SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS
ISSUERS UNDER SECTION 12(b) OR 12(g) OF THE SECURITIES ACT OF 1934
L.A.M. PHARMACEUTICAL, CORP.
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(Name of Small Business Issuer in Its Charter)
Delaware Applied For
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(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
800 Sheppard Avenue West, Commercial Unit 1,
North York, Ontario, Canada M3H 6B4
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(Address of Principal Executive Offices) (Zip Code)
1-877-526-7717 or (416) 633-3004
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(Company's Telephone Number, Including Area Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of Each Class Name Of Each Exchange On Which
To Be So Registered Each Class Is To Be Registered
Securities to be registered pursuant to Section 12(g) of the Act:
Common stock, $0.0001 par value
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(Title of Class)
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TABLE OF CONTENTS
PART I........................................................................
Item 1..Description of Business.............................................
Item 2..Management's Discussion and Analysis and Plan of Operation..........
Item 3..Description of Property.............................................
Item 5..Directors, Executive Officers, Promoters and Control Persons........
Item 6..Executive Compensation..............................................
Item 7..Certain Relationships and Related Transactions......................
Item 8..Description of Securities...........................................
PART II.......................................................................
Item 1.Market Price of and Dividends on the Company's Common Equity and Other
Shareholder Matters.
Item 2..Legal Proceedings...................................................
Item 3..Changes in and Disagreements with Accountants.......................
Item 4..Recent Sales of Unregistered Securities.............................
Item 5..Indemnification of Directors and Officers...........................
PART F/S......................................................................
Index to Financial Statements...............................................
PART III......................................................................
Index to Exhibits...........................................................
SIGNATURES....................................................................
<PAGE>
PART I
Item 1. Description of Business.
L.A.M, Pharmaceutical, Corp. (the "Company") was incorporated in Delaware
in July 1998. In September 1998 the Company acquired all of the issued and
outstanding shares of LAM Pharmaceuticals LLC ("LAM") for 6,000,000 shares of
the Company's common stock. LAM was organized in Florida in 1997 to
commercialize a new drug delivery system which offers patients, among other
benefits, safer and more effective treatment for a number of serious diseases.
Unless otherwise indicated, all references to the Company include LAM.
In September 1998 the Company sold 3,930,000 shares of its common stock to
seventeen persons for $0.01 per share and sold 63,000 shares of its common stock
to 63 persons for $0.10 per share. Between October 1998 and October 1999 the
Company sold 399,500 shares of its common stock to 19 persons for $1.00 per
share.
Between June 1999 and February 2000 the Company sold convertible notes in
the principal amount of $1,517,000 to 29 persons. The notes are unsecured, bear
interest at 9.5% per year, and are due and payable at various dates between June
2000 and February 2001. At the option of the holder, each $1.00 of unpaid note
principal may be converted into two shares of the Company's common stock.
The objective of the Company is to develop, license, produce and sell
novel and proprietary pharmaceuticals. Notwithstanding the above, the Company
has not obtained U.S. Food and Drug Administration (FDA) approval for any of its
products.
The Company is the owner of a proprietary drug delivery technology that
involves the use of an original Ionic Polymer Matrix (IPM) for the purpose of
delivering, enhancing and sustaining the action of certain established
therapeutic agents.
The IPM technology is not a drug in and of itself, but rather a new system
for carrying, delivering and releasing drugs in a manner that can extend and/or
improve their efficacy and safety.
In order to fully understand and appreciate the significance and
effectiveness of the Company's drug delivery technology it is important to
understand how various drug-based formulations are applied to the skin and the
ways that substances applied to the skin are absorbed by the skin and other
structures of the body.
For many years lotions, creams, suspensions and solutions of various
natural (herbal) and therapeutic (drug) substances have been applied to the
skin. When it comes to treating pain, sexual dysfunction and other disease
states which emanate from structures of the body below the skin, topical therapy
is not effective unless the therapeutic agent can penetrate the outer layer of
the skin (stratum corneum) which acts as a protective barrier. This layer
consists of numerous dead cells and cells in transition, which collectively form
an effective barrier to penetration of substances, such as bacteria, in the air
or in water. Thus the stratum corneum plays an important role in protecting the
body from invasion by harmful substances.
<PAGE>
It is this same protective role which has posed a major challenge over the
years regarding devising a mechanism that can effectively penetrate the stratum
corneum for the purpose of delivering therapeutic substances to structures deep
within the body.
In 1994 the Company's scientists discovered that certain molecules, called
polymers were found to possess strong electrical charges which, when combined
with other polymers of a specific electrical charge, are able to effectively
penetrate the outer layers of the skin. In addition, these molecules are able to
attach or surround other molecules such as therapeutic drug molecules and carry
them within a matrix through the outer layers of the skin into the deeper
structures below. The Company's scientists recognized that these discoveries
would be of great significance in regard to the delivery of therapeutic agents.
This phenomenon, the ionic polymer matrix (IPM) delivery system, is exclusive
and proprietary to the Company.
IPM technology combines in a matrix, in a novel manner, those drugs which
are well-established and generally regarded by the public, the regulatory
authorities and the pharmaceutical industry as safe. When combined with the
active drug ingredient, IPM facilitates the delivery of greater amounts of drug
to the target area than is otherwise possible. IPM therefore offers potential
benefits by providing faster and more prolonged therapeutic activity, less
intrusive and less painful methods of delivery and faster onset of therapeutic
process.
The initial approach has been and continues to be to research and develop
applications of the IPM technology using well known and FDA approved or licensed
drugs whose patents have expired or which are not otherwise proprietary. This
approach has a number of benefits:
o The properties, safety and efficacy of the drug that is to be delivered
are well established and regulatory approvals or licenses for them have
been granted in most or all important markets.
o The matrix materials used with the IPM technology should be safe for use
in humans.
o The regulatory process required to gain approval or licenses for
the drug-IPM delivery matrix should be substantially shorter than
for a drug-IPM matrix where the drug is not approved or licensed.
The Company plans to evaluate a limited number of IPM/drug formulations
that have shown promise during preliminary clinical investigation. Assuming
successful Phase I and II trials and, depending on the circumstances, early
Phase III clinical trials which bear out this early promise, the Company's
preferred course will be to negotiate licensing agreements and/or joint ventures
with larger pharmaceutical companies with the financial wherewithal and
marketing ability to distribute and market the products.
If the clinical trials are promising then the Company may be in a position
to negotiate licenses which would generate sufficient revenue so as to allow the
Company to exploit the IPM technology using a variety of other drugs. It should
be emphasized that a number of risks may be associated with this approach. While
preliminary results have been promising, there is no certainty that the efficacy
of the IPM/compounds currently being tested will be borne out in subsequent
clinical trials. In addition, more clinical studies may be requested by a
potential licensee before it is willing to enter into an agreement.
<PAGE>
The Company's objective is to raise sufficient capital to enable it to
sustain ongoing research and administrative overhead as well as to enable it to
undertake the work necessary to obtain FDA approval for its products. The
ability to do this, will allow the Company to enhance and develop its products
to their greatest possible value before negotiating a license.
The longer the Company is able to fund development and the clinical trials
for its products and thereby establish their efficacy, the greater their value
will be to a potential licensee given the reduced risk of failure. Consequently,
the longer the Company retains sole ownership of the products the greater will
be its bargaining position with prospective licensees and strategic alliance
partners. Indeed, the industry places incrementally larger different values on
drugs as they progress through the clinical trials required by the FDA.
All of the Company's initial capitalization has been expended and the
ongoing operations are being funded by advances from either the Company's
existing shareholders and/or directors.
In July 1996, the Company entered into a joint venture agreement with
South Florida Bio-availability Clinic ("SFBC"), a private company located in
Miami, Florida. SFBC is a contract research company specializing in Phase I,
Phase II and Phase III clinical studies. Under the terms of the agreement, SFBC
has conducted a number of studies in human patients for the purpose of the
Company's FDA drug approval submissions.
The agreement between the Company and SFBC provides that SFBC will provide
office and laboratory space to the Company in it's Miami facilities. As part of
this agreement, the Company has transferred its equipment and research
activities from Toronto to Miami. SFBC also agreed to provide certain support
staff and office infrastructure to the Company.
This arrangement benefits the Company because it allows it to associate
with a well-known and respected research facility and gives its researchers the
ability to work in close proximity to SFBC staff. In addition, by obtaining
studies at cost, the Company is able to move its research along at a faster pace
than would have otherwise been possible.
At the present time the Company is focusing its efforts on the following
projects:
ARTHRITIC PAIN
The Company has developed a transdermal (through the skin) IPM drug
designed to be used in topical form for the relief of arthritic pain and pain
caused by related conditions.
At the present time, an effective transdermal preparation containing an
NSAID (nonsteroidal anti-inflammatory drug) for the treatment of arthritis is
not available on the market. The reasons for this are apparent when one
considers the technical challenges that must be overcome to effectively
penetrate the outer barrier of the skin.
Under the terms of the Canada Health Act and regulations, specialist
physicians are permitted a compassionate prescribing prerogative. This
prerogative allows for the prescribing of drugs which have not yet been approved
for sale in Canada, on a compassionate basis, for patients for whom no other
available medication has provided relief. Administration of the Diclofenac-IPM
<PAGE>
on a compassionate basis at the Rothbart Pain Clinic in Toronto have yielded
positive results in the treatment of arthritis.
The Company's Diclofenac-IPM is a highly effective and therapeutic
preparation containing 30 mg. of diclofenac per ml. This clear, aqueous and
highly absorbent gel is applied to the skin adjacent to the affected area.
Within several minutes the preparation dries and therapeutic levels of
diclofenac are delivered to the affected structures below the skin. In the case
of a patient suffering from osteoarthritis of the knee, for example, the outer
layer of the knee would be treated by the application of a small amount of the
Company's Diclofenac matrix to the skin covering the knee and gently massaged
for 20-30 seconds. After several minutes, the patient is able to resume his or
her activities.
In cases where the patient is experiencing acute pain, relief is apparent
within ten minutes. Relief of the symptoms of arthritis often lasts for 4-6
hours. In many cases one application of several doses of diclofenac will settle
or reduce the pain for longer periods. Thus the application of repeated doses is
required only when it becomes necessary to control pain.
The Company's Diclofenac matrix leaves no film or residue on the surface
of the skin and therefore can be applied to clean skin at any time of the day or
night. Relief of symptoms, as described earlier, is rapid and repeat dosing
should take place according to the patient's individual needs, but generally
every 4-6 hours. In addition to the gel matrix, the Company is currently working
on a Diclofenac patch for long-term relief (up to 3 days) for symptoms of
arthritis.
The Company's Diclofenac-IPM gel is especially important for the treatment
of arthritis in sufferers who experience acute inflammation and pain (flares).
This is a common condition that occurs frequently in the joints and surrounding
structures of patients suffering from osteoarthritis. Management of these acute
flares is especially important for individuals who need to return to their daily
activities in the shortest possible time. Clinical experience has demonstrated
that when the Company's Diclofenac matrix is used for acute flares, relief of
pain is not only rapid but is also long-lasting.
The most common form of arthritis is osteoarthritis, which affects an
estimated 20+ million people in the United States and Canada. The most common
form of medication used and prescribed for osteoarthritis is NSAID's. Examples
of non prescription NSAID's are ASA and ibuprofen. The world's best selling
prescription NSAID is diclofenac.
A risk faced by all users of orally administered NSAIDs, in particular
regular users, is NSAID-induced ulcers. NSAIDs are the most frequently used
class of drug by those suffering from arthritis. It is estimated that over
20,000 deaths occur annually in Canada and the United States resulting from
complications of NSAID-induced ulcers. One of the compassionate uses of the
Company's Diclofenac-IPM has been to treat patients suffering from gastric side
effects associated with the oral form of diclofenac. The topical administration
of diclofenac through the Company's Diclofenac-IPM mechanism would obviate many
of these risks and problems.
The Company is proceeding with the development of a long acting form of an
Diclofenac-IPM anti-inflammatory and analgesic. The Company is prioritizing its
activities on the development of the previously mentioned patch and is in the
process of conducting pilot studies on animals and on a compassionate basis in
<PAGE>
humans. Once these trials are concluded, the Company plans on filing the
appropriate data for regulatory approval and enlarging the scope of its IPM
patch research.
SEXUAL DYSFUNCTION DRUG
The Company technology has been successfully used to develop a topical gel
which, when applied to the genitals, provides a safe and effective treatment for
male impotency, a problem affecting 140 million men worldwide. The gel is
applied easily and without discomfort to the outside skin of the male genitals a
few minutes before sexual intercourse. The side-effects experienced with tablets
or intra-urethral treatments are minimized and are of a minor and infrequent
nature. The Company's IPM matrix utilizes an established agent which has been
approved for over 15 years. Pilot clinical trials conducted under the
compassionate provisions of the Canada Health Act are currently being conducted
in Toronto Canada, as well as throughout the United States.
The Company's gel offers several major advantages over current treatments,
(Viagra, Muse, etc.). Firstly, the gel is applied directly to the outside skin
of the male genitals. Thus pain associated with invasive therapy is eliminated.
Furthermore, side-effects associated with tablets (drug interactions) are
reduced to a very low incidence and are very mild when they infrequently occur.
Sexual activity can commence almost immediately after application of the gel
(within 2 to 3 minutes).
In December 1997, the Company granted an exclusive worldwide license to
Ixora Bio-Medical Co. ("Ixora"), for the marketing, sale and distribution of
certain of its transdermal drugs for the treatment of male and female sexual
dysfunction. The Company has received licensing payments of $200,000 from Ixora
and is to receive a further payment of $300,000 in September 2000. Ixora is
required to reimburse the Company for all costs of clinical studies and related
research required by the FDA or other government agencies as well as patent
procurement and maintenance costs, provided however that Ixora is not obligated
to reimburse the Company for costs in excess of $10,000 per quarter. The Company
will receive the following royalties on sales by Ixora:
o 9% of all Net Sales of licensed products approved by the FDA and for
which the patent rights have not expired.
o 6.5% of all Net Sales of all licensed products which did not require
FDA approval and for which the patent rights have not expired.
o 4.5 of all Net Sales of all licensed products for which the patent
rights have expired or have been held to be invalid.
For purposes of the license agreement the term "Net Sales" means gross
sales less advertising/promotion expenses not exceeding 8% of gross sales and
sales taxes.
The Company presently owns 37% of Ixora.
<PAGE>
Following completion in the latter part of 2000 of pilot trials for its
sexual dysfunction drugs, the Company plans to file the necessary applications
with various regulatory authorities to commence Phase II and Phase III trials
for the purpose of gaining marketing approval for these drugs. The trials should
take approximately 12-18 months on an accelerated basis.
SKIN CARE
The Company's IPM matrix spreads easily over large areas of skin, making
it ideal for use as a cosmetic in various applications to the skin. Cosmetics
are a multi-billion dollar a year industry that do not require approval before
marketing, although cosmetics must be safe, contain appropriate cosmetic
ingredients and be labeled properly. Various uses for the Company's product
include controlling body odors, relief of dryness, and for moisturization. For
example, the IPM matrix could be used as a lubricant, to replenish moisture and
general skin conditioning, particularly because it is non-staining and
non-irritating. When used with a fragrance, it could control odor. When combined
with certain over-the-counter (OTC) drugs, the IPM-drug matrix could be marketed
as a cosmetic.
Certain products marketed in the United States are considered cosmetics
and OTC drugs because they make cosmetic claims as well as therapeutic claims
and are intended to treat or prevent disease. Examples of such products include,
but are not limited to, anti-dandruff shampoos; sunscreens; make-ups,
moisturizers and skin care products that bear sunscreen, skin protectant or acne
claims; anti-caries products that make breath-freshening or whitening claims;
antiperspirants that bear deodorant claims; and anti-microbial soaps. These
products must comply with the FDA requirements for both cosmetics and OTC drugs.
As a cosmeceutical, a combination of an OTC monographed drug and a
cosmetic product, the IPM matrix can be used for a variety of topical and other
uses. These include use with certain antibiotic first aid products, antifungal
drugs, dandruff, dermatitis and psoriasis control products, external analgesics,
skin protectant-type products, such as for poison ivy and fever blisters and
cold sores, first aid antiseptics, and anorectal products. Presently several
cutaneous surgeons and dermatologists in North America are conducting
preliminary IPM skin care trials.
GOVERNMENT REGULATION
The Company's drug and cosmetic products are regulated in the United
States under the Federal Food, Drug and Cosmetic Act (FD&C Act), the Public
Health Service Act, and the laws of certain states. The Federal Food and Drug
Administration (FDA) exercises significant regulatory control over drugs
manufactured and/or sold in the United States, including those that are
unapproved.
Federal laws such as the FD&C Act cover the testing, manufacture,
distribution, marketing, labeling, advertising (for prescription drugs), of all
new drugs and biologics. Drug registration and listing requirements also exist.
<PAGE>
Cosmetics
Cosmetics are generally the least regulated by the FDA compared to other
products subject to the FD&C Act. The legal distinction between cosmetics and
drugs is typically based on the intended use of the product, which is normally
discerned from its label or labeling. Cosmetic products are those intended for
"cleansing, beautifying, promoting attractiveness, or altering appearance"
whereas drugs are those intended for "diagnosis, cure, mitigation, treatment, or
prevention of disease", or that "affect the structure or any function of the
body".
A claim suggesting that a product affects the body in some "physiological"
way usually renders the product a drug - even if the effect is temporary. A
claim that the product penetrates and affects layers beneath the skin's surface
most likely would be viewed by the FDA as a drug claim. However, claims that a
product affects appearance through a "physical" effect are generally considered
cosmetic claims. The FDA's rationale for this distinction is that a claim of a
physiological effect is a claim that the product "affects" the structure or
function of the body, which is one element of the statutory definition of a
drug. A claim indicating that a product's effects are on the surface of the skin
can be a cosmetic claim.
In order to be marketed lawfully as a cosmetic, the product must be
properly labeled and each ingredient and each finished cosmetic product must be
adequately substantiated for safety prior to marketing.
Products may be marketed as both cosmetics and drugs so long as they comply
with both the cosmetic and drug requirements of the FDA. Generally, to the
extent any conflict arises, the drug requirements take precedence over the
cosmetic requirements. To be marketed in the United States, drug products must
either comply with specified OTC drug regulations (monographs) or be
specifically approved through the New Drug Application ("NDA") or biologic
licensure process.
OTC Drug Monograph
OTC drugs generally are defined as those drug products that can be used
safely and effectively by the general public without seeking treatment by a
physician or other health care professional. Thus, they do not require a
prescription by a health care professional and are available at retail
establishments. An OTC drug may be marketed if it conforms to a particular
product monograph as described below and otherwise meets the requirements of the
FD&C Act. If a drug product does not conform to a particular OTC monograph, then
typically an NDA must be reviewed and approved by the FDA prior to marketing.
Unlike prescription drugs, OTC drugs must bear adequate directions for safe and
effective use and warnings against misuse.
OTC monographs lists active ingredients, their dosage levels, and uses
(claims) for which OTC drug products are considered generally recognized as safe
and effective for specific use and are not misbranded. If a particular level of
an active ingredient and claim are allowed by a monograph, then a manufacturer
may market a product containing that ingredient and bearing that claim without
specific FDA approval - subject to compliance with other requirements of the
monographs and FD&C Act, including drug registration and listing obligations.
Aspirin is a common drug allowed by a monograph.
<PAGE>
New Drug Applications and Biologic License Applications
New drugs and products that are not cosmetics or devices and that are not
covered by an OTC monograph must be approved by the FDA prior to marketing in
the United States. Certain states, however, have passed laws which allow a state
agency having functions similar to the FDA to approve the testing and use of
pharmaceutical products within the state. In the case of either FDA or state
regulation, pre-clinical testing programs on animals, followed by three phases
of clinical testing on humans, are typically required in order to establish
product safety and efficacy. The Company believes that its IPM technology, when
used with approved or unapproved prescription drugs or biologics, will be
regulated as an unapproved new drug or unapproved biologic and will require
approval by the FDA.
It is also possible that the IPM technology in such circumstances may be
regulated as a combination drug and medical device, in which case it would be
subject both to medical device and drug regulation. Medical device regulation is
based on classification of the device into three classes, I, II, or III. Class
III medical devices are regulated much like drugs, whereas Class I and II
devices are subject to abbreviated clearance procedures. It is also possible
that the use of the IPM technology with a monographed OTC drug could render the
product an unapproved new drug, which would mean that the product is subject to
new drug application approval requirements before marketing.
The first stage of evaluation, pre-clinical testing, must be conducted in
animals. After safety has been demonstrated, the test results are submitted to
the FDA (or a state regulatory agency) along with a request for authorization to
conduct clinical testing, which includes the protocol that will be followed in
the initial human clinical evaluation. If the applicable regulatory authority
does not object to the proposed study, the investigator can proceed with Phase I
trials. Phase I trials consist of pharmacological studies on a relatively few
number of human subjects under rigidly controlled conditions in order to
establish lack of toxicity and a safe dosage range.
After Phase I testing is completed, one or more Phase II trials are
conducted in a limited number of patients to continue to test the product's
safety and also its efficacy, i.e. its ability to treat or prevent a specific
disease. If the results appear to warrant further studies, the data are
submitted to the applicable regulatory authority along with the protocol for a
Phase III trial. Phase III trials consist of extensive studies in large
populations designed to assess the safety of the product and the most desirable
dosage in the treatment or prevention of a specific disease. The results of the
clinical trials for a new drug are submitted to the FDA as part of a New Drug
Application ("NDA").
Biological drugs, such as vaccines, are subject to Biologics License
Applications (BLAs), not NDAs as are other drugs. They must be safe, pure and
potent. Generic competition does not exist for biologics, as it does for other
drugs. Biological drugs are generally subject to the same testing,
manufacturing, distribution, marketing, labeling, advertising and other
requirements for other drugs.
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To the extent all or a portion of the manufacturing process for a product
is handled by an entity other than the Company, the manufacturing entity is
subject to inspections by the FDA and by other Federal, state and local agencies
and must comply with FDA Good Manufacturing Practices ("GMP") requirements. In
complying with GMP regulations, manufacturers must continue to expend time,
money and effort in the area of production, quality control and quality
assurance to ensure full compliance.
The process of biologic and new drug development and regulatory approval
or licensure requires substantial resources and many years. There can be no
assurance that regulatory approval will ever be obtained for products developed
by the Company. Authorization for testing, approval for marketing of drugs,
including biologics, by regulatory authorities of most foreign countries must
also be obtained prior to initiation of clinical studies and marketing in those
countries. The approval process varies from country to country and the time
period required in each foreign country to obtain approval may be longer or
shorter than that required for regulatory approval in the United States.
There are no assurances that clinical trials conducted under approval from
state authorities or conducted in foreign countries will be accepted by the FDA
for approval in the United States. Product approval or licensure in a foreign
country does not mean that the product will be approved or licensed by the FDA
and there are no assurances that the Company will receive any approval or
license by the FDA or any other governmental entity for the marketing of a drug
product.
Product Status
All of the Company's products are in various stages of development and
testing and the commercial sale of any of these products may not occur until
December 2000 at the earliest. As a result, the Company expects to incur
substantial losses for the foreseeable future. The Company's estimates of the
costs associated with future research and clinical studies may be substantially
lower than the actual costs of these activities. If the Company's cost estimates
are incorrect, the Company will need additional funding for its research
efforts. There can be no assurance that the Company's products will prove to
have any therapeutic or other value.
The following is a summary of the status of the products which are being
developed by the Company:
Projected Cost Projected Date
Anticipated FDA Needed to Complete of Completion
Product Name Classification Studies/Trials
of Studies/Trials
Arthritic Pain New Drug Application $1,500,000 (1)
Sexual Dysfunction New Drug Application $1,500,000 (2)
Skin Care Cosmetic/OTC Monograph $1,500,000 (1)
(1) The Company plans to fund the majority of the costs of these studies by
licensing the rights to these products to a joint venture partner. As of
April 30, 2000 the Company had not entered into any agreements with any
third party with respect to the further development of these products.
Clinical studies are expected to last 18 to 24 months.
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(2) The Company has licensed this product to Ixora Bio-Medical Co. See Item 1
of this registration statement. Pursuant to the terms of the Licensing
Agreement Ixora is responsible for all the costs required to obtain
regulatory approval of this product. Clinical studies and related research
are expected to be completed by January 2002.
Other Products
As part of its ongoing research and development program the Company
intends to develop and commercialize as many products based on its IPM
technology as possible. The Company is in the early stages of developing
formulations involving morphine, and other compounds. Its long-range goal is to
exploit every possible use of the IPM technology where the matrix delivery
system improves therapeutic effects of the drug that is being delivered.
Patents and Trademarks
As of April 30, 2000, the Company owned or had rights to six U.S. patents,
four U.S. patents applications and twelve international patent applications
designating over 100 foreign countries with claims relating to its sustained
release delivery matrix system, systems containing drug preparations, uses of
the systems for various treatment therapies and addiction therapeutic program.
Employees
As of April 30, 2000 the Company had four full time employees and one part
time employee.
Item 2. Management's Discussion and Analysis and Plan of Operations
All of the Company's products are in the development stage. As a result,
the Company has not generated any revenues from the sale of its products.
Revenues since its inception represent payments received from Ixora. See Item 1
of this Registration Statement for further information concerning the Company's
agreement with Ixora.
Due to the lack of any significant revenues, the Company has relied upon
proceeds realized from the public and private sale of its common stock and
convertible notes to meet its funding requirements. Funds raised by the Company
have been expended primarily in connection with research, development, clinical
studies and administrative costs. Since the Company does not anticipate
realizing revenues until such time as it begins the commercial sale of its
products or enters into licensing arrangements regarding these products (which
could take a number of years), the Company will be required, through the sale of
securities, debt financing or other arrangements, to fund its operations.
However, there can be no assurance that such financing will be available or be
available on favorable terms.
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The primary components of general and administrative expenses during the
last two years were:
1999 1998
---- ----
Officer's salary $60,000 $120,000
Employee salaries and benefits $151,830 $183,661
Investor Relations $91,941 $15,000
Commissions paid on sale of
Convertible Notes $27,471 --
Financial Consulting $42,875 $36,000
Legal and Auditing $92,801 $106,852
During the year ended December 31, 1999 the Company recorded an expense of
$449,656 (which did not require the use of cash) associated with the grant of
options to consultants and employees and common stock issued in consideration
for services.
During the three months ended March 31, 2000 research and development
expenses increased due to the start of clinical trials in Toronto, Canada as
well as deferred compensation paid to the Company's president. The clinical
trials pertain to the Company's arthritic pain drug. During this same period
general and administrative expenses increased as the result of sales commissions
paid in connection with the sale of the Company's convertible notes, additional
administrative personnel and increased legal expenses.
Liquidity and Sources of Capital
The Company's operations used approximately $55,000 in cash during the
period ended December 31, 1998. During this period the Company also spent
approximately $55,000 on patent and trademark applications. Cash required during
1998 was generated through sales of the Company's common stock ($378,785) and
convertible notes ($125,000).
During the year ended December 31, 1999 the Company's operations used
approximately $348,000 in cash and the Company spent approximately $166,000 on
patent and trademark applications. Cash required during the year was generated
through sales of the Company's common stock ($60,000) and convertible notes
($1,077,000).
The Company's operations used approximately $442,000 in cash during the
quarter ended March 31, 2000. During this same period the Company purchased
equipment having a cost of $13,204 and spent $54,434 on patents. Cash required
during this period was derived from the sale of convertible notes ($265,000) and
from the Company's cash on hand at December 31, 1999.
During fiscal 2000, the Company expects that it will spend between
$110,000 and $150,000 on research, development, and clinical studies. As of
April 30, 2000 the Company had working capital of approximately $676,000
(exclusive of the convertible debentures that are expected to be converted to
equity and liabilities due to shareholders of the Company). The Company plans to
use its existing financial resources as well as the proceeds from the sale of
its common stock to fund its capital requirements during this period. The
<PAGE>
Company does not have any commitments from any third party to provide any
capital to the Company It should be noted that substantial funds may be needed
for more extensive research and clinical studies which may be necessary before
the Company will be able to sell any of its products on a commercial basis.
Other than funding its research and development activities and operating
losses, the Company does not have any material capital commitments.
Item 3. Description of Property.
The Company's research facilities are located at SFBC in Miami Florida.
The Company's laboratories are registered and licensed by the State of Florida
and are in compliance with the FDA's Good Manufacturing Practices. The state of
the art equipment in these facilities include: three Cafano mixing systems, a 20
foot commercial depyrogenating oven, sterilized fume hood autoclaves, and a
Milipure sterile manufacturing water system.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth certain information as of March 31, 2000
concerning the common stock owned by each officer and director of the Company,
and each other person known to the Company to be the beneficial owner of more
than five percent (5%) of the Company's common stock.
Name and Address Shares Owned Percentage Ownership
Alan Drizen 2,524,924 (1) 24%
1201-100 Canyon Avenue
Toronto, Ontario M3H 5T9
Peter Rothbart 2,679,924 (2) 26%
274 St. Clements Avenue.
Toronto, Ontario M4R 1H5
Gary Nath 1,848,226 18%
6106 Goldtree Way,
Bethesda, Maryland 20817
Lisa Krinsky 1,127,240 (3) 11%
11190 Biscayne Blvd.
Miami, Florida 33181
Arnold Hantman 498,389 5%
11190 Biscayne Blvd.
Miami, Florida 33181
(All Officers and Directors as
a group, 3 persons) 7,053,074 68%
(1) Includes shares held by the Canyon Trust, a discretionary trust, of which
Mr. Drizen may be deemed the beneficial owner.
(2) Includes shares held by the Shirlaine Establishment Trust, of which Mr.
Rothbart may be deemed the beneficial owner.
(3) Includes shares held by the South Florida Bioavailability Clinic of which
Lisa Krinsky is the majority shareholder.
There are no arrangements known to the Company which may result in a change in
control of the Company.
Item 5. Directors, Executive Officers, Promoters and Control Persons.
The directors and executive officers of the Company are as follows:
Name Age Position
Alan Drizen 60 President and Director
Peter Rothbart, M.D. 61 Treasurer and Director
Gary M. Nath 54 Secretary and Director
Alan Drizen has been President and a director of the Company since its
inception. He has spent 30 years in senior positions including Chairman of the
Board and a director of a number of pharmaceutical companies. He was educated in
England, the United States and Canada and trained as a biochemist. Mr. Drizen
has both technical and managerial expertise in the development and
commercialization of new drugs. In the late 1980's, Mr. Drizen and his team of
scientists characterized molecules known as mucopolysaccharides which led to the
founding of Hyal Pharmaceutical Corporation, a public company listed on the
Toronto Stock Exchange and NASDAQ. The analytical standard, developed by his
team, for one particular molecule, sodium hyaluronate, now a component of many
pharmaceutical preparations, is still used by the Canada Health Protection
Branch as the official standard for this drug. Mr. Drizen's interest in polymer
chemistry eventually led to his collaboration with Dr. Peter Rothbart and to the
discoveries on which the Companys technologies are based.
Peter Rothbart, M.D., Medical Director, has been a director and Treasurer
of the Company since its inception. He has been a consulting anesthetist for
over 20 years and is a leading pain specialist and principal of the Rothbart
Pain Management Clinic in Toronto, Canada. Dr. Rothbart is currently President
of the North American Cervicogenic Headache Society, an association of
specialists in the treatment of cervicogenic headaches. He was also recently
elected Chair of the Chronic Pain Section of the Ontario Medical Association. In
collaboration with Alan Drizen, Dr. Rothbart discovered the IPM delivery system.
In addition to his role as a director of the Company and Medical Director, Dr.
Rothbart is using the Company's diclofenac matrix in his Toronto clinic on a
compassionate basis.
Gary M. Nath, has been Secretary and a director of the Company since its
inception. He has a BS degree in Biology and Chemistry, two years of
post-graduate work in Biochemistry and a law degree. Mr. Nath has worked in the
patent and trademark law departments of FMC Corporation, NL Industries, and
Warner Lambert Company in the capacities of patent attorney, group patent and
trademark counsel and general patent counsel, respectively. Mr. Nath is the
founding and managing partner of the intellectual property law firm Nath &
Associates located in Washington, DC. He counsels a wide range of domestic and
<PAGE>
international clients across a broad range of technologies, including chemical,
pharmaceutical, biotechnical and mechanical fields. He has published extensively
and has spoken on intellectual property law procurement, enforcement and
transfer before numerous professional and lay groups in the United States and
Japan. He is a member of the American Bar Association, the New Jersey Bar
Association, the American Intellectual Property Law Association, the
International Patent Association, the Association of University Technology
Managers, and is admitted to practice before the U.S. Patent and Trademark
Office, Canadian Patent Office and numerous courts around the United States.
Item 6. Executive Compensation.
The following table sets forth in summary form the compensation
received by (i) the Chief Executive Officer of the Company and (ii) by each
other executive officer of the Company who received in excess of $100,000 during
the fiscal years ended December 31, 1998 and 1999.
Annual Compensation Long Term Compensation
All
Re- Other
Other stric- Com-
Name and Compen- Stock Options pensa-
Principal Fiscal Salary Bonus sation Awards Granted tion
Position Year (1) (2) (3) (4) (5) (6)
- ------------ ------ ------ ------ ------- ------- ------- ------
Alan Drizen,
President and 1999 $60,000 -- -- -- -- --
Chief Executive 1998 $120,000 -- -- -- -- --
Officer
(1) The dollar value of base salary (cash and non-cash) received.
(2) The dollar value of bonus (cash and non-cash) received.
(3) Any other annual compensation not properly categorized as salary or bonus,
including perquisites and other personal benefits, securities or property.
(4) During the period covered by the foregoing table, the shares of restricted
stock issued as compensation for services. The table below shows the number
of shares of the Company's common stock owned by the officers listed above,
and the value of such shares as of December 31, 1999.
Name Shares Value
Alan Drizen 2,524,924 $10,100,000
(5) The shares of Common Stock to be received upon the exercise of all stock
options granted during the period covered by the table
(6) All other compensation received that the Company could not properly report
in any other column of the table.
<PAGE>
The following shows the amounts which the Company expects to pay to its
officers during the twelve month period ending December 31, 2000, and the time
which the Company's executive officers plan to devote to the Company's business.
The Company does not have employment agreements with any of its officers.
Proposed Time to be Devoted
Name Compensation To Company's Business
Alan Drizen $120,000 100%
Petar Rothbart ----- 5%
Gary M. Nath ----- 15%
(1) The compensation to be paid to these persons will depend upon funding the
Company receives separate and apart from this offering.
Gary Nath provides legal services to the Company. See Part I, Item 7 of
this registration statement. During the year ending December 31, 2000 the
Company expects that it will continue to use the services of Mr. Nath's law
firm.
The Company's Board of Directors may increase the compensation
paid to the Company's officers depending upon the results of the Company's
future operations.
The Company does not have any employment agreements with any of its
executive officers.
The Company has not granted any options to any of its officers or
directors.
Long Term Incentive Plans - Awards in Last Fiscal Year
None.
Employee Pension, Profit Sharing or Other Retirement Plans
The Company does not have a defined benefit, pension plan, profit
sharing or other retirement plan, although the Company may adopt one or more of
such plans in the future.
Compensation of Directors
Standard Arrangements. At present the Company does not pay its
directors for attending meetings of the Board of Directors, although the Company
expects to adopt a director compensation policy in the future. The Company has
no standard arrangement pursuant to which directors of the Company are
compensated for any services provided as a director or for committee
participation or special assignments.
Other Arrangements. During the year ended December 31, 1999, and except
as disclosed elsewhere in this registration statement, no director of the
Company received any form of compensation from the Company.
<PAGE>
See " Stock Option and Bonus Plans" below for information concerning
stock options and stock bonuses granted to the Company's officers and directors.
Stock Option and Bonus Plans
The Company has an Incentive Stock Option Plan, a Non-Qualified Stock
Option Plan and a Stock Bonus Plan. A summary description of each Plan follows.
In some cases these three Plans are collectively referred to as the "Plans".
Incentive Stock Option Plan. The Incentive Stock Option Plan authorizes
the issuance of options to purchase up to 600,000 shares of the Company's Common
Stock, less the number of shares already optioned under both this Plan and the
Non-Qualified Stock Option Plan. The Incentive Stock Option Plan became
effective on March 15, 2000 and will remain in effect until March 15, 2010
unless terminated earlier by action of the Board. Only officers, directors and
key employees of the Company may be granted options pursuant to the Incentive
Stock Option Plan.
In order to qualify for incentive stock option treatment under the
Internal Revenue Code, the following requirements must be complied with:
1.Options granted pursuant to the Plan must be exercised no later than:
(a) The expiration of thirty (30) days after the date on which an
option holder's employment by the Company is terminated.
(b) The expiration of one year after the date on which an option
holder's employment by the Company is terminated, if such termination is due to
the Employee's disability or death.
2. In the event of an option holder's death while in the employ of the
Company, his legatees or distributees may exercise (prior to the option's
expiration) the option as to any of the shares not previously exercised.
3. The total fair market value of the shares of Common Stock
(determined at the time of the grant of the option) for which any employee may
be granted options which are first exercisable in any calendar year may not
exceed $100,000.
4. Options may not be exercised until one year following the date of
grant. Options granted to an employee then owning more than 10% of the Common
Stock of the Company may not be exercisable by its terms after five years from
the date of grant.
5. The purchase price per share of Common Stock purchasable under an
option is determined by the Committee but cannot be less than the fair market
value of the Common Stock on the date of the grant of the option (or 110% of the
fair market value in the case of a person owning the Company's stock which
represents more than 10% of the total combined voting power of all classes of
stock).
<PAGE>
Non-Qualified Stock Option Plan. The Non-Qualified Stock Option Plan
authorizes the issuance of options to purchase up to 600,000 shares of the
Company's Common Stock less the number of shares already optioned under both
this Plan and the Incentive Stock Option Plan. The Non-Qualified Stock Option
Plan became effective on March 15, 2000 and will remain in effect until March
15, 2010 unless terminated earlier by the Board of Directors. The Company's
employees, directors, officers, consultants and advisors are eligible to be
granted options pursuant to the Plan, provided however that bona fide services
must be rendered by such consultants or advisors and such services must not be
in connection with the offer or sale of securities in a capital-raising
transaction. The option exercise price is determined by the Committee but cannot
be less than the market price of the Company's Common Stock on the date the
option is granted.
Options granted pursuant to the Plan not previously exercised terminate
upon the date specified when the option was granted.
Stock Bonus Plan. Up to 300,000 shares of Common Stock may be granted
under the Stock Bonus Plan. Such shares may consist, in whole or in part, of
authorized but unissued shares, or treasury shares. Under the Stock Bonus Plan,
the Company's employees, directors, officers, consultants and advisors are
eligible to receive a grant of the Company's shares; provided, however, that
bona fide services must be rendered by consultants or advisors and such services
must not be in connection with the offer or sale of securities in a
capital-raising transaction.
Other Information Regarding the Plans. The Plans are administered by
the Company's Board of Directors. The Board of Directors has the authority to
interpret the provisions of the Plans and supervise the administration of the
Plans. In addition, the Board of Directors is empowered to select those persons
to whom shares or options are to be granted, to determine the number of shares
subject to each grant of a stock bonus or an option and to determine when, and
upon what conditions, shares or options granted under the Plans will vest or
otherwise be subject to forfeiture and cancellation.
In the discretion of the Board of Directors, any option granted
pursuant to the Plans may include installment exercise terms such that the
option becomes fully exercisable in a series of cumulating portions. The Board
of Directors may also accelerate the date upon which any option (or any part of
any options) is first exercisable. Any shares issued pursuant to the Stock Bonus
Plan and any options granted pursuant to the Incentive Stock Option Plan or the
Non-Qualified Stock Option Plan will be forfeited if the "vesting" schedule
established by the Board of Directors at the time of the grant is not met. For
this purpose, vesting means the period during which the employee must remain an
employee of the Company or the period of time a non-employee must provide
services to the Company. At the time an employee ceases working for the Company
(or at the time a non-employee ceases to perform services for the Company), any
shares or options not fully vested will be forfeited and cancelled. In the
discretion of the Board of Directors payment for the shares of Common Stock
underlying options may be paid through the delivery of shares of the Company's
Common Stock having an aggregate fair market value equal to the option price,
provided such shares have been owned by the option holder for at least one year
prior to such exercise. A combination of cash and shares of Common Stock may
also be permitted at the discretion of the Board of Directors.
<PAGE>
Options are generally non-transferable except upon death of the option
holder. Shares issued pursuant to the Stock Bonus Plan will generally not be
transferable until the person receiving the shares satisfies the vesting
requirements imposed by the Board of Directors when the shares were issued.
The Board of Directors of the Company may at any time, and from time to
time, amend, terminate, or suspend one or more of the Plans in any manner it
deems appropriate, provided that such amendment, termination or suspension
cannot adversely affect rights or obligations with respect to shares or options
previously granted. The Board of Directors may not, without shareholder
approval: make any amendment which would materially modify the eligibility
requirements for the Plans; increase or decrease the total number of shares of
Common Stock which may be issued pursuant to the Plans except in the case of a
reclassification of the Company's capital stock or a consolidation or merger of
the Company; reduce the minimum option price per share; extend the period for
granting options; or materially increase in any other way the benefits accruing
to employees who are eligible to participate in the Plans.
The Plans are not qualified under Section 401(a) of the Internal
Revenue Code, nor are they subject to any provisions of the Employee Retirement
Income Security Act of 1974.
Summary. The following sets forth certain information as of April 30,
2000, concerning the stock options and stock bonuses granted by the Company.
Each option represents the right to purchase one share of the Company's common
stock.
Total Shares Remaining
Shares Reserved for Shares Options/
Reserved Outstanding Issued As Shares
Name of Plan Under Plan Options Stock Bonus Under Plan
- ------------ ---------- ------------ ----------- ----------
Incentive Stock Option Plan 600,000 -- N/A 600,000
Non-Qualified Stock Option
Plan 600,000 -- N/A 600,000
Stock Bonus Plan 300,000 N/A -- 300,000
Other Options
Between September 1998 and April 30, 2000 the Company granted options to
employees, consultants and third parties which collectively allow for the
purchase of 1,310,466 shares of the Company's common stock. The options are
exercisable at prices ranging between $0.65 and $4.00 per share and expire at
various dates between September 2000 and December 2002.
Item 7. Certain Relationships and Related Transactions.
In September 1998 the Company sold shares of its common stock to the
persons, in the amounts, and for the consideration set forth below:
<PAGE>
Number
Name of Shares Consideration
Alan Drizen 1,076,308 (1) $10,763
Petar Rothbart 1,076,308 (2) $10,763
Gary M. Nath 742,784 $7,423
In September 1998 the Company issued 6,000,000 shares of its common stock
in consideration for all of issued and outstanding shares of LAM Pharmaceuticals
LLC, a Florida limited liability company. See Part I, Item 1 of this
registration statement. The following officers, directors and other persons
received shares of the Company's common stock in connection with this
transaction.
Name Shares Acquired
Alan Drizen 1,603,616 (1)
Petar Rothbart 1,603,616 (2)
Gary M. Nath 1,105,942
Lisa Krinsky 674,510 (3)
Arnold Hantman 376,019
All Other Sellers as a Group 636,297
----------
6,000,000
(1) Includes shares held by the Canyon Trust, a discretionary trust, of which
Mr. Drizen may be deemed the beneficial owner.
(2) Includes shares held by the Shirlaine Establishment Trust, of which Mr.
Rothbart may be deemed the beneficial owner.
(3) Includes shares held by the South Florida Bioavailability Clinic of which
Lisa Krinsky is the majority shareholder.
The Company has received advances from Alan Drizen ($525,000), Peter
Rothbart ($170,000) and Gary Nath ($475,000) that were used to fund the
Company's operations, research and development and clinical trials. These
advances will be repaid, without interest, out of 25% of the profits realized by
the Company.
During 1998 and 1999 the Company paid Gary Nath, an officer and director
of the Company, $10,721 and $63,210 respectively for legal services provided to
the Company. As of December 31, 1999 the Company owed Mr. Nath approximately
$124,000 for legal services.
Item 8. Description of Securities
Common Stock
The Company is authorized to issue 50,000,000 shares of Common Stock (the
"Common Stock"). As of March 31, 2000 the Company had 10,392,500 shares of
Common Stock issued
<PAGE>
and outstanding. Holders of Common Stock are each entitled to cast one vote for
each share held of record on all matters presented to shareholders. Cumulative
voting is not allowed; hence, the holders of a majority of the outstanding
Common Stock can elect all directors.
Holders of Common Stock are entitled to receive such dividends as may be
declared by the Board of Directors out of funds legally available therefore and,
in the event of liquidation, to share pro rata in any distribution of the
Company's assets after payment of liabilities. The Board of Directors is not
obligated to declare a dividend and it is not anticipated that dividends will be
paid until the Company is in profit.
Holders of Common Stock do not have preemptive rights to subscribe to
additional shares if issued by the Company. There are no conversion, redemption,
sinking fund or similar provisions regarding the Common Stock. All of the
outstanding shares of Common Stock are fully paid and non-assessable and all of
the shares of Common stock offered hereby will be, upon issuance, fully paid and
non-assessable.
Preferred Stock
The Company is authorized to issue up to 5,000,000 shares of Preferred
Stock. The Company's Articles of Incorporation provide that the Board of
Directors has the authority to divide the Preferred Stock into series and,
within the limitations provided by Delaware statute, to fix by resolution the
voting power, designations, preferences, and relative participation, special
rights, and the qualifications, limitations or restrictions of the shares of any
series so established. As the Board of Directors has authority to establish the
terms of, and to issue, the Preferred Stock without shareholder approval, the
Preferred Stock could be issued to defend against any attempted takeover of the
Company.
PART II
Item 1. Market Price of and Dividends on the Company's Common Equity and Other
Shareholder Matters.
As of April 30, 2000, there were 91 record owners of the Company's common
stock. The Company's common stock is traded in the over-the-counter market under
the symbol "LAMP". Set forth below are the range of high and low bid quotations
for the periods indicated as reported by the National Quotation Bureau. The
market quotations reflect interdealer prices, without retail mark-up, mark-down
or commissions and may not necessarily represent actual transactions. The
Company's common stock began trading in August 1999.
Quarter Ending High Low
9/30/99 $1.38 $0.60
12/31/99 $4.00 $0.88
Holders of Common Stock are entitled to receive such dividends as may be
declared by the Board of Directors out of funds legally available therefor and,
in the event of liquidation, to share pro rata in any distribution of the
Company's assets after payment of liabilities. The Board of Directors is not
<PAGE>
obligated to declare a dividend. The Company has not paid any dividends and the
Company does not have any current plans to pay any dividends.
Between September 1998 and April 30, 2000 the Company granted options to
employees, consultants and third parties which collectively allow for the
purchase of 1,310,466 shares of the Company's common stock. The options are
exercisable at prices ranging between $0.65 and $4.00 per share and expire at
various dates between September 2000 and December 2002.
Item 2. Legal Proceedings.
None
Item 3. Changes in and Disagreements with Accountants.
Not applicable.
Item 4. Recent Sales of Unregistered Securities.
A. In September 1998 the Company acquired all of the issued and
outstanding shares of LAM Pharmaceuticals LLC ("LAM") for 6,000,000 shares of
the Company's common stock. At the time of acquisition LAM had the rights to the
proprietary drug delivery technology and pharmaceuticals that are being
developed by the Company.
B. In September 1998 the Company sold 3,930,000 shares of its common stock
to seventeen persons for $0.01 per share and sold 63,000 shares of its common
stock to 63 persons for $0.10 per share. Between October 1998 and October 1999
the Company sold 399,500 shares of its common stock to 19 persons for $1.00 per
share.
C. Between June 1999 and February 2000 the Company sold convertible notes
in the principal amount of $1,517,000 to 29 persons. The notes are unsecured,
bear interest at 9.5% per year, and are due and payable at various dates between
June 2000 and February 2001. At the option of the holder, each $1.00 of (unpaid
not) principal may be converted into two shares of the Company's common stock.
The sales of shares referenced in Note B were exempt from registration
pursuant to Rule 504 of the Securities and Exchange Commission. No underwriters
were involved with the sale of these securities and no commissions or other
forms of remuneration were paid to any person in connection with these sales.
The sale of the common stock and convertible notes referenced in Notes A
and C were exempt transactions under Section 4(2) of the Securities Act of 1933
as transactions by an issuer not involving a public offering. The shareholders
of LAM and the holders of the convertible notes acquired these securities for
investment purposes only and without a view to distribution. At the time the
shareholders of Lam and the holders of the convertible notes acquired these
securities, all were fully informed and advised about matters concerning the
Company, including its business, financial affairs and other matters. The
shareholders of LAM and the holders of the convertible note acquired the
securities for their own account. The certificates evidencing the securities
purchased by the shareholders of LAM bear a legend stating that they may not be
<PAGE>
offered, sold or transferred other than pursuant to an effective registration
statement under the Securities Act of 1933, or pursuant to an applicable
exemption from registration. The shares purchased by the shareholders of LAM and
the holders of the convertible note are "restricted" securities as defined in
Rule 144 of the Securities and Exchange Commission. Although no underwriters
were involved with the sale of these securities, the Company paid commissions of
$74,600 to an unrelated third party in connection with the sale of its
convertible notes.
Item 5. Indemnification of Directors and Officers.
The Delaware Corporation Law and the Company's Bylaws provide that the
Company may indemnify any and all of its officers, directors, employees or
agents or former officers, directors, employees or agents, against expenses
actually and necessarily incurred by them, in connection with the defense of any
legal proceeding or threatened legal proceeding, except as to matters in which
such persons shall be determined not to have acted in good faith and in the best
interest of the Company. Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors, officers, or
persons controlling the Company pursuant to the foregoing provisions, the
Company has been informed that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Securities Act of 1933 and is therefore unenforceable.
<PAGE>
L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Miami, Florida
TABLE OF CONTENTS
- ------------------------------------------------------------------------------
Independent Auditors' Report F-2
Balance Sheets at December 31, 1999 and 1998 F-3
Statements of Changes in Stockholders' Deficit
for the Period From the Date Of Inception
(February 1, 1994) Through December 31, 1999 F-4 to F-5
Statements of Operations for the Years Ended
December 31, 1999, 1998 and 1997 and for the
Period From the Date of Inception (February 1,
1994) Through December 31, 1999 F-6
Statements of Cash Flows for the Years Ended
December 31, 1999, 1998 and 1997 and for the
Period From the Date of Inception (February 1,
1994) Through December 31, 1999 F7 to F-8
Notes to Financial Statements F-9 to F-12
Interim Unaudited Financial Statements F-13 to F-20
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
and Shareholders
L.A.M. Pharmaceutical, Corp.
Miami, Florida
We have audited the accompanying balance sheets of L.A.M. Pharmaceutical,
Corp. (A Development Stage Company) as of December 31, 1999 and 1998, and the
related statements of changes in stockholders' deficit, operations and cash
flows for each of the three years in the period ended December 31, 1999 and for
the period from the date of inception (February 1, 1994) through December 31,
1999. 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. The financial statements of L.A.M.
Pharmaceutical L.L.C. as of December 31, 1997 and from the date of inception
(February 1, 1994) through December 31, 1997 were audited by other auditors
whose report dated September 14, 1998 expressed an unqualified opinion on those
statements.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of L.A.M. Pharmaceutical, Corp.
as of December 31, 1999 and 1998 and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1999 and for
the period from the date on inception (February 1, 1994) through December 31,
1999, in conformity with generally accepted accounting principles.
Rotenberg & Company, LLP
Rochester, New York
March 15, 2000
<PAGE>
L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Miami, Florida
BALANCE SHEETS
- --------------------------------------------------------------------------------
December 31, 1999 1998
- --------------------------------------------------------------------------------
ASSETS
Current Assets
Cash and Cash Equivalents $ $
558,710 410,577
Cash Held by Broker - Debentures
465,000 --
Note Receivable - Debentures
50,000 --
Accounts Receivable
75,000 114,349
Prepaid Expenses
-- 5,320
- --------------------------------------------------------------------------------
Total Current Assets
1,148,710 530,246
Property and Equipment - Net of
Accumulated Depreciation 4,922 3,648
Other Assets
Patents and Trademarks - Net of Accumulated Amortization
232,417 74,178
- --------------------------------------------------------------------------------
Total Assets $1,386,049 $608,072
- --------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts Payable and Accrued Expenses $ $
185,627 52,944
Convertible Debentures
1,252,000 --
Deposit on Debentures
-- 125,000
Note Payable
-- 5,320
- --------------------------------------------------------------------------------
Total Current Liabilities
1,437,627 183,264
Non-Current Liabilities
Due to Stockholders
1,266,837 1,266,837
- --------------------------------------------------------------------------------
Total Liabilities
2,704,464 1,450,101
- --------------------------------------------------------------------------------
Stockholders' Deficit
Common Stock - $.0001 Par; 50,000,000
Shares Authorized; 10,392,500
and 10,332,500 Shares Issued and
outstanding as of December 31, 1999
and 1998, respectively
1,039 1,033
Additional Paid in Capital
2,132,823 1,515,492
Deficit Accumulated During Development Stage
(3,452,277) (2,358,554)
- --------------------------------------------------------------------------------
Total Stockholders' Deficit
(1,318,415) (842,029)
- --------------------------------------------------------------------------------
Total Liabilities and Stockholders' Deficit
$1,386,049 $608,072
- --------------------------------------------------------------------------------
<PAGE>
L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Miami, Florida
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
For the Period From the Date of Inception (February 1, 1994) Through
December 31, 1999
- --------------------------------------------------------------------------------
Deficit
Accumulated
Additional During Total
Common Paid-In Development Stockholders'
Shares Stock Capital Stage Equity(Deficit)
- --------------------------------------------------------------------------------
Inception -
February 1, 1994 $ -- $ -- $ -- $ -- --
Capital Contribution -
Services Rendered -- -- 22,799 -- 22,799
Capital Contribution -
Laboratory Equipment -- -- 24,245 -- 24,245
Net Loss
-- -- -- (356,393) (356,393)
- --------------------------------------------------------------------------------
Balance - December 31, 1994
-- -- 47,044 (356,393) (309,349)
Capital Contribution - Services
Rendered -- -- 172,020 -- 172,020
Net Loss
-- -- -- (522,095) (522,095)
- --------------------------------------------------------------------------------
Balance - December 31, 1995
-- -- 219,064 (878,488) (659,424)
Capital Contribution - Services
Rendered -- -- 185,495 -- 185,495
Capital Contribution - Leasehold
Improvements -- -- 9,775 -- 9,775
Capital Contribution - Interest
Expense -- -- 49,738 -- 49,738
Capital Contribution in Cash
-- -- 51,001 -- 51,001
Net Loss
-- -- -- (643,733) (643,733)
- --------------------------------------------------------------------------------
Balance - December 31, 1996 -- $ -- $515,073 $(1,522,221) $(1,007,148)
- continued -
<PAGE>
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
For the Period From the Date of Inception (February 1, 1994) Through
December 31, 1999
- --------------------------------------------------------------------------------
- -Continued-
Deficit
Accumulated
Additional During Total
Common Paid-In Development Stockholders'
Shares Stock Capital Stage Equity(Deficit)
- --------------------------------------------------------------------------------
Balance -
December 31, 1996 $ -- -- 515,073 $(1,522,221) $(1,007,148)
Capital Contribution -
Services Rendered -- -- 377,072 -- 377,072
Capital Contribution -
Interest Expense -- -- 99,477 -- 99,477
Capital Contribution
in Cash -- -- 111,199 -- 111,199
Distribution -- -- (30,000) -- (30,000)
Net Loss -- -- -- (499,626) (499,626)
- --------------------------------------------------------------------------------
Balance -
December 31, 1997 -- -- 1,072,821 2,021,847) (949,026)
Recapitalization
as L.A.M. Pharmaceutical,
Corp. 6,000,000 600 (600) -- --
Capital Contribution -
Interest Expense -- -- 103,579 -- 103,579
Issuance of Common
Stock for Cash 4,332,500 433 378,352 -- 378,785
Distribution -- -- (38,660) -- (38,660)
Net Loss -- -- -- (336,707) (336,707)
- --------------------------------------------------------------------------------
Balance -
December 31, 1998 10,332,500 1,033 1,515,492 (2,358,554) (842,029)
Capital Contribution -
Interest Expense -- -- 107,681 -- 107,681
Issuance of Common
Stock for Cash 60,000 6 59,994 -- 60,000
Stock Options and Awards
Granted - Compensation
for Services Rendered -- -- 449,656 -- 449,656
Net Loss -- -- -- (1,093,723) 1,093,723)
- --------------------------------------------------------------------------------
Balance -
December 31, 1999 10,392,500 $1,039 $2,132,823 $(3,452,277) $(1,318,415)
- --------------------------------------------------------------------------------
<PAGE>
L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Miami, Florida
STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1999, 1998, 1997 and for the
Period
From the Date of Inception (February 1, 1994) Through
December 31, 1999
- ------------------------------------------------------------------------------
Date of
Inception
(February 1,
1994)
Through
December 31,
1999 1998 1997 1999
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Total Revenue $ 29,301 $151,112 $200,000 $380,413
- ------------------------------------------------------------------------------
Expenses
Research and Development
211,843 190,721 434,103 1,886,847
General and Administrative
779,397 190,052 153,523 1,545,274
Interest Expense
120,625 103,579 99,477 373,419
Depreciation and Amortization
11,159 3,467 12,523 27,149
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Total Expenses
1,123,024 487,819 699,626 3,832,690
- ------------------------------------------------------------------------------
Net Loss $(1,093,723) $(336,707) $(499,626) $(3,452,277)
- ------------------------------------------------------------------------------
Loss Per Common Share - Basic
and Diluted $(0.11) $(0.03) $(0.08) $(0.47)
- ------------------------------------------------------------------------------
Weighted Average Number of
Common
Shares Outstanding 10,392,500 10,047,917 6,000,000
- ------------------------------------------------------------------------------
<PAGE>
L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Miami, Florida
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1999, 1998, 1997 and for
the Period
From the Date of Inception (February 1, 1994) Through
December 31, 1999
- --------------------------------------------------------------------------------
Date of
Inception
February 1,
1994)
Through
December 31,
1999 1998 1997 1999
- --------------------------------------------------------------------------------
Cash Flows from Operating Activities
Net Loss $(1,093,723)$(336,707) $(499,626) $(3,452,277)
Adjustments to Reconcile
Net Loss to Net Cash Flows
From Operating Activities:
Depreciation and Amortization
11,159 3,467 12,523 42,810
Capital Contributions:
Services Rendered including
Stock Options and Awards
Granted 449,656 -- 377,072 1,207,042
Interest Expense 107,681 103,579 99,477 360,475
Changes in Assets and Liabilities:
Accounts Receivable 39,349 85,651 (200,000) (75,000)
Prepaid Expenses 5,320 (3,225) (2,095) --
Accounts Payable and Accrued
Expenses 132,683 (4,443) 49,187 185,627
Due to Stockholders -- 96,525 85,911 1,266,837
- --------------------------------------------------------------------------------
Net Cash Flows from Operating
Activities (347,875) (55,153) (77,551) (464,486)
- --------------------------------------------------------------------------------
Cash Flows from Investing Activities
Acquisition of Equipment (4,274) (812) -- (5,086)
Acquisition of Patents and
Trademarks (166,398) (31,091) (27,461) (241,043)
- --------------------------------------------------------------------------------
Net Cash Flows from Investing
Activities (170,672) (31,903) (27,461) (246,129)
- --------------------------------------------------------------------------------
Cash Flows from Financing Activities
Cash Capital Contributions -- -- 111,199 162,200
Proceeds from Issuance of Common
Stock 60,000 378,785 -- 438,785
Proceeds from (Repayment) of Notes
Payable (5,320) 3,225 2,095 --
Proceeds from Convertible
Debentures 1,077,000 125,000 -- 1,202,000
Distributions to Stockholders -- (38,660) (30,000) (68,660)
- --------------------------------------------------------------------------------
Net Cash Flows from Financing
Activities 1,131,680 468,350 83,294 1,734,325
- --------------------------------------------------------------------------------
Net Increase (Decrease) in Cash
and Cash Equivalents 613,133 381,294 (21,718) 1,023,710
Cash and Cash Equivalents -
Beginning 410,577 29,283 51,001 --
of Period
Cash and Cash Equivalents - End of
Period $1,023,710 $410,577 $29,283 $1,023,710
- --------------------------------------------------------------------------------
<PAGE>
L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Miami, Florida
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1999, 1998, 1997 and for
the Period
From the Date of Inception (February 1, 1994) Through
December 31, 1999 -Continued-
- --------------------------------------------------------------------------------
Date of
Inception
February 1,
1994)
Through
December 31,
1999 1998 1997 1999
- --------------------------------------------------------------------------------
NON-CASH INVESTING AND FINANCING ACTIVITIES
Issuance of Common Stock in Exchange
for Property and Equipment $-- $-- $ -- $34,020
- --------------------------------------------------------------------------------
<PAGE>
L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Miami, Florida
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note A - Summary of Transaction
L.A.M. Pharmaceutical, Corp. (the Company) was initially formed as
L.A.M. Pharmaceutical, LLC (the LLC) in February 1994. In September
1998, the members of L.A.M. Pharmaceuticals LLC, a Florida Limited
liability company, exchanged all of their interests in the LLC for
6,000,000 shares of the Company's common stock. The stock exchange
between the Company and the members of the LLC is considered a
recapitalization or reverse acquisition. Under reverse acquisition
accounting, the LLC was considered the acquirer for accounting and
financial reporting purposes, and acquired the assets and assumed the
liabilities of the Company. The accompanying financial statements
include the historical accounts of the Company and the LLC. All
inter-company accounts and transactions have been eliminated.
Note B - Nature of Operations and Summary of Significant Accounting Policies
L.A.M. Pharmaceutical, Corp. was incorporated on July 24, 1998 under the laws of
the State of Delaware. The Company has the authority to issue 50,000,000 shares
of common stock, $.0001 par value. The Company is engaged in the research and
development of Novel, Proprietary, Long Lasting Injectable Drugs and Delivery
Systems for Transdermal and Topical Drugs.
Development Stage
The Company has operated as a development stage enterprise since its
inception by devoting substantially all of its efforts to financial
planning, raising capital, research and development, and developing
markets for its products. Accordingly, the financial statements of the
Company have been prepared in accordance with the accounting and
reporting principles prescribed by Statement of Financial Accounting
Standards No. 7, "Accounting and Reporting by Development Stage
Enterprises," issued by the Financial Accounting Standards Board.
Method of Accounting
The corporation maintains its books and prepares its financial
statements on the accrual basis of accounting.
Use of 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
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expense
during the reporting period. Actual results can differ from those
estimates.
Concentrations of Credit Risk
Financial instruments which potentially expose the Corporation to
significant concentrations of credit risk consist principally of bank
deposits. Cash is placed primarily in high quality short-term interest
bearing financial instruments.
<PAGE>
L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Miami, Florida
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note B -Nature of Operations and Summary of Significant Accounting Policies
-continued
Cash and Cash Equivalents
Cash and cash equivalents include time deposits, certificates of
deposit, and all highly liquid debt instruments with original maturities
of three months or less. The company maintains cash and cash equivalents
at financial institutions that periodically may exceed federally insured
amounts.
Property, Equipment and Depreciation
Property and equipment are stated at cost, less accumulated depreciation
computed using the straight-line method over the estimated useful lives
as follows:
Furniture and Fixtures 5 - 7 Years
Computer Equipment 5 - 7 Years
Leasehold Improvements 5 Years
Maintenance and repairs are charged to expense. The cost of the assets
retired or otherwise disposed of and the related accumulated
depreciation are removed from the accounts.
Patents and Trademarks
Patents are carried at cost and are amortized using the straight-line
method over their estimated useful lives, not to exceed 17 years from
the date of issuance of the patent. Amortization expense for the years
ended December 31, 1999, 1998 and 1997 was $8,159, $467 and $-0-,
respectively.
Research and Development Costs
Research and development expenditures are expensed as incurred.
Net Income (Loss) Per Common Share
Net income (loss) per common share is computed in accordance with SFAS
No. 128, "Earnings Per Share". Basic earnings per common share is
calculated by dividing income available to common shareholders by the
weighted-average number of common shares outstanding for each period.
Diluted earnings per common share is calculated by adjusting the
weighted-average shares outstanding assuming conversion of all
potentially dilutive stock options, warrants and convertible securities.
Diluted earnings per share is the same as basic earnings per share for
all of the periods presented since the effect of the conversion of the
debentures and the stock options and awards granted would have an
anti-dilutive effect on earnings per share.
Income Taxes
The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes," using the asset and liability approach,
which requires recognition of deferred tax liabilities and assets for
the expected future tax consequences of temporary differences
<PAGE>
L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Miami, Florida
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note B Nature of Operations and Summary of Significant Accounting Policies
-continued
Income Taxes (cont'd)
between the carrying amounts and the tax basis of such assets and
liabilities. This method utilizes enacted statutory tax rates in effect
for the year in which the temporary differences are expected to reverse
and gives immediate effect to changes in income tax rates upon
enactment. Deferred tax assets are recognized, net of any valuation
allowance, for temporary differences and net operating loss and tax
credit carryforwards. Deferred income tax expense represents the change
in net deferred assets and liability balances. The Company had no
material deferred tax assets or liabilities for the periods presented.
Deferred tax assets arising from the net operating losses incurred
during the development stage have been fully reserved against due to the
uncertainty as to when or whether the tax benefit will be realized.
Stock Options and Awards
The Company accounts for employee stock options in accordance with the
provisions of SFAS No. 123 "Accounting for Stock-Based Compensation".
SFAS No. 123 prescribes the recognition of compensation based on the
fair value of the options on the grant date. The Company values stock
options issued based upon an option-pricing model and recognizes this
value as an expense over the vesting period.
Note C - Licensing Agreement
The Company has an exclusive license agreement (the License Agreement)
with Ixora Bio-Medical Company, Inc. (Ixora). Under the License
Agreement, Ixora has agreed to pay the Company $500,000 for the
exclusive rights of the Company's male and female sexual dysfunction
product technology. Ixora has also agreed to pay all costs for the
development, registration and protection of intellectual property,
including but not limited to patent costs, raw material costs, clinical
development costs and compensation of all Company personnel involved in
the sexual dysfunction product technology.
Note D - Property and Equipment
Property and equipment are recorded at cost and consisted of the
following:
------------------------------------------------------------------------
December 31, 1999 1998
------------------------------------------------------------------------
--------------------------------------------------------
Furniture and Fixtures $25,960 $25,057
--------------------------------------------------------
Computer Equipment 3,371 --
--------------------------------------------------------
Leasehold Improvements 9,775 9,775
--------------------------------------------------------
$39,106 34,832
--------------------------------------------------------
Less: Accumulated Depreciation 34,184 31,184
--------------------------------------------------------
Net Property and Equipment $4,922 $ 3,648
------------------------------------------------------------------------
Depreciation expense for the years ended December 31, 1999, 1998 and
1997 was $3,000, $3,000, and $12,523, respectively.
<PAGE>
L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Miami, Florida
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note E - Due to Stockholders
The Company has a liability for 1996 salaries and other expenses due to
three of its stockholders totaling $1,050,000 and $216,837,
respectively. The Company has agreements with these stockholders, which
provides for payment of this obligation without interest, not to exceed
25% of the profits realized by the Company in any year. The Company has
imputed interest at 8.5% and charged operations for each of the periods
presented with an offsetting credit to additional paid in capital.
Note F - Income Taxes
The Company has approximately $2,900,000 of net operating loss
carryforwards for federal tax purposes as of December 31, 1999, which is
available to offset future taxable income and will begin to expire
during the year 2013. The Corporation has fully reserved for any future
tax benefits from the net operating loss carryforwards since it has not
generated any revenues to date.
Note G - Common Stock
The Company's securities are not registered under the Securities Act of
1933 and, therefore, no offering may be made which would constitute a
"Public Offering" within the meaning of the United States Securities Act
of 1933, unless the shares are registered pursuant to an effective
registration statement under the Act.
The stockholders may not sell, transfer, pledge or otherwise dispose of
the common shares of the company in the absence of either an effective
registration statement covering said shares under the 1933 Act and
relevant state securities laws, or an opinion of counsel that
registration is not required under the Act or under the securities laws
of any such state.
Note H - Convertible Debentures
The Company issued convertible debentures during 1999 having an
aggregate principal balance of $1,252,000. These debentures are
unsecured obligations of the Company that mature during the next twelve
months and bear interest at an annualized rate of 9.5% payable at
maturity. The debentures are convertible into common shares of the
Company at $.50 per share (2 shares for each $1 of principal) at any
time, at the option of the holder. The common shares issued on
conversion have a restriction as to resale for a period of 1 year from
the date that the original debenture was issued. The Company may also
redeem the debentures at any time upon written notice and payment to the
holder of all unpaid principal and interest. The debentures are not
subject to any sinking fund requirements. The Company anticipates that
the holders of the debentures will exercise their conversion options
during 2000.
<PAGE>
L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Miami, Florida
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note I - Stock Options and Awards
During 1998, the Company granted stock options for 515,500 shares of
common stock to investors in connection with the original issuance of
shares at exercise prices that were not less than the fair value of the
common stock at the date of grant. Additionally, the Company granted
stock options for 225,000 shares of common stock to employees and
consultants at exercise prices that were not less than fair value.
During 1999, the Company granted stock options for 519,966 shares of
common stock to employees and consultants as compensation for services
rendered at exercise prices that were below the fair value of the
common stock at the date of grant. Accordingly, the Company recognized
compensation expense as a charge against operations during 1999 for the
difference between the fair value and the exercise price of the common
stock at the date of grant. All of the outstanding options are fully
vested. Stock options outstanding and exercisable at December 31, 1998
and 1999 are as follows:
Grant Exercise
Shares Date Term Price
Options Issued: 218,000 Sept 1998 24 Months $.65
185,500 Sept 1998 36 Months .65
162,000 Oct 1998 24 Months .65
75,000 Nov 1998 24 Months .65
100,000 Dec 1998 36 Months 1.00
-------
Outstanding at
December 31, 1998 740,500
Options Issued:
30,000 Mar 1999 24 Months .65
250,000 Oct 1999 18 Months .65
100,000 Nov 1999 36 Months .65
39,966 Dec 1999 3 Months 1.50
100,000 Dec 1999 36 Months 4.00
-------
Outstanding at
December 31, 1999 1,260,466
=========
In December 1999, the Company granted an award of 25,000 shares of common stock
as compensation to an outside consultant. The Company has charged operations for
the fair value of the common stock award on the date of grant.
<PAGE>
L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Miami, Florida
TABLE OF CONTENTS
- ------------------------------------------------------------------------------
Independent Accountants' Report on Interim Financial Statements F-14
Balance Sheets at March 31, 2000 (Unaudited) and December 31, 1999 F-15
Statements of Changes in Stockholders' Deficit for the Period
From the Date Of Inception (February 1, 1994) Through March 31,
2000 (Unaudited) F-16 to F-17
Statements of Operations for the Three Months Ended March
31, 2000 and 1999 (Unaudited) and for the Period From the Date
of Inception (February 1, 1994) Through March 31, 2000 (Unaudited) F-18
Statements of Cash Flows for the Three Months Ended March
31, 2000 and 1999 (Unaudited) and for the Period From the
Date of Inception (February 1, 1994) Through March 31, 2000
(Unaudited) F-19
Notes to Financial Statements F-20
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors
and Shareholders
L.A.M. Pharmaceutical, Corp.
Miami, Florida
We have reviewed the accompanying balance sheet of L.A.M. Pharmaceutical,
Corp. (a Development Stage Company) as of March 31, 2000 and the related
statements of operations, changes in stockholders' deficit and cash flows for
the three months ended March 31, 2000 and 1999 and for the period from the date
of inception (February 1, 1994) through March 31, 2000, in accordance with
standards established by the American Institute of Certified Public Accountants.
All information included in these financial statements is the representation of
the Company's management.
A review consists principally of inquiries of Company personnel and
analytical procedures applied to the financial data. It is substantially less in
scope than an audit in accordance with generally accepted auditing standards,
the objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial statements in order for them to be
in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the balance sheets as of December 31, 1999 and 1998, and the related
statements of operations, changes in stockholders' deficit and cash flows for
the years then ended, and for the period from the date of inception (February 1,
1994)) through December 31, 1999 (presented elsewhere herein); and in our report
dated March 15, 2000, we expressed an unqualified opinion on those financial
statements.
Rotenberg & Company, LLP
Rochester, New York
May 12, 2000
<PAGE>
L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Miami, Florida (Unaudited)
March 31, December 31,
BALANCE SHEETS 2000 1999
- --------------------------------------------------------------------------------
ASSETS
Current Assets
Cash and Cash Equivalents $ 48,486 $ 558,710
Cash Held by Broker - Debentures 750,497 465,000
Note Receivable - Debentures 50,000 50,000
Accounts Receivable 75,000 75,000
- --------------------------------------------------------------------------------
Total Current Assets 923,983 1,148,710
Property and Equipment - Net of Accumulated
Depreciation 17,126 4,922
Other Assets
Patents and Trademarks - Net of Accumulated 283,306 232,417
Amortization
- --------------------------------------------------------------------------------
Total Assets $ 1,224,415 $ 1,386,049
- --------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts Payable and Accrued Expenses $ 271,636 $ 185,627
Convertible Debentures 1,517,000 1,252,000
- --------------------------------------------------------------------------------
Total Current Liabilities 1,788,636 1,437,627
Non-Current Liabilities
Due to Stockholders 1,266,837 1,266,837
- --------------------------------------------------------------------------------
Total Liabilities 3,055,473 2,704,464
- --------------------------------------------------------------------------------
Stockholders' Deficit
Common Stock - $.0001 Par; 50,000,000 Shares Authorized;
10,392,500 Shares
Issued and Outstanding 1,039 1,039
Additional Paid in Capital 2,159,746 2,132,823
Deficit Accumulated During Development Stage (3,991,843) (3,452,277)
- --------------------------------------------------------------------------------
Total Stockholders' Deficit (1,831,058) (1,318,415)
- --------------------------------------------------------------------------------
Total Liabilities and Stockholders' Deficit $ 1,224,415 $ 1,386,049
- --------------------------------------------------------------------------------
<PAGE>
L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Miami, Florida
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
For the Period From the Date of Inception (February 1, 1994) Through
March 31, 2000 (Unaudited)
- --------------------------------------------------------------------------------
Deficit
Accumulated
Additional During Total
Common Paid-In Development Stockholders'
Shares Stock Capital Stage Equity/(Deficit)
- --------------------------------------------------------------------------------
Inception -
February 1, 1994 -- $ -- $ -- $-- $ --
Capital Contribution - Services
Rendered -- -- 22,799 -- 22,799
Capital Contribution - Laboratory
Equipment -- -- 24,245 -- 24,245
Net Loss -- -- -- (356,393) (356,393)
- --------------------------------------------------------------------------------
Balance - December 31, 1994
-- -- 47,044 (356,393) (309,349)
Capital Contribution - Services
Rendered -- -- 172,020 -- 172,020
Net Loss -- -- -- (522,095) (522,095)
- --------------------------------------------------------------------------------
Balance - December 31, 1995
-- -- 219,064 (878,488) (659,424)
Capital Contribution - Services
Rendered -- -- 185,495 -- 185,495
Capital Contribution - Leasehold
Improvements -- -- 9,775 -- 9,775
Capital Contribution - Interest
Expense -- -- 49,738 -- 49,738
Capital Contribution in Cash -- -- 51,001 -- 51,001
Net Loss -- -- -- (643,733) (643,733)
- --------------------------------------------------------------------------------
Balance - December 31, 1996
-- -- 515,073 (1,522,221) (1,007,148)
Capital Contribution - Services
Rendered -- -- 377,072 -- 377,072
Capital Contribution - Interest
Expense -- -- 99,477 -- 99,477
Capital Contribution in Cash
-- -- 111,199 -- 111,199
Distributions -- -- (30,000) -- (30,000)
Net Loss -- -- -- (499,626) (499,626)
- --------------------------------------------------------------------------------
Balance -
December 31, 1997 $ -- -- $(949,026) $1,072,821 $(2,021,847)
<PAGE>
STATEMENTS OF CHANGES IN STOCKHOLDERS'
DEFICIT
For the Period From the Date of Inception (February 1, 1994) Through March 31,
2000 (Unaudited)
- --------------------------------------------------------------------------------
- -Continued-
Deficit
Accumulated
Additional During Total
Common Paid-In Development Stockholders'
Shares Stock Capital Stage Equity/(Deficit)
- --------------------------------------------------------------------------------
Balance -
December 31, 1997 -- $ -- $1,072,821 $(2,021,847) $(949,026)
Recapitalization
as L.A.M. Pharmaceutical,
Corp. 6,000,000 600 (600) -- --
Capital Contribution -
Interest Expense -- -- 103,579 -- 103,579
Issuance of Common Stock
for Cash 4,332,500 433 378,352 -- 378,785
Distributions -- -- (38,660) -- (38,660)
Net Loss -- -- -- (336,707) (336,707)
- --------------------------------------------------------------------------------
Balance -
December 31, 1998 10,332,500 1,033 1,515,492 (2,358,554) (842,029)
Capital Contribution -
Interest Expense -- -- 107,681 -- 107,681
Issuance of Common Stock
for Cash 60,000 6 59,994 -- 60,000
Stock Options and Awards
Granted -
Compensation for Services
Rendered -- -- 449,656 -- 449,656
Net Loss -- -- -- (1,093,723) (1,093,723)
- --------------------------------------------------------------------------------
Balance -
December 31, 1999 10,392,500 1,039 2,132,823 (3,452,277) (1,318,415)
Capital Contribution -
Interest Expense -- -- 26,923 -- 26,923
Net Loss for the Period -
(Unaudited) -- -- -- (539,566) (539,566)
- --------------------------------------------------------------------------------
Balance -
March 31, 2000 $10,392,500 $1,039 2,159,746 $(3,991,843) $(1,831,058)
- --------------------------------------------------------------------------------
<PAGE>
L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Miami, Florida
STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 2000 and 1999 and for the Period From the
Date of Inception (February 1, 1994) Through March 31, 2000 (Unaudited)
(Unaudited)
Date of
Inception
(Unaudited) (February 1,
1994)
Quarter Ended March 31, Through
2000 1999 March 31, 2000
- ------------------------------------------------------------------------
Total Revenue $ 2,747 $ 1,123 $ 383,160
- ------------------------------------------------------------------------
Expenses
Research and Development 2,137,913
251,065 44,225
General and Administrative 1,756,128
226,515 70,619
Interest Expense 433,607
60,188 26,923
Depreciation and Amortization 47,355
4,545 1,545
- ------------------------------------------------------------------------
Total Expenses 4,375,003
542,313 143,312
- ------------------------------------------------------------------------
Net Loss $(539,566) $(142,189) $ (3,991,843)
- ------------------------------------------------------------------------
Loss Per Common Share - Basic
and Diluted $ (0.05) $ (0.01) $ (0.63)
- ------------------------------------------------------------------------
Weighted Average Number of
Common
Shares Outstanding 10,392,500 10,392,500
- ------------------------------------------------------------------------
<PAGE>
L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Miami, Florida
STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2000 and 1999, and
for the Period
From the Date of Inception (February 1, 1994) Through
March 31, 2000 (Unaudited)
- --------------------------------------------------------------------------------
Date of
Inception
(Unaudited) (February 1,
1994)
Quarter Ended March 31, Through
2000 1999 March 31, 2000
- --------------------------------------------------------------------------------
Cash Flows from Operating Activities
Net Loss $(539,566) $ (142,189) $(3,991,843)
Non-Cash Adjustments:
Depreciation and Amortization
4,545 1,545 47,355
Capital Contributions:
Services Rendered including Stock
Options and Awards
-- -- 1,207,042
Interest Expense
26,923 26,923 387,398
Changes in Assets and Liabilities:
Accounts Receivable
-- -- (75,000)
Prepaid Expenses
-- -- --
Accounts Payable and Accrued Expenses
86,009 21,120 271,636
Due to Stockholders - Salaries and
Expenses -- -- 1,266,837
- --------------------------------------------------------------------------------
Net Cash Flows from Operating Activities
(422,089) (92,601) (886,575)
- --------------------------------------------------------------------------------
Cash Flows from Investing Activities
Equipment
(13,204) -- (18,290)
Patents and Trademarks
(54,434) (19,300) (295,477)
- --------------------------------------------------------------------------------
Net Cash Flows from Investing Activities
(67,638) (19,300) (313,767)
- --------------------------------------------------------------------------------
Cash Flows from Financing Activities
Cash Capital Contributions
-- -- 162,200
Proceeds from Issuance of Common Stock
-- -- 438,785
Proceeds from Convertible Debentures
265,000 -- 1,467,000
Distributions to Stockholders
-- -- (68,660)
- --------------------------------------------------------------------------------
Net Cash Flows from Financing Activities
265,000 -- 1,999,325
- --------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash
Equivalents (224,727) (111,901) 798,983
Cash and Cash Equivalents - Beginning
1,023,710 410,577 --
- --------------------------------------------------------------------------------
Cash and Cash Equivalents - Ending $798,983 $298,676 $798,983
- --------------------------------------------------------------------------------
NON-CASH INVESTING AND FINANCING
ACTIVITIES
Issuance of Common Stock in Exchange
for Property and Equipment $-- $ -- $34,020
- --------------------------------------------------------------------------------
<PAGE>
L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Miami, Florida
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note A - Basis of Presentation
The condensed financial statements of L.A.M. Pharmaceutical, Corp. (the
"Company") included herein have been prepared by the Company, without
audit, pursuant to the rules and regulations of the Securities and
Exchange Commission (the "SEC"). Certain information and footnote
disclosures normally included in financial statements prepared in
conjunction with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although
the Company believes that the disclosures are adequate to make the
information presented not misleading. These condensed financial
statements should be read in conjunction with the annual audited
financial statements and the notes thereto included elsewhere herein in
the Company's registration statement on Form 10SB.
The accompanying unaudited interim financial statements reflect all
adjustments of a normal and recurring nature which are, in the opinion
of management, necessary to present fairly the financial position,
results of operations and cash flows of the Company for the interim
periods presented. The results of operations for these periods are not
necessarily comparable to, or indicative of, results of any other
interim period of for the calendar year taken as a whole. Factors that
affect the comparability of financial data from year to year and for
comparable interim periods include non-recurring expenses associated
with the Company's registration with the Securities and Exchange
Commission and costs incurred to raise capital and acquisitions of
patents and trademarks.
<PAGE>
PART III
ITEM 1.EXHIBITS
Exhibit
Number Exhibit Name Page
- -------- ------------ ----
Exhibit 2 Plan of Acquisition, Reorganization, Arrangement,
Liquidation, etc. None
Exhibit 3 Articles of Incorporation and Bylaws ____
Exhibit 4 Instruments Defining the Rights of Security Holders
Exhibit 4.1 Incentive Stock Option Plan ____
Exhibit 4.2 Non-Qualified Stock Option Plan ____
Exhibit 4.3 Stock Bonus Plan ____
Exhibit 5 Opinion of Counsel None
Exhibit 9 Voting Trust Agreement None
Exhibit 10 Material Contracts
Exhibit 10.1 Agreements with Ixora Bio-Medical Co. ____
Exhibit 27 Financial Data Schedule ____
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
Company caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
L.A.M. PHARMACEUTICALS, CORP.
Date: May 15, 2000 By: /s/ Alan Drizen
---------------------------------
Alan Drizen
President and Chief Executive Officer
<PAGE>
L.A.M. PHARMACEUTICAL, CORP.
REGISTRATION STATEMENT
ON FORM 10-SB
EXHIBITS
CERTIFICATE OF INCORPORATION
OF
L.A.M. PHARMACEUTICAL, CORP.
First: The Name of the corporation is L.A.M. Pharmaceutical, Corp.
Second: The address of its registered office in the State of Delaware is Three
Mill Road, Suite 104 in the City of Wilmington, County of New Castle,
19806-2146. Its registered agent at such address is The Incorporators Ltd.
Third: The purpose of the corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of
Delaware.
Fourth: The corporation shall have the authority to issue fifty million shares
of common stock with a par value of $0.0001.
FIFTH: The Board of Directors is expressly authorized to adopt, amend, or repeal
the By-Laws of the corporation.
SIXTH: The stockholders and directors may hold their meetings and keep the books
and documents of the corporation outside the State of Delaware, at such places
from time to time designated by the By-Laws, except as otherwise required by the
Laws of Delaware.
SEVENTH: The corporation is to have perpetual existence.
EIGHTH: The name and mailing address of the incorporator is Matthew D. Esteves
at Three Mill Road, Suite 104, Wilmington, DE 19806-2146.
NINTH: The number of directors of the corporation shall be fixed from time to
time by its By-Laws and may be increased or decreased.
TENTH: The Board of Directors is expressly authorized and shall have such
authority as set forth in the By-Laws to the extent such authority would be
valid under Delaware Law.
ELEVENTH: No director of the corporation shall have personal liability to the
corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director, provided that this provision shall not eliminate or limit
the liability of a director (a) for any breach of the director's duty or loyalty
to the corporation or its stockholders, (b) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law, (c)
under Section 174 of the Delaware Corporation Law, or (d) for any transaction
from which the director derived an improper personal benefit.
THE UNDERSIGNED Incorporator for the purpose of forming a corporation pursuant
to the laws of the State of Delaware, does make this Certificate, hereby
declaring and certifying that the facts herein stated are true.
July 24, 1998 BY: /s/ Matthew D. Esteves
-----------------------
Matthew D. Esteves - Incorporator
<PAGE>
BY-LAWS
OF
L.A.M. PHARMACEUTICAL CORP.
ARTICLE I
OFFICES
Section l. Offices:
- -------------------
The principal office of the Corporation shall be at 800 Sheppard Avenue
West, Commercial Unit 1, North York, Ontario, Canada M3H 6B4, and the
Corporation shall have other offices at such places as the Board of Directors
may from time to time determine.
ARTICLE II
STOCKHOLDER'S MEETINGS
Section l. Place:
- -----------------
The place of stockholders' meetings shall be the principal office of
the Corporation unless some other place either within or without the State of
Delaware shall be determined and designated from time to time by the Board of
Directors.
Section 2. Annual Meeting:
- --------------------------
The annual meeting of the stockholders of the Corporation for the
election of directors to succeed those whose terms expire, and for the
transaction of such other business as may properly come before the meeting,
shall be held each year on a date to be determined by the Board of Directors. If
the annual meeting of the stockholders be not held, or if held and directors
shall not have been elected for any reason, then the election of directors may
be held at any meeting of stockholders thereafter called pursuant to these
By-laws and the laws of Delaware.
Section 3. Special Meetings:
- ----------------------------
Special meetings of the stockholders for any purpose or purposes may be
called by the President, the Board of Directors, or the holders of ten percent
(l0%) or more of all the shares entitled to vote at such meeting, by the giving
of notice in writing as hereinafter described.
Section 4. Voting:
- ------------------
At all meetings of stockholders, voting may be viva voce; but any
qualified voter may demand a stock vote, whereupon such vote shall be taken by
ballot and the Secretary shall record the name of the stockholder voting, the
number of shares voted, and, if such vote shall be by proxy, the name of the
proxy holder. Voting may be in person or by proxy appointed in writing, manually
signed by the stockholder or his duly authorized attorney-in-fact. No proxy
shall be valid after eleven months from the date of its execution, unless
otherwise provided therein.
<PAGE>
Each stockholder shall have such rights to vote as the Articles of
Incorporation provide for each share of stock registered in his name on the
books of the Corporation, except where the transfer books of the Corporation
shall have been closed or a date shall have been fixed as a record date, not to
exceed, in any case, fifty (50) days preceding the meeting, for the
determination of stockholders entitled to vote. The Secretary of the Corporation
shall make, at least ten (l0) days before each meeting of stockholders, a
complete list of the stockholders entitled to vote at such meeting or any
adjournment thereof, arranged in alphabetical order, with the address of and the
number of shares held by each, which list, for a period of ten (l0) days prior
to such meeting, shall be kept on file at the principal office of the
Corporation and shall be subject to inspection by any stockholder at any time
during usual business hours. Such list shall also be produced and kept open at
the time and place of the meeting and shall be subject to the inspection of any
stockholder during the whole time of the meeting.
Section 5. Order of Business:
- -----------------------------
The order of business at any meeting of stockholders shall be as
follows:
l. Calling the meeting to order.
2. Calling of roll.
3. Proof of notice of meeting.
4. Report of the Secretary of the stock represented at the meeting and
the existence or lack of a quorum.
5. Reading of minutes of last previous meeting and disposal of any
unapproved minutes.
6. Reports of officers.
7. Reports of committees.
8. Election of directors, if appropriate.
9. Unfinished business.
10. New business.
11. Adjournment.
12. To the extent that these By-laws do not apply, Roberts' Rules of
Order shall prevail.
<PAGE>
Section 6. Notices:
- -------------------
Written or printed notice stating the place, day, and hour of the
meeting and, in case of a special meeting, the purpose or purposes for which the
meeting is called, shall be delivered not less than ten (l0) nor more than fifty
(50) days before the date of the meeting, either personally or by mail, by or at
the direction of the President, the Secretary, or the officer or persons calling
the meeting, to each stockholder of record entitled to vote at such meeting,
except that, if the authorized capital stock is to be increased, at least thirty
(30) days' notice shall be given. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail addressed to the shareholder
at his address as it appears on the stock transfer books of the Corporation,
with postage thereon prepaid.
Section 7. Quorum:
- ------------------
A quorum at any annual or special meeting shall consist of the
representation in person or by proxy of one third of the number of shares of the
outstanding capital stock of the Corporation entitled to vote at such meeting.
In the event a quorum be not present, the meeting may be adjourned by those
present for a period not to exceed sixty (60) days at any one adjournment; and
no further notice of the meeting or its adjournment shall be required. The
stockholders entitled to vote, present either in person or by proxy at such
adjourned meeting, shall, if equal to a majority of the shares entitled to vote
at the meeting, constitute a quorum, and the votes of a majority of those
present in numbers of shares entitled to vote shall be deemed the act of the
shareholders at such adjourned meeting.
Section 8. Action by Shareholders Without a Meeting:
- ----------------------------------------------------
Any action required to be or which may be taken at a meeting of the
shareholders of the Corporation may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by shareholders
owning a majority of the shares entitled to vote with respect to the subject
matter thereof.
ARTICLE III
BOARD OF DIRECTORS
Section l. Organization and Powers:
- -----------------------------------
The Board of Directors shall constitute the policy-making or
legislative authority of the Corporation. Management of the affairs, property,
and business of the Corporation shall be vested in the Board of Directors who
shall be elected at the annual meeting of stockholders by a plurality vote for a
term of one (l) year, and shall hold office until their successors are elected
and qualify. Directors need not be stockholders. The number of directors shall
be established from time-to-time by a resolution adopted by the Board of
Directors. Directors shall have all powers with respect to the management,
control, and determination of policies of the Corporation that are not limited
by these By-laws, the Articles of Incorporation, or the statutes of the State of
Delaware, and the enumeration of any power shall not be considered a limitation
thereof.
<PAGE>
Section 2. Vacancies:
- ---------------------
Any vacancy in the Board of Directors, however caused or created, shall
be filled by the affirmative vote of a majority of the remaining directors,
though less than a quorum of the Board, or at a special meeting of the
stockholders called for that purpose. The directors elected to fill vacancies
shall hold office for the unexpired term and until their successors are elected
and qualify.
Section 3. Regular Meetings:
- ----------------------------
A regular meeting of the Board of Directors shall be held, without
other notice than this By-law, immediately after and at the same place as the
annual meeting of stockholders or any special meeting of stockholders at which a
director or directors shall have been elected. The Board of Directors may
provide by resolution the time and place, either within or without the State of
Delaware, for the holding of additional regular meetings without other notice
than such resolution.
Section 4. Special Meetings:
- ----------------------------
Special meetings of the Board of Directors may be held at the principal
office of the Corporation, or such other place as may be fixed by resolution of
the Board of Directors for such purpose, at any time on call of the President or
of any member of the Board, or may be held at any time and place without notice,
by unanimous written consent of all the members, or with the presence and
participation of all members at such meeting. A resolution in writing signed by
all the directors shall be as valid and effectual as if it had been passed at a
meeting of the directors duly called, constituted, and held.
Section 5. Notices:
- -------------------
Notices of both regular and special meetings, save when held by
unanimous consent or participation, shall be mailed by the Secretary to each
member of the Board not less than days before any such meeting and notices of
special meetings may state the purposes thereof. No failure or irregularity of
notice of any regular meeting shall invalidate such meeting or any proceeding
thereat.
Section 6. Quorum and Manner of Acting:
- ---------------------------------------
A quorum for any meeting of the Board of Directors shall be a majority
of the Board of Directors as then constituted. Any act of the majority of the
directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors. Any action of such majority, although not at a regularly
called meeting, and the record thereof, if assented to in writing by all of the
other members of the Board, shall always be as valid and effective in all
respects as if otherwise duly taken by the Board of Directors.
<PAGE>
Section 7. Executive Committee:
- -------------------------------
The Board of Directors may by resolution of a majority of the Board
designate two (2) or more directors to constitute an executive committee, which
committee, to the extent provided in such resolution, shall have and may
exercise all of the authority of the Board of Directors in the management of the
Corporation; but the designation of such committee and the delegation of
authority thereto shall not operate to relieve the Board of Directors, or any
member thereof, of any responsibility imposed on it or him by law.
Section 8. Order of Business:
- -----------------------------
The order of business at any regular or special meeting of the Board of
Directors, unless otherwise prescribed for any meeting by the Board, shall be as
follows:
l. Reading and disposal of any unapproved minutes.
2. Reports of officers and committees.
3. Unfinished business.
4. New business.
5. Adjournment.
6. To the extent that these By-laws do not apply, Roberts' Rules of
Order shall prevail.
Section 9. Remuneration:
- ------------------------
No stated salary shall be paid to directors for their services as such,
but, by resolution of the Board of Directors, a fixed sum and expenses of
attendance, if any, may be allowed for attendance at each regular or special
meeting of the Board. Members of special or standing committees may be allowed
like compensation for attending meetings. Nothing herein contained shall be
construed to preclude any director from receiving compensation for serving the
Corporation in any other capacity, subject to such resolutions of the Board of
Directors as may then govern receipt of such compensation.
ARTICLE IV
OFFICERS
Section l. Titles:
- ------------------
The officers of the Corporation shall consist of a President, one or
more Vice Presidents, a Secretary, and a Treasurer, the last two of which
offices may be combined and held by one person, who shall be elected for one (l)
year by the directors at their first meeting following the annual meeting of
stockholders. Such officers shall hold office until removed by the Board of
<PAGE>
Directors or until their susccessors are elected and qualify. The Board of
Directors may appoint from time to time such other officers as it deems
desirable who shall serve during such terms as may be fixed by the Board at a
duly held meeting. The Board, by resolution, shall specify the titles, duties
and responsibilities of such officers.
Section 2. President:
- ---------------------
The President shall preside at all meetings of stockholders and, in the
absence of a, or the, Chairman of the Board of Directors, at all meetings of the
directors. He shall be generally vested with the power of the chief executive
officer of the Corporation and shall countersign all certificates, contracts,
and other instruments of the Corporation as authorized by the Board of Directors
or required by law. He shall make reports to the Board of Directors and
stockholders and shall perform such other duties and services as may be required
of him from time to time by the Board of Directors.
Section 3. Vice President:
- --------------------------
The Vice President shall perform all the duties of the President if the
President is absent or for any other reason is unable to perform his duties and
shall have such other duties as the Board of Directors shall authorize or
direct.
Section 4. Secretary:
- ---------------------
The Secretary shall issue notices of all meetings of stockholders and
directors, shall keep minutes of all such meetings, and shall record all
proceedings. He shall have custody and control of the corporate records and
books, excluding the books of account, together with the corporate seal. He
shall make such reports and perform such other duties as may be consistent with
his office or as may be required of him from time to time by the Board of
Directors.
Section 5. Treasurer:
- ---------------------
The Treasurer shall have custody of all moneys and securities of the
Corporation and shall have supervision over the regular books of account. He
shall deposit all moneys, securities, and other valuable effects of the
Corporation in such banks and depositories as the Board of Directors may
designate and shall disburse the funds of the Corporation in payment of just
debts and demands against the Corporation, or as they may be ordered by the
Board of Directors, shall render such account of his transactions as may be
required of him by the President or the Board of Directors from time to time and
shall otherwise perform such duties as may be required of him by the Board of
Directors.
The Board of Directors may require the Treasurer to give a bond
indemnifying the Corporation against larceny, theft, embezzlement, forgery,
misappropriation, or any other act of fraud or dishonesty resulting from his
duties as Treasurer of the Corporation, which bond shall be in such amount as
appropriate resolution or resolutions of the Board of Directors may require.
<PAGE>
Section 6. Vacancies or Absences:
- ---------------------------------
If a vacancy in any office arises in any manner, the directors then in
office may choose, by a majority vote, a successor to hold office for the
unexpired term of the officer. If any officer shall be absent or unable for any
reason to perform his duties, the Board of Directors, to the extent not
otherwise inconsistent with these By-laws, may direct that the duties of such
officer during such absence or inability shall be performed by such other
officer or subordinate officer as seems advisable to the Board.
Section 7. Compensation:
- ------------------------
No officer shall receive any salary or compensation for his services
unless and until the Board of Directors authorizes and fixes the amount and
terms of such salary or compensation.
ARTICLE V
STOCK
Section l. Certificates of Shares:
- ----------------------------------
Each holder of stock of the Corporation shall be entitled to a stock
certificate signed by the President or Vice President and also by the Secretary
or an assistant secretary of the Corporation. The certificates of shares shall
be in such form, not inconsistent with the Certificate of Incorporation or
Articles of Incorporation, as shall be prepared or approved by the Board of
Directors. (All certificates shall be prepared or approved by the Board of
Directors). All certificates shall be consecutively numbered. Each certificate
shall state upon its face that the Corporation is organized under the laws of
this state; the name of the person to whom issued; the number and class of
shares; and the designation of the series, if any, which such certificate
represents; the par value of each share represented by the certificate, or a
statement that the shares are without par value. The name of the person owning
the shares represented thereby, with the number of such shares and the date of
issue, shall be entered on the Corporation's books, and no certificate shall be
valid unless it be signed by the President or Vice President and by the
Secretary or an assistant secretary of the Corporation. The seal of the
Corporation affixed to stock certificates may be a facsimile. The signatures of
officers as above described on any such certificate may be a facsimile if the
certificate is countersigned by a transfer agent, or registered by a registrar,
other than the Corporation itself or an employee of the Corporation.
Section 2. New Certificates:
- ----------------------------
All certificates surrendered to the Corporation shall be canceled and
no new certificate shall be issued, except to evidence transfer of stock from
the unissued stock or treasury of the Corporation, or, in the case of a lost
certificate, except upon posting a bond of indemnity in such form and with such
surety or sureties and for such amount as shall be satisfactory to the directors
<PAGE>
and upon producing by affidavit or otherwise such evidence of loss or
destruction as the Board may require, until the former certificates for the same
number of shares have been surrendered and canceled.
Section 3. Transfer of Shares:
- ------------------------------
Shares in the capital stock of the Corporation shall be transferred
only on the books of the Corporation by the holder thereof in person, or by his
attorney, upon surrender and cancellation of certificates for a like number of
shares. The delivery of a certificate of stock of this Corporation to a bona
fide purchaser or pledgee for value, together with a written transfer of the
same or a written power of attorney to sell, assign, and transfer the same,
signed by the owner of the certificate, shall be a sufficient delivery to
transfer the title against all persons except the Corporation. No transfer of
stock shall be valid against the Corporation until it shall have been registered
upon the books of the Corporation.
Section 4. Closing of Transfer Books or Provisions for Record Date:
- -------------------------------------------------------------------
The stock transfer books may be closed by the Board of Directors for a
period not exceeding fifty (50) days prior to any meeting of the stockholders or
prior to the payment of dividends; or the Board of Directors may fix in advance
a day not more than fifty (50) days prior to the holding of any such meeting of
stockholders or payment of dividends as the day as of which stockholders
entitled to notice of and to vote at such meeting or to payment of dividends, as
the case may be, shall be determined; and only stockholders of record on such
day shall be entitled to notice or to vote at such meeting, or to receive
dividends, as the case may be.
Section 5. Regulations:
- -----------------------
The Board of Directors shall have power and authority to take all such
rules and regulations as they deem expedient concerning the issue, transfer, and
registration of certificates for shares of the capital stock of the Corporation.
The Board of Directors may appoint a Transfer Agent and a Registrar and may
require all stock certificates to bear the signature of such Transfer Agent or
such Registrar.
Section 6. Restrictions on Stock:
- ---------------------------------
The Board of Directors may restrict any stock issued by giving the
Corporation or any stockholder "first right of refusal to purchase" the stock,
by making the stock redeemable or by restricting the transfer of the stock,
under such terms and in such manner as the directors may deem necessary and as
are not inconsistent with the Articles of Incorporation or the laws of the State
of Delaware. Any stock so restricted must carry a stamped legend setting out the
restriction or conspicuously noting the restriction and stating where it may be
found in the records of the Corporation.
<PAGE>
ARTICLE VI DIVIDENDS AND FINANCES
Section l. Dividends: Dividends may be declared by the directors and paid out of
any funds legally available therefor under the laws of Delaware, as may be
deemed advisable from time to time by the Board of Directors of the Corporation.
Before declaring any dividends, the Board of Directors may set aside out of net
profits or earned or other surplus such sums as the Board may think proper as a
reserve fund to meet contingencies or for other purposes deemed proper and to
the best interests of the Corporation.
Section 2. Moneys:
- ------------------
The moneys, securities, and other valuable effects of the Corporation
shall be deposited in the name of the Corporation in such banks or trust
companies as the Board of Directors shall designate and shall be drawn out or
removed only as may be authorized by the Board of Directors from time to time.
Section 3. Fiscal Year:
- -----------------------
The Board of Directors by resolution shall determine the fiscal year of
the Corporation.
ARTICLE VII
SEAL
The Board of Directors shall provide a corporate seal which shall be in
the form of a circle and shall have inscribed thereon the name of the
Corporation and the words "SEAL, Delaware," and shall be entrusted in the care
of the Secretary or such other officer of the Corporation as the Board of
Directors shall designate.
ARTICLE VIII
NOTICES
Section l. Requirements:
- ------------------------
Whenever a notice shall be required by the statutes of the State of
Delaware or by these By-laws, such notice may be given in writing by depositing
the same in the United States mails in a postpaid, sealed envelope addressed to
the person for whom such notice is intended to his or her home or other address,
as the same shall appear on the stock transfer books of the Corporation. The
time of mailing shall be deemed to be the time of giving such notice. A waiver
of any notice in writing, signed by a stockholder, director, or officer, whether
before, at, or after the time stated in such waiver for holding a meeting, shall
be deemed the equivalent of duly giving such notice.
<PAGE>
Section 2. Presence:
- --------------------
The presence of any officer at a meeting, or the presence of any
stockholder or director at a meeting, unless such presence is for the sole
purpose of objecting to the holding of such meeting on the ground that it is not
duly held or convened, shall in all events be considered a waiver of notice
thereof; and failure to vote thereat shall not defeat the effectiveness of such
waiver.
Section 3. Ratification:
- ------------------------
The ratification or approval in writing of the minutes of any meeting
of officers, stockholders, or directors shall have the same force and effect as
if the ratifying or approving officer, director, or stockholder were present in
person at said meeting.
ARTICLE IX
AMENDMENTS
These By-laws may be altered, amended, or repealed by the Board of
Directors by resolution of a majority of the Board.
ARTICLE X
INDEMNIFICATION
The Corporation shall indemnify any and all of its directors or
officers, or former directors or officers, or any person who may have served at
its request as a director or officer of another corporation in which this
Corporation owns shares of capital stock or of which it is a creditor and the
personal representatives of all such persons, against expenses actually and
necessarily incurred in connection with the defense of any action, suit, or
proceeding in which they, or any of them, were made parties, or a party, by
reason of being or having been directors or officers or a director or officer of
the Corporation, or of such other corporation, except in relation to matters as
to which any such director or officer or person shall have been adjudged in such
action, suit, or proceeding to be liable for negligence or misconduct in the
performance of any duty owed to the Corporation. Such indemnification shall not
be deemed exclusive of any other rights to which those indemnified may be
entitled, independently of this Article X, by law, under any By-law agreement,
vote of stockholders, or otherwise.
ARTICLE XI
CONFLICTS OF INTEREST
No contract or other transaction of the Corporation with any other
persons, firms or corporations, or in which the Corporation is interested, shall
be affected or invalidated by the fact that any one or more of the directors or
officers of the Corporation is interested in or is a director or officer of such
other firm or corporation; or by the fact that any director or officer of the
Corporation, individually or jointly with others, may be a party to or may be
interested in any such contract or transaction; and relieves every person who
may become a director or officer of the Corporation from any liability that
might otherwise arise by reason of his contracting with the Corporation for the
benefit of himself or any firm or corporation in which he may in any way be
interested.
L.A.M. PHARMACEUTICAL CORP.
INCENTIVE STOCK OPTION PLAN
1. Purpose. The purpose of the Incentive Stock Option Plan (the
"Plan") is to advance the interests of L.A.M. Pharmaceutical Corp. and any
subsidiary corporation (hereinafter referred to as the "Company") and all
of its shareholders, by strengthening the Company's ability to attract and
retain in its employ individuals of training, experience, and ability, and
to furnish additional incentive to officers and valued employees upon whose
judgment, initiative, and efforts the successful conduct and development of
its business largely depends, by encouraging such officers and employees to
become owners of capital stock of the Company.
This will be effected through the granting of stock options as
herein provided, which options are intended to qualify as "Incentive Stock
Options" within the meaning of Section 422 of the Internal Revenue Code, as
amended (the "Code").
2. Definitions.
-----------
(a) "Board" means the Board of Directors of the Company.
(b) "Committee" means the directors duly appointed to administer the
Plan.
(c) "Common Stock" means the Company's Common Stock.
(d) "Date of Grant" means the date on which an Option is granted under
the Plan.
(e) "Option" means an Option granted under the Plan.
(f) "Optionee" means a person to whom an Option, which has not
expired, has been granted under the Plan.
(g) "Successor" means the legal representative of the estate of a
deceased optionee or the person or persons who acquire the right to exercise an
Option by bequest or inheritance or by reason of the death of any Optionee.
3. Administration of Plan. The Plan shall be administered by the
Company's Board of Directors or in the alternative, by a committee of two or
more directors appointed by the Board (the "Committee"). If a Committee should
be appointed, the Committee shall report all action taken by it to the Board.
The Committee shall have full and final authority in its discretion, subject to
the provisions of the Plan, to determine the individuals to whom and the time or
times at which Options shall be granted and the number of shares and purchase
price of Common Stock covered by each Option; to construe and interpret the
Plan; to determine the
<PAGE>
terms and provisions of the respective Option agreements, which need not be
identical, including, but without limitation, terms covering the payment of the
Option Price; and to make all other determinations and take all other actions
deemed necessary or advisable for the proper administration of the Plan. All
such actions and determinations shall be conclusively binding for all purposes
and upon all persons.
4. Common Stock Subject to Options. The aggregate number of shares of
the Company's Common Stock which may be issued upon the exercise of Options
granted under the Plan shall not exceed 600,000. The shares of Common Stock to
be issued upon the exercise of Options may be authorized but unissued shares,
shares issued and reacquired by the Company or shares bought on the market for
the purposes of the Plan. In the event any Option shall, for any reason,
terminate or expire or be surrendered without having been exercised in full, the
shares subject to such Option but not purchased thereunder shall again be
available for Options to be granted under the Plan.
The aggregate fair market value (determined as of the time any option
is granted) of the stock for which any employee may be granted options which are
first exercisable in any single calendar year under this Plan (and any other
plan of the Company meeting the requirements for Incentive Stock Option Plans)
shall not exceed $100,000.
5. Participants. Options will be granted only to persons who are
employees of the Company or subsidiaries of the Company and only in connection
with any such person's employment. The term "employees" shall include officers
as well as other employees, and the officers and other employees who are
directors of the Company. The Committee will determine the employees to be
granted options and the number of shares subject to each option.
6. Terms and Conditions of Options. Any Option granted under the Plan
shall be evidenced by an agreement executed by the Company and the recipient and
shall contain such terms and be in such form as the Committee may from time to
time approve, subject to the following limitations and conditions:
(a) Option Price. The purchase price of each option shall not be
less than 100% of the fair market value of the Company's common stock at the
time of the granting of the option provided, however, if the optionee, at the
time the option is granted, owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company, the purchase price
of the option shall not be less than 110% of the fair market value of the stock
at the time of the granting of the option.
(b) Period of Option. The maximum period for exercising an option
shall be 10 years from the date upon which the option is granted, provided,
however, if the optionee, at the time the option is granted, owns stock
possessing more than l0% of the total combined voting power of all classes of
stock of the Company, the maximum period for exercising an option shall be five
years from the date upon which the option is granted and provided further,
however, that these periods may be shortened in accordance with the provisions
of Paragraph 7 below.
<PAGE>
Subject to the foregoing, the period during which each option may be
exercised, and the expiration date of each Option shall be fixed by the
Committee.
If an optionee shall cease to be employed by the Company due to
disability, as defined in Section 22(e)(3) of the Code, he may, but only within
the one year next succeeding such cessation of employment, exercise his option
to the extent that he was entitled to exercise it on the date of such cessation.
The Plan will not confer upon any optionee any right with respect to continuance
of employment by the Company, nor will it interfere in any way with his right,
or his employer's right, to terminate his employment at any time.
(c) Vesting of Shareholder Rights. Neither an Optionee nor his
successor shall have any rights as a shareholder of the Company until the
certificates evidencing the shares purchased are properly delivered to such
Optionee or his successor.
(d) Exercise of Option. Each Option shall be exercisable from time
to time during a period (or periods) determined by the Committee and ending upon
the expiration or termination of the Option; provided, however, the Committee
may, by the provisions of any Option Agreement, limit the number of shares
purchaseable thereunder in any period or periods of time during which the Option
is exercisable. An Option shall not be exercisable in whole or in part prior to
the date of shareholder approval of the Plan.
Options may be exercised in part from time to time during the
option period. The exercise of any option will be contingent upon compliance by
the Optionee (or purchaser acting pursuant to Section 6(b)) with the provisions
of Section 10 below and upon receipt by the Company of either (i) cash or
certified bank check payable to its order in the amount of the purchase price of
such shares (ii) shares of Company stock having a fair market value equal to the
purchase price of such shares, or (iii) a combination of (i) and (ii). If any
law or regulation requires the Company to take any action with respect to the
shares to be issued upon exercise of any option, then the date for delivery of
such stock shall be extended for the period necessary to take such action.
(e) Nontransferability of Option. No Option shall be transferable
or assignable by an Optionee, otherwise than by will or the laws of descent and
distribution and each Option shall be exercisable, during the Optionee's
lifetime, only by him. No Option shall be pledged or hypothecated in any way and
no Option shall be subject to execution, attachment, or similar process except
with the express consent of the Committee.
(f) Death of Optionee. In the event of the death of an optionee
while in the employ of the Company, the option theretofore granted to him shall
be exercisable only within the three months succeeding such death and then only
(i) by the person or persons to whom the optionee's rights under the option
shall pass by the optionee's will or by the laws of descent and distribution,
and (ii) if and to the extent that he was entitled to exercise the option at the
date of his death.
7. Assumed Options. In connection with any transaction to which Section
424(a) of the Code is applicable, options may be granted pursuant hereto in
substitution of existing options or existing options may be assumed as
<PAGE>
prescribed by that Section and any regulations issued thereunder.
Notwithstanding anything to the contrary contained in this Plan, options granted
pursuant to this Paragraph shall be at prices and shall contain such terms,
provisions, and conditions as may be determined by the Committee and shall
include such provisions and conditions as may be necessary to meet the
requirements of Section 424(a) of the Code.
8. Certain Dispositions of Shares. Any options granted pursuant to this
Plan shall be conditioned such that if, within the earlier of (i) the two-year
period beginning on the date of grant of an option or (ii) the one-year period
beginning on the date after which any share of stock is transferred to an
individual pursuant to his exercise of an option, such an individual makes a
disposition of such share of stock by way of sale, exchange, gift, transfer of
legal title, or otherwise, such individual shall promptly report such
disposition to the Company in writing and shall furnish to the Company such
details concerning such disposition as the Company may reasonably request.
9. Reclassification, Consolidation, or Merger. If and to the extent
that the number of issued shares of Common Stock of the Corporation shall be
increased or reduced by change in par value, split up, reclassification,
distribution of a dividend payable in stock, or the like, the number of shares
subject to Option and the Option price per share shall be proportionately
adjusted by the Committee, whose determination shall be conclusive. If the
Corporation is reorganized or consolidated or merged with another corporation,
an Optionee granted an Option hereunder shall be entitled to receive Options
covering shares of such reorganized, consolidated, or merged company in the same
proportion, at an equivalent price, and subject to the same conditions. The new
Option or assumption of the old Option shall not give Optionee additional
benefits which he did not have under the old Option, or deprive him of benefits
which he had under the old Option.
10. Restrictions on Issuing Shares. The exercise of each Option shall
be subject to the condition that if at any time the Company shall determine in
its discretion that the satisfaction of withholding tax or other withholding
liabilities, or that the listing, registration, or qualification of any shares
otherwise deliverable upon such exercise upon any securities exchange or under
any state or federal law, or that the consent or approval of any regulatory
body, is necessary or desirable as a condition of, or in connection with, such
exercise or the delivery or purchase of shares purchased thereto, then in any
such event, such exercise shall not be effective unless such withholding,
listing, registration, qualification, consent, or approval shall have been
effected or obtained free of any conditions not acceptable to the Company.
Unless the shares of stock covered by the Plan have been registered
with the Securities and Exchange Commission pursuant to Section 5 of the
Securities Act of l933, each optionee shall, by accepting an option, represent
and agree, for himself and his transferees by will or the laws of descent and
distribution, that all shares of stock purchased upon the exercise of the option
will be acquired for investment and not for resale or distribution. Upon such
exercise of any portion of an option, the person entitled to exercise the same
shall, upon request of the Company, furnish evidence satisfactory to the Company
(including a written and signed representation) to the effect that the shares of
stock are being acquired in good faith for investment and not for resale or
distribution. Furthermore, the Company may, if it deems appropriate, affix a
legend to certificates representing shares of stock purchased upon exercise of
<PAGE>
options indicating that such shares have not been registered with the Securities
and Exchange Commission and may so notify its transfer agent. Such shares may be
disposed of by an optionee in the following manner only: (l) pursuant to an
effective registration statement covering such resale or reoffer, (2) pursuant
to an applicable exemption from registration as indicated in a written opinion
of counsel acceptable to the Company, or (3) in a transaction that meets all the
requirements of Rule l44 of the Securities and Exchange Commission. If shares of
stock covered by the Plan have been registered with the Securities and Exchange
Commission, no such restrictions on resale shall apply, except in the case of
optionees who are directors, officers, or principal shareholders of the Company.
Such persons may dispose of shares only by one of the three aforesaid methods.
11. Use of Proceeds. The proceeds received by the Company from the sale
of Common Stock pursuant to the exercise of Options granted under the Plan shall
be added to the Company's general funds and used for general corporate purposes.
l2. Amendment, Suspension, and Termination of Plan. The Board of
Directors may alter, suspend, or discontinue the Plan, but may not, without the
approval of a majority of those holders of the Company's Common Stock voting in
person or by proxy at any meeting of the Company's shareholders, make any
alteration or amendment thereof which operates to (a) make any material change
in the class of eligible employees as defined in Section 5, (b) extend the term
of the Plan or the maximum option periods provided in paragraph 6, (c) decrease
the minimum option price provided in paragraph 6, except as provided in
paragraph 9, or (d) materially increase the benefits accruing to employees
participating under this Plan.
Unless the Plan shall theretofore have been terminated by the Board,
the Plan shall terminate ten years after the effective date of the Plan. No
Option may be granted during any suspension or after the termination of the
Plan. No amendment, suspension, or termination of the Plan shall, without an
Optionee's consent, alter or impair any of the rights or obligations under any
Option theretofore granted to such Optionee under the Plan.
13. Limitations. Every right of action by any person receiving options
pursuant to this Plan against any past, present or future member of the Board,
or any officer or employee of the Company arising out of or in connection with
this Plan shall, irrespective of the place where such action may be brought and
irrespective of the place of residence of any such director, officer or employee
cease and be barred by the expiration of one year from the date of the act or
omission in respect of which such right of action arises.
14. Governing Law. The Plan shall be governed by the laws of the State of
Delaware.
15. Expenses of Administration. All costs and expenses incurred in the
operation and administration of this Plan shall
be borne by the Company.
L.A.M. PHARMACEUTICAL CORP.
NON-QUALIFIED STOCK OPTION PLAN
l. Purpose. This Non-Qualified Stock Option Plan (the "Plan") is
intended to advance the interests of L.A.M. Pharmaceutical Corp. (the "Company")
and its shareholders, by encouraging and enabling selected officers, directors,
consultants and key employees upon whose judgment, initiative and effort the
Company is largely dependent for the successful conduct of its business, to
acquire and retain a proprietary interest in the Company by ownership of its
stock. Options granted under the Plan are intended to be Options which do not
meet the requirements of Section 422 of the Internal Revenue Code of 1954, as
amended (the "Code").
2. Definitions.
-----------
(a) "Board" means the Board of Directors of the Company.
(b) "Committee" means the directors duly appointed to administer the
Plan.
(c) "Common Stock" means the Company's Common Stock.
(d) "Date of Grant" means the date on which an Option is granted under
the Plan.
(e) "Option" means an Option granted under the Plan.
(f) "Optionee" means a person to whom an Option, which has not expired,
has been granted under the Plan.
(g) "Successor" means the legal representative of the estate of a
deceased optionee or the person or persons who acquire the right to exercise an
Option by bequest or inheritance or by reason of the death of any Optionee.
3. Administration of Plan. The Plan shall be administered by the
Company's Board of Directors or in the alternative, by a committee of two or
more directors appointed by the Board (the "Committee"). If a Committee should
be appointed, the Committee shall report all action taken by it to the Board.
The Committee shall have full and final authority in its discretion, subject to
the provisions of the Plan, to determine the individuals to whom and the time or
times at which Options shall be granted and the number of shares and purchase
price of Common Stock covered by each Option; to construe and interpret the
Plan; to determine the terms and provisions of the respective Option agreements,
which need not be identical, including, but without limitation, terms covering
the payment of the Option Price; and to make all other determinations and take
all other actions deemed necessary or advisable for the proper administration of
the Plan. All such actions and determinations shall be conclusively binding for
all purposes and upon all persons.
<PAGE>
4. Common Stock Subject to Options. The aggregate number of shares of
the Company's Common Stock which may be issued upon the exercise of Options
granted under the Plan shall not exceed 600,000. The shares of Common Stock to
be issued upon the exercise of Options may be authorized but unissued shares,
shares issued and reacquired by the Company or shares bought on the market for
the purposes of the Plan. In the event any Option shall, for any reason,
terminate or expire or be surrendered without having been exercised in full, the
shares subject to such Option but not purchased thereunder shall again be
available for Options to be granted under the Plan.
5. Participants. Options may be granted under the Plan to employees,
directors and officers, and consultants or advisors to the Company (or the
Company's subsidiaries), provided however that bona fide services shall be
rendered by such consultants or advisors and such services must not be in
connection with the offer or sale of securities in a capital-raising
transaction.
6. Terms and Conditions of Options. Any Option granted under the Plan
shall be evidenced by an agreement executed by the Company and the recipient and
shall contain such terms and be in such form as the Committee may from time to
time approve, subject to the following limitations and conditions:
(a) Option Price. The Option Price per share with respect to each
Option shall be determined by the Committee but shall in no instance be
less than the par value of the Common Stock.
(b) Period of Option. The period during which each option may be
exercised, and the expiration date of each Option shall be fixed by the
Committee, but, notwithstanding any provision of the Plan to the contrary, such
expiration date shall not be more than ten years from the date of Grant.
(c) Vesting of Shareholder Rights. Neither an Optionee nor his
successor shall have any rights as a shareholder of the Company until the
certificates evidencing the shares purchased are properly delivered to such
Optionee or his successor.
(d) Exercise of Option. Each Option shall be exercisable from time
to time during a period (or periods) determined by the Committee and ending upon
the expiration or termination of the Option; provided, however, the Committee
may, by the provisions of any Option Agreement, limit the number of shares
purchaseable thereunder in any period or periods of time during which the Option
is exercisable.
(e) Nontransferability of Option. No Option shall be transferable
or assignable by an Optionee, otherwise than by will or the laws of descent and
distribution and each Option shall be exercisable, during the Optionee's
lifetime, only by him. No Option shall be pledged or hypothecated in any way and
no Option shall be subject to execution, attachment, or similar process except
with the express consent of the Committee.
<PAGE>
(f) Death of Optionee. If an Optionee dies while holding an Option
granted hereunder, his Option privileges shall be limited to the shares which
were immediately purchasable by him at the date of death and such Option
privileges shall expire unless exercised by his successor within four months
after the date of death.
7. Reclassification, Consolidation, or Merger. If and to the extent
that the number of issued shares of Common Stock of the Corporation shall be
increased or reduced by change in par value, split up, reclassification,
distribution of a dividend payable in stock, or the like, the number of shares
subject to Option and the Option price per share shall be proportionately
adjusted by the Committee, whose determination shall be conclusive. If the
Corporation is reorganized or consolidated or merged with another corporation,
an Optionee granted an Option hereunder shall be entitled to receive Options
covering shares of such reorganized, consolidated, or merged company in the same
proportion, at an equivalent price, and subject to the same conditions. The new
Option or assumption of the old Option shall not give Optionee additional
benefits which he did not have under the old Option, or deprive him of benefits
which he had under the old Option.
8. Restrictions on Issuing Shares. The exercise of each Option shall be
subject to the condition that if at any time the Company shall determine in its
discretion that the satisfaction of withholding tax or other withholding
liabilities, or that the listing, registration, or qualification of any shares
otherwise deliverable upon such exercise upon any securities exchange or under
any state or federal law, or that the consent or approval of any regulatory
body, is necessary or desirable as a condition of, or in connection with, such
exercise or the delivery or purchase of shares purchased thereto, then in any
such event, such exercise shall not be effective unless such withholding,
listing, registration, qualification, consent, or approval shall have been
effected or obtained free of any conditions not acceptable to the Company.
Unless the shares of stock covered by the Plan have been
registered with the Securities and Exchange Commission pursuant to Section 5 of
the Securities Act of l933, each optionee shall, by accepting an option,
represent and agree, for himself and his transferrees by will or the laws of
descent and distribution, that all shares of stock purchased upon the exercise
of the option will be acquired for investment and not for resale or
distribution. Upon such exercise of any portion of an option, the person
entitled to exercise the same shall, upon request of the Company, furnish
evidence satisfactory to the Company (including a written and signed
representation) to the effect that the shares of stock are being acquired in
good faith for investment and not for resale or distribution. Furthermore, the
Company may, if it deems appropriate, affix a legend to certificates
representing shares of stock purchased upon exercise of options indicating that
such shares have not been registered with the Securities and Exchange Commission
and may so notify the Company's transfer agent. Such shares may be disposed of
by an optionee in the following manner only: (l) pursuant to an effective
registration statement covering such resale or reoffer, (2) pursuant to an
applicable exemption from registration as indicated in a written opinion of
counsel acceptable to the Company, or (3) in a transaction that meets all the
requirements of Rule l44 of the Securities and Exchange Commission. If shares of
stock covered by the Plan have been registered with the Securities and Exchange
<PAGE>
Commission, no such restrictions on resale shall apply, except in the case of
optionees who are directors, officers, or principal shareholders of the Company.
Such persons may dispose of shares only by one of the three aforesaid methods.
9. Use of Proceeds. The proceeds received by the Company from the sale
of Common Stock pursuant to the exercise of Options granted under the Plan shall
be added to the Company's general funds and used for general corporate purposes.
10. Amendment, Suspension, and Termination of Plan. The Board of
Directors may alter, suspend, or discontinue the Plan at any time.
Unless the Plan shall theretofore have been terminated by the
Board, the Plan shall terminate ten years after the effective date of the Plan.
No Option may be granted during any suspension or after the termination of the
Plan. No amendment, suspension, or termination of the Plan shall, without an
Optionee's consent, alter or impair any of the rights or obligations under any
Option theretofore granted to such Optionee under the Plan.
11. Limitations. Every right of action by any person receiving options
pursuant to this Plan against any past, present or future member of the Board,
or any officer or employee of the Company arising out of or in connection with
this Plan shall, irrespective of the place where such action may be brought and
irrespective of the place of residence of any such director, officer or employee
cease and be barred by the expiration of one year from the date of the act or
omission in respect of which such right of action arises.
12. Governing Law. The Plan shall be governed by the laws of
the State of Delaware.
13. Expenses of Administration. All costs and expenses incurred in
the operation and administration of this Plan shall be borne by the Company.
<PAGE>
L.A.M. PHARMACEUTICAL CORP.
STOCK BONUS PLAN
l. Purpose. The purpose of this Stock Bonus Plan is to advance the
interests of L.A.M. Pharmaceutical Corp. (the "Company") and its
shareholders, by encouraging and enabling selected officers, directors,
consultants and key employees upon whose judgment, initiative and effort
the Company is largely dependent for the successful conduct of its
business, to acquire and retain a proprietary interest in the Company by
ownership of its stock, to keep personnel of experience and ability in the
employ of the Company and to compensate them for their contributions to the
growth and profits of the Company and thereby induce them to continue to
make such contributions in the future.
2. Definitions.
A. "Board" shall mean the board of directors of the Company.
B. "Committee" means the directors duly appointed to administer the
Plan.
C. "Plan" shall mean this Stock Bonus Plan.
D. "Bonus Share" shall mean the shares of common stock of the
Company reserved pursuant to Section 4 hereof and any such shares issued to a
Recipient pursuant to this Plan.
E. "Recipient" shall mean any individual rendering services for the
Company to whom shares are granted pursuant to this Plan.
3. Administration of Plan. The Plan shall be administered by a
committee of two or more directors appointed by the Board (the "Committee"). The
Committee shall report all action taken by it to the Board. The Committee shall
have full and final authority in its discretion, subject to the provisions of
the Plan, to determine the individuals to whom and the time or times at which
Bonus Shares shall be granted and the number of Bonus Shares; to construe and
interpret the Plan; and to make all other determinations and take all other
actions deemed necessary or advisable for the proper administration of the Plan.
All such actions and determinations shall be conclusively binding for all
purposes and upon all persons.
4. Bonus Share Reserve. There shall be established a Bonus Share
Reserve to which shall be credited 300,000 shares of the Company's common stock.
In the event that the shares of common stock of the Company should, as a result
of a stock split or stock dividend or combination of shares or any other change,
or exchange for other securities by reclassification, reorganization, merger,
consolidation, recapitalization or otherwise, be increased or decreased or
changed into or exchanged for, a different number or kind of shares of stock or
<PAGE>
other securities of the Company or of another corporation, the number of shares
then remaining in the Bonus Share Reserve shall be appropriately adjusted to
reflect such action. Upon the grant of shares hereunder, this reserve shall be
reduced by the number of shares so granted. Distributions of Bonus Shares may,
as the Committee shall in its sole discretion determine, be made from authorized
but unissued shares or from treasury shares. All authorized and unissued shares
issued as Bonus Shares in accordance with the Plan shall be fully paid and
non-assessable and free from preemptive rights.
5. Eligibility, and Granting and Vesting of Bonus Shares. Bonus Shares
may be granted under the Plan to the Company's (or the Company's subsidiaries)
employees, directors and officers, and consultants or advisors to the Company
(or its subsidiaries), provided however that bona fide services shall be
rendered by such consultants or advisors and such services must not be in
connection with the offer or sale of securities in a capital-raising
transaction.
The Committee, in its sole discretion, is empowered to grant to an
eligible Participant a number of Bonus Shares as it shall determine from time to
time. Each grant of these Bonus Shares shall become vested according to a
schedule to be established by the Committee directors at the time of the grant.
For purposes of this plan, vesting shall mean the period during which the
recipient must remain an employee or provide services for the Company. At such
time as the employment of the Recipient ceases, any shares not fully vested
shall be forfeited by the Recipient and shall be returned to the Bonus Share
Reserve. The Committee, in its sole discretion, may also impose restrictions on
the future transferability of the bonus shares, which restrictions shall be set
forth on the notification to the Recipient of the grant.
The aggregate number of Bonus Shares which may be granted pursuant
to this Plan shall not exceed the amount available therefore in the Bonus Share
Reserve.
6. Form of Grants. Each grant shall specify the number of Bonus Shares
subject thereto, subject to the provisions of Section 5 hereof.
At the time of making any grant, the Committee shall advise the
Recipient by delivery of written notice, in the form of Exhibit A hereto
annexed.
7. Recipients' Representations.
---------------------------
A. The Committee may require that, in acquiring any Bonus Shares,
the Recipient agree with, and represent to, the Company that the Recipient is
acquiring such Bonus Shares for the purpose of investment and with no present
intention to transfer, sell or otherwise dispose of shares except such
distribution by a legal representative as shall be required by will or the laws
of any jurisdiction in winding-up the estate of any Recipient. Such shares shall
be transferable thereafter only if the proposed transfer shall be permissible
pursuant to the Plan and if, in the opinion of counsel (who shall be
<PAGE>
satisfactory to the Committee), such transfer shall at such time be in
compliance with applicable securities laws.
B. To effectuate Paragraph A above, the Recipient shall deliver to
the Committee, in duplicate, an agreement in writing, signed by the Recipient,
in form and substance as set forth in Exhibit B hereto annexed, and the
Committee shall forthwith acknowledge its receipt thereof.
8. Restrictions Upon Issuance. A. Bonus Shares shall forthwith after
the making of any representations required by Section 6 hereof, or if no
representations are required then within thirty (30) days of the date of grant,
be duly issued and transferred and a certificate or certificates for such shares
shall be issued in the Recipient's name. The Recipient shall thereupon be a
shareholder with respect to all the shares represented by such certificate or
certificates, shall have all the rights of a shareholder with respect to all
such shares, including the right to vote such shares and to receive all
dividends and other distributions (subject to the provisions of Section 7(B)
hereof) paid with respect to such shares. Certificates of stock representing
Bonus Shares shall be imprinted with a legend to the effect that the shares
represented thereby are subject to the provisions of this Agreement, and to the
vesting and transfer limitations established by the Committee, and each transfer
agent for the common stock shall be instructed to like effect with respect of
such shares.
B. In the event that, as the result of a stock split or stock
dividend or combination of shares or any other change, or exchange for other
securities, by reclassification, reorganization, merger, consolidation,
recapitalization or otherwise, the Recipient shall, as owner of the Bonus Shares
subject to restrictions hereunder, be entitled to new or additional or different
shares of stock or securities, the certificate or certificates for, or other
evidences of, such new or additional or different shares or securities, together
with a stock power or other instrument of transfer appropriately endorsed, shall
also be imprinted with a legend as provided in Section 7(A), and all provisions
of the Plan relating to restrictions herein set forth shall thereupon be
applicable to such new or additional or different shares or securities to the
extent applicable to the shares with respect to which they were distributed.
C. The grant of any Bonus Shares shall be subject to the condition
that if at any time the Company shall determine in its discretion that the
satisfaction of withholding tax or other withholding liabilities, or that the
listing, registration, or qualification of any Bonus Shares upon such exercise
upon any securities exchange or under any state or federal law, or that the
consent or approval of any regulatory body, is necessary or desirable as a
condition of, or in connection with, the issuance of any Bonus Shares, then in
any such event, such exercise shall not be effective unless such withholding,
listing, registration, qualification, consent, or approval shall have been ef-
fected or obtained free of any conditions not acceptable to the Company.
<PAGE>
D. Unless the Bonus Shares covered by the Plan have been
registered with the Securities and Exchange Commission pursuant to Section 5 of
the Securities Act of l933, each Recipient shall, by accepting a Bonus Share,
represent and agree, for himself and his transferees by will or the laws of
descent and distribution, that all Bonus Shares were acquired for investment and
not for resale or distribution. The person entitled to receive Bonus Shares
shall, upon request of the Committee, furnish evidence satisfactory to the
Committee (including a written and signed representation) to the effect that the
shares of stock are being acquired in good faith for investment and not for
resale or distribution. Furthermore, the Committee may, if it deems appropriate,
affix a legend to certificates representing Bonus Shares indicating that such
Bonus Shares have not been registered with the Securities and Exchange
Commission and may so notify the Company's transfer agent. Such shares may be
disposed of by a Recipient in the following manner only: (l) pursuant to an
effective registration statement covering such resale or reoffer, (2) pursuant
to an applicable exemption from registration as indicated in a written opinion
of counsel acceptable to the Company, or (3) in a transaction that meets all the
requirements of Rule l44 of the Securities and Exchange Commission. If Bonus
Shares covered by the Plan have been registered with the Securities and Exchange
Commission, no such restrictions on resale shall apply, except in the case of
Recipients who are directors, officers, or principal shareholders of the
Company. Such persons may dispose of shares only by one of the three aforesaid
methods.
9. Limitations. Neither the action of the Company in establishing the
Plan, nor any action taken by it nor by the Committee under the Plan, nor
any provision of the Plan, shall be construed as giving to any person the
right to be retained in the employ of the Company.
Every right of action by any person receiving shares of common
stock pursuant to this Plan against any past, present or future member of the
Board, or any officer or employee of the Company arising out of or in connection
with this Plan shall, irrespective of the place where action may be brought and
irrespective of the place of residence of any such director, officer or employee
cease and be barred by the expiration of one year from the date of the act or
omission in respect of which such right of action arises.
10. Amendment, Suspension or Termination of the Plan. The Board of
Directors may alter, suspend, or discontinue the Plan at any time.
Unless the Plan shall theretofore have been terminated by the Board,
the Plan shall terminate ten years after the effective date of the Plan. No
Bonus Share may be granted during any suspension or after the termination of the
Plan. No amendment, suspension, or termination of the Plan shall, without a
recipient's consent, alter or impair any of the rights or obligations under any
Bonus Share theretofore granted to such recipient under the Plan.
<PAGE>
11. Governing Law. The Plan shall be governed by the laws of the State
of Delaware.
12. Expenses of Administration. All costs and expenses incurred in the
operation and administration of this Plan shall be borne by the Company.
<PAGE>
- EXHIBIT A -
L.A.M. PHARMACEUTICAL CORP.
STOCK BONUS PLAN
TO: Recipient: PLEASE BE ADVISED that L.A.M. Pharmaceutical Corp. has
on the date hereof granted to the Recipient the number of Bonus Shares as
set forth under and pursuant to the Stock Bonus Plan. Before these shares
are to be issued, the Recipient must deliver to the Committee that
administers the Stock Bonus Plan an agreement in duplicate, in the form as
Exhibit B hereto. The Bonus Shares are issued subject to the following
vesting and transfer limitations.
Vesting:
-------
Number of Shares Date of Vesting
Transfer Limitations:
--------------------
L.A.M. PHARMACEUTICAL CORP.
.
------------- By ---------------------------
Date
<PAGE>
- EXHIBIT B -
LAM Pharmaceutical Corp.
800 Sheppard Avenue West,
Commercial Unit 1
North York, Ontario
Canada M3H 6B4
Gentlemen: I represent and agree that said Bonus Shares are being acquired by me
for investment and that I have no present intention to transfer, sell or
otherwise dispose of such shares, except as permitted pursuant to the Plan and
in compliance with applicable securities laws, and agree further that said
shares are being acquired by me in accordance with and subject to the terms,
provisions and conditions of said Plan, to all of which I hereby expressly
assent. These agreements shall bind and inure to the benefit of my heirs, legal
representatives, successors and assigns.
My address of record is:
and my social security number: .
Very truly yours,
Receipt of the above is hereby acknowledged.
LAM Pharmaceutical, Corp.
------------- By ----------------------------
Date its ----------------------------
IXORA
EXCLUSIVE WORLD WIDE
LICENCE,
SUPPLY
and SHAREHOLDER
AGREEMENTS
<PAGE>
LICENCE and SUPPLY AGREEMENT
Page
DEFINITIONS: 2
ARTICLE I DEVELOPMENT OF PRODUCTS 3
ARTICLE 2 PATENT PROSECUTION 7
ARTICLE 3 SALES AND CONSIDERATION TO LAM 10
ARTICLE 4 PUBLIC COMPANY AND ASSOCIATED MATTERS 16
ARTICLE 5 TERMS OF SUPPLY 16
ARTICLE 6 PRICE AND PAYMENT 22
ARTICLE 7 QUALITY CONTROL 23
ARTICLE 8 RECALL 25
ARTICLE 9 REPRESENTATIONS AND WARRANTIES 25
ARTICLE 10 CONFIDENTIALITY 28
ARTICLE 11 TERM AND REMEDY 29
ARTICLE 12 INSURANCE AND INDEMNIFICATION 31
ARTICLE 13 FORCE MAJEURE 33
ARTICLE 14 DISPUTES; Arbitration 33
ARTICLE 15 GENERAL 35
Schedule "A" "Products" 39
Schedule "B" "Patents Rights" 40
Schedule "C "Other Patent Rights" 41
Schedule "D" Expenses incurred or accrued to the end
of Jan 31, 1999 (Section 1.5(a)) 42
Schedule "E" FINANCIAL STATEMENTS (section 9.2(e)) 44
Schedule "F" AUTHORIZED CAPITAL STOCK OF IXORA BIO.COM
(section 3.4(3)) 46
<PAGE>
EXCLUSIVE WORLD WIDE LICENCE AND SUPPLY AGREEMENT
THIS AGREEMENT substitutes and restates in its entirety the Agreement between
the parties effective as of December 31, 1997. This agreement is effective upon
execution.
B E T W E E N:
LAM PHARMACEUTICAL CORP., a corporation organized and existing under the laws of
Delaware
hereinafter designated as "LAM"
- -and-
IXORA BIOMEDICAL COMPANY INC., a corporation organized and existing under
the laws of Delaware
hereinafter designated as "IXORA"
(Both LAM and IXORA are hereinafter sometimes collectively referred to as the
"Parties", and each may be referred to in the singular as a "Party").
WHEREAS LAM is in the process of researching and developing, and will continue
to research and develop, products for the purpose of treating male sexual
dysfunction and female sexual dysfunction in humans and animals;
AND WHEREAS LAM has or is in the process of making application for certain
patents, as more fully described on Schedule "B" to which Ixora has exclusive
rights to, hereto (the patents and patent applications including divisionals,
continuations, reissues, substitutes, extensions thereof and foreign
applications claiming priority therefrom;"Patents Rights");
AND WHEREAS LAM has or is in the process of making application for certain
patents, as more fully described on Schedule "C" to which Ixora has rights to
operate under, hereto (the patent applications and patents, including
divisionals, continuations, reissues, substitutes, extensions thereof and
foreign applications claiming priority therefrom, being herein referred to as
the "Other Patent Rights" );
AND WHEREAS IXORA desires to be entitled to commercially market and sell the
Products (as defined in Schedule "A") in all countries of the world (the
"Territory") to third parties under its own brand names or otherwise;
AND WHEREAS LAM desires to grant to IXORA an exclusive, world-wide license, with
a right of sub-license, in the Field of Use (as defined in Schedule "A") to all
<PAGE>
the Patent Rights, subject to the terms of this Agreement, to use and sell
Products; whose manufacture, sale or use is claimed in the Patent Rights.
AND WHEREAS IXORA acknowledges the risks and uncertainties related to the
development of the Products and acknowledges that further development is
required before the Products may be suitable/approved for full and unrestricted
commercial marketing and sale in certain jurisdictions within the Territory,
which development LAM agrees to continue to undertake
AND WHEREAS all Schedules attached hereto form part of this Agreement;
AND WHEREAS this Agreement has been duly negotiated between the Parties.
NOW THEREFORE for good and valuable consideration, the receipt and sufficiency
of which is acknowledged by the Parties, LAM and IXORA mutually agree as
follows:
DEFINITIONS:
Term where defined first used
Additional Rights 2.9 2.9
Beneficial Therapeutic 1.1b 1.1
Effect
Commercial Sales 3.5b(iv) 3.5a(i)
Commercially Viable 1.1c 1.1
Change of Control 15.13 11.4
Field of Use Schedule "A" 5th. Whereas
Improvement 5.8f 5.8f
Manufacturer 5.7a 5.6
Manufacturing Agreement 5.7a 5.7a
Manufacturing Know How 5.8a(iii) 5.8a(iii)
Marketing Territory 4th. Whereas 4th. Whereas
Other Patent Rights Schedule "C" 3rd. Whereas
Patent Rights Schedule "B" 2nd. Whereas
Party page 1 page1
Parties page1 page1
Performance Profile 1.1b 1.1b
Preliminary Study 3.11c(ii) 3.11c(ii)
Process 5.8a 5.7a
Product Schedule "A" 4th. Whereas
Product Availability Date 5.10b 5.10b
Research 3.11c 3.11c
Research Request 3.11c(i) 3.11c(i)
Specification not defined used often
Target Application 3.11c 1.1b
Territory 4th. Whereas 4th. Whereas
<PAGE>
ARTICLE I
DEVELOPMENT OF PRODUCTS
1.1LAM shall perform, carry out diligently, faithfully and to the best of LAM's
ability its obligations hereunder and shall use its best efforts to research
and develop Products with a Beneficial Therapeutic Effect that can be
rendered Commercially Viable in the most cost and time effective/efficient
manner.
a) After the same has been rendered Commercially Viable, LAM will continue to
improve and develop and modify the Products in such manner as may be
necessary in order to continue to make the Products Commercially Viable and
therapeutically beneficial. LAM shall provide IXORA with technical assistance
relating to the development and marketing of the Products as reasonably
requested by IXORA. Initial contact hereunder will be on at least a monthly
basis unless otherwise agreed by the Parties.
b) For a product to be considered a Product, the results of the product research
and development efforts as contemplated herein must provide: 1) Ixora with
documentation of the NDA approval from the FDA and an estimation of its
capablity of being rendered Commercially Viable, or 2) for a product not
requiring FDA approval, IXORA with an independent legal opinion from an arm's
length third party satisfactory to IXORA and with statistically significant
clinical evidence from an arm's length third party satisfactory to IXORA,
acting reasonably, that such substance demonstrates clinically an efficacious
(effective in treating the target condition in a timely manner) and efficient
(without side effects or if any exists such being safe to the user)
(collectively the) "Performance Profile" (herein referred to Beneficial
Therapeutic Effect) to treat the Target Application and an estimation of its
capablity of being rendered Commercially Viable.
c) Commercially Viable refers to a Product comparing favorably to other
therapeutically effective alternatives if available for the Target
Application including, without limitation, a consideration of the potential
cost to manufacture such product to enable Ixora to establish a minimum price
to achieve profitability and the therapeutic effects of such product when
compared to actual or known foreseeable competitive alternatives.
<PAGE>
1.2IXORA shall, in its sole and absolute discretion, decide upon the
jurisdictions in which to seek government approvals, licenses, registrations,
clearances or other authorizations of any federal, state, provincial, local
or other authorized regulatory agency, department, bureau or other
governmental entity necessary for the use, storage, import, export,
transport, marketing, sale and distribution of Products (which list of
jurisdictions may from time to time be added to or deleted from by IXORA in
its sole and absolute discretion, being herein referred to as the "Marketing
Territory"). IXORA shall give notice from time to time to LAM of the
jurisdictions comprising the Marketing Territory. IXORA and/or LAM will use
reasonable efforts to make the required applications and take such other
necessary action to obtain the necessary government approvals, licenses, and
registrations, clearances or other authorizations, and both parties agree to
assist each other in this respect to the best of each parties abilities.
1.3IXORA and/or LAM shall use reasonable efforts to obtain and maintain
throughout the continuation of this Agreement all necessary approvals,
licenses, and registrations, clearances or other authorizations for Products
required by government and/or regulatory authorities having jurisdiction over
the importation, handling, use, sale or distribution of Products in the
Marketing Territory. Both parties agree to use its reasonable efforts to
assist each other in pursuing such approvals, licenses, registrations,
clearances or other authorizations.
1.4IXORA shall have the sole right and responsibility to take such actions with
respect to the Products as would normally be done in accordance with accepted
business practices and legal requirements to obtain and maintain the
authorization and/or ability to market a product in the Marketing Territory,
including, without limitation, the following:
(1)responding to product and medical complaints relating to the Products (it
being understood that LAM shall promptly refer any possible adverse effects
and any complaints which it receives and which may relate, directly or
indirectly, to the Products, to IXORA and that IXORA shall promptly refer any
possible adverse effects and any complaints which it receives and which may
relate, directly or indirectly, to the Products, to LAM); and
(2)communicating with any governmental agencies and satisfying their
requirements regarding the authorization and/or continued authorization to
market the Products in commercial quantities in the Marketing Territory.
1.5(a) IXORA agrees, upon the signing of this Agreement, to reimburse LAM for
all commercially reasonable expenses that LAM has incurred prior to December
31, 1999 directly relating to the development of the Products to render the
same commercially marketable and saleable in the Marketing Territory,
including all costs relating to the following categories of expenses:
<PAGE>
(1) raw materials and disposables;
(2) development costs;
(3) compensation of all LAM personnel involved in the development of the
Products, including their out-of-pocket expenses (but only to the extent
their compensation relates directly to the amount of time such personnel
devoted to the development of the Products);
(4) patent procurement and maintenance costs; (5) clinical trial expenses; and
(6) FDA legal analyses.
Allsuch expenses incurred or accrued to December 31, 1999 are identified on
Schedule "D" hereto. Such reimbursement shall occur in the following schedule
of payments; i) $35,000 within 60 days of signing to Nath & Associates, ii)
another $41,000 within 90 days of signing to Nath & Associates, and iii) the
balance of $75,000 to LAM within 120 days of signing.
(b)IXORA also agrees, upon the signing of this Agreement, to reimburse LAM for
all commercially reasonable and prudent expenses that LAM incurs after
January 1, 2000 directly relating to the development of the Products, to
render the same commercially marketable and saleable in the Marketing
Territory, and for projects with a cost exceeding $10,000/quarter, that (i)
LAM has obtained IXORA's prior written approval (ii) a detailed budget,
acceptable to Ixora, is submitted to IXORA by LAM in respect of such
expenses, (iii) such expenses are incurred in accordance with and as
contemplated in such budget and approval, and (iv) such costs relate to the
following categories of expenses:
(1) raw materials and disposables;
(2) development costs;
(3) compensation of all LAM personnel involved in the development of the
Products including their out-of-pocket expenses (but only to the extent
their compensation relates directly to the amount of time such personnel
devoted to the development of the Products); and
(4) patent procurement and maintenance costs; (5) clinical trial expenses; and
(6) FDA legal analyses.
Payments to LAM under this Article shall be due on the later of (i) 60 days
after receipt by IXORA of an invoice specifying in detail the expenses to be
reimbursed or (ii) 120 days after the execution of this Agreement.
c) Contemporaneously with the submission of any expenses of the nature
contemplated in this section, IXORA shall be provided with copies of invoices
and other evidence satisfactory to IXORA, acting reasonably, substantiating
LAM's entitlement to be reimbursed hereunder.
<PAGE>
d) Upon and after execution of this Agreement, the persons who will be
conducting clinical trials and providing FDA and other regulatory analysis in
connection with matters relating to this Agreement including, without
limitation, the use, storage, import, export, transport, marketing, sale and
distribution of Products shall be such persons as are agreeable to IXORA and
LAM, acting reasonably.
1.6LAM shall keep true and accurate records and books of account containing all
data reasonably required for the computing of and verification of the
expenses to be reimbursed in accordance with this Article. Such expense
records shall be retained for at least the period of time that documentation
must be preserved in accordance with the requirements and guidelines of
applicable government authorities (but in no event less than five years)
following reimbursement therefor and shall be available during normal
business hours for inspection by an independent third party audit arranged by
IXORA within one year of the close of the fiscal year in which the expenses
were incurred for the purpose of verifying reports and expenses hereunder. In
the event that any such inspection shows an over-reporting and overpayment
for any annual period, then IXORA shall be entitled to deduct the overpayment
amount from the next payment due to LAM hereunder, whether it be for
reimbursement purposes or royalty purposes, as well as to deduct on an
overpayment in excess of $10,000 therefrom interest which would have accrued
on the overpayment amount at two percent above the U.S. prime rate
(calculated from time to time from the date such overpayment amount was paid
to the date of actual deduction). In the event that any such inspection shows
an overpayment in excess of two percent, then IXORA shall also be entitled to
deduct the cost of the inspection from the next payment due to LAM hereunder,
whether it be for reimbursement purposes or royalty purposes.
1.7LAM will, from time to time during the term of this Agreement, enter into a
consulting/employment contract(s) with key person(s) with substantial
industry research, experience and capabilities, to apply LAM's technology to
ensure LAM can satisfy Ixora's present and ongoing Product development needs.
Such key persons will be identified to Ixora by LAM as a matter of the
Parties ongoing business relationship enabling Ixora to remain informed on a
timely basis as to the terms and conditions of such contracts and key
person(s) association with LAM. Such contract shall include confidentiality
and non-competition provisions.
IXORA shall be entitled to take out and maintain a key person(s) life
insurance policy on such person(s) in such amounts and on such terms and
conditions as IXORA may from time to time determine. IXORA will be the sole
beneficiary of said policy. In the event that IXORA wishes to obtain
substitute or additional insurance, LAM will use its reasonable best efforts
to cause such key person(s) to offer such assistance and cooperation as may
be necessary to obtain such insurance. Notwithstanding the foregoing, no
provision herein shall exclude LAM or any third party from procuring and
maintaining a life insurance policy on the lives of such key person(s). Such
key person(s) upon the execution of this agreement are Alan Drizen and
Michael Micalizzi.
<PAGE>
1.8LAM shall, upon request from IXORA and in accordance with the provisions of
section 3.11, engage in research and development with a view to providing
IXORA on a timely basis with Products to treat conditions of the nature
contemplated on Schedule "A" hereto.
1.9LAM shall, upon request from IXORA, provide IXORA on a timely basis with
products which are to be used by IXORA in connection with clinical trials
associated with the Products, payment for which products shall be made in
accordance with the principles of section 1.5 hereof.
1.10 Upon the effective date and during the term of this Agreement LAM agrees to
grant and herewith grants to Ixora a world wide exclusive license to sell,
use, market, (and, for the purposes contemplated in sections 5.8, 5.9 and
11.4 hereof, to make and have made) etc. Products with the right to
sublicense the same under the Patent Rights in the Field of Use; provided,
that a right of use shall extend to Other Patent Rights as set forth in
Schedule "C" which are owned or controlled by LAM and which are generic to or
would dominate the Patent Rights but only to the extent that the practice
that any invention covered by the Products would necessarily infringe the
Other Patents Rights set for in Schedule "C".
ARTICLE 2
PATENT PROSECUTION
2.1LAM shall, except as otherwise provided in this Agreement, be responsible
for the preparation, filing, prosecution and maintenance of all patent
applications and patents specifically within the Patent Rights at IXORA's
expense. Following the date of this Agreement, IXORA shall be given
reasonable opportunity to advise LAM in such filing, prosecution and
maintenance and shall be provided with copies of all documentation and
correspondence regarding such filing, prosecution and maintenance of patents
and filed patent applications within the Patent Rights.
a) Title to inventions relating to LAM's ionic polymer matrix technology or
Products employing LAM's ionic polymer matrix technology for application in
the Field of Use and to patent applications and patents thereon made
independently by employees of either LAM or Ixora or jointly by employees of
both Parties during the term of and arising from work performed under this
Agreement shall reside in LAM, and any such inventions, patent applications
or patents thereof shall be included and be part of the Patent Rights of this
Agreement provided they fall within the Field of Use.
b) Title to inventions relating to technology unrelated to LAM's matrix
technology or Products provided hereunder, and to patent applications and
patents thereon made independently by employees of either LAM or Ixora during
the term of this Agreement shall reside in LAM or Ixora (the party who
develops the invention) and not be part of the Patent Rights of this
Agreement.
<PAGE>
c) In the event a Party elects not to file a patent application on a joint
invention when it has a right to do so under 2.1a and 2.1b, then the other
party may do so and the declining Party will assign its entire interest in
the other Party.
d) LAM, Ixora and their employees shall execute any and all documents and
instruments necessary for filing, obtaining, perfecting title and enforcing
any patents for such inventions. The obligations of 2.1d shall continue
beyond the expiration of this Agreement and shall be binding upon the
assignees, executors, administrators or other legal representatives of LAM
and Ixora and their respective employees.
2.2During the term of this Agreement, LAM and IXORA shall inform each other
promptly in writing of any alleged infringement by third parties in respect
of the Products and the Patent Rights and/or Other Patent Rights and of any
evidence indicating such infringement.
2.3In the event that LAM determines not to prepare, file, prosecute and
maintain a patent application and patent in a particular jurisdiction within
the Territory solely in connection with the Patent Rights (or does not do so
on an expeditious basis after being requested by IXORA in writing to do so)
will result in a royalty reduction as set forth in 3.5(a)iii for the country
in question.
2.4IXORA shall have the right, but shall not be obligated, to prosecute, on
behalf of IXORA and LAM, all infringements of the Patent Rights at IXORA's
expense. If IXORA determines to prosecute such infringements and has not been
successful in persuading the alleged infringer to cease and desist or, at its
sole discretion, decides not to bring suit against an alleged infringer
within six months of notification of alleged infringement, it shall so notify
LAM in writing, and LAM shall have the right, but shall not be obligated, to
prosecute all infringements of the Patent Rights at its own expense, on
behalf of IXORA and LAM.
2.5In the event that either LAM or IXORA shall initiate an infringement action
as set out above, the other Party shall cooperate fully and shall supply such
assistance as reasonably requested in prosecuting an infringement action by
the Party initiating the proceedings. The Party which initiates and / or
maintains such proceedings shall have sole control of, and be responsible for
the costs associated with, that suit.
2.6Any damages received from any such action shall first be used to reimburse
all reasonable expenses related to the litigation paid or to be paid by the
initiator as per 2.5.
i) Wherein the Litigation does not require an infringer to remove said product
from the market, the Patent Rights are then deemed non-exclusive and any
royalties due LAM for Products involving such Patent Rights shall be
consistent with 3.5(a)iii, providing that the Product is not covered by any
other of the Patent Rights. Any remaining amounts of damages received from
any such action shall be paid to Ixora and treated as forming part of Net
Sales for the purposes of calculating royalties due to LAM hereunder.
<PAGE>
ii)Otherwise all remaining amounts of damages received from any such action
shall be divided evenly between LAM and Ixora.
2.7Should any Patent Rights licensed hereunder be declared invalid or held
unenforceable by a decision of a court or other tribunal of competent
jurisdiction on in the country in which the patent was granted be binding on
all persons in said country, from which no appeal is or can be taken, then
the construction placed upon said patent by said court or other tribunal
shall be followed by the Parties hereto from and after the date of entry of
the decree of said court or tribunal and royalties shall thereafter be
payable to LAM in accordance with such construction for the country in which
the Litigation occurred.
The Parties will not dispute an interpretation within a country and Ixora
agrees to pay the relative royalty rate according to section 3.5. This
doesn't preclude Ixora or LAM from appealing a decision. If it becomes a
non-exclusive product then the provisions dealing with non-exclusivity come
into effect!
2.8Infringement Defense. Ixora shall have the right, but not the obligation, to
defend and control any suit against Ixora, Ixora's sublicensees and/or LAM
and LAM's affiliates alleging a Product and its relevant Patent Rights
infringe any patent or other intellectual property right of a third party
arising out of manufacture, use, sale or offer to sell or importation of a
Product by Ixora or it's sublicensees. In the event of such suit, Ixora shall
be responsible for the costs and expenses, including legal fees and costs,
associated with such suit or action including those incurred by LAM in
co-operating with Ixora. In the event the patent claim or any third party is
held in a final and unappealable order of a court to be valid and infringed
or Ixora with LAM's prior permission, enters into a settlement of such
proceedings, Ixora shall pay the full amount of any damages and/or settlement
amount due to such third party and LAM shall promptly reimburse Ixora 50% of
such amounts.
Ixora then pays the relevant royalty rate as per section 3.5.
2.9Option to License Additional Rights; Should LAM have reason to believe that
LAM's acquired or developed technologies or alternate products employing said
technologies not related to the Field of Use have application in the Field of
Use, LAM agrees to provide Ixora with written notice setting forth in
adequate detail the nature of a product application in the Field of Use and
Ixora following receipt of such notice and within 30 days thereafter elects
to engage in negotiations with LAM and advise LAM of the same to establish
the terms and conditions upon which Ixora shall be permitted to obtain the
exclusive right and responsibility to market and sell the product as a
Product in the Field of Use (the "Additional Rights"). If Ixora elects to
enter into such negotiations with LAM and has advised LAM as provided herein,
then Ixora and LAM shall use their respective commercially reasonable efforts
for a period of 90 calendar days, such 90 day period to commence on the day
immediately succeeding the day on which Ixora affirmatively elects to so
proceed, to negotiate in good faith the terms and conditions upon which Ixora
<PAGE>
shall be permitted to obtain the Additional Rights. If, following the
conclusion of such 90 day period (or such later date if the duration of such
period shall be extended by the mutual consent of Parties), a mutually
acceptable agreement shall not have been executed and delivered by Parties,
then LAM shall be permitted to pursue such other arrangements with another
party for the marketing and sale of the product which shall not be of a
lessor value to LAM than the terms and conditions Ixora was prepared to
accept at the termination of the Parties negotiations or LAM first offers
Ixora an option to match the terms and conditions LAM is prepared to accept
from another party.
2.10 Ixora will use reasonable commercial efforts to include in Product
packaging sold by Ixora, affiliated companies and sublicensees of Ixora the
applicable patent(s) number licensed hereunder in accordance with each
countries patent laws.
ARTICLE 3
SALES AND CONSIDERATION TO LAM
3.1Throughout the term of this Agreement, IXORA agrees to use reasonable
efforts to market, sell, distribute and commercially exploit the Products in
the Marketing Territory.
The parties acknowledge that IXORA and its employees and agents will be
engaged initially to market products with the foregoing applications,
treatments and fields of use for such technology.
Ixora will, from time to time during the term of this Agreement, enter into a
consulting/employment contract(s) with key person(s) with substantial
management, experience and capabilities, to direct Ixora's efforts to ensure
Ixora can address marketplace needs. Such key persons will be identified to
LAM by Ixora as a matter of the Parties ongoing business relationship
enabling LAM to remain informed on a timely basis as to the terms and
conditions of such contracts and key person(s) association with Ixora. Such
contract shall include confidentiality and non-competition provisions. Such
key person(s) upon the execution of this agreement are John Easton and Ken
Skoretz.
3.2During the term of this Agreement, IXORA shall create and develop, with the
assistance and cooperation of LAM, sales and promotional materials relating
to the Products for distribution to independent third parties.
3.3IXORA shall provide all promotional literature and promotional material, and
LAM shall provide all clinical evaluation packages for IXORA's approval,
relating to the Products, where applicable, to be used by IXORA. IXORA shall
have access to and be entitled to review all data and records of LAM which
are used or useful in connection with the preparation of the clinical
<PAGE>
evaluation packages, and shall be entitled to review and comment upon the
clinical evaluation packages prior to their finalization (it being understood
that the final decision making in respect of the contents of clinical
evaluation packages, based upon the data and information which is submitted
by LAM, shall be IXORA's). The Parties shall limit claims regarding the
Products' efficacy and safety to those contained in such documentation, and
shall consult with one another with respect to the information to be
contained in the clinical evaluation packages.
3.4 In consideration of LAM entering into this Agreement, LAM shall receive from
IXORA:
(1) a payment of U.S. $200,000, which the Parties acknowledge has already
been paid by IXORA to LAM;
(2) a payment of U.S. $300,000 which shall be payable 120 days after the
execution of his Agreement;
(3) 2,025,000 common shares in the capital of IXORA, being 45% of the number
of common shares in the capital of IXORA outstanding (on a fully-diluted
basis) on the effective date of the original Agreement. The authorized
capital stock of IXORA, immediately prior to the execution date of this
Agreement and immediately after its execution, is shown in Schedule "F".
IXORA hereby represents and warrants to LAM that all shares of common
stock issued to LAM in accordance with this section, when issued, will be
duly authorized and validly issued, fully paid and non-assessable and
issued in compliance with all applicable federal and state securities
laws. Except as expressly set forth in this Agreement or on any Schedule
hereto, there are no pre-emptive or other outstanding rights, warrants,
options, conversion rights or agreements for the purchase or acquisition
from IXORA of any shares of the capital stock or other securities of
IXORA. With the exception of the Shareholder Agreement entered into
between LAM, IXORA and certain Shareholders of Ixora dated May 1, 2000
(and signed contemporaneously with the execution of this Agreement), there
are no outstanding agreements affecting or relating to the voting,
issuance, purchase, redemption, repurchase or transfer of any securities
of IXORA or any IXORA Subsidiary (as hereinafter defined).
(4) all other payments contemplated to be made by Ixora to LAM hereunder.
3.5(a) Subject to section 3.5(b) hereof, in further consideration of LAM
entering into this Agreement and granting to IXORA the rights and licenses
provided for herein employing LAM's patented technology as set forth in
schedules "B" and "C", IXORA shall pay to LAM a running royalty at a rate of:
i) nine per cent (9%) of IXORA's Net Sales (as defined below) for FDA approved
Products in respect of which Patent Rights and/or Other Patent Rights have
not expired and/or have not been held to be invalid. However, beginning the
third fiscal year of Commercial Sales of a Product, such royalty payments
shall be credited by an amount equal to not more than 10% of such royalties
<PAGE>
to an aggregate maximum of the mutually agreed costs as per article 1.5
whether incurred by LAM or Ixora including any net costs incurred by Ixora
in relation to Article 2 during the life of said Product for each such
Product.
ii) six and one half percent (6.5%) of IXORA's Net Sales (as defined below) for
all other Products in respect of which Patent Rights and/or Other Patent
Rights have not expired and/or have not been held to be invalid. However,
beginning the third fiscal year of Commercial Sales of a Product, such
royalty payments shall be credited by an amount equal to not more than 10%
of such royalties to an aggregate maximum of the mutually agreed costs as
per article 1.5 whether incurred by LAM or Ixora including any net costs
incurred by Ixora in relation to Article 2 during the life of said Product
for each such Product.
iii) four and one half per cent (4.5%) of Ixora's Net Sales (as defined below)
for Products in respect of which Patent Rights and/or Other Patent Rights
have expired and/or been held to be invalid or those Products set forth in
article 2.6(i). However, beginning the third fiscal year of Commercial
Sales of a Product, such royalty payments shall be credited by an amount
equal to not more than 10% of such royalties to an aggregate maximum of
the mutually agreed costs as per article 1.5 whether incurred by LAM or
Ixora including any net costs incurred by Ixora in relation to Article 2
during the life of said Product for each such Product.
3.5(b) IXORA agrees to pay to LAM a minimum royalty of :
i) $75,000 for the year ending the first full fiscal year of Commercial Sales
for each Product in a mutually agreeable Territory, to be paid in
quarterly payments with the first payment due at the close of the first
quarter of the first such year as per herein provided;
ii) $150,000 for the year ending the second full fiscal year of Commercial
Sales for each Product in a mutually agreeable Territory, to be paid in
quarterly payments with the first payment due at the close of the first
quarter of the second such year as per herein provided;
iii) and $250,000 for each full fiscal year of Commercial Sales for each
Product in a mutually agreeable Territory thereafter to be paid in
quarterly payments with the first payment due at the close of the first
quarter of the each year thereafter as per herein provided;
iv) The total of all such minimum payment requirements as per 3.5(b) i, ii,
iii in relation to Commercial Sales (the payment to Ixora for Products
meeting specifications for said Product, delivered to a customer of
Ixora's) shall not exceed $1,250,000 in any fiscal year for all Products.
Any such payments shall be considered to be a credit against obligations of
IXORA otherwise owing pursuant to section 3.5(a). If IXORA has otherwise paid
any amount in royalties in respect of such year in respect of actual Net
Sales pursuant to section 3.5(a), the amounts payable pursuant to this
subsection 3.5(b) shall be reduced by the amounts actually paid in such year
pursuant to section 3.5(a).
<PAGE>
3.6IXORA shall within 60 days after the end of each fiscal quarter of IXORA
while this Agreement is in effect and where there have been Net Sales, submit
to LAM a report of IXORA's Net Sales during the preceding quarter year and
the total amount of royalties due hereunder. IXORA shall, at the same time as
submitting the report, remit to LAM any royalties then due and payable.
3.7In the event that IXORA is required by any law to withhold and/or make
payments to tax authorities in respect of any payments payable by IXORA to
LAM under this Agreement, the liability of IXORA under this Agreement shall
be to that extent satisfied, and such amounts shall be deemed to have been
paid to LAM on their due dates, for which LAM can verify through an
independent third party audit at LAM's expense.
3.8IXORA shall keep true and accurate records and books of account containing
all data reasonably required for the computing of and verification of
royalties to be paid in accordance with this Article. Such records shall be
retained for at least five years following a given reporting period and shall
be available during normal business hours for inspection by an independent
third party audit arranged by LAM within one year of the close of the fiscal
year in which the royalties were incurred for the sole purpose of verifying
reports and payments hereunder. In the event that any such inspection shows
an under-reporting and underpayment for any annual period, then IXORA shall
pay to LAM any additional sum that would have been payable to LAM had IXORA
reported correctly, plus on an underpayment in excess of $10,000 interest on
the additional sum at the U.S. prime rate from time to time charged plus 2%
(calculated from time to time from the date such amounts should have been
paid to the date of actual payment). In the event that any such inspection
shows an under-reporting and underpayment in excess of two percent, then
IXORA shall also pay to LAM the cost of the inspection.
3.9"Net Sales" shall mean, with respect to the Products, for any period, the
gross amount of cash amounts actually received in respect of sales by IXORA
or any Affiliate, which shall mean for the purpose of this clause 3.9 any
entity which controls, or is controlled by or is under common control of
Ixora where control is presumed in the case of an equity interest greater
than twenty percent (20%) from the sale or license of any Product, less the
following if not already deducted:
(a) trade, quantity and cash discounts allowed;
(b) discounts, refunds, rebates, chargebacks and retroactive price adjustments;
(c) Products returns and allowances;
(d) any tax imposed on the Products that is appropriately deducted from sales
under U.S. generally accepted accounting principles ("GAAP");
<PAGE>
(e) allowance for freight, shipping and insurance expenses if included in the
invoiced amount;
(f) value added tax, sales or turnover tax, or excise taxes, or duties which
are included
in the invoiced amount;
(g)advertising and promotional/selling expenses, as well as sales, marketing
and administration charges, incurred by IXORA and its Affiliates in
connection with sales of the Products not exceeding eight percent of gross
sales; and
Forgreater certainty, provision of a Product for the purpose of conducting
preclinical or clinical research shall not be deemed to be a sale, so long as
the Product is provided at a price which does not exceed the reasonably
estimated cost of production and distribution thereof.
In the event that the Products are sold as part of a combination product, the
Net Sales of the Products, for the purposes of determining royalty payments
shall be determined by multiplying the Net Sales (as defined in this
definition) of the combination product, on a per product basis, by the
fraction A/(A + B), where A is the average sales price of the Product when
sold separately in finished form and B is the average sales price of the
other product(s) sold separate in finished form. In the event that such
average sales price cannot be determined for both the Products and other
product(s) in combination, Net Sales for purposes of determining royalty
payments shall be calculated by multiplying the Net Sales of the combination
products, on a per product basis, by the fraction C/(C + D), where C is
IXORA's cost of goods of the Products and D is the cost of goods of the other
product(s), determined in accordance with the method of accounting normally
employed by IXORA in computing cost of goods.
Notwithstanding the foregoing, in no event shall Net Sales for any Product be
less than the purchase price paid by IXORA for such Product.
3.10 "Affiliate" is any corporation, partnership, limited liability company or
other entity that directly or indirectly controls, is controlled by or is
under common control with Ixora or LAM as the case may be. "Control"
(including, with correlative meaning, the terms "controlled by" and "under
common control with"), as used with respect to any such entity, is (a) the
ownership of 50% or more of the voting securities of such entity or (b) the
ability, directly or indirectly, to elect at least a majority of the board of
directors (or the controlling body) of such entity.
3.11 LAM and IXORA each agree to adhere to the following milestones:
(a) IXORA using reasonable commercial efforts will obtain initial financing
required to meet
i) its immediate specific obligations under this Agreement within 9 months
of signing this Agreement.
<PAGE>
ii) payment to LAM within a non extendable term of 120 days of signing this
Agreement, the obligations set forth in sections 1.5a and 3.4(2)
b) IXORA shall use its reasonable efforts to deliver to LAM, within 90 days
of a Product being developed as contemplated herein, a marketing and
distribution plan. c) IXORA & LAM desires LAM to undertake ongoing research
("Research") to improve existing Products and to identify substances which
may have the potential to become Products to treat one or more areas of the
Field of Use (the "Target Application") as outlined in Schedule "A" and
subsequently develop products in order of priority as mutually agreed to,
using applications of LAM's technologies (at the date hereof, includes the
ionic polymer matrix technology) which (1) are within LAM's area of expertise
and knowledge or (2) are proposed by LAM then:
i) the party proposing the research shall submit to the other Party a proposal
(the "Research Request") outlining the general terms of the Research;
ii)IXORA and LAM shall within 30 days or as soon as reasonably practicable
thereafter negotiate in good faith, the scope, goals, timeframes and
structure of the Research (the "Preliminary Study"), using all reasonable
commercial effort so as to ensure the Preliminary Study is completed within
60 days thereafter;
iii) LAM shall use reasonable efforts to ensure that it is capable of
performing its obligations outlined in this section 3.11c including,
without limitation:
(a) hiring, if necessary, additional personnel; and
(b) arranging for such additional facilities and equipment as necessary.
d) LAM shall, within 60 days of finalizing the Preliminary Study, submit a
proposed detailed budget for the first year's research activities, which the
parties shall, in good faith negotiate, within 30 days a mutually agreeable
budget. Upon agreement by the Parties on a research budget and payment
schedule LAM shall promptly commence research or development activities. Not
less than 60 days before expiration of any period covered by a budget, Ixora
shall initiate discussions and the Parties shall negotiate in good faith a
mutually agreeable budget for the subsequent one-year period. The provisions
of section 1.5(b) and (c) shall apply, mutatis mutandis, to such research
activity.
e) LAM will keep Ixora advised on a timely basis of all developments resulting
from the Research.
<PAGE>
ARTICLE 4
PUBLIC COMPANY AND ASSOCIATED MATTERS
4.1The Parties acknowledge that IXORA shall from time to time consider the
appropriateness of becoming a public company with its shares listed or quoted
for trading on a Canadian or U.S. stock exchange or quotation system (which
may occur either by vending the outstanding shares of IXORA into an existing
public company or by offering its common shares to the public through an
Initial Public Offering). For the purposes of this Agreement, "Initial Public
Offering" shall mean issuing securities to the public with the issuance of
said securities being qualified by the filing of a prospectus, registration
statement or similar document in the applicable jurisdiction. The Parties
acknowledge that the above is an intention only of IXORA, and the decision as
to whether IXORA will become a public company and the timing of same may be
determined by factors beyond the control of IXORA, including those factors
relating to IXORA's business, the stage of IXORA's development, market
valuations of companies at IXORA's stage of development, the valuation of
IXORA and its securities, applicable conditions of the financial markets, as
well as a determination by IXORA's shareholders and Board of Directors as to
what is in the best interests of IXORA and its shareholders.
4.2During the first 10 years of this Agreement, LAM shall be entitled to
appoint to the Board of Directors of IXORA a number of Directors in
approximate proportion with LAM's approximate percentage ownership of IXORA
at that time, in accordance with U.S. Securities and Exchange Commission
(SEC) requirements, which shall be a minimum of one (1) Director provided
LAM's equity position exceeds 10% of all shares outstanding at the time of
appointment or the exclusive licenses granted herein remain in exisitence for
the first 10 years of this agreement.
ARTICLE 5
TERMS OF SUPPLY
5.1Subject to the terms and conditions set forth herein, LAM hereby grants
IXORA the exclusive rights within the Territory to market, package,
distribute and otherwise sell the Products, whether under its own brand names
or otherwise. IXORA shall be entitled to appoint sub-distributors for all or
some of the Products in the Territory without the prior consent of LAM
provided Ixora remains responsible for payments of royalties set forth in 3.5
for all Net Sales of such distributors. Notwithstanding the foregoing, IXORA
shall remain responsible for its obligations under this Agreement.
5.2IXORA shall have exclusive control over the marketing, packaging,
distribution and sale, including pricing, of the Products in the Territory,
and LAM shall provide such assistance and cooperation to IXORA as IXORA may
reasonably request.
<PAGE>
5.3IXORA shall be entitled to provide all finished packaging, labelling, and
distribution materials relating to the Products, which shall be subject to
prior review and approval by LAM, which approval may only be withheld if LAM,
acting reasonably, believes that such packaging, labelling and distribution
materials are contrary to legal or regulatory requirements.
5.4LAM agrees that it shall not manufacture, market or distribute the Products
in the Territory during the term of this Agreement except in accordance with
the terms of this Agreement. LAM shall not sell or offer to sell, either
directly or indirectly and in any manner or form whatsoever, a product which
is directly competitive with the Products. IXORA shall not represent or
distribute during the term of this Agreement any product which is promoted to
compete directly with any Products in the Fields of Use. If IXORA undertakes
to promote any product in the Fields of Use other than the Products as
defined herein, IXORA will so inform LAM by written notice within thirty (30)
days of such undertaking.
5.5In the event LAM should receive an order for the Products, LAM shall
immediately transmit it to IXORA for acceptance or rejection.
5.6Upon the request of IXORA, LAM shall promptly furnish all formulae,
specifications, particulars, analyses, reports, literature and other
information (whether or not generated by or on behalf of LAM) in its
possession or under its control relating to the Products, if specifically
required or requested by applicable regulatory authorities in connection with
statutory requirements relating to the sale, marketing, distribution,
labelling and/or registration of the Products in the Marketing Territory to
said applicable regulatory authorities or if required or requested by the
Manufacturer (as hereinafter defined) in order to permit the Manufacturer to
manufacture Products on behalf of IXORA in a timely and efficient manner and
in order to permit the Manufacturer to duplicate results which may have been
previously generated by LAM in laboratory examples of the manufacture and
utility of such Products.
5.7
(a)LAM shall, as soon as reasonably practicable after the execution and
delivery of this Agreement and identification of a Product, enter into a
manufacturing agreement (such agreement, as amended or superceded from time
to time, and whether with the same manufacturing party or an alternative
party, being herein referred to as the "Manufacturing Agreement") with a
manufacturer (the party who is the manufacturer from time to time under the
Manufacturing Agreement is herein referred to as the "Manufacturer"),
pursuant to which the Manufacturer shall manufacture and supply the Products
to LAM for the purpose of subsequent purchase by and delivery to IXORA. LAM
shall, in addition to the information contemplated by section 5.6 hereof to
be provided, provide to the Manufacturer whatever assistance, product
information and licenses may be required by the Manufacturer in order to
permit the Manufacturer to be entitled to perform its obligations under such
agreement. LAM will, within 60 days after the execution and delivery of this
Agreement, identify a potential Manufacturer which it believes will pass a
<PAGE>
GMP audit. The Manufacturing Agreement shall contain such confidentiality
obligations as LAM may reasonably require. The Manufacturing Agreement shall
otherwise contain such provisions as are customary in an agreement of that
nature.
(b)In any event that Ixora shall not accept a Manufacturer selected by LAM
which Manufacturer is capable of manufacturing the Product(s) at a
commercially viable cost in compliance with GMP standards and has the
capacity for current and future demands, LAM will not be considered to be in
breach of any terms and conditions of this Agreement. The Parties hereby
agree to co-operate to identify additional manufacturers which shall satisfy
all the obligations of the Parties hereto.
(c)During the first 10 years from the date of execution of this Agreement,
IXORA shall not have the right to manufacture the Products itself nor have
access to LAM's manufacturing trade secrets, related know-how, data,
information, knowledge, formulae and manufacturing techniques except as
specifically contemplated herein, but Ixora shall have the right to authorise
other persons to manufacture for IXORA. Thereafter Ixora shall have the right
to manufacturer the Products itself and have access LAM's manufacturing trade
secrets, related know-how, data, information, knowledge, formulae and
manufacturing techniques.
(d)LAM and Ixora shall work together to ensure that the Manufacturer(s) have
the ability to produce Products that are Commercially Viable in the
quantities and time frames projected. Both parties shall do their best
efforts to forthwith undertake resolutions to any such issues.
5.8
a) Ixora acknowledges LAM's desire to contract with a single and alternate
back-up source to manufacture LAM's family of products employing LAM's
proprietary ionic polymer matrix technology for all fields of use including
those licensed herein to Ixora. All Manufacturing Agreements that LAM enters
into with respect to the manufacture of the Products shall contain a
direction that obliges the Manufacturer to forthwith give a written notice to
IXORA that:
i) it has received said direction,
ii) it agrees to be bound by such direction, and
iii) it has received the Manufacturing Know-How for Ixora's Products
Such agreements shall, among other things, contain a provision requiring LAM
and the Manufacturer to deliver to IXORA true and complete copies of any
amendments to such agreements entered into between LAM and such
Manufacturer(s)with respect to the manufacturing of Products, forthwith after
the same shall have been signed.
"Manufacturing Know-How" means all necessary files, Information, knowledge
and data, whether patented or unpatented, including Products formulae and
manufacturing techniques and any other information provided to the
Manufacturer by or on behalf of LAM and whether pursuant to sections 5.6 or
<PAGE>
5.7, pursuant to the Manufacturing Agreement or otherwise in regard to the
Products which are necessary, desirable or reasonably required to carry out
the Manufacture of the Products
"Information" shall mean and include, but not necessarily be limited to, the
technical information, technical systems, know-how, engineering and other
data, outline and sketches, drawings, flow diagrams, standard product
specification, operating procedures, testing and inspection procedures,
computer programs and analytical methods, which LAM at any time, whether now
or in the future, owns or has an interest in (including, a right to licence)
relating to the Products, and Processes (the process for manufacturing);
(b)Should LAM not enter into a Manufacturing Agreement, unless otherwise
provided for in 5.7(b), with respect to the manufacture of a Product so
identified by Ixora, within six months after such identification, Ixora shall
immediately have the rights to have the Products manufactured unless
otherwise specified in 5.7(c). The provisions of this paragraph are without
prejudice to the rights of IXORA to otherwise pursue its remedies against LAM
hereunder.
(c)LAM and/or its Manufacturer shall maintain in full force and effect fire and
extended casualty insurance covering its plant and equipment in an amount at
least sufficient to pay (subject to a reasonable deductible amount) the
replacement cost of all plant and equipment located at the Manufacturer's
manufacturing site or sites or if LAM has more than one Manufacturer and
therefore manufacturing site at the time, at least sufficient to pay the
replacement cost of all plant and equipment located at the manufacturing site
having the greatest Product production capacity. Such insurance policy shall
provide that in the event such insurance coverage should be terminated for
any reason, the insurer will give LAM thirty (30) days prior written notice
of termination. In the event that LAM and/or the Manufacturer fails to obtain
such insurance, Ixora may obtain the insurance described herein and shall be
entitled to invoice LAM for, and LAM shall pay, the costs for such insurance.
d) In the event that any Product manufacturing site of LAM suffers fire damage
or other casualty, LAM shall use all reasonable efforts to collect as soon as
reasonably practicable the insurance proceeds that are collectible under such
insurance and shall use such proceeds to replace the Product plant and/or
equipment that shall have suffered such damage. Notwithstanding the
provisions set forth in Article 14, in the event LAM fails to comply with the
provisions of the immediately preceding sentence, Ixora shall have the right
to seek specific performance or other similar equitable relief compelling
compliance by LAM with this Article.
e) LAM shall give Ixora written notice of any decision, relating to regulatory
issues or otherwise, which may result in a change to the form, fit, function,
components or material of any Product, or to the finished goods inspection
process for the Product provided, however, that if any such change involves
trade secrets then LAM shall be required to disclose the pendency of such
<PAGE>
change but not the nature of such change. Ixora shall have the right to test
any product made after implementation of such change. Within 30 days after
completion of such testing, Ixora shall notify LAM whether Ixora is willing
to sell the new version of the Product. Ixora shall not be required to sell
any product manufactured after implementation of such change if the product
does not conform to the specifications relating to the Performance Profile of
the original Product. If LAM effects such change because it is required to do
so as a result of any change to FDA requirements and Ixora elects not to sell
such changed product, either Party may issue a notice of termination relating
to said Product as follows:
If Ixora declines to sell the new version, Ixora shall issue such notice to
LAM, which shall become effective either (i) immediately, if the original
version of the Product is already withdrawn from the market, or (ii) if such
withdrawal has not occurred at the time such notice is given, upon the
earlier of (A) withdrawal of the original version of the Product from the
market and (B) the date that is sixty (60) days after such notice is given.
LAM at it's option, may reimburse Ixora all expenses incurred as per article
1.5, 3.5, and article 2 for a paid up, royalty-free, exclusive, world-wide
license, with a right of sub-license, in the Field of Use to all the Patent
Rights to use, sell, make and have made said Product.
f) The Parties shall negotiate in good faith the incorporation of any
"Improvements" (which shall mean any technical improvement, modification,
invention or discovery, whether patented or unpatented, made or acquired
prior to or during the term of this Agreement constituting additions to
and/or betterments in the Process or the Products) into the specifications
and the allocation of development costs for any Product incorporating such
Improvements that the Parties mutually agree to develop.
5.9 In the event that:
a) LAM becomes bankrupt or insolvent or takes the benefit of any act now or
hereafter in force for bankrupt or insolvent debtors or files a proposal
or takes any action other than which affects a change of control, LAM
shall be deemed to automatically grant to IXORA a rights and license in
the Manufacturing Agreement such that IXORA shall stand in LAM's place
with respect to such Manufacturing Agreement as it relates to the rights
and obligations, incurred after such date to the Products herein.
b) LAM breaches any of the provisions of this Article 5 contained in the
Manufacturing Agreement (or any agreement replacing or superseding such
agreement), which breach shall not have been cured within 60 days after
receipt by LAM of notice of such breach and after LAM has had a reasonable
opportunity to attempt to cure said breach, LAM shall be deemed to
automatically grant to IXORA a rights and license in the Manufacturing
Agreement such that IXORA shall stand in LAM's place with respect to such
Manufacturing Agreement as it relates to the rights and obligations,
incurred after such date to the Products herein.
<PAGE>
c) The Manufacturer of the Product is undertaken by or on behalf of Ixora as
a result of Ixora exercising it's rights hereunder and Ixora did not
terminate this Agreement pursuant to Article 11, then upon the elimination
of the supply interruption by LAM, LAM shall have the right to resume
supply of the Product under this Agreement provided, however, that
resumption of such supply shall be subject to any agreement or other
arrangement Ixora shall have entered into in order to obtain supply of
such Product.
5:10
a) LAM shall ensure that all Manufacturing Agreements that it enters into,
including the original Manufacturing Agreement, with respect to the
manufacture of the Products, contain provisions not unreasonably inconsistent
with the provisions of this Article.
b) The Manufacturer shall schedule the availability of Products from production
for Commercial Sale (the "Product Availability Date") for each Product, but
in no event more than 120 days after such Product is identified as a Product
and a Manufacturing Agreement executed in accordance with the terms of this
Agreement.
c) LAM shall negotiate on behalf of itself and Ixora with the Manufacturer terms
concerning, perpetual forecasting, firm fixed order periods, pricing,
capacity and timely resolution to capacity issues, etc. to be included in
LAM's Manufacturing Agreement with the advise and consent of Ixora which
consent shall not be unreasonably withheld.
d) LAM and/or the Manufacturer shall ship to any legally available (a country in
which the Product has been approved for sale or clinical testing) location
chosen by Ixora utilizing carriers chosen by or agreeable to LAM. LAM and/or
the Manufacturer will pack the Product in a manner suitable for shipment to
enable the Product to withstand the effects of shipping, including handling
during loading and unloading, all in accordance with the Specifications.
IXORA shall submit delivery instructions to the Manufacturer, which delivery
instructions shall identify (a) the quantity of each Product required, (b)
the required delivery date, (c) the address to which each Product shall be
delivered, and (d) any other applicable shipping instructions. The
Manufacturer shall confirm orders within 10 Business Days after receipt.
Except as herein otherwise specified in this section, the Manufacturer shall
deliver quantities of the Product covered by the firm, fixed purchase order
for any month within 10 days after receipt of delivery instructions from
IXORA. All orders shall be shipped F.O.B. the Manufacturer's facility. For
purposes hereof, each order shall be deemed to have been delivered, and risk
of loss with respect to each shipment shall pass from the Manufacturer to
IXORA, upon delivery of the shipment by the Manufacturer to a carrier for
transport to the location specified in the IXORA order.
e) Upon F.O.B. the Manufacturer's facility, title shall pass to IXORA; in
circumstances where the Product is shipped or otherwise delivered to
<PAGE>
customers of IXORA or any of its Affiliates, title to such Products shall
pass to such customers when delivered to the customer.
f) LAM will advise IXORA of any anticipated supply deficiencies and will use its
best efforts to obtain alternative manufacturing capability (provided,
however, that this sentence shall in no way detract from LAM's obligations to
supply hereunder).
g) If, during the term of this Agreement, either Party becomes aware that in
order to market and sell (or to continue to market and sell) Products for use
in the Field of Use in the Territory the applicable Regulatory Authority
requires the manufacture of the Products to be done, in whole or in part, in
such Territory and LAM does not then manufacture the Products in such
Territory, then such Party will give the other Party written notice of such
fact and the Parties shall use their respective commercially reasonable
efforts to negotiate the terms and conditions pursuant to which such
manufacture of the Products in such Territory shall occur and the terms and
conditions upon which the Products will be sold by LAM to Ixora for resale in
such Territory.
5.11Ixora shall supply LAM or its Manufacturer in ready-to-use form the labels,
packaging inserts and containers for the Product(s) in volumes sufficient to
fulfill all orders placed by Ixora within a reasonable period of time prior
to the first and each subsequent order by Ixora, as included in LAM's
Manufacturing Agreement as per the advice and consent of Ixora which consent
shall not be unreasonably withheld.
5.12Ixora warrants and represents that the labels and other labelling /
packaging specifications provided to LAM or its Manufacturer shall be in
full conformity with regulatory approvals and all applicable laws and
regulations.
5.13In the event some or all of the labelling / packaging specifications are
required for LAM's regulatory Filings with the FDA or foreign country
filings, for the Product, then Ixora shall provide such portions as may be
required for such regulatory filings.
5.14Ixora or its affiliates shall store all Products in controlled conditions
as specified in the Product specification and labelling/ packaging
specifications. LAM shall have the right to arrange during normal business
hours an annual inspection by an independent third party of Ixora's
distribution center for compliance with the aforementioned conditions. Ixora
or its affiliates will obtain a waiver of liability for LAM and Ixora with
any customer it sells Product to who fails to store said Product consistent
with said Products unique storage requirements.
<PAGE>
ARTICLE 6
PRICE AND PAYMENT
6.1The Manufacturing Agreement shall provide that the price of any component of
the Products supplied to IXORA or the Manufacturer by LAM will be at the
actual out-of-pocket cost to LAM paid to third parties
manufacturing/producing such components, including all costs for
manufacturing, producing or otherwise obtaining, and for packaging, such
Products as determined in accordance with GAAP such that LAM receives no
profit solely through the supply of such components to IXORA.
6.2LAM shall keep true and accurate records and books of account containing all
data reasonably required for the computing of and verification of the costs
of the components of the Products to be paid by IXORA to LAM in accordance
with this Article. Such cost records shall be retained for at least five
years following the payment therefor and shall be available during normal
business hours for inspection by an independent third party audit arranged by
IXORA within one year of the close of the fiscal year in which the royalties
were incurred for the purpose of verifying reporting and expenses hereunder.
In the event that any such inspection shows an over-reporting and overpayment
for any annual period, then IXORA shall be entitled to deduct the overpayment
amount from the next payment due to LAM hereunder, whether it be for
reimbursement purposes or royalty purposes, as well as deduct on an
overpayment in excess of $10,000 therefrom interest which would have accrued
on the overpayment amount at the U.S. prime rate from time to time charged
plus 2% (calculated from time to time from the date such overpayment amount
was paid to the date of actual deduction) provided said overpayment is
through no fault of IXORA. In the event that any such inspection shows an
overpayment in excess of two percent, then IXORA shall also be entitled to
deduct the cost of the inspection from the next payment due to LAM hereunder,
whether it be for reimbursement purposes or royalty purposes.
ARTICLE 7
QUALITY CONTROL
7.1With respect to the Products manufactured by or on behalf of LAM, LAM and/or
its Manufacturer shall comply with all the then current Good Manufacturing
Practices regulations for pharmaceutical products as set forth and amended
from time to time by the United States Food and Drug Administration (or any
successor thereof), or comparable regulations issued by the applicable
regulatory authorities in the Marketing Territory, including the Health
Protection Branch of Health Canada (or any successor thereof). LAM shall be
entirely responsible for the quality of such components of the Products which
LAM and/or its Manufacturer manufactures and shall indemnify IXORA for all
third-party claims arising out of the manufacture by LAM, and/or its
Manufacturer , of the components of the Products.
<PAGE>
7.2The Products, when delivered to IXORA, shall initially have a remaining
shelf life of not less than 12 months provided, however, that LAM shall
endeavour to conduct research and development associated with such components
so that such components shall have an extended shelf life with a goal of a
five year shelf life.
7.3IXORA shall have the right at any time during normal business hours, upon 10
days written notice to LAM or its Manufacturer , to inspect the production
operations of LAM or its Manufacturer, including but not limited to quality
control facilities, procedures and records with respect to the manufacturing
and the standards and specifications of the Products in order to ensure LAM
or its Manufacturer comply with its obligations hereunder.
7.4 LAM or the Manufacturer shall promptly furnish to IXORA:
(a) reports of inspection by regulatory authorities relating to the manufacture
of the Products to be supplied hereunder or under the Manufacturing
Agreement;
(b)a certificate of analysis and certificate of compliance with regulatory
requirements and Good Manufacturing Practices for each lot of finished
Products supplied to IXORA; and
(c)the stability data which confirms the assigned expiration date for each lot
of the Products supplied to IXORA.
7.5For the purposes hereof, each order shall be deemed to have been delivered,
and risk of loss with respect to each shipment shall pass from LAM and/or its
Manufacturer to IXORA, upon delivery of the shipment by LAM or the
Manufacturer of the Product(s) to a carrier for transport to the location
specified in the IXORA order. IXORA shall insure each shipment of Product
against loss or damage. Where the shipment does not comply with section 7.1,
IXORA shall forthwith notify LAM and/ or its Manufacturer of this fact,
return the shipment at LAM's expense and LAM and/or its Manufacturer shall
promptly replace the shipment at no additional cost to IXORA.
7.6During the term of this Agreement and following its termination, LAM shall
report to IXORA and IXORA shall report to LAM, immediately upon receipt, any
information concerning any side-effect, injury, toxicity or sensitivity
reaction, or any other unexpected incidence and the severity thereof,
associated with the Products or the components of the Products supplied as
contemplated hereunder, whether or not determined to be attributable to the
Products. LAM shall also notify IXORA immediately of any information which it
receives regarding any threatened or pending action by any governmental
agency which may affect the safety or efficacy claims of the Products or the
components of the Products to be supplied as contemplated hereunder, or the
continued marketing and sale of the Products.
<PAGE>
7.7All complaints by end-users relating to the quality of the components of the
Products to be supplied as contemplated hereunder shall be the responsibility
of LAM, who undertakes to diligently handle such complaints. In the event
that IXORA becomes aware of such complaints, it shall notify LAM and IXORA
shall render reasonable assistance to LAM in connection therewith.
ARTICLE 8
RECALL
In the event LAM or IXORA shall be required or requested by any governmental
authority (or shall voluntarily decide) to recall the Products because they
may violate any laws or for any other reason, IXORA shall be responsible for
coordinating such recall. The Parties shall cooperate fully with one another
in connection with any recall. If a recall is due to IXORA's negligence,
willful misconduct or breach of this Agreement, which may be subrogated to
the Manufacturer, IXORA shall reimburse LAM for all of the reasonable costs
and expenses actually incurred by LAM in connection with the recall. If a
recall is due to LAM's negligence, willful misconduct or breach of this
Agreement, which may be subrogated to the Manufacturer, LAM shall reimburse
IXORA for the royalties paid by IXORA in respect of such recalled Products
and shall reimburse IXORA for all of the reasonable costs and expenses
actually incurred by Ixora in connection with the recall. Under no
circumstances will LAM or IXORA be obligated to pay to the other the cost of
lost opportunities, consequential damages or other such expenses or losses.
Pursuant to this Article, the Party claiming any reimbursement shall provide
the other Party with reasonably acceptable documentation of all reimbursable
costs and expenses.
ARTICLE 9
REPRESENTATIONS AND WARRANTIES
9.1LAM makes the following representations and warranties to IXORA and does so
in full understanding and acknowledgement that IXORA is relying on the said
representations and warranties in concluding this Agreement:
(a)LAM is a corporation organized and existing under the laws of Delaware. No
action has been taken by the Directors, Officers or Shareholders of LAM to
dissolve LAM. LAM has the corporate power and authority to enter into this
Agreement and to perform all its obligations hereunder.
(b)LAM has taken all necessary corporate actions and proceedings to enable it
to enter into this Agreement and perform its obligations hereunder.
<PAGE>
(c)LAM has not made any written or oral agreement or undertaking with any other
person regarding the right to sell the Products in the Territory.
(d)There is no outstanding litigation, action, claim or other similar
proceeding in respect of the Products or any of the intellectual property to
be used in connection with the production of the Products, nor is any
threatened.
(e)Once signed, this Agreement is a legal, valid and binding obligation of LAM,
enforceable against it by IXORA in accordance with its terms, except as the
obligations hereunder may be limited by bankruptcy, insolvency and any other
laws affecting the rights of creditors generally.
(f)The execution, delivery and performance of this Agreement by LAM (1) does
not, to the best of LAM's knowledge, violate or conflict with any provision
of law or any regulation, or any writ, order, judgment or decree of any court
or governmental or regulatory authority, or any provision of its articles of
incorporation or by-laws; and (2) does not result in the breach of, or
constitute a default, cause the acceleration of performance, or require any
consent under, or result in the creation of any lien, charge or encumbrance
upon any of its property or assets pursuant to any instrument or agreement to
which it is a party or by which it or its properties may be bound or
affected.
(g)LAM to the best of LAM's knowledge is the beneficial title-holder to and
owner of all intellectual property related to the Products which intellectual
property (to the extent that the same has been patented or is in the process
of being patented) is identified on Schedules "B" and "C" hereto (which
Schedule includes all of the current Patent Rights) (the "Patents") and no
other person has, to its knowledge, any right, title or interest in such
intellectual property. LAM has obtained assignments from all persons who were
involved in the creation of such intellectual property of all of their rights
and interests in the Patents and such components of the Products have been
assigned and transferred to LAM.
(h)LAM warrants that it has not granted rights, licensed under this Agreement
herein to a third party in derogation of this Agreement, the Agreement will
not be in conflict with any other existing agreements to which it is a party
and it shall not enter into any other agreements that conflict with its
rights or obligations provided hereunder including any rights and obligations
that survive termination hereof.
(i) LAM has the right to license the Patent Rights to IXORA,
(j)LAM knows of no patent, trade secret rights or other intellectual property
rights which are owned by a third party which could be infringed by IXORA
selling the Products in the Territory.
<PAGE>
(k)LAM has not received any communication and is not aware that any party has
made any claim which challenges or is inconsistent with any of the statements
contained in this Article. Without limiting the generality of the foregoing,
LAM has not received any communication from any person alleging that the
Patents infringe any intellectual property of any other person.
(l)To the best of LAM's knowledge and belief, all information including
regulatory, sales and marketing information, non-clinical and pre-clinical
data and clinical trial data supplied by it to IXORA is true and correct in
all material respects.
9.2IXORA makes the following covenants, representations and warranties to LAM
with the full understanding and acknowledgement that LAM is relying on the
said representations and warranties in concluding this Agreement:
(a)IXORA is a corporation organized and existing under the laws of Florida. No
action has been taken by the Directors, Officers or Shareholders of IXORA to
dissolve IXORA. IXORA has the corporate power to enter into this Agreement
and to perform its obligations hereunder.
(b)IXORA has taken all necessary corporate actions and proceedings to enable it
to enter into this Agreement and to perform its obligations hereunder.
(c)Once signed, this Agreement is a legal, valid and binding obligation of
IXORA, enforceable against it by LAM in accordance with its terms, except as
the obligations hereunder may be limited by bankruptcy, insolvency and any
other laws affecting the rights of creditors generally.
(d) Ixora will use their best efforts to market and sell the Products.
(e)Ixora shall provide LAM with financial statements on an annual basis as long
as it is a Private company.
9.3 In any event not herein provided for:
i) LAM or its Manufacturer, LAM shall obtain and maintain in its own name in
trust for the benefit of IXORA under the terms of this Agreement,
manufacturing and research agreements, manufacturing trade secrets related
know-how, data, information, knowledge, formulae and manufacturing techniques
as well as approvals, licenses, registrations, clearances or other
authorizations with regard to the Products.
ii)Ixora, Ixora shall obtain and maintain in its own name in trust for the
benefit of LAM under the terms of this Agreement, marketing and sales related
agreements, know-how, data, information, knowledge, techniques, approvals,
licenses, registrations, clearances or other authorizations with regard to
the Products.
iii) In the event that the parties can not agree on a mutually acceptable third
party Trustee, the parties agree to be bound by injunctive relief below;
<PAGE>
Ixora shall forthwith provide LAM information and process relating to
marketing and sales related agreements, know-how, data, information,
knowledge, techniques, approvals, licenses, registrations, clearances or
other authorizations with regard to the Products. Failure to do so within 5
business days shall entitle LAM to injunctive relief, without notice and
without bond compelling Ixora to so act. The parties submit to the
personnal jurisdictation of either the state or federal court located in
Palm Beach county, Florida.
LAM shall forthwith provide Ixora information as per 5.7(c) and an other
information and process relating to manufacturing and research agreements,
manufacturing trade secrets related know-how, data, information, knowledge,
formulae and manufacturing techniques as well as approvals, licenses,
registrations, clearances or other authorizations with regard to the
Products Failure to do so within 5 business days shall entitle Ixora to
injunctive relief, without notice and without bond compelling LAM to so
act. The parties submit to the personnal jurisdictation of either the state
or federal court located in Palm Beach county, Florida.
ARTICLE 10
CONFIDENTIALITY
10.1 Each Party (the "Recipient") shall use all reasonable efforts to keep all
information (the "Product Information") concerning the proprietary
intellectual property provided to it by the other Party (the "Disclosing
Party") related to the Products confidential and shall not make use of it or
disclose it to any other person, except as authorized by this Agreement. Such
obligation to maintain confidentiality shall survive any expiration or
termination of this Agreement and shall continue in force thereafter.
10.2 The obligation of confidentiality shall not extend to any Product
Information which:
(a) otherwise than by way of breach of section 10.1 herein, is or becomes a
part of the public domain;
(b)was otherwise in the Recipient's lawful possession prior to disclosure by
the Disclosing Party, as shown by the Recipient's written records, free from
any obligation of confidentiality;
(c) is hereafter disclosed to the Recipient by a third party who is not in
violation of any obligation of confidentiality in respect of said
information; or
(d)the Recipient is obliged by law to disclose to a third party, provided that
such disclosure shall only be to the extent required by such law.
<PAGE>
10.3 The Parties mutually agree to edit the Agreement to keep certain financial
and other aspects of the Agreement confidential when put into the public
domain except as required to make disclosure by law or such regulatory
authritory or as mutually agreed upon which will not be unreasonably
withheld. This obligation to maintain confidentiality shall survive any
expiration or termination of this Agreement and shall continue in force
thereafter.
ARTICLE 11
TERM AND REMEDY
11.1 The provisions of this Agreement will come into effect on the execution
hereof and shall continue in force for a period of 99 years.
11.2 In the event:
a) IXORA fails to pay any money due by it hereunder, as and when same becomes
due and payable, but only in the event such sum remains outstanding 60 days
after receipt by it of a written notice from LAM that the sum is due, except
as herein provided in articles 1.5(a) and 3.4(2);
b) either Party becomes bankrupt or insolvent or takes the benefit of any act
now or hereafter in force for bankrupt or insolvent debtors or files a
proposal or takes any action or proceeding before any court or governmental
body of competent jurisdiction for dissolution, winding-up or liquidation or
for the liquidation of its assets; or
c) either Party fails to observe, perform and keep any of the other material
covenants, agreements, provisions, stipulations, representations and
conditions herein contained to be kept, observed and performed by it, which
breach shall not have been cured within 60 days or extended time as mutually
agreed, after receipt by the defaulting Party of notice of such breach and
after the defaulting Party has had a reasonable opportunity to attempt to
cure said breach,
d) Then the Party not in default or breach hereunder shall, except as
hereinafter provided in this Article 11, have the immediate right to cancel
and terminate this Agreement upon giving to the other Party notice of
termination (provided that such right of cancellation shall only apply while
such breach continues).
e) If IXORA has the right to terminate this Agreement as contemplated in this
section 11.2 (other than as a result of the provisions of section 11.2(b)),
or if LAM is otherwise in breach of any of the covenants, agreements,
provisions, stipulations, representations and conditions herein contained to
be kept, observed and performed by it, IXORA shall be entitled to place in
escrow any future payments relating to the specific breach owing to LAM
<PAGE>
hereunder less 20 % until such time as all such breaches have been cured by
depositing with a court of suitable jurisdiction or other trustee in
accordance with this Agreement said future payments. Upon cure LAM is only
entitled to thoses monies placed in escrow.
f) If LAM has the right to cancel and terminate this Agreement or if Ixora is
otherwise in breach of any of the covenants, agreements, provisions,
stipulations, representations and conditions herein contained to be kept,
observed and performed by it as contemplated herein, then such termination
and cancellation shall, as contemplated in section 11.5 hereof, be effective
on the earlier of (i) the fourth anniversary of the date on which IXORA
receives notice of such intended cancellation if a Product has been
commercially sold and (ii) the subsequent date upon which LAM gives notice
under this section 11.2 that it is entitled to terminate or cancel this
Agreement pursuant to section 11.2(a) as a result of the breach by IXORA of
its obligations under section 11.5. In such event the Parties obligations
under 3:11 and 1.5 shall terminate.
11.3 Upon termination or expiration of this Agreement, all licenses granted
herein shall (except as otherwise contemplated in section 11.5) immediately
terminate. IXORA shall immediately cease promoting and distributing Products
and using any LAM trademark, trade name, logo or designation provided,
however, that (i) IXORA and its sublicensees shall be entitled to dispose of
any Products then held in their respective inventories, and (ii) LAM shall
not be obligated to satisfy any purchase orders previously submitted by IXORA
and its sublicensees, and IXORA and its sublicensees shall be entitled to
dispose of any inventory of Products acquired by them prior to the
termination and pay the royalties provided for herein.
11.4 If LAM is in breach of this Agreement as contemplated in section 11.2 (b)
or (c) other then a Change of Control as per 15.13 in circumstances where
IXORA has the right, but has not, terminated this Agreement, then (a) IXORA,
at its option, may pay a fair market value for a paid up, royalty-free,
exclusive, world-wide license, with a right of sub-license, in the Field of
Use to all the Patent Rights to use, sell, make and have made Products whose
manufacture, sale or use is claimed under the Patent Rights (or which is
identified, isolated or manufactured by means of processes claimed in whole
or in part under the Patent Rights), and (b) any Manufacturing Agreement
shall revert to IXORA such that IXORA shall stand in LAM's place with respect
to such Manufacturing Agreement as it relates to the rights and obligations,
incurred after such date, to the Products herein. Ixora must give notice
within 30 days of the receipt of the decision of the arbritrator as to
whether it wishes to elect to obtain the rights contemplated in this section
11.4(a)
11.5 Notwithstanding any provision of this Agreement except as provided for in
3.11a, in the event of a breach of any provision hereof by IXORA which, under
the terms of this Article, would otherwise give LAM the entitlement to cancel
and terminate this Agreement,
<PAGE>
i) the exclusive licenses granted to IXORA herewith shall terminate and IXORA
shall become non-exclusive licenses for a period of four years from such
date for any Product having commercial sales, provided the minimum
royalties set forth in section 3.5(b) and royalties in 3.5(a) are
thereafter paid in respect of such four year period, and
ii) Lam at its option, may pay Ixora a fair market value for a paid up,
royalty-free, exclusive, world-wide license, with a right of sub-license,
in the Field of Use to all the Patent Rights to use, sell, make and have
made Products whose manufacture, sale or use is claimed under the Patent
Rights (or which is identified, isolated or manufactured by means of
processes claimed in whole or in part under the Patent Rights) (does not
enable LAM to reduce 4 yrs but LAM must purchase product rights paid,
incurred by Ixora including but not limited to expenses as per sections 1.5
and 3.11 etc. before they can offer them to anyone else), and
iii) In the event that Ixora cures their breach, Ixora shall re-acquire an
exclusive license on the terms and conditions set out herein for any or
all world wide territories, if still available from LAM.
11.6 The foregoing right of the Parties to terminate this Agreement shall be at
the option of the Party who is not in breach of its obligations and the
failure to exercise such right in the event of any occurance giving rise
thereto shall not constitute waiver of the right in the event of any
subsequent occurrence.
11.7 The termination of this Agreement for any reason shall not prejudice LAM's
right to royalties due to it hereunder and unpaid on the date of termination
or to an examination of Ixora's records as provided herein this Agreement.
ARTICLE 12
INSURANCE AND INDEMNIFICATION
12.1 Both Parties shall indemnify and hold the other Party and its officers,
directors, and employees harmless against any liability, damages, loss (other
than loss of potential sales) or expenses (including without limitation,
expenses of total or partial Product recalls) resulting from any third-party
(including any Regulatory Authority) claims, suits, proceedings, demands, or
recoveries in connection with the Product manufactured by LAM or other
activities of LAM or Product sold by Ixora or other activities of Ixora or as
subsequently negotiated.
12.2 Both Parties shall obtain and maintain in full force and effect valid and
collectible general liability and product liability insurance in respect of
the Products for death, illness, bodily injury and property damage in an
amount not less than $2,000,000 combined single limit. Such policy, where
possible shall name the other Party as an insured or an additional insured
thereunder and each Party shall grant like coverage to the other Party under
a standard broad form vendor's endorsement thereto. Both Parties shall within
ten (10) days after the date of execution of this Agreement provide the other
<PAGE>
Party with evidence of this coverage, provided that the existence of such
coverage shall in no way limit any Party's liability or obligations
hereunder. Such insurance policy shall provide that in the event such
insurance coverage should be materially adversely changed or terminated for
any reason, the insurer thereunder will give both Parties thirty (30) days
prior written notice of such change or termination.
12.3 Except as provide for elsewhere,
(a)In the event a Claim is made upon the Indemnified Party, the Indemnified
Party shall promptly give notice of such Claim to the Indemnifying Party, and
shall promptly deliver to such Indemnifying Party all information and written
material available to the indemnified Party relating to such Claim. If such
Claim is first made upon the Indemnifying Party, the Indemnifying Party shall
promptly give notice of such Claim to the Indemnified Party.
(b)The Indemnified Party will, if notified of the Indemnifying Party's election
to do so within fifteen (15) days after the date of notice of a Claim, permit
the Indemnifying Party to defend in the name of the Indemnified Party any
Claim in any appropriate administrative or judicial proceedings and take
whatever actions may be reasonably requested of the Indemnified Party to
permit the Indemnifying Party to make such defense and obtain an adjudication
of such Claim on the merits, including the signing of pleadings and other
documents, if necessary; provided that the Indemnifying Party shall defend
the Claim with counsel reasonably satisfactory to the Indemnified Party and
provide the Indemnified Party with evidence reasonably satisfactory to the
Indemnified Party that the Indemnifying Party can satisfy the Claim if it is
upheld. In addition to the liability for the ultimate settlement or judgment,
if any, arising out of such Claim under this Agreement, the Indemnifying
Party shall be solely responsible for all the fees and expenses incurred in
connection with such defense or proceedings, regardless of their outcome.
However, the Indemnifying Party shall not be responsible for any expenses,
including attorneys fees and costs, incurred by the Indemnified Party to
monitor the defense of the Claim by the Indemnifying Party.
(c)In the event the Indemnifying Party does not accept the defense of such
Claim under the terms hereof, the Indemnified Party shall be entitled to
conduct such defense and settle or compromise such Claim, and the
Indemnifying Party's indemnification obligation under this Agreement shall be
absolute, regardless of the outcome of such Claim. The Indemnifying Party
shall not have the right to direct the defense of such an action on behalf of
the Indemnified Party if the Indemnified Party has reasonably concluded that
there may be defenses available to it that are different from or additional
to those available to the Indemnifying Party; provided, however, that in such
event, the Indemnifying Party shall bear the fees and expenses of only one
<PAGE>
(1) separate counsel for the Indemnified Party. In addition, the Indemnified
Party, at its option, may elect not to permit the Indemnifying Party to
control the defense against a Claim for reasons other than those set forth in
the immediately preceding sentence in which case the Indemnifying Party shall
not be obligated to indemnify the Indemnified Party against any settlements,
judgments or other costs or obligations arising thereunder which the
Indemnified Party may make or incur relating to such Claim.
ARTICLE 13
FORCE MAJEURE
13.1 If either Party is affected by Force Majeure, it shall notify the other
Party of the nature and extent thereof within 10 days of the occurrence
thereof.
13.2 Neither Party shall be deemed to be in breach of this Agreement, or
otherwise liable to the other, by reason of any delay in performance, or
non-performance, of any of its obligations hereunder to the extent that such
delay or non-performance is due to any Force Majeure of which it has notified
the other Party.
13.3 In the event any Force Majeure prevails for a continuous period in excess
of 30 days and the affected Party is unable to fulfill its obligations
hereunder beyond such period of 30 days, the other Party shall be entitled to
suspend its performance of its obligations under this Agreement until such
time as the affected Party is able to fulfill its obligations.
13.4 In this Agreement, "Force Majeure" shall mean in relation to either Party,
any circumstances beyond the reasonable control of that Party, including,
without limiting the generality of the foregoing, any delay or failure to
comply with the terms of the Agreement, which is caused by fire, flood,
inevitable accident, war, riot, civil commotion, embargo, blockade,
prohibition of export, governmental directive, intervention of civil, naval
or military authorities or other agencies of government, legal restrictions,
strike, lockout or any other form of industrial action.
ARTICLE 14
DISPUTES; Arbitration
14.1 Disputes Generally. The Parties hereby undertake to use good faith efforts
to settle all disputes arising under this Agreement within 30 days or such
extended time as the parties mutually agree. Failing settlement or mutual
agreeement, all disputes, including without limitation claims of breach of
contract, fraud in the inducement and negligence shall be finally settled
pursuant to the rules of the American Arbitration Association (AAA). The
arbitration shall take place in the state of Florida, and the parties hereby
agree to exclude any right of application or appeal to the courts in
<PAGE>
connection with any question of law arising in the course of the reference or
out of the award. Notwithstanding the foregoing, any disputes with respect to
the validity of any Licensed Patent or disclosure of any confidential
information shall not be subject to this arbitration provision, but shall be
heard by United States courts.
14.2 Selection of Arbitrator(s). Each of the parties shall appoint one
arbitrator and the two so nominated shall, in turn, choose a third
arbitrator. If the arbitrators chosen by the parties cannot agree on the
choice of the third arbitrator within a period of thirty (30) days after
their nomination, then the third arbitrator shall be appointed pursuant to
the rules of the AAA. If either Party fails to appoint its own arbitrator
within the specified period, the arbitrator appointed by the other Party
shall be the sole arbitrator. The Parties shall use their best efforts to
appoint arbitrators who are knowledgeable in biotechnology.
14.3 Governing Law. The laws of the State Delaware, USA, excluding that body of
law known as conflicts of laws, shall be the applicable substantive law. The
applicable procedural law shall be the law of the place of arbitration;
provided, however, that all questions concerning the construction or effect
of patent applications and patents shall be decided in accordance with the
laws of the country in question.
14.4 Decision of Arbitrators. The arbitrators will decide in accordance with the
terms of this Agreement and will take into account any appropriate
international trade usages applicable to the transaction. A written
transcript of the hearing will be made and furnished to the parties. The
award of the arbitrators will be final and binding upon the parties. Judgment
upon the award may be entered in any court having jurisdiction. An
application may be made to any such court for judicial acceptance of the
award and an order of enforcement.
14.5 Expense of Arbitration. The arbritrator shall award all expenses incurred
in connection with arbitration and reasonable attorneys' fees incurred in
connection with the dispute.
14.6 Suspension of Running of Time Periods; Monetary Disputes
(a)From the date a Party notifies the other Party that it wishes to commence
any Dispute resolution provision contained in this Article until such time as
such Dispute has been finally settled by arbitration, the running of the time
periods set forth in this Agreement within which a Party may cure a breach,
shall be suspended as to the subject matter of such Dispute, subject to the
provisions set forth in clause (b) of this Article 14.6.
(b)If a Dispute concerns the amount of money owed hereunder by one Party (such
Party, the "Non-Claimant") to the other Party (the "Claimant") then the cure
period relating to that portion of such money as to which no Dispute exists
between the Parties shall not be so suspended and that portion of such money
as to which a Dispute exists except as provided for in sections 1.6, 3.8 and
6.2 will be deposited by the Non-Claimant in an interest-bearing escrow
account with an escrow agent to be mutually agreed to by the Parties. If the
<PAGE>
arbitrator determines that the Claimant is owed some or all of the money that
the Claimant has claimed then the Claimant shall be entitled to the interest
earned on such portion of the money determined by the arbitrator to be due
the Claimant. In addition, if the arbitrator determines that the Claimant did
not have a reasonable basis for claiming the disputed amount then within
twenty (20) days after such determination the Claimant shall remit to the
Non-Claimant an amount equal to 25% of the disputed amount in addition to the
disputed amount plus interest earned thereon. Conversely, if the arbitrator
determines that the Non-Claimant did not have a reasonable basis for
disputing the disputed amount then within twenty (20) days after such
determination the Non-Claimant shall remit to the Claimant an amount equal to
25% of the disputed amount in addition to the disputed amount plus interest
earned thereon.
ARTICLE 15
GENERAL
15.1 Neither Party shall do anything which will intentionally jeopardize the
goodwill of the other Party or the reputation of the other's products
(including the Products).
15.2 This Agreement shall not be assignable by either Party without the other
Party's prior written consent, which consent may not be unreasonably withheld
except as otherwise provided herein. Notwithstanding the foregoing, LAM shall
be entitled at any time to assign any of its rights, duties, obligations,
covenants or agreements under this Agreement, provided that the assignee
agrees in writing and in form and substance satisfactory to IXORA, acting
reasonably, to assume and be bound by all of the terms and obligations
contained in this Agreement as if such assignee had entered into this
Agreement in the place and stead of LAM; and provided that IXORA receive in
form and substance satisfactory to it, acting reasonably, evidence that the
assignee's agreements referred to above are legal, valid and binding
obligations of the assignee.
15.3 This Agreement and all schedules attached hereto constitute the entire
agreement between the Parties and supersede all prior agreements, letters of
intent, understandings, agreements, representations, warranties or other
provisions, express or implied, relating to the subject matter of this
Agreement and no amendments of any provision hereof shall be binding on
either Party unless consented to in writing by both Parties.
15.4 The Parties hereto mutually covenant and agree that a waiver by either
Party of a breach of any of the terms of this Agreement by the other Party
shall not be deemed a waiver of any subsequent breach of the terms of this
Agreement.
15.5 If any provision of this Agreement should be determined by a tribunal of
competent jurisdiction to be invalid, illegal or unenforceable in any
respect, such determination shall not impair or affect the validity, legality
or enforce ability of the remaining provisions hereof, and each provision of
this Agreement is to be considered separate, severable and distinct, except
those which are an integral part of or are otherwise clearly inseparable from
such invalid or unenforceable part or provision.
<PAGE>
15.6 Unless otherwise indicated, all dollar amounts referred to in this
Agreement are expressed in United States currency.
15.7 Nothing in this Agreement shall be deemed or construed to constitute
between the Parties the relationship of principal and agent, nor to create
any partnership, joint venture or other form of legal association of any
nature whatsoever. Neither Party is hereby constituted a legal representative
of the other Party for any purpose whatsoever; and neither is granted any
right or authority hereunder to assume or create, whether in writing or
otherwise, any obligation or responsibility, express or implied, or to make
any representation, warranty or guarantee, or otherwise to act in any manner
in the name of the other Party.
15.8 All notices shall be in writing in English and shall be sent by registered
mail or by telex, cable or facsimile to the following addresses unless
otherwise instructed by notice to the other Party:
if to IXORA:
Northbridge Centre
515 North Flagler Drive
Suite 1201
West Palm Beach, Florida
33401-4347
Fax: 561-833-5525
if to LAM: c/o South Florida Bioavailability Clinic
11190 Biscayne Boulevard
Miami, Florida
33181-3405
Fax: 305-895-8616
15.9 All notices shall be deemed to have been duly given and received (i) on the
fifth Business Day following the sending thereof by registered mail, or (ii)
on the day such telex, cable or facsimile is sent, provided such day is a
Business Day, failing which it shall be deemed to be received on the next
Business Day.
15.10 In this Agreement, "Business Day" shall mean any day except a day that is
a Saturday, a Sunday, or a statutory holiday in the province of Ontario or
the State of Delaware.
15.11 The Parties have expressly requested that this Agreement and any related
documents, including schedules and exhibits, be drafted in English.
15.12 Each Party hereto acknowledges that it and its legal counsel have reviewed
and participated in settling the terms of this Agreement, and the Parties
<PAGE>
hereby agree that any rule of construction to the effect that any ambiguity
is to be resolved against the drafting party shall not be applicable in the
interpretation of this Agreement.
15.13 A "Change of Control" shall be deemed to have occurred if (A) any "person"
(as such term is used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities representing 25% or more of the combined voting
power of then outstanding securities; or (B) the stockholders approve a
merger or consolidation with or into any other corporation, other than a
merger or consolidation which would result in the voting securities
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least 80% of the combined voting power of the voting
securities of such surviving entity outstanding immediately after such merger
or consolidation, or the stockholders approve a plan of complete liquidation
or an agreement for the sale or disposition of all or substantially all
assets.
Assignment; Change of Control; Partial Assignment.
(a)Neither Party shall transfer or assign this Agreement, in whole or in part,
without the prior written consent of the other Party (which shall not be
unreasonably withheld), except that
(i)Ixora may, without such consent, assign this Agreement, including all of
Ixora's rights and obligations hereunder, to a purchaser of all or
substantially all of Ixora's assets that agrees in writing to assume all of
Ixora's obligations under this Agreement; and
(ii) LAM may, without such consent, assign this Agreement, including all of
LAM's rights and obligations hereunder, to a purchaser of all or
substantially all of LAM's assets relating to this Agreement that agrees in
writing to assume all of LAM's obligations under this Agreement.
(iii) In the event of any Change of Control, the respective rights and
obligations of Ixora and LAM (or any successor to or assignee of LAM's or
Ixora's resulting from such Change of Control) under this Agreement shall
continue in full force and effect and shall be binding upon and inure to the
benefit of such successor or assignee of LAM or Ixora.
(b)If Ixora desires to delegate some but not all of its duties and/or assign
some but not all of its rights hereunder to any Affiliate, such transfer
shall only be done with LAM's prior consent, which will not be unreasonably
withheld, provided Ixora and such Affiliate shall execute and deliver to LAM
an undertaking (Affiliates that have executed and delivered such undertaking
are referred to as "Delegate Affiliates") with respect to the duties so
delegated and/or rights so assigned to any Delegate Affiliate and described
in the undertaking executed by such Delegate Affiliate. Ixora shall have the
right to require LAM to treat such Delegate Affiliate as if it were Ixora and
accord such Delegate Affiliate the same cooperation as is owed to Ixora
<PAGE>
hereunder and such assigned rights hereunder, but such Delegate Affiliate
shall not be deemed a third-party beneficiary of this Agreement and only
Ixora may enforce LAM's obligations hereunder. LAM shall likewise be entitled
to look to Ixora for performance of any duty delegated to a Delegate
Affiliate.
IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to be
duly executed by its duly authorized representative.
LAM PHARMACEUTICAL CORP. IXORA BIOMEDICAL COMPANY INC.
Per:___________________May 1, 2000 Per:____________________May 1, 2000
Name: Alan Drizen Name: John Easton
Title: President & CEO Title: President
Authorized Signing Officer Authorized Signing Officer
Witnessed By: Witnessed By:________________________
-------------------
K. M. Skoretz K. M. Skoretz
<PAGE>
Schedule "A"
"Products"
For the purposes of the foregoing Agreement, "Products" means those
products using an application of LAM's proprietary ionic polymer matrix
technology and improvements thereof in combination with therapeutic agents, to
which Ixora has rights to solely in the "Field of Use" for the treatment of male
sexual dysfunction and female sexual dysfunction in humans and animals,
described in this Schedule "A" are herein referred to as the "Fields of Use".
Including:
Products for the purposes of section 1.9 of the Agreement to which this
Schedule is attached include, but are not limited to, substances which address
the following types of dysfunctions:
(a) Female Dryness / Lubrication
(b) Erectile Dysfunction
(c) Painful Sex (e.g. vaginismus, etc.)
(d) Such other areas within the Field of Use which may be identified from time
to time by LAM or Ixora, including but not limited to:
1. Premature Ejaculation
2. Retarded Ejaculation
3. Stimulation
4. Orgasm
5. Sexual Performance Anxiety
6. Sexual Arousal
7. Semen Production
8. Drug induced sexual disorders
<PAGE>
Schedule "B"
"Patents Rights"
1. U.S. Patent Application 08/825,121 / U.S. Patent 5,952,006
Continuation-in-part, U.S. Patent Application 08/536,750 & 08/796,578
Title: DRUG PREPARATIONS FOR TREATING IMPOTENCY
Inventors: Drizen et al.
Reference: 22890-XXX
2. U.S. Patent Application No. 09/048,335 / U.S. Patent 6,036,977
Continuation-in-part, U.S. Patent Application 08/536,750 & 08/796,578
Title: DRUG PREPARATION FOR TREATING SEXUAL DYSFUNCTION
Inventors: Drizen et al.
Reference: 22890-X4
Also filed in Europe, Canada, Australia, Israel
3. U.S. Patent Application 09/148,986
Continuation-in-part of U.S. Patent Application No. 09/048,335
Title: DRUG PREPARATIONS FOR TREATING SEXUAL DYSFUNCTION
Inventors: Drizen et al.
Reference: 23622
<PAGE>
Schedule "C"
"Other Patent Rights"
Ixora is granted rights of use of the technology set forth below and to any
domineering patents obtained by LAM which cover the Products but only to the
extent that the sale of any Product would necessarily infringe said Other Patent
Rights.
1. U.S. Patent Application 08/796,578
Title: TOPICAL DRUG PREPARATIONS
Continuation-in-part of U.S. Patent Application No. 08/536,750
Inventors: Drizen et al
Patent Number: 5,897,880
<PAGE>
Schedule "D"
Expenses incurred or accrued to the end of Jan 31, 1999 of the nature
contemplated in Section 1.5(a)
===============================================================================
as per letter dated April 7, 2000 from alan Drizen
<PAGE>
Schedule "D"
Expenses incurred or accrued to the end of Jan 31, 1999 of the
nature contemplated in Section 1.5(a)
===============================================================================
as per fax from Gary Nath totalling $75,580.29 for the period March 1997 through
December 1999
<PAGE>
Schedule "E"
FINANCIAL STATEMENTS
(section 9.2(e))
as per Ixora Bio-Medical Co. Balance Sheet as of December 31, 1999
<PAGE>
Schedule "E"
FINANCIAL STATEMENTS
(section 9.2(e))
as per Ixora Bio-Medical Co. Profit and Loss January through December, 1999
<PAGE>
Schedule "F"
AUTHORIZED CAPITAL STOCK OF IXORA BIOMEDICAL COMPANY INC.
(section 3.4(3))
- ---------------------------------------------------------------------------
Date Shareholder Equity % # Shares Share
------------- Capitalization
12/97
12/99
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Dec. 31,1997 J. Easton 55 2,475,000
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
LAM 45 2,025,000
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
4,500,000
- ---------------------------------------------------------------------------
Dec. 31,1999 J. Easton 55 2,275,000^
et al 41.8 28,000
-----------
98/99 2,303,000
0.5
42.3
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
LAM 45 2,025,000
37.2
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
K. Skoretz 10 450,000
et al 8.3 175,000
-------
98/99 625,000
3.2
11.5
- ---------------------------------------------------------------------------
Ixora 492,753
Investors 9.0
- ---------------------------------------------------------------------------
5,445,753
100.0
- ---------------------------------------------------------------------------
<PAGE>
SHAREHOLDER AGREEMENT
Page
ARTICLE I Definitions 1
ARTICLE II Operating Matters 4
ARTICLE III Most Favored Shareholder Status 5
ARTICLE IV Dealing in Shares 6
ARTICLE V Confidentiality 15
ARTICLE VI Securities Legislation Matters 15
ARTICLE VII General 16
FORM OF DECLARATION FOR REMOVAL OF LEGEND 24
<PAGE>
Ixora Shareholder Agreement May 1, 2000
THIS SHAREHOLDER AGREEMENT made as of the May 1, 2000
A M O N G:
LAM PHARMACEUTICALS, INC. a corporation existing under the laws of
Delaware
(hereinafter referred to as "LAM")
- and -
John Easton et al
(hereinafter referred to as "JohnCo")
- and -
IXORA BIOMEDICAL COMPANY INC., a corporation existing under
the laws of Delaware
(hereinafter referred to as the "Corporation").
WHEREAS LAM and JohnCo have agreed to define their respective rights as
shareholders of the Corporation and to regulate certain matters relating to the
organisation and operation of the Corporation by the terms of this agreement.
NOW, THEREFORE, in consideration of the mutual promises contained
herein and the payment of $1.00 by each of the parties hereto to the others, the
receipt and adequacy of which are acknowledged, the parties hereto agree as
follows:
ARTICLE I
Interpretation
1.1 Definitions
In this agreement and the recitals hereto, unless the context otherwise
requires, the following words and expressions shall have the following
meanings:
"Arm's Length Party" means a person to which a Shareholde desires to sell
<PAGE>
all or any part of its Shares;
"Board" means the board of directors of the Corporation;
"Business Day" means any day other than Saturday, Sunday and any other day
on which the main branch of the Chase Manhattan Bank is not open for
business in the City of New York;
"Common Shares" means the common shares of the Corporation as
currently constituted;
"control" means beneficial ownership, direct or indirect, or the exercise
of control or direction over securities of an issuer which:
(i) carry more than 50% of the voting rights attached to all
securities of the issuer which carry rights to vote either
under all circumstances or under some circumstances that have
occurred and are continuing; and/or
(ii) amount to more than 50% of the shares of the issuer that
entitle the holders thereof, either by their terms or in the
discretion of the board of directors of such corporation, to
an unlimited amount of dividends and/or which carry a residual
right to participate to an unlimited degree in earnings of the
issuer and/or in its assets upon liquidation or winding up;
"Defaulting Purchaser" has the meaning provided in Section 4.2(d);
"Defaulting Shareholder" has the meaning provided in Section 4.7;
"Director" means a member of the Board;
"Initial Public Offering" means the first to occur of the following
events:
(i) the issuance to the public of Securities having an aggregate
of gross proceeds of not less than $3,000,000 by the
Corporation pursuant to a registration statement or a
prospectus or similar document;
(ii) the amalgamation or merger of the Corporation with a
corporation which results in the shareholders of the
corporation receiving securities which are traded on the New
York Stock Exchange, the American Stock Exchange, the Nasdaq
National Market including the Over-the-Counter bulletin board
market or the Toronto Stock Exchange.
"Nominee Director" means an individual who has been nominated by a
party to this agreement to be a member of the Board;
"Permitted Transferee" has the meaning provided in Section 4.3 and 4.4;
<PAGE>
"person" means and includes an individual, corporation, general
partnership, limited partnership, firm, joint stock company, company,
joint venture, syndicate, trust or trustee, association or other form of
entity or organization, whether or not a legal entity;
"Related Person" means, in respect of a person,
(i) any person who is an affiliate (as that term is defined in the rules of the
Securities and Exchange Commission);
(ii) any person who is related by blood, adoption or marriage to such person;
(iii) any person controlled by a person described in subparagraph (i);
"Securities" means
(i) Shares or
(ii) securities capable of conversion or exchange into or carrying a right to
purchase or subscribe for any shares
of the Corporation;
"Selling Notice" has the meaning provided in Section 4.2(a);
"Shareholder" means a holder of a Security who is a party to this
agreement at the time the word "Shareholder" is applied and "Shareholders"
means all those persons each of which is a Shareholder for the purposes of
this agreement at the time the word "Shareholders" is applied;
"Shares" means shares of any class of the Corporation that may be
authorized from time to time;
"Transfer" means any sale, exchange, assignment, gift, bequest,
disposition, mortgage, charge, pledge, encumbrance, grant of security
interest or other arrangement by which, directly or indirectly,
possession, legal title or beneficial ownership passes from one person to
another, or to the same person in a different capacity, whether or not
voluntary and whether or not for value, and any agreement to effect any of
the foregoing, and the words "Transferred", "Transferring" and similar
words have corresponding meanings.
<PAGE>
1.2 Sections and Headings
The division of this agreement into Articles and Sections and the
insertion of headings are for the convenience of reference only and shall
not affect the construction or interpretation of this Agreement. The term
"this agreement", "hereof", "hereunder" and similar expressions refer to
this agreement and not to any particular Article, Section or other
particular Article, Section or other portion hereof and include any
agreement or instrument supplemental or ancillary hereto. Unless something
in the subject matter or context is inconsistent therewith, references
herein to Articles and Sections are to Articles and Sections of this
agreement.
1.3 Time Periods
When calculating the period of time within which or following which any
act is to be done or step taken pursuant to this agreement, the date which
is the reference date in calculating such period shall be excluded. If any
action or matter is to take place on a day which is not a Business Day,
such action or matter shall be sufficiently done for the purposes of this
agreement if done on the next Business Day thereafter.
1.4 Extended Meanings
Words importing the singular number only shall include the plural and vice
versa and words importing gender shall include the masculine, feminine and
neuter genders.
ARTICLE II
Operating Matters
2.1 Management of the Corporation
(a) The business and affairs of the Corporation shall be managed by the
Board in accordance with the by-laws of the Corporation.
(b) The Board will consist of such number of Directors as may be
determined from time to time (the "Number"), but in no event shall
the number of Directors to be elected be less than five (5). The
Shareholders shall use all reasonable commercial efforts and shall
vote their Shares so that the members of the Board shall be composed
of:
(i) such number of Directors (the "LAM Number") to be nominated by
LAM, where the LAM Number shall be the number (rounded to the
nearest whole number if such number results in a fraction
greater or equal to 2/3, and rounded to the next lowest whole
number if such number results in a fraction less than 2/3)
which results when the number of directors to be elected is
multiplied by the fraction determined by dividing:
<PAGE>
(1) the number of Shares held by LAM and its Permitted Transferees at the
record date for the calling of a meeting of the Shareholders at which
Directors are to be elected;
by
(2) the aggregate number of Shares held by all shareholders of the Corporation
at the record date for the calling of a meeting of the shareholders at
which Directors are to be elected; and
(ii) such number of Directors to be appointed by JohnCo which is
the number which results when the LAM Number is subtracted
from the Number.
(c) The replacement for a Director who ceases to hold office shall be nominated
in the manner in which his predecessor was selected. If a Nominee Director
ceases to hold office between annual meetings, the parties shall use all
reasonable commercial efforts (subject to applicable laws and the exercise
of powers consistent with the Directors' fiduciary duties) so that the
Board shall forthwith fill such vacancy with another nominee Director
nominated by the first Nominee Director's nominating Shareholder. If a
Shareholder provides written notice to the other Shareholders of such
Shareholder's desire to replace some or all of such Shareholder's Nominee
Director(s), the Shareholders shall cause such meetings to be held to
remove and replace such Nominee Director with the designated replacement.
ARTICLE III
Most Favored Shareholder Status
3.1 Pre-Emptive Rights
(a) Neither the Corporation nor any subsidiary of the Corporation shall
issue or sell any of its Securities unless such Securities are first
offered to each Shareholder by notice in writing (the "Subscription
Offer") at a price per Security determined or fixed by a majority of
the Directors, so that ratio of
(w) the number of the Securities being offered to each Shareholder;
to
(x) the number of the Securities to be issued or sold;
is as nearly as possible equal to the ratio of:
(y) the number of the Common Shares held by each Shareholder at
the time
<PAGE>
to
(z) the number of the Common Shares held by all Shareholders at the time.
(b) The Subscription Offer shall:
(i) specify all relevant terms and conditions associated with the
Securities proposed to be issued or sold, including the attributes
and the price thereof;
(ii) state that if the Subscription Offer is not accepted in writing to
the Corporation (the "Acceptance Notice"), will be deemed to be
declined five Business Days after the date the Subscription Offer is
received by the shareholder); and
(iii) state the proportion of the Securities so offered which the
Shareholder is entitled to purchase up to (for greater certainty, a
Shareholder may purchase a part only of the Securities so offered to
him).
(c) Notwithstanding any other provision of this Article III, the rights
granted in this Section 3.1 shall not apply to the sale of the
Corporation's Securities priced greater than $0.99 per share (or common
stock equivalent in the event of the sale of securities convertible
into common stock).
ARTICLE IV
Dealing in Shares
4.1 No Transfer of Securities
(a) In addition to all of the other requirements contained herein, the
Shareholders shall not and shall not make any agreement to directly or
indirectly, Transfer or grant an option on, any of their Securities or
their rights under this agreement without first complying with all of the
provisions of this agreement other than in respect of a Transfer which
satisfies the requirements of Section 4.3. In the absence of such consent,
any attempt to accomplish or effect any or all of the acts prohibited
hereby shall be null and void. The certificates representing the shares
shall be marked with a legend stating that any transfer of the shares
represented by such certificate is subject to the provisions of this
Agreement.
(b) No proposed dealing in any Securities (including the issuance thereof)
in violation of this agreement shall be valid. Such disqualification
shall be in addition to and not in lieu of any other remedies to
enforce the provisions of this agreement.
(c) Notwithstanding anything else contained herein, every Transfer of all or a
portion of the Securities held by a Shareholder, in addition to the
requirements of the articles of the Corporation, shall be subject to the
condition that the proposed transferee, if not already bound by this
<PAGE>
agreement, shall first enter into an agreement with the other parties
hereto to be bound hereby. For greater certainty, but without limiting the
generality of the foregoing, each of the Shareholders shall be bound by the
provisions of this agreement in respect of any Securities which may be
acquired by such Shareholder after the date hereof in accordance with the
provisions of this agreement.
(d) No Shareholder may (except pursuant to Section 4.3) Transfer any
Securities unless, in addition to obtaining the consents contemplated
in this Section 4.1, such Shareholder also complies with the provisions
of Section 4.2 or 4.4. A Transfer pursuant to Section 4.4 is exempt
from the provisions of Section 4.2.
(e) No Shareholder may Transfer any Securities unless such Transfer is made
in compliance with all applicable laws (including, without limitation,
Rule 144 under the US Securities Act of 1933) and all contractual
undertakings which the Shareholder may make from time to time with the
Corporation.
(f) Except with the written consent of the Corporation, not withstanding
the legal ability to do so no Shareholder shall Transfer any Securities
directly or indirectly prior to the third anniversary of the date of
this agreement or the period specified in 4.1(g), whichever should
occur first except as specifically contemplated in sections 4.3 or 4.4
hereof.
(g) If, in connection with the Initial Public Offering, the underwriters or
other brokers (collectively, the "Underwriter") retained by the
Corporation request as a condition to completing the Initial Public
Offering that the Shareholders to enter into a contractual agreement
with the Corporation and/or the Underwriter whereby the Shareholders
will be restricted in whole or in part from selling some or all of such
Shareholders' Securities for a period of time not to exceed eighteen
(18) months, the Shareholders shall comply with such request.
Right of First Refusal
(a) (i) In the event that any Shareholder (hereinafter referred to in this
Section 4.2 as the "Offeror") in good faith receives an offer from (which
offer it wishes to accept), or wishes to make an offer to, (either such
offer being hereinafter in this Section 4.2 referred to as the "Offer") an
Arm's Length Party (including another Shareholder or some other
Shareholders), which party shall be identified as the principal prospective
offeror who has offered to acquire beneficial ownership of such Securities,
to purchase or sell any or all of the Securities then owned by the Offeror
shall forthwith give to the other Shareholders (hereinafter in this Section
4.2 sometimes collectively referred to as the "Offerees" and sometimes
individually referred to as an "Offeree") notice (hereinafter in this
Section 4.2 referred to as a "Selling Notice") of its intention to sell
such Securities accompanied by a true copy of the Offer which shall
identify the principal on whose behalf the Offer is made in the event the
Offer is made by or to an agent.
<PAGE>
(ii) Each Selling Notice shall be deemed for the purposes of this
Section 4.2 to be a separate Selling Notice in respect of each
class of Securities the Offeror proposes to sell.
(b) Upon notice in accordance with the provisions of Section 4.2(a) having been
given, each of the Offerees shall have 15 Business Days from the date when
such notice shall be deemed to have been received by such Offeree within
which to give to the Offeror a notice (hereinafter in this Section 4.2
referred to as a "Purchase Notice") that it agrees to purchase all of the
Securities referred to in the Offer (or such lesser number of the
Securities as such Offeree may specify in a Purchase Notice) on the same
terms and conditions as are contained in the Offer, provided that:
(i) if more than one of the Offerees shall have given Purchase
Notices, they shall be deemed, unless they otherwise in
writing agree among them, to each offer to purchase the lesser
of (x) the number of Securities as such Offeree specified in
its Purchase Notice, and (y) that proportion of the class and
number of Securities of the Offeror referred to in the Offer
which is determined by using the following formula:
Number of Securities of Number of Common Shares Held by Offeree
---------------------------------------
particular Class Referred X Total Number of Common Shares Held by
to in Offer Offerees Giving Purchase Notice
provided, however, that any Offeree may, in its Purchase
Notice, indicate that it is prepared to purchase Securities
referred to in the Selling Notice in excess of such Offeree's
proportionate entitlement (and indicating therein the maximum
number of Securities which the Offeree is prepared to
acquire), and if in respect of any Offerees (hereinafter
referred to as the "Minor Offerees") the number of Securities
referred to in subparagraph 4.2(b)(i)(x) is less than the
number of Securities referred to in subparagraph 4.2(b)(i)(y),
(the Securities resulting from such difference being
hereinafter referred to as the "Remaining Securities"), any
Offeree other than a Minor Offeree may purchase that
proportion of the Remaining Securities as is determined having
regard to the calculation provided for in subparagraph
4.2(b)(i)(y), disregarding the Securities held by the Minor
Offerees (or in such other proportions as may be agreed upon
by the Offerees other than the Minor Offerees). The foregoing
procedures shall be repeated as often as is necessary until
either one or more of the Offerees have elected to acquire all
<PAGE>
of the Securities referred to in the Selling Notice or until
there remain Securities which no Offeree has elected to
purchase; and
(ii) if any of the Offerees shall not have given a Purchase Notice
pursuant to the provisions hereof, then such Offerees shall be
deemed for all purposes to have refused to purchase the
Securities offered by the Offeror.
(c) The closing of any transaction contemplated by Section 4.2(b) hereof
shall take place at the offices of the Corporation at the hour of
10:00 o'clock in the forenoon of the date set by the Offeror in the
Selling Notice for the closing of the transaction (herein sometimes
referred to as the "Closing Date" or the "Closing") which, subject
to Section 4.2(d), shall not be earlier than the 10th day nor later
than the 20th day following the last day upon which a Purchase
Notice could have been given by any Offeree.
(d) In the event that an Offeree (hereinafter in this Section 4.2 sometimes
referred to as the "Defaulting Purchaser") shall fail to complete the
aforesaid transaction in accordance with the terms and conditions of the
Offer, the Purchase Notice and this agreement, the Offeror, in addition to
any other rights or remedies to which it may be entitled against the
Defaulting Purchaser, shall have the right immediately after the date
scheduled for completion of the transaction, to keep or deal with the
Securities which the Offeror would have sold to the Defaulting Purchaser
had the Defaulting Purchaser not defaulted; provided that if more than one
Offeree has given a Purchase Notice, the closing of all transactions
contemplated by Section 4.2(b) shall be delayed to a time as hereinafter
provided and the Offeror shall give written notice to such other Offerees
who have given Purchase Notices (hereinafter in this Section 4.2(d)
referred to as "Non-Defaulting Offerees") of the default by the Defaulting
Purchaser and the Offeror shall not be entitled to sell the Securities
which the Offeror would have sold to the Defaulting Purchaser had the
Defaulting Purchaser not defaulted unless such Non-Defaulting Offerees
shall not have agreed to purchase, pro rata in proportion to their existing
holdings of such Securities (disregarding holdings of Shareholders other
than Non-Defaulting Offerees) or in such other proportions as they may
agree, such Securities from the Offeror in accordance with the terms and
conditions of the Offer and this agreement within five days of their
receipt of such notice. The closing of any transaction contemplated by
Section 4.2(b) (other than one involving a Defaulting Purchaser) and any
transaction pursuant to this Section 4.2(d) shall take place as
contemplated by Section 4.2(c) except that the Closing Date shall not be
earlier than the 10th day nor later than the 15th day following the last
day upon which a Non-Defaulting Offeree could have agreed to purchase the
Securities which were to have been purchased by the Defaulting Purchaser.
(e) In the event that the Offerees in the aggregate elect not to
<PAGE>
purchase, or are deemed by reason of the provisions of this
agreement to have refused to purchase, all the Securities referred
to in the Offer, the Offeror may, accept or make the Offer and
proceed to sell the Securities referred to therein provided that:
(i) the Offeror sells the Securities at a price and on and in accordance with
the terms and conditions contained in the Offer;
(ii) the transaction contemplated by the Offer closes within a
period of 90 days following the last day upon which a Purchase
Notice could have been given by any Offeree;
(iii) the Offeror sells to the Arm's Length Party named in the Offer
as the principal to whom or on whose behalf the Offer was
made; and
(iv) the Arm's Length Party to whom the Offeror sells the
Securities, contemporaneously with the purchase of the
Securities, covenants and agrees with all the Shareholders and
the other parties to this agreement to be bound by the terms
and conditions of this agreement as if it were an original
party hereto.
(f) If the Offeror fails to close the sale of the Securities within the
said period of 90 days, then the Offeror may not sell the Securities
unless it again first complies with the provisions contained in this
Section 4.2 hereof.
4.3 Transfers to Legal Personal Representatives
Nothing contained in this agreement shall prevent one or more legal
personal representatives (such one or more legal personal representatives
being hereinafter in this section called the "Trustees") of a Shareholder
from becoming registered as a shareholder or shareholders in respect of
any Securities beneficially owned by the Shareholder at the time of the
death of such Shareholder or the Transfer of any such Securities standing
in the name of the Trustees of the Shareholder upon any change of Trustees
to the Trustees for the time being of the Shareholder, providing always
that such Trustees shall be bound by the provisions of this agreement. The
Trustees may Transfer any Securities that were owned by such Shareholder
to the beneficiaries of his estate. Transfers permitted pursuant to this
Section 4.3 may be effected without complying with Section 4.2 so long as
the Trustees and such beneficiaries, as the case may be, covenants and
agrees with all the Shareholders and the other parties to this agreement
to be bound by the terms and conditions of this agreement as if it were an
original party hereto.
<PAGE>
4.4 Permitted Transferees
(a) Notwithstanding any other provision of this agreement, other than Section
4.3, but subject always to Section 4.1,
(1) each Shareholder shall be entitled after giving notice to the
other Shareholders and to the Corporation to Transfer all or
any part of the Securities beneficially owned by it to a
corporation (the "transferee"), provided that (i) the
transferor covenants to remain bound by the terms of this
agreement as if it continued to be a Shareholder of the
Corporation and perform such obligations to the extent that
the Permitted Transferee fails to do so, to the extent that
Shareholder is able to do so, (ii) the transferor or John
Easton {or persons who are Related Persons to the transferor
or John Easton} controls the transferee and directly or
indirectly holds a majority of the voting interests of such
transferee, and the only other shareholders of the transferee
are the transferor, John Easton and/or persons who are Related
Persons to the transferor or John Easton, as the case may be,
(iii) the transferee becomes bound by the terms of this
agreement as if it were an original party hereto and (iv) the
transferor and the transferee covenant to the Corporation and
to the other Shareholders that (1) each shall continue to
ensure that the condition in item (ii) above continues to be
correct so long as the transferee owns any Shares and (2) the
transferor shall not Transfer any of the shares in the capital
of the transferee without first transferring ownership of its
Securities from the transferee back to the transferor;
(2) each Shareholder shall be entitled after giving notice to the
other Shareholders and to the Corporation to Transfer all or
any part of the Securities beneficially owned by it to a trust
(the "transferee"), provided that (i) the sole trustee of the
transferee is the Shareholder or John Easton, (ii) the
transferor covenants to remain bound by the terms of this
agreement as if it continued to be a Shareholder of the
Corporation and perform such obligations to the extent that
the Permitted Transferee fails to do so, to the extent that
Shareholder is able to do so, (iii) the sole beneficiaries of
the transferee are the transferor, John Easton, and/or persons
who are Related Persons to the transferor or John Easton, as
the case may be, (iii) the transferee becomes bound by the
terms of this agreement as if it were an original party hereto
and (iv) the transferor and the transferee covenants to the
Corporation and to the other Shareholders that each shall
continue to ensure that the condition in item (ii) above
continues to be correct so long as the transferee owns any
Shares; and
(3) JohnCo and each Permitted Transferee of JohnCo shall be
<PAGE>
entitled after giving notice to the other Shareholders and to
the Corporation to Transfer all or any part of the Securities
beneficially owned by it to John Easton or a person who is a
Related Person of John Easton (the "transferee"), provided
that (i) the transferor covenants to remain bound by the terms
of this agreement as if it continued to be a Shareholder of
the Corporation and perform such obligations to the extent
that the Permitted Transferee fails to do so, to the extent
that Shareholder is able to do so, (ii) the transferee becomes
bound by the terms of this agreement as if it were an original
party hereto.
Each of the transferees referred to in this Section 4.4(a) are
hereinafter referred to as the "Permitted Transferee" of such
Shareholder, which term shall include an initial or subsequent
Permitted Transferee of such transferee. A Permitted Transferee of a
Shareholder shall at all times be entitled to retransfer any or all
of the Securities to such Shareholder, who shall be deemed to be a
Permitted Transferee for such purposes.
(b) Notwithstanding the completion of any sale of the Securities by a
Shareholder to a Permitted Transferee pursuant to subsection 4.4(a),
that Shareholder shall continue to be bound by all the obligations
hereunder as if it continued to be a Shareholder of the Corporation
and perform such obligations to the extent that the Permitted
Transferee fails to do so, to the extent that Shareholder is able to
do so.
4.5 General Provisions for Purchase and Sale
(a) For the purposes of closing a transaction of purchase and sale of
Securities as contemplated by this Article, in the event that the person
who is obligated to sell his Securities pursuant to the terms hereof (the
"Seller") neglects or refuses to close, the prospective purchaser
(hereinafter in this Section 4.5 sometimes referred to as the "Purchaser"),
ipso facto, without notice shall, in addition to any other recourse
provided by law or otherwise for the benefit of the Purchaser, have the
right but not the obligation to close, without the Seller, upon payment to
the accountants of the Corporation for the account of the Seller the
purchase price of the Seller's Securities; and for that purpose, the Seller
shall be deemed to have irrevocably constituted the Purchaser the Seller's
true and lawful attorney to complete the transaction and to complete and
execute each and every document necessary in that behalf.
(b) If at a relevant time of Closing, the Seller shall be indebted to the
Corporation, the Seller shall be deemed to have directed the Purchaser to
pay to the Corporation that amount of such indebtedness which is equal to
that percentage of the Shares owned by the Seller which are being sold to
the Purchaser provided that the Purchaser shall not be required to pay to
the Corporation any amount in excess of the purchase price otherwise
<PAGE>
payable by it to the Seller. To the extent that the Purchaser makes any
such payment to the Corporation, such payment shall reduce the indebtedness
of the Seller to the Corporation and reduce the amount payable by the
Purchaser to the Seller in respect of the purchase price. If, following any
such payment by the Purchaser to the Corporation in respect of the Seller's
indebtedness, the amount of the Seller's indebtedness to the Corporation
has not been reduced by at least the same percentage as the percentage of
the Shares owned by the Seller which are being sold to the Purchaser, the
Seller shall make a payment to the Corporation in cash or by certified
cheque at the time of Closing to reduce its indebtedness by at least such
percentage, and the Purchaser shall, at its option, not be required to
complete any purchase of the Sellers Securities unless and until the Seller
shall have made the payment.
(c) The Corporation shall give written notice to a Purchaser at least seven
days before the time of Closing (or such shorter period of time as the
Purchaser may agree) of the amount of a Seller's indebtedness to the
Corporation payable by the Purchaser pursuant to Section 4.5(b). Such
amount shall be determined from the books of the Corporation and shall be
certified by the Corporation's accountants and the Purchaser shall be
entitled to rely on any such notice which it receives from the Corporation.
If the Corporation does not give any written notice to the Purchaser of the
Seller's indebtedness to the Corporation, then the Purchaser shall be
entitled to pay the entire amount of the purchase price to the Seller
provided that no such failure to give notice by the Corporation shall
prejudice the right of the Corporation to require payment of any
indebtedness to it by the Seller if any in fact exists.
(d) At the relevant time of Closing, the Purchaser shall pay to the
Seller the required amount of the purchase price payable on Closing
by cash or certified cheque unless this agreement otherwise
provides, or subject to any adjustment as determined by Section
4.5(b) and (c), less any liability to which the Purchaser may be
subject by virtue of applicable statutory withholding provisions, if
applicable and deliver over any other documents required for the
completion of the transaction, and the Seller shall:
(i) deliver to or cause to be delivered to the Purchaser the
certificates representing the Shares and Securities to be sold
to the Purchaser, duly endorsed in blank for transfer;
(ii) deliver a certificate to the Purchaser pursuant to which the
Seller shall warrant that it has good and marketable title to
the Shares and Securities being purchased free and clear of
all liens, charges, claims, encumbrances, security interests
or any other rights or interests of any other person and has
<PAGE>
full power and authority and is otherwise entitled to complete
the sale, which warranties shall survive completion of the
purchase and sale; and
(iii) deliver to the Purchaser evidence satisfactory to the
Purchaser as to the Seller's residency for income tax
purposes.
ARTICLE V
Confidentiality
5.1 Confidentiality
Each Shareholder acknowledges that it will have access to and may be
entrusted with information and trade secrets and know-how concerning the
business of the Corporation and the present and contemplated services and
techniques of the Corporation, the disclosure of any of which information
or trade secrets or know-how to others or to the public will be highly
detrimental to the best interests of the Corporation. Each Shareholder
further acknowledges and agrees that the right to maintain the secrecy of
such information and trade secrets and know-how constitutes a proprietary
right which the Corporation is entitled to protect. Accordingly, each
Shareholder further covenants and agrees that at all times during the term
hereof and at all times thereafter he will hold all of the foregoing
information, trade secrets and know-how in secrecy. Without limiting the
generality of the foregoing, except as permitted by the Corporation, each
Shareholder agrees that it shall not at any time divulge, disclose or
communicate, directly or indirectly, to any person, or use for his own
benefit or for the benefit of anyone other than the Corporation or an
affiliate thereof, any trade secrets of the Corporation; any client or
potential client identities and contacts; client or potential client
lists; client or potential client financial, business or personal
information; the client's, potential client's or the Corporation's or any
subsidiary's research; and financial and business information relating to
the Corporation its affiliates, their businesses, their clients or their
potential clients. The provisions of this Article shall not apply to any
information which is conveyed to all or substantially all of the
shareholders of the Corporation.
ARTICLE VI
Securities Legislation Matters
6.1 Prior to the acquisition of any shares of the Corporation, any prospective
shareholder agrees represents and warrants to the Corporation that:
(a) Acquisition. The prospective shareholder is acquiring such Shares
for its own account and without the view to the distribution thereof
within the meaning of the US Securities Act of 1933 (the "Securities
<PAGE>
Act") or with any present intention of distributing or selling any
of such Shares except in compliance with the Securities Act.
(b) No Registration. The prospective shareholder understands that (x) such
Shares (i) have not been and may not be registered under the Securities Act
or any state securities laws, (ii) will be issued in reliance upon an
exemption from the registration and prospectus delivery requirements of the
Securities Act pursuant to Section 4(2) thereof, (iii) will be issued in
reliance upon exemptions from the registration and prospectus delivery
requirements of state securities laws which relate to private offerings and
(iv) must be held by the prospective shareholder indefinitely, (y) there is
not currently any trading market for the Shares and there can be no
assurances that the Shares will be listed on any exchange or quoted on any
quotation system, and (z) the prospective shareholder must therefore bear
the economic risk of the investment indefinitely unless a subsequent
disposition thereof is registered under the Securities Act and applicable
state securities laws or is exempt therefrom. The prospective shareholder
understands that such Shares are restricted securities under the Securities
Act. The prospective shareholder agrees that if it decides to offer, sell
or otherwise transfer any of such Shares, such Shares may be offered, sold
or otherwise transferred only (A) to the Corporation, (B) outside the
United States in accordance with Rule 904 of Regulation S under the 1933
Act, (C) within the United States in accordance with the exemption from
registration under the 1933 Act provided by Section 4(i) thereunder, if
applicable, or (D) with the prior written consent of the Corporation,
pursuant to another exemption from registration under the 1933 Act, and in
compliance with any applicable state securities laws. The prospective
shareholder further understands that the exemption depends upon, among
other things, the bona fide nature of the investment intent of the
prospective shareholder expressed herein. Pursuant to the foregoing, the
prospective shareholder acknowledges that the certificates representing any
Shares of the Corporation acquired by it shall bear the following
restrictive legends:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
(THE "1933 ACT"). THE HOLDER HEREOF, BY PURCHASING SUCH
SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT
SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED
ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN
ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE 1933 ACT,
(C) WITHIN THE UNITED STATES IN ACCORDANCE WITH THE EXEMPTION
FROM REGISTRATION UNDER THE 1933 ACT PROVIDED BY RULE 144
THEREUNDER, IF APPLICABLE, OR (D) WITH THE PRIOR WRITTEN
CONSENT OF THE CORPORATION, PURSUANT TO ANOTHER EXEMPTION FROM
<PAGE>
REGISTRATION UNDER THE 1933 ACT, AND IN COMPLIANCE WITH ANY
APPLICABLE STATE SECURITIES LAWS. DELIVERY OF THIS CERTIFICATE
MAY NOT CONSTITUTE GOOD DELIVERY IN SETTLEMENT OF TRANSACTIONS
ON STOCK EXCHANGES OR OTHER MARKETS.";
provided, that if Shares are being sold under paragraph (b)(B)
above, any such legend may be removed by providing a declaration to
the Corporation and its registrar and transfer agent to the effect
set forth in Exhibit A hereto (or as the Corporation may prescribe
from time to time); and provided, further, that, if any such Shares
are being sold under paragraph (b)(C) above, the legend may be
removed by delivery to the registrar and transfer agent and the
Corporation of an opinion of counsel, of recognized standing
reasonably satisfactory to the Corporation, that such legend is no
longer required under applicable requirements of the 1933 Act or
state securities laws.
ARTICLE VII
General
7.1 Amendments and Waivers
No modification, variation, amendment or termination by mutual consent of
this Agreement and no waiver of the performance of any of the
responsibilities of any of the Shareholders shall be effected unless such
action is taken in writing and is signed by the Corporation together with
Shareholders holding a majority of the Common Shares held by JohnCo and
his Permitted Transferees and by Shareholders holding a majority of the
Common Shares held by LAM and its Permitted Transferees. No amendment to
this agreement shall be valid or binding unless set forth in writing and
duly executed by the Corporation and such requisite Shareholders. No
waiver of any breach of any provision of this agreement shall be effective
or binding unless made in writing and signed by the party purporting to
give the same and, unless otherwise provided in the written waiver, shall
be limited to the specific breach waived.
7.2 Severability
Each of the covenants, provisions, Articles, Sections, subsections and
other subdivisions hereof is severable from every other covenant,
provision, Articles, Section, subsection and the invalidity or
unenforceability of any one or more covenants, provisions, Articles,
Sections, subsections or subdivisions of this agreement shall not affect
the validity or enforceability of the remaining covenants, provisions,
Articles, Sections, subsections and subdivisions hereof.
<PAGE>
7.3 Time of Essence
Time shall be of the essence of this agreement.
7.4 Notice
Any notice or other written communication required or permitted hereunder
shall be in writing and:
(a) delivered personally to the party or, if the party is a corporation, an
officer of the party to whom it is directed;
(b) sent by registered mail, postage prepaid, return receipt requested
(provided that such notice or other written communication shall not
be forwarded by mail if on the date of mailing the party sending
such communication knows or ought reasonably to know of any
difficulties with the postal system which might affect the delivery
of mail, including the existence of an actual or imminent postal
service disruption in the city from which such communication is to
be mailed or in which the address of the recipient is found); or
(c) sent by telecopier if and only if a telecopier number is set out as
applicable to that person.
All such notices shall be addressed to the party to whom it is directed at
the following addresses:
(A) to JohnCo:
198 Walnut Avenue, Unit 10
Toronto, Ontario
M6J 2N6
(B) to LAM:
c/o South Florida Bioavailability Clinic
11190 Biscayne Boulevard
Miami, Florida
33181-3405
(C) to the Corporation:
<PAGE>
Northbridge Centre
515 North Flagler Drive
Suite 1201
West Palm Beach, Florida
33401-4347
or at such other address or telecopier number as the other party may from
time to time direct in writing, and any such notice shall be deemed to
have been received, if telecopied, on the first Business Day after sending
or, if sent by registered mail, on the fifth Business Day after mailing
or, if delivered, upon the date of delivery. If normal mail service is
interrupted by strike, slowdown, force majeure or other cause, a notice
sent by the impaired means of communication will not be deemed to be
received until actually received, and the party sending the notice shall
utilize any other such services which have not been so interrupted or
shall deliver such notice in order to ensure prompt receipt thereof.
7.5 Entire Agreement
This agreement, together with the agreements referred to herein, constitutes and
contains the entire and only agreement among the parties relating to the matters
described herein and supersedes and cancels any and all previous agreements and
understandings between all or any of the parties relative hereto. Any and all
prior and contemporaneous negotiations, memoranda of understanding or position,
and preliminary drafts and prior versions of this agreement, whether signed or
unsigned, between the parties leading up to the execution hereof shall not be
used by any party to construe the terms or affect the validity of this
agreement. There are no representations, inducements, promises, understandings,
conditions or warranties express, implied or statutory, between the parties
other than as expressly set forth in this agreement.
<PAGE>
7.6 Further Assurances
The Shareholders shall collectively cause such meetings of the Corporation
to be held, votes cast, resolutions passed, by-laws enacted, documents
executed and acts and things done to cause the operations and activities
of the Corporation to be conducted in accordance with the terms of this
agreement. Where the provisions of the articles, by-laws or resolutions of
the Corporation or any of its subsidiaries are inconsistent with the terms
and conditions of this agreement, the terms and conditions of this
agreement shall govern to the extent permitted by law. The Shareholders
shall at all times carry out and shall take such action to cause the
Corporation to carry out the provisions of this agreement. Without
limiting the generality of the foregoing, the Shareholders shall vote at
all meetings of shareholders of the Corporation and act in all other
respects in connection with the corporate proceedings of the Corporation
so as to ensure that the provisions of this agreement are complied with
and so as to ensure that, subject to the other provisions hereof, the
Nominee Director of each Nominating Shareholder is elected and appointed
and maintained in office from time to time as a member of the Board. The
Shareholders shall each vote their Shares and take any other corporate
action which they are required or permitted to take as shareholders of the
Corporation only in accordance with the provisions of this agreement. Each
of the Shareholders will, to the extent that it is permitted by law to do
so, cause the Board to act and vote in order that the purpose, intent and
provisions of this agreement shall be carried out. Provided that a
Shareholder has acted and voted in accordance with the foregoing
provisions of this Section 7.6, such Shareholder shall incur no liability
in respect of the Corporation's failure to comply with the provisions of
this agreement.
7.7 Application of Agreement
(a) This agreement shall be binding upon and enure to the benefit of the
parties hereto and their respective heirs, administrators,
executors, successors and permitted assigns. The Corporation shall
have no obligations hereunder and is only a party hereto for the
purposes of taking the benefit of the Shareholders' covenants
contained herein.
(b) No dealing of any nature or type contemplated in Section 4.1 or
otherwise in this agreement in any Securities by any Shareholder
which is otherwise permitted or provided for by the terms of this
agreement shall be effected or entered on the registers of the
Corporation unless the person with whom the Shareholder is so
dealing has become a party to this agreement or has agreed to be
bound by all of the terms hereof.
(c) The parties hereto agree that the provisions of this agreement relating to
Securities shall apply mutatis mutandis to any Securities into which the
<PAGE>
Securities may be converted, changed, reclassified, redivided,
redesignated, subdivided or consolidated and to any Securities which are
received by the parties hereto as a stock dividend or distribution payable
in Securities of the Corporation or any of its subsidiaries, as the case
may be, and to any Securities of the Corporation or any of its
subsidiaries, as the case may be, or of any successor or continuing company
or corporation to the Corporation or any of its subsidiaries, as the case
may be, which may be received by the parties hereto on a reorganization,
amalgamation, consolidation or merger, statutory or otherwise.
7.8 Term
Except as hereinafter provided, this agreement shall continue
indefinitely, unless terminated by mutual agreement in writing by all the
Shareholders. This agreement shall terminate upon:
(a) the dissolution of the Corporation; or
(b) one Shareholder becoming the beneficial owner of all of the Securities; or
(c) the date of the Initial Public Offering.
Except as provided in Section 4.4, at the later of (i) the time any
Shareholder disposes of the last of his Securities pursuant to the terms
of this agreement, and (ii) the time any Shareholder no longer holds any
instrument which by its terms entitles such Shareholder to acquire
Securities, such party shall be deemed to cease to be a party hereto, and
shall cease to be entitled to any rights, and shall cease to be subject to
any responsibilities, hereunder (except rights and responsibilities which
have arisen prior to such time).
Notwithstanding the foregoing provisions of this section, the provisions
of sections 4.1(e), (f) and (g) and of Article VI shall remain in full
force and effect notwithstanding the termination of all other provisions
hereof.
7.9 Governing Law
This agreement shall be governed by and construed in accordance with the
laws of the State of Delaware.
<PAGE>
7.10 Execution and Counterparts
This agreement may be executed in several counterparts, each of which,
when so executed, shall be deemed to be an original, and such counterparts
together shall constitute one and the same instrument. This agreement may
be executed by any person who is from time to time to become a party
hereto by signing a counterpart hereof, each of which counterparts shall
be deemed to be an original, and such counterparts together shall
constitute a single instrument.
IN WITNESS WHEREOF the parties have executed this agreement.
LAM PHARMACEUTICALS, INC.
Per: ________________________May 1, 2000
Name: Alan Drizen
Title: President & CEO
Authorized Signing Officer
{JOHNCO}
Per: _________________________May 1, 2000
Name: John Easton
Title: President
Authorized Signing Officer
IXORA BIOMEDICAL COMPANY, INC.
Per: _________________________May 1, 2000
Name: K. M. Skoretz
Title: C.O.O.
Authorized Signing Officer
<PAGE>
FORM OF DECLARATION FOR REMOVAL OF LEGEND
TO: Ixora Biomedical Company Inc. (the "Corporation")
The undersigned (a) acknowledges that the sale of the securities of the
Corporation to which this declaration relates is being made in reliance on Rule
904 of Regulation S under the United States Securities Act of 1933, as amended
(the "1933 Act") and (b) certifies that (1) the undersigned is not an affiliate
of the Corporation as that term is defined in the 1933 Act, (2) the offer of
such securities was not made to a person in the United States and either (A) at
the time the buy order was originated, the buyer was outside the United States,
or the seller and any person acting on its behalf reasonably believed that the
buyer was outside the United States, or (B) the transaction was executed in, on
or through the facilities of the Canadian Dealing Network, The Toronto Stock
Exchange, the Montreal Exchange, the Vancouver Stock Exchange or the Alberta
Stock Exchange or any other designated offshore securities market as defined in
Regulation S under the 1933 Act and neither the seller nor any person acting on
its behalf knows that the transaction has been prearranged with a buyer in the
United States, (3) neither the seller nor any affiliate of the seller nor any
person acting on any of their behalf has engaged or will engage in any directed
selling efforts in the United States in connection with the offer and sale of
such securities, (4) the sale is bona fide and not for the purpose of "washing
off" the resale restrictions imposed because the securities are "restricted
securities" (as such term is defined in Rule 144(a)(3) under the 1933 Act), (5)
the seller does not intend to replace the securities sold in reliance on Rule
904 of the 1933 Act with fungible unrestricted securities and (6) the
contemplated sale is not a transaction, or part of a series of transactions
which, although in technical compliance with Regulation S, is part of a plan or
scheme to evade the registration provisions of the 1933 Act. Terms used herein
have the meanings given to them by Regulation S.
Dated:
Name of Seller
By:
Name:
Title:
Securities to which this
Declaration Relates:
-----------------------------------------------
{describe: Number and Class}
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001071272
<NAME> L.A.M. PHARMACEUTICAL, CORP.
<MULTIPLIER> 1
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-1-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1
<CASH> 558,710
<SECURITIES> 0
<RECEIVABLES> 125,000
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<CURRENT-ASSETS> 1,148,710
<PP&E> 39,106
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<TOTAL-ASSETS> 1,386,049
<CURRENT-LIABILITIES> 1,437,627
<BONDS> 0
0
0
<COMMON> 1,039
<OTHER-SE> (1,319,454)
<TOTAL-LIABILITY-AND-EQUITY> 1,386,049
<SALES> 0
<TOTAL-REVENUES> 29,301
<CGS> 0
<TOTAL-COSTS> 1,002,399
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 120,625
<INCOME-PRETAX> (1,093,723)
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<INCOME-CONTINUING> (1,093,723)
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<NAME> L.A.M. PHARMACEUTICAL, CORP.
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