONSANTO without compensation to any other party.
Article 4 - MONSANTO Rights of First Refusal
4.1 Rights in the Field, LICENSEE hereby grants to MONSANTO the following rights
of first refusal:
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15
(a) First Right of First Refusal. At least one hundred and twenty (120) days
prior to the inception of Phase I clinical trials of one or more of the
Compounds for use in the Field, LICENSEE shall provide MONSANTO full access
to, and a comprehensive final report on, all information developed by or
for LICENSEE on Compounds for use in the Field, said final report to
contain sufficient animal data for submission of an IND to the FDA. After
receiving said final report MONSANTO shall have at least ninety (90) days
prior to such inception of Phase I clinical trials, to negotiate in good
faith for a period not to exceed ninety (90) days a Development and License
Agreement (the "Development and License Agreement") covering the clinical
development, registration and marketing of a Compound for use in the Field.
The Development and License Agreement shall contain terms and conditions
substantially similar to those contained in this Agreement including
exclusive licenses to MONSANTO under all intellectual property generated
during the Development Program except that it shall include compensation to
LICENSEE in a form that will take into consideration the following factors:
(a) the reimbursement to LICENSEE of all LICENSEE Development Costs
incurred to the date of the Development and License Agreement by MONSANTO
upon signature of such Development and License Agreement less the MONSANTO
Development Costs (b) the payment of a normal and customary lump sum
representing the net present value of a world-wide license to manufacture,
market and distribute the Compound to be developed through clinical trials
for use in the Field, as negotiated between the parties (c) the payment of
agreed milestone payments by MONSANTO (the "Milestone Payments') for the
funding of the clinical development and
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16
registration of a Compound for use in the Field (d) the payment by MONSANTO
of reasonable and customary royalties calculated as a percentage of the Net
Sales of the Product incorporating the Compound for use in the Field.
(b) Second Right of First Refusal. If MONSANTO shall not exercise its First
Right of First Refusal and/or shall have failed to agree with LICENSEE the
terms of the Development and License Agreement, LICENSEE agrees to notify
MONSANTO at the end of Phase II Clinical Trials of one or more of the
Compounds for use in the Field and provide MONSANTO with full access to,
and a comprehensive final report on all information developed by or for
LICENSEE in Phase II Clinical Trials on Compounds for use in the Field and
containing all data appropriate for deciding to commence Phase III Clinical
Trials, and MONSANTO shall have ninety (90) days after receiving said final
report within which to notify LICENSEE of its exercise of its Second Right
of First Refusal. If MONSANTO shall exercise its Second Right of First
Refusal, LICENSEE agrees to negotiate in good faith with MONSANTO for a
period not to exceed ninety (90) days an agreement for the clinical
development, registration and marketing of the Compound for use in the
Field (the "Marketing Agreement"). The Marketing Agreement shall contain
terms and conditions substantially similar to those contained in this
Agreement including exclusive licenses to MONSANTO under all intellectual
property generated during the Development Program except that it shall
include compensation to LICENSEE in a form that will take into
consideration the following factors: (a) the .reimbursement to LICENSEE of
all LICENSEE Development Costs incurred to the date of the Marketing
Agreement
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17
less the MONSANTO Development Costs by MONSANTO upon signature of such
Marketing Agreement, (b) the payment of a normal and customary lump sum
representing the net present value of a world-wide license to manufacture,
market and distribute the Compound for use in the Field, as negotiated
between the parties (c) the payment by MONSANTO to LICENSEE of all costs
and expense set forth in the Development Program for the clinical
development of the Compound for use in the Field and the registration of
the Product for sale for use in the Field in the Territory and (d) the
payment by MONSANTO of reasonable and customary royalties calculated as a
percentage of the Net Sales of the Product incorporating the Compound for
use in the Field.
(c) Agreements with Third Parties. If MONSANTO shall have failed to exercise
any of its rights of first refusal contained herein and/or following the
good faith negotiations between the parties, LICENSEE and MONSANTO are
unable to agree to the terms and conditions of a Development and License
Agreement or a Marketing Agreement, LICENSEE shall be free to negotiate
with any third party any agreement; provided, however, that such agreement
with a third party shall be consistent with MONSANTO's rights and
LICENSEE's obligations herein and further that no such agreement with such
third party shall contain terms and conditions, including payments and
compensation, which in the aggregate are more favorable to such third party
than the terms and conditions negotiated between MONSANTO and LICENSEE.
Prior to execution of any such agreement with a third party, LICENSEE shall
provide MONSANTO with a fully negotiated version of such agreement, which
does not reveal the identity of such third party.
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18
MONSANTO shall have five (5) business days after receipt of such agreement
to review it. Neither the failure of MONSANTO to exercise its First Right
of First Refusal, nor the failure of MONSANTO and LICENSEE to negotiate to
conclusion a Development and License Agreement shall result in the
abrogation of MONSANTO's Second Right of First Refusal and LICENSEE's
obligation to negotiate in good faith a Marketing Agreement.
4.2 Rights Outside the Field. LICENSEE hereby grants to MONSANTO the same
rights of first refusal for uses of the Compounds outside the Field as set
forth in Article 4.1 hereof if MONSANTO can conclusively show that any such
uses outside the Field were developed using any of the Compound or the
synthesis intermediates provided by MONSANTO to LICENSEE pursuant to
Article 3.5 hereof, failing which MONSANTO shall have no rights with
respect to uses of the Compounds outside the Field owned by LICENSEE. The
terms of Articles 4.1 are incorporated by reference herein mutatis
mutandis.
Article 5 - Royalties
5.1 In consideration of the licenses granted in Article 2.1 hereof, LICENSEE
agrees to pay MONSANTO a royalty equal one and one half per cent (1.5%) of
the actual Net Sales of the Product sold by LICENSEE or its sub-licensee to
unaffiliated third parties for use in the Field. The royalty shall only be
payable on Net Sales of a Product in each country
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19
in the Territory where a valid MONSANTO Patent is pending or issued, or
where LICENSEE has substantial market exclusivity, said royalty to be paid
for the life of said Patent or for the duration of said market exclusivity.
5.2 All Royalty payments shall be made within sixty (60) days after the end of
each calendar quarter during each calendar year and shall be calculated on
actual Net Sales of Products during the quarter concerned. All royalties
shall be paid in United States Dollars and Net Sales of Products
denominated in a currency other than Dollars shall be converted to Dollars
at the exchange rate for purchasing Dollars with such currency prevailing
on the last day of the quarter in question as quoted in the Wall Street
Journal. Each royalty payment shall be accompanied by a statement showing
Net Sales and calculation of royalties due.
5.3 If LICENSEE receives Third Party Transfer Compensation resulting from a
LICENSEE Transfer of Rights, LICENSEE shall pay over to MONSANTO
twenty-five per cent (25%) of such Third Party Transfer Compensation within
thirty (30) days of receipt thereof.
5.4 Any Affiliate of MONSANTO may, at MONSANTO's discretion, receive on behalf
of MONSANTO any payment obligation of LICENSEE under this AGREEMENT and
such payment shall be received by MONSANTO's Affiliate in lieu of payment
to MONSANTO with the same effect as if payment has been tendered to
MONSANTO in satisfaction of such obligation under this Agreement. LICENSEE
will complete
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20
requisite forms to obtain any reduced withholding tax rate under the Income
Tax treaties between US. and a relevant country.
5.5 LICENSEE shall keep (or cause to be kept) and maintain complete and
accurate records of its sales of product, in accordance with US. Generally
Accepted Accounting Practices, such records shall be accessible to an
independent certified public accountant selected by MONSANTO. Such records
may be inspected at reasonable times during business hours within two (2)
years after the end of the period to which such records relate, for the
purpose of verifying Net Sales and any remittance of royalties due thereon.
Such accountant shall be paid by MONSANTO and shall disclose to MONSANTO
only such information as relates to the accuracy of the records kept and
payments made.
Article 6 - Representations and Warranties
6.1 By LICENSEE. LICENSEE hereby represents and warrants to MONSANTO that (a)
LICENSEE has full legal right, power and authority to execute, deliver and
perform its obligations under this Agreement, (b) the execution, delivery
and performance by LICENSEE of this Agreement do not contravene or
constitute a default under any provision of applicable law or its articles
of incorporation or by-laws (or equivalent documents) or of any agreement,
judgment, injunction, order, decree or other instrument binding upon
LICENSEE, (c) all licenses, consents, authorizations and approvals, if any,
required for the execution, delivery and performance by LICENSEE of this
Agreement have been obtained and are in full force and effect and all
conditions
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21
thereof have been complied with, and no other action by or with respect
to, or filing with, any governmental authority or any other entity or
person is required in connection with this execution, delivery and
performance by LICENSEE of this Agreement, and (d) this Agreement
constitutes a valid and binding agreement of LICENSEE, enforceable
against LICENSEE in accordance with its terms.
6.2 By MONSANTO. MONSANTO hereby represents and warrants to LICENSEE that (a)
MONSANTO has full legal right, power and authority to execute, deliver and
perform its obligations under this Agreement, (b) the execution, delivery
and performance by MONSANTO of this Agreement do not contravene or
constitute a default under any provisions of applicable law or of its
articles of incorporation or by-laws (or equivalent documents) or of any
agreement, judgment, injunction, order, decree or other instrument binding
upon MONSANTO, (c) all licenses, consents, authorizations and approvals, if
any, required for the execution, delivery and performance by MONSANTO of
this Agreement have been obtained and are in full force and effect and all
conditions thereof have been complied with, and no other action by or with
respect to, or filing with, any governmental authority or any other entity
or person is required in connection with the execution, delivery and
performance by MONSANTO of this Agreement, and (d) this Agreement
constitutes a valid and binding agreement of MONSANTO, enforceable against
MONSANTO in accordance with its terms. MONSANTO makes no representation or
warranty that the use or sale of the Compound in the Field will not
infringe any patent or proprietary rights of third parties. MONSANTO
further represents and warrants that to the best of its knowledge all of
the patents listed in Appendix A, as of the Date of this Agreement, are not
being
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22
infringed by any third parties, are to the extent held by MONSANTO or
controlled by MONSANTO free and clear of all liens, encumbrances and other
claims, and are not subject to any pending cancellation or reexamination
proceeding or any other pending proceeding challenging their scope or
validity, except as may occur during prosecution of said Patents in patent
offices in which said Patents are pending
6.3 LICENSEE further warrants and represents that, at the date of this
Agreement with respect to any party other than MONSANTO, LICENSEE shall
have obtained appropriate instruments showing:
(a)conveyance to LICENSEE of all right, title and interest in and to the
Patents listed in Appendix A, to the extent that any parties other than
MONSANTO may hold any such right, title or interest in said Patents, and
(b) grant to LICENSEE of exclusive, sub-licensable, world-wide,
royalty-free, irrevocable license rights to all know-how, including but not
limited to all information, data, and structure-activity relationships,
relating to the Field.
6.4 LICENSEE further warrants and represents that the Funding Agreement, and
any other contract related to development of Compounds between LICENSEE and
any third party, shall have terms and conditions consistent with this
Agreement including, specifically, provisions covering intellectual
property which are consistent with the conveyances and grants of this
Agreement and which provide ownership of all intellectual property in
LICENSEE and/or grant of exclusive, sub-licensable,
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23
world-wide, irrevocable licenses of rights to LICENSEE in any such
intellectual property without any other encumbrances.
6.5 Survival of Representations and Warranties. The representations and
warranties contained herein shall survive the execution, delivery and
performance of this Agreement by the parties, notwithstanding any
investigation at any time made by or on behalf of any party or parties.
Article 7 - Infringement and Indemnification
7.1 Infringement Claims. Each party shall promptly advise the other party of
any infringements or suspected infringements of any MONSANTO Patents of
which such party becomes aware, and each party shall cooperate with and
assist the other party in any action undertaken for the assertion of
infringement of any MONSANTO Patent. In the event that either party
concludes that activities of third parties, in the opinion of their
counsel, constitutes an actionable infringement of a MONSANTO Patent,
MONSANTO shall within ninety (90) days initiate action, not necessarily
formal litigation, to terminate or abate such activity. MONSANTO shall keep
LICENSEE advised of the status of MONSANTO's efforts to terminate the
infringing activity. In the event that MONSANTO shall fail to commence
action to terminate or abate infringing activity within the ninety (90) day
period set forth above, then LICENSEE shall have the right at its cost, to
proceed under such MONSANTO Patent to terminate the infringement. In such
event, LICENSEE shall have the right to proceed through
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24
counsel of its own selection and to initiate and control all proceedings
associated therewith. MONSANTO shall render reasonable assistance and
cooperate with LICENSEE as needed, at LICENSEE's expense. If in any
infringement proceeding commenced under this Article, whether the same be
commenced or controlled by LICENSEE or MONSANTO, damages or the like are
recovered in an amount exceeding the cost and fees incurred in obtaining
the same, such excess amounts shall be the property of the party
controlling the proceeding.
7.2 Indemnification
(a) Indemnification by LICENSEE. LICENSEE hereby agrees that it shall be
responsible for, indemnify, hold harmless and defend MONSANTO, MONSANTO's
Affiliates and their respective directors, officers, managing members,
shareholders, partners, attorneys, accountants, agents, employees and
consultants and their heirs, successors and assigns (collectively the
"MONSANTO Indemnitees") from and against any and all claims, demands,
losses, liabilities, damages, costs and expenses (including the cost of
settlement, reasonable, legal and accounting fees and any other expenses
for investigating or defending any actions or threatened actions)
(collectively, "Losses" suffered or incurred by any MONSANTO Indemnitee
arising out of, relating to, resulting from or in connection with (a) any
actual or alleged injury or death of any third party or damage to any
property caused or claimed to be caused by the Product or by any act of
LICENSEE or any third party acting for LICENSEE in the development or
commercialization of the Product for use in the Field, at any time prior to
the exercise by MONSANTO of any of its rights of first refusal contained in
Article 4.1,
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25
provided that such injury, death or damage is not directly attributable to
MONSANTO Intellectual Property. (b) the breach of any representation or
warranty made by LICENSEE herein, or (c) any action, suit or other
proceeding, or compromise, settlement or judgment, relating to any of the
foregoing matters with respect to which MONSANTO Indemnitees are entitled
to indemnification hereunder. The foregoing shall not apply to the extent
that such Losses are due to the willful misconduct or negligence of any
MONSANTO Indemnitees, as finally determined by a court of competent
jurisdiction.
(b) Prior to initiation of any human clinical trial, LICENSEE shall have
obtained an insurance policy from an insurer which is reasonably acceptable
to MONSANTO in an amount not less than ten million United States dollars
(US$10,000,000) to cover claims, liability, expenses, damages and costs due
to injury to persons or damage to property arising or resulting from the
manufacture, use or sale of any Product, or the practice of any process, as
set forth herein and shall name MONSANTO as primary insured to be
compensated for any claims made against MONSANTO prior to any other named
insured under such policy. LICENSEE shall furnish to MONSANTO a Certificate
of Insurance corroborating the issue of such policy, and copies of all
renewal certificates corroborating the continued force of such policy.
Further, LICENSEE shall require the insurer provide to MONSANTO with
notices of any policy cancellation, non-renewal or modification.
(c) Indemnification by MONSANTO. MONSANTO' hereby agrees that it shall be
responsible for, indemnify, hold harmless and defend LICENSEE's Affiliates
and their
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26
respective directors, officers, managing members, shareholders, partners.
attorneys, accountants, agents. employees and consultants and their heirs,
successors and assigns (collectively, the "LICENSEE Indemnities") from and
against any and all claims, demands, losses, liabilities, damages costs and
expenses (including the cost of settlement, reasonable legal and accounting
fees and any other expenses for investigating or defending any actions or
threatened actions) (collectively "Losses") suffered or incurred by any
LICENSEE Indemnitee arising out of, relating to, resulting from or in
connection with (a) the breach of any representation or warranty made by
MONSANTO herein, and (b) any action, suit or other proceeding, or
compromise, settlement or judgment, relating to any of the foregoing
matters with respect to which LICENSEE Indemnitees are entitled to
indemnification hereunder. The foregoing shall not apply to the extent that
such Losses are due to the willful misconduct or negligence of any LICENSEE
Indemnitees, as finally determined by a court of competent jurisdiction.
(d) Notice of Claims. In the event that a claim is made pursuant to Article
7.2.(a) or 7.2(c) above against any party which seeks indemnification
hereunder (the "Indemnitee"), the Indemnitee agrees to promptly notify the
other party (the "Indemnitor") of such claim or action and, in the case of
any claim by a third person against the Indemnitee, the Indemnitor may, at
its option, elect to assume control of the defense of such claim or action;
provided that (a) the Indemnitee shall be entitled to participate therein
(through counsel of its own choosing) at the Indemnitee's sole cost and
expense, and (b) the Indemnitor shall not settle or compromise any such
claim or action without the prior written consent of the Indemnitee, unless
such settlement or compromise includes a
<PAGE>
27
general release of the Indemnitee and all of the other LICENSEE Indemnitees
or MONSANTO Indemnitees. as the case may be, from any and all liability
with respect hereto.
Article 8 - Confidentiality
8.1 During the term of this Agreement and for a period of ten (10) years after
the termination hereof for any reason, LICENSEE agrees to hold in
confidence this Agreement and its terms and all MONSANTO Know-How and any
other confidential information disclosed by MONSANTO to the LICENSEE
(collectively the "Confidential Information") and not use the same for any
purpose other than as set forth in this Agreement nor disclose the same to
any other person except to the extent that it is necessary for LICENSEE to
enforce its rights under this Agreement or if required by law; provided,
that if LICENSEE shall be required by law to disclose any such Confidential
Information to any third party, LICENSEE shall give prompt written notice
thereof to MONSANTO and shall minimize such disclosure to the amount
required. Notwithstanding the foregoing, LICENSEE may disclose Confidential
Information (a) to its attorneys, accountants and other professional
advisors under an obligation of confidentiality, (b) to its banks, other
financial institutions or investors under an obligation of confidentiality,
for the purpose of raising capital or borrowing money or maintaining
compliance with agreements, arrangements and understandings relating
thereto, and (c) to any Entity who proposes to purchase or otherwise
succeed (by merger, operation of law or otherwise) to all of LICENSEE's
right, title and interest in, to and under this Agreement, if such Entity
agrees to maintain the confidentiality of
<PAGE>
28
such Confidential Information pursuant to a written agreement. The standard
of care required to be observed hereunder shall be not less than the degree
of care which LICENSEE uses to protect its own information of a similar and
confidential nature.
8.2 During the term of this Agreement and for a period of ten (10) years after
the termination hereof for any reason, MONSANTO agrees to hold in
confidence this Agreement and its terms and any other confidential
information disclosed by LICENSEE to MONSANTO (collectively the
"Confidential Information") and not use the same for any purpose other than
as set forth in this Agreement nor disclose the same to any other person
except to the extent that it is necessary for MONSANTO to enforce its
rights under this Agreement or if required by law; provided, that if
MONSANTO shall be required by law to disclose any such Confidential
Information to any third party, MONSANTO shall give prompt written notice
thereof to the LICENSEE and shall minimize such disclosure to the amount
required. Notwithstanding the foregoing, MONSANTO may disclose Confidential
Information (a) to its attorneys, accountants and other professional
advisors under an obligation of confidentiality, (b) to its banks, other
financial institutions or investors under an obligation of confidentiality,
for the purpose of raising capital or borrowing money or maintaining
compliance with agreements, arrangements and understandings relating
thereto, and (c) to any Entity who proposes to purchase or otherwise
succeed (by merger, operation of law or otherwise) to all of MONSANTO's
right, title and interest in, to and under this Agreement, if such Entity
agrees to maintain the confidentiality of such Confidential Information
pursuant to a written agreement. The standard of care required to be
<PAGE>
29
observed hereunder shall be not less than the degree of care which MONSANTO
uses to protect its own information of a similar and confidential nature.
8.3 The restrictions set forth in Articles 8.1 and 8.2 hereof shall not apply
to any Confidential Information which:
(a) was already known to LICENSEE or MONSANTO, as the case may be, prior
to its disclosure by the other party, as shown by the recipient's
written records;
(b) at the time of the disclosure is or subsequently thereto becomes
generally available to the public other than by speculation, rumor or
by a violation of the terms of this Agreement;
(c) subsequent to disclosure is acquired from or made available to a party
by a third party and neither disclosure to nor use by such party
violates any obligation of said third party to MONSANTO or LICENSEE,
as the case may be; and
(d) LICENSEE is required to disclose to a Regulatory Agency in connection
with the preparation and filing of applications for marketing approval
of a Product.
(e) LICENSEE includes in any articles published in recognized scientific
publications in connection with the development of the Compounds.
<PAGE>
30
Article 9 - Intellectual Property - Improvements
9.1 Rights to Proprietary Technology. Neither party shall through this
Agreement obtain any rights to the other party's proprietary technology
except for such rights as are expressly granted or allocated under this
Agreement.
9.2 Improvements and Filing, Prosecution and Maintenance of Patents. Any
invention, discovery or development (including, without limitation, data,
formulae or research results) generated in the course of the Development
Program pertaining directly to the Compound, including formulation
technology for the Compound, shall be owned solely by LICENSEE. In the
event that any such invention, discovery or development is deemed
patentable, LICENSEE may, at its option and cost, elect to seek patent
protection thereon and MONSANTO shall render reasonable assistance to
LICENSEE whenever requested to do so, at LICENSEE's cost, to the extent
MONSANTO is required to sign and execute such forms and documents as may be
necessary to assist LICENSEE in the filing and prosecution of such
applications.
9.3 MONSANTO agrees to file, maintain and defend the MONSANTO Patents in the
Major Markets for the term of this Agreement. The scope of additional
international patent filings necessary to protect the marketing and
licensing interests of the parties will be determined in advance of actual
filings on a country-by-country or regional basis in discussions between
representatives of each party, said discussions to be initiated by
LICENSEE, with appropriate consideration of filing, prosecution and
maintenance costs, and the enforceability of patent claims in the country
or region. The
<PAGE>
31
costs of all such filings and maintenance costs shall be borne by MONSANTO,
until such time as MONSANTO gives at least ninety (90) days written notice
of its intention to abandon any such Patent for which MONSANTO is paying
such costs. At LICENSEE's request MONSANTO shall provide LICENSEE with
evidence of the payment of all such costs at least thirty (30) days prior
to the date upon which failure to have paid such cost will result in the
abandonment or lapse of the Patent. MONSANTO shall have no liability for
any inadvertent lapse of a Patent.
9.4 In the event that MONSANTO intends to abandon or discontinue maintenance or
prosecution of any MONSANTO Patent in any country of the Major Markets,
MONSANTO shall give LICENSEE sufficient advance notice to allow LICENSEE to
take any action necessary to renew, maintain or revive such MONSANTO
Patents at LICENSEE's expense. MONSANTO shall provide all reasonable
assistance required for LICENSEE to accomplish such result.
Article 10 - Limitations on Liability
10.1 No Warranties. Except as expressly set forth in Article 6 hereof, neither
party makes any representations or warranties as to any matter whatsoever.
EACH PARTY HEREBY DISCLAIMS ANY AND ALL OTHER REPRESENTATIONS AND
WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE COMPOUND, THE PRODUCTS
AND THE MONSANTO INTELLECTUAL PROPERTY, INCLUDING WITHOUT LIMITATION, ANY
WARRANTIES OF
<PAGE>
32
MERCHANTABILITY OR FITNESS FOR ANY PART1CULAR PURPOSE TO THE EXTENT
PROVIDED BY LAW, MONSANTO SHALL NOT BE LIABLE UNDER ANY CONTRACT.
NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY FOR ANY
INCIDENTAL OR CONSEQUENTIAL DAMAGES.
10.2 Force Majeure. No party shall be liable for failure or delay in performing
any of its obligations hereunder if such failure or delay is occasioned by
compliance with any governmental regulation, request or order, or by
circumstances beyond the reasonable control of the party so failing or
delaying, including without limitation. Acts of God, war, insurrection,
fire, flood, accident, labor strikes, work stoppage or slowdown (whether or
nor such labor events is within the reasonable control of the parties). or
inability to obtain power or necessary to enable such party to perform its
obligations hereunder. Each party shall (a) promptly notify the other party
in writing of any such event of force majeure, the expected duration
thereof and its anticipated effect on the ability of such party to perform
its obligations hereunder, and (b) make reasonable efforts to remedy any
such event of force majeure.
Article 11 - Non-use of Names
Neither party shall use the name of the other party or the name of any
Affiliates or employees of such party, nor any adaptation thereof, in any
advertising, promotional or sales literature or other publication without prior
written consent obtained from such other party in each case. In the event that a
party is required by law by the SEC or ex-U.S. counterpart thereof to
<PAGE>
33
disclose the name of the other party, the parties shall agree on the scope and
nature of such disclosure, within the requirements of the law, prior to any such
disclosure.
Article 12 - Publicity
12.1 The terms of this Agreement shall be considered confidential information of
MONSANTO and subject to the provisions of this Article 8 hereof
12.2 If LICENSEE determines to issue any press release or other public statement
or announcement of or relating to this Agreement (hereinafter collectively
"LICENSEE Announcement"), MONSANTO shall have the right to review such
LICENSEE Announcement, and to make reasonable revisions thereof, prior to
release or publication thereof by LICENSEE or any LICENSEE agent or
contractor. MONSANTO shall have the absolute right to block the issuance of
any press release or other public announcement which refers directly or
indirectly to MONSANTO, its Affiliates or new venture partners, other than
announcements contemplated in the second sentence of Article 11 hereof.
12.3 It is agreed and understood that LICENSEE may disclose the terms of this
Agreement under obligations of confidentiality to a prospective sublicensee
pursuant to the negotiation of a sublicense authorized under Article 2
hereof, provided that such prospective sublicensee agrees to a
confidentiality agreement at least as restrictive as the provisions of
Article 8 hereof, and MONSANTO is expressly named as a third party
beneficiary of such confidentiality agreement.
<PAGE>
34
Article 13 - Term and Termination
13.1 Term. This agreement shall be effective from the date first above written
and, unless sooner terminated in accordance with the provisions of this
Article 13, shall continue until the later to occur of (a) fifteen (15)
years from the date of this Agreement, or (b) the expiration of all royalty
duration obligations set forth in Article 5.1 hereof
13.2 Events of Default. Each party shall have the right to terminate this
Agreement upon the occurrence of any of the following events (each, an
"Event of Default") with respect to the other party (the "Defaulting
Party"): (a) a decree or order shall have been entered by a court of
competent jurisdiction adjudging the Defaulting Party bankrupt or
insolvent, or approving as properly filed a petition - seeking
reorganization, readjustment arrangement, composition or similar relief for
the Defaulting Party under any bankruptcy law or any other similar
applicable statute, law or regulation, or a decree or order of a court of
competent jurisdiction shall have been entered for the appointment of a
receiver or liquidator or trustee or assignee in bankruptcy or insolvency
of the Defaulting Party or a substantial part of its property, or for the
winding up or liquidation of its affairs; or (b) the Defaulting Party shall
institute proceedings to be adjudicated a voluntary bankrupt, or shall
consent to the filing of a bankruptcy petition against it, or shall file a
petition or answer or consent seeking reorganization, readjustment,
arrangement, composition, liquidation or similar relief under any
bankruptcy law or any other similar applicable statute, law or regulation
or shall consent to the appointment of a receiver or liquidator or trustee
or assignee in bankruptcy or insolvency of it or of a substantial part of
its property, or shall make an
<PAGE>
35
assignment for the benefit of creditors, or shall be unable to pay its
debts generally as they become due; or (c) the Defaulting Party shall
commit a material breach of the terms of this Agreement and the Defaulting
Party does not undertake diligent and continuous efforts to remedy such
breach and all of its effects within thirty (30) days after written notice
thereof is given by the other party to the Defaulting party and such breach
is not fully remedied within a reasonable period.
13.3 Termination. Each party may terminate this Agreement upon the occurrence of
any Event of Default by the other party by giving written notice thereof to
the other party, which notice shall specifically identify the reason(s) for
such termination. LICENSEE shall have the right, as its option, to
terminate this Agreement on a country-by-country basis (a) at any time if
LICENSEE unilaterally elects to discontinue development or marketing of the
Compound; (b) immediately if the manufacture, use, sale or distribution of
the Product is enjoined permanently and unavoidably by a court or
administrative agency of competent jurisdiction as infringing the patent
rights of any third party in any country; or if it reasonably determines on
the advice of competent patent counsel, that the manufacture, use, sale or
distribution of the Product unavoidably infringes the patent rights of any
third party in any Major Market; and (c) immediately in the event that the
Product is deemed unmarketable for any reason.
13.4 (a) MONSANTO shall have the right, at its option to terminate this
Agreement (i) if LICENSEE has (x) not provided the final report pursuant to
the terms of Article 4.1 (a) hereof within two years of the Effective Date
of this Agreement or (y) not provided the final report pursuant to the
terms of Article 4.1 (b) hereof, or (ii) the Date of First
<PAGE>
36
Commercial Sale of a Product in a Major Market shall not have occurred
within six (6) years of the Effective Date of this Agreement or (iii) IgX
Corp. shall default in its obligations to LICENSEE under the Funding
Agreement and such default is not remedied within thirty (30) days if such
default. The time limits set forth in Articles 13.4 (a) (i) or 13.4 (a)
(ii) hereof shall be extended on a day-to-day basis for any Regulatory
Delays.
(b) If the Date of First Commercial Sale of a Product in any particular
Major Market shall not have occurred within the period set forth in Section
13.4 (a) (ii), MONSANTO shall have an option, exercisable within ninety
(90) days following such date, to request an exclusive license for such
Product for such Major market. If MONSANTO shall exercise such option, the
parties agree to negotiate in good faith a license agreement for such Major
Market pursuant to the terms of Section 4.1(b) hereof, the terms of which
are incorporated herein by reference mutatis mutandis.
13.5 Consequences of Termination. The termination of this Agreement for any
reason shall be without prejudice to (a) the rights and obligations of the
parties pursuant to Sections 7 and 10 hereof, and (b) any other remedies as
may now or hereafter be available to any party, whether under this
Agreement or otherwise.
13.6 In the event of termination under Article 13.3(b) if LICENSEE can obtain a
reasonable license or settlement agreement with regard to the third party
patent rights, LICENSEE may elect to continue the Agreement and reduce the
royalty to be paid hereunder by up
<PAGE>
37
to 50% in each quarter to offset actual expenses incurred in obtaining the
license or settlement.
13.7 Within twenty (20) days after termination of this Agreement, irrespective
of the basis for termination, LICENSEE shall promptly return to MONSANTO
all materials and data comprising MONSANTO Intellectual Property or
otherwise relating to the manufacture of products. If any inventory of
finished Products remains in LICENSEE's inventory after termination,
MONSANTO at its sole election may purchase all or a portion of such
inventory of finished products at LICENSEE's list price.
Within a period of ninety (90) days after the date of termination, any
finished Products which MONSANTO has not elected to purchase from LICENSEE
may be disposed by LICENSEE by use or sale within the limitations of
Article 2 hereof; provided, however. that LICENSEE shall not have the right
to dispose of finished Products if actual or potential injury to persons or
property, and/or creation or extension of actual or potential liability of
MONSANTO, either forms any part of the basis for termination or is
otherwise incurred or threatened or is reasonably anticipated by MONSANTO.
13.8 Any inventory of finished Products, raw materials therefor and/or
intermediates therefor not used or sold under the provisions of Article
12.6 hereof shall be destroyed by LICENSEE within one hundred (100) days
after termination of this Agreement.
13.9 The obligations contained in Articles 7, 8, 9, 10, 11, 42 and 14 shall
survive termination of this Agreement.
<PAGE>
38
Article 14 - Miscellaneous
14.1 Notices. All payments, notices, reports and/or other communications
accordance with this Agreement, shall be sufficiently made or given on the
date of the mailing if delivered by hand, by facsimile or sent by first
class mail postage prepaid and addressed as follows:
In the case of LICENSEE:
IgX Oxford Hepatitis Corp.
Attn: Albert J. Henry, Chairman
One Springfield Avenue
Summit, New Jersey 07901
with a copy to:
Henry & Co.
Attn.: June Knaudt
4370 La Jolla Village Drive, Suite 400
San Diego California 92122-1251
In the case of MONSANTO:
MONSANTO Company
800 N. Lindbergh Boulevard
St. Louis Missouri 63167
USA
Attention: General Counsel
<PAGE>
39
with a copy to:
G.D. Searle & Co.
5200 Old Orchard Road
Skokie, Illinois 60077
Attention: Licensing Dept.
or such other address as either party shall notify the other in writing.
14.2 Arbitration. Any dispute, controversy or claim arising out of or relating
to this Agreement shall be settled by arbitration under the American
Arbitration Association by a panel of three arbitrators, one selected by
each party and the third selected by the other two arbitrators. Any
arbitration proceeding commenced by either party shall be held in the New
York City, New York metropolitan area (including northern New Jersey). The
decision of the arbitrators may be entered in any court of competent
jurisdiction, and execution may be had thereon. In any arbitration pursuant
to this Agreement, each party shall be entitled to discovery proceedings in
accordance with the United States Federal Rules of Civil Procedure
governing discovery as then in effect. The expenses of such arbitration,
including attorneys' fees, shall be allocated between the parties as the
arbitrators may decide and as the claims and interests of each party may
prevail. Notwithstanding anything to the contrary contained herein, any
dispute, controversy or claim relating to the actual or threatened
unauthorized use of any Confidential Information, or the validity,
enforceability or infringement of any patent rights, shall not be submitted
to arbitration hereunder and shall be resolved by a court of competent
jurisdiction.
<PAGE>
40
14.3 Amendments. etc. This Agreement may not be amended or modified, nor may any
right or remedy of any party be waived, unless the same is in writing and
signed by such party or a duly authorized representative of such party. The
waiver by any party of the breach of any term or provision hereof by any
other party shall not be construed as a waiver of any other subsequent
breach.
14.4 No Waiver: Remedies. No failure or delay by any party in exercising any of
its rights or remedies hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or remedy preclude
any other or further exercise thereof or the exercise of any other right or
remedy. The rights and remedies of the parties provided in this Agreement
are cumulative and not exclusive of any rights or remedies provided by law.
14.5 Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective heirs, legal
representatives, successors and permitted assigns; provided that, LICENSEE
may assign or otherwise transfer this Agreement or any of its rights,
duties or obligations hereunder without the prior written consent of
MONSANTO and MONSANTO may assign or otherwise transfer this Agreement
without the prior written consent of LICENSEE to any company which merges
with or is merged into MONSANTO or any company to which MONSANTO shall
transfer the line of business associated with this Agreement. Any agreement
between LICENSEE and any third party assigning or transferring any of its
rights, duties or obligations hereunder shall contain the obligation by
such third party to maintain and fulfill all obligations owed by LICENSEE
to MONSANTO hereunder.
<PAGE>
41
14.6 Relationship of Parties. LICENSEE and MONSANTO are not (and nothing in this
Agreement shall be construed to constitute them) partners, joint ventures,
agents. representatives or employees of the other party. nor to create any
relationships between them other than that of an independent contractor.
Neither party shall have any responsibility or liability for the actions of
the other party except as specifically provided herein. Neither party shall
have any right or authority to bind or obligate the other party in any
manner or make any representation or warranty on behalf of the other party.
14.7 Expenses. Unless otherwise provided herein, all costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby
shall be paid by the party which shall have incurred the same and the other
party shall have no liability relating thereto.
14.8 Entire Agreement. This Agreement constitutes the entire agreement between
the parties and supersedes all prior proposals, communications,
representations and agreements, whether oral or written, with respect to
the subject matter hereof
14.9 Severability. Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of
this Agreement or affecting the validity or enforceability of any of the
terms or provisions hereof in any other jurisdiction.
<PAGE>
42
14.10 Counterparts. This Agreement may be signed in any number of counterparts.
each of which shall be deemed an original and all of which when taken
together shall constitute but one and the some instrument.
14.11 Governing Law. This Agreement, including the performance and
enforceability hereof, shall be governed by and construed in accordance
with the laws of the State of New York without reference to choice of law
doctrine.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
IgX Oxford Hepatitis Corp.
By: /s/ Albert J. Henry
--------------------------
Chairman
IgX Oxford Hepatitis Corp.
MONSANTO Conipany
By: /s/ Richard U. De Schutter
--------------------------
Richard U. De Schutter
Vice Chairman
MONSANTO Co.
<PAGE>
EXHIBIT "F"
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is made as of this _____ day of
_____, 199_, by and between IgX Corp., a Delaware corporation (the "Company"),
and __________________ ("Indemnitee").
RECITALS
A. The Company and Indemnitee recognize the increasing difficulty in
obtaining liability insurance for directors, officers, employees and
agents, the significant increases in the cost of such insurance and the
general reductions in the coverage of such insurance.
B. The Company and Indemnitee further recognize the substantial increase
in corporate litigation in general, subjecting directors, officers,
employees, and agents to expensive litigation risk at the same time
that the availability and coverage of liability insurance has been
severely limited.
C. Indemnitee does not regard the current protection available as adequate
under the present circumstances, and Indemnitee and other directors,
officers, employers and agents of the Company may not be willing to
continue to serve as directors, officers, employees and agents without
additional protection.
D. The Company desires to attract and retain the services of highly
qualified individuals, such as Indemnitee, to serve as directors,
officers, employees and agents of the Company and to indemnify its
directors, officers, employees and agents so as to provide them with
the maximum protection permitted by law.
AGREEMENT
The Company and Indemnitee hereby agree as follows:
1. Agreement to Serve. Indemnitee agrees to serve and/or continue to serve
the Company, at the Company's will (or under separate written agreement
approved by the Board of Directors of the Company, if such agreement
exists), in the capacity Indemnitee currently serves the Company, as
long as Indemnitee is duly appointed or elected and qualified in
accordance with the applicable provisions of the Bylaws of the Company
or any subsidiary of the Company or (subject to any employment
agreement between Indemnitee and the Company) until such time as
Indemnitee tenders a written resignation or is removed in accordance
with the Bylaws; provided, however, that nothing contained in this
Agreement is intended to or shall create any right (express or implied)
to continued employment by Indemnitee.
<PAGE>
2. Indemnification.
(a) Third Party Proceedings. The Company shall indemnify
Indemnitee if Indemnitee is or was a party or is threatened to
be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in
the right of the Company) by reason of the fact that
Indemnitee is or was a director, officer, employee or agent of
the Company, or any subsidiary of the Company, by reason of
any action or inaction on the part of Indemnitee while a
director, officer, employee or agent, or by reason of the fact
that Indemnitee is or was serving at the request of the
Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise, against expenses (including, without limitation,
attorneys' fees, disbursements and retainers, accounting and
witness fees, travel and deposition costs, and expenses of
investigations), judgments, fines and amounts paid in
settlement (if such settlement is approved in advance by the
Company) actually and reasonably incurred by Indemnitee in
connection with such action, suit or proceeding if Indemnitee
acted in good faith and in a manner Indemnitee reasonably
believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe Indemnitee's
conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon
a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that Indemnitee did not act in
good faith and in a manner which Indemnitee reasonably
believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that Indemnitee's
conduct was unlawful.
(b) Proceedings by or in the Right of the Company. The Company
shall indemnify Indemnitee if Indemnitee was or is a party or
is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Company or
any subsidiary of the Company to procure a judgment in its
favor by reason of the fact that Indemnitee is or was a
director, officer, employee or agent of the Company, or any
subsidiary of the Company, by reason of any action or inaction
on the part of Indemnitee while a director, officer, employee
or agent, or by reason of the fact that Indemnitee is or was
serving at the request of the Company as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses
(including, without limitation, attorneys' fees, disbursements
and retainers, accounting and witness fees, travel and
deposition costs, and expenses of investigations) and, to the
fullest extent permitted by law, amounts paid in settlement,
in each case to the extent actually and reasonably incurred by
Indemnitee in connection with the defense or settlement of
such action or suit (i) if Indemnitee acted in good faith and
in a manner Indemnitee reasonably believed to be in or not
opposed to the best interests of the Company and its
stockholders, except that no indemnification shall be made in
respect of any claim, issue or matter as to which Indemnitee
shall have been adjudged to be liable to the Company in the
performance of Indemnitee's duty to the Company and its
stockholders unless and only to the extent that the court in
which such action or suit is or was pending shall determine
upon application that, in view of all the circumstances of the
case, Indemnitee is fairly and reasonably entitled to
indemnity for expenses and then only to the extent that the
court shall determine; (ii) if Indemnitee is a director, to
the extent that the action or contemplated action seeks
monetary damages for breach of Indemnitee's duties to the
Company and its stockholders in circumstances under which
Indemnitee's personal liability therefor has been
-2-
<PAGE>
eliminated as a result of the provisions of Section 102(b)(7)
of the Delaware General Corporation Law; or (iii) if
Indemnitee is an agent other than a director, to the extent
that, were Indemnitee a director, Indemnitee would have the
right to be indemnified under Section 2(b)(ii), above; and in
the case of Section 2(b)(ii) and 2(b)(iii) above,
indemnification shall include, to the extent not prohibited by
law, indemnification against all judgments, fines and amounts
paid in settlement actually and reasonably incurred by
Indemnitee in connection with such action, suit or proceeding.
(c) Mandatory Payment of Expenses. To the extent that Indemnitee
has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in Sections 2(a)
or (b) or in defense of any claim, issue or matter therein,
Indemnitee shall be indemnified against expenses (including,
without limitation, attorneys' fees, disbursements and
retainers, accounting and witness fees, travel and deposition
costs, and expenses of investigations) actually and
reasonably incurred by Indemnitee in connection therewith.
(d) Indemnification for Serving as a Witness. Notwithstanding any
other provision of this Agreement, to the extent that
Indemnitee is, by reason of Indemnitee's status as a director,
officer, employee or agent of the Company, a witness in any
action, suit or proceeding, whether civil, criminal,
administrative or investigative, Indemnitee shall be
indemnified against expenses actually and reasonably incurred
by Indemnitee in connection therewith.
3. Expenses; Indemnification Procedure.
(a) Advancement of Expenses. The Company shall advance all
reasonable expenses incurred by Indemnitee in connection with
the investigation, defense, settlement or appeal of any civil,
criminal, administrative or investigative action, suit or
proceeding referenced in Section 2(a) or (b) hereof (but not
amounts actually paid in settlement of any such action, suit
or proceeding). Indemnitee hereby undertakes to repay such
amounts advanced only if, and to the extent that, it shall
ultimately be determined that Indemnitee is not entitled to be
indemnified by the Company as authorized hereby.
(b) Notice/Cooperation by Indemnitee. Indemnitee shall, as a
condition precedent to his right to be indemnified under this
Agreement, give the Company notice, in accordance with Section
14 hereof, of any claim made against Indemnitee for which
indemnification will or could be sought under this Agreement.
Notice to the Company shall be directed to the Chief Executive
Officer of the Company. In addition, Indemnitee shall give the
Company such information and cooperation as it may reasonably
require and as shall be within Indemnitee's power.
(c) Procedure. Any indemnification and advances provided for in
Section 2 and this Section 3 shall be made no later than 30
days after receipt of the written request of Indemnitee. If a
claim under this Agreement, under any statute, or under any
provision of the Company's Certificate of Incorporation or
Bylaws providing for indemnification, is not paid in full by
the Company within 30 days after a written request for payment
thereof has first been received by the Company, Indemnitee
may, but need not, at any time thereafter bring an action
against the Company
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to recover the unpaid amount of the claim and, subject to
Section 13 of this Agreement, Indemnitee shall also be
entitled to be paid for the expenses (including attorneys'
fees) of bringing such action. It shall be a defense to any
such action (other than an action brought to enforce a claim
for expenses incurred in connection with any action, suit or
proceeding in advance of its final disposition) that
Indemnitee has not met the standards of conduct which make it
permissible under applicable law for the Company to indemnify
Indemnitee. Indemnitee shall be entitled to receive interim
payments of expenses pursuant to Section 3(a) unless and until
such defense may be finally adjudicated by court order or
judgment from which no further right of appeal exists. It is
the intention of the parties that if the Company contests
Indemnitee's right to indemnification, the question of
Indemnitee's right to indemnification shall be for the court
to decide, and neither the failure of the Company (including
its Board of Directors, any committee or subgroup of the Board
of Directors, independent legal counsel, or its stockholders)
to have made a determination that indemnification of
Indemnitee is proper in the circumstances because Indemnitee
has met the applicable standard of conduct required by
applicable law, nor an actual determination by the Company
(including its Board of Directors, any committee or subgroup
of the Board of Directors, independent legal counsel, or its
stockholders) that Indemnitee has not met such applicable
standard of conduct, shall create a presumption that
Indemnitee has or has not met the applicable standard of
conduct.
(d) Notice to Insurers. If, at the time of the receipt of a
notice of a claim pursuant to Section 3(b) hereof, the
Company has director and officer liability insurance in
effect, the Company shall give prompt notice of the
commencement of such proceeding to the insurers in accordance
with the procedures set forth in the respective policies. The
Company shall thereafter take all necessary or desirable
action to cause such insurers to pay, on behalf of the
Indemnitee, all amounts payable as a result of such
proceeding in accordance with the terms of such policies.
(e) Selection of Counsel. In the event the Company shall be
obligated under Section 3(a) hereof to pay the expenses of any
proceedings against Indemnitee, the Company, if appropriate,
shall be entitled to assume the defense of such proceeding,
with counsel approved by Indemnitee, upon the delivery to
Indemnitee of written notice of its election so to do. After
delivery of such notice, approval of such counsel by
Indemnitee and the retention of such counsel by the Company,
the Company will not be liable to Indemnitee under this
Agreement for any fees of counsel subsequently incurred by
Indemnitee with respect to the same proceeding, provided that
(i) Indemnitee shall have the right to employ separate counsel
in any such proceeding at Indemnitee's expense; and (ii) if
(A) the employment of counsel by Indemnitee has been
previously authorized by the Company, (B) Indemnitee shall
have reasonably concluded that there may be a conflict of
interest between the Company and Indemnitee in the conduct of
any such defense, or (C) the Company shall not, in fact, have
employed counsel to assume the defense of such pro ceeding,
then the fees and expenses of Indemnitee's counsel shall be at
the expense of the Company.
4. Additional Indemnification Rights; Nonexclusivity.
(a) Scope. Notwithstanding any other provision of this Agreement,
the Company hereby agrees to indemnify the Indemnitee to the
fullest extent permitted by law, notwithstanding
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that such indemnification is not specifically authorized by
the other provisions of this Agreement, the Company's
Certificate of Incorporation, the Company's Bylaws or by
statute. In the event of any change in any applicable law,
statute or rule which narrows the right of a Delaware
corporation to indemnify a member of its board of directors or
its officers, employees or agents, such change, to the extent
not otherwise required by such law, statute or rule to be
applied to this Agreement, shall have no effect on this
Agreement or the parties' rights and obligations hereunder.
(b) Nonexclusivity. The indemnification provided by this Agreement
shall not be deemed exclusive of any rights to which
Indemnitee may be entitled under the Company's Certificate of
Incorporation, its Bylaws, any agreement, any vote of
stockholders or disinterested Directors, the Delaware General
Corporation Law or otherwise, both as to action in
Indemnitee's official capacity and as to action in another
capacity while holding such office. The indemnification
provided under this Agreement shall continue as to Indemnitee
for any action taken or not taken while serving in an
indemnified capacity even though he may have ceased to serve
in such capacity at the time of any action, suit or other
covered proceeding.
5. Partial Indemnification. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the expenses, judgments, fines or penalties actually or reasonably
incurred by him in the investigation, defense, appeal or settlement of any civil
or criminal action, suit or proceeding, but not, however, for the total amount
thereof, the Company shall nevertheless indemnify Indemnitee for the portion of
such expenses, judgments, fines or penalties to which Indemnitee is entitled.
6. Mutual Acknowledgement. Both the Company and Indemnitee acknowledge
that in certain instances, Federal law or applicable public policy may prohibit
the Company from indemnifying its directors, officers, employees and/or agents
under this Agreement or otherwise. Indemnitee understands and acknowledges that
the Company has undertaken or may be required in the future to undertake with
the Securities and Exchange Commission to submit the question of indemnification
to a court in certain circumstances for a determination of the Company's right
under public policy to indemnify Indemnitee.
7. Liability Insurance. If the Company does not maintain a policy or
policies of officers and directors liability insurance with a reputable
insurance company(ies), upon written request of Indemnities, the Company shall,
from time to time, make the good faith determination whether or not it is
practicable for the Company to obtain and maintain such a policy or policies of
insurance. Officers and directors liability insurance would cover, among other
things, coverage for losses from wrongful acts and/or to ensure the Company's
performance of its obligations under this Agreement. The Company shall not be
obligated to make such determination more than once in any 12-month period based
on written requests from Indemnities and any other persons with similar rights.
Among other considerations, the Company will weigh the costs of obtaining such
insurance coverage against the protection afforded by such coverage. In all such
policies of liability insurance, Indemnitee shall be named as an insured in such
a manner as to provide Indemnitee the same rights and benefits as are accorded
to the most favorably insured of the Company's directors, if Indemnitee is a
director;
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<PAGE>
or of the Company's officers, if Indemnitee is not a director of the Company but
is an officer; or of the Company's employees, if Indemnitee is not a director or
officer but is an employee; or of the Company's agents, if Indemnitee is not a
director, officer or employee but is an agent. Notwithstanding the foregoing,
the Company shall have no obligation to obtain or maintain such insurance if the
Company determines in good faith that such insurance is not reasonably
available, if the premium costs for such insurance are disproportionate to the
amount of coverage provided, if the coverage provided by such insurance is
limited by exclusions so as to provide an insufficient benefit, or if Indemnitee
is covered by similar insurance maintained by a subsidiary or parent of the
Company.
8. Severability. Nothing in this Agreement is intended to require or
shall be construed as requiring the Company to do or fail to do any act in
violation of applicable law. The Company's inability, pursuant to court order,
to perform its obligations under this Agreement shall not constitute a breach of
this Agreement. The provisions of this Agreement shall be severable as provided
in this Section 8. If this Agreement or any portion hereof shall be invalidated
on any ground by any court of competent jurisdiction, then the Company shall
nevertheless indemnify Indemnitee to the full extent permitted by any applicable
portion of this Agreement that shall not have been invalidated, and the balance
of this Agreement not so invalidated shall be enforceable in accordance with its
terms.
9. Exceptions. Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:
(a) Claims Initiated by Indemnitee. To indemnify or advance expenses
to Indemnitee with respect to proceedings or claims initiated or
brought voluntarily by Indemnitee and not by way defense, except
with respect to proceedings brought to establish or enforce a
right to indemnification under this Agreement or any other statute
or otherwise as required under Section 145 of the Delaware General
Corporation Law, but such indemnification or advancement of
expenses may be provided by the Company in specific cases if the
Board of Directors has approved the initiation or bringing of such
suit;
(b) Lack of Good Faith. To indemnify Indemnitee for any expenses
incurred by the Indemnitee with respect to any proceeding
instituted by Indemnitee to enforce or interpret this Agreement,
if a court of competent jurisdiction determines that each of the
material assertions made by the Indemnitee in such proceeding was
not made in good faith or was frivolous;
(c) Insured Claims. To indemnify Indemnitee for expenses or
liabilities of any type whatsoever (including, but not limited to,
judgments, fines, ERISA excise taxes or penalties, and amounts
paid in settlement) which have been paid directly to Indemnitee by
an insurance carrier under a policy of officers' and directors'
liability insurance or other policy of insurance maintained by the
Company;
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<PAGE>
(d) Claims Under Section 16(b). To indemnify Indemnitee for expenses
and the payment of profits arising from the purchase and sale by
Indemnitee of securities in violation of Section 16(b) of the
Securities Exchange Act of 1934, as amended, or any similar
successor statute;
(e) Unlawful Claims. To indemnify Indemnitee in any manner which is
contrary to public policy or which a court of competent
jurisdiction has finally determined to be unlawful;
(f) Failure to Settle Proceeding. To indemnify Indemnitee for
liabilities in excess of the total amount at which settlement
reasonably could have been made, or for any cost and/or expenses
incurred by Indemnitee following the time such settlement
reasonably could have been effected, if Indemnitee shall have
unreasonably delayed, refused or failed to enter into a settlement
of any action, suit or proceeding (or investigation or appeal
thereof) recommended in good faith, in writing, by the Company; or
(g) Breach of Employment Agreement. To indemnify Indemnitee for any
breach by Indemnitee of any employment agreement between
Indemnitee and the Company or any of its subsidiaries.
10. Construction of Certain Phrases. For purposes of this Agreement,
references to the "Company" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, employees and/or agents, so that if Indemnitee is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, Indemnitee shall stand in the same position under the
provisions of this Agreement with respect to the resulting or surviving
corporation as Indemnitee would have with respect to such constituent
corporation if its separate existence had continued. For purposes of this
Agreement, references to "other enterprises" shall include employee benefit
plans; references to "fines" shall include any excise taxes assessed on
Indemnitee with respect to an employee benefit plan; and references to "serving
at the request of the Company" shall include any service as a director, officer,
employee or agent of the Company or any subsidiary of the Company which imposes
duties on, or involves services by, such director, officer, employee or agent
with respect to an employee benefit plan, its participants, or beneficiaries;
and if Indemnitee acted in good faith and in a manner Indemnitee reasonably
believed to be in the interest of the participants and beneficiaries of an
employee benefit plan, Indemnitee shall be deemed to have acted in a manner "not
opposed to the best interest of the Company" as referred to in this Agreement.
11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.
12. Successors and Assigns. This Agreement shall be binding upon the
Company and its successors and assigns, and shall inure to the benefit of
Indemnitee and Indemnitee's estate, heirs, legal representatives and assigns.
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<PAGE>
13. Attorneys' Fees. In the event that any action is instituted by
Indemnitee under this Agreement to enforce or interpret any of the terms hereof,
Indemnitee shall be entitled to be paid all court costs and expenses, including
reasonable attorneys' fees, incurred by Indemnitee with respect to such action,
unless as a part of such action, the court of competent jurisdiction determines
that each of the material assertions made by Indemnitee as a basis for such
action were not made in good faith or were frivolous. In the event of an action
instituted by or in the name of the Company under this Agreement to enforce or
interpret any of the terms of this Agreement, Indemnitee shall be entitled to be
paid all court costs and expenses, including attorneys' fees, incurred by
Indemnitee in defense of such action (including with respect to Indemnitee's
counterclaims and cross-claims made in such action), unless as a part of such
action the court determines that each of Indemnitee's material defenses to such
action were made in bad faith or were frivolous.
14. Notice. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand and receipted for by the party addressee, on the date of such
receipt, or (ii) if mailed by domestic certified or registered mail with postage
prepaid, on the third business day after the date postmarked. Addresses for
notice to either party are as shown on the signature page of this Agreement, or
as subsequently modified by written notice.
[15. Consent to Jurisdiction. The Company and Indemnitee each hereby
irrevocably consent to the jurisdiction of the courts of the State of __________
for all purposes in connection with any action or proceeding which arises out of
or relates to this Agreement and agree that any action instituted under this
Agreement shall be brought only in the state courts of the State of __________,
or in Federal courts located in such State.]
16. Choice of Law. This Agreement shall be governed by and its
provisions construed in accordance with the laws of the State of Delaware.
[17. California Law. To the extent that the Company is subject to the
provisions of Section 317 of the California General Corporation Law pursuant to
Section 2115 of the California General Corporation Law, nothing in this
Agreement shall be deemed to require the Company to take any action which would
cause it to be in violation of Section 317 of the California General Corporation
Law.]
[Remainder of Page Intentionally Left Blank]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
IgX CORP., a Delaware corporation, as the Company
By: _____________________________________________
Name: ___________________________________________
Title: __________________________________________
Notice Address: ________________________________
________________________________
________________________________
AGREED TO AND ACCEPTED:
INDEMNITEE:
________________________________
Notice Address: ________________
________________
________________
[Signature Page to Indemnification Agreement]
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EXECUTIVE EMPLOYMENT AGREEMENT
This EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement"), effective as of
June 1, 1997, by and between IgX Limited, a company incorporated under the laws
of Ireland, (the "Company"), and Carroll W. Allen, an individual (the
"Executive"), with reference to the following facts;
A. Company is engaged in the business of developing and marketing
IGX-CPL3 and other drug products.
B. Company desires to retain the services of Executive, and Executive
is willing to provide such services to Company; and
C. Company and Executive desire to enter into an agreement to provide
for Executive's employment by the Company upon the terms and conditions set
forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing facts and mutual
agreements set forth below, the parties, intending to be legally bound, agree as
follows;
1. Employment. The Company hereby agrees to employ Executive, and
Executive hereby accepts such employment and agrees to perform Executive's
duties and responsibilities in accordance with the terms and conditions
hereinafter set forth.
1.1 Duties and Responsibilities. Executive shall serve as Executive
Vice President, Business Development and Marketing. During the Employment Term,
Executive shall perform all duties and accept all responsibilities incident to
such positions and other appropriate duties as may be assigned to Executive by
the Company's Board of Directors (the "Board") from time to time.
1.2 Employment Term. The term of Executive's employment under this
Agreement shall commence as of the date hereof (the "Effective Date") and shall
continue for two (2) years until May 31, 1999, unless earlier terminated in
accordance with Section 4 hereof. The term of Executive's employment may be
extended by mutual written agreement entered into at least sixty (60) days prior
to the expiration of the then-effective "Employment Term" as that term is
defined below. The period commencing as of the Effective Date and ending two (2)
years
<PAGE>
thereafter, or such later date to which the term of Executive's employment under
the Agreement shall have been extended by mutual written Agreement, is referred
to herein as the "Employment Term."
1.3 Extent of Service. During the Employment Term, Executive agrees
to use Executive's best efforts to carry out the duties and responsibilities
under Section 1.1 hereof and to devote substantially all Executive's business
time, attention and energy thereto. Executive further agrees not to work either
on a part-time or independent contracting basis for any other business or
enterprise during the Employment Term without the prior written consent of the
Board, which consent shall not be unreasonably withheld.
1.4 Base Salary. The Company shall pay Executive a base salary (the
"Base Salary") at the annual rate of $160,000 (U.S. Dollars), payable at such
times as the Company customarily pays its other senior level executives (but in
any event no less often than monthly). The Base Salary shall be subject to all
state, federal, and local payroll tax withholding and any other withholdings
required by law. The Company will make an interest-free loan of $40,000 to
Executive, which is considered earned by Executive at the rate of $10,000 per
year. Therefore, after year one, principal amount of loan outstanding is
$30,000; after year two, principal amount outstanding $20,000; after year three
principal amount outstanding $10,000 with zero principal balance after four
years of employement. If Executive does not continue as an employee for four
years, outstanding principal balance is payable to Company at the time Executive
terminates employment.
1.5 Incentive Compensation. Executive shall be eligible to earn a
cash bonus of up to fifty percent (50%) of base salary, or $80,000 (U.S.
Dollars), for each twelve-month period during the Employment Term based on
meeting performance objectives and bonus criteria to be mutually identified by
Executive and the Board. Executive's bonus shall be evaluated and payable based
upon accomplishing the agreed-upon objectives in six-month intervals throughout
the Employment Term commencing on June 1, 1997 and each six-month period
thereafter. Executive's bonus, if any, shall be subject to all applicable tax
and payroll withholdings. If Executive earns the full bonus, Executive's total
compensation will be $240,000 (U.S. Dollars) per annum.
1.6 Other Benefits. During the Employment Term, Executive and his
spouse and children shall be entitled to participate in all employee benefit
plans and programs made available to the Company's senior level executives as a
group or to its employees generally, as such plans or programs may be in effect
from time to time, which presently include medical, dental and hospitalization.
Executive shall also be entitled to use one (1) Company vehicle, an Oldsmobile
Aurora. Company shall reimburse Executive for all business-related operating
expenses for such vehicle, including maintenance and fuel expenses. Executive
shall be provided office space and staff assistance appropriate for Executive's
position and adequate for the performance of his duties.
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1.7 The Company will seek disability insurance for Executive.
1.8 The Company will lease an Oldsmobile Aurora for Executive use.
1.9 It is contemplated that Executive will relocate to Nashville,
Tennessee, USA, sometime in 1998. The Company will pay out-of-pocket moving
expenses plus one/half of brokerage commission incurred to sell Executive's
residence in New Jersey.
1.10 Reimbursement of Expenses; Vacation. Executive shall be
provided with reimbursement of expenses related to Executive's employment by the
Company on a basis no less favorable than that which may be authorized from time
to time by the Board, in its sole discretion, for senior level executives as a
group. Executive shall be entitled to vacation and holidays in accordance with
the Company's normal personnel policies for senior level executives.
1.11 Share Options. Executive shall be entitled to receive an option
under the Company's 1996 Stock Option Plan to purchase up to 125,000 of the
Company's Ordinary Shares at an exercise price of $5.00 (U.S.) per share (the
"Option"). The Option will be issued pursuant to the terms of that certain Share
Option Agreement in the form attached hereto as Exhibit "A" and incorporated
herein by this reference. The Option shall vest over a four (4) year period
commencing on the Effective Date and shall have a ten (10) year term. If, and
only if, the Employment Term is extended past the initial two (2) year period,
the Company agrees to consider granting to Executive additional options to
purchase up to a maximum of 100,000 of the Company's Ordinary Shares at an
exercise price of $5.00 (U.S.) per share, which additional options shall also
vest over a four (4) year period commencing with the date of grant.
1.12 No Other Compensation. Except as expressly provided in Sections
1.4 through 1.12, Executive shall not be entitled to any other compensation or
benefits.
2. Confidential Information. Executive recognizes and acknowledges that
by reason of Executive's employment by and service to the Company before, during
and, if applicable, after the Employment Term, Executive will have access to
certain confidential and proprietary information relating to the Company's
business, which may include, but is not limited to, trade secrets, trade
"know-how," product development techniques and plans, formulas, customer lists
and addresses, funding programs, cost and pricing information, marketing and
sales techniques, strategy and programs, computer programs and software and
financial information (collectively referred to as "Confidential Information").
Executive acknowledges that such Confidential Information is a valuable and
unique asset of the Company, and Executive covenants that he will not, unless
expressly authorized in writing by the Company, at any time during the course of
Executive's employment use any Confidential Information or divulge or disclose
any Confidential Information to any person, firm or corporation except in
connection with the performance of Executive's duties for the Company and in a
manner consistent with the Company's policies regarding Confidential
Information. Executive also covenants that at any
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<PAGE>
time after the termination of such employment, directly or indirectly, he will
not use any Confidential Information or divulge or disclose any Confidential
Information to any person, firm or corporation, unless such information is in
the public domain through no fault of Executive or except when required to do so
by a court of law, by any governmental agency having supervisory authority over
the business of the Company or by any administrative or legislative body
(including a committee thereof) with apparent jurisdiction to order Executive to
divulge, disclose or make accessible such information. All written Confidential
Information (including, without limitation, in any computer or other electronic
format) which comes into Executive's possession during the course of Executive's
employment shall remain the property of the Company. Except as required in the
performance of Executive's duties for the Company, or unless expressly
authorized in writing by the Company, Executive shall not remove any written
Confidential Information from the Company's premises, except in connection with
the performance of Executive's duties for the Company and in a manner consistent
with the Company's policies regarding Confidential Information. Upon termination
of Executive's employment, the Executive agrees to return immediately to the
company all written Confidential Information (including, without limitation, in
any computer or other electronic format) in Executive's possession.
3. Non-Competition; Non-Solicitation.
3.1 Non-Compete. The Executive hereby covenants and agrees that
during the term of this Agreement, the Executive will not, without the prior
written consent of the Company, directly or indirectly, on his own behalf or in
the service or on behalf of others, whether or not for compensation, engage in
any business activity, or have any interest in any person, firm, corporation or
business, through a subsidiary or parent entity or other entity (whether as a
shareholder, agent, joint venturer, security holder, trustee, partner,
consultant, creditor lending credit or money for the purpose of establishing or
operating any such business, partner or otherwise) which is competitive with the
then existing business of Company being conducted in the Covered Area, as
defined hereinbelow. For the purpose of this Section 3.1, "Covered Area" shall
mean all geographical areas of the United States, Ireland and other foreign
jurisdictions where Company then has offices and/or sells its products directly
or indirectly through distributors and/or other sales agents. Notwithstanding
the foregoing, the Executive may own shares of companies whose securities are
publicly traded, so long as such securities do not constitute more than one
percent (1%) of the outstanding securities of any such company.
3.2 Non-Solicitation. The Executive further agrees that as long as
the Agreement remains in effect and for a period of one (1) year from its
termination, the Executive will not divert any business of the Company and/or
its affiliates or any customers or suppliers of the Company and/or the Company's
and/or its affiliates' business to any other person, entity or competitor, or
induce or attempt to induce, directly or indirectly, any person to leave his or
her employment with the Company.
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<PAGE>
4. Termination
4.1 By Company. The Company may, in its discretion and at its
option, terminate the Executive's employment with or without Cause, and without
prejudice to any other right or remedy to which the Company may be entitled at
law or in equity or under this Agreement. The Executive shall be deemed
terminated for "Cause" (i) if Executive is convicted of a felony; (ii) any
neglect or breach of duty by Executive, or any failure by executive to perform
to the reasonable satisfaction of the Board, such duties as may be delegated to
Executive from time to time; (iii) Executive otherwise materially breaches any
provision of this Agreement; or (iv) after a determination by a majority of the
Board of Directors of the Company, acting in good faith, that the Executive has
engaged in conduct not appropriate of an employee. In the event the Company
desires to terminate the Executive's employment without Cause, the Company shall
give the Executive not less than sixty (60) days' advance written notice.
4.2 By Executive's Death or Disability. This Agreement shall also be
terminated upon the Executive's death and/or a finding of permanent physical or
mental disability, such disability to be determined by in the sole discretion of
a physician selected by the Company.
4.3 Compensation on Termination. In the event the Company terminates
Executive's employment for Cause, all payments under this Agreement shall cease,
except for Base Salary to the extent already accrued. In the event of
termination by reason of Executive's death and/or permanent disability,
Executive or his executors, legal representatives or administrators, as
applicable, shall be entitled to an amount equal to Executive's Base Salary
accrued through the date of termination, plus a pro rata share of any annual
bonus to which Executive would otherwise be entitled for the year in which death
or permanent disability occurs. Upon termination of Executive without cause, if
Executive executes a written release, substantially in the form attached hereto
as Exhibit "B" (the "Release"), of any and all claims against the Company and
all related parties with respect to all matters arising out of Executive's
employment by the Company (other than Executive's entitlement under any employee
benefit plan or program sponsored by the Company in which Executive participated
and under which Executive has accrued a benefit), and the termination thereof,
Executive shall be entitled to receive, in equal monthly installments, as
liquidated damages for the failure of the Company to continue to employ
Executive, an amount equal to the amount of Executive's Base Salary for the
remainder of the initial two (2) year Employment Term, provided that Executive
remains in compliance with the provisions of Section 3 hereof.
4.4 Voluntary Termination. Executive may voluntarily terminate the
Employment Term upon sixty (60) days' prior written notice for any reason;
provided, however, that no further payments shall be due under this Agreement in
that event except that Executive shall be entitled to any benefits due under any
compensation or benefit plan provided by the Company for executives or otherwise
outside of this Agreement.
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5. Controversies. Any controversy or claim arising out of or relating
to the Executive's employment and this Agreement, the breach hereof, or the
coverage of this arbitration provision, shall be settled by arbitration in
California, which arbitration shall be in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, as such rules shall
be in effect on the date of delivery of demand for arbitration. The arbitration
of such issues, including the determination of the amount of any damages
suffered by any party, shall be to the exclusion of any court of law. The
decision of the arbitrators or a majority of them shall be final and binding
upon the parties and the personal representatives, heirs or devises of the
Executive, if applicable. There shall be three arbitrators, one (1) to be chosen
directly by the Executive, one (1) to be chosen by the Company and one (1) to be
chosen by the two (2) arbitrators so chosen. The Company and the Executive shall
each pay the fees of the arbitrators selected by it or him and of its or his own
attorneys, the expense of witnesses and all other expenses connected with the
presentation of such party's case, except that the arbitrators may impose all
such fees, costs and expenses otherwise payable by the prevailing party on the
losing party if it determines that the losing party's position was taken without
good faith or solely for the purpose of delay. The costs of the arbitration
including the cost of the record of transcripts thereof, if any, administrative
fees, and all other fees and costs, including those of the third arbitrator,
shall be borne one-half by the Executive and one-half by the Company, except
that the arbitrators may impose all such fees, costs and expenses otherwise
payable by the prevailing party on the losing party if it determines that the
losing party's position was taken without good faith or solely for the purpose
of delay.
6. General Provisions.
6.1 Modification; No Waiver. No modification, amendment or discharge
of this Agreement shall be valid unless the same is in writing and signed by all
parties hereto. Failure of any party at any time to enforce any provisions of
this Agreement or any rights or to exercise any election shall in no way be
considered to be a waiver of such provisions, rights or elections and shall in
no way affect the validity of this Agreement. The exercise by any party of any
of its rights or any of its elections under this Agreement shall not preclude or
prejudice such party from exercising the same or any other right it may have
under this Agreement irrespective of any previous action taken.
6.2 Notices. All notices and other communications required or
permitted hereunder or necessary or convenient in connection herewith shall be
in writing and shall be deemed to have been given when hand delivered or mailed
by registered or certified mail as follows (provided that notice of change of
address shall be deemed given only when received):
If to the Company, to: Albert J. Henry, Chairman
IgX Ltd.
Granard
County Longford
Ireland
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<PAGE>
If to Executive, to:
--------------------------------------
--------------------------------------
--------------------------------------
--------------------------------------
or to such other names or addresses as the Company or Executive, as the case may
be, shall designate by notice to each other person entitled to receive notices
in the manner specified in this Section.
6.3 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California.
6.4 Further Assurances. Each party to this Agreement shall execute
all instruments and documents and take all actions as may be reasonably required
to effectuate this Agreement.
6.5 Severability. Should any one or more of the provisions of this
Agreement or of any agreement entered into pursuant to this Agreement be
determined to be illegal or unenforceable, then such illegal or unenforceable
provision shall be modified by the proper court or arbitrator to the extent
necessary and possible to make such provision enforceable, and such modified
provision and all other provisions of this Agreement and of each other agreement
entered into pursuant to this Agreement shall be given effect separately from
the provision or portion thereof determined to be illegal or unenforceable and
shall not be affected thereby.
6.6 Successors and Assigns. Executive may not assign this Agreement
without the prior written consent of the Company. The Company may assign its
rights without the written consent of the Executive, so long as the Company or
its assignee complies with the other material terms of this Agreement. The
rights and obligations of the Company under this Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of the
Company, and the Executive's rights under this Agreement shall inure to the
benefit of and be binding upon his heirs and executors. The Company's
subsidiaries and controlled affiliates shall be express third party
beneficiaries of this Agreement.
6.7 Entire Agreement. This Agreement supersedes all prior agreements
and understandings between the parties, oral or written. No modification,
termination or attempted waiver shall be valid unless in writing, signed by the
party against whom such modification, termination or waiver is sought to be
enforced.
6.8 Choice of Law. This Agreement shall be governed by and
interpreted and constructed in accordance with the internal laws of Ireland,
without regard to principles of conflict of laws, and shall be binding upon the
parties hereto in the United States and worldwide.
-7-
<PAGE>
6.9 Counterparts: Facsimile. This Agreement may be executed in one
or more counterparts, each of which shall for all purposes be deemed to be an
original, and all of which taken together shall constitute one and the same
instrument. This Agreement may be executed by facsimile with original signatures
to follow.
IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
have executed this Agreement as of the date first written above.
IgX LIMITED, a company incorporated under the
laws of Ireland
---------------------------------------------
By:
------------------------------------------
Title:
---------------------------------------
---------------------------------------------
Carroll W. Allen
[SIGNATURE PAGE TO EXECUTIVE EMPLOYMENT AGREEMENT]
-8-
<PAGE>
EXHIBIT "A"
SHARE OPTION AGREEMENT
A-1
<PAGE>
EXHIBIT "B"
IgX LIMITED
RELEASE AGREEMENT
[DATE]
Mr. Carroll W. Allen
[ADDRESS]
Dear Mr. Allen:
This Release Agreement sets forth the offer by IgX Limited ("the
Company") of special severance benefits in exchange for the consideration
described below. The terms of our offer, which will constitute an agreement upon
your acceptance pursuant to the provisions hereof, are as follows:
1. Your employment [will terminate/had terminated] as of [date] (the
"Severance Date").
2. You acknowledge that prior to the Severance Date, the Company had
no obligation to provide you with the severance benefits set
forth in Section 5.3 of your Employment Agreement dated as of
June 1, 1997. However, as consideration for your agreement to the
release and covenant not to sue and the other conditions set
forth in this letter, the Company will pay you the severance in
accordance with the terms of the Employment Agreement.
3. You acknowledge receipt of all vacation earned by you up to and
including the Severance Date. Your accrual of vacation ceased
effective on the Severance Date.
4. You represent and warrant that by the close of business on the
date you execute this Release Agreement, you will return to the
Company all property owned by the Company, including all credit
cards furnished to you by the Company and all originals and
copies of the following, whether in your possession or previously
removed by you from the Company's premises and still existing,
and whether recorded on paper, computer disk, other
computer-readable form or any other medium: all lists,
correspondence, books, letters, records, financial data and other
B-1
<PAGE>
materials and writings owned by the Company or used by it in
connection with the conduct of its business.
You will respond to inquiries by the Company about any matters
concerning the Company or its affairs that occurred or arose
during the period of your employment by the Company; and you will
cooperate with the Company in investigating, prosecuting and
defending any charges, claims, demands, liabilities, causes of
action, lawsuits and other proceedings by, against or involving
the Company relating to any period during which you were employed
by the Company or relating to matters of which you have knowledge
or should have knowledge by virtue of your employment by the
Company, all for no additional compensation; provided that
complying with this paragraph does not require you to travel more
than 100 miles from your residence or office at the time of
compliance (whichever is more distant), does not require you to
devote more than eight (8) consecutive hours or twenty-four (24)
hours in a calendar month, and does not cause your employment at
the time of compliance to be placed in jeopardy. If compliance
with this paragraph requires you to travel outside the area
described in the preceding sentence or devote more time than set
forth in the preceding sentence, the Company will compensate you
for all such time and travel at an hourly rate of $100. The
Company will reimburse you for all reasonable expenses you incur
in complying with this paragraph in accordance with the Company's
employee business expense approval procedures then in effect.
5. You represent and warrant that you have disclosed to the Company
all contracts, understandings, agreements, proposals, offers and
bids to which the Company may be a party or by which it may be
bound or affected or which have been made for the benefit of the
Company or which may have obligated the Company in any way,
whether oral or written, including, without limitation,
employment agreements, of which you have knowledge.
6. As consideration for the payments and agreements described above,
you hereby release, agree not to sue, and agree not to bring suit
with or on behalf of another against, the Company and its
predecessor, subsidiary, affiliate and successor corporations and
business entities, past, present and future, and their directors,
officers, shareholders, employees, executives and agents, past,
present and future, and their heirs, executors, administrators
and assigns, with respect to any and all claims, demands,
liabilities, actions, causes of action, suits, debts, charges,
complaints, obligations, promises, agreements, controversies,
damages and expenses (including attorneys' fees and costs
actually incurred) arising out of facts which occurred prior to
the execution of this Release Agreement, including but not
limited to any claims arising from or in connection with your
employment
B-2
<PAGE>
relationship with the Company or the severance of that
relationship and including claims arising from any alleged
violation of any federal, state or local statutes, ordinances or
common law (including but not limited to Title VII of the Civil
Rights Act of 1964, as amended, the Age Discrimination in
Employment Act, the Americans with Disabilities Act, the
California Fair Employment and Housing Act, and the California
Labor Code). This release and waiver includes, among others,
claims based on age discrimination in violation of the federal
Age Discrimination in Employment Act ("ADEA") and applicable
state law. Such laws prohibit an employer from taking adverse
action against an employee, including terminating employment, on
the basis of the employee's age of 40 or more. By agreeing to the
release and waiver in this paragraph, you are agreeing to forego
any claim and agreeing not to sue on the ground, among others,
that the termination of your employment by the Company violated
the ADEA. In the event you, or any person, firm or entity on your
behalf, files, sues or causes or permits to be filed any action
seeking damages, injunctive, declaratory, monetary or other
relief, despite your agreement not to do so thereunder, you agree
to pay to the Company, regardless of the outcome of such action,
as liquidated damages: (i) all of the Company's legal fees and
expenses in defending such action and (ii) one-half (1/2) of all
severance payments made to you pursuant to Section 5.4(b) of your
Employment Agreement.
7. For the purposes of implementing a full and complete release and
discharge of claims, you expressly acknowledge that this Release
Agreement is intended to include in its effect, without
limitation, all the claims described in the preceding paragraphs,
whether known or unknown, suspected or unsuspected, and that this
Agreement contemplates the extinction of all such claims,
including claims for attorneys' fees. You expressly waive any
right to assert after the execution of this Agreement that any
such claim, demand, obligation or cause of action has, through
ignorance or oversight, been omitted from the scope of the
Agreement. You expressly waive any and all rights and benefits
conferred upon you by the provisions of Section 1542 of the Civil
Code of California which provides as follows:
A general release does not extend to claims which the creditor
does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have materially
affected his settlement with the debtor.
8. You will not disclose to any person, including, but not limited
to, any former, current or prospective employee of the Company,
its affiliates and its subsidiaries, the fact that this offer has
been made or the existence or terms of the Agreement;
B-3
<PAGE>
provided, however, that you may discuss and disclose this offer
to your attorney, your spouse and your financial adviser; and you
may disclose such aspects of the Agreement as may be required to
be disclosed by court order, by the proper inquiry of a State or
Federal governmental agency or by a subpoena to testify issued by
a court of competent jurisdiction, in any of which events, you
agree to respond truthfully to all questions asked of you. If you
breach this covenant, you agree to repay to the Company all
monies paid to you pursuant to Paragraph 2 of this Agreement and
any and all attorneys' fees incurred by the Company to collect
such payment.
9. Neither the fact that this offer was made or Agreement entered,
nor any provision of this Agreement, shall be construed as an
admission of any wrongdoing of any kind by the Company.
10. Any notice required or permitted to be given under this Agreement
shall be in writing and given by hand delivery or by certified or
registered United States mail, postage prepaid, and shall be
effective on the date delivered by hand or mailed, in the case of
the Company, to its usual business address from time to time and,
in your case, to your most recent home address as shown on the
records of the Company.
11. If any provision of this Agreement is declared or determined by
any court to be illegal or invalid, validity of the remaining
parts, terms or provisions shall not be affected thereby and said
illegal or invalid part, term or provision shall be deemed not to
be a part of this Agreement.
12. This Agreement sets forth the entire agreement between the
parties hereto and fully supersedes any and all prior agreements
or understandings between the parties hereto pertaining to the
subject matter hereof.
13.
You may accept this offer by signing it below no later than
_________ (__) days from the day you receive it and returning the
signed and dated acceptance for my receipt no later than
____________ (__) days from the date that you receive this offer.
Your acceptance is to be sent in an envelope marked "CONFIDENTIAL
- TO BE OPENED BY ADDRESSEE ONLY" and addressed to me at the
above address.
14. You may revoke your acceptance of this offer within _______ (__)
days after the date on which you signed this letter to accept the
offer. To be effective, your revocation must be in writing,
signed and dated no later than _____ (__) days from the date on
which you signed and dated your acceptance of this
B-4
<PAGE>
offer; and the written revocation must be received by me in an
envelope addressed in the manner described in the last paragraph
above no later than _____ (__) days after the date on which you
signed the revocation.
You should consult with an attorney before entering into this
Agreement.
Sincerely,
IgX LIMITED
----------------------------
By:
-------------------------
Title:
----------------------
The undersigned hereby agrees to the terms of this Release and such
release shall be binding upon the undersigned.
----------------------------
Carroll W. Allen
Date:
-----------------------
<PAGE>
[IGX LOGO]
EXECUTIVE EMPLOYMENT AGREEMENT
This EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement") is entered into
effective as of December 1, 1996 by and between IgX Limited, a company
incorporated under the laws of Ireland and having its registered office at 41-45
Saint Stephen's Green, Dublin 1 (the "Company"), and Robert L. Renfroe an
individual residing at 8730 Via del Valle, Scottsdale, Arizona (the
"Executive").
WHEREAS, The Company is about to commence a phase 3 clinical trial for
IGX-CPL3 in England and elsewhere in Europe (the "Proposed Clinical");
WHEREAS, the Company wishes to employ the Executive as its Vice
President of Operations and Managing Director, Ireland, for a period of
approximately one (1) year (the "Pilot Plant Period") on the terms and
conditions set forth herein;
WHEREAS, if the Company's Proposed Clinical is successful and a
Marketing Authorization Application (MAA) is approved by the Irish Medicines
Board (IMB), the Company wishes to retain the services of the Executive for an
additional period of approximately three (3) years beyond completion of Proposed
Clinical (the "Manufacturing Plant Period") on terms and conditions to be agreed
upon by the Company and the Executive;
WHEREAS, the Executive desires to assume such responsibilities on said
terms and conditions; and
WHEREAS, the Company wishes to secure the Executive's agreement not to
compete with the Company during the term of the Agreement and for a period of
three (3) years after the termination of the Agreement.
NOW, THEREFORE, in consideration of the mutual premises, the respective
covenants and commitments of the parties set forth herein and for other good and
valuable consideration, the receipt and legal sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound, hereby agree as
follows:
<PAGE>
IgX Limited
Executive Employment Agreement
1. Employment. The Company hereby agrees to employ the Executive as its
Vice President of Operations and Managing Director, Ireland, as set forth in
Section 2 below, and the Executive agrees to accept such employment upon the
terms and conditions set forth herein. The Executive shall have such duties and
responsibilities as mutually agreed upon by the Executive and the Board of
Directors of the Company. The Executive agrees to devote substantially all of
his productive time, energy and abilities to the proper and efficient discharge
of his duties. Initially, the Executive shall report to the Chairman of the
Board of the Company, subject to change at the discretion of the Board of
Directors.
2. Term. Subject to the provisions for termination in Section 5 below,
the Executive shall be employed by the Company as Vice President of Operations
of the Company for a period of approximately one (1) year, beginning on December
1, 1996, and continuing until December 31, 1997 (the "Initial Term"). Upon
completion of the Proposed Clinical and if the Proposed Clinical is successful,
the Company shall file an amended Marketing Authorization Application (MAA) with
the Irish Medicines Board (IMB), and if such MAA is approved, the Company and
the Executive shall enter into an amendment to this Agreement to provide for a
term of employment for the Manufacturing Plant Period (approximately three (3)
years), the terms and conditions of such extended term to be agreed upon by the
parties hereto.
3. Compensation. For all services the Executive may render to the
Company and its subsidiaries during the Initial Term and in the event this
Agreement is extended by the Company for the duration of the Manufacturing Plant
Period as provided in Section 2 above (the "Additional Term"), the Executive
will be compensated as follows:
3.1 Annual Salary. The Executive shall receive an annual base salary
of One Hundred and Ten Thousand Dollars ($110,000), payable every two (2) weeks
in equal installments (less all required and authorized withholdings and
deductions). The annual salary shall be subject to annual review by a
Compensation Committee of the Board of Directors at the same time as the
salaries of other employees of the Company are reviewed, and may be increased
(but not decreased) taking into consideration the amount, extent and performance
of the Executive's services, the financial performance and condition of the
Company and such other factors deemed relevant by such Committee.
3.2 Expenses. The Executive shall be entitled to reimbursement for
all reasonable actual out-of-pocket expenses necessarily incurred by the
Executive in the performance of his duties set forth herein in accordance with
the established
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<PAGE>
IgX Limited
Executive Employment Agreement
policies of the Company for employees of the Company, provided the Executive
itemizes such expenses and provides receipts evidencing such expenses to Company
in accordance with the Company's then existing travel policy. The Executive
shall be entitled to an automobile allowance of $750 per month. The Company
shall pay all reasonable operating, maintenance and insurance expenses for such
automobile.
3.3 Relocation and Living Expenses. The Company shall pay all of the
Executive's reasonable expenses and incidental costs associated with his
relocation from Scottsdale, Arizona to Ireland up to a maximum of $10,000. The
Company shall pay all of the Executive's reasonable expenses and incidental
costs associated with his relocation from Ireland to Scottsdale, Arizona up to a
maximum of $10,000 The Executive hereby acknowledges and agrees that all
relocation expenses must be approved by the Executive's immediate supervisor.
The Company shall also pay for the Executive's reasonable living expenses in
Ireland up to a maximum of $1,000 per month.
3.4 Airplane Fares. The Company shall furnish the Executive with:
(i) round trip airplane tickets for two (2) people from Ireland to San Diego,
California once a year; (ii) round trip airplane tickets for two (2) people from
Ireland to an appropriate location for bereavement leave (in the event of the
death of a son, daughter, mother or father); and (iii) round trip airplane
tickets for two (2) people from Ireland to an appropriate location for emergency
leave (if such leave is approved by the Executive's immediate supervisor).
3.5 Other Benefits. In addition to the other provisions set forth
herein, the Executive and his spouse, Christina, shall receive the same standard
employment benefits as other executive employees of the Company shall receive
from time to time, including, but not limited to, health and dental insurance,
life insurance, financial counsel (income shelter), all foreign and domestic tax
administration and preparation, annual vacation, sick leave, pension and profit
sharing plans, bonus plans and medical expense reimbursement plans, if any, as
may be approved by the Board of Directors from time to time. The Executive shall
be provided office space and staff assistance appropriate for the Executive's
position and adequate for the performance of his duties.
4. Confidential Information: Non-Compete
4.1 Confidential Information. The Executive acknowledges that his
employment has and will bring him into close contact with many confidential
affairs of the Company, including matters of a technical nature, such as "know
how," formulae, secret processes or machines, inventories and research projects
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<PAGE>
IgX Limited
Executive Employment Agreement
and matters of a business nature, such as information about costs, profits,
markets, sales, employees, lists of customers, other information of a similar
nature to the extent not available to the public, plans for future developments
and any other information that constitutes a "trade secret" of the Company under
the Uniform Trade Secrets Act (collectively, the "Confidential Information").
The Executive agrees to keep secret and not to use for purposes unrelated to the
Company all Confidential Information of the Company, including information
received in confidence by the Company from others, and agrees not to disclose
such Confidential Information to anyone outside the Company except as required
in the course of his duties, either during or after his employment with the
Company. The Executive further agrees to deliver promptly to the Company on
termination of his employment with the Company, or at any time it may so
request, all memoranda, notes, records, manuals, drawings, blueprints and any
other documents of a confidential nature belonging to the Company, including all
copies of such materials, which the Executive may then possess or have under his
control. The Company and the Executive each acknowledges and agrees that the
Confidential Information shall not include knowledge brought to the Company by
the Executive as of the Effective Date. The Executive agrees to be bound by the
terms of that certain Confidentiality and Non-Disclosure Agreement, of April 26,
1994, attached hereto as Exhibit "A" and incorporated herein by this reference
(the "Confidentiality Agreement"). All terms herein shall be read consistently
with the Confidentiality Agreement.
4.2 Non-Compete. The Executive hereby covenants and agrees that the
Executive will not, without the prior written consent of the Company, directly
or indirectly, whether individually or through any entity controlled by the
Executive during the term of this Agreement and for a period of three (3) years
from the termination of this Agreement, directly or indirectly, on his own
behalf or in the service or on behalf of others, whether or not for
compensation, engage in any business activity, or have any interest in any
person, firm, corporation or business, through a subsidiary or parent entity or
other entity (whether as a shareholder, agent, joint venturer, security holder,
trustee, partner, consultant, creditor lending credit or money for the purpose
of establishing or operating any such business, partner or otherwise) which is
competitive with the then existing business of Company being conducted in the
Covered Area, as defined hereinbelow. For the purpose of this Section 4.2,
"Covered Area" shall mean all geographical areas of the United States and
foreign jurisdictions where Company then has offices and/or sells its products
directly or indirectly through distributors and/or other sales agents.
Notwithstanding the foregoing, the Executive may own shares of companies whose
securities are publicly traded, so long as such
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<PAGE>
IgX Limited
Executive Employment Agreement
securities do not constitute more than one percent (1%) of the outstanding
securities of any such company.
4.3 Non-Solicitation. The Executive further agrees that as long as
the Agreement remains in effect and for a period of three (3) years from its
termination, the Executive will not divert any business of the Company and/or
its affiliates or any customers or suppliers of the Company and/or the Company's
and/or its affiliates' business to any other person, entity or competitor, or
induce or attempt to induce, directly or indirectly, any person to leave his or
her employment with the Company.
4.4 Remedies. The Executive acknowledges and agrees that his
obligations provided herein are necessary and reasonable in order to protect the
Company and its affiliates and their respective business and the Executive
expressly agrees that monetary damages would be inadequate to compensate the
Company and/or its affiliates for any breach by the Executive of his covenants
and agreements set forth herein. Accordingly, the Executive agrees and
acknowledges that any such violation or threatened violation of this Section 4
will cause irreparable injury to the Company and that, in addition to any other
remedies that may be available, in law, in equity or otherwise, the Company and
its affiliates shall be entitled to obtain injunctive relief against the
threatened breach of this Section 4 or the continuation of any such breach by
the Executive without the necessity of proving actual damages.
5. Termination.
5.1 By Company. The Company may, in its discretion and at its
option, terminate the Executive's employment with or without Cause, and without
prejudice to any other right or remedy to which the Company may be entitled at
law or in equity or under this Agreement. The Executive shall be deemed
terminated for "Cause" after a determination by a majority of the Board of
Directors of the Company, acting in good faith, that the Executive has engaged
in conduct not appropriate of an employee. In the event the Company desires to
terminate the Executive's employment without Cause, the Company shall give the
Executive not less than thirty (30) days written notice of its intention to do
so.
5.2 By Executive's Death or Disability. This Agreement shall also be
terminated upon the Executive's death and/or a finding of permanent physical or
mental disability, such disability to be determined by in the sole discretion of
a physician selected by the Company.
5.3 Salary and Benefits. In the event the Proposed Clinical is
terminated by the Company during the Pilot Plant Period, the Executive shall be
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IgX Limited
Executive Employment Agreement
entitled to receive a severance payment equal to twelve (12) months of his
annual salary, or One Hundred Ten Thousand Dollars ($110,000), plus all
applicable benefits. In the event the Proposed Clinical is terminated by the
Company during the Manufacturing Plant Period, the Executive shall be entitled
to receive a severance payment equal to one (1) year of his annual salary, or
One Hundred and Ten Thousand Dollars ($110,000), plus all applicable benefits.
In the event the Executive's employment with the Company is terminated for any
other reason prior to the expiration of the Initial Term and/or any Additional
Term, all compensation and other benefits shall cease of the date of such
termination of employment.
6. Share Option. Concurrently with the contract date, the Company shall
grant to the Executive an option, under the Company's 1996 Share Option Scheme
(the "Option Scheme"), to purchase up to 83,696 of the Company's Ordinary Shares
(the "Option") at an exercise price of one cent (US) per share pursuant to the
terms of that certain Share Option Agreement substantially in the form attached
hereto as Exhibit "B" and incorporated herein by this reference. The Option
shall vest over a four (4) year period commencing on the contract date and shall
continue to vest during any applicable severance period referred to in Section
5.3 above.
7. Controversies. Any controversy or claim arising out of or relating
to the Executive's employment and this Agreement, the breach hereof, or the
coverage of this arbitration provision, shall be settled by arbitration in
Delaware which arbitration shall be in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, as such rules shall
be in effect on the date of delivery of demand for arbitration. The arbitration
of such issues, including the determination of the amount of any damages
suffered by any party, shall be to the exclusion of any court of law. The
decision or the arbitrators or a majority of them shall be final and binding
upon the parties and the personal representatives, heirs or devises of the
Executive, if applicable. There shall be three arbitrators, one (1) to be chosen
directly by the Executive, one (1) to be chosen by the Company and one (1) to be
chosen by the two (2) arbitrators so chosen. The Company and the Executive shall
each pay the fees of the arbitrators selected by it or him and of its or his own
attorneys, the expense of witnesses and all other expenses connected with the
presentation of such party's case, except that the arbitrators may impose all
such fees, costs and expenses otherwise payable by the prevailing party on the
losing patty if it determines that the losing party's position was taken without
good faith or solely for the purpose of delay. The costs of the Arbitration
including the cost of the record of transcripts thereof, if any, administrative
fees,
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IgX Limited
Executive Employment Agreement
and all other fees and costs, including those of the third arbitrator, shall be
borne one-half by the Executive and one-half by the Company, except that the
arbitrators may impose all such fees, costs and expenses otherwise payable by
the prevailing party on the losing party if it determines that the losing
party's position was taken without good faith or solely for the purpose of
delay.
8. General Provisions.
8.1 Modification. No Waiver. No modification, amendment or discharge
of this Agreement shall be valid unless the same is in writing and signed by all
parties hereto. Failure of any party at any time to enforce any provisions of
this Agreement or any rights or to exercise any election shall in no way be
considered to be a waiver of such provisions, rights or elections and shall in
any way affect the validity of this Agreement. The exercise by any party of any
of its rights or any of its elections under this Agreement shall not preclude or
prejudice such party from exercising the same or any other right it may have
under this Agreement irrespective of any previous action taken.
8.2 Notice. Any notice to be given to the Company under the terms of
this Agreement shall be addressed to the Company, to the attention of the Board
of Directors, at the address of its executive offices set forth above. Any
notice to be given to the Executive shall be addressed to him at the residence
address set forth above, or such other address as the Executive may hereafter
designate in writing to the Company. Any notice shall be deemed duly given when
personally delivered or five (5) days after deposit in registered or certified
mail, postage prepaid, as provided herein.
8.3 Severability. Should any one or more of the provisions of this
Agreement or of any agreement entered into pursuant to this Agreement be
determined to be illegal or unenforceable, then such illegal or unenforceable
provision shall be modified by the proper court or arbitrator to the extent
necessary and possible to make such provision enforceable, and such modified
provision and all other provisions of this Agreement and of each other agreement
entered into pursuant to this Agreement shall be given effect separately from
the provision or portion thereof determined to be illegal or unenforceable and
shall not be affected thereby.
8.4 Successors and Assigns. Neither the Executive nor the Company
may assign this Agreement without the prior written consent of the other;
provided, however, the Company may assign its rights under Section 4 hereof
without the written consent of the Executive, which shall remain enforceable so
long as the Company or its assignee complies with the other
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IgX Limited
Executive Employment Agreement
material terms of this Agreement. The rights and obligations of the Company
under this Agreement shall inure to the benefit of and be binding upon the
successors and permitted assigns of the Company, and the Executive's rights
under this Agreement shall inure to the benefit of and be binding upon his heirs
and executors.
8.5 Entire Agreement. This Agreement supersedes all prior agreements
and understandings between the parties, oral or written. No modification,
termination or attempted waiver shall be valid unless in writing, signed by the
party against whom such modification, termination or waiver is sought to be
enforced.
8.6 Choice of Law. This Agreement shall be governed by and
interpreted and constructed in accordance with the internal laws of Ireland,
without regard to principles of conflict of laws, and shall be binding upon the
parties hereto in the United States and worldwide.
8.7 Counterparts: Facsimile. This Agreement may be executed in one
or more counterparts, each of which shall for all purposes be deemed to be an
original, and all of which taken together shall constitute one and the same
instrument. This Agreement may be executed by facsimile with original signatures
to follow.
IN WITNESS WHEREOF, the parties hereto have executed this Executive
Employment Agreement as of the date first written above.
COMPANY: IGX LIMITED, a company
incorporated under the laws of Ireland
By:
-------------------------------------
Albert J. Henry
Chairman of the Board of Directors
EXECUTIVE:
----------------------------------------
Robert L. Renfroe
<PAGE>
ZHGMPF Draft: September 29, 1998
CERTIFICATE OF AMENDMENT
OF
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
IgX CORP.
IgX Corp., a corporation organized and existing under and by virtue of
the Delaware General Corporation Law (the "Corporation"), does hereby certify
that:
FIRST: The Board of Directors of the Corporation adopted the following
resolutions by unanimous written consent:
RESOLVED, that Article IV, paragraph A, of the Amended and Restated
Certificate of Incorporation be and hereby is amended to read in its entirety as
follows:
ARTICLE IV
A. Classes of Stock. This Corporation is authorized to issue
three classes of stock to be designated, respectively, "Common Stock,"
"Series A Preferred Stock," "Series B Preferred Stock" and a class of
undesignated "Preferred Stock" to be issued from time to time in one or
more series. The total number of shares which this Corporation is
authorized to issue is __________________, of which _______________
shares shall be Common Stock, $0.001 par value per share, 3,700,001
shares shall be Series A Preferred Stock, $0.001 par value per share;
1,874,999 shares shall be Series B Preferred Stock, $0.001 par value
per share, and ____________ shares shall be Preferred Stock, $0.001 par
value per share.
RESOLVED, FURTHER, that Article IV of the Amended and Restated
Certificate of Incorporation be amended to add a new paragraph D, to
read in its entirety as follows:
<PAGE>
ZHGMPF Draft: September 29, 1998
D. Preferred Stock. The Preferred Stock may be issued from
time to time in one or more series. The Board of Directors of the
Corporation is hereby expressly authorized to provide, by resolution or
resolutions duly adopted by it prior to issuance, for the creation of
each such series and to fix the designation and the powers,
preferences, rights, qualifications, limitations and restrictions
relating to the shares of each such series. The authority of the Board
of Directors with respect to each series of Preferred Stock shall
include, but not be limited to, determining the following:
(1) the designation of such series, the number of shares to
constitute such series and the stated value if different from the par
value thereof;
(2) whether the shares of such series shall have voting
rights, in addition to any voting rights provided by law, and, if so,
the terms of such voting rights, which may be general or limited;
(3) the dividends, if any, payable on such series, whether
any such dividends shall be cumulative, and, if so, from what date, the
conditions and dates upon which such dividends shall be payable, and
the preference or relation which such dividends shall bear to the
dividends payable on any shares of stock of any other class or any
other series of Preferred Stock;
(4) whether the shares of such series shall be subject to
redemption by the Corporation, and, if so, the times, prices and other
conditions of such redemption;
(5) the amount or amounts payable upon shares of such
series upon, and the rights of the holders of such series in, the
voluntary or involuntary liquidation, dissolution or winding up, or
upon any distribution of the assets, of the Corporation;
(6) whether the shares of such series shall be subject to
the operation of a retirement or sinking fund and, if so, the extent to
and manner in which any such retirement or sinking fund shall be
applied to the purchase or redemption of the shares of such series for
retirement or other corporate purposes and the terms and provisions
relating to the operation thereof;
(7) whether the shares of such series shall be convertible
into, or exchangeable for, shares of stock of any other class or any
other series of Preferred Stock or any other securities and, if so, the
price or process or the rate or rates of
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<PAGE>
ZHGMPF Draft: September 29, 1998
conversion or exchange and the method, if any, of adjusting the same,
and any other terms and conditions of conversion or exchange;
(8) the limitations and restrictions, if any, to be
effective while any shares of such series are outstanding upon the
payment of dividends or the making of other distributions on, and upon
the purchase, redemption or other acquisition by the Corporation of,
the Common Stock or shares of stock of any other class or any other
series of Preferred Stock;
(9) the conditions or restrictions, if any, upon the
creation of indebtedness of the Corporation or upon the issuance of any
additional stock, including additional shares of such series or of any
other series of Preferred Stock or of any other class; and
(10) any other powers, preferences and relative,
participating, optional and other special rights, and any
qualifications, limitations and restrictions thereof.
The powers, preferences and relative, participating, option and other
special rights of each series of Preferred Stock, and the
qualifications, limitations or restrictions thereof, if any, may differ
from those of any and all other series at any time outstanding. All
shares of any one series of Preferred Stock shall be identical in all
respects with all other shares of such series, except that shares of
any one series issued at different times may differ as to the dates
from which dividends thereof shall be cumulative.
RESOLVED, FURTHER, that Article VII of the Amended and Restated
Certificate of Incorporation be and hereby is amended to read in its entirety as
follows:
ARTICLE VII
A. The number of directors of the Corporation shall be fixed
from time to time by a Bylaw or amendment thereof duly adopted by the
Board of Directors.
B. Commencing with the annual meeting of stockholders in 1998,
the directors shall be classified, with respect to the time for which
they severally hold office, into three (3) classes, as nearly equal in
number as possible as the then total number of directors constituting
the entire board permits, pursuant to the provisions of the
Corporation's Certificate of Incorporation and its Bylaws. The
respective classes of directors shall be elected to terms of one, two
and three years. At each subsequent annual meeting of stockholders, the
successors to the class of directors
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<PAGE>
ZHGMPF Draft: September 29, 1998
whose term expires at that meeting shall be elected, by a plurality of
the votes cast, to hold office for a term expiring at the annual
meeting of the stockholders held in the third year following the year
of their election and until their successors have been duly elected and
qualified.
C. Except as otherwise fixed by resolution of the Board of
Directors pursuant to this Certificate of Incorporation relating to the
authorization of the Board of Directors to provide by resolution for
the issuance of preferred stock and determine the rights of the holders
of such preferred stock to elect directors, newly created directorships
resulting from any increase in the authorized number of directors or
any vacancies in the Board of Directors resulting from death,
resignation, retirement, disqualification, removal from office or other
cause shall be filled solely by the Board of Directors, acting by not
less than a majority of the directors then in office or by a sole
remaining director in office. Any director so chosen shall hold office
until the next election of the class for which such director shall have
been chosen and until his successor shall be elected and qualified. No
decrease in the number of directors shall shorten the term of any
incumbent director.
D. At any annual meeting of stockholders of the Corporation,
or at any special meeting of stockholders of the Corporation, the
notice of which shall have stated that the removal of a director or
directors is among the purposes of the meeting, the holders of capital
stock entitled to vote thereon, present in person or by proxy, by vote
of a majority of the outstanding shares thereof, voting together as a
single class, may remove such director or directors only for cause. For
purposes of this Certificate of Incorporation, "cause" means an act or
acts by an individual involving the commission of a felony, willful
misconduct, fraud, embezzlement, dishonesty, breach of fiduciary duty
or violation or breach of a written employment or consulting agreement
of the Corporation's policy as described in a Corporation manual or
handbook, any of which acts cause the Corporation material damage.
E. Notwithstanding any other provision of this Certificate of
Incorporation or the Bylaws of the Corporation, and notwithstanding the
fact that a lesser percentage may be specified by law, this Certificate
of Incorporation or the Bylaws of the Corporation, the affirmative vote
of the holders of at least two-thirds (2/3) of the combined voting
power of the then outstanding shares of stock entitled to vote
generally in the election of directors, voting together as a single
class, shall be required to alter, amend, or adopt any provision
inconsistent with or repeal this Article VII.
RESOLVED, FURTHER, that the first paragraph of Article IX be designated
as section "A. Meetings of Stockholders" and that a new section "B" which reads
in its entirety as follows be added:
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<PAGE>
ZHGMPF Draft: September 29, 1998
B. No Stockholder Action Without a Meeting. No action required
by the Delaware General Corporation Law to be taken at an annual or
special meting of stockholders, nor any action which may be taken at
any annual or special meeting of stockholders may be taken by consent
of stockholders without a meeting.
SECOND: Such amendment was consented to and authorized by the holders
of a majority of the issued and outstanding capital stock of the Corporation
entitled to vote on such amendment by unanimous written consent in accordance
with the applicable provisions of Section 228 of the Delaware General
Corporation Law.
THIRD: Such amendment was duly adopted in accordance with the
applicable provisions of Section 242 of the Delaware General Corporation Law.
[Remainder of Page Intentionally Left Blank]
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<PAGE>
ZHGMPF Draft: September 29, 1998
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed by Albert J. Henry, its Chairman, and attested by ______,
its Secretary, this ____ day of __________, 1998.
IgX CORP.,
a Delaware corporation
By
----------------------------------------
Albert J. Henry, Chairman
ATTEST:
By:
---------------------------------
, Secretary
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<PAGE>
EXECUTIVE EMPLOYMENT AGREEMENT
This EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement"), effective as of
March ___, 1997, by and between IgX Limited, a company incorporated under the
laws of Ireland, (the "Company"), and Craig R. Rennie, an individual (the
"Executive") with reference to the following facts;
A. Company is engaged in the business of developing and marketing
IGX-CPL3 and other drug products.
B. Company desires to retain the services of Executive, and Executive
is willing to provide such services to Company; and
C. Company and Executive desire to enter into an agreement to provide
for Executive's employment by the Company upon the terms and conditions set
forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing facts and mutual
agreements set forth below, the parties, intending to be legally bound, agree as
follows;
1. Employment. The Company hereby agrees to employ Executive, and
Executive hereby accepts such employment and agrees to perform Executive's
duties and responsibilities in accordance with the terms and conditions
hereinafter set forth.
1.1 Duties and Responsibilities. Executive shall serve as
Chief Executive Officer and President. During the Employment Term, Executive
shall perform all duties and accept all responsibilities incident to such
positions and other appropriate duties as may be assigned to Executive by the
Company's Board of Directors (the "Board") from time to time. Executive shall
also serve as a director of the Company if requested by the Board.
1.2 Employment Term. The term of Executive's employment under
this Agreement shall commence as of the date hereof (the "Effective Date") and
shall continue for two (2) years until March __,1999, unless earlier terminated
in accordance with Section 4 hereof. The term of Executive's employment may be
extended by mutual written agreement entered into at least sixty (60) days prior
to the expiration of the then-effective "Employment Term" as that term is
defined below. The period commencing as of the Effective Date and ending two (2)
years thereafter, or such later date to which the term of Executive's employment
under the Agreement shall have been extended by mutual written Agreement, is
referred to herein as the "Employment Term."
1.3 Extent of Service. During the Employment Term, Executive
agrees to use Executive's best efforts to carry out the duties and
responsibilities under Section 1.1 hereof and to devote substantially all
Executive's business time, attention and energy thereto. Executive further
agrees not to work either on a part-time or independent contracting basis for
any other business or enterprise during the Employment Term without the prior
written consent of the Board, which consent shall not be unreasonably withheld.
1.4 Base Salary. The Company shall pay Executive a base salary
(the "Base Salary") at the annual rate of (pound)140,000 (Pounds Sterling),
payable at such times as the Company customarily pays its other senior level
executives (but in any event no less often than monthly). The Base Salary shall
be subject to all state, federal, and local payroll tax withholding and any
other withholdings required by law.
1.5 Incentive Compensation. Executive shall be eligible to earn a
cash bonus of up to fifty percent (50%) of base salary, or (pound)70,000 (Pounds
Sterling), for each twelve-month period during the Employment Term based on
meeting performance objectives and bonus criteria to be mutually identified by
Executive and the Board. Executive's bonus shall be evaluated and payable based
upon accomplishing the agreed-upon objectives in six-month intervals throughout
the Employment Term commencing on March __, 1997 and each six-month period
thereafter. Executive's bonus, if any, shall be subject to all applicable tax
and payroll withholdings. If Executive earns the full bonus, Executive's total
compensation will be (pound)210,000 (Pounds Sterling) per annum.
1.6 Other Benefits. During the Employment Term, Executive shall be
entitled to participate in all employee benefit plans and programs made
available to the Company's senior level executives as a group or to its
employees generally, as such plans or programs may be in effect from time to
time (the "Benefit Coverages"), including, without limitation, medical, dental,
hospitalization, short-term and long-term disability and life insurance plans,
accidental death and dismemberment protection and travel accident insurance.
Executive shall also be entitled to use one (1) Company "luxury class vehicle"
as such term is defined by the Board from time to time. Company shall reimburse
Executive for all business-related operating expenses for such vehicle,
including maintenance and fuel expenses. Executive shall be provided office
space and staff assistance appropriate for Executive's position and adequate for
the performance of his duties.
1.7 Reimbursement of Expenses; Vacation. Executive shall be
provided with reimbursement of expenses related to Executive's employment by the
Company on a basis no less favorable than that which may be authorized from time
to time by the Board, in its sole discretion, for senior level executives as a
group. Executive shall be entitled to vacation and
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<PAGE>
holidays in accordance with the Company's normal personnel policies for senior
level executives.
1.8 Share Options. Executive shall be entitled to receive an
option under the Company's 1996 Stock Option Plan to purchase up to 200,000 of
the Company's Ordinary Shares at an exercise price of $5.00 (U.S.) per share
(the "Option"). The Option will be issued pursuant to the terms of that certain
Share Option Agreement in the form attached hereto as Exhibit "A" and
incorporated herein by this reference. The Option shall vest over a four (4)
year period commencing on the Effective Date and shall have a ten (10) year
term. If, and only if, the Employment Term is extended past the initial two (2)
year period, the Company agrees to grant to Executive additional options to
purchase up to 100,000 of the Company's Ordinary Shares at an exercise price of
$5.00 (U.S.) per share, which additional options shall also vest over a four (4)
year period commencing with the date of grant.
1.9 No Other Compensation. Except as expressly provided in
Sections 1.4 through 1.8, Executive shall not be entitled to any other
compensation or benefits.
2. Confidential Information. Executive recognizes and acknowledges
that by reason of Executive's employment by and service to the Company before,
during and, if applicable, after the Employment Term, Executive will have access
to certain confidential and proprietary information relating to the Company's
business, which may include, but is not limited to, trade secrets, trade
"know-how," product development techniques and plans, formulas, customer lists
and addresses, new and used car and other vehicle dealership names and
addresses, financing services, funding programs, cost and pricing information,
marketing and sales techniques, strategy and programs, computer programs and
software and financial information (collectively referred to as "Confidential
Information"). Executive acknowledges that such Confidential Information is a
valuable and unique asset of the Company, and Executive covenants that he will
not, unless expressly authorized in writing by the Company, at any time during
the course of Executive's employment use any Confidential Information or divulge
or disclose any Confidential Information to any person, firm or corporation
except in connection with the performance of Executive's duties for the Company
and in a manner consistent with the Company's policies regarding Confidential
Information. Executive also covenants that at any time after the termination of
such employment, directly or indirectly, he will not use any Confidential
Information or divulge or disclose any Confidential Information to any person,
firm or corporation, unless such information is in the public domain through no
fault of Executive or except when required to do so by a court of law, by any
governmental agency having supervisory authority over the business of the
Company or by any administrative or legislative body (including a committee
thereof) with apparent jurisdiction to order Executive to divulge, disclose or
make accessible such information. All written Confidential Information
(including, without limitation, in any computer or other electronic format)
which comes into Executive's possession during the course of Executive's
employment shall remain the property of the Company. Except as required in the
performance of Executive's duties for the Company, or unless expressly
authorized in writing by the Company, Executive shall not remove any written
Confidential
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<PAGE>
Information from the Company's premises, except in connection with the
performance of Executive's duties for the Company and in a manner consistent
with the Company's policies regarding Confidential Information. Upon termination
of Executive's employment, the Executive agrees to return immediately to the
company all written Confidential Information (including, without limitation, in
any computer or other electronic format) in Executive's possession.
3. Non-Competition; Non-Solicitation.
3.1 Non-Compete. The Executive hereby covenants and agrees
that during the term of this Agreement, the Executive will not, without the
prior written consent of the Company, directly or indirectly, on his own behalf
or in the service or on behalf of others, whether or not for compensation,
engage in any business activity, or have any interest in any person, firm,
corporation or business, through a subsidiary or parent entity or other entity
(whether as a shareholder, agent, joint venturer, security holder, trustee,
partner, consultant, creditor lending credit or money for the purpose of
establishing or operating any such business, partner or otherwise) which is
competitive with the then existing business of Company being conducted in the
Covered Area, as defined hereinbelow. For the purpose of this Section 3.1,
"Covered Area" shall mean all geographical areas of the United States, Ireland
and other foreign jurisdictions where Company then has offices and/or sells its
products directly or indirectly through distributors and/or other sales agents.
Notwithstanding the foregoing, the Executive may own shares of companies whose
securities are publicly traded, so long as such securities do not constitute
more than one percent (1%) of the outstanding securities of any such company.
3.2 Non-Solicitation. The Executive further agrees that as
long as the Agreement remains in effect and for a period of one (1) year from
its termination, the Executive will not divert any business of the Company
and/or its affiliates or any customers or suppliers of the Company and/or the
Company's and/or its affiliates' business to any other person, entity or
competitor, or induce or attempt to induce, directly or indirectly, any person
to leave his or her employment with the Company.
3.3 Remedies. The Executive acknowledges and agrees that his
obligations provided herein are necessary and reasonable in order to protect the
Company and its affiliates and their respective business and the Executive
expressly agrees that monetary damages would be inadequate to compensate the
Company and/or its affiliates for any breach by the Executive of his covenants
and agreements set forth herein. Accordingly, the Executive agrees and
acknowledges that any such violation or threatened violation of this Section 3
will cause irreparable injury to the Company and that, in addition to any other
remedies that may be available, in law, in equity or otherwise, the Company and
its affiliates shall be entitled to obtain injunctive relief against the
threatened breach of this Section 3 or the continuation of any such breach by
the Executive without the necessity of proving actual damages.
4. Termination
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<PAGE>
4.1 By Company. The Company may, in its discretion and at its
option, terminate the Executive's employment with or without Cause, and without
prejudice to any other right or remedy to which the Company may be entitled at
law or in equity or under this Agreement. The Executive shall be deemed
terminated for "Cause" (i) if Executive is convicted of a felony; (ii) any
neglect or breach of duty by Executive, or any failure by executive to perform
to the reasonable satisfaction of the Board, such duties as may be delegated to
Executive from time to time; (iii) Executive otherwise materially breaches any
provision of this Agreement; or (iv) after a determination by a majority of the
Board of Directors of the Company, acting in good faith, that the Executive has
engaged in conduct not appropriate of an employee. In the event the Company
desires to terminate the Executive's employment without Cause, the Company shall
give the Executive not less then sixty (60) days' advance written notice.
4.2 By Executive's Death or Disability. This Agreement shall
also be terminated upon the Executive's death and/or a finding of permanent
physical or mental disability, such disability to be determined by in the sole
discretion of a physician selected by the Company.
4.3 Compensation on Termination. In the event the Company
terminates Executive's employment for Cause, all payments under this Agreement
shall cease, except for Base Salary to the extent already accrued. In the event
of termination by reason of Executive's death and/or permanent disability,
Executive or his executors, legal representatives or administrators, as
applicable, shall be entitled to an amount equal to Executive's Base Salary
accrued through the date of termination, plus a pro rata share of any annual
bonus to which Executive would otherwise be entitled for the year in which death
or permanent disability occurs. Upon termination of Executive without cause, if
Executive executes a written release, substantially in the form attached hereto
as Exhibit "B" (the "Release"), of any and all claims against the Company and
all related parties with respect to all matters arising out of Executive's
employment by the Company (other than Executive's entitlement under any employee
benefit plan or program sponsored by the Company in which Executive participated
and under which Executive has accrued a benefit), and the termination thereof,
Executive shall be entitled to receive, in equal monthly installments, as
liquidated damages for the failure of the Company to continue to employ
Executive, an amount equal to the amount of Executive's Base Salary for the
remainder of the initial two (2) year Employment Term, provided that Executive
remains in compliance with the provisions of Section 3 hereof.
4.4 Voluntary Termination. Executive may voluntarily terminate
the Employment Term upon sixty (60) days' prior written notice for any reason;
provided, however, that no further payments shall be due under this Agreement in
that event except that Executive shall be entitled to any benefits due under any
compensation or benefit plan provided by the Company for executives or otherwise
outside of this Agreement.
5. Controversies. Any controversy or claim arising out of or relating
to the Executive's employment and this Agreement, the breach hereof, or the
coverage of this
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<PAGE>
arbitration provision, shall be settled by arbitration in California, which
arbitration shall be in accordance with the Commercial Arbitration Rules of the
American Arbitration Association, as such rules shall be in effect on the date
of delivery of demand for arbitration. The arbitration of such issues, including
the determination of the amount of any damages suffered by any party, shall be
to the exclusion of any court of law. The decision of the arbitrators or a
majority of them shall be final and binding upon the parties and the personal
representatives, heirs or devises of the Executive, if applicable. There shall
be three arbitrators, one (1) to be chosen directly by the Executive, one (1) to
be chosen by the Company and one (1) to be chosen by the two (2) arbitrators so
chosen. The Company and the Executive shall each pay the fees of the arbitrators
selected by it or him and of its or his own attorneys, the expense of witnesses
and all other expenses connected with the presentation of such party's case,
except that the arbitrators may impose all such fees, costs and expenses
otherwise payable by the prevailing party on the losing party if it determines
that the losing party's position was taken without good faith or solely for the
purpose of delay. The costs of the arbitration including the cost of the record
of transcripts thereof, if any, administrative fees, and all other fees and
costs, including those of the third arbitrator, shall be borne one-half by the
Executive and one-half by the Company, except that the arbitrators may impose
all such fees, costs and expenses otherwise payable by the prevailing party on
the losing party if it determines that the losing party's position was taken
without good faith or solely for the purpose of delay.
6. General Provisions.
6.1 Modification; No Waiver. No modification, amendment or
discharge of this Agreement shall be valid unless the same is in writing and
signed by all parties hereto. Failure of any party at any time to enforce any
provisions of this Agreement or any rights or to exercise any election shall in
no way be considered to be a waiver of such provisions, rights or elections and
shall in no way affect the validity of this Agreement. The exercise by any party
of any of its rights or any of its elections under this Agreement shall not
preclude or prejudice such party from exercising the same or any other right it
may have under this Agreement irrespective of any previous action taken.
6.2 Notices. All notices and other communications required or
permitted hereunder or necessary or convenient in connection herewith shall be
in writing and shall be deemed to have been given when hand delivered or mailed
by registered or certified mail as follows (provided that notice of change of
address shall be deemed given only when received):
If to the Company, to: Albert J. Henry, Chairman
IgX Ltd.
Granard
County Longford
Ireland
If to Executive, to: _____________________________
_____________________________
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<PAGE>
_____________________________
_____________________________
or to such other names or addresses as the Company or Executive, as the case may
be, shall designate by notice to each other person entitled to receive notices
in the manner specified in this Section.
6.3 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
6.4 Further Assurances. Each party to this Agreement shall execute
all instruments and documents and take all actions as may be reasonably required
to effectuate this Agreement.
6.5 Severability. Should any one or more of the provisions of this
Agreement or of any agreement entered into pursuant to this Agreement be
determined to be illegal or unenforceable, then such illegal or unenforceable
provision shall be modified by the proper court or arbitrator to the extent
necessary and possible to make such provision enforceable, and such modified
provision and all other provisions of this Agreement and of each other agreement
entered into pursuant to this Agreement shall be given effect separately from
the provision or portion thereof determined to be illegal or unenforceable and
shall not be affected thereby.
6.6 Successors and Assigns. Executive may not assign this
Agreement without the prior written consent of the Company. The Company may
assign its rights without the written consent of the Executive, so long as the
Company or its assignee complies with the other material terms of this
Agreement. The rights and obligations of the Company under this Agreement shall
inure to the benefit of and be binding upon the successors and permitted assigns
of the Company, and the Executive's rights under this Agreement shall inure to
the benefit of and be binding upon his heirs and executors. The Company's
subsidiaries and controlled affiliates shall be express third party
beneficiaries of this Agreement.
6.7 Entire Agreement. This Agreement supersedes all prior
agreements and understandings between the parties, oral or written. No
modification, termination or attempted waiver shall be valid unless in writing,
signed by the party against whom such modification, termination or waiver is
sought to be enforced.
6.8 Choice of Law. This Agreement shall be governed by and
interpreted and constructed in accordance with the internal laws of Ireland,
without regard to principles of conflict of laws, and shall be binding upon the
parties hereto in the United States and worldwide.
6.9 Counterparts: Facsimile. This Agreement may be executed in one
or more counterparts, each of which shall for all purposes be deemed to be an
original, and all of which
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<PAGE>
taken together shall constitute one and the same instrument. This Agreement may
be executed by facsimile with original signatures to follow.
IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
have executed this Agreement as of the date first written above.
IgX LIMITED, a company incorporated
under the laws of Ireland
-----------------------------------
By:
--------------------------------
Title:
----------------------------
-----------------------------------
Craig R. Rennie
[SIGNATURE PAGE TO EXECUTIVE EMPLOYMENT AGREEMENT]
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<PAGE>
EXHIBIT "A"
SHARE OPTION AGREEMENT
A-1
<PAGE>
EXHIBIT "B"
IgX LIMITED
RELEASE AGREEMENT
[DATE]
Mr. Craig R. Rennie
- -------------------
[ADDRESS]
Dear Mr. Rennie:
This Release Agreement sets forth the offer by IgX Limited ("the
Company") of special severance benefits in exchange for the consideration
described below. The terms of our offer, which will constitute an agreement upon
your acceptance pursuant to the provisions hereof, are as follows:
1. Your employment [will terminate/had terminated] as of [date] (the
"Severance Date").
2. You acknowledge that prior to the Severance Date, the Company had
no obligation to provide you with the severance benefits set forth
in Section 5.3 of your Employment Agreement dated as of March __,
1997. However, as consideration for your agreement to the release
and covenant not to sue and the other conditions set forth in this
letter, the Company will pay you the severance in accordance with
the terms of the Employment Agreement.
3. You acknowledge receipt of all vacation earned by you up to and
including the Severance Date. Your accrual of vacation ceased
effective on the Severance Date.
4. You represent and warrant that by the close of business on the
date you execute this Release Agreement, you will return to the
Company all property owned by the Company, including all credit
cards furnished to you by the Company and all originals and copies
of the following, whether in your possession or previously removed
by you from the Company's premises and still existing, and whether
recorded on paper, computer disk, other computer-readable form or
any other medium: all lists, correspondence, books, letters,
records, financial data and other
B-1
<PAGE>
Mr. Craig R. Rennie
[DATE]
Page 2
materials and writings owned by the Company or used by it in
connection with the conduct of its business.
You will respond to inquiries by the Company about any matters
concerning the Company or its affairs that occurred or arose
during the period of your employment by the Company; and you will
cooperate with the Company in investigating, prosecuting and
defending any charges, claims, demands, liabilities, causes of
action, lawsuits and other proceedings by, against or involving
the Company relating to any period during which you were employed
by the Company or relating to matters of which you have knowledge
or should have knowledge by virtue of your employment by the
Company, all for no additional compensation; provided that
complying with this paragraph does not require you to travel more
than 100 miles from your residence or office at the time of
compliance (whichever is more distant), does not require you to
devote more than eight (8) consecutive hours or twenty-four (24)
hours in a calendar month, and does not cause your employment at
the time of compliance to be placed in jeopardy. If compliance
with this paragraph requires you to travel outside the area
described in the preceding sentence or devote more time than set
forth in the preceding sentence, the Company will compensate you
for all such time and travel at an hourly rate of $100. The
Company will reimburse you for all reasonable expenses you incur
in complying with this paragraph in accordance with the Company's
employee business expense approval procedures then in effect.
5. You represent and warrant that you have disclosed to the Company
all contracts, understandings, agreements, proposals, offers and
bids to which the Company may be a party or by which it may be
bound or affected or which have been made for the benefit of the
Company or which may have obligated the Company in any way,
whether oral or written, including, without limitation, employment
agreements, of which you have knowledge.
6. As consideration for the payments and agreements described above,
you hereby release, agree not to sue, and agree not to bring suit
with or on behalf of another against, the Company and its
predecessor, subsidiary, affiliate and successor corporations and
business entities, past, present and future, and their directors,
officers, shareholders, employees, executives and agents, past,
present and future, and their heirs, executors, administrators and
assigns, with respect to any and all claims, demands, liabilities,
actions, causes of action, suits, debts, charges, complaints,
obligations, promises, agreements, controversies, damages and
expenses (including attorneys' fees and costs actually incurred)
arising out of facts which occurred prior to the execution of this
Release Agreement, including but not limited to any claims arising
from or in connection with your employment
B-2
<PAGE>
Mr. Craig R. Rennie
[DATE]
Page 3
relationship with the Company or the severance of that
relationship and including claims arising from any alleged
violation of any federal, state or local statutes, ordinances or
common law (including but not limited to Title VII of the Civil
Rights Act of 1964, as amended, the Age Discrimination in
Employment Act, the Americans with Disabilities Act, the
California Fair Employment and Housing Act, and the California
Labor Code). This release and waiver includes, among others,
claims based on age discrimination in violation of the federal Age
Discrimination in Employment Act ("ADEA") and applicable state
law. Such laws prohibit an employer from taking adverse action
against an employee, including terminating employment, on the
basis of the employee's age of 40 or more. By agreeing to the
release and waiver in this paragraph, you are agreeing to forego
any claim and agreeing not to sue on the ground, among others,
that the termination of your employment by the Company violated
the ADEA. In the event you, or any person, firm or entity on your
behalf, files, sues or causes or permits to be filed any action
seeking damages, injunctive, declaratory, monetary or other
relief, despite your agreement not to do so thereunder, you agree
to pay to the Company, regardless of the outcome of such action,
as liquidated damages: (i) all of the Company's legal fees and
expenses in defending such action and (ii) one-half (1/2) of all
severance payments made to you pursuant to Section 5.4(b) of your
Employment Agreement.
7. For the purposes of implementing a full and complete release and
discharge of claims, you expressly acknowledge that this Release
Agreement is intended to include in its effect, without
limitation, all the claims described in the preceding paragraphs,
whether known or unknown, suspected or unsuspected, and that this
Agreement contemplates the extinction of all such claims,
including claims for attorneys' fees. You expressly waive any
right to assert after the execution of this Agreement that any
such claim, demand, obligation or cause of action has, through
ignorance or oversight, been omitted from the scope of the
Agreement. You expressly waive any and all rights and benefits
conferred upon you by the provisions of Section 1542 of the Civil
Code of California which provides as follows:
A general release does not extend to claims which the creditor
does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have materially
affected his settlement with the debtor.
8. You will not disclose to any person, including, but not limited
to, any former, current or prospective employee of the Company,
its affiliates and its subsidiaries, the fact that this offer has
been made or the existence or terms of the Agreement;
B-3
<PAGE>
Mr. Craig R. Rennie
[DATE]
Page 4
provided, however, that you may discuss and disclose this offer to
your attorney, your spouse and your financial adviser; and you may
disclose such aspects of the Agreement as may be required to be
disclosed by court order, by the proper inquiry of a State or
Federal governmental agency or by a subpoena to testify issued by
a court of competent jurisdiction, in any of which events, you
agree to respond truthfully to all questions asked of you. If you
breach this covenant, you agree to repay to the Company all monies
paid to you pursuant to Paragraph 2 of this Agreement and any and
all attorneys' fees incurred by the Company to collect such
payment.
9. Neither the fact that this offer was made or Agreement entered,
nor any provision of this Agreement, shall be construed as an
admission of any wrongdoing of any kind by the Company.
10. Any notice required or permitted to be given under this Agreement
shall be in writing and given by hand delivery or by certified or
registered United States mail, postage prepaid, and shall be
effective on the date delivered by hand or mailed, in the case of
the Company, to its usual business address from time to time and,
in your case, to your most recent home address as shown on the
records of the Company.
11. If any provision of this Agreement is declared or determined by
any court to be illegal or invalid, validity of the remaining
parts, terms or provisions shall not be affected thereby and said
illegal or invalid part, term or provision shall be deemed not to
be a part of this Agreement.
12. This Agreement sets forth the entire agreement between the parties
hereto and fully supersedes any and all prior agreements or
understandings between the parties hereto pertaining to the
subject matter hereof.
13. You may accept this offer by signing it below no later than
_________ (__) days from the day you receive it and returning the
signed and dated acceptance for my receipt no later than
____________ (__) days from the date that you receive this offer.
Your acceptance is to be sent in an envelope marked "CONFIDENTIAL
- TO BE OPENED BY ADDRESSEE ONLY" and addressed to me at the above
address.
14. You may revoke your acceptance of this offer within _______ (__)
days after the date on which you signed this letter to accept the
offer. To be effective, your revocation must be in writing, signed
and dated no later than _____ (__) days from the date on which you
signed and dated your acceptance of this
B-4
<PAGE>
Mr. Craig R. Rennie
[DATE]
Page 5
offer; and the written revocation must be received by me in an
envelope addressed in the manner described in the last paragraph
above no later than _____ (__) days after the date on which you
signed the revocation.
You should consult with an attorney before entering into this
Agreement.
Sincerely,
IgX LIMITED
--------------------------------------
By:
-----------------------------------
Title:
--------------------------------
The undersigned hereby agrees to the terms of this Release and such
release shall be binding upon the undersigned.
--------------------------------------
Craig R. Rennie
Date:
---------------------------------
<PAGE>
IgX LIMITED
123 Mount Anville Park
Dublin 14
Ireland
Craig R Rennie Esq
Renwood
Ellwood Road
Beaconsfield
Bucks
HP9 1EN
Date: 9 September 1998
Dear Mr Rennie:
This letter confirms the basis on which your employment with IgX Limited ("the
Company") has terminated by reason of redundancy, following the relocation of
the corporate headquarters of the Company to the USA.
1. Your employment with, and directorship of, the Company pursuant to the
terms and conditions of that certain Executive Employment Agreement
dated April 1, 1997 ("the Employment Agreement"), have terminated
with effect from May 12, 1998, and you have no authority to act for
or on behalf of the Company in any respect as of May 12, 1998.
2. You will be entitled to continue to use the car allocated to you by the
Company until 30th November 1998, when you will promptly comply with
the Company's reasonable requirements to return the car. The Company
will be responsible for the reasonable insurance and operating costs
directly related to the car until that date. You agree to indemnify
and hold harmless the Company from and against any and all claims,
demands, assessments, damages, liabilities and obligations (other
than reasonable insurance and operating costs) arising out of or in
connection with your operation of the car through November 30, 1998.
3. You acknowledge that the Company has no obligation to provide you with
any form of severance benefits. However, as consideration for this
letter and without any admission of liability, the Company will pay
to you by direct bank transfer the total sum of (pounds)85,800.00 by
way of a termination payment. The first (pounds)30,000.00 of that
amount will be paid free of tax and the Company will deduct tax at
basic rate (23%) from the remaining (pounds)55,800.00, giving a total
net amount payable to you equal to (pounds)72,996.00. You agree to
indemnify and hold harmless the Company from and against any and all
claims, demands, assessments, damages, liabilities and obligations
arising out of or in connection with the tax-free treatment of the
first (pounds)30,000. Of that net amount, (pounds)58,696 will be paid
to you within seven days of the date of the Company's receipt of your
acceptance of the terms of this letter. The remaining (pounds)14,300
will be paid to you forthwith upon the return of the car in compliance
with the Company's reasonable requirements under Section 2 above (or,
in the absence of any such requirements, to the lessor of the car).
<PAGE>
4. Other than as expressly set forth in Section 3 above, you acknowledge
and agree that you have received all wages, bonuses, commissions,
vacation pay, incentives and all other compensation of any kind
earned during your employment with the Company.
5. In addition, following your acceptance of the terms of this letter, the
Company will make a contribution of (pounds)5,000.00 (including VAT) to
your legal fees, to be paid directly to your legal advisers within
seven days of receipt by the Company of an invoice in that amount.
6. The letter to you dated 12th May 1998 from Zevnik Horton Guibord
McGovern Palmer & Fognani, L.L.P., written on the instructions of the
Company and all statements contained within it are irrevocably
withdrawn in their entirety. The Company irrevocably undertakes that it
will neither repeat any of the statements made in that letter
concerning you nor make any similar statements and that it shall ensure
that its Directors and make reasonable efforts to ensure that its other
officers, agents, employees and associated companies also comply with
that undertaking.
7. Within seven days of your acceptance of the terms of this letter the
Company will provide you with a reference letter signed by its
Chairman substantially in the form set out in Schedule "A" to this
letter. The Company irrevocably undertakes that it will not (and that
it will ensure that its directors and make reasonable efforts to
ensure that its other officers, agents, employees and associated
companies do not) make any oral or written statement or other
communication to any third party which is adverse to you or to your
future career prospects or which is inconsistent with the terms of
this letter or the letter set out in Schedule "A".
8. The terms of this letter are in full and final settlement of any claim
which you may have arising out of your employment with the Company
and its termination and of any claims which the Company may have
against you, and each party hereby fully and without limitation
releases and discharges the other (in the case of you, your heirs,
executors, administrators, agents, successors and assigns and in the
case of the Company its directors, officers, shareholders, employees,
executives, agents, affiliates (including IgX Corp.), successors and
assigns (the "Company Affiliates") with respect to any and all
claims, demands, liabilities, actions, causes of action, suits,
debts, charges, obligations, promises, agreements, controversies,
damages and expenses (including legal fees and costs actually
incurred) arising out of facts which occurred prior to the execution
of this letter, including without limitation, any and all claims
arising under the Employment Agreement.
9. To give full effect to the provisions in paragraph 8 above you hereby:-
a. agree to refrain from instituting or continuing any
proceedings before an Employment Tribunal in relation to any
claims or complaints within Section 18(1)(d) of the
Industrial Tribunals Act 1996, Section 77(4) of the Sex
Discrimination Act 1975, Section 72(4) of the Race Relations
Act 1976 and Section 9(2) of the Disability Discrimination
Act 1995 (together "the Acts");
b. confirm that you have received independent legal advice from
a qualified adviser as defined in the Acts ("your Adviser")
concerning the terms and effect of this Agreement and, in
particular, its effect on your ability to pursue your rights
before an Employment Tribunal; and
<PAGE>
c. confirm that your Adviser is Robert McCreath of Eversheds,
Senator House, 85 Queen Victoria Street, London EC4V 4JL.
10. Both parties agree to keep the facts and terms of this letter strictly
confidential and not to disclose any aspects of it, save on a
confidential basis for the purpose of obtaining legal or financial
advice, or as may otherwise be required by law or by any Court of
competent jurisdiction or by any tax authority of competent
jurisdiction and save that you may disclose the facts and terms of
this letter to your spouse. Your spouse hereby agrees to execute the
Consent of Spouse attached hereto as Schedule "B". This
confidentiality provision will not extend to the disclosure by you of
the letter set out in Schedule "A" to be supplied to you by the
Company.
11. You hereby represent that you have returned all property of the Company
in your possession to the Company (other than the car), including all
credit cards furnished to you by the Company (other than that used
solely for the purposes of recouping the operating costs of the car
which you will return at the same time as the car), and originals and
copies of all lists, correspondence, books, letters, records,
financial data and other materials and writings owned by the Company
or used by it in connection with the conduct of its business, whether
in your possession or previously removed by you from the Company's
premises and still existing, and whether recorded on paper, computer
disk, other computer-readable form or any other medium.
12. You agree not to make any disparaging statements regarding the Company
or the Company Affiliates. You further agree that you will not solicit
or induce or attempt to induce any employee of or consultant to the
Company and/or the Company Affiliates to terminate his or her
employment with the Company and/or the Company Affiliates, devote
less than all of his or her efforts to the affairs of the Company
and/or the Company Affiliates or to perform consulting services for
any business entity or individual other than the Company and/or the
Company Affiliates.
13. You acknowledge that as a result of your position with the Company,
you have received trade secrets and confidential information
concerning the organisation, business and finances of the Company
and/or the Company Affiliates (including, without limitation, trade
secrets and confidential information respecting inventions,
improvements, products, marketing plans and strategies, forecasts,
designs, methods, know-how, regulatory plans and strategies,
suppliers, techniques, systems and processes) and you hereby agree
that you will not use, publish or otherwise disclose in any way to
any person or entity any trade secrets or confidential information of
the Company and/or any Company Affiliates and will maintain the
strict confidentiality thereof.
14. This Agreement shall inure to the benefit of the parties and their
respective successors and assigns.
15. You acknowledge that a breach of the covenants and agreements in this
letter will result in irreparable and continuing damage to the
Company and the Company Affiliates for which there will be no
adequate remedy at law and you agree that, in the event of any breach
of the aforesaid covenants or agreements, the Company, the Company
Affiliates and their successors and assigns, in addition to any other
rights or remedies such persons may have in law or in equity, shall
have the right to injunctive relief.
<PAGE>
16. No covenant, term or condition or the breach thereof shall be deemed
waived, unless it is waived in writing and signed by the party
against whom the waiver is claimed. Any waiver of breach of any
covenant, term or condition shall not be deemed to be a waiver of any
preceding or succeeding breach of the same or any other covenant,
term of condition. The failure of any party to insist upon strict
performance of any covenant, term or condition hereunder shall not
constitute a waiver of such party's right to demand strict compliance
therewith in the future.
17. The parties agree that if a court of competent jurisdiction finds any
provision of this letter to be invalid or unenforceable, the validity
of enforceability of the remaining provisions shall not be affected
and the court shall enforce the affected provision and all remaining
provisions to the fullest extent permitted by law.
18. You acknowledge that you have read and understand this letter and that
you are signing this letter voluntarily and without coercion. You
further acknowledge that you have been represented by independent
legal counsel in the negotiation and execution of this letter.
19. Nothing in this letter will be construed as an admission of any
wrongdoing of any kind by the Company or by you.
20. The terms set out in this letter form the entire agreement between the
parties and fully supersede any and all prior agreements and
understandings between the parties in relation to its subject matter.
The parties agree that this letter cannot be changed, modified,
supplemented or rescinded except by a written document signed by both
parties
21. You may accept this offer by signing it below and returning the signed
and dated acceptance to the writer no later than fourteen days from
the date of this letter. You may accept this offer by fax, and by
which you will be deemed to have undertaken to return the original
signed acceptance to the Company as soon as practicable. The terms of
this letter will be effective immediately upon communication to the
Company of your acceptance.
Yours sincerely
I hereby agree to the terms of the above letter from IgX Limited and confirm
that the terms will be binding upon me.
/s/ Craig R. Rennie
---------------------------
Craig R Rennie
Date:
<PAGE>
SCHEDULE 'A'
IgX LIMITED
123 Mount Anville Park
Dublin 14
Ireland
Dear Mr Rennie:
Closure of UK Offices
The shareholders in the group holding company, IgX Corporation, have decided
to relocate the corporate headquarters of IgX Limited to the USA with
immediate effect.
As a direct consequence of this decision all UK based positions have been made
redundant and the offices located in High Wycombe are being closed. This
decision is a strategic one and in no way reflects negatively on your
performance as CEO and President, nor on the performance of any other UK based
management or staff.
I wish you well in your future career and would thank you for your efforts and
contribution whilst with IgX.
Yours sincerely
Albert J. Henry
Chairman
<PAGE>
SCHEDULE 'B'
CONSENT OF SPOUSE
I, ___________________, spouse of Craig R. Rennie, do hereby certify,
acknowledge and agree as follows:
1. I have read and approve each and every provision set forth in the
Settlement Agreement (the "Agreement") dated September 9, 1998 by and between
Craig R. Rennie and IgX Limited, a company organised under the laws of Ireland
(the "Company").
2. I accept and agree to be bound by the Agreement in all respects
and in lieu of each other interest I may have in the Company or its
affiliates, whether that interest may be community property or quasi-community
property under the laws relating to marital property in effect in the
jurisdiction of our residence as of the date of the signing of the Agreement.
Dated:
------------------------------
[Signature]
------------------------------
[Please Print Name]
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