UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form 20-F
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(X) REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the Fiscal Year Ended December 31, 1998
IMMUNE NETWORK RESEARCH LTD.
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(Exact name of Registrant as specified in its charter)
British Columbia, Canada
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(Jurisdiction of amalgamation)
3650 Wesbrook Mall, Vancouver, British Columbia, Canada V6S 2L2
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(Address of principal executive office)
Commission File Number:
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Securities registered or to be registered pursuant to Section 12(b) of the Act:
Not Applicable
Securities registered or to be registered pursuant to Section 12(g) of the Act:
Common Shares, Without Par Value
Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act: None
Number of outstanding shares of each of the Registrant's classes of capital or
common stock as of September 30, 1999: 27,939,465 Common Shares Without Par
Value
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days: Not Applicable
Indicate by check mark which financial statement item the Registrant has elected
to follow:
Item 17 X Item 18
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TABLE OF CONTENTS
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Page No.
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CURRENCY EXCHANGE RATES -4-
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS -4-
GLOSSARY -6-
ITEM 1. DESCRIPTION OF BUSINESS -7-
Formation of the Company -7-
Business of the Company -7-
Projects -10-
Summary of Research & Development Programs -10-
Biotech Projects -10-
AIDS Project (1F7) -10-
Alzheimers Disease Project (AD2) -12-
Asthma Project ( BP1) -12-
Internet Joint Ventures -13-
Edutainment Software Development -13-
Internet Health & Fitness Service -13-
Material Agreements -14-
Sidney Kimmel Cancer Center -14-
ImmPheron, Inc. -14-
University of British Columbia -14-
Bridge Pharma, Inc. -15-
Skye Boat, Ltd. -15-
Inexsis Inc. -16-
Markets -16-
AIDS Project (1F7) -16-
Alzheimer's Disease Project (AD2) -17-
Asthma Project (BP1) -17-
Edutainment Software Development -18-
Internet Health & Fitness Service -18-
Business Strategy -18-
Research and Development Expenses -19-
Patents -19-
1F7 Antibody -19-
Alzheimer Disease -19-
Asthma -19-
Government Regulation -20-
United States Regulation -20-
Canadian Regulation -21-
Additional Regulatory Considerations -22-
Regulation in Other Jurisdictions -22-
Risk Factors -22-
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ITEM 2. DESCRIPTION OF PROPERTY -28-
ITEM 3. LEGAL PROCEEDINGS -28-
ITEM 4. CONTROL OF COMPANY -28-
ITEM 5. NATURE OF TRADING MARKET -29-
ITEM 6. EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING
SECURITY HOLDERS -30-
ITEM 7. TAXATION -31-
ITEM 8. SELECTED FINANCIAL DATA -32-
ITEM 9. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
& RESULTS OF OPERATIONS -35-
General -35-
Liquidity & Capital Resources -35-
Six Month Period Ended June 30, 1999 -35-
Year Ended December 31, 1998 -36-
Year Ended December 31, 1997 -36-
Year Ended December 31, 1996 -36-
Results of Operations -36-
Six Month Period Ended June 30, 1999 -36-
Year Ended December 31,1998 -36-
Year Ended December 31, 1997 -37-
Year Ended December 31, 1996 -37-
ITEM 9A. MARKET RISK -37-
ITEM 10. DIRECTORS AND OFFICERS OF THE COMPANY -37-
ITEM 11. COMPENSATION OF DIRECTORS AND OFFICERS -38-
ITEM 12. OPTIONS TO PURCHASE SECURITIES FROM THE COMPANY -38-
Incentive Stock Options -38-
Share Purchase Warrants -39-
ITEM 13. INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS -40-
ITEM 14. DESCRIPTION OF SECURITIES TO BE REGISTERED -40-
Shares -40-
Escrow Shares -40-
ITEM 15. DEFAULTS UNDER SENIOR SECURITIES -41-
ITEM 16. CHANGES IN SECURITIES AND CHANGES IN SECURITY FOR
REGISTERED SECURITIES -41-
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ITEM 17. FINANCIAL STATEMENTS -41-
ITEM 18. FINANCIAL STATEMENTS -42-
ITEM 19. FINANCIAL STATEMENTS & EXHIBITS -42-
Financial Statements -42-
Exhibits -42-
Corporate Documentation -42-
Instruments Defining the Rights of Holders of Securities Being
Registered -42-
Material Contracts -43-
SIGNATURES
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CURRENCY EXCHANGE RATES
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The Company's accounts are maintained in Canadian dollars. In this Registration
Statement all currency references are expressed in Canadian dollars unless
otherwise indicated. As of September 30, 1999, the exchange rate for conversion
to U.S. dollars was Cdn$1.00 = US$0.6815. The following table sets forth the
exchange rates for one Canadian dollar expressed in terms of one U.S. dollar for
the past five calendar years.
U.S. Dollars per One Canadian Dollar
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1999(1) 1998 1997 1996 1995 1994
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High $0.6915 $0.6311 $0.7422 $0.7513 $0.7533 $0.7632
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Low 0.6462 0.7105 0.6999 0.7235 0.7009 0.7103
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Average for Period 0.6702 0.6714 0.7198 0.7329 0.7285 0.7301
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End of Period 0.6835 0.6504 0.6999 0.7301 0.7331 0.7128
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(1) Covers the period from January 1 through June 30, 1999.
Exchange rates are based upon the noon buying rate in New York City for cable
transfers in foreign currencies as certified for customs purposes by the Federal
Reserve Bank of New York.
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
-------------------------------------------------
Certain statements in this Registration Statement constitute "forward looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward looking statements involve known achievements of the
Company, or industry results, to be materially different from any future
results, performance or achievements expressed or implied by such forward
looking statements. These factors include, but are not limited to: the
Company's early stage of development; the fact that the Company's technology is
in the research stage and therefore its potential benefits for human therapy are
unproven; the possibility that favorable relationships with collaborators cannot
be established or, if established will be abandoned by the collaborators before
completion of product development; the possibility that the Company or its
collaborators will not successfully develop any products; the possibility that
advances by competitors will cause the Company's proposed products not to be
viable; uncertainties as to the requirement that a drug be found to be safe and
effective after extensive clinical trials and the possibility that the results
of such trials, if commenced and completed, will not establish the safety or the
efficacy of the Company's products; risks relating to requirements for approvals
by government agencies such as the FDA before products can be marketed and the
possibility that such approvals will not be obtained in a timely manner or at
all or will be conditioned in a manner that would impair the Company's ability
to market the product successfully; the risk that the Company's patents could be
invalidated or narrowed in scope by judicial actions or that the Company's
technology could infringe the patent or other intellectual property rights of
third parties; the possibility that the Company will not be able to raise
adequate capital to fund its operations through the process of developing and
testing a successful product or that future financing will be completed on
unfavourable terms; the possibility that any products successfully developed by
the Company will not achieve market acceptance; and other risks and
uncertainties which may not be described herein. Further information concerning
these and other risks and uncertainties is included under "Item 1 - Description
of
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Business - Risk Factors". These risks and uncertainties should be considered
when evaluating forward looking statements, and undue reliance should not be
placed upon forward looking statements.
The information in this Registration Statement is as at September 30, 1999
unless otherwise stated.
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GLOSSARY
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The following are abbreviations and definitions of terms commonly used in the
biotechnology industry and this Registration Statement.
AIDS Acquired Immunodeficiency Syndrome.
Amalgamation means the amalgamation of Bobby Cadillac's Food
Corporation and Immune Network Research Ltd. effective
April 24, 1996, whereby the Company was formed.
BCFC means Bobby Cadillac's Food Corporation, as it existed
prior to the Amalgamation.
clonotypic effect a persistent tendency of the humoral immune response
to have a narrow range of targets.
Company means Immune Network Research Ltd., formed upon the
Amalgamation.
Immune Network means Immune Network Research Ltd., as it existed prior
to the Amalgamation.
Financial Statements the financial statements listed in Item 19(a) herein.
Fiscal 2000 the fiscal year of the Company ended December 31, 2000.
Fiscal 1999 the fiscal year of the Company ended December 31, 1999.
Fiscal 1998 the fiscal year of the Company ended December 31, 1998.
Fiscal 1997 the fiscal year of the Company ended December 31, 1997.
Fiscal 1996 the fiscal year of the Company ended December 31, 1996.
Fiscal 1995 the fiscal year of the Company ended December 31, 1995.
Fiscal 1994 the fiscal year of the Company ended December 31, 1994.
HIV human immunodeficiency virus.
monoclonal antibodies antibodies which are produced by a single clone and
are homogenous.
Share a common share without par value in the capital stock
of the Company.
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ITEM 1. DESCRIPTION OF BUSINESS
A. Formation of the Company
------------------------
The Company was formed by the amalgamation, under the Company Act (British
Columbia), of Immune Network and BCFC on April 24, 1996.
The Amalgamation was completed pursuant to an agreement (the "Amalgamation
Agreement") between Immune Network and BCFC following receipt of (i) required
securityholders approval, (ii) an order from the Supreme Court of British
Columbia approving the Amalgamation under section 237 of the Company Act
(British Columbia), and (iii) acceptance from the Vancouver Stock Exchange to
the filing of documentation relating to the Amalgamation. The Amalgamation
became effective upon the issuance of a certificate of amalgamation by the
Registrar of Companies for the Province of British Columbia on April 24, 1996.
The principal features of the Amalgamation are summarized as follows:
- - The property, assets and liabilities of each of Immune Network and BCFC
became the property, assets and liabilities of the Company.
- - The Company issued a total of 11,927,962 Shares to the shareholders of
Immune Network and BCFC, as follows:
(a) the issued and outstanding common shares of Immune Network were exchanged
for 7,664,653 Shares on the basis of 1.33 Shares for each one Immune
Network common share held; and
(b) the issued and outstanding common shares of BCFC were exchanged for
4,263,309 Shares on the basis of two Shares for each three BCFC common
shares held.
- - 5,566,667 Shares were issued to the principals of the Company subject to
escrow restrictions (see "Item 14 - Description of Securities to be
Registered-Escrow Shares").
- - The holders of options to acquire shares of BCFC were deemed to be
holders of options to acquire that number of Shares (333,333 at the time of
the Amalgamation) resulting from the application of a 3:2 share exchange
ratio to the number of common shares of BCFC that such holder could
previously acquire.
B. Business of the Company
-----------------------
The Company is a biotechnology company focused on the development of important
new drugs to treat major diseases, predominantly involving the body's immune
system. Using both its internal expertise and external network, the Company
carefully selects technology, rapidly completes critical steps in the
development of the technology, and then licenses or spins off the technology.
By focusing on this accelerated development and divestiture model the Company
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strives to provide its shareholders with a rapid return on investment, reduced
risk, and a wider portfolio of technology holdings. The present focus of the
Company is on the following three biotech projects:
AIDS project (1F7)
Alzheimers Disease project (AD2)
Asthma project (BP1)
See "Item 1 - Description of Business - Projects - Biotech Projects".
The Company is also participating as founding shareholder and scientific advisor
in two internet joint ventures:
Internet Health Edutainment
Health and Fitness Internet Site
See "Item 1 - Description of Business - Projects - Internet Joint Ventures".
During the five years preceding the date of this Registration Statement, the
general development of the Company and its predecessor, Immune Network, has
been as follows:
- - The Company was formed on April 24, 1996, the effective date of the
Amalgamation.
- - In December 1997, as amended in December 1998, the Company entered into
a research joint venture agreement with Immpheron, Inc. regarding the AIDS
project (see "Item 1 - Description of Business - Material Agreements -
Immpheron").
- - On December 15, 1998, the Company was issued a U.S. patent for its
"Anti-idiotypic antibody" and its use in diagnosis and therapy in HIV-related
diseases (see "Item 1 - Description of Business - Patents").
- - In July 1999, the Company entered into an agreement with the University
of British Columbia (the "UBC Option Agreement") whereby the Company was
granted an option to license certain technology for the treatment of
Alzheimer's disease (see "Item 1 - Description of Business - Material
Agreements - University of British Columbia").
- - In August 1999, the Company entered into a joint venture arrangement
with Bridge Pharma, Inc. for the development of a new asthma therapeutic (see
"Item 1 - Description of Business - Material Agreements - Bridge Pharma,
Inc.").
- - In August 1999, the Company entered into an internet joint venture with
Inexsis Inc. to develop an online service focusing on personal health and
fitness (see "Item 1 - Description of Business - Material Agreements - Inexsis
Inc.").
- - In September 1999, the Company entered into a joint venture arrangement
with Skye Boat, Ltd. to create standalone and online edutainment software (see
"Item 1 - Description of Business - Material Agreements - Skye Boat, Ltd.").
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- - In October 1999, the Company exercised its option to license technology
for the treatment of Alzheimer's disease from the University of British
Columbia (see "Item 1 - Description of Business - Material Agreements -
University of British Columbia").
The Company expects to complete a research milestone in its current fiscal year
by completing the application for an investigational new drug (IND), in either
Canada or the United States, to evaluate the use of at least one of its drugs in
development: an antibody (IQ199) as an immune-based therapeutic for AIDS and/or
a disease modifying therapeutic (IQ200) for Alzheimer's disease. During Fiscal
2000, the Company expects to initiate a Phase I/II clinical trial of IQ199 and
Phase II trial of IQ200. The Company also expects a research milestone to be
reached during the current fiscal year in its asthma drug project by completing
in vitro and in vivo testing of a series of compounds (IQ210 and analogs).
During the first half of Fiscal 2000, the Company will commence preclinical
toxicity testing of a compound for asthma treatment. See "Item 1 - Business of
the Company - Projects - Biotech Projects - AIDS Project (1F7)" and "Item 1 -
Business of the Company - Government Regulation".
The Company's plan of operation for the remainder of its current fiscal year and
for the first six months of its next fiscal year is dependent upon its ability
to raise additional funds. The Company has completed two private placements
during the current fiscal year raising $942,977, the stated use of proceeds of
which is as follows:
$ 250,000 - research activities - pharmacology testing
and preparation for clinical trials
$ 100,000 - test material production - synthesis of compounds
and compositions required for further testing and
product development
$ 150,000 - preclinical development - toxicity testing and
preparation of data
$ 100,000 - clinical regulatory expenses - consultation with
regulatory experts and preparation of regulatory
filings
$ 142,977 - general working capital
$ 200,000 - general and administrative expenses
The Company plans to collaborate with development partners on its AIDS and
Alzheimer's disease projects, reducing the requirement for capital.
Notwithstanding this, the Company anticipates a requirement for further equity
financing of more than $1 million before the end of the first quarter of Fiscal
2000. The Company intends to raise this capital through one or more private
placements.
The Company has no regular cash flow and is dependent on generating income
primarily by raising funds by the issuance of shares in order to finance
research and development activities and meet general and administrative expenses
in the medium term. In the long term, the Company intends to derive its income
from licensing arrangements and divestitures of intellectual property. There
can be no assurance that the Company will be successful in raising the required
financing or in carrying out intellectual property transactions that produce
income. Reference should be made to "Item 1 - Business of the Company - Risk
Factors" for disclosure of the distinctive or special characteristics of the
Company's operations or industry which may have a material impact upon its
future financial performance.
At September 30, 1999, the Company had 8 full-time employees and 5 part-time
employees, 80% of whom are involved in research and development.
The Company does not anticipate any material acquisition or any material
increase in the number of employees in the foreseeable future.
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The Company has met all commitments to date and is not in arrears of its
financial obligations.
See also "Item 8 - Selected Financial Data".
C. Projects
--------
Summary of Research & Development Programs
The following table summarizes the Company's current research and development
programs:
<TABLE>
<CAPTION>
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Project Product Candidate Development Status Research & Development
Partner
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<S> <C> <C> <C>
AIDS - 1F7 antibody Compound IQ199 Pre-clinical / Pre-IND(1) ImmPheron, Inc.
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Alzheimer's Disease - Compound IQ200 Assessment for Phase II
AD2 project clinical research(2) ---
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Alzheimer's Disease - Compound IQ201 Pre-clinical ---
AD2 project
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Asthma - BP1 project Compound IQ210 Pre-clinical Bridge Pharma, Inc.
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Edutainment Software Web site and software Proof of Concept Skye Boat, Ltd.
- --------------------------------------------------------------------------------------------------
Internet Health and Web site and software Proof of Concept Inexsis Inc.
Fitness
- --------------------------------------------------------------------------------------------------
</TABLE>
(1) Pre-clinical includes pharmacological and efficacy testing in animals,
toxicology testing and formulation work. After completion of such actions, the
product, with the approval of a governing body, can enter human trials (Phases
I, II and III). See "Item 1 - Description of Business - Government Regulation".
(2) A Phase II clinical trial is a pivotal trial designed to test a drug's
effectiveness in a relevant patient group. The Company has contracted with
experts to assess the data available to date and to determine an optimal
clinical testing and commercialization strategy.
The Company presently focuses the majority of its scientific research on its
biotech projects (see "Projects - Biotech Projects" and "Research and
Development Expenses" below).
Biotech Projects
AIDS Project (1F7)
- ------------------
The goal of the Company's 1F7 project is to develop an AIDS therapy (IQ199, a
type of monoclonal antibody or "mAb") that addresses two major problems facing
current drugs: (1) the existence of various strains of HIV with different
sensitivity to existing therapies; and (2) the ability of HIV to mutate which
allows the virus to become resistant to existing drug therapy.
AIDS occurs because the HIV virus destroys the immune system of infected
individuals. After initial infection, lymphatic B-cells begin producing
antibodies specific to the infecting viral strain. Antibodies are proteins
secreted by cells in the blood that help the body fight infections and diseases
by searching out and selectively binding to their targets to guard the immune
system against infectious microorganisms. Monoclonal antibodies ("mAb's") are
an important part of developing therapies that work. The term monoclonal refers
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to the fact that the cells which secrete the antibodies are derived from clones,
or identical copies, of a single cell. Monoclonal antibodies are screened in
the laboratory and selected by their sensitivity and specificity to particular
target receptors so that they can be utilized to diagnose and/or treat specific
diseases.
Viral replication is initially suppressed by the immune system; however, a high
viral mutation rate produces new forms of the virus. The immune system does not
produce antibodies specific to the new variants, but continues to produce
antibodies against the original strain - this is called the "clonotypic effect".
The antibodies produced against the original viral strain are ineffective
against the new variants. Unchecked by the body's immune system, the new viral
strains proliferate, leading to the destruction or functional impairment of
cells of the immune system and inhibition of the body's ability to fight
infections and certain cancers.
Current therapy for HIV infection is often ineffective in the long term since
these agents usually target only specific strains of HIV. When the virus
mutates the drugs are no longer effective. Many drug companies attempt to
overcome this problem by developing therapeutics that recognize more than one
strain of HIV. However, with continuous viral mutation, the long-term
effectiveness of these therapies is limited. Previously, combinations of
several anti-HIV drugs were shown to be effective in patients with AIDS
symptoms. Recently, however, as a result of the appearance of new drug
resistant HIV strains, trials using combination drug approaches have been
unsuccessful at reducing AIDS symptoms. In addition, serious drug side effects
and high medication costs make patient compliance difficult to maintain.
Therefore, current therapies may not provide a long-term solution to AIDS,
making alternative approaches in AIDS therapy increasingly desirable.
The Company's 1F7 monoclonal antibody, which is a novel approach for treating
HIV infection, is aimed at resetting the body's immune system to continue to
fight the AIDS virus even as the virus mutates. 1F7 was discovered in 1993 by
Drs. Sybille Muller, Keinz Kohler, Michael Grant and Haito Wang. It is a
patented (see "Item 1 - Description of Business - Patents") murine (mouse)
immunoglobulin (IgM) monoclonal antibody that is raised against, and is
anti-idiotypic to, human anti-HIV antibodies. 1F7 is not directed against any
one strain of HIV, but instead may stimulate the immune system by suppressing
the B-cells that are producing antibodies against the initial HIV strain. 1F7
also appears to stimulate these cells to produce antibodies against the mutant
virus strains (Muller et al, Stimulation of HIV-1-neutralizing antibodies in
simian HIV-IIIB-infected macaques (The Proceedings of the National Academy of
Sciences USA, 95:1, 276-281).
An experiment was carried out to test the efficacy of 1F7 in suppressing
dominant antibody responses in HIV-infected macaque monkeys. Significant
increases in the number of neutralization antibodies for more than one virus
strains (HIV-1 IIIB and MN) were detected in the blood of the 1F7-inoculated
macques. Moreover, in all three injected macaques, antibody binding to disparate
viral strains (MN, CM and SF2), not bearing the idiotope corresponding to 1F7,
increased following 1F7 inoculation.
In HIV patients the CD8+ "cytotoxic" T-cells destroy CD4+ "helper" T-cells that
have become infected with the virus. It is thought that a key factor in the
pathology of AIDS is the observation that cytotoxic T-cells also kill healthy
uninfected helper T-cells. Early in vitro experiments conducted by Dr. Michael
Grant have demonstrated that 1F7 selectively inhibited the destruction of
uninfected CD4+ cells by cytotoxic T-cells from HIV-infected individuals (Dr.
Michael Grant, unpublished data).
In summary, the experiments conducted by Dr. Muller and colleagues and Dr. Grant
suggest that the monoclonal antibody 1F7, has several important effects on both
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humoral (antibody-mediated) and cellular immunity mechanisms that make it an
ideal candidate for an HIV therapy. In addition, failures of other drug
therapies opens the market for new and novel AIDS therapeutics such as 1F7.
The Company is currently preparing an IND application for filing with the FDA
upon completion of preclinical studies (see "Item 1 - Description of Business -
Government Regulation"). Once the IND becomes effective, the Company can then
begin the first of three phases of clinical trials. Preliminary discussions are
being held with various research organizations and the FDA regarding the
requirements and conditions for a clinical trial.
Alzheimers Disease Project (AD2)
- --------------------------------
The short term goal of the Company's Alzheimer's disease project (AD2) is to
demonstrate that an existing drug, already in use for another condition, is
effective in slowing the progression of Alzheimer's disease. The Company is
presently developing a clinical, regulatory and commercial strategy for the
project. Clinical trials for IQ200, the first generation compound in this
project, will be designed to confirm the ability of the compound to slow the
progression of dementia in confirmed Alzheimer's disease patients. The Company
is also conducting research on IQ201 and subsequent candidates as possible
second generation agents for prevention of onset and/or slowing progression of
Alzheimer's disease.
Alzheimer's disease is a condition characterized by death of brain cells and
severe degradation of mental health. Primarily affecting the elderly,
Alzheimer's disease currently afflicts over 35 million people worldwide (The
World Health Report 1999. World Health Organization) and is the eighth leading
cause of death in people aged 65 and older in the United States (National Center
for Health Statistics, U.S. Department of Health and Human Services 1996).
Presently, there are only two drugs approved for the treatment of this disease -
both treat the symptoms of the disease by temporarily improving brain function
but they do not arrest or slow the progression of the disease.
In 1992, researchers at the University of British Columbia initiated a
retrospective study on the prevalence of dementia among elderly Japanese
patients receiving the lead compound of the AD2 project, for another condition.
They found that the occurrence of dementia was 37% lower in patients chronically
treated with the AD2 compound as compared to patients not receiving it. These
results suggest that continuous therapy with the Company's drug candidate IQ200
may lower the incidence of dementia.
The Company entered into an option agreement with the University of British
Columbia (the "UBC Option Agreement") for an exclusive worldwide license on a
patent that covers the use of the certain compounds in the Company's AD2 project
for the treatment of dementia (see "Item 1 - Description of Business - Material
Agreements - UBC Option Agreement" and "Patents"). Subsequently the Company
exercised its option and is currently finalizing the terms of the superceding
license agreement.
Asthma Project ( BP1)
- ---------------------
The goal of the Company's asthma project is to synthesize and test several new
compounds, starting with compound IQ210, that have disease-modifying actions in
asthma. In a joint venture with the Company, Bridge Pharma, Inc. (see "Item 1 -
Description of Business - Material Agreements - Bridge Pharma, Inc."), intends
to screen these compounds in laboratory models of asthma, select a clinical
candidate and initiate clinical testing of this candidate. Initial data from
Bridge Pharma indicates that these novel non-steroidal disease-modifying
therapeutics have a better activity profile with fewer side effects than other
drugs of their class.
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Asthma is a disorder characterized by chronic inflammation, and
hyper-sensitivity of the air passages in the lung. People who suffer from
asthma experience "attacks" during which their air passages contract causing
difficulty in breathing. Temporary relief from the symptoms of asthma is
currently achieved through use of bronchodilators that re-open the air passages.
Recently, a better understanding of the underlying pathophysiology of asthma has
led to the conclusion that long-term management of asthma should be achieved
with safe, disease-modifying drugs, and to acutely maintain normal lung function
with the use of bronchodilator drugs only as needed. Various bronchodilator
drugs are currently available, however, there is still a need for effective,
well-tolerated, non-steroidal, disease-modifying drugs.
The etiology of asthma involves the release of a large number of mediators from
mast cells and other pro-inflammatory cells. Inhibiting a single mediator is
not always effective. Inhibition of multiple mediators is more likely to
produce a broad-based anti-inflammatory effect. The only known method to meet
such a goal is to induce stabilization of mast cells and other pro-inflammatory
cells, thereby inhibiting their release of inflammatory mediators. The research
of the Bridge Pharma joint venture involves exploration of targeted mast cell
stabilizers which are effective but do not possess the side-effects associated
with the steroids and other drugs that are currently available.
Internet Joint Ventures
Edutainment Software Development
- --------------------------------
The Company is participating in the development of educational and entertaining
computer software with the assistance of computer software developers Skye Boat,
Ltd. ("Skye Boat") (see "Item 1 - Description of Business - Material Agreements
- - Skye Boat, Ltd."). The concept of the game is that players will captain a
tiny miniaturized submarine deep in the body of an ailing or injured human, and
attempt to save the life of their host through direct treatment and
intervention. Participants learn skills and knowledge of science to overcome
various real-world medical situations involving threats or "opponents" such as
disease, viral infection, injury and other afflictions.
The Company will assist in this project by providing scientific and biological
expertise to Skye Boat. This joint venture allows the Company to maximize the
use of its scientific resources with a potential for rapid revenue. In
addition, the Company intends to expand its internet presence with an online
version of the game and receive the benefits of the online and networking
expertise of Skye Boat's personnel.
Internet Health & Fitness Service
- ---------------------------------
The Company is participating in an internet joint venture with Inexsis Inc. (see
"Item 1 - Description of Business - Material Agreements - Inexsis Inc.") to
develop an online health service ("MMB"). MMB is intended to be an internet -
based consumer health network consisting of an interactive web site focusing on
personal health, fitness and nutrition, and affiliated relationships with health
content, service and product providers. Its primary objective will be to
empower consumers with the information and resources they need to achieve their
fitness and health objectives. The primary focus of MMB will be on fitness
conscious consumers in the 18 - 55 age group (students, generation X'ers and
baby boomers) who need to track and understand the impact of their diet and
physical activities on their relative and absolute health and fitness and/or get
help, advice and coaching from experts and their peer community.
The Company expects that this joint venture will allow the Company to expand its
internet presence and extend commercial use of its scientific network. In
addition, the Company expects to gain technical advantage with respect to the
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internet and information management technology required to carry out its core
business.
D. Material Agreements
-------------------
Sidney Kimmel Cancer Center
By an arms length exclusive licensing agreement dated April 23, 1993 (the "1F7
License Agreement") entered into between the Company and the San Diego Regional
Cancer Center (now known as the Sidney Kimmel Cancer Center) (the "Cancer
Center"), the Company licensed from the Cancer Center the technology
characterized as "Antibody 1F7" (see "Patents" below). Under the terms of the
1F7 License Agreement, the Company is required to pay to the Cancer Center a
royalty equal to 2% of net sales of therapeutic licensed products and 5% of net
sales of diagnostic licensed products resulting from Antibody 1F7 technology.
In accordance with the Immpheron Agreement (see below), this royalty cost will
be a cost to the joint venture in the event that Immpheron becomes entitled to a
50% interest in the Antibody 1F7 technology.
The Company has paid a license fee of US$10,000 to the Cancer Center.
ImmPheron, Inc.
By an arms length agreement dated December 15, 1997, as amended December 15,1998
(the "Immpheron Agreement"), the Company formed a strategic partnership with
Immpheron, Inc. ("Immpheron") to continue research and development of monoclonal
Antibody 1F7 and the intellectual property related to its use as a therapeutic
for the prevention and treatment of HIV infection. See "Item 1 - Description of
Business - Biotech Projects - AIDS Project (1F7)". The Company granted
Immpheron the right to acquire a 50% interest in the Antibody 1F7 technology
licensed from the Cancer Center by doing the following:
(a) funding the preclinical trial substantially as set forth in the
Immpheron Agreement; and
(b) completing a formal report and manuscript on the research, in a format
suitable for publication in a scientific journal, by March 31, 1999.
Immpheron has not yet earned its 50% interest.
University of British Columbia
By an arms length agreement dated July 9, 1999 (the "UBC Option Agreement")
entered into with the University of British Columbia ("UBC"), the Company was
granted an exclusive option for the world-wide license to use and sublicense of
certain technology for the treatment of Alzheimer's disease, and manufacture,
distribute and sell products based on such technology. The option provides the
Company with a six month term to evaluate the technology. In consideration of
the grant of the option, the Company paid to UBC the sum of $5,000. See "Item 1
- - Description of Business - Biotech Projects - Alzheimers Disease Project
(AD2)".
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Page 15
The Company has exercised the option under the UBC Option Agreement. A license
agreement will be negotiated by the Company and UBC containing the following
material terms:
(a) an initial, non-refundable, license fee will be payable upon execution of
the license agreement, which is intended to partially reimburse UBC for its
costs of developing, protecting and licensing the technology;
(b) payments will be made to UBC upon reaching certain milestones, including
the initiation of phase III clinical trials, filing of an NDA with the FDA,
and upon receipt of FDA approval for marketing;
(c) a royalty will be paid to UBC based upon the total gross revenue derived
from the sale of products using the technology;
(d) an annual, non-refundable, license maintenance fee of $1,000 will be paid
in advance to UBC;
(e) UBC will own and manage the patent portfolio, including all patents for
improvements. The Company will pay all future patent, prosecution and
maintenance costs and will reimburse all cost incurred to date by UBC and in
return have the right to designate which technologies should be patented and
shall become a licensee of all resulting patents on the same terms and
provided in the license agreement;
(f) although UBC does not generally assign its technology, provision will be
made for such assignment upon the achievement of certain milestones; and
(g) the license agreement will terminate with respect to any patent and
royalties applicable thereto, on the expiration or invalidity of the patent,
and with respect to the know-how and all other rights, on the later to occur
of expiration or invalidity of the last patent, if any, licensed under the
license agreement or ten years.
Bridge Pharma, Inc.
By an arms length agreement dated August 12, 1999 (the "Bridge Pharma
Agreement") with Bridge Pharma, Inc. ("BPI"), the Company has entered into a
joint venture arrangement, on a 50-50 basis, with BPI for the development of a
new asthma therapeutic. In order to retain its 50% interest, the Company is
required to provide up to US$2 million in funding to the project over a period
of two years. Any additional costs above the first US$2 million will be shared
equally between the parties. The goal of the collaboration between the Company
and BPI is to finish the work necessary to complete clinical trials either as a
continuance of the joint venture or in alliance with a strategic partner. See
"Item 1 - Description of Business - Biotech Projects - Asthma Project (BP1)".
Skye Boat, Ltd.
By an arms length memorandum of agreement dated August 23, 1999 (the "Skye Boat
Agreement") the Company has agreed to participate in a joint venture with Skye
Boat, Ltd. ("Skye Boat") to create standalone and online edutainment software
focusing on medicine and anatomy. Under the terms of the Sky Boat Agreement,
the Company will provide the joint venture with technical, scientific and
medical expertise and will contribute US$7,500 to the expenses of the joint
venture. The Company and Skye Boat will each hold
<PAGE>
Page 16
50% of the founders equity in the joint venture through completion of its design
phase. Following the design phase, it is expected that the joint venture will
seek external financing thus diluting the interest of the parties.
See "Item 1 - Description of Business - Internet Joint Ventures - Edutainment
Software Development".
Inexsis Inc.
By an arms length memorandum of agreement dated August 17, 1999 (the "Inexsis
Agreement") the Company has agreed to participate in an internet joint venture
with Inexsis Inc. ("Inexsis") and a group (the "Management Team") represented
by Ping Quin, to develop an online service with a focus on personal health and
fitness. The mission of the joint venture is to create a premier internet
destination to provide users with the most relevant personalized information,
tools and support needed to achieve fitness and wellness objectives. Under the
terms of the Inexsis Agreement, subject to regulatory approval, the Company will
provide the joint venture with technical, scientific and medical expertise and
will contribute to start-up expenses of the joint venture. The Company and
Inexsis will each hold 15%, for a total of 30%, of the founding shares in the
joint venture with the balance reserved for the Management Team, the members of
which are to be assembled.
See "Item 1 - Description of Business - Internet Joint Ventures - Internet
Health & Fitness Service".
E. Markets
-------
The statistical information provided throughout this section has been sourced
from the Company's market research reports, from public offering disclosure
published by competitors believed by the Company to be accurate, from published
data, and from the Company's experience in the industry.
AIDS Project (1F7)
AIDS was first recognized in 1981 and has since become a major epidemic,
affecting more than 30 million people worldwide (The World Health Report 1999.
World Health Organization). AIDS is caused by the HIV, and is generally
transmitted through the transfer of bodily fluids.
The current U.S. market for HIV drugs is estimated to be in excess of US$3
billion (IMS Health, 1998). The Company feels that its 1F7 antibody, drug
candidate IQ199, could represent a significant new treatment for HIV which would
compete for a significant portion of this market.
The monoclonal antibody IQ199 will compete primarily with other treatments that
improve the qualify of life for HIV-infected individuals. Current treatment
includes two classes of agents known as antiviral and immune stimulating agents.
There are several problems with the current therapeutics such as: viral
resistance, serious health complications, and high treatment cost. The
mechanism of action of IQ199 is different from current HIV drugs and may
represent a more efficient approach, associated with a wider therapeutic window.
By blocking the inherent immune response (clonal dominance), IQ199 should allow
the immune system to regain its ability to respond to the endogenous virus.
This unique mechanism of action gives IQ199 a potential competitive advantage
over other drug therapies. Since multiple HIV drugs are often used in
combination chemotherapy regimens, it is unlikely that IQ199 will compete with
individual AIDS therapeutics. It is more likely that IQ199 may become part of
such combination regimens.
<PAGE>
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Alzheimer's Disease Project (AD2)
Competition currently exists among companies and research groups attempting to
develop new drugs to combat Alzheimer's disease. There are numerous drugs in
various stages of clinical trials. These trial drugs fall into one of five
categories: cholinominetics, antioxidants, estrogen replacement,
anti-inflammatory and other. The FDA, however, has approved only two drugs.
(See "Item 1 - Government Regulation") Both drugs are acetylcholinesterase
inhibitors, and their overall benefit to Alzheimer's patients is minimal. The
first such drug approved, tacrine, had side effects that prevented it from being
accepted in the market. The most recently approved agent, donepezil, produces
only mild increases in alertness. Despite this, most physicians treating
Alzheimer's disease patients are expected to prescribe donepezil because there
are so few alternatives (Med Sci Bull. 1997; 20).
NSAIDS (non-steroidal anti-inflammatory drugs) have shown some promise for use
in Alzheimer's treatment, but the potential for serious gastrointestinal side
effects complicate their therapeutic use. The new anti-inflammatory "COX-2
inhibitors" are in clinical testing for Alzheimer's disease, but none have yet
been approved for the indication.
The Company's AD2 drug candidates have a unique combination of actions with a
manageable and well-established toxicology profile. The Company's AD2 project
represents a novel approach to pharmacological therapy of Alzheimer's disease.
The Company's review of patent literature indicates that the Company's approach
to drug treatment appears to be unique.
Despite their limited effectiveness and serious side-effects, the few drugs that
are approved for use in Alzheimer's disease have U.S. sales that exceed US$400
million annually (Reuters news). The Company anticipates an effective and safe
therapy for Alzheimer's disease to have a market in the U.S. in excess of US$1
billion.
Asthma Project (BP1)
Asthma morbidity and mortality are increasing worldwide. More than 15 million
Americans, including 5 million children, suffer from asthma. Among adults in
the U.S. 1 in 20 is asthmatic and among children the prevalence is higher -
about 1 in 10 (J. Allergy Clin. Immunol. 1997, 100:771). Asthma related
mortality in the U.S. and Canada has increased by more than 25% during the last
20 years and the direct annual cost is estimated at over $7 billion annually in
the U.S. alone (Global Initiative for Asthma, NIH, 1995).
Anti-asthmatic drugs for clinical use fall into two categories: (1) those which
primarily provide symptomatic relief (bronchodilators); and (2) those which
provide a long-term disease-modifying action. There is now a sound medical
rational for the use of disease modifying agents as first-line drugs in the
management of chronic asthma. Current asthma therapy is inadequate and
management believes that the future market for disease-modifying drugs, such as
IQ210 under development by Bridge Pharma and the Company, will be as large as
the current market for symptomatic broncholdilating drugs.
In the asthma therapeutic market, the Company's proposed asthma treatment will
compete primarily with other disease-modifying asthma therapies. Current
treatment includes inhaled steroids, antiallergenic agents such as sodium
cromoglycate (inhalant) and ketotifen fumarate (systemic). The anti-asthmatic
agent under research by the Company and its partner (see "Item 1 - Description
of Business - Material Agreements - Bridge Pharma, Inc.") has demonstrated in
pre-clinical studies a better activity profile with fewer side effects than
other drugs of its class. It is expected that this agent could become an
important treatment for asthma.
<PAGE>
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Edutainment Software Development
Consumer interest in computer games dates back to 1976 when the Atari game
machines first reached the market. The industry has changed since that time due
to the rapid development of computer technology. Currently, there are several
different genres within the games industry including "edutainment" games.
"Edutainment" is the use of games to educate while playing and having fun. The
game and entertainment segment of the software market represents 41.6% of the
total consumer software market, and in 1998 the worldwide consumer software
market grew 10.9% to US$5 billion (Consumer Software: 1999 Worldwide Markets and
Trends; Mary Wardley; Report #W19246 - July 1999).
There are several different edutainment game companies in the market, two
examples being: (1) Theatrix Interactive, which publishes educational software;
and (2) Smart Games, which creates strategy and perception games. The project
being developed with Skye Boat (see "Item 1 - Description of Business - Internet
Joint Ventures - Edutainment Software Development") is unique in that it has a
medical context and will take players inside the human body. The participant
will be restoring the health of an injured person by traveling within the
patient's body and combating ailments and injuries.
Internet Health & Fitness Service
Unlike health information providers such as drkoop.com and fitnessonline.com,
diet.com, or weight loss product vendors such as diet.com and JennyCraig.com,
MMB (see "Item 1 - Description of Business - Internet Joint Ventures - Internet
Health & Fitness Services") is intended to be a fitness management network
centered on the users' own physiological and nutrition data.
Business Strategy
In Fiscal 1999, the Company has adopted a new business strategy in order to
achieve its goals. The Company's objective is to realize a rapid return on
investment ("ROI") through participation in "special situations" in biotech.
Special situations in biotech are stalled projects that have an underlying
foundation of strong science, protectable intellectual property, and a clearly
identified market niche. The Company's goal is to capitalize on special
situations through a strategy of acquisition of rights or other interest in the
project, value addition, and rapid divestiture through licenses, alliances,
capital appreciation, or spin-offs. The Company differentiates itself from
other biotech companies by focusing on the potential for rapid ROI rather than
focusing on a particular scientific or therapeutic specialization.
<PAGE>
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F. Research and Development Expenses
---------------------------------
The Company currently focuses the majority of its research activities on its
biotech projects. During Fiscal 1998, 1997 and 1996, the Company spent $31,055,
$77,548 and $348,734, respectively, on research and development of its biotech
projects.
G. Patents
-------
Intellectual property protection is achieved through use of patents and other
administrative mechanisms. All patents granted or filed have either been
assigned to the Company or licensed for use by the Company.
1F7 Antibody
Title: Anti-Idiotypic Antibody and its use in Diagnosis and Therapy in
HIV-Related Disease
United States Patent Number: 5,849,583
Date Granted: December 15, 1998
The Company has licensed this patent from the Sidney Kimmel Cancer Center (see
"Item 1 - Description of Business - Material Agreements - Sidney Kimmel Cancer
Center").
Alzheimer Disease
Title: Dapsone and Promin for the treatment of dementia
United States Patent Number: 5,532,219
Date Granted: July 2, 1996
The Company has exercised an exclusive option to license this technology and
currently negotiating the terms of a license agreement with UBC (see "Item 1 -
Description of Business - Material Agreements - University of British
Columbia").
Asthma
A new application was filed by Bridge Pharma, Inc. and is part of the
intellectual property covered by the joint venture with the Company (see "Item 1
- - Description of Business - Material Agreements - Bridge Pharma, Inc.").
In addition to its patents, the Company also relies upon trade secrets, know-how
and the continuing technological innovations to develop its competitive
position. It is the Company's policy to require its directors, employees,
consultants, members of its scientific advisory board and parties to
collaborative agreements to execute confidentiality agreements upon the
commencement of employment, consulting or collaborative relationships with the
Company. These agreements provide that all confidential information developed
or made known during the course of the relationship with the Company is to be
kept confidential except in specific circumstances. In the case of employees
and consultants, the agreements provide that all inventions resulting from work
performed for the Company utilizing property of the Company or relating to the
Company's business and conceived or completed by the individual during
employment are the exclusive property of the Company to the extent permitted by
law.
<PAGE>
Page 20
H. Government Regulation
---------------------
The research and development, manufacture and market of biotechnology products
are subject to regulation by the Food and Drug Administration (the "FDA") in
the United States, by the Health Protection Branch (the "HPB") of the Department
of Health and Welfare Canada in Canada, and by comparable regulatory authorities
in other countries. These national agencies and other federal, state,
provincial and local entities regulate the testing, manufacture, safety and
promotion of the Company's products.
United States Regulation
The Company is required by the FDA to comply with the following procedures prior
to marketing its products:
- preclinical laboratory and animal toxicology tests;
- submission of an investigational new drug application ("IND"), which
must become effective before human clinical trials commence;
- adequate and well-controlled human clinical trials to establish the
safety and efficiacy of the drug for its intended application;
- the submission of a new drug application ("NDA") to the FDA; and
- FDA approval of a NDA prior to any commercial sale or shipment of the
product, including pre-approval and post-approval inspections of
manufacturing facilities.
Preclinical laboratory and animal toxicology tests must be performed to assess
the safety and potential efficiacy of the product. The results of these
preclinical tests are then submitted to the FDA as part of an IND requesting
authorization to initial human clinical trials. Clinical trials may be
initiated only upon approval of the IND by the FDA.
Clinical trials involve the administration of the biotechnology product to
individuals under the supervision of qualified medical investigators. Clinical
studies are conducted in accordance with protocols that detail the objectives of
a study, the parameters to be used to monitor safety and the efficiacy criteria
to be evaluated. Each protocol is submitted to the FDA prior to the
commencement of each clinical trial. Clinical studies are typically conducted
in three sequential stages, which may overlap:
Phase I: Initial introduction of the compound into human subjects to test for
safety, dosage, tolerance, metabolic interaction, distribution,
excretion and pharmacodynamics.
Phase II: Studies in a limited patient population to:
- determine the efficacy of the product for specific, targeted
indications;
- determine optimal dosage; and
- identify possible adverse effects and safety risks.
In the event Phase II evaluations demonstrate that the drug is effective and has
an acceptable safety profile, Phase III of the clinical trial will proceed.
Phase III: Clinical trials are undertaken to further evaluate clinical
efficacy of the product and to further test for its safety within an
expanded patient population at geographically dispersed clinical
study sites.
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Page 21
The Company or the FDA may suspend clinical trials at any time if either
believes the clinical subjects are being exposed to unacceptable health risks.
The results of the product development, analytical laboratory studies and
clinical studies are submitted to the FDA as part of an NDA for approval of the
marketing and commercialization of the controlled release product.
If the approval being sought is for a new therapeutic area on a previously
clinically tested drug the approval process will require a new full clinical
trial regime, from preclinical to Phase III. However, if the approval being
sought is for a new indication within a therapeutic area on a drug that has been
through one or more stages of clinical trials, then it is possible, if the
indication is close enough to that of the original submission, that any clinical
data available on this drug might be used to avoid repetition of these trials.
The FDA may deny approval of an NDA if applicable regulatory criteria are not
satisfied or may require additional testing. Product approvals may be withdrawn
if compliance within regulatory standards is not maintained or if problems occur
after the product reaches the market. The FDA may require further testing and
surveillance programs to monitor the biotechnology product that has been
commercialized. Noncompliance with applicable requirements can result in fines
and other judicially imposed sanctions, including product seizures, injunction
actions and criminal prosecutions.
Canadian Regulation
The regulations concerning the sale of biotechnology drugs in Canada are
substantially similar to those of the United States described above.
The Company must submit an IND to the HPB prior to conducting clinical trials of
a new drug in Canada. This application includes information about the methods
of manufacture of the drug and controls, and preclinical laboratory and animal
toxicology tests on the safety and potential efficacy of the drug. If the HPB
does not notify the Company within 60 days of receiving the application that the
application is unsatisfactory, the Company may proceed with clinical trials of
the drug. The phases of clinical trials are the same as those described under
"United States Regulation" above.
The Company must submit a new drug submission ("NDS") to the HPB and receive a
notice of compliance from the HPB before selling a new drug in Canada. The NDS
includes information describing the new drug, including its proper name, the
proposed name under which the new drug will be sold, a quantitative list of
ingredients of the new drug, the methods of manufacturing, processing and
packaging of the new drug, the controls applicable to these operations, the
tests conducted to establish the safety of the new drug, the results of clinical
trials and the effectiveness of the new drug when used as intended. If the HPB
determines that the NDS meets the requirements of Canada's Food and Drugs Act
and Regulations, the HPB will issue a notice of compliance for the new drug.
The HPB may deny approval of an NDS if applicable regulatory criteria are not
satisfied, or the HPB may require additional testing of a product. Product
approvals may be withdrawn if compliance with regulatory standards is not
maintained or if problems occur after the product reaches the market. The HPB
may require further testing and surveillance programs to monitor the
biotechnology product which has been commercialized. Noncompliance with
applicable requirements can result in fines and other judicially imposed
sanctions, including product seizures and criminal prosecutions.
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Page 22
Additional Regulatory Considerations
In addition to the regulatory approval process, biotechnology companies are
subject to regulations under provincial, state and federal law, including
requirements regarding occupational safety, laboratory practices, environmental
protection and hazardous substance control. Also, biotechnology companies may
be subject to other present and future local, provincial, state, federal and
foreign regulations, including possible future regulations of the biotechnology
industry.
Certain provincial regulatory authorities in Canada have the ability to
determine whether the cost of a drug sold within its province will be reimbursed
by a provincial government health plan by listing drugs on formularies. These
provincial formularies may affect the prices and/or volume of drugs sold within
such provinces.
Proposals have recently been made that, if implemented, would significantly
change Canada's drug approval system. Basically, the recommendations emphasize
the need for efficiency in Canadian drug review. Proposals include the
establishment of a separate agency for drug regulation with a revised approval
system based on those found in European Community countries. However, there is
no assurance that such changes will be implemented or will expedite the approval
of controlled release products.
The Canadian government has regulations which prohibit the issuance of a notice
of compliance for a medicine, other than the first medicine marketed in Canada,
provided that the patent owner of the medicine has filed a list of its Canadian
patents covering that medicine with the HPB. After receiving such list, the HPB
may refuse to issue a notice of compliance permitting the importation or sale of
a patented medicine to persons other than a patent owner until patents on the
medicine expire or are declared invalid by a court of competent jurisdiction.
Regulation in Other Jurisdictions
The Company may decide to develop one or more of its compounds first in regions
outside of North America and Europe, depending upon clinical and commercial
factors. Currently, the Company has no plans in place for drug development
activities outside of these regions.
In addition to meeting the specific requirements of the country for which a drug
is first intended to be commercialized, the Company intends to meet and exceed
the North American regulatory guidelines for any of its drug development
programs that are not initially commenced in North America.
I. Risk Factors
------------
The following provides a brief description of some of the risk factors which
should be considered in relation to the Company's business. It must be
recognized that there are three primary markets for pharmaceuticals: North
America, Europe and Japan/Asia, and the risk factors associated with the
Company's projects may vary according to the particular market being addressed.
Specific risk factors to be considered include, but are not limited to, the
following:
Early Stage of Development
All of the Company's products are in the research stage. At present, the
Company does not possess a marketable product. There can be no assurance that
any such products will be fully developed and tested, and if fully developed and
<PAGE>
Page 23
tested, will perform in accordance with the Company's expectations. There is
also no assurance that necessary regulatory approval or clearance will be
obtained in a timely manner, if at all, or that any of the Company's products
can be successfully and profitably developed, produced and marketed. The
research may fail or the compounds may not meet regulatory approval for human
use. Even if the Company's research programs are successful, development of a
marketable product will likely take several years.
There is no guarantee that the Company will make a satisfactory deal with a
major pharmaceutical company to conduct human clinical trials, to complete
product development, to obtain regulatory approval, and ultimately to market the
product.
Limited Revenues, History of Operating Loss & Accumulated Deficit
The Company has had no sales revenue to date. Although the Company has been
involved with pharmaceuticals since 1991, it has been engaged only in research
and development. The Company has generated limited revenue and has incurred
significant operating losses, including net losses of $201,671 in Fiscal 1998,
$262,744 in Fiscal 1997, $825,674 in Fiscal 1996, $559,444 in Fiscal 1995, and
$493,178 in Fiscal 1994. At December 31, 1998, the Company had an accumulated
deficit of $2,669,376. It will be a number of years, if ever, before the
Company will receive any significant revenues from commercial sales of products.
The future growth and profitability of the Company will be principally dependent
upon its ability to successfully complete development of, obtain regulatory
approvals for, and market or license its proposed products. Accordingly, the
Company's prospects must be considered in light of the risks, expenses and
difficulties frequently encountered in connection with the establishment of a
new business in a highly competitive industry, characterized by new product
introductions. The Company anticipates that it will incur substantial operating
expenses in connection with the research, development, testing and approval of
its proposed products and expects these expenses to result in continuing and
significant losses until such time as the Company is able to achieve adequate
revenue levels. There can be no assurance that the Company will be able to
significantly increase revenues or achieve profitable operations. Failure to
obtain additional capital, if needed, would have a material adverse effect on
the Company's operations. See "Item 9 - Management's Discussion & Analysis of
Financial Condition & Results of Operations".
Uncertainties of Additional Funding Required
The Company will require substantial capital resources in order to conduct its
operations. The Company presently does not have sufficient financial resources
to undertake all of its currently planned research and development activities
through to the first half of the next fiscal year. In addition to the working
capital on hand, the Company will require additional funds for these purposes.
The Company intends to seek these funds through equity financing, collaborative
arrangements with corporate sponsors, or from other sources. The Company may
also require additional funds in order to acquire technology or products that
complement the Company's efforts. There can be no assurance that additional
financing will be available on acceptable terms. Additional equity financings
could result in significant dilution to existing shareholders. If sufficient
capital is not available, the Company may be required to delay, reduce the scope
of, eliminate or divest one or more of its discovery, research or development
programs, any of which could have a material adverse effect on the Company's
business, financial condition and results of operations. See "Item 9 -
Management's Discussion & Analysis of Financial Condition & Results of
Operations".
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No Assurance of Regulatory Approval - Potential Delays
The preclinical testing and clinical trials of any products developed by the
Company or its collaborators and the manufacturing, labeling, sale,
distribution, export or import, marketing, advertising and promotion of any new
products resulting therefrom are subject to regulation by federal, state and
local governmental authorities in the United States, principally the FDA, and by
other similar agencies in other countries (see "Item 1 - Government
Regulation"). In order for a product developed by the Company or its
collaborators to be marketed and sold in a particular country it must receive
all relevant regulatory approvals or clearances. The regulatory process, which
includes extensive preclinical studies and clinical trials of each product in
order to establish its safety and efficacy, is uncertain, can take many years
and requires the expenditures of substantial resources. Data obtained from a
preclinical trial and clinical activities are susceptible to varying
interpretations which could delay, limit or prevent regulatory approval or
clearance. In addition, delays or rejections may be encountered based upon
changes in regulatory policy during the period of product development and/or the
period of review of any application for regulatory approval or clearance for a
product. Delays in obtaining regulatory approvals or clearances would adversely
affect the marketing of any products developed by the Company or its
collaborators, impose significant additional costs on the Company and its
collaborators, diminish any competitive advantages that the Company or its
collaborators may attain and adversely affect the Company's ability to receive
royalties and generate revenues and profits. There can be no assurance that,
even after such time and expenditures, any required regulatory approvals or
clearances will be obtained for any products developed by or in collaboration
with the Company.
Any regulatory approval or clearances granted may entail limitations on the
indicated uses for which the new product may be marketed that could limit the
potential market for such product. In addition, product approvals or
clearances, once granted, may be withdrawn if problems occur after initial
marketing. Furthermore, manufacturers of approved products are subject to
pervasive review, including compliance with detailed regulation governing GMP
("Good Manufacturing Procedures"). Failure to comply with applicable regulatory
requirements can result in actions such as warning letters, fines, injunctions,
civil penalties, recall or seizure of products, total or partial suspension of
production, refusal of the government to renew marketing applications or
criminal prosecution.
The Company is also subject to numerous federal, state and local laws,
regulations and recommendations relating to safe working conditions, laboratory
and manufacturing practices, the experimental use of animals, the environment
and the use and disposal of hazardous substances, used in connection with the
Company's discovery, research and development activities. The Company is unable
to predict the extent of government regulations which might have an adverse
effect on the discovery, development, production and marketing of the Company's
products. Also, there can be no assurance that the Company will not be required
to incur significant costs to comply with current or future laws or regulations
or that the Company will not be adversely affected by the cost of such
compliance.
Conflicts of Interest
Certain officers and directors of the Company also serve as officers and/or
directors of other companies which engage in biotechnology/pharmaceutical
research and development activities. Although there are inherent conflicts
arising from an officer or director holding such positions with more than one
company (such as in determining the allocation of the individual's time and
business opportunities presented to the individual), there are presently no
specific conflicts of interest arising from the Company and such other companies
having common insiders. See "Item 10 - Officers & Directors of the Company" for
identification of the biotechnology/pharmaceutical companies having common
insiders with the Company. To the extent that such other companies may
<PAGE>
Page 25
participate in ventures in which the Company may participate, the directors of
the Company would have a conflict of interest in negotiating and concluding
terms respecting the extent of such participation. In the event that such a
conflict of interest arises at a meeting of the directors of the Company, a
director who has such a conflict will abstain from voting for or against the
approval of the matter before the meeting. In accordance with the laws of the
Province of British Columbia, the directors of the Company are required to act
honestly, in good faith and in the best interests of the Company. In
determining whether the Company will participate in a particular program, the
directors will primarily consider the potential benefits to the Company, the
degree of risk to which the Company may be exposed and its financial position at
the time. Other than as indicated, the Company has no other procedures or
mechanisms to deal with conflicts of interest.
Competition & Agreements with Other Parties
The biotechnology industry is intensely competitive. Many companies, as well as
research organizations, currently engage in or have in the past engaged in
efforts related to the development of products in the same therapeutic areas as
the Company. Many of the competing companies have significantly greater
financial resources and expertise than the Company. Other smaller companies may
also prove to be significant competitors, particularly through collaborative
arrangements with large and established companies. Academic institutions,
government agencies and other public and private research organizations may also
conduct research, seek patent protection and establish collaborative
arrangements for discovery, research, clinical development and marketing of
products similar to those of the Company. There can be no assurance that
competitors will not develop more effective or more affordable products, or
achieve earlier patent protection or product commercialization than the Company
and its collaborators, or that such competitive products will not render the
Company's products obsolete.
The Company may, in the future, be unable to meet its share of costs incurred
under agreements to which it is a party and the Company may have its interests
in certain licenses, rights or products subject to such agreements reduced as a
result. Furthermore, if other parties to such agreements do not meet their
share of such costs, the Company may be unable to finance the costs required to
complete the recommended programs.
Dependence Upon Key Personnel
The Company is dependent upon a relatively small number of key employees and the
loss of any of these employees could have an adverse effect on the Company.
Competition among biotechnology and biotechnology companies for qualified
employees is intense, and the ability to retain and attract qualified
individuals is critical to the success of the Company. The Company has entered
into an employment agreement with each of its officers and key employees. The
Company is also dependent, to some extent, on the guidance of certain members of
its scientific advisory board, none of whom is obligated, or will devote his
full-time efforts, to the business of the Company. There can be no assurance
that the Company will be able to attract and retain such individuals currently
or in the future on acceptable terms, or at all. In addition, the Company does
not maintain "key person" life insurance on any officer, employee or consultant
of the Company. The Company also has relationships with scientific
collaborators at academic and other institutions, some of whom conduct research
at the Company's request or assist the Company in formulating its research and
development strategy. These scientific collaborators are not employees of the
Company and may have commitments to, or consulting or advisory contracts with,
other entities that may limit their availability to the Company. In addition,
these collaborators may have arrangements with other companies to assist such
other companies in developing technologies that may prove competitive to those
of the Company.
<PAGE>
Page 26
Patents, Permits & Licenses
The Company considers patent protection and proprietary technology to be
materially significant to its business. The Company relies on certain patents
and pending applications relating to various aspects of its potential products
and technology. These patents and patent applications are either owned by or
exclusively licensed to the Company. There can be no assurance that the Company
will be able to obtain and retain all necessary patents, licenses and permits
that may be required to carry out the research and development, manufacturing,
preclinical and clinical testing, obtaining regulatory approvals and marketing
of commercial products. There can also be no assurance that others will not
independently develop similar technologies, duplicate any technology developed
by the Company, the Company's technology will not infringe upon patents or other
rights owned by others, that any of the Company's patents will not be
challenged, invalidated or circumvented, or that the rights granted thereunder
will provide competitive advantages to the Company. Litigation, which could
result in substantial cost to the Company, may be necessary to enforce the
Company's rights provided by its patents or to determine the scope and validity
of others' proprietary rights.
No Assurance of Successful Manufacturing
The Company has no experience manufacturing commercial quantities of products
and does not currently have the resources to manufacture any products that it
may develop. Accordingly, the Company would be required to either develop the
facilities to manufacture independently any products with commercial potential,
or be dependent upon securing a contract manufacturer or other third party to
manufacture such products. There can be no assurance that the Company would be
able to independently develop such capabilities or that the terms of any such
arrangement would be favorable enough to permit the products to compete
effectively in the marketplace.
Dependence on & Management of Future Corporate Collaborations
The success of the Company's business strategy is largely dependent on its
ability to enter into collaborations and to effectively manage the relationships
that may come to exist as a result of this strategy. The Company is currently
seeking corporate collaborators, but there can be no assurance that such efforts
will lead to the establishment of any favourable collaboration. There can be
no assurance that any of the Company's future or existing collaborators will
commit sufficient resources to the company's research and development programs
or the commercialization of its products. Also, there can be no assurance that
such collaborators will not pursue existing or other development-stage products
or alternative technologies in preference to those being developed in
collaboration with the Company, or that disputes will not arise with respect to
ownership of technology developed under any such collaborations. Management of
the Company's collaborative relationships will require significant time and
effort from the Company's management team and effective allocation of the
Company's resources.
Currency Fluctuations
The Company reports its financial position and results of operations in Canadian
dollars in its annual financial statements. The Company's operations result in
exposure to foreign currency fluctuations and such fluctuations may materially
affect the Company's financial position and results of operations. The Company
does not currently take any steps to hedge against currency fluctuations.
<PAGE>
Page 27
Shares Reserved for Future Issuance
As at September 30, 1999, the Company had reserved 9,056,513 Shares for issuance
upon the exercise of stock options and share purchase warrants. Such Shares
represent a potential equity dilution of approximately 32.4% based upon
27,939,465 Shares then outstanding. (See "Item 12 - Options to Purchase
Securities From Company".) The issuance of these Shares has already received
Vancouver Stock Exchange approval. The Company may in the future enter into
commitments which would require the issuance of additional Shares and may grant
additional stock options and/or issue share purchase warrants. The Company's
share capital consists of 100,000,000 Shares. Issuance of such additional
Shares is subject to Vancouver Stock Exchange approval and compliance with
applicable securities legislation.
Dividends
To date, the Company has not declared or paid dividends on its Shares and does
not anticipate doing so in the foreseeable future.
Forward Looking Statements
This Report contains forward looking statements concerning the Company's
operations, economic performance and financial condition, including in
particular, the likelihood of the Company's success in operating as an
independent company and developing and expanding its business. These statements
are based upon a number of assumptions and estimates which are inherently
subject to significant uncertainties and contingencies, many of which are beyond
the control of the Company, and reflect future business decisions which are
subject to change. Some of these assumptions inevitably will not materialize,
and unanticipated events will occur which will affect the Company's future
results. All such forward looking statements are qualified by reference to
matters discussed under this section entitled "Risk Factors".
Year 2000 Concerns
Like any other company, advances and changes in available technology can
significantly impact the business and operations of the Company. For example, a
challenging problem exists as many computer systems worldwide do not have the
capability of recognizing the year 2000 or years thereafter. In simple terms,
it has been normal practice for computer hardware and software manufacturers to
use only the last two digits rather than all four to record the year in the date
fields. On January 1, 2000, when the year is designated "00", many computer
systems could either fail completely or create erroneous data as a result of
misinterpretation of the year. In some cases, date sensitive systems may begin
to fail prior to January 1, 2000. The Company may incur unexpected costs and
delays as a result of this issue.
The Company's operations are directly dependent on information technology, and
also rely on customers, suppliers, and other third parties that may be affected
by the year 2000 situation. This potential problem creates risk for the Company
from unforeseen problems in its own computer systems, and from parties with whom
the Company conducts its business.
The Company is in the process of undertaking a year 2000 compliance review to
assess the Company's exposure to year 2000 issues, and address compliance.
Internally, the Company has spent approximately $17,000 in upgrading computer
systems for year 2000 compliance. Externally, the Company is in the process of
contacting all critical suppliers to determine their state of readiness. The
Company will also request assurance from customers, suppliers (e.g., contract
research organizations), and third parties regarding year 2000 readiness.
<PAGE>
Page 28
However, it is not possible to be certain that all aspects of the year 2000
issue will be fully resolved before January 1, 2000.
The Company has allocated a further $5,000 for future costs relating to year
2000 compliance. It has adopted the same accounting treatment of year 2000
costs as its treatment of capital assets.
ITEM 2. DESCRIPTION OF PROPERTY
The Company currently leases 2000 square feet of office space for administrative
purposes in Vancouver, Canada. The lease expires on May 31, 2001 unless
extended by the Company for up to one year.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any material pending legal proceedings and is not
aware of any contemplated legal proceedings to which it may be a party.
ITEM 4. CONTROL OF COMPANY
As far as known to the Company, the Company is not directly or indirectly owned
or controlled by another corporation or by any foreign government. The
following table sets forth certain information, as at September 30, 1999,
concerning (i) persons that are the registered owners of, or are known by the
Company to own beneficially, directly or indirectly, more than 10% of the
outstanding Shares and (ii) beneficial ownership of Shares by all directors and
officers of the Company, as a group:
- -------------------------------------------------------------------------------
Identity of Holder No. of Common Shares Percentage of Class
- -------------------------------------------------------------------------------
CDS & Co.(1) 12,990,483 46.5%
- -------------------------------------------------------------------------------
Directors & Officers as 2,322,722 8.3%
a group (7 persons)(2)
- -------------------------------------------------------------------------------
(1) The Company is unaware of the beneficial owner of these Shares.
(2) Includes escrowed Shares (see page following), but does not include an
additional 1,746,500 Shares that may be acquired upon the exercise of
stock options or share purchase warrants. See "Item 12 - Options to
Purchase Securities from Company".
<PAGE>
Page 29
ITEM 5. NATURE OF TRADING MARKET
The Shares are traded in Canada on the Vancouver Stock Exchange and trade under
the symbol "IMM". The following table sets out for each of the periods
indicated the market price range and the trading volume on the Vancouver Stock
Exchange of the Shares for each quarterly period since January 1, 1997:
- -------------------------------------------------------------------------------
High Low Volume
Year Quarterly Summary ($) ($) (Common Shares)
- -------------------------------------------------------------------------------
1999 Third Quarter 0.26 0.13 2,080,784
Second Quarter 0.33 0.09 6,412,305
First Quarter 0.19 0.08 2,230,648
1998 Fourth Quarter 0.24 0.11 3,684,844
Third Quarter 0.25 0.09 1,964,582
Second Quarter 0.34 0.04 8,593,540
First Quarter 0.04 0.02 445,167
1997 Fourth Quarter 0.07 0.01 1,365,729
Third Quarter 0.14 0.01 1,556,074
Second Quarter 0.12 0.05 2,287,983
First Quarter 0.19 0.11 608,597
- -------------------------------------------------------------------------------
As of September 30, 1999, the closing price of the shares on the Vancouver Stock
Exchange was $0.20.
There is no active trading market for the Shares in the United States, although
United States residents may purchase Shares. The following table indicates the
approximate number of record holders of Shares at September 30, 1999, the number
of record holders of Shares with United States addresses and the portion and
percentage of Shares so held in the United States. On such date, 27,939,465
Shares were outstanding.
- -------------------------------------------------------------------------------
Total Number of Number of U.S. Shares Held in
Holders Holders the U.S. Percentage of Shares
- -------------------------------------------------------------------------------
166 62 1,865,676 6.7%
- -------------------------------------------------------------------------------
Depositories, brokerage firms and financial institutions hold a substantial
number of the Shares in "street names". Based upon enquiries made by the
Company as to the number of registered holders of Shares with United States
addresses, and on the number of annual reports and proxy statements requested by
nominees, management of the Company estimates that the total number of
beneficial holders of Shares exceeds 702, of which approximately 42 are U.S.
persons.
The Company is not aware of the distribution of any warrants to U.S. residents.
United States residents may beneficially own Shares or warrants held of record
by non-United States residents.
<PAGE>
Page 30
ITEM 6. EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS
There is no law or governmental decree or regulation in Canada that restricts
the export or import of capital, or affects the remittance of dividends,
interest or other payments to a non-resident holder of Shares, other than
withholding tax requirements. See"Item 7 - Taxation".
There is no limitation imposed by Canadian law or by the constituent documents
of the Company on the right of a non-resident to hold or vote Shares (the
"Voting Shares"), other than are provided in the Investment Canada Act (Canada)
(the "Investment Act"), as amended by the World Trade Organization Agreement
Implementation Act (the "WTOA Act"). The Investment Act generally prohibits
implementation of a reviewable investment by an individual, government, or
agency thereof, corporation, partnership, trust or joint venture that is not a
"Canadian", as defined in the Investment Act (a "non-Canadian"), unless, after
review, the minister responsible for the Investment Act is satisfied that the
investment is likely to be of net benefit to Canada. An investment in the
Voting Shares of the Company by a non-Canadian (other than a "WTO Investor", as
defined below) would be reviewable under the Investment Act if it were an
investment to acquire control of the Company and the company was not,
immediately prior to the implementation of the investment, controlled by a WTO
investor, and the value of the assets of the Company were $5.0 million or more.
An investment in Voting shares of the Company by a WTO investor would be
reviewable under the Investment Act if it were an investment to acquire direct
control of the company, and the value of the assets of the Company equaled or
exceeded $184 million (threshold amount for 1999). A non-Canadian, whether a
WTO Investor or otherwise, would acquire control of the Company for purposes of
the Investment Act if he or she acquired a majority of the Voting Shares of the
Company. The acquisition of less than a majority, but at least one-third of the
Voting Shares of the Company, would be presumed to be an acquisition of control
of the Company unless it could be established that the Company was not
controlled in fact by the acquirer through the ownership of the Voting Shares.
In general, an individual is a WTO Investor if he or she is a "national" of a
country (other than Canada) that is a member of the World Trade Organization
("WTO Member") or has a right of permanent residence in a WTO Member other than
Canada. A corporation or other entity will be a WTO Investor if it is a "WTO
Investor-controlled entity" pursuant to detailed rules set out in the Investment
Act. The United States is a WTO Member.
Certain transactions involving Voting Shares of the Company would be exempt from
the Investment Act, including:
(a) an acquisition of Voting Shares of the Company if the acquisition
were made in connection with the person's business as a trader or
dealer in securities;
(b) an acquisition or control of the Company in connection with the
realization of a security interest granted for a loan or other
financial assistance and not for the purpose related to the provisions
of the Investment Act; and
(c) an acquisition of control of the Company by reason of an
amalgamation, merger, consolidation or corporate reorganization,
following which the ultimate direct or indirect control in fact of the
Company, through the ownership of voting interests, remains unchanged.
<PAGE>
Page 31
ITEM 7. TAXATION
A brief description of certain provisions of the tax treaty between Canada and
the United States is included below, together with a brief outline of certain
taxes, including withholding provisions to which United States security holders
who are non-residents of Canada are subject under existing laws and regulations
of Canada and the United States; the consequences, if any, of state and local
taxes are not considered. Security holders should seek the advice of their own
tax advisors, tax counsel or accountants with respect to the applicability or
effect on their own taxes. The Company has not paid dividends on the Shares in
any of its last five fiscal years, and has no plans to pay dividends in the
immediate future. For additional particulars, see "Item 8 - Selected Financial
Data - Dividend Policy".
Canadian federal tax legislation would require a 25% withholding from any
dividends paid or deemed to be paid to the Company's non-resident shareholders.
However, a company resident in the United States that beneficially owns at least
10% of the voting stock of the Company would have this rate reduced to 5%
through the tax treaty between Canada and the United States. The rate of
Canadian non-resident withholding may not exceed 15% of the dividend in the case
of United States shareholders other than as described above. The amount of
stock dividends paid to non-residents of Canada would be subject to withholding
tax at the same rate as cash dividends. The amount of a stock dividend (for tax
purposes) would be equal to the amount by which the stated capital of the
Company had increased by reason of the payment of such a dividend. Interest
paid or deemed to be paid on the Company's debt securities held by non-Canadian
residents may also be subject to Canadian withholding tax, depending upon the
terms and provisions of such securities and any applicable tax treaty.
A non-resident holder is not subject to tax in Canada in respect of a capital
gain realized upon the disposition of a Share unless the Share represents
"taxable Canadian property" to the holder thereof. The Shares will be
considered taxable Canadian property to a non-resident holder only if:
(a) the non-resident holder;
(b) persons with whom the non-resident holder did not deal at arm's
length; or
(c) the non-resident holder and persons with whom he did not deal at
arm's length,
owned not less than 25% of the issued shares of any class or series of the
Company at any time during the five year period preceding the disposition. In
the case of a non-resident holder to whom Shares represent taxable Canadian
property and who is resident in the United States, no Canadian taxes will
generally be payable on a capital gain realized on such Shares by reason of the
Treaty unless:
(a) the value of such Shares is derived principally from real property
(including resource property) situated in Canada,
(b) they formed part of the business property or were otherwise effectively
connected with a permanent establishment or fixed base that the holder
has or had in Canada within the 12 months preceding the disposition; or
(c) the holder is a U.S. LLC which is not subject to tax in the U.S.
If subject to Canadian tax on such a disposition, the taxpayer's capital gain
(or capital loss) from a disposition is the amount by which the taxpayer's
proceeds of distribution exceed (or are exceeded by) the aggregate of the
<PAGE>
Page 32
taxpayer's adjusted cost base of the shares and reasonable expenses of
disposition. For Canadian income tax purposes, the "taxable capital gain" is
equal to three quarters of the capital gain.
This discussion is not intended to be, nor should it be construed to be, legal
or tax advice to any holder or prospective holder of Shares and no opinion or
representation with respect to the United Sates federal income tax consequences
to any such holder or prospective holder is made. Holders and prospective
holders are urged to consult their own tax advisors with respect to their
particular circumstances.
ITEM 8. SELECTED FINANCIAL DATA
The Company has a limited history of operations and has not generated any
operating revenues. The following table sets forth selected financial data for
the Company which has been derived from the audited financial statements of the
Company. The selected financial data provided below are not necessarily
indicative of the future results of operations or financial performance of the
Company. This information should be read in conjunction with the Company's
Financial Statements and "Item 9 - Management's Discussion & Analysis of
Financial Condition & Results of Operations" herein for a discussion of those
factors affecting comparability of the data in the following table.
The following financial data is expressed in Canadian dollars as used in the
Company's financial statements. The exchange rate for conversion to US dollars
is detailed in "Currency Exchange Rates".
<PAGE>
Page 33
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
SELECTED FINANCIAL DATA
- -----------------------------------------------------------------------------------------------------------------------------------
Six Six Fiscal Year Ended December 31
Months Months
Ended Ended
June 30, June 30, 1998 1997 1996(1) 1995 1994
1999 1998
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
REVENUE
Interest $ 1,425 $ 99 $ 912 $ 1,387 $ 18,016 $ --- $ ---
Grant & Miscellaneous 2,400 --- 1,667 --- ---
------- -------- -------- -------- -------- ------- -------
3,825 99 912 1,387 19,683 --- ---
- -----------------------------------------------------------------------------------------------------------------------------------
EXPENSES
General and Administrative 78,226 53,020 166,855 147,618 476,943 286,233 294,617
Research & Development 18,204 5,919 31,055 77,548 348,734 370,211 367,237
------- ------ ------- ------- ------- ------- -------
96,431 58,939 197,910 225,166 825,677 656,444 661,854
- -----------------------------------------------------------------------------------------------------------------------------------
LOSS BEFORE UNDERNOTED ITEMS 92,606 58,840 196,998 223,779 805,994 656,444 661,854
Loss (gain) on disposition of
of capital assets --- --- 4,673 --- --- --- (1,256)
Loss on disposition of
intangible assets --- --- --- 38,965 --- --- ---
Write-down of intangible
assets --- --- --- --- 60,180 --- 28,580
Refundable Investment Tax
Credit --- --- --- --- (40,500) (97,000) (196,000)
NET LOSS 92,606 58,840 201,671 262,744 825,674 559,444 493,178
DEFICIT, BEGINNING 2,669,376 2,467,705 2,467,705 2,204,961 1,359,357 799,913 306,735
- -----------------------------------------------------------------------------------------------------------------------------------
FAIR VALUE ADJUSTMENT --- --- --- --- 19,930 --- ---
- -----------------------------------------------------------------------------------------------------------------------------------
DEFICIT, ENDING $ 2,761,982 $2,526,545 $2,669,376 $2,467,705 $2,204,961 $1,359,357 $ 799,913
- ---------------------------========================================================================================================
Net Loss per Common Share $ 0.004 $ 0.003 $ 0.010 $ 0.013 $ 0.048 $ 0.053 $ 0.214
- ---------------------------========================================================================================================
Weighted Average Number
of Outstanding Shares 20,902,383 19,970,452 20,137,118 19,970,452 17,360,000 10,522,000 2,305,635
- ---------------------------========================================================================================================
BALANCE SHEET DATA:
Current Assets $ 861,227 $ 142,310 $ 87,606 $ 10,586 $ 244,865 $ 355,905 $ 407,469
Capital Assets 1,296 4,078 --- 12,988 16,566 17,025 21,957
Other Assets --- --- --- --- --- 55,506 94,261
Intangible Assets 153,292 139,082 147,462 143,609 204,074 253,606 210,959
LIABILITIES $ 894,832 $ 209,225 $ 137,654 $ 32,098 $ 67,676 $ 775,785 $ 993,654
SHARE CAPITAL $ 2,882,965 $ 2,602,790 $ 2,712,790 $ 2,602,790 $ 2,602,790 $ 1,265,614 $ 504,905
SHARES TO BE ISSUED $ --- $ --- $ 54,000 $ --- $ --- $ --- $ ---
DEFICIT $ 2,761,982 $ 2,526,545 $ 2,669,376 $ 2,467,705 $ 2,204,961 $ 1,359,357 $ 799,913
-----------------------------------------------------------------------------------------------------
<PAGE>
Page 34
OPERATING DATA:
Net Loss
Canadian GAAP $ 92,606 $ 58,840 $ 201,671 $ 262,744 $ 825,674 $ 559,444 $ 493,178
98,100 --- 162,000 --- 121,722 ---
-----------------------------------------------------------------------------------------------------
Add stock-based
compensation 98,100 --- 162,000 --- 121,722 --- ---
-----------------------------------------------------------------------------------------------------
U.S. GAAP 190,706 58,840 363,671 262,744 947,396 559,444 493,178
DEFICIT
Beginning, U.S. GAAP 2,953,098 2,589,427 2,589,427 2,326,683 1,379,287(2 799,913 306,735
Ending, U.S. GAAP 3,143,804 2,648,267 2,953,098 2,589,427 2,326,683 1,359,357 799,913
========= ========= ========= ========= ========= ========= =======
Loss per Share, U.S. GAAP $ 0.01 $ 0.01 $ 0.02 $ 0.02 $ 0.08 $ 0.07 $ 0.32
========== =========== ========== =========== ========== ========== ===========
Weighted Average Number of
Outstanding Shares
15,335,716 14,403,785 14,570,451 14,403,785 11,793,333 7,522,000 1,557,690
========== ========== ========== ========== ========== ========= =========
BALANCE SHEET DATA:
Share Capital
Canadian GAAP 2,882,965 2,602,790 2,712,790 2,602,790 2,602,790 1,265,614 540,905
U.S. GAAP 3,166,687 2,886,512 2,996,512 2,724,512 2,724,512 1,265,614 540,905
DEFICIT, ENDING
Canadian GAAP 2,761,892 2,526,545 2,669,376 2,467,705 2,204,961 1,359,357 799,913
U.S. GAAP 3,143,804 2,648,267 2,953,098 2,589,427 2,326,683 1,359,357 799,913
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) On April 24, 1996, BCFC and Immune Network amalgamated and continued
as the Company. On the effective date of the Amalgamation, the
issued share capital of the amalgamated company was 18,053,788 Shares
of which 4,263,309 (23.6%) were issued to BCFC shareholders and
13,790,479 (76.4%) were issued to Immune Network shareholders. The
amalgamation has been accounted for by the purchase method whereby
the Company is deemed to have acquired control of BCFC through the
business combination. Accordingly, the prior year financial figures
presented in the Financial Statements are those of the company.
(2) Beginning deficit in 1996 was adjusted for fair value adjustment of
$19,930. Detail is provided in Note 11 to the Financial Statements.
Under U.S. GAAP, stock based compensation to non-employees must be recorded at
the fair market value of the options granted. This compensation, determined
using a black-Scholes pricing model, is expenses over the vesting periods of
each option grant. For the purposes of reconcilation to U.S. GAAP, the Company
would record additional compensation expense of $98,100 in the six months ended
June 30, 1999, $162,000 in 1998 and $121,722 in 1996, in respect of options
granted to non-employees.
U.S. GAAP also requires escrow shares to be treated as contingent shares and as
such they are not included as outstanding shares for the purpose of calculating
earnings per share. When released from escrow, the fair market value of these
shares will be recognized as compensatory benefit and will be charged to
income.
To date, the Company has not paid any dividends on the Shares and it does not
expect to pay dividends in the foreseeable future.
The financial statements have been prepared in accordance with accounting
principles generally accepted in Canada ("Canadian GAAP"). These principles,
as applied to the Company, do not differ materially from those generally
accepted in the United States ("U.S. GAAP"), except for certain additional
disclosure required under U.S. GAAP. The application of the financial data,
in the case of the Company, conforms in all material respects for the periods
presented with U.S. GAAP, except as disclosed in Note 15 to the Financial
Statements. For a comparison of these differences between Canadian GAAP and
U.S. GAAP, see Note 15 to the Financial Statements.
<PAGE>
Page 35
ITEM 9. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION &
RESULTS OF OPERATIONS
General
- -------
The following discussion and analysis should be read in conjunction with the
Financial Statements and related notes. The Financial Statements are prepared
in accordance with Canadian generally accepted accounting principles. A
discussion of differences between Canadian and United States generally accepted
accounting principles is provided in Note 15 to the Financial Statements.
Since incorporation of Immune Network as a biotechnology company, the Company
has devoted its fiscal resources primarily to fund its research and development
programs. The Company's business remains at an early stage of development and
has been unprofitable. The Company expects to incur additional losses for the
next several years as it invests in product research and development,
pre-clinical studies and clinical trials, and regulatory compliance. The
Company's business is subject to significant risks, including uncertainties
associated with the regulatory approval process and with obtaining and enforcing
patents. See "Item 1 - Description of Business - Risk Factors".
Liquidity & Capital Resources
- -----------------------------
The Company has financed its operations primarily through equity financings,
government grants and tax credits. From January 1, 1994 to December 31, 1998,
the Company received approximately $2,712,790 in net proceeds from the sale of
equity securities.
Subsequent to the six month period ended June 30, 1999, the Company completed
two non-brokered private placements raising gross proceeds of $942,977. In
connection with this private placement, a total of 6,286,513 share purchase
warrants were issued, each warrant exercisable to purchase one Share at $0.15
in the first year and $0.18 in the second year.
The Company does not anticipate revenues from product sales for the foreseeable
future. Over the next several years, through preclinical development and the
early clinical stages of development, the Company expects to derive its sources
of funding primarily from equity financing. Additional funding may be obtained
through interest income. The long term sustainability of the Company is
expected to be achieved through collaborative and licensing arrangements and
the creation, development and ultimate disposition of intellectual property
All or a portion of the payments that may be received under such agreements
will likely be conditional upon the Company reaching certain developmental
milestones. As much as possible, the disposition of intellectual property is
intended to be carried out so as to ensure an appropriate balance between
future earnings potential and current liquidity.
Six Month Period Ended June 30, 1999
In February 1999 the Company completed a non-brokered private placement of
360,000 units at $0.15 per unit, each unit consisting of one Share and one
share purchase warrant exercisable for one year to purchase one additional
Share at $0.15.
<PAGE>
Page 36
The Company believes that cash on hand at June 30, 1999, in the amount of
$848,974, will not be sufficient to fund all of its currently planned research
and development activities. In addition to working capital on hand, the
Company will require additional funds for these purposes. The Company intends
to seek these funds through equity financing, collaborative arrangements with
corporate sponsors, or from other sources. The Company will continue to reply
on outside sources of financing to meet its capital needs beyond the next
fiscal year. However, there can be no assurance that additional financing will
be available on acceptable terms, if at all. If the Company is unable to raise
funds to satisfy its varying cash requirements, the Company's business,
financial condition and results of operations could be materially adversely
affected.
Year Ended December 31, 1998
During Fiscal 1998, the Company completed a private placement of 400,000 units
for total proceeds of approximately $80,000. Each unit consisted of one Share
and one share purchase warrant exercisable for one year to purchase one Share
at $0.20. At December 31, 1998, the Company had a working capital deficit of
approximately $48.
Year Ended December 31, 1997
There were no share capital transactions during Fiscal 1997.
Year Ended December 31, 1996
During Fiscal 1996, the Company raised approximately $572,620 pursuant to a
private placement of 1,590,611 at $0.36 per Share. This financing was done
before the amalgamation of Immune Network and BCFC on April 24, 1996. The
Company raised an additional $825,000 in a post-amalgamation private placement
of 1.5 million units, each unit consisting of one Share and one share purchase
warrant exercisable for one year to purchase one Share at $0.55.
Results of Operations
- ---------------------
Six Month Period Ended June 30, 1999
During the six months ended June 30, 1999, the Company reported a net loss of
$92,606 ($0.004 per Share) as compared to $58,840 ($0.003 per Share) for the
same period in 1998. For the six months ended June 30, 1999, the Company
expended $11,209 on its research activities as compared to nil during the six
months ended June 30, 1998. The increase in research and development
expenditures was primarily due to research activities. For the six months ended
June 30, 1999, the Company expended $78,226 in its administrative activities as
compared to $53,020 during the six months ended June 30, 1998. The increase in
administrative expenses is primarily due to the expansion of the Company's
administrative support staff with associated increases in overhead.
Year Ended December 31,1998
During Fiscal 1998, the Company reported a net loss of $201,671 ($0.010 per
Share) as compared to $262,744 ($0.013 per Share) during Fiscal 1997. Included
in the net loss for Fiscal 1998 figure was $10,795 in amortization. During
Fiscal 1998, the Company expended $20,260 in its research activities as compared
to $61,772 during Fiscal 1997. This decrease of $41,512 in research and
development expenditures can be attributed primarily to the decrease in
expenditures in scientific collaboration ($20,892), research salaries and
benefits ($8,294) and consulting fees ($11,022).
<PAGE>
Page 37
Year Ended December 31, 1997
During Fiscal 1997, the Company reported a net loss of $262,744 ($0.013 per
Share) as compared to $825,674 ($0.048 per Share) during Fiscal 1996. Included
in the net loss for Fiscal 1997 figure was $38,965 in loss on a disposition of
intangible assets. During Fiscal 1997 the Company expended $147,618 on
administrative expenses as compared to $476,943 during Fiscal 1996. The
significant decrease in administration expenses was attributed to costs
associated the amalgamation of Immune Network and BCFC in Fiscal 1996, and an
increase during that year in corporate communication activities.
During Fiscal 1997, the Company expended $77,548 in its research activities as
compared to $348,734 during Fiscal 1996. This decrease of $271,186 in research
and development expenditures can be primarily attributed to the decrease in
scientific collaboration ($83,310), research salaries and benefits ($88,883)
and consulting fees ($69,113).
Year Ended December 31, 1996
During Fiscal 1996, the Company reported a net loss of $825,674 ($0.048 per
Share) as compared to $559,444 ($0.053 per Share) during Fiscal 1995. Included
in the December 31, 1996 figure was $60,180 in a write-down of intangible
assets. During Fiscal 1996, the Company expended $288,490 in research
activities (net of refundable investment tax credits of $40,500) and $475,276
in administration expenses. The significant increase in administrative
expenses from Fiscal 1995 to Fiscal 1996 ($189,043) is attributable to the
costs associated with the amalgamation of Immune Network and BCFC, and an
increase in corporate communication activities.
ITEM 9A. MARKET RISK
The Company does not hold any market risk sensitive instruments and therefore
no disclosure is required under this Item.
ITEM 10. DIRECTORS AND OFFICERS OF THE COMPANY
As at September 30, 1999, the directors and executive officers of the Company,
the positions held by them and the period during which they have served as a
director or executive officer are as follows:
- -------------------------------------------------------------------------------
Name Position Period Served
- -------------------------------------------------------------------------------
Allen I. Bain AC President, Chief Executive Since May 14, 1999
Officer & Director
- -------------------------------------------------------------------------------
Robert J. Gayton AC Director Since May 31, 1994
- -------------------------------------------------------------------------------
Michael D. Grant Director and Vice-President, Since December 19, 1992
Research
- -------------------------------------------------------------------------------
Donald R. Rix AC Director Since June 24, 1996
- -------------------------------------------------------------------------------
<PAGE>
Page 38
- -------------------------------------------------------------------------------
Ronald G. Paton Corporate Secretary Since June 10, 1999
- -------------------------------------------------------------------------------
Ron Kertesz Commercial Director(1) Since June 29, 1999
- -------------------------------------------------------------------------------
Danny Lowe Controller Since June 29, 1999
- -------------------------------------------------------------------------------
(AC) Member of the audit committee of the Company.
(1) Senior officer position.
Each of the director's term of office expire at the Company's next annual
general meeting. The term of office for the Company's officers and members of
the audit committee expires at its next annual general meeting. The board of
directors appoints the Company's officers and the audit committee for the
ensuing year following each annual general meeting.
ITEM 11. COMPENSATION OF DIRECTORS AND OFFICERS
The aggregate amount of compensation paid by the Company during Fiscal 1998 to
all officers and directors, as a group, for services in all capacities was
$40,208.
None of the Company's directors and officers have received any manner of
compensation for services provided in their capacity as directors or officers
during the Company's most recently completed financial year with the exception
of stock options granted to certain directors and officers of the Company (see
"Item 12 - Options to Purchase Securities from the Company").
ITEM 12. OPTIONS TO PURCHASE SECURITIES FROM THE COMPANY
As at September 30, 1999, the Company had reserved an aggregate of 9,056,513
Shares for issuance as follows:
Incentive Stock Options
As at September 30, 1999, the Company had outstanding incentive stock options
pursuant to which an aggregate of 2,590,000 Shares may be purchased from the
Company as follows:
- -------------------------------------------------------------------------------
Optionees Exercise Price ($) Expiry Date Shares Under Option
- -------------------------------------------------------------------------------
Victor Jones $0.15 May 20, 2003 200,000
- -------------------------------------------------------------------------------
Robert J. Gayton $0.15 May 20, 2003 200,000
- -------------------------------------------------------------------------------
Michael D. Grant $0.15 May 20, 2003 200,000
- -------------------------------------------------------------------------------
Donald Rix $0.15 May 20, 2003 200,000
- -------------------------------------------------------------------------------
Jennifer Nestoruk $0.15 May 20, 2003 60,000
- -------------------------------------------------------------------------------
<PAGE>
Page 39
- -------------------------------------------------------------------------------
Optionees Exercise Price ($) Expiry Date Shares Under Option
- -------------------------------------------------------------------------------
Allen I. Bain $0.15 May 21, 2004 500,000
- -------------------------------------------------------------------------------
Ron Kertesz $0.15 May 21, 2004 150,000
$0.23 July 25, 2004 160,000
- -------------------------------------------------------------------------------
Ronald G. Paton $0.23 June 9, 2004 110,000
- -------------------------------------------------------------------------------
Danny Lowe $0.23 June 9, 2004 150,000
- -------------------------------------------------------------------------------
Michael Walker $0.23 June 9, 2004 130,000
- -------------------------------------------------------------------------------
Clive Page $0.23 June 9, 2004 155,000
- -------------------------------------------------------------------------------
Sultan Karim $0.23 July 25, 2004 100,000
- -------------------------------------------------------------------------------
Interactive Capital
Partners Ltd. $0.23 July 25, 2004 100,000
- -------------------------------------------------------------------------------
Alexander Zolotoy $0.23 July 25, 2004 50,000
- -------------------------------------------------------------------------------
Ping Quin $0.23 July 25, 2004 50,000
- -------------------------------------------------------------------------------
Talieh Shahrokhi $0.23 July 25, 2004 25,000
- -------------------------------------------------------------------------------
Matt Sadler $0.23 July 25, 2004 25,000
- -------------------------------------------------------------------------------
Brendan Payne $0.23 July 25, 2004 25,000
- -------------------------------------------------------------------------------
A total of 1,670,000 stock options are held by directors and senior officers of
the Company.
All of the stock options are non-transferable and terminate on the earlier of
the expiry date or the 30th day following the day on which the optionee ceases
to be eligible to hold stock options pursuant to the applicable VSE policy.
Share Purchase Warrants
As at September 30, 1999, share purchase warrants were outstanding entitling the
holders to purchase a total of 6,466,513 Shares as follows:
- -------------------------------------------------------------------------------
Number of Warrants Exercise Price Expiry Date
------------------ -------------- -----------
180,000 $0.15 December 2, 1999
- -------------------------------------------------------------------------------
6,286,513(1) $0.15 1st year July 13, 2000
$0.18 2nd year July 13, 2001
- -------------------------------------------------------------------------------
(1) A total of 76,500 share purchase warrants are held by directors and
senior officers of the Company.
There are no assurances that any of the incentive stock options or share
purchase warrants will be exercised.
<PAGE>
Page 40
ITEM 13. INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS
To the knowledge of current management, no director or officer of the Company
or any shareholder holding of record or beneficially, directly or indirectly,
owning more than 10% of the issued and outstanding Shares, or any of their
respective associates or affiliates or any relative or spouse of any of the
foregoing who has the same home, has had any material interest, directly or
indirectly, in any material transaction with the Company, or in any proposed
material transaction, since January 1, 1996.
Pursuant to a Loan Agreement dated September 13, 1999, Allen Bain, President,
CEO and a director of the Company, is presently indebted to the Company in the
sum of approximately $34,000. The loan is secured by a pledge of Shares and is
offset against rental payments owing by the Company. The rate of interest
charged on the principal sum outstanding is equal to Revenue Canada's
prescribed rate of interest in effect from time to time.
ITEM 14. DESCRIPTION OF SECURITIES TO BE REGISTERED
The shares to be registered are the Company's common shares without par value.
As at September 30, 1999, the authorized capital of the Company consists of
100,000,000 Shares of which 27,939,465 were issued as fully paid and
non-assessable. In addition, on such date, 9,056,513 Shares were reserved for
issuance against the exercise of outstanding stock options or share purchase
warrants (see "Item 12 - Options to Purchase Securities from the Company").
Shares
The holders of Shares are entitled to vote at all meetings of shareholders of
the Company, to receive dividends if and when declared by the directors, and
subject to the rights of the holders of any Shares ranking in priority to or on
parity with the Shares, to receive the remaining property and assets of the
Company in the event of liquidation, dissolution or winding up of the Company.
The Shares have no pre-emptive, redemption, purchase or conversion rights.
There are no sinking fund provisions in relation to the Shares and they are not
liable to further calls or to assessment by the Company. The British Columbia
Company Act provides that the rights and provisions attached to any class of
shares may not be modified, amended or varied unless consented to by special
resolution passed by a majority of not less than of the votes cast in person
or by proxy by holders of shares of that class.
The Company has not declared or paid any dividends on its outstanding Shares
since its inception and does not anticipate that it will do so in the
foreseeable future. The declaration of dividends is within the discretion of
the Company's board of directors. The Company is limited in its ability to pay
dividends on its Shares by limitations under British Columbia law relating to
the sufficiency of profits from which dividends may be paid.
Escrow Shares
The Company has 5,566,667 Shares (the "Escrow Shares") deposited with Montreal
Trust Company of Canada (the "Escrow Agent") pursuant to an escrow agreement
dated December 7, 1995 (the "Escrow Agreement"). The Escrow Agreement provides
that the Escrow Shares may not be traded in or released, nor may the Company,
its transfer agent or escrow holder make any transfer or record of any trading
of the Escrow Shares without the consent of the executive director of the
British Columbia Securities Commission or, while the Shares are listed on the
Vancouver Stock Exchange, the consent of the Vancouver Stock Exchange.
<PAGE>
Page 41
Release of the Escrow Shares is based upon the Company's cumulative cash flow.
Escrow Shares, while not freely tradeable, carry voting rights equal to those
of all other Shares. While not freely tradeable, Escrow Shares may be
transferred within escrow between principals of a listed company provided that
consent is first obtained from the Vancouver Stock Exchange. If a holder of
Escrow Shares ceases to be a principal of the Company, such holder shall be
entitled to retain ownership of the Escrow Shares and shall not be required to
transfer same.
The Escrow Agreement provides that the Escrow Shares must be surrendered to the
Company for cancellation:
(a) at the time of a major reorganization of the Company, if required as a
condition of the consent to the reorganization by the Vancouver Stock
Exchange;
(b) where the Shares have been subject to a cease trade order issued under
the British Columbia Securities Act for a period of two consecutive
years; or
(b) April 24, 2006.
ITEM 15. DEFAULTS UNDER SENIOR SECURITIES
None.
ITEM 16. CHANGES IN SECURITIES AND CHANGES IN SECURITY FOR REGISTERED
SECURITIES
None.
ITEM 17. FINANCIAL STATEMENTS
The consolidated financial statements of the Company have been prepared on the
basis of Canadian GAAP. A reconciliation to U.S. GAAP is included therein.
The Financial Statements filed as part of this Registration Statement are
listed in "Item 19 - Financial Statements & Exhibits".
<PAGE>
Page 42
ITEM 18. FINANCIAL STATEMENTS
Not applicable.
ITEM 19. FINANCIAL STATEMENTS & EXHIBITS
(a) Financial Statements
The Financial Statements and related notes of the Company, as required under
Item 17, comprise of the following:
Auditors' Report dated February 12, 1999 and February 12, 1998
Balance Sheets as of December 31, 1998 and 1997.
Statements of Operations and Deficit for the years ended December 31,
1998, 1997 and 1996.
Statements of Changes in Financial Position for the years ended
December 31, 1998, 1997 and 1996.
Notes to the Financial Statements.
(b) Exhibits
The following exhibits are filed as part of this Registration Statement.
(1) Corporate Documentation
-----------------------
The articles of incorporation and bylaws corresponding thereto
currently in effect are as follows:
1-1 Certificate of Amalgamation of the Company dated April 24, 1996;
1-2 Form 21, Special Resolution, of the Company filed on March 14,
1997, with respect to an amendment to the articles of
incorporation;
1-3 Form 1, Memorandum, of the Company approved by the British
Columbia Registrar of Companies May 2, 1995; and
1-4 Articles of incorporation of the Company.
(2) Instruments Defining the Rights of Holders of Securities Being
Registered
--------------------------------------------------------------
See Exhibit 1-4 above.
<PAGE>
Page 43
(3) Material Contracts
------------------
3-1 Escrow Agreement dated December 7, 1995;
3-2 Incentive Stock Option Agreements;
3-3 Licensing Agreement dated April 23, 1993 with the San Diego
Regional Cancer Center (now known as the Sidney Kimmel Cancer
Center)- to be filed by amendment;
3-4 Agreement dated December 15, 1997, as amended December 15, 1998,
with Immpheron, Inc. - to be filed by amendment;
3-5 Option Agreement dated July 9, 1999 with the University of British
Columbia - to be filed by amendment;
3-6 Joint Venture Agreement, dated August 12, 1999, with Bridge
Pharma, Inc. - to be filed by amendment;
3-7 Memorandum of Agreement, dated August 23, 1999, with Skye Boat,
Ltd. - to be filed by amendment;
3-8 Memorandum of Agreement, dated August 17, 1999, with Inexsis Inc.
and a Management Team represented by Ping Quin -to be filed by
amendment;
3-9 Executive Employment Agreement, dated May 21, 1999, with Allen
Bain; and
3-10 Loan Agreement, dated September 13, 1999, with Allen Bain.
<PAGE>
IMMUNE NETWORK RESEARCH LTD.
Vancouver, Canada
Financial Statements
For the Three Years Ended December 31, 1998
<PAGE>
CHERYL ARCHAMBAULT, INC.*
CHARTERED ACCOUNTANT *Practicing Through A Professional Organization
- -------------------------------------------------------------------------------
October 28, 1999
The Secretary
United States Securities and Exchange Commission
450 Fifth Street., N.W.
Washington, D.C. 20549
Dear Sirs,
Re: Immune Network Research Ltd.
- ---------------------------------
I refer to the Form 20-F - Statement of Registration submitted as at October
28, 1999, of the above noted company.
I have reported to the directors of the Company on the balance sheets as of
December 31, 1998 and 1997, and on the statements of operations and deficit and
changes in financial position for each of the years in the three year period
ended December 31, 1998.
My report on the financial statements was dated February 12, 1999.
I consent to the use in the above mentioned Form 20-F - Statement of
Registration, of my report dated February 12, 1999, to the Directors of Immune
Network Research Ltd. on the following financial statements:
Balance sheets as at December 31, 1998 and 1997;
Statements of operations and deficit and changes in financial position for
each of the years in the three year period ended December 31, 1998.
I report that I have read the Form 20-F - Statement of Registration and have no
reason to believe that there are any misrepresentations in the information
contained therein that is derived from the financial statements upon which I
have reported or that is within my knowledge as a result of my audit of such
financial statements.
This letter is provided to the securities regulatory authority to whom it is
addressed pursuant to the requirements of its securities legislation and not
for any other purpose.
Yours truly,
CHERYL ARCHAMBAULT, INC.
Chartered Accountant
/s/Cheryl Archambault, C.A.
DIRECT LINE: 231-7303 TEL: 231-7300 FAX: 231-7307
E-MAIL [email protected]
#152-8211 ACKROYD ROAD, RICHMOND, B.C. V6X 3J9
<PAGE>
Cheryl Archambault, Inc.*
*Practicing Through a Professional Corporation.
CHARTERED ACCOUNTANT
- ------------------------------------------------------------------------------
AUDITORS' REPORT
To the Directors of Immune Network Research Ltd.
I have audited the balance sheets of Immune Network Research Ltd. as at
December 31, 1998 and 1997, and the statements of operations and deficit
and changes in financial position for each of the years in the three year
period ended December 31, 1998. These financial statements are the
responsibility of the company's management. My responsibility is to express
an opinion on the financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform an audit to obtain reasonable
assurance 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.
In my opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as at December 31, 1998 and
1997, and the results of its operations and the changes in its financial
position for each of the years in the three year period ended December 31,
1998, in accordance with principles generally accepted in Canada.
/s/ Cheryl Archambault, C.A.
Richmond, B.C.
February 12, 1999
SUITE 152- 8211 ACKROYD ROAD, RICHMOND, B.C., V6X 3J9
Tel (604) 231-7300 Fax (604) 231-7307 E-mail [email protected]
<PAGE>
IMMUNE NETWORK RESEARCH LTD.
(Incorporated under the Company Act of British Columbia)
Balance Sheets
As at December 31, 1998 and 1997 (see Note 1).
(expressed in Canadian dollars)
- -------------------------------------------------------------------------------
1998 1997
- -------------------------------------------------------------------------------
Assets
Current assets:
Cash $ 76,992 $ 7,921
Accounts receivable 1,614 915
Deposits and prepaid expenses - 1,750
Share subscriptions receivable (Note 3) 9,000 -
- ------------------------------------------------------------------------------
87,606 10,586
Capital assets (Note 4) - 12,988
Intangible assets (Note 5 and 6) 147,462 143,609
- ------------------------------------------------------------------------------
$ 235,068 $ 167,183
- ------------------------------------------------------------------------------
Liabilities
Current liabilities:
Accounts payable and accrued liabilities $ 87,654 $ 32,098
- ------------------------------------------------------------------------------
87,654 32,098
Loan payable to shareholder (Note 7) 50,000 -
Commitments and contingent liabilities (Note 8)
Subsequent event (Note 13)
Share capital and deficit
Share capital - to be issued. (Note 3) 54,000 -
Share capital (Note 9) 2,712,790 2,602,790
Deficit (2,669,376) (2,467,705)
- -------------------------------------------------------------------------------
97,414 135,085
- -------------------------------------------------------------------------------
$ 235,068 $ 167,183
- -------------------------------------------------------------------------------
Approved on behalf of
the Board of Directors:
/s/ Allen I. Bain
- ------------------------
/s/ Robert J. Gayton
- ------------------------
See accompanying notes to financial statements
<PAGE>
IMMUNE NETWORK RESEARCH LTD.
Statements of Operations
For the years ended December 31, 1998, 1997 and 1996
(expressed in Canadian dollars)
- -------------------------------------------------------------------------------
1998 1997 1996
- -------------------------------------------------------------------------------
Administrative expenses
Advertising $ 35,249 $ 4,173 $ 24,369
Conferences - - 2,025
Consulting 58,983 56,938 269,909
Interest and bank charges 3,861 429 9,294
Legal, audit and accounting 17,598 48,287 55,436
Office supplies 9,266 9,248 13,543
Postage 8,793 3,146 8,121
Promotion and entertainment 439 478 31,341
Rent 11,387 8,909 11,201
Salaries and benefits - - 7,330
Securities, brokerage and transfer
agent fees 12,265 7,606 6,694
Subscriptions 158 673 3,117
Telephone 6,504 7,652 19,147
Travel 2,352 79 15,416
- ------------------------------------------------------------------------------
166,855 147,618 476,943
Research expenses - per schedule 31,055 77,548 348,734
- -------------------------------------------------------------------------------
Less:
Refundable investment tax credits
(Note 10) - - (40,500)
Loss before other items 197,910 225,166 785,177
Other items:
Interest income (912) (1,387) (18,016)
Miscellaneous income - - ( 1,667)
Write-down of intangible assets - - 60,180
Loss on disposition of capital assets
(Note 3) 4,673 - -
Loss on disposition of intangible
assets (Note 4) - 38,965 -
- -------------------------------------------------------------------------------
3,761 37,578 40,497
- -------------------------------------------------------------------------------
Net loss for the year $ 201,671 $ 262,744 $ 825,674
- -------------------------------------------------------------------------------
Weighted average number of shares
outstanding 20,137,118 19,970,452 17,360,000
Loss per share $ 0.01 $ 0.01 $ 0.05
=========== ========== ===========
See accompanying notes to financial statements
<PAGE>
IMMUNE NETWORK RESEARCH LTD.
Statements of Deficit
For the years ended December 31, 1998, 1997 and 1996
(expressed in Canadian dollars)
- -------------------------------------------------------------------------------
1998 1997 1996
- -------------------------------------------------------------------------------
Deficit at beginning of year $2,467,705 $2,204,961 $1,359,357
Net loss for the year 201,671 262,744 825,674
Fair value adjustment (Note 11) - - 19,930
- -------------------------------------------------------------------------------
Deficit at end of year $2,669,376 $2,467,705 $2,204,961
- -------------------------------------------------------------------------------
IMMUNE NETWORK RESEARCH LTD.
Schedules of Research Expenses
For the years ended December 31, 1998, 1997 and 1996
(expressed in Canadian dollars)
- -------------------------------------------------------------------------------
1998 1997 1996
- -------------------------------------------------------------------------------
Research expenses
Consulting (net of grants received) $ 2,000 $ 13,022 $ 82,135
Amortization 10,795 15,776 19,744
Laboratory material - 383 5,823
Laboratory supplies - 406 1,246
Salaries and benefits - 8,294 97,177
Scientific collaboration 18,260 39,152 122,462
Rent - - 5,150
Travel - 515 14,997
- -------------------------------------------------------------------------------
$ 31,055 $ 77,548 $ 348,734
- -------------------------------------------------------------------------------
See accompanying notes to financial statements
<PAGE>
IMMUNE NETWORK RESEARCH LTD.
Statements of Changes in Financial Position
For the years ended December 31, 1998 and 1997 and 1996
(expressed in Canadian dollars)
- -------------------------------------------------------------------------------
1998 1997 1996
- -------------------------------------------------------------------------------
Operating activities
Net loss for the year $ (201,671) $ 262,744 $ 825,674
Items not involving cash
Amortization 10,795 15,776 19,744
Loss on write-down of capital assets 4,673 - 60,180
Loss on disposition of intangible
assets - 38,965 -
- -------------------------------------------------------------------------------
(186,203) (208,003) 745,750
Accounts receivable (699) 2,528 26,749
Refundable investment tax credits - - 293,000
Deposits and prepaid expenses 1,750 5,250 (2,000)
Accounts payable and accrued liabilities 55,556 (35,578) (162,280)
- -------------------------------------------------------------------------------
(129,596) (235,803) (590,281)
Financing activities
Deferred share issue costs - - 55,506
Proceeds from (repayment of)
Related party debt - - (150,000)
Shareholder loan 50,000 - (100,000)
Share subscriptions received 45,000 - (332,320)
Common shares issued 110,000 - 1,337,176
- -------------------------------------------------------------------------------
205,000 - 810,362
Investing activities
Intangible assets (13,951) (14,698) (25,359)
Capital assets - - (3,694)
Proceeds from disposal of capital
assets 7,618 - -
Proceeds from disposal of intangible
assets - 24,000 -
- -------------------------------------------------------------------------------
(6,333) 9,302 (29,053)
- -------------------------------------------------------------------------------
Increase (decrease) in cash 69,071 (226,501) 191,028
Cash, beginning of year 7,921 234,422 28,366
Cash, amalgamation of BCFC (Note 16) - - 15,028
- -------------------------------------------------------------------------------
Cash, end of year $ 76,992 $ 7,921 $ 234,422
- -------------------------------------------------------------------------------
See accompanying notes to financial statements
<PAGE>
IMMUNE NETWORK RESEARCH LTD.
Notes to the Financial Statements
December 31, 1998 and 1997
- -------------------------------------------------------------------------------
1. Nature of operations
The Company is in the development stage and currently derives no revenues from
its operations. The Company's ability to remain as a going concern is
dependent on additional capital being raised to fund its future operations
and on-going research and development activities. The Company has inadequate
working capital to continue operations for the year. It is not possible to
predict whether financing efforts will be successful or whether the Company
will be able to secure the necessary research agreements in order to continue
its operations.
The financial statements have been prepared assuming the Company will continue
as a going concern. Accordingly, the financial statements do not give effect
to adjustments that would be necessary should the Company not be able to
continue as a going concern and, therefore, be required to realize its assets
and liquidate its liabilities in other than the normal course of business and
at amounts different from those in the accompanying financial statements.
2. Summary of significant accounting policies
The financial statements have been prepared in accordance with accounting
principals generally accepted in Canada. A reconciliation of amounts presented
in accordance with United States generally accepted accounting principles is
detailed in Note 15. Because a precise determination of many assets and
liabilities is dependent upon future events, the preparation of financial
statements necessarily involves the use of management's estimates and
approximations. Actual results could differ from those estimates.
The following is a summary of significant accounting policies used in
preparation of the financial statements:
a. Capital assets
Capital assets are recorded at cost. Depreciation is provided on a
declining balance basis over the expected useful lives of the assets at
the following annual rates:
Office equipment 20 %
Computers 30 %
Depreciation is reduced to one half the normal rate in the year of
acquisition for the respective assets.
b. Intangible assets
Intangible assets are recorded at the lower of cost or net realizable
value. Amortization of intellectual property is provided on a straight
line basis over 20 years. The patent is amortized over the life of the
patent which is 17 years from the date of issuance.
c. Loss per share
Loss per share is calculated based on the weighted average number of
shares outstanding. Fully diluted loss per share is not presented as
the effect of an exercise of outstanding share purchase options is
anti-dilutive.
<PAGE>
Page 2
IMMUNE NETWORK RESEARCH LTD.
Notes to the Financial Statements
December 31, 1998 and 1997
- -------------------------------------------------------------------------------
3. Share capital to be issued
Share capital to be issued consists of amounts received and receivable
in advance of the issuance of shares. During the year the Company
received $45,000 for 360,000 at $.15 per share. The balance of $9,000
was received subsequent to year end. (See subsequent event note 11).
4. Capital assets
- -------------------------------------------------------------------------------
1998 1997
- -------------------------------------------------------------------------------
Furniture and equipment $ 38,072 $ 38,072
Less: accumulated amortization (25,781) (25,084)
Less: proceeds from disposal of
capital assets (7,618) -
Less: loss on disposal of capital
assets (4,673) -
- -------------------------------------------------------------------------------
$ - $ 12,988
- -------------------------------------------------------------------------------
During the year the Company disposed of its computer and laboratory
equipment to a private company owned by two of the Company's research
consultants. A loss of $4,673 was incurred on the transaction.
5. Intangible assets
Intangible assets consists of patents, filings in respect of patent
applications and intellectual property.
On December 15, 1998 the Company was issued U.S. Patent Number
5,849,583 titled Anti-idiotypic antibody and its use in diagnosis and
therapy in HIV-related disease. The patent has a life of 17 years from
the date of issuance.
During 1997, the Company sold a patent and the rights to other
intellectual property to a shareholder and incurred a loss of $38,965 on
the transaction.
- -------------------------------------------------------------------------------
1998 1997
- -------------------------------------------------------------------------------
Intangible assets $ 202,529 $ 188,507
Less: accumulated amortization (55,067) (44,968)
- -------------------------------------------------------------------------------
$ 147,462 $ 143,609
- -------------------------------------------------------------------------------
6. Research joint venture
During 1997 the Company entered into a research joint venture agreement
with a U.S. private research Corporation (the "U.S. Corporation"). The
agreement provides that, in addition to other terms, the U.S.
Corporation will earn a fifty percent interest in certain of the
Company's intellectual property, provided it completes a budgeted
research program and a formal report on the research suitable for
publication in a scientific journal by December 31, 1998. The terms of
this agreement were extended to March 31, 1999 by mutual agreement. The
ultimate percentage of ownership in the Company's intellectual property
will also depend on each party's ability to fund further research.
<PAGE>
Page 3
IMMUNE NETWORK RESEARCH LTD.
Notes to the Financial Statements
December 31, 1998 and 1997
- -------------------------------------------------------------------------------
7. Loan payable to shareholder
During the year the Company borrowed $50,000 (the "Principal") from a
shareholder who holds less than 10% of the outstanding shares of the
Company. The loan plus any unpaid interest is due on or before June 15,
2001. The loan bears interest at 12% to be paid quarterly. As at year
end, $3,371 of interest has been accrued on the loan.
The lender may, at any time, convert the Principal to common shares of
the Company at a price of $.15 per share. The conversion price will
increase by $.05 per share each year. The Company can request
conversion at any time after June 15, 1999.
8. Commitments and contingent liabilities
a. University of British Columbia
------------------------------
The research agreement with the University of British Columbia expired
on December 31, 1996. The Company currently has an outstanding balance
owing of $18,700.
b. Sidney Kimmel Cancer Center- (formerly San Diego Regional Cancer Centre)
---------------------------
Under an exclusive licensing agreement entered into during 1993, the
Company is required to pay to the Sidney Kimmel Cancer Centre a royalty
equal to 2% of net sales of therapeutic licensed products and 5% of net
sales of diagnostic licensed products resulting from 1F7 Antibody
technology. In accordance with the joint venture research agreement
(Note 6), this cost will be a cost to the joint venture in the event
that the U.S. Corporation becomes entitled to a fifty percent interest
in certain of the Company's intellectual property.
c. Contingent liability
--------------------
The Company was included as a defendant with the Genesis Group in an
action in the Supreme Court of British Columbia regarding an alleged
unpaid finders fee. Management is of the view, the action is without
merit and believes no liability will result from this action.
Accordingly, no liability has been recorded in the financial statements.
9. Share capital
a. Authorized
100,000,000 common shares without par value.
(25,000,000 common shares without par value -1995)
Number
b. Issued and fully paid. of Shares Amount
---------- ------
INR (pre-amalgamation)
Balance, December 31, 1995 7,932,878 $ 1,265,614
Private offering @ $0.36 per share 1,590,612 572,620
Issued to the University of
British Columbia 25,000 9,000
Less: cancellation of escrow shares ( 3,800,000) ( 10,577)
------------ -----------
Pre-amalgamation outstanding shares 5,748,490 $ 1,836,657
=========== ===========
5,748,790 shares exchanged on a 4 new
for 3 old basis 7,664,653 $ 1,836,657
=========== ===========
<PAGE>
Page 4
IMMUNE NETWORK RESEARCH LTD.
Notes to the Financial Statements
December 31, 1998 and 1997
- -------------------------------------------------------------------------------
c. Immune Network Research Ltd. ("INRL")
Balance at December 31, 1995 - -
Issued on amalgamation 11,927,962 $ 4,121,993
Elimination of share capital upon
amalgamation (2,285,336)
---------
1,836,657
Escrow shares 5,566,667 55,667
Corporate finance fee 55,556 15,000
Finder's fee 503,603 135,973
------- -------
Balance prior to public offering 18,053,788 2,043,297
Public offering @ $0.55 per share 1,500,000 825,000
Exercise of stock options @ $0.22
per share 191,664 42,166
Greenshoe option @ $0.55 per share 225,000 123,750
Less: share issue costs - ( 431,423)
-------- --------
Balance at December 31, 1997 and 1996 19,970,452 $ 2,602,790
Balance at December 31, 1997 19,970,452 $ 2,602,790
Private placement at @$0.20 per share 400,000 80,000
Exercise of stock options @$0.15 per share 200,000 30,000
- -------------------------------------------------------------------------------
Balance at December 31, 1998 20,570,452 $ 2,712,790
- -------------------------------------------------------------------------------
d. Share purchase options
Share purchase options outstanding are as follows:
Number Option
of Shares Price
--------- -----
Expiry date:
May 7, 2001 100,000 $0.55
May 3, 2003 1,185,000 $0.15
May 25, 2003 300,000 $0.15
September 23, 2003* 150,000 $0.15
---------
1,735,000
=========
*options expired January 31, 1999.
e. 5,566,667 (1997 - 5,566,667) shares are held in escrow subject to the
direction and determination of the Vancouver Stock Exchange.
10. Refundable investment tax credits
In 1996, the Company became a public company and as such is no longer
eligible to claim refundable investment tax credits on current
expenditures. In 1996, the Company received $339,500 in investment tax
credits relating to 1994 through 1996. There are no further claims for
refundable tax credits outstanding.
<PAGE>
Page 5
IMMUNE NETWORK RESEARCH LTD.
Notes to the Financial Statements
December 31, 1998 and 1997
- -------------------------------------------------------------------------------
11. Business combination
Effective April 24, 1996, Bobby Cadillac's Food Corporation ("BCFC"), a
public company, and Immune Network Research Ltd. ("INR") amalgamated and
continued as Immune Network Research Ltd. ("INRL"). The issued share
capital of the amalgamated company was 18,053,788 shares (see Note 9),
of which 4,263,309 (23.6%) were issued to BCFC shareholders and 13,790,479
(76.4%) were issued to INR shareholders pre-amalgamation. The
amalgamation has been accounted for by the purchase method whereby the
company is deemed to have acquired control of BCFC through the business
combination. Details of the acquisition are as follows:
Net assets acquired at assigned values:
Total assets at book value $ 16,561
Total liabilities at book value ( 36,491)
----------
$( 19,930)
==========
In accordance with the amalgamation agreement:
i) INR (pre-amalgamation)
3,000,000 escrow shares and 800,000 common shares of INR were
exchanged for 5,566,667 escrow shares of INRL. 5,748,490 shares of
INR were exchanged for 7,664,653 shares of INRL
ii) BCFC (pre-amalgamation)
Of the 6,576,218 issued shares of BCFC, 231, 254 were canceled upon
amalgamation. A further 6,394,964 were exchanged for 4,263,309
shares of INRL.
The amalgamation was done concurrently with a public offering of 1,500,000
shares at $0.55 per share.
There was no goodwill on the acquisition. BCFC ceased operations
subsequent to the amalgamation.
12. Income tax losses
At December 31, 1998, the Company has operating losses of $1,698,668
expiring as follows, which may be carried forward to apply against future
years income for Canadian income tax purposes, subject to final
determination by taxation authorities.
Year Loss
---- ----
2000 $ 221,112
2001 119,369
2002 179,348
2003 615,911
2004 292,369
2005 270,559
----------
$ 1,698,668
==========
The Company has $835,000 of unused tax pools available to offset future
taxable income, subject to certain restrictions and final determination by
taxation authorities.
The potential income tax benefits related to these amounts have not been
recognized in these financial statements.
<PAGE>
Page 6
IMMUNE NETWORK RESEARCH LTD.
Notes to the Financial Statements
December 31, 1998 and 1997
- -------------------------------------------------------------------------------
13. Subsequent events
Subsequent to year end the Company received approval from the Vancouver
Stock Exchange for a private placement of 360,000 shares together with one
year warrants for the purchase of 180,000 additional shares all at a price
of $.15 per share. $45,000 was received during the year (Note 3).
14. Uncertainty due to the Year 2000 Issue
The Year 2000 Issue arises because many computerized systems use two
digits rather than four to identify a year. Date-sensitive systems may
recognize the year 2000 as 1900 or some other date, resulting in errors
when information using year 2000 dates is processed. In addition, similar
problems may arise in some systems which use certain dates in 1999 to
represent something other than a date. The effects of the Year 2000 Issue
may be experienced before, on, or after January 1, 2000, and, if not
addressed, the impact on operations and financial reporting may range
from minor errors to significant systems failure which could affect the
Company's ability to conduct normal business operations. It is not
possible to be certain that all aspects of the Year 2000 Issue affecting
the Company, including those related to the efforts of customers,
suppliers, or other third parties, will be fully resolved.
15. Reconciliation of generally accepted accounting principles
The Company prepares its financial statements in accordance with
accounting principles generally accepted in Canada ("Canadian GAAP")
which as applied in these financial statements conform in all
material respects to those accounting principles generally accepted
in the United States ("U.S. GAAP"), except as follows:
a. Under U.S. GAAP, the liability method is used in accounting for income
taxes pursuant to Statement of Financial Accounting Standards No. 109
"Accounting for Income Taxes" (SFAS 109). SFAS 109 requires
recognition of deferred tax assets and liabilities for the expected
future tax consequences of events that have been included in the
financial statements or tax returns. Under this method, deferred tax
assets and liabilities are determined based on the difference between
the financial reporting and tax bases of assets and liabilities using
enacted tax rates that will be in effect for the year in which the
differences are expected to reverse.
For reconciliation to U.S. GAAP purposes, a valuation allowance has
been recognized to offset deferred tax assets totaling approximately
$1,269,000 arising from temporary differences, tax credits and non-
capital loss carry forwards, for which realization is uncertain.
b. In 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, Earnings per Share (SFAS 128).
SFAS 128 replaced the previously reported primary and fully diluted
earnings per share with basic and dilutive earnings per share.
Unlike primary earnings per share, basic earnings per share excludes
any dilutive effects of options, warrants, and escrow shares. Dilutive
earnings per share are calculated in accordance with the treasury stock
method and are based on the weighted average number of common shares
and dilutive common share equivalents outstanding. For purposes of
reconciling to U.S. GAAP, all earnings per share amounts for all
periods have been presented, and where necessary, restated to conform
to the SFAS 128 requirements.
c. The Company operates primarily in one business segment with
substantially all of its assets and operations in Canada.
<PAGE>
Page 7
IMMUNE NETWORK RESEARCH LTD.
Notes to the Financial Statements
December 31, 1998 and 1997
- -------------------------------------------------------------------------------
d. Under US GAAP, stock based compensation to non-employees must be
recorded at the fair market value of the options granted pursuant to
Statement of Financial Accounting Standards No. 123 (SFAS 123). This
compensation, determined using a Black-Scholes pricing model, is
expensed over the vesting periods of each option granted. For purposes
of reconciliation to US GAAP under SFAS 123, the Company would record
additional compensation expense of $162,000 in respect of options
granted to non-employees [1997 $nil; 1996 $121,722].
The effect of the above on the Company's financial statements is set out
below:
Statements of loss and deficit
1998 1997 1996
- -------------------------------------------------------------------------------
Loss for the year
Canadian GAAP $ 201,671 $ 262,744 $ 825,674
Adjustment for stock-based
compensation (162,000) (121,722)
Loss and comprehensive loss for
the year
U.S. GAAP $ 363,671 $ 262,744 $ 947,396
Deficit beginning of the year
U.S. GAAP (1996-adjusted for
Note 11) 2,589,427 2,326,683 1,379,287
Deficit at end of year, U.S. GAAP 2,953,098 2,589,427 2,326,683
Loss per share, U.S. GAAP 0.02 0.02 0.08
- -------------------------------------------------------------------------------
Weighted average number of
shares outstanding 14,570,451 14,403,785 11,793,333
- -------------------------------------------------------------------------------
1998 1997
- -------------------------------------------------------------------------------
Balance sheets
Share capital $ 2,996,512 $ 2,724,512
16 Supplementary information
As of April 29, 1996 the audited statement of operations and deficit for
BCFC was as follows:
April 29,
1996
---------
Administrative expenses
Consulting fees $ 5,735
Depreciation -
Interest and bank charges -
Management fees 27,500
Office and miscellaneous -
Professional fees 11,748
Regulatory fees 4,083
Rent 6,000
Telephone -
Transfer agent fees 3,429
---------
<PAGE>
Page 8
IMMUNE NETWORK RESEARCH LTD.
Notes to the Financial Statements
December 31, 1998 and 1997
- -------------------------------------------------------------------------------
Loss before other items: ( 58,495)
Other items
Write-off of accounts payable 13,124
--------
Net loss for the year ( 45,371)
Deficit beginning of year (2,259,895)
---------
Deficit end of year $(2,305,266)
=========
The audited statement of changes in financial position for BCFC for the
period ended April 29, 1996 was as follows:
April 29
1996
--------
Operating activities
Loss for the year $( 45,371)
Items not affecting cash
Depreciation -
Write-off payables ( 13,124)
---------
( 58,495)
Accounts receivable 587
Accounts payable ( 57,487)
---------
( 115,395)
Financial activities
Issuance of capital stock for cash 122,911
Subscriptions received in advance ( 25,000)
---------
97,911
---------
Increase (decrease) in cash ( 17,484)
Cash beginning of period 32,512
---------
Cash end of period $ 15,028
=========
<PAGE>
IMMUNE NETWORK RESEARCH LTD.
REGISTRATION STATEMENT ON FORM 20-F
INDEX TO EXHIBITS
-----------------
Exhibit
Number Name of Exhibit
1-1 Certificate of Amalgamation of the Company dated April 24, 1996
1-2 Form 21, Special Resolution of the Company filed on March 14,1997,
with respect to an amendment to the Articles of Incorporation
1-3 Form 1, Memorandum of the Company approved by the British
Columbia Registrar of Companies on May 2, 1995
1-4 Articles of Incorporation of the Company
2 (See Exhibit 1-4 above)
3-1 Escrow Agreement dated December 7, 1995
3-2 Incentive Stock Option Agreements of Directors and Officers of the
Company
3-3 Licensing Agreement dated April 23, 1993 with the San Diego
Regional Cancer Centre (now known as the Sidney Kimmel Cancer
Centre) to be filed by amendment
3-4 Agreement dated December 15, 1997, as amended December 15, 1998
with ImmPheron, Inc. to be filed by amendment
3-5 Option Agreement dated July 9, 1999 with the University of
British Columbia to be filed by amendment
3-6 Joint Venture Agreement dated August 12, 1999 with Bridge Pharma,
Inc. to be filed by amendment
3-7 Memorandum of Agreement dated August 23, 1999 with Skye Boat, Ltd.
to be filed by amendment
3-8 Memorandum of Agreement dated August 17, 1999 with Inexsis Inc. and
a Management Team represented by Ping Quin to be filed by amendment
3-9 Executive Employment Agreement dated May 21, 1999 with Allen Bain
3-10 Loan Agreement dated September 13, 1999 with Allen Bain
<PAGE>
EXHIBIT 1-1
Certificate of Amalgamation of the Company dated April 24, 1996
<PAGE>
NUMBER: 518138
"SEAL of British Columbia"
CERTIFICATE
OF
AMALGAMATION
COMPANY ACT
CANADA
PROVINCE OF BRITISH COLUMBIA
I Hereby Certify that Bobby Cadillac's Food Corporation, incorporation number
262167, and Immune Network Research Ltd., incorporation number 401649, are
amalgamated as one company under the name IMMUNE NETWORK RESEARCH LTD.
----------------------------
SEAL Issued under my hand at Victoria, British Columbia,
on April 24, 1996
/S/John S. Powell
------------------------------
JOHN S. POWELL
Registrar of Companies
<PAGE>
EXHIBIT 1-2
Form 21, Special Resolution of the Company filed on March 14,1997
with respect to an amendment to the Articles of Incorporation
<PAGE>
I CERTIFY THIS IS A COPY OF A
DOCUMENT FILED ON FORM 21
PROVINCE OF BRITISH COLUMBIA
MAR 14 1997 Certificate of
/S/John S. Powell Incorporation No. 518138
- ----------------------
16 JOHN S. POWELL COMPANY ACT
REGISTRAR OF COMPANIES SPECIAL RESOLUTION
PROVINCE OF BRITISH COLUMBIA
The following special resolution was passed by the undermentioned Company on
the date stated:
Name of Company: IMMUNE NETWORK RESEARCH LTD.
Date resolution passed: OCTOBER 31, 1996
Resolution:
RESOLVED, as a special resolution, that the Articles of the Company be amended
by deleting the existing Article 17.4, and by substituting in its place the
following:
"17.4 The President, the Chairman or any two (2) Directors may, and the
Secretary or an Assistant Secretary upon request of the President, the Chairman
or any two (2) Directors shall, call a meeting of the Board at any time. At
least seven (7) calendar days before the time fixed for the meeting, notice of
such meeting specifying the place, day and hour of such meeting shall be given
by mail, postage prepaid, addressed to each of the Directors and alternate
Directors at his address as it appears on the books of the Company or by leaving
it at his usual business or residential address or by telephone, telegram,
telex, or any method of transmitting legibly recorded messages. It shall not be
necessary to give notice of a meeting of Directors to any Director or alternate
Director (i) who is at the time not in the Province of British Columbia or (ii)
if such meeting is to be held immediately following a general meeting at which
such Director shall have been elected or is the meeting of Directors at which
such Director is appointed. Accidental omission to give notice of a meeting to,
or the non-receipt of notice of a meeting by, any director or alternate director
shall not invalidate the proceedings at the meeting."
<PAGE>
Page 2
BE IT RESOLVED, as a special resolution, that the Articles of the Company be
amended by deleting the existing Article 17.6 and by substituting in its place
the following:
"17.6 The quorum necessary for the transaction of the business of the
Directors may be fixed by the Directors and, if not so fixed, shall be a
majority of the Directors, or their duly appointed alternates or, if the number
of Directors is fixed at one, shall be one Director."
Certified a true copy the 12th day of February, 1997.
---- -------- -----
/S/C. Knight
(Signature) --------------------------
CATHERINE KNIGHT
(Relationship to Company) Corporate Secretary
-------------------
<PAGE>
EXHIBIT 1-3
Form 1, Memorandum of the Company approved by the
British Columbia Registrar of Companies May 2, 1995
<PAGE>
APPROVED
FORM I (Section 5) /S/ V. ADAMS
COMPANY ACT FOR REGISTRAR OF COMPANIES
MEMORANDUM MAY 2 1995
----------
1. The name of the company is "Immune Network Research Ltd."
2. The authorized capital of the company consists of 100,000,000 common
shares without par value.
Hanna Heppell Bell & Visosky
<PAGE>
EXHIBIT 1-4
Articles of Incorporation of the Company
<PAGE>
ARTICLES OF
IMMUNE NETWORK RESEARCH LTD.
TABLE OF CONTENTS
-----------------
PART ARTICLE SUBJECT PAGE
- ---- ------- ------- ----
1 INTERPRETATION 1
1.1 Definitions 2
1.2 Construction of Words 2
1.3 Definitions Same as Company Act 2
1.4 Interpretation Act Rules of
Construction Apply 2
1.5 References to Writing 2
2 SHARES AND SHARE CERTIFICATES 2
2.1 Member Entitled to Certificate 2
2.2 Form of Certificate 2
2.3 Replacement of Lost or Defaced Certificate 2
2.4 Execution of Certificates 3
2.5 Recognition of Trusts 3
2.6 Delivery to Joint Holders 4
3 ISSUE OF SHARES 4
3.1 Directors Authorized 4
3.2 Commissions and Discounts 4
3.3 Conditions of Issue 4
4 SHARE REGISTERS 5
4.1 Registers of Members, Transfers
and Allotments 5
4.2 Branch Registers of Members 5
4.3 No Closing of Register of Members 5
5 TRANSFER OF SHARES 5
5.1 Transfer of Shares 5
5.2 Execution of Instrument of Transfer 6
5.3 Enquiry as to Title not Required 6
5.4 Submission of Instruments of Transfer 6
5.5 Transfer Fee 6
5.6 Consent of Directors Required 6
Hanna Heppell Bell & Visosky
<PAGE>
Page ii
6 TRANSMISSION OF SHARES 7
6.1 Personal Representatives Recognized
on Death 7
6.2 Death or Bankruptcy 7
6.3 Persons in Representative Capacity 7
7 ALTERATION OF CAPITAL 8
7.1 Increase of Authorized Capital 8
7.2 Other Capital Alterations 8
7.3 Creation, Variation and Abrogation
of Special Rights and Restrictions 8
7.4 Special Rights of Conversion 9
7.5 Class Meetings of Members 9
8 PURCHASE AND REDEMPTION OF SHARES 9
8.1 Company Authorized to Purchase
or Redeem its Shares 9
8.2 Offer to Purchase Made Pro Rata 9
8.3 Selection of Shares to be Redeemed 9
8.4 Purchased or Redeemed Shares Not Voted 10
9 BORROWING POWERS 10
9.1 Powers of Directors 10
9.2 Negotiability of Debt Obligations 10
9.3 Special Rights Attached to Debt Obligations . 10
9.4 Register of Debentureholders 11
9.5 Execution of Debt Obligations 11
9.6 Register of Indebtedness 11
10 GENERAL MEETING 11
10.1 Annual General Meeting 11
10.2 Waiver of Annual General Meeting 11
10.3 Classification of General Meetings 12
10.4 Calling of Meetings 12
10.5 Advance Notice for Election of Directors 12
10.6 Notice for General Meeting 12
10.7 Waiver or Reduction of Notice 12
10.8 Notice of Special Business at
General Meeting 12
10.9 Postponement of Meeting following
Advance Notice 12
Hanna Heppell Bell & Visosky
<PAGE>
Page iii
11 PROCEEDINGS AT GENERAL MEETINGS 13
11.1 Special Business 13
11.2 Requirement of Quorum 13
11.3 Quorum 14
11.4 Lack of Quorum 14
11.5 Chairman 14
11.6 Alternate Chairman 14
11.7 Adjournments 14
11.8 Resolutions Need Not Be Seconded 15
11.9 Decisions by Show of Hands or Poll 15
11.10 Casting Vote 15
11.11 Manner of Taking Poll 15
11.12 Disputed Vote 15
11.13 Retention of Ballots Cast on a Poll 15
11.14 Casting of Votes 15
11.15 Ordinary Resolution Sufficient 16
11.16 Resolutions in Counterparts 16
12 VOTES OF MEMBERS 16
12.1 Number of Votes Per Share or Member 16
12.2 Votes of Persons in Representative
Capacity 16
12.3 Representative of a Corporate Member 16
12.4 Votes by Joint Holders 17
12.5 Votes by Committee for a Member 17
12.6 Appointment of Proxyholders 17
12.7 Qualification of Proxyholders 17
12.8 Execution of Form of Proxy 17
12.9 Deposit of Proxy 18
12.10 Directors May Make Regulations
Relating to Deposit of Proxies 18
12.11 Form of Proxy 18
12.12 Validity of Proxy Vote 18
12.13 Revocation of Proxy 18
12.14 Chairman to Determine Validity 19
13 DIRECTORS 19
13.1 Number of Directors 19
13.2 Remuneration and Expenses of Directors 20
13.3 Qualification of Directors 20
14 ELECTION AND REMOVAL OF DIRECTORS 20
14.1 Election at Annual General Meetings 20
14.2 Eligibility of Retiring Director 20
14.3 Continuance of Directors 20
<PAGE>
Page iv
14.4 Election of Less than Required
Number of Directors 21
14.5 Filling a Casual Vacancy 21
14.6 Additional Directors 21
14.7 Alternate Directors 21
14.8 Termination of Directorship 21
14.9 Resignation of Directors 21
14.10 Removal of Directors 21
15 POWERS AND DUTIES OF DIRECTORS 22
15.1 Management of Affairs and Business 22
15.2 Appointment of Attorney 22
16 DISCLOSURE OF INTEREST OF DIRECTORS 23
16.1 Disclosure of Conflicting Interest 23
16.2 Voting and Quorum re Proposed Contract 23
16.3 Director May Hold Office or
Position with Company 24
16.4 Director Acting in Professional
Capacity 24
16.5 Director Receiving Remuneration
from Other Interests 24
17 PROCEEDINGS OF DIRECTORS 24
17.1 Chairman and Alternate 24
17.2 Meetings - Procedure - Casting Vote 25
17.3 Meetings by Conference Telephone 25
17.4 Notice of Meeting . 25
17.5 Waiver of Notice of Meetings 25
17.6 Quorum 26
17.7 Continuing Directors May Act
During Vacancy 26
17.8 Validity of Acts of Directors 26
17.9 Resolution in Writing Effective 26
17.10 Resolutions Need Not Be Seconded
and Chairman May Move a Motion 26
18 EXECUTIVE AND OTHER COMMITTEES 26
18.1 Appointment of Executive Committee 26
18.2 Appointment of Committees 27
18.3 Procedure at Meetings 27
Hanna Heppell Bell & Visosky
<PAGE>
Page v
19 OFFICERS 28
19.1 President and Secretary Required 28
19.2 Persons Holding More Than One Office
and Remuneration 28
19.3 Disclosure of Conflicting Interest 28
20 INDEMNITY AND PROTECTION OF DIRECTORS, OFFICERS
AND EMPLOYEES 28
20.1 Indemnification of Directors 28
20.2 Indemnification of Officers,
Employees, Agents 29
20.3 Indemnification not Invalidated
by Non-Compliance 29
20.4 Company May Purchase Insurance 29
21 DIVIDENDS AND RESERVE 29
21.1 Declaration of Dividends 29
21.2 Declared Dividend Date 30
21.3 Proportionate to Number of Shares Held 30
21.4 Reserves 30
21.5 Receipts from Joint Holders 30
21.6 No Interest on Dividends 30
21.7 Payment of Dividends 30
21.8 Capitalization of Undistributed Surplus 31
21.9 Fractional Share Dividends 31
22 DOCUMENTS, RECORDS AND REPORTS 31
22.1 Documents to be Kept 31
22.2 Accounts to be Kept 31
22.3 Inspection of Accounts 31
22.4 Financial Statements and Reports
for General Meetings 32
22.5 Financial Statements and Reports
for Members 32
23 NOTICES 32
23.1 Method of Giving Notice 32
23.2 Notice to Joint Holder 32
23.3 Notice to Personal Representative 32
23.4 Persons to Receive Notice 32
Hanna Heppell Bell & Visosky
<PAGE>
Page vi
24 RECORD DATES 33
24.1 Record Date 33
24.2 No Record Date Fixed 33
25 SEAL 33
25.1 Affixation of Seal to Documents 33
25.2 Reproduction of Seal 34
25.3 Official Seal for Other Jurisdictions 34
26 MECHANICAL REPRODUCTION OF SIGNATURES 34
26.1 Instruments May be Mechanically Signed 34
26.2 Definition of Instruments 35
Hanna Heppell Bell & Visosky
<PAGE>
PROVINCE OF BRITISH COLUMBIA
COMPANY ACT
ARTICLES
OF
IMMUNE NETWORK RESEASRCH LTD.
-----------------------------
APPROVED
/s/V. Adams
For Registrar of Companies
May 2, 1995
1.1 In these Articles, unless there is something in the subject or
context inconsistent therewith:
"Board of Directors", "Board", "the Directors" and "the Directors" mean the
Directors or sole Director of the Company for the time being;
"Company" means the company named at the head of these Articles;
"Company Act" means the Company Act of the Province of British Columbia as
from time to time enacted and all amendments thereto and includes all
regulations and amendments thereto made pursuant to that Act;
"member" means those persons defined as such in the Company Act and includes
any person who owns shares in the capital of the Company and whose name is
entered in the register of members or a branch register of members;
"ordinary resolution" means an ordinary resolution as defined in the Company
Act;
"registered owner" or "registered holder" when used with respect to a share
in the authorized capital of the Company means the person registered in the
register of members in respect of such share;
"seal" means the common seal of the Company, if the Company has one;
"solicitor of the Company" means any partner, associate or articled student
of the law firm retained by the Company in respect of the matter in
connection with which the term is used;
"special resolution" means a special resolution as defined in the Company
Act; and
"writing", "in writing" and like expressions include all modes of
representing, or reproducing, and recording words in visible form,
including: printing;
Hanna Heppell Bell & Visosky
<PAGE>
Page 2
lithographing; typewriting; and photostatic, electrostatic and mechanical
copying.
1.2 Words importing the singular include the plural and vice versa; and
words importing male persons include female persons and words importing persons
shall include corporations.
1.3 Any words or phrases defined in the Company Act shall, if not
inconsistent with the subject or context, bear the same meaning when used in
these Articles.
1.4 The Rules of Construction contained in the Interpretation Act of
the Province of British Columbia shall apply, mutatis mutandis, to the
interpretation of these Articles.
1.5 Reference in these Articles to writing shall be construed as
including references to printing, lithography, typewriting, photography and
other modes of representing or reproducing words in a visible form.
PART 2
SHARES AND SHARE CERTIFICATES
-----------------------------
2.1 Every member is entitled, without charge, to one certificate
representing the share or shares of each class or series held by him; provided
that, in respect of a share or shares held jointly by several persons, the
Company shall not be bound to issue more than one certificate, and delivery of a
certificate for a share to one of several joint registered holders or to his
duly authorized agent shall be sufficient delivery to all; and provided further
that the Company shall not be bound to issue certificates representing
redeemable shares, if such shares are to be redeemed within one month of the
date on which they were allotted. Any share certificate may be sent through the
mail by registered prepaid mail to the member entitled thereto, and neither the
Company nor any transfer agent shall be liable for any loss occasioned to the
member owing to any such share certificate so sent being lost in the mail or
stolen.
2.2 Every share certificate issued by the Company shall be in such form
as the Directors approve and shall comply with the Company Act.
2.3 If a share certificate:
(i) is worn or defaced, the Directors shall, upon production to
them of the said certificate and upon such other terms, if
any, as they may think fit, order the said certificate to be
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cancelled and shall issue a new certificate in lieu thereof;
(ii) is lost, stolen or destroyed, then, upon proof thereof to
the satisfaction of the Directors and upon such indemnity,
if any, as the Directors deem adequate being given, a new
share certificate in lieu thereof shall be issued to the
person entitled to such lost, stolen or destroyed
certificate; or
(iii) represents more than one share and the registered owner
thereof surrenders it to the Company with a written request
that the Company issue in his name two or more certificates
each representing a specified number of shares and in the
aggregate representing the same number of shares as the
certificate so surrendered, the Company shall cancel the
certificate so surrendered and issue in lieu thereof
certificates in accordance with such request.
There shall be paid to the Company such sum, not exceeding ten dollars, as the
Directors may from time to time fix, for each certificate to be issued under
this Article.
2.4 Every share certificate shall be signed manually by at least one
Officer or Director of the Company, or by or on behalf of a registrar, branch
registrar, transfer agent or branch transfer agent of the Company and any
additional signatures may be printed or otherwise mechanically reproduced and,
in such event, a certificate so signed is as valid as if signed manually,
notwithstanding that any person whose signature is so printed or mechanically
reproduced shall have ceased to hold the office that he is stated on such
certificate to hold at the date of the issue of the share certificate.
2.5 Except as required by law, statute or these Articles, no person
shall be recognized by the Company as holding any share upon any trust, and the
Company shall not be bound by or compelled in any way to recognize (even when
having notice thereof) any equitable, contingent, future or partial interest in
any share or in any fractional part of a share or (except only as by law,
statute or these Articles provided or as ordered by a court of competent
jurisdiction) any other rights in respect of any share except an absolute right
to the entirety thereof in its registered holder.
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2.6 The certificate representing shares registered in the name of two
or more persons shall be delivered to the person first named on the register of
members.
PART 3
ISSUE OF SHARES
---------------
3.1 Subject to the requirements of the Company Act with respect to
pro-rata offerings (if applicable) and otherwise and to any direction to the
contrary, save for a direction which, at the discretion of the Directors, may
not be proceeded with, contained in a resolution passed at a general meeting
authorizing any increase or alteration of capital, the shares shall be under the
control of the Directors who may, subject to the rights of the holders of the
shares of the Company for the time being outstanding, issue, allot, sell or
otherwise dispose of, and/or grant options on or otherwise deal in, shares
authorized but not outstanding, and outstanding shares held by the Company, at
such times, to such persons (including Directors), in such manner, upon such
terms and conditions and at such price or for such consideration, as the
Directors, in their absolute discretion, may determine.
3.2 Subject to the provisions of the Company Act, the Company, or the
Directors on behalf of the Company, may pay a commission or allow a discount to
any person in consideration of his subscribing or agreeing to subscribe, whether
absolutely or conditionally, for any shares in the Company, or procuring or
agreeing to procure subscriptions, whether absolutely or conditionally, for any
such shares, provided that, if the Company is not a specially limited company,
the rate of the commission and discount shall not in the aggregate exceed 25 per
centum. of the amount of the subscription price of such shares, and if the
Company is a specially limited company, the rate of the commission and discount
shall not in the aggregate exceed 95 per centum of the amount of the
subscription price of such shares.
3.3 No share may be issued until it is fully paid and the Company shall
have received the full consideration therefor in cash, property or past services
actually performed for the Company. The value of property or services for the
purposes of this Article shall be the value determined by the Directors by
resolution to be, in all circumstances of the transaction, the fair market value
thereof, and the full consideration received for a share issued by way of
dividend shall be the amount declared by the Directors to be the amount of the
dividend.
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PART 4
SHARE REGISTERS
---------------
4.1 The Company shall keep or cause to be kept a register of members, a
register of transfers and a register of allotments within British Columbia, all
as required by the Company Act, and may combine one or more of such registers.
If the Company's capital shall consist of more than one class of shares, a
separate register of members, register of transfers and register of allotments
may be kept in respect of each class of shares. The Directors on behalf of the
Company may appoint a trust company to keep the register of members, register of
transfers and register of allotments or, if there is more than one class of
shares, the Directors may appoint a trust company, which need not be the same
trust company, to keep the register of members, the register of transfers and
the register of allotments for each class of shares. The Directors on behalf of
the Company may also appoint one or more trust companies, including the trust
company which keeps the said registers of its shares or of a class thereof, as
transfer agent for its shares or such class thereof, as the case may be, and the
same or another trust company or companies as registrar for its shares or such
class thereof, as the case may be. The Directors may terminate the appointment
of any such trust company at any time and may appoint another trust company in
its place.
4.2 Subject to the provisions of the Company Act, the Company may keep
or cause to be kept one or more branch registers of members at such place or
places as the Directors may from time to time determine.
4.3 The Company shall not at any time close its register of members.
PART 5
TRANSFER OF SHARES
------------------
5.1 Subject to the restrictions, if any, set forth in the Memorandum
and these Articles, any member may transfer any of his shares by instrument in
writing executed by or on behalf of such member and delivered to the Company or
its transfer agent. The instrument of transfer of any share of the Company
shall be in the form, if any, on the back of the Company's share certificates or
in such other form as the Directors may from time to time approve. If the
Directors so determine, each instrument of transfer shall be in respect of only
one class of share. Except to the extent that the Company Act may otherwise
provide, the transferor shall be deemed to remain the holder of the shares until
the name of the transferee is entered in the register of members or a branch
register of members in respect thereof.
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5.2 The signature of the registered owner of any shares, or of his duly
authorized attorney, upon an authorized instrument of transfer shall constitute
a complete and sufficient authority to the Company, its Directors, Officers and
agents to register, in the name of the transferee as named in the instrument of
transfer, the number of shares specified therein or, if no number is specified,
all the shares of the registered owner represented by share certificates
deposited with the instrument of transfer. If no transferee is named in the
instrument of transfer, the instrument of transfer shall constitute a complete
and sufficient authority to the Company, its Directors, Officers and agents to
register, in the name of the person on whose behalf any certificate for the
shares to be transferred is deposited with the Company for the purpose of having
the transfer registered, the number of shares if specified in the instrument of
transfer or, if no number is specified, all the shares represented by all share
certificates deposited with the instrument of transfer.
5.3 Neither the Company nor any Director, Officer or agent thereof
shall be bound to enquire into the title of the person named in the form of
transfer as transferee, or, if no person is named therein as transferee, of the
person on whose behalf the certificate is deposited with the Company for the
purpose of having the transfer registered or be liable to any claim by such
registered owner or by any intermediate owner or holder of the certificate or of
any of the shares represented thereby or any interest therein for registering
the transfer, and the transfer, when registered, shall confer upon the person in
whose name the shares have been registered a valid title to such shares.
5.4 Every instrument of transfer shall be executed by the transferor
and left at the registered office of the Company or at the office of its
transfer agent or registrar for registration together with the share certificate
for the shares to be transferred and such other evidence, if any, as the
Directors or the transfer agent or registrar may require to prove the title of
the transferor or his right to transfer the shares and the right of the
transferee to have the transfer registered. All instruments of transfer, where
the transfer is registered, shall be retained by the Company or its transfer
agent or registrar and any instrument of transfer, where the transfer is not
registered, shall be returned to the person depositing the same together with
the share certificate which accompanied the same when tendered for registration.
5.5 There shall be paid to the Company in respect of the registration
of any transfer such sum, if any, as the Directors may from time to time
determine.
5.6 Notwithstanding any other provision of these Articles, if the
Company is, or becomes:
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(i) a company which is not a reporting company; or
(ii) a reporting company that has not, with respect to any of its
securities, filed a prospectus with the Superintendent of
Brokers for British Columbia or any similar securities
regulatory body within or outside British Columbia and
obtained therefor a receipt or its equivalent;
then no shares shall be transferred and entered on the register of members
without the previous consent of the Directors expressed by a resolution of the
Board and the Directors shall not be required to give any reason for refusing to
consent to any such proposed transfer. The consent of the Board required by
this Article may be in respect of a specific proposed trade or trades or trading
generally, whether or not over a specified period of time, or by specific
persons or with such other restrictions or requirements as the Directors may
determine.
PART 6
TRANSMISSION OF SHARES
----------------------
6.1 In the case of the death of a member, the survivor or survivors,
where the deceased was a joint registered holder, and the legal personal
representative of the deceased, where he was the sole holder, shall be the only
persons recognized by the Company as having any title to his interest in the
shares. Before recognizing any legal personal representative the Directors may
require him to deliver to the Company the original or a court-certified copy of
a grant of probate or letters of administration in British Columbia or such
other evidence and documents as the Directors consider appropriate to establish
the right of the personal representative to such title to the interest in the
shares of the deceased member.
6.2 Upon the death or bankruptcy of a member, his personal
representative or trustee in bankruptcy, although not a member, shall have the
same rights, privileges and obligations that attach to the shares formerly held
by the deceased or bankrupt member if the documents required by the Company Act
shall have been deposited with the Company. This Article does not apply on the
death of a member with respect to shares registered in his name and the name of
another person in joint tenancy.
6.3 Any person becoming entitled to a share in consequence of the death
or bankruptcy of a member shall, upon such documents and evidence being produced
to the Company as the Company Act requires, or who becomes entitled to a share
as a result of an order of a
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Court of competent jurisdiction or a statute, has the right either to be
registered as a member in his representative capacity in respect of such share,
or, if he is a personal representative, instead of being registered himself, to
make such transfer of the shares as the deceased or bankrupt person could have
made; but the Directors shall, as regards a transfer by a personal
representative or trustee in bankruptcy, have the right, if any, to decline or
suspend registration of a transferee as they would have in the case of a
transfer of a share by the deceased or bankrupt person before the death or
bankruptcy.
PART 7
ALTERATION OF CAPITAL
---------------------
7.1 The Company may by ordinary resolution filed with the Registrar
amend its Memorandum to increase the authorized capital of the Company by:
(i) creating shares with par value or shares without par value,
or both;
(ii) increasing the number of shares with par value or shares
without par value, or both; or
(iii) increasing the par value of a class of shares with par
value, if no shares of that class are issued.
7.2 The Company may by special resolution alter its Memorandum to
subdivide, consolidate, change from shares with par value to shares without par
value, or from shares without par value to shares with par value, or change the
designation of, all or any of its shares but only to such extent, in such manner
and with such consents of members holding shares of a class or series which is
the subject of or affected by such alteration, as the Company Act provides.
7.3 The Company may alter its Memorandum or these Articles:
(i) by special resolution, to create, define and attach special
rights or restrictions to any shares; and
(ii) by special resolution and by otherwise complying with any
applicable provision of its Memorandum or these Articles,
to vary or abrogate any special rights and restrictions
attached to any shares;
and in each case by filing a certified copy of such resolution with the
Registrar, but no right or special right attached to any issued
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shares shall be prejudiced or interfered with unless all members holding shares
of each class or series whose right or special right is so prejudiced or
interfered with consent thereto in writing, or unless a resolution consenting
thereto is passed at a separate class or series meeting of the holders of the
shares of each such class or series by a majority of three-fourths of the issued
shares of such class or series or such greater majority as may be specified by
the special rights attached to the class or series of shares.
7.4 If the Company is or becomes a reporting company, and if so
required by the Company Act, no resolution to create, vary or abrogate any
special right of conversion attaching to any class of shares shall be submitted
to a general meeting or a class meeting of members unless the Superintendent of
Brokers shall have first consented to the resolution.
7.5 Unless these Articles otherwise provide, the provisions of these
Articles relating to general meetings shall apply, with the necessary changes
and so far as they are applicable, to a class or series meeting of members
holding a particular class or series of shares, provided that the quorum at a
class or series meeting shall be one or more persons holding or representing by
proxy not less than one-third of the shares affected.
PART 8
PURCHASE AND REDEMPTION OF SHARES
---------------------------------
8.1 Subject to the special rights and restrictions attached to any
class of shares the Company may, by a resolution of the Directors and in
compliance with the Company Act, purchase any of its shares at the price and
upon the terms specified in such resolution or redeem any class of its shares in
accordance with the special rights and restrictions attaching thereto. No such
purchase or redemption shall be made if the Company is insolvent at the time of
the proposed purchase or redemption or if the proposed purchase or redemption
would render the Company insolvent.
8.2 Unless the shares of the Company are to be purchased through a
stock exchange, or from a bona fide employee or bona fide former employee of the
Company or of an affiliate of the Company, or his personal representative, in
respect of shares beneficially owned by such employee or former employee, or the
Company is purchasing the shares from dissenting members pursuant to the
requirements of the Company Act, the Company shall make its offer to purchase
pro rata to every member who holds shares of the class or series to be
purchased.
8.3 If the Company proposes at its option to redeem some but not all of
the shares of any class or series, the Directors may,
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subject to the special rights and restrictions attached to such shares, decide
the manner in which the shares to be redeemed shall be selected and such
redemption may or may not be made pro rata among every member holding any such
shares as the Directors may determine.
8.4 Subject to the provisions of the Company Act, any shares purchased
or redeemed by the Company may be sold or, if cancelled, reissued by it, but,
while such shares which have not been cancelled are held by the Company, it
shall not exercise any vote in respect of these shares and no dividend or other
distribution shall be paid or made thereon.
PART 9
BORROWING POWERS
----------------
9.1 Subject to the provisions of the Company Act, the Directors may
from time to time authorize the Company to:
(i) borrow money in such manner and amount, on such security,
from such sources and upon such terms and conditions as
they think fit;
(ii) issue bonds, debentures, and other debt obligations either
outright or as security for any liability or obligation of
the Company or any other person;
(iii) mortgage, charge, whether by way of specific or floating
charge, or give other security on the undertaking or on the
whole or any part of the property and assets of the Company,
both present and future; and
(iv) give financial assistance to any person, directly or
indirectly, by way of loan, guarantee, the provision of
security, or otherwise.
9.2 The Directors may make any bonds, debentures or other debt
obligations issued by the Company by their terms assignable free from any
equities between the Company and the person to whom they may be issued or any
other person who lawfully acquires them by assignment, purchase or otherwise.
9.3 The Directors may authorize the issue of any bonds, debentures or
other debt obligations of the Company at a discount,
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premium or otherwise and with special or other rights or privileges as to
redemption, surrender, drawings, allotment of or conversion into or exchange for
shares, attending at general meetings of the Company and otherwise as the
Directors may determine at or before the time of issue.
9.4 The Company shall keep or cause to be kept within the Province of
British Columbia in accordance with the Company Act a register of its debentures
and a register of debenture holders, which registers may be combined, and,
subject to the provisions of the Company Act, may keep or cause to be kept one
or more branch registers of its debentureholders at such place or places as the
Directors may from time to time determine and the Directors may by resolution,
regulation or otherwise make such provisions as they think fit respecting the
keeping of such branch registers.
9.5 Every bond, debenture or other debt obligation of the Company shall
be signed manually by at least one Director or Officer of the Company or by or
on behalf of a trustee, registrar, branch registrar, transfer agent or branch
transfer agent for the bond, debenture or other debt obligations appointed by
the Company or under any instrument under which the bond, debenture or other
debt obligation is issued and any additional signatures may be printed or
otherwise mechanically reproduced thereon and, in such event, a bond, debenture
or other debt obligation so signed is as valid as if signed manually
notwithstanding that any person whose signature is so printed or mechanically
reproduced shall have ceased to hold the office that he is stated on such bond,
debenture or other debt obligation to hold at the date of the issue thereof.
9.6 If the Company is or becomes a reporting company, the Company shall
keep or cause to be kept a register of its indebtedness to every Director or
Officer of the Company or an associate of any of them in accordance with the
provisions of the Company Act.
PART 10
GENERAL MEETING
---------------
10.1 Subject to any extensions of time permitted pursuant to the
Company Act, the first annual general meeting of the Company shall be held
within 15 months from the date of amalgamation and thereafter an annual general
meeting shall be held once in every calendar year at such time (not being more
than 13 months after the holding of the last preceding annual general meeting)
and place as may be determined by the Directors.
10.2 If the Company is, or becomes, a company which is not a reporting
company and all the members entitled to attend and vote at an annual general
meeting consent in writing to all the business
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which is required or desired to be transacted at the meeting, such annual
general meeting shall be deemed for the purpose of this Part to have been held
on the date specified in the consent, and it is not necessary for the Company to
hold that annual general meeting.
10.3 All general meetings other than annual general meetings are herein
referred to as and may be called extraordinary general meetings.
10.4 The Directors may, whenever they think fit, convene an
extraordinary general meeting. An extraordinary general meeting, if
requisitioned in accordance with the Company Act, shall be convened by the
Directors or, if not convened by the Directors, may be convened by the
requisitionists as provided in the Company Act.
10.5 If the Company is or becomes a reporting company, advance notice
of any general meeting at which Directors are to be elected shall be published
in the manner required by the Company Act.
10.6 A notice convening a general meeting specifying the place, the
day, and the hour of the meeting, and, in case of special business, the general
nature of that business, shall be given as provided in the Company Act and in
the manner hereinafter in these Articles mentioned, or in such other manner as
may be prescribed by the Directors to such persons as are entitled by law or
under these Articles to receive such notice from the Company. Accidental
omission to give notice of a meeting to, or the non-receipt of notice of a
meeting by, any member shall not invalidate the proceedings at that meeting.
10.7 All the members of the Company entitled to attend and vote at a
general meeting may, by unanimous consent in writing given before, during or
after the meeting, or if they are present at the meeting by a unanimous vote,
waive or reduce the period of notice of such meeting and an entry in the minute
book of such waiver or reduction shall be sufficient evidence of the due
convening of the meeting.
10.8 Except as otherwise provided by the Company Act, where any special
business at a general meeting includes considering, approving, ratifying,
adopting or authorizing any document or the execution thereof or the giving of
effect thereto, the notice convening the meeting shall, with respect to such
document, be sufficient if it states that a copy of the document or proposed
document is or will be available for inspection by members at the registered
office or records office of the Company or at some other place in British
Columbia designated in the notice during the usual business hours up to the date
of such general meeting.
10.9 Where, in accordance with the Company act, the Company has
published in prescribed manner an advance notice of a general meeting at which
Directors are to be elected, the Company may,
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notwithstanding such notice, postpone the general meeting to a date other than
that specified in such notice. In the event of such a postponement, the Company
shall publish, in the same manner prescribed for the original notice, a notice
of the postponement of the meeting which notice shall include, if the date to
which the meeting is postponed is known, the same information as is required by
the Company Act to be included in the original notice. If the date to which the
meeting is postponed is not known, the notice of postponement need state only
that the meeting is postponed until further notice, provided however that once
such date is known, the Company shall publish a new advance notice which shall
comply with the Company Act. The date to which any such meeting is postponed
shall be deemed to be the date of the meeting for the purpose of complying with
any time limitations in respect of general meetings prescribed by the Company
Act.
PART 11
PROCEEDINGS AT GENERAL MEETINGS
-------------------------------
11.1 All business shall be deemed special business which is transacted
at:
(i) an extraordinary general meeting other than the conduct of
and voting at, such meeting; and
(ii) an annual general meeting, with the exception of the conduct
of, and voting at, such meeting, the consideration of the
financial statement and of the respective reports of the
Directors and auditor, fixing or changing the number of
Directors, approval of a motion to elect two or more
Directors by a single resolution, the election of Directors,
the appointment of the auditor, the fixing of the
remuneration of the auditor and such other business as by
these Articles or the Company Act ought to be transacted at
a general meeting without prior notice thereof being given
to the members or any business which is brought under
consideration by the report of the Directors.
11.2 No business, other than election of the chairman or the
adjournment of the meeting, shall be transacted at any general meeting unless a
quorum of members in person or by proxy, entitled to attend and vote, is present
at the commencement of the meeting, but the quorum need not be present
throughout the meeting.
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11.3 Save as herein otherwise provided, a quorum shall be one member,
or one proxyholder representing members, holding not less than one-twentieth of
the issued shares entitled to be voted at the meeting. If there is only one
member the quorum is one person present and being, or representing by proxy,
such member. The Directors, the Secretary or, in his absence, an Assistant
Secretary, and the solicitor of the Company shall be entitled to attend at any
general meeting but no such person shall be counted in the quorum or be entitled
to vote at any general meeting unless he shall be a member or proxyholder
entitled to vote thereat.
11.4 If within half an hour from the time appointed for a general
meeting a quorum is not present, the meeting, if convened upon the requisition
of members, shall be dissolved. In any other case it shall stand adjourned to
the same day in the next week, at the same time and place, and, if at the
adjourned meeting a quorum is not present within half an hour from the time
appointed for the meeting, the person or persons present and being, or
representing by proxy, a member or members entitled to attend and vote at the
meeting shall be a quorum.
11.5 The Chairman of the Board, if any, or in his absence the President
of the Company or in his absence a Vice-President of the Company, if any, shall
be entitled to preside as chairman at every general meeting of the Company.
Notwithstanding the foregoing, with the consent of the meeting, which consent
may be expressed by the failure to object of any person present and entitled to
vote, the solicitor of the Company may act as chairman of the meeting.
11.6 If at any general meeting neither the Chairman of the Board nor
President nor a Vice-President is present within fifteen minutes after the time
appointed for holding the meeting or is willing to act as chairman, the
Directors present, shall choose someone of their number, or the solicitor of the
Company, to be chairman. If all the Directors present, and the solicitor of the
Company, decline to take the chair or fail to so choose or if no Director be
present, the persons present and entitled to vote shall choose one of their
number to be chairman.
11.7 The chairman may and shall, if so directed by the meeting, adjourn
the meeting from time to time and from place to place, but no business shall be
transacted at any adjourned meeting other than the business left unfinished at
the meeting from which the adjournment took place. When a meeting is adjourned
for 30 days or more, notice, but not the advance notice otherwise required with
respect to the election of Directors of a reporting Company, of the adjourned
meeting shall be given as in the case of an original meeting. Save as
aforesaid, it shall not be necessary to give any notice of an adjourned meeting
or of the business to be transacted at an adjourned meeting.
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11.8 No motion proposed at a general meeting need be seconded and the
chairman may propose or second a motion.
11.9 Subject to the provisions of the Company Act at any general
meeting a resolution put to the vote of the meeting shall be decided on a show
of hands, unless (before or on the declaration of the result of the show of
hands) a poll is directed by the chairman or demanded by at least one member
entitled to vote who is present in person or by proxy. The chairman shall
declare to the meeting the decision on every question in accordance with the
result of the show of hands or the poll, and such decision shall be entered in
the book of proceedings of the Company. A declaration by the chairman that a
resolution has been carried, or carried unanimously, or by a particular
majority, or lost or not carried by a particular majority and an entry to that
effect in the book of the proceedings of the Company shall be conclusive
evidence of the fact, without proof of the number or proportion of the votes
recorded in favour of, or against, that resolution.
11.10 In the case of an equality of votes, whether on a show of hands or on
a poll, the chairman of the meeting at which the show of hands takes place or at
which the poll is demanded shall not be entitled to a casting vote in addition
to the vote or votes to which he may be entitled as a member or proxyholder.
11.11 No poll may be demanded on the election of a chairman. A poll demanded
on a question of adjournment shall be taken at the meeting without adjournment.
A poll demanded on any other question shall be taken as soon as, in the opinion
of the chairman, is reasonably convenient, but in no event later than seven days
after the meeting and at such time and place and in such manner as the chairman
of the meeting directs. The result of the poll shall be deemed to be the
resolution of and passed at the meeting at which the poll was demanded. Any
business other than that upon which the poll has been demanded may be proceeded
with pending the taking of the poll. A demand for a poll may be withdrawn.
11.12 In the case of any dispute as to the admission or rejection of a vote,
whether by show of hands or on a poll, the chairman shall determine the same,
and his determination made in good faith is final and conclusive.
11.13 Every ballot cast upon a poll and every proxy appointing a proxyholder
who casts a ballot upon a poll shall be retained by the Secretary for such
period and be subject to such inspection as the Company Act may provide.
11.14 On a poll a person entitled to cast more than one vote need not, if he
votes, use all his votes or cast all the votes he uses in the same way.
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11.15 Unless the Company Act, the Memorandum or these Articles otherwise
provide, any action to be taken by a resolution of the members may be taken by
an ordinary resolution.
11.16 A resolution submitted to all members entitled to vote and consented
to in writing, whether by document, telegram, telex or any method of
transmitting legibly recorded messages or other means, by all of the members
entitled to vote, in the case of a special resolution, or so consented to by
members holding shares carrying 75% of the votes entitled to be cast in the case
of an ordinary resolution shall be as valid and effectual as if it had been
passed at a meeting of the members duly called and held. Such resolution may be
in two or more counterparts which together shall be deemed to constitute one
resolution in writing. Such resolution shall be filed with the minutes of the
proceedings of the members and shall be effective on the date stated thereon or
on the latest date stated on any counterpart.
PART 12
VOTES OF MEMBERS
----------------
12.1 Subject to any special voting rights or restrictions attached to
any class of shares and the restrictions on joint registered holders of shares,
on a show of hands every member who is present in person or by proxy and
entitled to vote thereat shall have one vote and on a poll every member shall
have one vote for each share of which he is the registered holder and may
exercise such vote either in person or by proxy.
12.2 Any person who is not registered as a member but is entitled to
vote at any general meeting in respect of a share, may vote the share in the
same manner as if he were a member; but, unless the Directors have previously
admitted his right to vote at that meeting in respect of the share, he shall
satisfy the Directors of his right to vote the share before the time for holding
the meeting, or adjourned meeting, as the case may be, at which he proposes to
vote.
12.3 Any corporation not being a subsidiary which is a member of the
Company may by resolution of its Directors or other governing body authorize
such person as it thinks fit to act as its representative at any general meeting
or class meeting. The person so authorized shall be entitled to exercise in
respect of and at such meeting the same powers on behalf of the corporation
which he represents as that corporation could exercise if it were an individual
member of the Company personally present, including, without limitation, the
right, unless restricted by such resolution, to appoint a proxyholder to
represent such corporation, and shall be counted for the purpose of forming a
quorum if present at the meeting. Evidence of the resolution appointing any
such
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representative may be sent to the Company by written instrument, telegram, telex
or any method of transmitting legibly recorded messages. Notwithstanding the
foregoing, a corporation being a member may appoint a proxyholder.
12.4 Where there are joint members registered in respect of any share,
any one of the joint members may vote at any meeting in person, by proxy or by
authorized representative in respect of the share as if he were solely entitled
to it. If more than one of the joint members is present at any meeting in
person, by proxy or by authorized representative, the joint member so present
whose name stands first on the register of members in respect of the share shall
alone be entitled to vote in respect of that share. For the purpose of this
Article several executors or administrators of a deceased member in whose sole
name any share stands shall be deemed joint members.
12.5 A member of unsound mind entitled to attend and vote, in respect
of whom an order has been made by any court having jurisdiction, may vote,
whether on a show of hands or on a poll, by his committee or other person in the
nature of a committee appointed by that court, and any such committee, or other
person may appoint a proxyholder. The chairman may require such proof of such
appointment as he sees fit.
12.6 A member holding more than one share in respect of which he is
entitled to vote shall be entitled to appoint one or more (but, in the case of a
non-reporting Company, not more than five) proxyholders to attend, act and vote
for him on the same occasion. If such a member should appoint more than one
proxyholder for the same occasion he shall specify the number of shares each
proxyholder shall be entitled to vote. A member may also appoint one or more
alternate proxyholders to act in the place and stead of an absent proxyholder.
12.7 Any person, having attained the age of majority, may act as
proxyholder whether or not he is entitled on his own behalf to be present and to
vote at the meeting at which he acts as proxyholder. The proxy may authorize
the person so appointed to act as proxyholder for the appointor for the period,
at any meeting or meetings, and to the extent permitted by the Company Act.
12.8 A proxy shall be in writing under the hand of the appointor or of
his attorney duly authorized in writing, or, if the appointor is a corporation,
either under the seal of the corporation or under the hand of a duly authorized
officer or attorney of that corporation.
12.9 Unless the Directors fix some other time by which proxies must be
deposited, a proxy and the power of attorney or other authority, if any, under
which it is signed, or a notarially certified copy thereof, shall be deposited
at the registered office
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of the Company or at such other place as is specified for that purpose in the
notice convening the meeting, not less than 48 hours (excluding Saturdays and
holidays) before the time for holding the meeting in respect of which the person
named in the instrument is appointed.
12.10 In addition to any other method of depositing proxies provided for in
these Articles, the Directors may by resolution make regulations relating to the
depositing of proxies at any place or places and fixing the time for depositing
the proxies. If the Company is or becomes a reporting company, the time so
fixed shall not exceed 48 hours (excluding Saturdays and holidays) preceding the
meeting or adjourned meeting specified in the notice calling a meeting of
members and providing for particulars of such proxies to be sent to the Company
or any agent of the Company in writing or by letter, telegram, telex or any
method of transmitting legibly recorded messages so as to arrive before the
commencement of the meeting or adjourned meeting at the office of the Company or
of any agent of the Company appointed for the purpose of receiving such
particulars and providing that proxies so deposited may be acted upon as though
the proxies themselves were deposited as required by this Part and votes given
in accordance with such regulations shall be valid and shall be counted.
12.11 Unless the Company Act or any other statute or law requires any other
form of proxy, a proxy, whether for a specified meeting or otherwise, shall be
either in the form following or in any other form that the Directors or the
chairman of the meeting shall approve:
Immune Network Research Ltd.
The undersigned, being a member of the above named Company, appoints
of or failing him
--------------------------------- -------------------
of for the undersigned to attend,
-------------------- ---------------------
act and vote for and on behalf of the undersigned at the general meeting of
the Company to be held on the day of and at any adjournment
--- ------- thereof.
Signed this , 19 .
----------- ---
----------------------------
(Signature of Member)
12.12 A vote given in accordance with the terms of a proxy is valid
notwithstanding the previous death or incapacity of the member giving the proxy
or the revocation of the proxy or of the authority under which the form of proxy
was executed or the
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transfer of the share in respect of which the proxy is given, provided that no
notification in writing of such death, incapacity, revocation or transfer shall
have been received at the registered office of the Company or by the chairman of
the meeting or adjourned meeting for which the proxy was given before the vote
was taken.
12.13 Every proxy may be revoked by an instrument in writing:
(i) executed by the member giving the same or by his attorney
authorized in writing or, where the member is a corporation,
by a duly authorized officer or attorney of the corporation;
and
(ii) delivered either at the registered office of the Company at
any time up to and including the last business day preceding
the day of the meeting, or any adjournment thereof at which
the proxy is to be used, or to the chairman of the meeting
on the day of the meeting or any adjournment thereof before
any vote in respect of which the proxy is to be used shall
have been taken;
or in any other manner provided by law.
12.14 The chairman of the meeting may determine whether or not a proxy,
deposited for use at such meeting, which may not strictly comply with the
requirements of this Part as to form, execution, accompanying documentation,
time of filing, or otherwise, shall be valid for use at such meeting and any
such determination made in good faith shall be final, conclusive and binding
upon such meeting.
PART 13
DIRECTORS
---------
13.1 The persons set out in the Amalgamation Agreement are the
Company's first Directors. The Directors to succeed the first Directors may be
appointed in writing by a majority of the directors or at a meeting of the
directors, or if not so appointed, they shall be elected by the members entitled
to vote on the election of Directors. The number of Directors, excluding
additional Directors, may be fixed or changed from time to time by ordinary
resolution, whether previous notice thereof has been given or not, but
notwithstanding anything contained in these Articles
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the number of Directors shall never be less than one or, if the Company is or
becomes a reporting company, less than three.
13.2 The remuneration of the Directors may from time to time be
determined by the Directors unless by ordinary resolution the members determine
that such remuneration shall be determined by the members. Such remuneration
may be in addition to any salary or other remuneration paid to any Director in
his capacity as Officer or employee of the Company. The Directors shall be
reimbursed for reasonable travelling, hotel and other expenses they incur in and
about the business of the Company and if any Director shall perform any
professional or other services for the Company that in the opinion of the
Directors are outside the ordinary duties of a Director or shall otherwise be
specially occupied in or about the Company's business, he may be paid a
remuneration to be fixed by the Board, or, at the option of such Director, by
the Company in general meeting, and such remuneration may be either in addition
to, or in substitution for any other remuneration that he may be entitled to
receive. The Directors on behalf of the Company, unless otherwise determined by
ordinary resolution, may pay a gratuity or pension or allowance on retirement to
any Director who has held any office or position with the Company or to his
spouse or dependants and may make contributions to any fund and pay premiums for
the purchase or provision of any such gratuity, pension or allowance.
13.3 A Director shall not be required to hold a share in the capital of
the Company as qualification for his office but shall be qualified as required
by the Company Act to become or act as a Director. Any Director who is not a
member shall be deemed to have agreed to be bound by the provisions of the
articles to the same extent as if he were a member of the Company.
PART 14
ELECTION AND REMOVAL OF DIRECTORS
---------------------------------
14.1 At each annual general meeting of the Company all the Directors
shall retire and the members entitled to vote thereat shall elect a Board of
Directors consisting of the number of Directors for the time being fixed
pursuant to these Articles.
14.2 A retiring Director shall be eligible for re-election.
14.3 Where the Company fails to hold an annual general meeting in
accordance with the Company Act, the Directors then in office shall be deemed to
have been elected or appointed as Directors on the last day on which the annual
general meeting could have been held pursuant to these Articles and they may
hold office until other Directors are appointed or elected or until the day on
which the next annual general meeting is held.
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14.4 If at any general meeting at which there should be an election of
Directors the places of any of the retiring Directors are not filled by such
election, such of the retiring Directors who are not re-elected as may be
requested by the newly-elected Directors shall, if willing to do so, continue in
office to complete the number of Directors for the time being fixed pursuant to
these Articles until further new Directors are elected at a general meeting
convened for the purpose. If any such election or continuance of Directors does
not result in the election or continuance of the number of Directors for the
time being fixed pursuant to these Articles such number shall be fixed at the
number of Directors actually elected or continued in office.
14.5 The remaining Directors or Director shall have the power from time
to time to appoint any person as a Director to fill any casual vacancy occurring
in the Board of Directors.
14.6 Between successive annual general meetings the Directors shall
have power to appoint one or more additional Directors but the number of
additional Directors shall not be more than one-third of the number of Directors
elected or appointed at the last annual general meeting. Any Director so
appointed shall hold office only until the next following annual general meeting
of the Company, but shall be eligible for election at such meeting and, so long
as he is an additional Director, the number of Directors shall be increased
accordingly.
14.7 Any Director may by instrument in writing delivered to the Company
appoint any person to be his alternate to act in his place at meetings of the
Directors at which he is not present unless the Directors shall have reasonably
disapproved the appointment of such person as an alternate Director and
shallhave given notice to that effect to the Director appointing the alternate
Director within a reasonable time after delivery of such instrument to the
Company. Every such alternate shall be entitled to notice of meetings of the
Directors and to attend and vote as a Director at a meeting at which the person
appointing him is not personally present, and, if he is a Director, to have a
separate vote on behalf of the Director he is representing in addition to his
own vote. A Director may at any time by instrument, telegram, telex or any
method of transmitting legibly recorded messages delivered to the Company revoke
the appointment of an alternate appointed by him. The remuneration payable to
such an alternate shall be payable out of the remuneration of the Director
appointing him.
14.8 A Director ceases to hold office when he:
(i) dies;
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(ii) resigns his office by notice in writing delivered to the
registered office of the Company;
(iii) is convicted of an indictable offence and the other
Directors shall have resolved to remove him;
(iv) ceases to be qualified to act as a Director pursuant to the
Company Act; or
(v) is removed in accordance with Article 14.10.
14.9 Every resignation of a Director becomes effective at the time a
written resignation is delivered to the registered office of the Company or at
the time specified in the resignation, whichever is later.
14.10 The Company may by special resolution remove any Director before the
expiration of his period of office and may by an ordinary resolution appoint
another person in his stead.
PART 15
POWERS AND DUTIES OF DIRECTORS
------------------------------
15.1 The Directors shall manage or supervise the management of the
affairs and business of the Company and shall have the authority to exercise all
such powers of the Company as are not, by the Company Act or by the Memorandum
or these Articles, required to be exercised by the Company in general meeting.
15.2 The Directors may from time to time by power of attorney or other
instrument under seal appoint any person to be the attorney of the Company for
such purposes, and with such powers, authorities and discretions (not exceeding
those vested in or exercisable by the Directors under these Articles and
excepting the powers of the Directors relating to the constitution of the Board
and of any of its committees and the appointment or removal of Officers and the
power to declare dividends) and for such period, with such remuneration and
subject to such conditions as the Directors may think fit, and any such
appointment may be made in favour of any of the Directors or any of the members
of the Company or in favour of any corporation, or of any of the members,
Directors, nominees or managers of any corporation, firm or joint venture and
any such power of attorney may contain such provisions for the protection or
convenience of persons dealing with such attorney as the Directors think fit.
Any such attorney may be authorized by the Directors to sub-delegate all or any
of the
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powers, authorities and discretions for the time being vested in him.
PART 16
DISCLOSURE OF INTEREST OF DIRECTORS
-----------------------------------
16.1 A Director who is in any way, directly or indirectly, interested
in an existing or proposed contract or transaction with the Company or who holds
any office or possesses any property whereby, directly or indirectly, a duty
or interest might be created to conflict with his duty or interest as a Director
shall declare the nature and extent of his interest in such contract or
transaction or of the conflict or potential conflict with his duty and interest
as a Director, as the case may be, in accordance with the provisions of the
Company Act.
16.2 A Director shall not vote in respect of any such contract or
transaction with the Company in which he is interested and if he shall do so his
vote shall not be counted, but he shall be counted in the quorum present at the
meeting at which such vote is taken. Subject to the provisions of the Company
Act, the prohibitions contained in this Part shall not apply to:
(i) any contract or transaction relating to a loan to the
Company, the repayment of all or part of which a Director or
a specified corporation or a specified firm in which he has
an interest has guaranteed or joined in guaranteeing;
(ii) any contract or transaction made, or to be made, with or for
the benefit of an affiliated corporation of which a Director
is a Director or Officer;
(iii) any contract by a Director to subscribe for or underwrite
shares or debentures to be issued by the Company or a
subsidiary of the Company, or any contract, arrangement or
transaction in which a Director is, directly or indirectly,
interested if all the other Directors are also, directly or
indirectly, interested in the contract, arrangement or
transaction;
(iv) determining the remuneration of the Directors;
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(v) purchasing and maintaining insurance to cover Directors
against liability incurred by them as Directors; or
(vi) the indemnification of any Director by the Company.
These exceptions may from time to time be suspended or amended to any extent
approved by the Company in general meeting and permitted by the Company Act,
either generally or in respect of any particular contract or transaction or for
any particular period.
16.3 A Director may hold any office or position with the Company, other than
the office of auditor of the Company, in conjunction with his office of Director
for such period and on such terms, as to remuneration or otherwise, as the
Directors may determine and no Director or intended Director shall be
disqualified by his office from contracting with the Company either with regard
to his tenure of any such other office or position or as vendor, purchaser or
otherwise, and, subject to compliance with the provisions of the Company Act, no
contract or transaction entered into by or on behalf of the Company in which a
Director is in any way interested shall be liable to be voided by reason
thereof.
16.4 Subject to compliance with the provisions of the Company Act, a
Director or his firm may act in a professional capacity for the Company and he
or his firm shall be entitled to remuneration for professional services as if he
were not a Director.
16.5 A Director may be or become a director or other officer or employee of,
or otherwise interested in, any corporation or firm in which the Company may be
interested as a member or otherwise, and, subject to compliance with the
provisions of the Company Act, such Director shall not be accountable to the
Company for any remuneration or other benefits received by him as director,
officer or employee of, or from his interest in, such other corporation or firm.
PART 17
PROCEEDINGS OF DIRECTORS
------------------------
17.1 The Chairman of the Board, if any, or in his absence the President,
shall preside as chairman at every meeting of the Directors, or if there is no
Chairman of the Board or neither the Chairman of Board nor the President is
present within fifteen minutes of the time appointed for holding the meeting or
is willing to act as chairman, or, if the Chairman of the Board, if any, and the
President have advised the Secretary that they will not be present at the
meeting, the Directors present shall choose one of
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their number to be chairman of the meeting. With the consent of the meeting,
the solicitor of the Company may act as Chairman of a meeting of the Directors.
17.2 The Directors may meet together for the dispatch of business, adjourn
and otherwise regulate their meetings, as they think fit. Questions arising at
any meeting shall be decided by a majority of votes. In case of an equality of
votes the chairman shall not have a second or casting vote. Meetings of the
Board held at regular intervals may be held at such place, at such time and upon
such notice (if any) as the Board may by resolution from time to time determine.
17.3 A Director may participate in a meeting of the Board or of any
committee of the Directors by means of conference telephones or other
communications facilities by means of which all Directors participating in the
meeting can hear each other and provided that all such Directors agree to such
participation. A Director participating in a meeting in accordance with this
Article shall be deemed to be present at the meeting and to have so agreed and
shall be counted in the quorum therefor and be entitled to speak and vote
thereat.
17.4 A Director may, and the Secretary or an Assistant Secretary upon
request of a Director shall, call a meeting of the Board at any time.
Reasonable notice shall be given for any meeting specifying the place, day and
hour of such meeting shall be given by mail, postage prepaid, addressed to each
of the Directors and alternate Directors at his address as it appears on the
books of the Company or by leaving it at his usual business or residential
address or by telephone, telegram, telex, or any method of transmitting legibly
recorded messages. It shall not be necessary to give notice of a meeting of
Directors to any Director or alternate Director if such meeting is to be held
immediately following a general meeting at which such Director shall have been
elected or is the meeting of Directors at which such Director is appointed.
Accidental omission to give notice of a meeting of Directors to, or by the
non-receipt of notice by, any Director shall not invalidate the proceedings at
that meeting.
17.5 Any Director of the Company may file with the Secretary a document
executed by him waiving notice of any past, present or future meeting or
meetings of the Directors being, or required to have been, sent to him and may
at any time withdraw such waiver with respect to meetings held thereafter.
After the filing of such waiver with respect to future meetings, and until such
waiver is withdrawn, no notice of any meeting of the Directors need be given to
such Director or, unless the Director otherwise requires in writing to the
Secretary, to his alternate Director, and all meetings of the Directors so held
shall be deemed not to be improperly called or constituted by reason of notice
not having been given to such Director or alternate Director.
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17.6 The quorum necessary for the transaction of the business of the
Directors may be fixed by the Directors and if not so fixed shall be a majority
of the Directors or, if the number of Directors is fixed at one, shall be one
Director.
17.7 The Directors may act notwithstanding any vacancy in their body, but,
if and so long as their number is reduced below the number fixed pursuant to
these Articles as the necessary quorum of Directors, the Directors may act for
the purpose of increasing the number of Directors to that number, or of
summoning a general meeting of the Company, but for no other purpose.
17.8 Subject to the provisions of the Company Act, all acts done by any
meeting of the Directors or of a committee of Directors, or by any person acting
as a Director, shall, not-withstanding that it be afterwards discovered that
there was some defect in the qualification, election or appointment of any such
Directors or of the members of such committee or person acting as aforesaid, or
that they or any of them were disqualified, be as valid as if every such person
had been duly elected or appointed and was qualified to be a Director.
17.9 A resolution consented to in writing, whether by document, telegram,
telex or any method of transmitting legibly recorded messages or other means, by
all of the Directors or their alternates shall be as valid and effectual as if
it had been passed at a meeting of the Directors duly called and held. Such
resolution may be in two or more counterparts which together shall be deemed to
constitute one resolution in writing. Such resolution shall be filed with the
minutes of the proceedings of the Directors and shall be effective on the date
stated thereon or on the latest date stated on any counterpart.
17.10 No resolution proposed at a meeting of Directors need be seconded, and the
chairman of any meeting is entitled to move or propose a resolution.
PART 18
EXECUTIVE AND OTHER COMMITTEES
------------------------------
18.1 The Directors may by resolution appoint an Executive Committee to
consist of such member or members of their body as they think fit, which
Committee shall have, and may exercise during the intervals between the meetings
of the Board, all the powers vested in the Board except the power to fill
vacancies in the Board, the power to change the membership of, or fill vacancies
in, said Committee or any other committee of the Board and such other powers, if
any, as may be specified in the resolution. The said Committee shall keep
regular minutes of its transactions and shall cause them to be recorded in books
kept for that purpose, and shall
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report the same to the Board of Directors at such times as the Board of
Directors may from time to time require. The Board shall have the power at any
time to revoke or override the authority given to or acts done by the Executive
Committee, except as to acts done before such revocation or overriding, and to
terminate the appointment or change the membership of such Committee and to fill
vacancies in it. The Executive Committee may make rules for the conduct of its
business and may appoint such assistants as it may deem necessary. A majority
of the members of said Committee shall constitute a quorum thereof.
18.2 The Directors may by resolution appoint one or more committees
consisting of such member or members of their body as they think fit and may
delegate to any such committee between meetings of the Board such powers of the
Board (except the power to fill vacancies in the Board and the power to change
the membership of or fill vacancies in any committee of the Board and the power
to appoint or remove Officers appointed by the Board) subject to such conditions
as may be prescribed in such resolution, and all committees so appointed shall
keep regular minutes of their transactions and shall cause them to be recorded
in books kept for that purpose, and shall report the same to the Board of
Directors at such times as the Board of Directors may from time to time require.
The Directors shall also have power at any time to revoke or override any
authority given to or acts to be done by any such committees except as to acts
done before such revocation or overriding and to terminate the appointment or
change the membership of a committee and to fill vacancies in it. Committees
may make rules for the conduct of their business and may appoint such assistants
as they may deem necessary. A majority of the members of a committee shall
constitute a quorum thereof.
18.3 The Executive Committee and any other committee may meet and adjourn as
it thinks proper. Questions arising at any meeting shall be determined by a
majority of votes of the members of the committee present, and in case of an
equality of votes the chairman shall not have a second or casting vote. A
resolution approved in writing by all the members of the Executive Committee or
any other committee shall be as valid and effective as if it had been passed at
a meeting of such Committee duly called and constituted. Such resolution may be
in two or more counterparts which together shall be deemed to constitute one
resolution in writing. Such resolution shall be filed with the minutes of the
proceedings of the committee and shall be effective on the date stated thereon
or on the latest date stated in any counterpart.
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PART 19
OFFICERS
--------
19.1 The Directors shall, from time to time, appoint a President and a
Secretary and such other Officers, if any, as the Directors shall determine and
the Directors may, at any time, terminate any such appointment. No Officer
shall be appointed unless he is qualified in accordance with the provisions of
the Company Act.
19.2 One person may hold more than one of such offices except that the
offices of President and Secretary must be held by different persons unless the
Company has only one member. Any person appointed as the Chairman of the Board,
the President or the Managing Director shall be a Director. The other Officers
need not be Directors. The remuneration of the Officers of the Company as such
and the terms and conditions of their tenure of office or employment shall from
time to time be determined by the Directors; such remuneration may be by way of
salary, fees, wages, commission or participation in profits or any other means
or all of these modes and an Officer may in addition to such remuneration be
entitled to receive after he ceases to hold such office or leaves the employment
of the Company a pension or gratuity. The Directors may decide what functions
and duties each Officer shall perform and may entrust to and confer upon him any
of the powers exercisable by them upon such terms and conditions and with such
restrictions as they think fit and may from time to time revoke, withdraw, alter
or vary all or any of such functions, duties and powers. The Secretary
shall, inter alia, perform the functions of the Secretary specified in the
Company Act.
19.3 Every Officer of the Company who holds any office or possesses any
property whereby, whether directly or indirectly, duties or interests might he
created in conflict with his duties or interests as an Officer of the Company
shall, in writing, disclose to the President the fact and the nature, character
and extent of the conflict.
PART 20
INDEMNITY AND PROTECTION OF DIRECTORS, OFFICERS AND EMPLOYEES
-------------------------------------------------------------
20.1 Subject to the provisions of the Company Act, the Directors shall cause
the Company to indemnify a Director or former Director of the Company and the
Directors may cause the Company to indemnify a Director or former Director of a
corporation of which the Company is or was a member and the heirs and personal
representatives of any such person against all costs, charges and expenses,
including an amount paid to settle an action or satisfy a judgment, actually and
reasonably incurred by him or them including an amount paid to settle an action
or satisfy a judgment in a civil, criminal or
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administrative action or proceeding to which he is or they are made a party by
reason of his being or having been a Director of the Company or a Director of
such corporation, including any action brought by the Company or any such
corporation. Each Director of the Company on being elected or appointed shall
be deemed to have contracted with the Company on the terms of the foregoing
indemnity.
20.2 Subject to the provisions of the Company Act, the Directors may cause
the Company to indemnify any Officer, employee or agent of the Company or of a
corporation of which the Company is or was a member (notwithstanding that he is
also a Director) and his heirs and personal representatives against all costs,
charges and expenses whatsoever incurred by him or them and resulting from his
acting as an Officer, employee or agent of the Company or such corporation. In
addition the Company shall indemnify the Secretary or an Assistant Secretary of
the Company (if he shall not be a full time employee of the Company and
notwithstanding that he is also a Director) and his respective heirs and
legal representatives against all costs, charges and expenses whatsoever
incurred by him or them and arising out of the functions assigned to the
Secretary by the Company Act or these Articles and each such Secretary and
Assistant Secretary shall on being appointed be deemed to have contracted with
the Company on the terms of the foregoing indemnity.
20.3 The failure of a Director or Officer of the Company to comply with the
provisions of the Company Act or of the Memorandum or these Articles shall not
invalidate any indemnity to which he is entitled under this Part.
20.4 The Directors may cause the Company to purchase and maintain insurance
for the benefit of any person who is or was serving as a Director, Officer,
employee or agent of the Company or as a Director, officer, employee or agent of
any corporation of which the Company is or was a member and his heirs or
personal representatives against any liability incurred by him as such Director,
Officer, employee or agent.
PART 21
DIVIDENDS AND RESERVE
---------------------
21.1 The Directors may from time to time declare and authorize payment of
such dividends, if any, as they may deem advisable and need not give notice of
such declaration to any member. No dividend shall be paid otherwise than out of
funds and/or assets properly available for the payment of dividends and a
declaration by the Directors as to the amount of such funds or assets available
for dividends shall be conclusive. The Company may pay any such dividend wholly
or in part by the distribution of specific assets,
Hanna Heppell Bell & Visosky
<PAGE>
Page 30
and in particular by paid up shares, bonds, debentures or other securities of
the Company or any other corporation, or in any one or more such ways as may be
authorized by the Company or the Directors, and where any difficulty arises with
regard to such a distribution the Directors may settle the same as they think
expedient, and in particular may fix the value for distribution of such specific
assets or any part thereof, and may determine that cash payments in substitution
for all or any part of the specific assets to which any members are entitled
shall be made to any members on the basis of the value so fixed to adjust the
rights of all parties, and may vest any such specific assets in trustees for the
persons entitled to the dividend as may seem expedient to the Directors.
21.2 Any dividend declared on shares of any class by the Directors may be
made payable on such date as is fixed by the Directors.
21.3 Subject to the rights of members (if any) holding shares with specific
rights as to dividends, all dividends on shares of any class shall be declared
and paid according to the number of such shares held.
21.4 The Directors may, before declaring any dividend, set aside out of the
funds properly available for the payment of dividends such sums as they think
proper as a reserve or reserves, which shall, at the discretion of the
Directors, be applicable for meeting contingencies, or for equalizing dividends,
or for any other purpose to which such funds of the Company may be properly
applied, and pending such application may, at the like discretion, either be
employed in the business of the Company or be invested in such investments as
the Directors may from time to time think fit. The Directors may also, without
placing the same in reserve, carry forward such funds which they think prudent
not to divide.
21.5 If several persons are registered as joint holders of any share, any
one of them may give an effective receipt for any dividend, bonus or other
moneys payable in respect of the share.
21.6 No dividend shall bear interest against the Company. Where the
dividend to which a member is entitled includes a fraction of a cent, such
fraction shall be disregarded in making payment thereof and such payment shall
be deemed to be payment in full.
21.7 Any dividend, bonus or other moneys payable in cash in respect of
shares may be paid by cheque or warrant sent through the post directed to the
registered address of the holder, or in the case of joint holders, to the
registered address of that one of the joint holders who is first named on the
register, or to such person and to such address as the holder or joint holders
may direct in writing. Every such cheque or warrant shall be made payable to
the
Hanna Heppell Bell & Visosky
<PAGE>
Page 31
order of the person to whom it is sent. The mailing of such cheque or warrant
shall, to the extent of the sum represented thereby (plus the amount of any tax
required by law to be deducted) discharge all liability for the dividend, unless
such cheque or warrant shall not be paid on presentation or the amount of tax so
deducted shall not be paid to the appropriate taxing authority.
21.8 Notwithstanding anything contained in these Articles, the Directors may
from time to time capitalize any undistributed surplus on hand of the Company
and may from time to time issue as fully paid and non-assessable any unissued
shares, or any bonds, debentures or debt obligations of the Company as a
dividend representing such undistributed surplus on hand or any part thereof.
21.9 Notwithstanding any other provisions of these articles should any
dividend result in any members being entitled to a fractional part of a share of
the Company, the Directors shall have the right to pay such members in place of
that fractional share, the cash equivalent thereof calculated on the par value
thereof or, in the case of shares without par value, calculated on the price or
consideration for which such shares were or were deemed to be issued, and shall
have the further right and complete discretion to carry out such distribution
and to adjust the rights of the members with respect thereon on as practical and
equitable a basis as possible including the right to arrange through a fiscal
agent or otherwise for the sale, consolidation or other disposition of those
fractional shares on behalf of those members of the Company.
PART 22
DOCUMENTS, RECORDS AND REPORTS
------------------------------
22.1 The Company shall keep at its records office or at such other place as
the Company Act may permit, the documents, copies, registers, minutes, and
records which the Company is required by the Company Act to keep at its records
office or such other place, as the case may be.
22.2 The Company shall cause to be kept proper books of account and
accounting records in respect of all financial and other transactions of the
Company to record properly the financial affairs and condition of the Company
and to comply with the Company Act.
22.3 Unless the Directors determine otherwise, or unless otherwise
determined by an ordinary resolution, no member of the Company shall be entitled
to inspect the accounting records of the Company.
Hanna Heppell Bell & Visosky
<PAGE>
Page 32
22.4 The Directors shall from time to time at the expense of the Company
cause to be prepared and laid before the Company in general meeting such
financial statements and reports as are required by the Company Act.
22.5 Every member shall be entitled, on demand, to be furnished with a copy
of the latest financial statement of the Company including the auditor's report
on it, if any, and, if so required by the Company Act, a copy of each annual
financial statement and interim financial statement shall be mailed to each
member.
PART 23
NOTICES
-------
23.1 A notice, statement, report or other document may be given or delivered
by the Company to any member either by delivery to him personally or by sending
it by mail to his address as recorded in the register of members. Where a
notice, statement, report or other document is sent by mail, service or delivery
of the notice, statement or report shall be deemed to be effected by properly
addressing, prepaying and mailing the notice, statement or report and to have
been given on the day, Saturdays and holidays excepted, following the date of
mailing. A certificate signed by the Secretary or other Officer of the Company
or of any other corporation acting in that behalf for the Company that the
letter, envelope or wrapper containing the notice, statement, report or other
document was so addressed, prepaid and mailed shall be conclusive evidence
thereof.
23.2 A notice, statement, report or other document may be given or delivered
by the Company to the joint holders of a share by giving the notice to the joint
holder first named in the register of members in respect of the share.
23.3 A notice, statement, report or other document may be given or delivered
by the Company to the persons entitled to a share in consequence of the death,
bankruptcy or incapacity of a member by sending it by mail, prepaid, addressed
to them by name or by the title of representatives of the deceased or
incapacitated person or trustee of the bankrupt, or by any like description, at
the address (if any) supplied to the Company for the purpose by the persons
claiming to be so entitled, or (until such address has been so supplied) by
giving the notice in a manner in which the same might have been given if the
death, bankruptcy or incapacity had not occurred.
23.4 Notice of every general meeting or meeting of members holding shares of
a particular class or series shall be given in a manner hereinbefore authorized
to every member holding at the time
Hanna Heppell Bell & Visosky
<PAGE>
Page 33
of the issue of the notice or the date fixed for determining the members
entitled to such notice, whichever is the earlier, shares which confer the right
to notice of and to attend and vote at any such meeting. No other person except
the auditor of the Company and the Directors of the Company shall be entitled to
receive notices of any such meeting.
PART 24
RECORD DATES
------------
24.1 The Directors may fix in advance a date, which shall not be more than
the maximum number of days permitted by the Company Act, preceding the date of
any meeting of members, including class and series meetings, or of the payment
of any dividend or of the proposed taking of any other proper action requiring
the determination of members, as the record date for the determination of the
members entitled to notice of, or to attend and vote at, any such meeting and
any adjournment thereof, or entitled to receive payment of any such dividend or
for any other proper purpose and, in such case, notwithstanding anything
elsewhere contained in these Articles, only members of record on the date so
fixed shall be deemed to be members for the purposes aforesaid.
24.2 Where no record date is so fixed f or the determination of members as
provided in the preceding Article the date on which the notice is mailed or on
which the resolution declaring the dividend is adopted, as the case may be,
shall be the record date for such determination.
PART 25
SEAL
----
25.1 The Directors may provide a seal for the Company and, if they do so,
shall provide for the safe custody of the seal which shall not be affixed to any
instrument except in the presence of the following persons, namely:
(i) any two Directors; or
(ii) any one of the Chairman of the Board, the President, the
Managing Director, a Director or a Vice-President together
with any one of the Secretary, the Treasurer, the Secretary-
Treasurer, an Assistant Secretary, an Assistant Treasurer
and an Assistant Secretary-Treasurer; or
Hanna Heppell Bell & Visosky
<PAGE>
Page 34
(iii) if the Company shall have only one member, the President or
the Secretary; or
(iv) such person or persons as the Directors may from time to
time by resolution appoint;
and the said Directors, Officers, person or persons in whose presence the seal
is so affixed to an instrument shall sign such instrument. For the purpose of
certifying under seal true copies of any document or resolution the seal may be
affixed in the presence of any one of the foregoing persons.
25.2 To enable the seal of the Company to be affixed to any bonds,
debentures, share certificates, or other securities of the Company, whether in
definitive or interim form, on which facsimiles of any of the signatures of the
Directors or Officers of the Company are, in accordance with the Company Act
and/or these Articles, printed or otherwise mechanically reproduced there may be
delivered to the firm or company employed to engrave, lithograph or print such
definitive or interim bonds, debentures, share certificates or other securities
one or more unmounted dies reproducing the Company's seal and the Chairman of
the Board, the President, the Managing Director or a Vice-President and the
Secretary, Treasurer, Secretary-Treasurer, an Assistant Secretary, an Assistant
Treasurer or an Assistant Secretary-Treasurer may by a document authorize such
firm or company to cause the Company's seal to be affixed to such definitive or
interim bonds, debentures, share certificates or other securities by the use of
such dies. Bonds, debentures, share certificates or other securities to which
the Company's seal has been so affixed shall for all purposes be deemed to be
under and to bear the Company's seal lawfully affixed thereto.
25.3 The Company may have an official seal for use in any other province,
state, territory or country, and all of the powers conferred by the Company Act
with respect thereto may be exercised by the Directors or by a duly authorized
agent of the Company.
PART 26
MECHANICAL REPRODUCTION OF SIGNATURES
-------------------------------------
26.1 The signature of any Officer, Director, registrar, branch registrar,
transfer agent or branch agent of the Company, unless otherwise required by the
Company Act or by these Articles, may, if authorized by the Directors, be
printed, lithographed, engraved or otherwise mechanically reproduced upon all
instruments executed or issued by the Company or any Officer thereof; and any
instrument on which the signature of any such person is so reproduced shall be
deemed to have been manually signed by such person whose signature is so
reproduced and shall be as valid to all intents and purposes
Hanna Heppell Bell & Visosky
<PAGE>
Page 35
as if such instrument had been signed manually, and notwithstanding that the
person whose signature is so reproduced may have ceased to hold the office
that he is stated on such instrument to hold at the date of the delivery
or issue of such instrument.
26.2 The term "instrument" as used in Article 26.1, shall include deeds,
mortgages, hypothecs, charges, conveyances, transfers and assignments of
property, real or personal, agreements, releases, receipts and discharges for
the payment of money or other obligation, shares and share warrants of the
Company, bonds, debentures and other debt obligations of the Company, and all
paper writings.
Hanna Heppell Bell & Visosky
<PAGE>
EXHIBIT 2
Instruments Defining the Rights of Holders of Securities Being Registered
(See Exhibits 1-4 above)
<PAGE>
EXHIBIT 3-1
Escrow Agreement dated December 7, 1995
<PAGE>
ESCROW AGREEMENT
----------------
THIS AGREEMENT is dated for reference the 7th day of December, 1995.
AMONG:
THE MONTREAL TRUST COMPANY OF CANADA, having an office at 510 Burrard Street,
-------------------------------------
Vancouver, British, Columbia, V6C 3B9
(the "Escrow Agent")
OF THE FIRST PART
AND:
IMMUNE NETWORK -RESEARCH LTD., having an office at Suite 900 - 475:Howe
------------------------------
Street, Vancouver, British Columbia, V6C 3C8
(the "INR")
OF THE SECOND PART
AND:
BOBBY CADILLAC'S FOOD CORPORATION, 2201 - 2075 Comox Street, Vancouver,
---------------------------------
British Columbia, V6G 1S2
("BCFC")
OF THE THIRD PART
AND:
EACH SHAREHOLDER, as defined in this Agreement
----------------
(collectively, the "Parties")
OF THE FOURTH PART
WHEREAS pursuant to an Amalgamation Agreement dated April 21, 1995 among
INR and BCFC, INR and BCFC have agreed to amalgamate (the "Amalgamation") to
form a new entity to be known as "Immune Network Research Ltd." (the "Issuer");
<PAGE>
Page 2
AND WHEREAS pursuant to the Amalgamation, each Shareholder will acquire
Shares of the Issuer;
AND WHEREAS the Escrow Agent has agreed to act as escrow agent for the
Issuer in respect of the Shares upon the acquisition of the Shares by each
Shareholder;
NOW THEREFORE in consideration of the covenants contained in this Agreement
and other good and valuable consideration (the receipt and sufficiency of which
is acknowledged), the Parties agree as follows:
1. INTERPRETATION
In this Agreement:
(a) "Acknowledgment" means the acknowledgment and agreement to be bound in
the form attached as Schedule "A" to this Agreement;
(b) "Act" means the Securities Act, S.B.C. 1985, c.83;
(c) "Exchange" means the Vancouver Stock Exchange;
(d) "Local Policy Statement 3-07" means the Local Policy Statement 3-07 in
effect as of the date of reference of this Agreement and attached as
Schedule "B" to this Agreement;
(e) "Shareholder" means a person who is or will become a holder of shares of
the Issuer who executes this Agreement or an Acknowledgment;
(f) "Shares" means the shares of each Shareholder described in Schedule "C"
to this Agreement, as amended from time to time in accordance with
section 9;
(g) "Superintendent" means the Superintendent of Brokers appointed under the
Act; and
(h) "Superintendent or the Exchange" means the Superintendent, if the shares
of the Issuer are not listed on the Exchange, or the Exchange if the
shares of the Issuer are listed on the Exchange.
2. PLACEMENT OF SHARES IN ESCROW
The Shareholder places the Shares in escrow with the Escrow Agent and shall
deliver the certificates representing the Shares to the Escrow Agent as soon as
practicable.
<PAGE>
Page 3
3. VOTING OF SHARES IN ESCROW
Except as provided by section 4(a), the Shareholder may exercise all voting
rights attached to the Shares.
4. WAIVER OF SHAREHOLDER'S RIGHTS
The Shareholder waives the rights attached to the Shares:
(a) to vote the Shares on a resolution to cancel any of the Shares;
(b) to receive dividends; and
(c) to participate in the assets and property of the Issuer on a winding up
or dissolution of the Issuer.
5. ABSTENTION FROM VOTING AS A DIRECTOR
A Shareholder that is or becomes a director of the Issuer shall abstain from
voting on a directors' resolution to cancel any of the Shares.
6. TRANSFER WITHIN ESCROW
(1) The Shareholder shall not transfer any of the Shares except in
accordance with Local Policy Statement 3-07 and with the consent of the
Superintendent or the Exchange.
(2) The Escrow Agent shall not effect a transfer of the Shares within escrow
unless the Escrow Agent has received:
(a) a copy of an Acknowledgment executed by the person to whom the Shares
are to be transferred, and
(b) a letter from the Superintendent or the Exchange consenting to the
transfer.
(3) Upon the death or bankruptcy of a Shareholder, the Escrow Agent shall
hold the Shares subject to this Agreement for the person that is legally
entitled to become a registered owner of the Shares.
(4) If a Shareholder ceases to be a "principal", as that term is defined in
Local Policy 3-07, such Shareholder shall be entitled to retain ownership of the
Shares and shall not be required to transfer or surrender to the Issuer for
cancellation any Shares held by him except where required by section 8.
<PAGE>
Page 4
7. RELEASE FROM ESCROW
(1) The Shareholder irrevocably directs the Escrow Agent to retain the
Shares until the Shares are released from escrow pursuant to subsection (2) or
surrendered for cancellation pursuant to section 8.
(2) The Escrow Agent shall not release the Shares from escrow unless the
Escrow Agent has received a letter from the Superintendent or the Exchange
consenting to the release.
(3) The approval of the Superintendent or the Exchange to a release from
escrow of any of the Shares shall terminate this Agreement only in respect of
the Shares so released.
8. SURRENDER FOR CANCELLATION
The Shareholder shall surrender the Shares for cancellation and the Escrow Agent
shall deliver the certificates representing such Shares to the Issuer:
(a) at the time of a major reorganization of the Issuer, if required as a
condition of the consent to the reorganization by the Superintendent or
the Exchange,
(b) where the Issuer's shares have been subject to a cease trade order
issued under the Act for a period of two consecutive years,
(c) 10 years from the date the Exchange accepts this Agreement for filing,
or
(d) where required by section 6(4).
9. AMENDMENT OF AGREEMENT
(1) Subject to subsection (2), this Agreement may be amended only by a
written agreement among the Parties and with the written consent of the
Superintendent or the Exchange.
(2) Schedule "C" to this Agreement shall be amended upon:
(a) a transfer of Shares pursuant to section 6;
(b) a release of Shares from escrow pursuant to section 7; or
(c) a surrender of Shares for cancellation pursuant to section 8;
and the Escrow Agent shall note the amendment on the Schedule "C" in its
possession.
<PAGE>
Page 5
10. INDEMNIFICATION OF ESCROW AGENT
INR, BCFC, the Issuer and the Shareholders, jointly and severally, release,
indemnify and save harmless the Escrow Agent from all costs, charges, claims,
demands, damages, losses and expenses resulting from the Escrow Agent's
compliance in good faith with this Agreement.
11. RESIGNATION OF ESCROW AGENT
(1) If the Escrow Agent wishes to resign as escrow agent in respect of the
Shares, the Escrow Agent shall give notice to the Issuer.
(2) If the Issuer wishes the Escrow Agent to resign as escrow agent in
respect of the Shares, the Issuer shall give notice to the Escrow Agent.
(3) A notice referred to in subsections (1) or (2) shall be in writing and
delivered to:
(a) INR, BCFC or the Issuer at:
Suite 900
475 Howe Street
Vancouver, British Columbia
V6C 3C8
Facsimile: (604) 684-5854
or
(b) the Escrow Agent at:
510 Burrard Street
Vancouver, British Columbia
V6C 3139
Facsimile: (604) 683-3694
and the notice shall be deemed to have been received on the date of delivery.
INR, BCFC, the Issuer or the Escrow Agent may change its address for notice by
giving notice to the other party in accordance with this subsection.
(4) A copy of a notice referred to in subsections (1) or (2) shall
concurrently be delivered to the Superintendent or the Exchange.
(5) The resignation of the Escrow Agent shall be effective and the Escrow
Agent shall cease to be bound by this Agreement on the date that is 180 days
after the date of receipt of the notice referred to in subsection (1) or (2)
<PAGE>
Page 6
on such other date as the Escrow Agent and the Issuer may agree upon (the
"resignation date").
(6) The Issuer shall, before the, resignation date and with the written
consent of the Superintendent or the Exchange, appoint another escrow agent and
that appointment shall be binding on the Issuer and the Shareholders.
12. FURTHER ASSURANCES
The Parties shall execute and deliver any documents and perform any acts
necessary to carry out the intent of this Agreement.
13. TIME
Time is of the essence of this Agreement.
14. GOVERNING LAWS
This Agreement shall be construed in accordance with and governed by the laws of
British Columbia and the laws of Canada applicable in British Columbia.
15. COUNTERPARTS
This Agreement may be executed in two or more counterparts, each of which shall
be deemed to be an original and all of which shall constitute one agreement.
16. LANGUAGE
Wherever a singular expression is used in this Agreement, that expression is
deemed to include the plural or the body corporate where required by the
context.
17. ENUREMENT
This Agreement enures to the benefit of and is binding on the Parties and their
heirs, executors, administrators, successors and permitted assigns.
<PAGE>
Page 7
The Parties have executed and delivered this Agreement as of the date of
reference of this Agreement.
The Common Seal of THE MONTREAL )
TRUST COMPANY OF CANADA was )
hereunto affixed in the presence of: ) c/s
/s/ P. Hosfield )
- --------------------------- )
Authorized Signatory )
/s/ L Buckley )
- --------------------------- )
Authorized-Signatory )
The Corporate Seal of IMMUNE NETWORK )
RESEARCH LTD. was hereunto affixed in the )
presence of: )
) c/s
/s/ Ana Maria Gomez )
- -------------------------- )
Authorized Signatory )
)
/s/ R. Gayton )
- -------------------------- )
Authorized Signatory )
The Corporate Seal of BOBBY CADILLAC'S )
FOOD CORPORATION was hereunto affixed )
in the presence of: )
) c/s
/s/ )
- -------------------------- )
Authorized Signatory )
)
/s/ )
- -------------------------- )
Authorized Signatory )
<PAGE>
Page 8
SIGNED, SEALED AND DELIVERED by )
HOWARD CHANDLER in the presence of: )
)
/s/ Jennifer Chandler )
- ----------------------------- )
Name )
)
76A Princes Pt. Rd., Yarmouth Me, USA, 04096 )
- -------------------------------------------- ) /s/ H.M. Chandler
Address ) -----------------
) HOWARD CHANDLER
Secretary )
- --------------------------- )
Occupation )
SIGNED, SEALED AND DELIVERED by )
PIETER CULLIS in the presence of: )
)
/s/ Diane Tanguay )
- ----------------------------- )
Name )
)
6951 Dawson St., Vancouver BC, Canada, V5S 2W4)
- ---------------------------------------------- ) /s/ Pieter Cullis
Address ) -----------------
) PIETER CULLIS
Scientific Administration )
- --------------------------- )
Occupation )
SIGNED, SEALED AND DELIVERED by )
J. HAIG deB. FARRIS in the presence of: )
)
/s/ Catherine Knight )
- ----------------------------- )
Name )
)
842 Tsawwassen Beach Rd., Delta BC, Canada )
- ------------------------------------------ ) /s/ J. Haig deB. Farris
Address ) -----------------------
) J. HAIG deB. FARRIS
Secretary )
- --------------------------- )
Occupation )
<PAGE>
Page 9
SIGNED, SEALED AND DELIVERED by )
ROBERT GAYTON in the presence of: )
)
/s/ Catherine Knight )
- ----------------------------- )
Name )
)
842 Tsawwassen Beach Rd., Delta BC, Canada, V4N 2J3 )
- --------------------------------------------------- ) /s/ Robert Gayton
Address ) -----------------
) ROBERT GAYTON
Secretary )
- --------------------------- )
Occupation )
SIGNED, SEALED AND DELIVERED by )
ANA MARIA GOMEZ in the presence of: )
)
/s/ Catherine Knight )
- ----------------------------- )
Name )
)
842 Tsawwassen Beach Rd., Delta BC, Canada, V4N 2J3 )
- --------------------------------------------------- ) /s/ Ana Maria Gomez
Address ) ------------------
) ANA MARIA GOMEZ
Secretary )
- --------------------------- )
Occupation )
SIGNED, SEALED AND DELIVERED by )
MICHAEL GRANT in the presence of: )
)
/s/ Maureen Gallant )
- ----------------------------- )
Name )
)
41 Montenwil Dr. Mount Pearl NF, Canada )
- --------------------------------------- ) /s/ Michael Grant
Address ) -----------------
) MICHAEL GRANT
Science Technician I )
- --------------------------- )
Occupation )
<PAGE>
Page 10
SIGNED, SEALED AND DELIVERED by )
GEOFFREY W. HOFFMAN in the presence of: )
)
/s/ D. Hoffman )
- ----------------------------- )
Name )
)
3311 Quesnel Dr., Vancouver BC, Canada )
- -------------------------------------- ) /s/ Geoffrey W. Hoffman
Address ) -----------------------
) GEOFFREY W. HOFFMAN
Teacher )
- --------------------------- )
Occupation )
SIGNED, SEALED AND DELIVERED by )
VICTOR JONES in the presence of: )
)
/s/ Catherine Knight )
- ----------------------------- )
Name )
)
842 Tsawwassen Beach, Delta BC, Canada )
- ---------------------------------------- ) /s/ Victor Jones
Address ) ----------------
) VICTOR JONES
Secretary )
- --------------------------- )
Occupation )
SIGNED, SEALED AND DELIVERED by )
TRACY KION in the presence of: )
)
/s/ M. D. Whaley )
- ----------------------------- )
Name )
)
2899 Neptune Crescent, Burnaby BC, Canada, V3J 7A4 )
- -------------------------------------------------- ) /s/ Tracy Kion
Address ) --------------
) TRACY KION
Research Assistant / Lab. Manager )
- --------------------------- )
Occupation )
<PAGE>
Page 11
SIGNED, SEALED AND DELIVERED by )
SYBILLE MULLER in the presence of: )
)
/s/ Phyllis Burns )
- ----------------------------- )
Name )
)
800 Rose St., 200 Combs Research Building )
- ----------------------------------------- ) /s/ Sybille Muller
Address ) ------------------
) SYBILLE MULLER
Staff Assistant )
- --------------------------- )
Occupation )
SIGNED, SEALED AND DELIVERED by )
ROBERT SLOMAN in the presence of: )
)
/s/ Stephen Sim )
- ----------------------------- )
Name )
)
8826 NE 124th St., Kirkland WA, USA, 98034 )
- ------------------------------------------ ) /s/ Robert Sloman
Address ) ---------------------
) ROBERT SLOMAN
Customer Support Manager )
- --------------------------- )
Occupation )
SIGNED, SEALED AND DELIVERED by )
CLAYTON WELDER in the presence of: )
)
/s/ Victor Jones )
- ----------------------------- )
Name )
)
4121 Vine St., Vancouver BC, Canada )
- ------------------------------------- ) /s/ Clayton Welder
Address ) -------------------
) CLAYTON WELDER
Executive )
- --------------------------- )
Occupation )
<PAGE>
Page 12
SIGNED, SEALED AND DELIVERED by )
MARK WHALEY in the presence of: )
)
/s/ Ana Maria Gomez )
- ----------------------------- )
Name )
)
1005-1465 West 12th Ave., Canada )
- --------------------------------- ) /s/ Mark Whaley
Address ) ------------------
) MARK WHALEY
Research Scientist )
- --------------------------- )
Occupation )
SIGNED, SEALED AND DELIVERED by )
ROBERT D. WIENS in the presence of: )
)
/s/ Victor Jones )
- ----------------------------- )
Name )
)
4121 Vine St., Vancouver BC, Canada )
- ----------------------------------- ) /s/ Robert D. Wiens
Address ) ------------------
) ROBERT D. WIENS
Executive )
- --------------------------- )
Occupation )
SIGNED, SEALED AND DELIVERED by )
YU-ZHOU YANG in the presence of: )
)
/s/ Ana Maria Gomez )
- ----------------------------- )
Name )
)
1005-1465 West 12th Ave., Canada )
- ----------------------------------- ) /s/ Yu-Zhou Yang
Address ) ----------------
) YU-ZHOU YANG
Research Scientist )
- --------------------------- )
Occupation )
<PAGE>
EXHIBIT 3-2
Incentive Stock Options of Directors and Officers of the Company
<PAGE>
AGREEMENT 1
THIS INCENTIVE STOCK OPTION AGREEMENT is made as of the 26th day of July, 1999.
BETWEEN: DR. ALEXANDER ZOLOTOY, 21 - 8591 Blundell Road, Richmond,
British Columbia, V7Y 1K2
(the "Optionee")
AND: IMMUNE NETWORK RESEARCH LTD., having its registered and
records office located at Suite 700, 625 Howe Street,
Vancouver, British Columbia, V6C 2T6
(the "Company")
WHEREAS the Optionee is a director, senior officer, consultant, dependant
contractor or a bona fide employee of the Company or a subsidiary thereof, or
an employee of a company under contract to provide management services to the
Company (the "Management Company") and requires as a condition of holding such
position that the parties enter into this Agreement on the terms and conditions
set forth,
THIS AGREEMENT WITNESSES that in consideration of the covenants and agreements
herein contained, the parties covenant and agree as follows:
1. The Company hereby grants to the Optionee as an incentive and in
consideration of his services and not in lieu of salary or any other
compensation, subject to the terms and conditions hereinafter set forth, the
irrevocable right and option (the "Option") to purchase from time to time up to
a total of 50,000 fully paid and non-assessable common shares in the capital
stock of the Company. The Option is exercisable as to 25,000 common shares
during the initial six month period of this Agreement, with the remainder
exercisable at any time thereafter until the Expiry Date (hereinafter defined).
2. Subject to the provisions of paragraphs 1, 4, 5 and 8 hereof, the Option
shall be exercisable by the Optionee in whole or in part at any time before
4:00 p.m. (Vancouver time) on July 25, 2004 (the "Expiry Date") at an exercise
price of $0.23 per share.
3. In order to exercise the Option, the Optionee shall give written notice
to the Company of his intention to exercise his Option in whole or in part,
such notice to be accompanied by cash, certified cheque, bank draft or money
order payable to the Company for the full amount of the purchase price of the
share being then purchased. When such payment is received, the Company
covenants and agrees to issue and deliver to the Optionee share certificates
registered in the name of the Optionee for the number of shares so purchased.
4. The Optionee represents and warrants that he is a director, senior
officer, consultant, dependant contractor or an employee of the Company or a
subsidiary thereof or an employee of the Management Company. Subject to the
provisions of paragraphs 5 and 8, the Option shall terminate at the close of
business on the date which is thirty (30) calendar days after the Optionee
ceases to be a director, senior officer, consultant, dependant contractor or an
employee of the Company or a subsidiary thereof or ceases to be an employee of
the Management Company and any unexercised portion of the Option may not be
exercised by the Optionee after such time.
<PAGE>
Page 2
5. If at any time the Optionee shall be dismissed by the Company or the
Management Company for cause or if the Company's contract with the Management
Company or with the Optionee terminates, any unexercised portion of the Option
shall immediately terminate.
6. The Optionee shall not, either during the term of his employment with
the Company or the Management Company or while under contract with the Company
or a subsidiary thereof, or at any time thereafter, disclose to any person,
firm or corporation any confidential information concerning the business
affairs of the Company which the Optionee may have acquired in the course of or
incidental to his employment or otherwise, whether for his own benefit, or to
the detriment, or intended or probable detriment, of the Company.
7. The Optionee shall at all times abide by all lawful directives given by
the board of directors of the Company.
8. If the Optionee should die while any Options are exercisable, the Option
may then be exercised by his legal heirs or personal representatives, to the
same extent as if the Optionee was alive and a director, senior officer,
consultant, dependant contractor or an employee of the Company or a subsidiary
thereof or of the Management Company, on or before the earlier of a period of
twelve (12) months after the Optionee's death or the Expiry Date but only for
such shares as the Optionee was entitled to at the date of the death of the
Optionee.
9. Subject to paragraph 8, the Option shall be non-transferable and
non-assignable.
10. The Optionee covenants and agrees that he will complete and deliver the
documents prescribed by the policies of the Vancouver Stock Exchange.
11. The granting and exercise of the Option by the Optionee are subject to
the required approvals of:
(a) the British Columbia Securities Commission or, if the Company is listed
thereon, the Vancouver Stock Exchange;
(b) any other regulatory authority having jurisdiction; and
(c) if the Optionee is an insider of the Company or a consultant, then by
the shareholders of the Company,
provided, however, that in the event that such approvals are not obtained
within 12 months of the date of this Agreement, then this Agreement shall from
that date be null and void and of no further force and effect. For the
purposes of this Agreement, the term "insider" shall have the meaning ascribed
to it in the Securities Act, R.S.B.C. 1996, c.418.
12. In the event any of the terms of this Agreement are amended, then any
such amendments will not be effective until the Company's receipt of the
required approvals specified in paragraph 11.
13. In the event of any subdivision, consolidation or other change in the
share capital of the Company while any portion of the Option is outstanding,
the number of shares under Option to the Optionee and the exercise price
thereof shall be deemed adjusted in accordance with such subdivision,
consolidation or other change in the share capital of the Company.
14. In the event that the Company shall amalgamate, consolidate with, or
merge into another corporation, the Optionee will thereafter receive, upon
<PAGE>
Page 3
exercise of the Option, the securities or property to which a holder of the
number of shares then deliverable upon the exercise of the Option would have
been entitled upon such amalgamation, consolidation or merger and the Company
will take steps in connection with such amalgamation, consolidation or merger
as may be necessary to ensure that the provisions hereof shall thereafter be
applicable, as near as reasonably may be, in relation to any securities or
property thereafter deliverable upon the exercise of the Option. A sale of all
or substantially all of the assets of the Company for a consideration (apart
from the assumption of obligations), a substantial portion of which consists of
securities, shall be deemed a consolidation, amalgamation or merger for the
purposes of this Agreement.
15. This Agreement shall enure to the benefit of and be binding upon the
parties and upon the successors or assigns of the Company and the executors,
administrators, and legal personal representatives of the Optionee.
16. This Agreement shall be exclusively governed according to the laws of
British Columbia and the laws of Canada applicable therein. This Agreement is
subject to the exclusive jurisdiction of the courts of the said Province.
17. This Agreement may be signed by the parties in counterparts, both of
which together shall form one and the same instrument and each of which so
signed shall be deemed to be an original.
IN WITNESS WHEREOF the parties have executed this Agreement the day and year
first above written notwithstanding its actual date of execution.
SIGNED, SEALED and DELIVERED
in the presence of:
/s/ Brendan Payne /s/ Dr. A. Zolotoy
- ------------------------------- ----------------------
Witness DR. ALEXANDER ZOLOTOY
IMMUNE NETWORK RESEARCH LTD.
by its Authorized Signatory:
/s/ Allen Bain
- -------------------
Signature
<PAGE>
AGREEMENT 2
THIS INCENTIVE STOCK OPTION AGREEMENT is made as of the 21st day of May, 1999.
BETWEEN: ALLEN BAIN
2039 MacDonald Street
Vancouver, B.C.
V6K 3Y2
(the "Optionee")
AND: IMMUNE NETWORK RESEARCH LTD.
3650 Wesbrook Mall
Vancouver, B.C.
V6S 2L2
(the "Company")
WHEREAS the Optionee is a director, dependant contractor or a bona fide
employee of the Company or a subsidiary thereof, or an employee of a company
under contract to provide management services to the Company (the "Management
Company") and requires as a condition of holding such position that the parties
enter into this Agreement on the terms and conditions set forth,
THIS AGREEMENT WITNESSES that in consideration of the premises and of the
covenants and agreements therein contained the parties thereto covenant and
agree as follows:
1. The Company hereby grants to the Optionee as an incentive and in
consideration of his services and not in lieu of salary or any other
compensation, subject to the terms and conditions hereinafter set forth, the
irrevocable right and option (the "Option") to purchase from time to time up to
a total of 500,000 fully paid and non-assessable common shares in the capital
stock of the Company.
2. Subject to the provisions of paragraphs 4, 5 and 8 hereof, the Option
shall be exercisable by the Optionee in whole or in part at any time before
4:00 p.m. (Vancouver time) on May 21, 2004 (the "Expiry Date") at an exercise
price of $0.15 per share.
3. In order to exercise the Option, the Optionee shall give written notice
to the Company of his intention to exercise his Option in whole or in part,
such notice to be accompanied by cash, certified cheque, bank draft or money
order payable to the Company for the full amount of the purchase price of the
share being then purchased. When such payment is received, the Company
covenants and agrees to issue and deliver to the Optionee share certificates
registered in the name of the Optionee for the number of shares so purchased.
4. The Optionee represents and warrants that he is a director, dependant
contractor or an employee of the Company or a subsidiary thereof or an employee
of the Management Company. Subject to the provisions of paragraphs 5 and 8,
the Option shall terminate at the close of business on the date which is thirty
(30) calendar days after the Optionee ceases to be a director, dependant
contractor or an employee of the Company or a subsidiary thereof or ceases to
be an employee of the Management Company and any unexercised portion of the
Option may not be exercised by the Optionee after such time.
<PAGE>
Page 2
5. If at any time the Optionee shall be dismissed by the Company or the
Management Company for cause or if the Company's contract with the Management
Company terminates, any unexercised portion of the Option shall immediately
terminate.
6. The Optionee shall not, either during the term of his employment or
while under contract with the Company or a subsidiary thereof, or at any time
thereafter, disclose to any person, firm or corporation any confidential
information concerning the business affairs of the Company which the Optionee
may have acquired in the course of or incidental to his employment or
otherwise, whether for his own benefit, or to the detriment, or intended or
probable detriment, of the Company.
7. The Optionee shall at all times abide by all lawful directives given by
the board of directors of the Company.
8. If the Optionee should die while he is a director, dependant contractor
or an employee of the Company or a subsidiary thereof, or an employee of the
Management Company, the Option may then be exercised by his legal heirs or
personal representatives, to the same extent as if the Optionee was alive and a
director, dependant contractor or an employee of the Company or a subsidiary
thereof or of the Management Company, on or before the earlier of a period of
twelve (12) months after the Optionee's death or the Expiry Date but only for
such shares as the Optionee was entitled to at the date of the death of the
Optionee.
9. Subject to paragraph 8, the Option shall be non-transferable and
non-assignable.
10. The Optionee covenants and agrees that he will complete and deliver the
documents prescribed by the policies of the Vancouver Stock Exchange.
11. The granting and exercise of the Option by the Optionee are subject to
the required approvals of:
(a) the British Columbia Securities Commission or, if the Company is listed
thereon, the Vancouver Stock Exchange;
(b) any other regulatory authority having jurisdiction; and
(c) if the Optionee is an insider of the Company, then by the members of
the Company,
provided, however, that in the event that such approvals are not obtained
within 12 months of the date of this Agreement, then this Agreement shall from
that date be null and void and of no further force and effect. For the
purposes of this Agreement, the term "insider" shall have the meaning ascribed
to it in the Securities Act, R.S.B.C. 1996, c.418.
12. In the event any of the terms of this Agreement are amended, then any
such amendments will not be effective until the Company's receipt of the
required approvals specified in paragraph 11.
13. In the event of any subdivision, consolidation or other change in the
share capital of the Company while any portion of the Option is outstanding,
the number of shares under Option to the Optionee and the exercise price
thereof shall be deemed adjusted in accordance with such subdivision,
consolidation or other change in the share capital of the Company.
<PAGE>
Page 3
14. In the event that the Company shall amalgamate, consolidate with, or
merge into another corporation, the Optionee will thereafter receive, upon
exercise of the Option, the securities or property to which a holder of the
number of shares then deliverable upon the exercise of the Option would have
been entitled upon such amalgamation, consolidation or merger and the Company
will take steps in connection with such amalgamation, consolidation or merger
as may be necessary to ensure that the provisions hereof shall thereafter be
applicable, as near as reasonably may be, in relation to any securities or
property thereafter deliverable upon the exercise of the Option. A sale of all
or substantially all of the assets of the Company for a consideration (apart
from the assumption of obligations), a substantial portion of which consists of
securities, shall be deemed a consolidation, amalgamation or merger for the
purposes of this Agreement.
15. This Agreement shall enure to the benefit of and be binding upon the
parties hereto and upon the successors or assigns of the Company and the
executors, administrators, and legal personal representatives of the Optionee.
16. This Agreement shall be governed, construed and enforced according to
the laws of the Province of British Columbia and is subject to the exclusive
jurisdiction of the courts of the said Province.
17. This Agreement may be signed by the parties hereto in several
counterparts, all of which together shall form one and the same instrument and
each of which so signed shall be deemed to be an original.
IN WITNESS WHEREOF the parties have executed this Agreement the day and year
first above written notwithstanding its actual date of execution.
SIGNED, SEALED and DELIVERED
in the presence of:
/s/ Ron Kertesz /s/ Allen Bain
- ------------------ -----------------
Witness ALLEN BAIN
IMMUNE NETWORK RESEARCH LTD.,
by its Authorized Signatory:
/s/ Donald Rix
- --------------------------
Signature
<PAGE>
AGREEMENT 3
THIS INCENTIVE STOCK OPTION AGREEMENT is made as of the 26th day of July, 1999.
BETWEEN: BRENDAN PAYNE, 2724 - 1 Fairview Crescent, Vancouver, British
Columbia, V6T 2B9
(the "Optionee")
AND: IMMUNE NETWORK RESEARCH LTD., having its registered and
records office located at Suite 700, 625 Howe Street,
Vancouver, British Columbia, V6C 2T6
(the "Company")
WHEREAS the Optionee is a director, senior officer, consultant, dependant
contractor or a bona fide employee of the Company or a subsidiary thereof, or
an employee of a company under contract to provide management services to the
Company (the "Management Company") and requires as a condition of holding such
position that the parties enter into this Agreement on the terms and conditions
set forth,
THIS AGREEMENT WITNESSES that in consideration of the covenants and agreements
herein contained, the parties covenant and agree as follows:
1. The Company hereby grants to the Optionee as an incentive and in
consideration of his services and not in lieu of salary or any other
compensation, subject to the terms and conditions hereinafter set forth, the
irrevocable right and option (the "Option") to purchase from time to time up to
a total of 25,000 fully paid and non-assessable common shares in the capital
stock of the Company. The Option is exercisable as to 12,000 common shares
during the initial six month period of this Agreement, with the remainder
exercisable at any time thereafter until the Expiry Date (hereinafter defined).
2. Subject to the provisions of paragraphs 1, 4, 5 and 8 hereof, the Option
shall be exercisable by the Optionee in whole or in part at any time before
4:00 p.m. (Vancouver time) on July 25, 2004 (the "Expiry Date") at an exercise
price of $0.23 per share.
3. In order to exercise the Option, the Optionee shall give written notice
to the Company of his intention to exercise his Option in whole or in part,
such notice to be accompanied by cash, certified cheque, bank draft or money
order payable to the Company for the full amount of the purchase price of the
share being then purchased. When such payment is received, the Company
covenants and agrees to issue and deliver to the Optionee share certificates
registered in the name of the Optionee for the number of shares so purchased.
4. The Optionee represents and warrants that he is a director, senior
officer, consultant, dependant contractor or an employee of the Company or a
subsidiary thereof or an employee of the Management Company. Subject to the
provisions of paragraphs 5 and 8, the Option shall terminate at the close of
business on the date which is thirty (30) calendar days after the Optionee
ceases to be a director, senior officer, consultant, dependant contractor or an
employee of the Company or a subsidiary thereof or ceases to be an employee of
the Management Company and any unexercised portion of the Option may not be
exercised by the Optionee after such time.
<PAGE>
Page 2
5. If at any time the Optionee shall be dismissed by the Company or the
Management Company for cause or if the Company's contract with the Management
Company or with the Optionee terminates, any unexercised portion of the Option
shall immediately terminate.
6. The Optionee shall not, either during the term of his employment with
the Company or the Management Company or while under contract with the Company
or a subsidiary thereof, or at any time thereafter, disclose to any person,
firm or corporation any confidential information concerning the business
affairs of the Company which the Optionee may have acquired in the course of or
incidental to his employment or otherwise, whether for his own benefit, or to
the detriment, or intended or probable detriment, of the Company.
7. The Optionee shall at all times abide by all lawful directives given by
the board of directors of the Company.
8. If the Optionee should die while any Options are exercisable, the Option
may then be exercised by his legal heirs or personal representatives, to the
same extent as if the Optionee was alive and a director, senior officer,
consultant, dependant contractor or an employee of the Company or a subsidiary
thereof or of the Management Company, on or before the earlier of a period of
twelve (12) months after the Optionee's death or the Expiry Date but only for
such shares as the Optionee was entitled to at the date of the death of the
Optionee.
9. Subject to paragraph 8, the Option shall be non-transferable and
non-assignable.
10. The Optionee covenants and agrees that he will complete and deliver the
documents prescribed by the policies of the Vancouver Stock Exchange.
11. The granting and exercise of the Option by the Optionee are subject to
the required approvals of:
(a) the British Columbia Securities Commission or, if the Company is listed
thereon, the Vancouver Stock Exchange;
(b) any other regulatory authority having jurisdiction; and
(c) if the Optionee is an insider of the Company or a consultant, then by
the shareholders of the Company,
provided, however, that in the event that such approvals are not obtained
within 12 months of the date of this Agreement, then this Agreement shall from
that date be null and void and of no further force and effect. For the
purposes of this Agreement, the term "insider" shall have the meaning ascribed
o it in the Securities Act, R.S.B.C. 1996, c.418.
12. In the event any of the terms of this Agreement are amended, then any
such amendments will not be effective until the Company's receipt of the
required approvals specified in paragraph 11.
13. In the event of any subdivision, consolidation or other change in the
share capital of the Company while any portion of the Option is outstanding,
the number of shares under Option to the Optionee and the exercise price
thereof shall be deemed adjusted in accordance with such subdivision,
consolidation or other change in the share capital of the Company.
14. In the event that the Company shall amalgamate, consolidate with, or
merge into another corporation, the Optionee will thereafter receive, upon
<PAGE>
Page 3
exercise of the Option, the securities or property to which a holder of the
number of shares then deliverable upon the exercise of the Option would have
been entitled upon such amalgamation, consolidation or merger and the Company
will take steps in connection with such amalgamation, consolidation or merger
as may be necessary to ensure that the provisions hereof shall thereafter be
applicable, as near as reasonably may be, in relation to any securities or
property thereafter deliverable upon the exercise of the Option. A sale of all
or substantially all of the assets of the Company for a consideration (apart
from the assumption of obligations), a substantial portion of which consists of
securities, shall be deemed a consolidation, amalgamation or merger for the
purposes of this Agreement.
15. This Agreement shall enure to the benefit of and be binding upon the
parties and upon the successors or assigns of the Company and the executors,
administrators, and legal personal representatives of the Optionee.
16. This Agreement shall be exclusively governed according to the laws of
British Columbia and the laws of Canada applicable therein. This Agreement is
subject to the exclusive jurisdiction of the courts of the said Province.
17. This Agreement may be signed by the parties in counterparts, both of
which together shall form one and the same instrument and each of which so
signed shall be deemed to be an original.
IN WITNESS WHEREOF the parties have executed this Agreement the day and year
first above written notwithstanding its actual date of execution.
SIGNED, SEALED and DELIVERED
in the presence of:
/s/ Michelle Wong /s/ Brendan Payne
- ----------------------------- --------------------------
Witness BRENDAN PAYNE
IMMUNE NETWORK RESEARCH LTD.
by its Authorized Signatory:
/S/ Allen Bain
- ---------------------
Signature
<PAGE>
AGREEMENT 4
THIS INCENTIVE STOCK OPTION AGREEMENT is made as of the 10th day of June, 1999.
BETWEEN: CLIVE PAGE
25 Edna Street
London SW11 3DP
England
(the "Optionee")
AND: IMMUNE NETWORK RESEARCH LTD.
3650 Wesbrook Mall
Vancouver, B.C.
V6S 2L2
(the "Company")
WHEREAS the Optionee is a director, dependant contractor or a bona fide
employee of the Company or a subsidiary thereof, or an employee of a company
under contract to provide management services to the Company (the "Management
Company") and requires as a condition of holding such position that the parties
enter into this Agreement on the terms and conditions set forth,
THIS AGREEMENT WITNESSES that in consideration of the premises and of the
covenants and agreements therein contained the parties thereto covenant and
agree as follows:
1. The Company hereby grants to the Optionee as an incentive and in
consideration of his services and not in lieu of salary or any other
compensation, subject to the terms and conditions hereinafter set forth, the
irrevocable right and option (the "Option") to purchase from time to time up to
a total of 155,000 fully paid and non-assessable common shares in the capital
stock of the Company.
2. Subject to the provisions of paragraphs 4, 5 and 8 hereof, the Option
shall be exercisable by the Optionee in whole or in part at any time before
4:00 p.m. (Vancouver time) on June 9, 2004 (the "Expiry Date") at an exercise
price of $0.23 per share.
3. In order to exercise the Option, the Optionee shall give written notice
to the Company of his intention to exercise his Option in whole or in part,
such notice to be accompanied by cash, certified cheque, bank draft or money
order payable to the Company for the full amount of the purchase price of the
share being then purchased. When such payment is received, the Company
covenants and agrees to issue and deliver to the Optionee share certificates
registered in the name of the Optionee for the number of shares so purchased.
4. The Optionee represents and warrants that he is a director, dependant
contractor or an employee of the Company or a subsidiary thereof or an employee
of the Management Company. Subject to the provisions of paragraphs 5 and 8,
the Option shall terminate at the close of business on the date which is
thirty (30) calendar days after the Optionee ceases to be a director,
dependant contractor or an employee of the Company or a subsidiary thereof or
ceases to be an employee of the Management Company and any unexercised portion
of the Option may not be exercised by the Optionee after such time.
<PAGE>
Page 2
5. If at any time the Optionee shall be dismissed by the Company or the
Management Company for cause or if the Company's contract with the Management
Company terminates, any unexercised portion of the Option shall immediately
terminate.
6. The Optionee shall not, either during the term of his employment or
while under contract with the Company or a subsidiary thereof, or at any time
thereafter, disclose to any person, firm or corporation any confidential
information concerning the business affairs of the Company which the Optionee
may have acquired in the course of or incidental to his employment or
otherwise, whether for his own benefit, or to the detriment, or intended or
probable detriment, of the Company.
7. The Optionee shall at all times abide by all lawful directives given by
the board of directors of the Company.
8. If the Optionee should die while he is a director, dependant contractor
or an employee of the Company or a subsidiary thereof, or an employee of the
Management Company, the Option may then be exercised by his legal heirs or
personal representatives, to the same extent as if the Optionee was alive and a
director, dependant contractor or an employee of the Company or a subsidiary
thereof or of the Management Company, on or before the earlier of a period of
twelve (12) months after the Optionee's death or the Expiry Date but only for
such shares as the Optionee was entitled to at the date of the death of the
Optionee.
9. Subject to paragraph 8, the Option shall be non-transferable and
non-assignable.
10. The Optionee covenants and agrees that he will complete and deliver the
documents prescribed by the policies of the Vancouver Stock Exchange.
11. The granting and exercise of the Option by the Optionee are subject to
the required approvals of:
(a) the British Columbia Securities Commission or, if the Company is listed
thereon, the Vancouver Stock Exchange;
(b) any other regulatory authority having jurisdiction; and
(c) if the Optionee is an insider of the Company, then by the members of
the Company,
provided, however, that in the event that such approvals are not obtained
within 12 months of the date of this Agreement, then this Agreement shall from
that date be null and void and of no further force and effect. For the
purposes of this Agreement, the term "insider" shall have the meaning ascribed
to it in the Securities Act, R.S.B.C. 1996, c.418.
12. In the event any of the terms of this Agreement are amended, then any
such amendments will not be effective until the Company's receipt of the
required approvals specified in paragraph 11.
13. In the event of any subdivision, consolidation or other change in the
share capital of the Company while any portion of the Option is outstanding,
the number of shares under Option to the Optionee and the exercise price
thereof shall be deemed adjusted in accordance with such subdivision,
consolidation or other change in the share capital of the Company.
<PAGE>
Page 3
14. In the event that the Company shall amalgamate, consolidate with, or
merge into another corporation, the Optionee will thereafter receive, upon
exercise of the Option, the securities or property to which a holder of the
number of shares then deliverable upon the exercise of the Option would have
been entitled upon such amalgamation, consolidation or merger and the Company
will take steps in connection with such amalgamation, consolidation or merger
as may be necessary to ensure that the provisions hereof shall thereafter be
applicable, as near as reasonably may be, in relation to any securities or
property thereafter deliverable upon the exercise of the Option. A sale of all
or substantially all of the assets of the Company for a consideration (apart
from the assumption of obligations), a substantial portion of which consists of
securities, shall be deemed a consolidation, amalgamation or merger for the
purposes of this Agreement.
15. This Agreement shall enure to the benefit of and be binding upon the
parties hereto and upon the successors or assigns of the Company and the
executors, administrators, and legal personal representatives of the Optionee.
16. This Agreement shall be governed, construed and enforced according to
the laws of the Province of British Columbia and is subject to the exclusive
jurisdiction of the courts of the said Province.
17. This Agreement may be signed by the parties hereto in several
counterparts, all of which together shall form one and the same instrument and
each of which so signed shall be deemed to be an original.
IN WITNESS WHEREOF the parties have executed this Agreement the day and year
first above written notwithstanding its actual date of execution.
SIGNED, SEALED and DELIVERED
in the presence of:
/s/Clive Page
- ------------------------ ---------------
Witness CLIVE PAGE
IMMUNE NETWORK RESEARCH LTD.,
by its Authorized Signatory:
/s/ Allen Bain
- -----------------------
Signature
<PAGE>
AGREEMENT 5
THIS INCENTIVE STOCK OPTION AGREEMENT is made as of the 10th day of June, 1999.
BETWEEN: DANNY LOWE
2822 Eton Street
Vancouver, B.C.
V5K 1K5
(the "Optionee")
AND: IMMUNE NETWORK RESEARCH LTD.
3650 Wesbrook Mall
Vancouver, B.C.
V6S 2L2
(the "Company")
WHEREAS the Optionee is a director, dependant contractor or a bona fide
employee of the Company or a subsidiary thereof, or an employee of a company
under contract to provide management services to the Company (the "Management
Company") and requires as a condition of holding such position that the parties
enter into this Agreement on the terms and conditions set forth,
THIS AGREEMENT WITNESSES that in consideration of the premises and of the
covenants and agreements therein contained the parties thereto covenant and
agree as follows:
1. The Company hereby grants to the Optionee as an incentive and in
consideration of his services and not in lieu of salary or any other
compensation, subject to the terms and conditions hereinafter set forth, the
irrevocable right and option (the "Option") to purchase from time to time up to
a total of 150,000 fully paid and non-assessable common shares in the capital
stock of the Company.
2. Subject to the provisions of paragraphs 4, 5 and 8 hereof, the Option
shall be exercisable by the Optionee in whole or in part at any time before
4:00 p.m. (Vancouver time) on June 9, 2004 (the "Expiry Date") at an exercise
price of $0.23 per share.
3. In order to exercise the Option, the Optionee shall give written notice
to the Company of his intention to exercise his Option in whole or in part,
such notice to be accompanied by cash, certified cheque, bank draft or money
order payable to the Company for the full amount of the purchase price of the
share being then purchased. When such payment is received, the Company
covenants and agrees to issue and deliver to the Optionee share certificates
registered in the name of the Optionee for the number of shares so purchased.
4. The Optionee represents and warrants that he is a director, dependant
contractor or an employee of the Company or a subsidiary thereof or an employee
of the Management Company. Subject to the provisions of paragraphs 5 and 8,
the Option shall terminate at the close of business on the date which is thirty
(30) calendar days after the Optionee ceases to be a director, dependant
contractor or an employee of the Company or a subsidiary thereof or ceases to
be an employee of the Management Company and any unexercised portion of the
Option may not be exercised by the Optionee after such time.
<PAGE>
Page 2
5. If at any time the Optionee shall be dismissed by the Company or the
Management Company for cause or if the Company's contract with the Management
Company terminates, any unexercised portion of the Option shall immediately
terminate.
6. The Optionee shall not, either during the term of his employment or
while under contract with the Company or a subsidiary thereof, or at any time
thereafter, disclose to any person, firm or corporation any confidential
information concerning the business affairs of the Company which the Optionee
may have acquired in the course of or incidental to his employment or
otherwise, whether for his own benefit, or to the detriment, or intended or
probable detriment, of the Company.
7. The Optionee shall at all times abide by all lawful directives given by
the board of directors of the Company.
8. If the Optionee should die while he is a director, dependant contractor
or an employee of the Company or a subsidiary thereof, or an employee of the
Management Company, the Option may then be exercised by his legal heirs or
personal representatives, to the same extent as if the Optionee was alive and a
director, dependant contractor or an employee of the Company or a subsidiary
thereof or of the Management Company, on or before the earlier of a period of
twelve (12) months after the Optionee's death or the Expiry Date but only for
such shares as the Optionee was entitled to at the date of the death of the
Optionee.
9. Subject to paragraph 8, the Option shall be non-transferable and
non-assignable.
10. The Optionee covenants and agrees that he will complete and deliver the
documents prescribed by the policies of the Vancouver Stock Exchange.
11. The granting and exercise of the Option by the Optionee are subject to
the required approvals of:
(a) the British Columbia Securities Commission or, if the Company is listed
thereon, the Vancouver Stock Exchange;
(b) any other regulatory authority having jurisdiction; and
(c) if the Optionee is an insider of the Company, then by the members of
the Company,
provided, however, that in the event that such approvals are not obtained
within 12 months of the date of this Agreement, then this Agreement shall from
that date be null and void and of no further force and effect. For the
purposes of this Agreement, the term "insider" shall have the meaning ascribed
to it in the Securities Act, R.S.B.C. 1996, c.418.
12. In the event any of the terms of this Agreement are amended, then any
such amendments will not be effective until the Company's receipt of the
required approvals specified in paragraph 11.
13. In the event of any subdivision, consolidation or other change in the
share capital of the Company while any portion of the Option is outstanding,
the number of shares under Option to the Optionee and the exercise price
thereof shall be deemed adjusted in accordance with such subdivision,
consolidation or other change in the share capital of the Company.
<PAGE>
Page 4
14. In the event that the Company shall amalgamate, consolidate with, or
merge into another corporation, the Optionee will thereafter receive, upon
exercise of the Option, the securities or property to which a holder of the
number of shares then deliverable upon the exercise of the Option would have
been entitled upon such amalgamation, consolidation or merger and the Company
will take steps in connection with such amalgamation, consolidation or merger
as may be necessary to ensure that the provisions hereof shall thereafter be
applicable, as near as reasonably may be, in relation to any securities or
property thereafter deliverable upon the exercise of the Option. A sale of all
or substantially all of the assets of the Company for a consideration (apart
from the assumption of obligations), a substantial portion of which consists of
securities, shall be deemed a consolidation, amalgamation or merger for the
purposes of this Agreement.
15. This Agreement shall enure to the benefit of and be binding upon the
parties hereto and upon the successors or assigns of the Company and the
executors, administrators, and legal personal representatives of the Optionee.
16. This Agreement shall be governed, construed and enforced according to
the laws of the Province of British Columbia and is subject to the exclusive
jurisdiction of the courts of the said Province.
17. This Agreement may be signed by the parties hereto in several
counterparts, all of which together shall form one and the same instrument and
each of which so signed shall be deemed to be an original.
IN WITNESS WHEREOF the parties have executed this Agreement the day and year
first above written notwithstanding its actual date of execution.
SIGNED, SEALED and DELIVERED
in the presence of:
/s/ Ron Kertesz /s/ Danny Lowe
- ---------------------- --------------------
Witness DANNY LOWE
IMMUNE NETWORK RESEARCH LTD.,
by its Authorized Signatory:
/s/ Allen Bain
- --------------------
Signature
<PAGE>
AGREEMENT 6
THIS INCENTIVE STOCK OPTION AGREEMENT is made as of the 26th day of July, 1999.
BETWEEN: INTERACTIVE CAPITAL PARTNERS LTD., having an office located
at 30 Corporte Park, Suite 314, Irvine, CA 92606
--------------------------------------------
(address)
(the "Optionee")
AND: IMMUNE NETWORK RESEARCH LTD., having its registered and
records office located at Suite 700, 625 Howe Street,
Vancouver, British Columbia, V6C 2T6
(the "Company")
WHEREAS the Optionee is a director, senior officer, consultant, dependant
contractor or a bona fide employee of the Company or a subsidiary thereof, or
an employee of a company under contract to provide management services to the
Company (the "Management Company") and requires as a condition of holding such
position that the parties enter into this Agreement on the terms and conditions
set forth,
THIS AGREEMENT WITNESSES that in consideration of the covenants and agreements
herein contained, the parties covenant and agree as follows:
1. The Company hereby grants to the Optionee as an incentive and in
consideration of his services and not in lieu of salary or any other
compensation, subject to the terms and conditions hereinafter set forth, the
irrevocable right and option (the "Option") to purchase from time to time up to
a total of 100,000 fully paid and non-assessable common shares in the capital
stock of the Company. The Option is exercisable as to 50,000 common shares
during the initial six month period of this Agreement, with the remainder
exercisable at any time thereafter until the Expiry Date (hereinafter defined).
2. Subject to the provisions of paragraphs 1, 4, 5 and 8 hereof, the Option
shall be exercisable by the Optionee in whole or in part at any time before
4:00 p.m. (Vancouver time) on July 25, 2004 (the "Expiry Date") at an exercise
price of $0.23 per share.
3. In order to exercise the Option, the Optionee shall give written notice
to the Company of his intention to exercise his Option in whole or in part,
such notice to be accompanied by cash, certified cheque, bank draft or money
order payable to the Company for the full amount of the purchase price of the
share being then purchased. When such payment is received, the Company
covenants and agrees to issue and deliver to the Optionee share certificates
registered in the name of the Optionee for the number of shares so purchased.
4. The Optionee represents and warrants that he is a director, senior
officer, consultant, dependant contractor or an employee of the Company or a
subsidiary thereof or an employee of the Management Company. Subject to the
provisions of paragraphs 5 and 8, the Option shall terminate at the close of
business on the date which is thirty (30) calendar days after the Optionee
ceases to be a director, senior officer, consultant, dependant contractor or an
employee of the Company or a subsidiary thereof or ceases to be an employee of
the Management Company and any unexercised portion of the Option may not be
exercised by the Optionee after such time.
5. If at any time the Optionee shall be dismissed by the Company or the
Management Company for cause or if the Company's contract with the Management
Company or with the Optionee terminates, any unexercised portion of the Option
shall immediately terminate.
<PAGE>
Page 2
6. The Optionee shall not, either during the term of his employment with
the company or the Management Company or while under contract with the Company
or a subsidiary thereof, or at any time thereafter, disclose to any person,
firm or corporation any confidential information concerning the business
affairs of the Company which the Optionee may have acquired in the course of or
incidental to his employment or otherwise, whether for his own benefit, or to
the detriment, or intended or probable detriment, of the Company.
7. The Optionee shall at all times abide by all lawful directives given by
the board of directors of the Company.
8. If the Optionee should die while any Options are exercisable, the Option
may then be exercised by his legal heirs or personal representatives, to the
same extent as if the Optionee was alive and a director, senior officer,
consultant, dependant contractor or an employee of the Company or a subsidiary
thereof or of the Management Company, on or before the earlier of a period of
twelve (12) months after the Optionee's death or the Expiry Date but only for
such shares as the Optionee was entitled to at the date of the death of the
Optionee.
9. Subject to paragraph 8, the Option shall be non-transferable and
non-assignable.
10. The Optionee covenants and agrees that he will complete and deliver the
documents prescribed by the policies of the Vancouver Stock Exchange.
11. The granting and exercise of the Option by the Optionee are subject to
the required approvals of:
(a) the British Columbia Securities Commission or, if the Company is listed
thereon, the Vancouver Stock Exchange;
(b) any other regulatory authority having jurisdiction; and
(c) if the Optionee is an insider of the Company or a consultant, then by
the shareholders of the Company,
provided, however, that in the event that such approvals are not obtained
within 12 months of the date of this Agreement, then this Agreement shall from
that date be null and void and of no further force and effect. For the
purposes of this Agreement, the term "insider" shall have the meaning ascribed
to it in the Securities Act, R.S.B.C. 1996, c.418.
12. In the event any of the terms of this Agreement are amended, then any
such amendments will not be effective until the Company's receipt of the
required approvals specified in paragraph 11.
13. In the event of any subdivision, consolidation or other change in the
share capital of the Company while any portion of the Option is outstanding,
the number of shares under Option to the Optionee and the exercise price
thereof shall be deemed adjusted in accordance with such subdivision,
consolidation or other change in the share capital of the Company.
14. In the event that the Company shall amalgamate, consolidate with, or
merge into another corporation, the Optionee will thereafter receive, upon
exercise of the Option, the securities or property to which a holder of the
number of shares then deliverable upon the exercise of the Option would have
been entitled upon such amalgamation, consolidation or merger and the Company
will take steps in connection with such amalgamation, consolidation or merger
<PAGE>
Page 3
as may be necessary to ensure that the provisions hereof shall thereafter be
applicable, as near as reasonably may be, in relation to any securities or
property thereafter deliverable upon the exercise of the Option. A sale of all
or substantially all of the assets of the Company for a consideration (apart
from the assumption of obligations), a substantial portion of which consists of
securities, shall be deemed a consolidation, amalgamation or merger for the
purposes of this Agreement.
15. The Optionee acknowledges that neither the Option nor the shares
issuable upon exercise of the Option have been registered under the United
States Securities Act of 1933, as amended (the "1933 Act") and may not be
offered or resold in the United States unless registered under the 1933 Act and
the securities laws of all applicable states of the United States or an
exemption from such registration requirements is available. Therefore, the
certificates representing any shares issued upon exercise of the Option shall
contain a restrictive legend substantially in the following form:
"The securities represented by this certificate have not been registered under
the United States Securities Act of 1933, as amended, (the "1933 Act"), and may
not be offered or sold in the United States or to U.S. Persons or for the
account or benefit of a U.S. Person unless registered under the 1933 Act or
unless an exemption from such registration is available. The securities
represented by this certificate may not be exercised by or on behalf of any
U.S. Person unless registered under the 1933 Act or unless an exemption for
such registration is available."
16. This Agreement shall enure to the benefit of and be binding upon the
parties and upon the successors or assigns of the Company and the executors,
administrators, and legal personal representatives of the Optionee.
17. This Agreement shall be exclusively governed according to the laws of
British Columbia and the laws of Canada applicable therein. This Agreement is
subject to the exclusive jurisdiction of the courts of the said Province.
18. This Agreement may be signed by the parties in counterparts, both of
which together shall form one and the same instrument and each of which so
signed shall be deemed to be an original.
IN WITNESS WHEREOF the parties have executed this Agreement the day and year
first above written notwithstanding its actual date of execution.
INTERACTIVE CAPITAL PARTNERS LTD.
by its Authorized Signatory:
/s/ Edward C. Andercheck
- -------------------------
Signature
IMMUNE NETWORK RESEARCH LTD.
by its Authorized Signatory:
/s/ Allen Bain
- -----------------
Signature
<PAGE>
AGREEMENT 7
THIS INCENTIVE STOCK OPTION AGREEMENT is made as of the 26th day of July, 1999.
BETWEEN: MATTHEW SADLER, of 4539 West 7th Avenue, Vancouver, British
Columbia, V6R 1X2
(the "Optionee")
AND: IMMUNE NETWORK RESEARCH LTD., having its registered and
records office located at Suite 700, 625 Howe Street,
Vancouver, British Columbia, V6C 2T6
(the "Company")
WHEREAS the Optionee is a director, senior officer, consultant, dependant
contractor or a bona fide employee of the Company or a subsidiary thereof, or
an employee of a company under contract to provide management services to the
Company (the "Management Company") and requires as a condition of holding such
position that the parties enter into this Agreement on the terms and conditions
set forth,
THIS AGREEMENT WITNESSES that in consideration of the covenants and agreements
herein contained, the parties covenant and agree as follows:
1. The Company hereby grants to the Optionee as an incentive and in
consideration of his services and not in lieu of salary or any other
compensation, subject to the terms and conditions hereinafter set forth, the
irrevocable right and option (the "Option") to purchase from time to time up to
a total of 25,000 fully paid and non-assessable common shares in the capital
stock of the Company. The Option is exercisable as to 12,000 common shares
during the initial six month period of this Agreement, with the remainder
exercisable at any time thereafter until the Expiry Date (hereinafter defined).
2. Subject to the provisions of paragraphs 1, 4, 5 and 8 hereof, the Option
shall be exercisable by the Optionee in whole or in part at any time before
4:00 p.m. (Vancouver time) on July 25, 2004 (the "Expiry Date") at an exercise
price of $0.23 per share.
3. In order to exercise the Option, the Optionee shall give written notice
to the Company of his intention to exercise his Option in whole or in part,
such notice to be accompanied by cash, certified cheque, bank draft or money
order payable to the Company for the full amount of the purchase price of the
share being then purchased. When such payment is received, the Company
covenants and agrees to issue and deliver to the Optionee share certificates
registered in the name of the Optionee for the number of shares so purchased.
4. The Optionee represents and warrants that he is a director, senior
officer, consultant, dependant contractor or an employee of the Company or a
subsidiary thereof or an employee of the Management Company. Subject to the
provisions of paragraphs 5 and 8, the Option shall terminate at the close of
business on the date which is thirty (30) calendar days after the Optionee
ceases to be a director, senior officer, consultant, dependant contractor or an
employee of the Company or a subsidiary thereof or ceases to be an employee of
the Management Company and any unexercised portion of the Option may not be
exercised by the Optionee after such time.
<PAGE>
Page 2
5. If at any time the Optionee shall be dismissed by the Company or the
Management Company for cause or if the Company's contract with the Management
Company or with the Optionee terminates, any unexercised portion of the Option
shall immediately terminate.
6. The Optionee shall not, either during the term of his employment with
the Company or the Management Company or while under contract with the Company
or a subsidiary thereof, or at any time thereafter, disclose to any person,
firm or corporation any confidential information concerning the business
affairs of the Company which the Optionee may have acquired in the course of or
incidental to his employment or otherwise, whether for his own benefit, or to
the detriment, or intended or probable detriment, of the Company.
7. The Optionee shall at all times abide by all lawful directives given by
the board of directors of the Company.
8. If the Optionee should die while any Options are exercisable, the Option
may then be exercised by his legal heirs or personal representatives, to the
same extent as if the Optionee was alive and a director, senior officer,
consultant, dependant contractor or an employee of the Company or a subsidiary
thereof or of the Management Company, on or before the earlier of a period of
twelve (12) months after the Optionee's death or the Expiry Date but only for
such shares as the Optionee was entitled to at the date of the death of the
Optionee.
9. Subject to paragraph 8, the Option shall be non-transferable and
non-assignable.
10. The Optionee covenants and agrees that he will complete and deliver the
documents prescribed by the policies of the Vancouver Stock Exchange.
11. The granting and exercise of the Option by the Optionee are subject to
the required approvals of:
(a) the British Columbia Securities Commission or, if the Company is listed
thereon, the Vancouver Stock Exchange;
(b) any other regulatory authority having jurisdiction; and
(c) if the Optionee is an insider of the Company or a consultant, then by
the shareholders of the Company,
provided, however, that in the event that such approvals are not obtained
within 12 months of the date of this Agreement, then this Agreement shall from
that date be null and void and of no further force and effect. For the
purposes of this Agreement, the term "insider" shall have the meaning ascribed
to it in the Securities Act, R.S.B.C. 1996, c.418.
12. In the event any of the terms of this Agreement are amended, then any
such amendments will not be effective until the Company's receipt of the
required approvals specified in paragraph 11.
13. In the event of any subdivision, consolidation or other change in the
share capital of the Company while any portion of the Option is outstanding,
the number of shares under Option to the Optionee and the exercise price
thereof shall be deemed adjusted in accordance with such subdivision,
consolidation or other change in the share capital of the Company.
14. In the event that the Company shall amalgamate, consolidate with, or
merge into another corporation, the Optionee will thereafter receive, upon
<PAGE>
Page 3
exercise of the Option, the securities or property to which a holder of the
number of shares then deliverable upon the exercise of the Option would have
been entitled upon such amalgamation, consolidation or merger and the Company
will take steps in connection with such amalgamation, consolidation or merger
as may be necessary to ensure that the provisions hereof shall thereafter be
applicable, as near as reasonably may be, in relation to any securities or
property thereafter deliverable upon the exercise of the Option. A sale of all
or substantially all of the assets of the Company for a consideration (apart
from the assumption of obligations), a substantial portion of which consists of
securities, shall be deemed a consolidation, amalgamation or merger for the
purposes of this Agreement.
15. This Agreement shall enure to the benefit of and be binding upon the
parties and upon the successors or assigns of the Company and the executors,
administrators, and legal personal representatives of the Optionee.
16. This Agreement shall be exclusively governed according to the laws of
British Columbia and the laws of Canada applicable therein. This Agreement is
subject to the exclusive jurisdiction of the courts of the said Province.
17. This Agreement may be signed by the parties in counterparts, both of
which together shall form one and the same instrument and each of which so
signed shall be deemed to be an original.
IN WITNESS WHEREOF the parties have executed this Agreement the day and year
first above written notwithstanding its actual date of execution.
SIGNED, SEALED and DELIVERED
in the presence of:
/s/ Brendan Payne /s/ Matthew Sadler
- ------------------------ --------------------------
Witness MATTHEW SADLER
IMMUNE NETWORK RESEARCH LTD.
by its Authorized Signatory:
/s/ Allen Bain
- -------------------------------
Signature
<PAGE>
AGREEMENT 8
THIS INCENTIVE STOCK OPTION AGREEMENT is made as of the 10th day of June, 1999.
BETWEEN: MICHAEL WALKER
5176 Connaught Drive
Vancouver, B.C.
V6M 3G2
(the "Optionee")
AND: IMMUNE NETWORK RESEARCH LTD.
3650 Wesbrook Mall
Vancouver, B.C.
V6S 2L2
(the "Company")
WHEREAS the Optionee is a director, dependant contractor or a bona fide
employee of the Company or a subsidiary thereof, or an employee of a company
under contract to provide management services to the Company (the "Management
Company") and requires as a condition of holding such position that the parties
enter into this Agreement on the terms and conditions set forth,
THIS AGREEMENT WITNESSES that in consideration of the premises and of the
covenants and agreements therein contained the parties thereto covenant and
agree as follows:
1. The Company hereby grants to the Optionee as an incentive and in
consideration of his services and not in lieu of salary or any other
compensation, subject to the terms and conditions hereinafter set forth, the
irrevocable right and option (the "Option") to purchase from time to time up to
a total of 130,000 fully paid and non-assessable common shares in the capital
stock of the Company.
2. Subject to the provisions of paragraphs 4, 5 and 8 hereof, the Option
shall be exercisable by the Optionee in whole or in part at any time before
4:00 p.m. (Vancouver time) on June 9, 2004 (the "Expiry Date") at an exercise
price of $0.23 per share.
3. In order to exercise the Option, the Optionee shall give written notice
to the Company of his intention to exercise his Option in whole or in part,
such notice to be accompanied by cash, certified cheque, bank draft or money
order payable to the Company for the full amount of the purchase price of the
share being then purchased. When such payment is received, the Company
covenants and agrees to issue and deliver to the Optionee share certificates
registered in the name of the Optionee for the number of shares so purchased.
4. The Optionee represents and warrants that he is a director, dependant
contractor or an employee of the Company or a subsidiary thereof or an employee
of the Management Company. Subject to the provisions of paragraphs 5 and 8,
the Option shall terminate at the close of business on the date which is thirty
(30) calendar days after the Optionee ceases to be a director, dependant
contractor or an employee of the Company or a subsidiary thereof or ceases to
be an employee of the Management Company and any unexercised portion of the
Option may not be exercised by the Optionee after such time.
<PAGE>
Page 2
5. If at any time the Optionee shall be dismissed by the Company or the
Management Company for cause or if the Company's contract with the Management
Company terminates, any unexercised portion of the Option shall immediately
terminate.
6. The Optionee shall not, either during the term of his employment or
while under contract with the Company or a subsidiary thereof, or at any time
thereafter, disclose to any person, firm or corporation any confidential
information concerning the business affairs of the Company which the Optionee
may have acquired in the course of or incidental to his employment or
otherwise, whether for his own benefit, or to the detriment, or intended or
probable detriment, of the Company.
7. The Optionee shall at all times abide by all lawful directives given by
the board of directors of the Company.
8. If the Optionee should die while he is a director, dependant contractor
or an employee of the Company or a subsidiary thereof, or an employee of the
Management Company, the Option may then be exercised by his legal heirs or
personal representatives, to the same extent as if the Optionee was alive and a
director, dependant contractor or an employee of the Company or a subsidiary
thereof or of the Management Company, on or before the earlier of a period of
twelve (12) months after the Optionee's death or the Expiry Date but only for
such shares as the Optionee was entitled to at the date of the death of the
Optionee.
9. Subject to paragraph 8, the Option shall be non-transferable and
non-assignable.
10. The Optionee covenants and agrees that he will complete and deliver the
documents prescribed by the policies of the Vancouver Stock Exchange.
11. The granting and exercise of the Option by the Optionee are subject to
the required approvals of:
(a) the British Columbia Securities Commission or, if the Company is listed
thereon, the Vancouver Stock Exchange;
(b) any other regulatory authority having jurisdiction; and
(c) if the Optionee is an insider of the Company, then by the members of
the Company,
provided, however, that in the event that such approvals are not obtained
within 12 months of the date of this Agreement, then this Agreement shall from
that date be null and void and of no further force and effect. For the
purposes of this Agreement, the term "insider" shall have the meaning ascribed
to it in the Securities Act, R.S.B.C. 1996, c.418.
12. In the event any of the terms of this Agreement are amended, then any
such amendments will not be effective until the Company's receipt of the
required approvals specified in paragraph 11.
13. In the event of any subdivision, consolidation or other change in the
share capital of the Company while any portion of the Option is outstanding,
the number of shares under Option to the Optionee and the exercise price
thereof shall be deemed adjusted in accordance with such subdivision,
consolidation or other change in the share capital of the Company.
<PAGE>
Page 3
14. In the event that the Company shall amalgamate, consolidate with, or
merge into another corporation, the Optionee will thereafter receive, upon
exercise of the Option, the securities or property to which a holder of the
number of shares then deliverable upon the exercise of the Option would have
been entitled upon such amalgamation, consolidation or merger and the Company
will take steps in connection with such amalgamation, consolidation or merger
as may be necessary to ensure that the provisions hereof shall thereafter be
applicable, as near as reasonably may be, in relation to any securities or
property thereafter deliverable upon the exercise of the Option. A sale of all
or substantially all of the assets of the Company for a consideration (apart
from the assumption of obligations), a substantial portion of which consists of
securities, shall be deemed a consolidation, amalgamation or merger for the
purposes of this Agreement.
15. This Agreement shall enure to the benefit of and be binding upon the
parties hereto and upon the successors or assigns of the Company and the
executors, administrators, and legal personal representatives of the Optionee.
16. This Agreement shall be governed, construed and enforced according to
the laws of the Province of British Columbia and is subject to the exclusive
jurisdiction of the courts of the said Province.
17. This Agreement may be signed by the parties hereto in several
counterparts, all of which together shall form one and the same instrument and
each of which so signed shall be deemed to be an original.
IN WITNESS WHEREOF the parties have executed this Agreement the day and year
first above written notwithstanding its actual date of execution.
SIGNED, SEALED and DELIVERED
in the presence of:
/s/ /s/ Michael Walker
- ----------------------------- -------------------------------
Witness MICHAEL WALKER
IMMUNE NETWORK RESEARCH LTD.,
by its Authorized Signatory:
/s/ Allen Bain
- -------------------------------
Signature
<PAGE>
AGREEMENT 9
THIS INCENTIVE STOCK OPTION AGREEMENT is made as of the 26th day of July, 1999.
BETWEEN: PING QUIN, of 2125 West 14th Avenue, Vancouver, British
Columbia, V6K 2V8
(the "Optionee")
AND: IMMUNE NETWORK RESEARCH LTD., having its registered and
records office located at Suite 700, 625 Howe Street,
Vancouver, British Columbia, V6C 2T6
(the "Company")
WHEREAS the Optionee is a director, senior officer, consultant, dependant
contractor or a bona fide employee of the Company or a subsidiary thereof, or
an employee of a company under contract to provide management services to the
Company (the "Management Company") and requires as a condition of holding such
position that the parties enter into this Agreement on the terms and conditions
set forth,
THIS AGREEMENT WITNESSES that in consideration of the covenants and agreements
herein contained, the parties covenant and agree as follows:
1. The Company hereby grants to the Optionee as an incentive and in
consideration of his services and not in lieu of salary or any other
compensation, subject to the terms and conditions hereinafter set forth, the
irrevocable right and option (the "Option") to purchase from time to time up to
a total of 50,000 fully paid and non-assessable common shares in the capital
stock of the Company. The Option is exercisable as to 25,000 common shares
during the initial six month period of this Agreement, with the remainder
exercisable at any time thereafter until the Expiry Date (hereinafter defined).
2. Subject to the provisions of paragraphs 1, 4, 5 and 8 hereof, the Option
shall be exercisable by the Optionee in whole or in part at any time before
4:00 p.m. (Vancouver time) on July 25, 2004 (the "Expiry Date") at an exercise
price of $0.23 per share.
3. In order to exercise the Option, the Optionee shall give written notice
to the Company of his intention to exercise his Option in whole or in part,
such notice to be accompanied by cash, certified cheque, bank draft or money
order payable to the Company for the full amount of the purchase price of the
share being then purchased. When such payment is received, the Company
covenants and agrees to issue and deliver to the Optionee share certificates
registered in the name of the Optionee for the number of shares so purchased.
4. The Optionee represents and warrants that he is a director, senior
officer, consultant, dependant contractor or an employee of the Company or a
subsidiary thereof or an employee of the Management Company. Subject to the
provisions of paragraphs 5 and 8, the Option shall terminate at the close of
business on the date which is thirty (30) calendar days after the Optionee
ceases to be a director, senior officer, consultant, dependant contractor or an
employee of the Company or a subsidiary thereof or ceases to be an employee of
the Management Company and any unexercised portion of the Option may not be
exercised by the Optionee after such time.
<PAGE>
Page 2
5. If at any time the Optionee shall be dismissed by the Company or the
Management Company for cause or if the Company's contract with the Management
Company or with the Optionee terminates, any unexercised portion of the Option
shall immediately terminate.
6. The Optionee shall not, either during the term of his employment with
the Company or the Management Company or while under contract with the Company
or a subsidiary thereof, or at any time thereafter, disclose to any person,
firm or corporation any confidential information concerning the business
affairs of the Company which the Optionee may have acquired in the course of
or incidental to his employment or otherwise, whether for his own benefit, or
to the detriment, or intended or probable detriment, of the Company.
7. The Optionee shall at all times abide by all lawful directives given by
the board of directors of the Company.
8. If the Optionee should die while any Options are exercisable, the Option
may then be exercised by his legal heirs or personal representatives, to the
same extent as if the Optionee was alive and a director, senior officer,
consultant, dependant contractor or an employee of the Company or a subsidiary
thereof or of the Management Company, on or before the earlier of a period of
twelve (12) months after the Optionee's death or the Expiry Date but only for
such shares as the Optionee was entitled to at the date of the death of the
Optionee.
9. Subject to paragraph 8, the Option shall be non-transferable and
non-assignable.
10. The Optionee covenants and agrees that he will complete and deliver the
documents prescribed by the policies of the Vancouver Stock Exchange.
11. The granting and exercise of the Option by the Optionee are subject to
the required approvals of:
(a) the British Columbia Securities Commission or, if the Company is listed
thereon, the Vancouver Stock Exchange;
(b) any other regulatory authority having jurisdiction; and
(c) if the Optionee is an insider of the Company or a consultant, then by
the shareholders of the Company,
provided, however, that in the event that such approvals are not obtained within
12 months of the date of this Agreement, then this Agreement shall from that
date be null and void and of no further force and effect. For the purposes of
this Agreement, the term "insider" shall have the meaning ascribed to it in the
Securities Act, R.S.B.C. 1996, c.418.
12. In the event any of the terms of this Agreement are amended, then any
such amendments will not be effective until the Company's receipt of the
required approvals specified in paragraph 11.
13. In the event of any subdivision, consolidation or other change in the
share capital of the Company while any portion of the Option is outstanding, the
number of shares under Option to the Optionee and the exercise price thereof
shall be deemed adjusted in accordance with such subdivision, consolidation or
other change in the share capital of the Company.
14. In the event that the Company shall amalgamate, consolidate with, or
merge into another corporation, the Optionee will thereafter receive, upon
<PAGE>
Page 3
exercise of the Option, the securities or property to which a holder of the
number of shares then deliverable upon the exercise of the Option would have
been entitled upon such amalgamation, consolidation or merger and the Company
will take steps in connection with such amalgamation, consolidation or merger as
may be necessary to ensure that the provisions hereof shall thereafter be
applicable, as near as reasonably may be, in relation to any securities or
property thereafter deliverable upon the exercise of the Option. A sale of all
or substantially all of the assets of the Company for a consideration (apart
from the assumption of obligations), a substantial portion of which consists of
securities, shall be deemed a consolidation, amalgamation or merger for the
purposes of this Agreement.
15. This Agreement shall enure to the benefit of and be binding upon the
parties and upon the successors or assigns of the Company and the executors,
administrators, and legal personal representatives of the Optionee.
16. This Agreement shall be exclusively governed according to the laws of
British Columbia and the laws of Canada applicable therein. This Agreement is
subject to the exclusive jurisdiction of the courts of the said Province.
17. This Agreement may be signed by the parties in counterparts, both of
which together shall form one and the same instrument and each of which so
signed shall be deemed to be an original.
IN WITNESS WHEREOF the parties have executed this Agreement the day and year
first above written notwithstanding its actual date of execution.
SIGNED, SEALED and DELIVERED
in the presence of:
/s/ Brendan Payne /s/ Ping Quin
- ----------------------------- -------------------------------
Witness PING QUIN
IMMUNE NETWORK RESEARCH LTD.
by its Authorized Signatory:
/s/ Allen Bain
- -------------------------------
Signature
<PAGE>
AGREEMENT 10
THIS INCENTIVE STOCK OPTION AGREEMENT is made as of the 21st day of May, 1999.
BETWEEN: RON KERTESZ
4133 West 11th Avenue
Vancouver, B.C.
V6R 2L5
(the "Optionee")
AND: IMMUNE NETWORK RESEARCH LTD.
3650 Wesbrook Mall
Vancouver, B.C.
V6S 2L2
(the "Company")
WHEREAS the Optionee is a director, dependant contractor or a bona fide employee
of the Company or a subsidiary thereof, or an employee of a company under
contract to provide management services to the Company (the "Management
Company") and requires as a condition of holding such position that the parties
enter into this Agreement on the terms and conditions set forth,
THIS AGREEMENT WITNESSES that in consideration of the premises and of the
covenants and agreements therein contained the parties thereto covenant and
agree as follows:
1. The Company hereby grants to the Optionee as an incentive and in
consideration of his services and not in lieu of salary or any other
compensation, subject to the terms and conditions hereinafter set forth, the
irrevocable right and option (the "Option") to purchase from time to time up to
a total of 150,000 fully paid and non-assessable common shares in the capital
stock of the Company.
2. Subject to the provisions of paragraphs 4, 5 and 8 hereof, the Option
shall be exercisable by the Optionee in whole or in part at any time before 4:00
p.m. (Vancouver time) on May 21, 2004 (the "Expiry Date") at an exercise price
of $0.15 per share.
3. In order to exercise the Option, the Optionee shall give written notice
to the Company of his intention to exercise his Option in whole or in part, such
notice to be accompanied by cash, certified cheque, bank draft or money order
payable to the Company for the full amount of the purchase price of the share
being then purchased. When such payment is received, the Company covenants and
agrees to issue and deliver to the Optionee share certificates registered in the
name of the Optionee for the number of shares so purchased.
4. The Optionee represents and warrants that he is a director, dependant
contractor or an employee of the Company or a subsidiary thereof or an employee
of the Management Company. Subject to the provisions of paragraphs 5 and 8, the
Option shall terminate at the close of business on the date which is thirty (30)
calendar days after the Optionee ceases to be a director, dependant contractor
or an employee of the Company or a subsidiary thereof or ceases to be an
employee of the Management Company and any unexercised portion of the Option may
not be exercised by the Optionee after such time.
<PAGE>
Page 2
5. If at any time the Optionee shall be dismissed by the Company or the
Management Company for cause or if the Company's contract with the Management
Company terminates, any unexercised portion of the Option shall immediately
terminate.
6. The Optionee shall not, either during the term of his employment or while
under contract with the Company or a subsidiary thereof, or at any time
thereafter, disclose to any person, firm or corporation any confidential
information concerning the business affairs of the Company which the Optionee
may have acquired in the course of or incidental to his employment or otherwise,
whether for his own benefit, or to the detriment, or intended or probable
detriment, of the Company.
7. The Optionee shall at all times abide by all lawful directives given by
the board of directors of the Company.
8. If the Optionee should die while he is a director, dependant contractor
or an employee of the Company or a subsidiary thereof, or an employee of the
Management Company, the Option may then be exercised by his legal heirs or
personal representatives, to the same extent as if the Optionee was alive and a
director, dependant contractor or an employee of the Company or a subsidiary
thereof or of the Management Company, on or before the earlier of a period of
twelve (12) months after the Optionee's death or the Expiry Date but only for
such shares as the Optionee was entitled to at the date of the death of the
Optionee.
9. Subject to paragraph 8, the Option shall be non-transferable and
non-assignable.
10. The Optionee covenants and agrees that he will complete and deliver the
documents prescribed by the policies of the Vancouver Stock Exchange.
11. The granting and exercise of the Option by the Optionee are subject to
the required approvals of:
(a) the British Columbia Securities Commission or, if the Company is listed
thereon, the Vancouver Stock Exchange;
(b) any other regulatory authority having jurisdiction; and
(c) if the Optionee is an insider of the Company, then by the members of the
Company,
provided, however, that in the event that such approvals are not obtained within
12 months of the date of this Agreement, then this Agreement shall from that
date be null and void and of no further force and effect. For the purposes of
this Agreement, the term "insider" shall have the meaning ascribed to it in the
Securities Act, R.S.B.C. 1996, c.418.
12. In the event any of the terms of this Agreement are amended, then any
such amendments will not be effective until the Company's receipt of the
required approvals specified in paragraph 11.
13. In the event of any subdivision, consolidation or other change in the
share capital of the Company while any portion of the Option is outstanding, the
number of shares under Option to the Optionee and the exercise price thereof
shall be deemed adjusted in accordance with such subdivision, consolidation or
other change in the share capital of the Company.
<PAGE>
Page 3
14. In the event that the Company shall amalgamate, consolidate with, or
merge into another corporation, the Optionee will thereafter receive, upon
exercise of the Option, the securities or property to which a holder of the
number of shares then deliverable upon the exercise of the Option would have
been entitled upon such amalgamation, consolidation or merger and the Company
will take steps in connection with such amalgamation, consolidation or merger as
may be necessary to ensure that the provisions hereof shall thereafter be
applicable, as near as reasonably may be, in relation to any securities or
property thereafter deliverable upon the exercise of the Option. A sale of all
or substantially all of the assets of the Company for a consideration (apart
from the assumption of obligations), a substantial portion of which consists of
securities, shall be deemed a consolidation, amalgamation or merger for the
purposes of this Agreement.
15. This Agreement shall enure to the benefit of and be binding upon the
parties hereto and upon the successors or assigns of the Company and the
executors, administrators, and legal personal representatives of the Optionee.
16. This Agreement shall be governed, construed and enforced according to
the laws of the Province of British Columbia and is subject to the exclusive
jurisdiction of the courts of the said Province.
17. This Agreement may be signed by the parties hereto in several
counterparts, all of which together shall form one and the same instrument and
each of which so signed shall be deemed to be an original.
IN WITNESS WHEREOF the parties have executed this Agreement the day and year
first above written notwithstanding its actual date of execution.
SIGNED, SEALED and DELIVERED
in the presence of:
/s/ /s/ Ron Kertesz
- ----------------------------- -------------------------------
Witness RON KERTESZ
IMMUNE NETWORK RESEARCH LTD.,
by its Authorized Signatory:
/s/ Allen Bain
- -------------------------------
Signature
<PAGE>
AGREEMENT 11
THIS INCENTIVE STOCK OPTION AGREEMENT is made as of the 26th day of July, 1999.
BETWEEN: RON KERTESZ, of 4133 West 11th Avenue, Vancouver, British
Columbia, V6R 2L5
(the "Optionee")
AND: IMMUNE NETWORK RESEARCH LTD., having its registered and
records office located at Suite 700, 625 Howe Street,
Vancouver, British Columbia, V6C 2T6
(the "Company")
WHEREAS the Optionee is a director, senior officer, consultant, dependant
contractor or a bona fide employee of the Company or a subsidiary thereof, or
an employee of a company under contract to provide management services to the
Company (the "Management Company") and requires as a condition of holding such
position that the parties enter into this Agreement on the terms and conditions
set forth,
THIS AGREEMENT WITNESSES that in consideration of the covenants and agreements
herein contained, the parties covenant and agree as follows:
1. The Company hereby grants to the Optionee as an incentive and in
consideration of his services and not in lieu of salary or any other
compensation, subject to the terms and conditions hereinafter set forth, the
irrevocable right and option (the "Option") to purchase from time to time up
to a total of 160,000 fully paid and non-assessable common shares in the
capital stock of the Company.
2. Subject to the provisions of paragraphs 4, 5 and 8 hereof, the Option
shall be exercisable by the Optionee in whole or in part at any time before
4:00 p.m. (Vancouver time) on July 25, 2004 (the "Expiry Date") at an
exercise price of $0.23 per share.
3. In order to exercise the Option, the Optionee shall give written
notice to the Company of his intention to exercise his Option in whole or
in part, such notice to be accompanied by cash, certified cheque, bank draft
or money order payable to the Company for the full amount of the purchase price
of the share being then purchased. When such payment is received, the Company
covenants and agrees to issue and deliver to the Optionee share certificates
registered in the name of the Optionee for the number of shares so purchased.
4. The Optionee represents and warrants that he is a director, senior
officer, consultant, dependant contractor or an employee of the Company or a
subsidiary thereof or an employee of the Management Company. Subject to the
provisions of paragraphs 5 and 8, the Option shall terminate at the close of
business on the date which is thirty (30) calendar days after the Optionee
ceases to be a director, senior officer, consultant, dependant contractor or an
employee of the Company or a subsidiary thereof or ceases to be an employee of
the Management Company and any unexercised portion of the Option may not be
exercised by the Optionee after such time.
5. If at any time the Optionee shall be dismissed by the Company or the
Management Company for cause or if the Company's contract with the Management
Company or with the Optionee terminates, any unexercised portion of the Option
shall immediately terminate.
6. The Optionee shall not, either during the term of his employment with the
Company or the Management Company or while under contract with the Company or a
subsidiary thereof, or at any time thereafter, disclose to any person, firm or
<PAGE>
Page 2
corporation any confidential information concerning the business affairs of the
Company which the Optionee may have acquired in the course of or incidental to
his employment or otherwise, whether for his own benefit, or to the detriment,
or intended or probable detriment, of the Company.
7. The Optionee shall at all times abide by all lawful directives given by
the board of directors of the Company.
8. If the Optionee should die while any Options are exercisable, the Option
may then be exercised by his legal heirs or personal representatives, to the
same extent as if the Optionee was alive and a director, senior officer,
consultant, dependant contractor or an employee of the Company or a subsidiary
thereof or of the Management Company, on or before the earlier of a period of
twelve (12) months after the Optionee's death or the Expiry Date but only for
such shares as the Optionee was entitled to at the date of the death of the
Optionee.
9. Subject to paragraph 8, the Option shall be non-transferable and
non-assignable.
10. The Optionee covenants and agrees that he will complete and deliver the
documents prescribed by the policies of the Vancouver Stock Exchange.
11. The granting and exercise of the Option by the Optionee are subject to
the required approvals f:
(a) the British Columbia Securities Commission or, if the Company is listed
thereon, the Vancouver Stock Exchange;
(b) any other regulatory authority having jurisdiction; and
(c) if the Optionee is an insider of the Company or a consultant, then by
the shareholders of the Company,
provided, however, that in the event that such approvals are not obtained within
12 months of the date of this Agreement, then this Agreement shall from that
date be null and void and of no further force and effect. For the purposes of
this Agreement, the term "insider" shall have the meaning ascribed to it in the
Securities Act, R.S.B.C. 1996, c.418.
12. In the event any of the terms of this Agreement are amended, then any
such amendments will not be effective until the Company's receipt of the
required approvals specified in paragraph 11.
13. In the event of any subdivision, consolidation or other change in the
share capital of the Company while any portion of the Option is outstanding,
the number of shares under Option to the Optionee and the exercise price
thereof shall be deemed adjusted in accordance with such subdivision,
consolidation or other change in the share capital of the Company.
14. In the event that the Company shall amalgamate, consolidate with, or
merge into another corporation, the Optionee will thereafter receive, upon
exercise of the Option, the securities or property to which a holder of the
number of shares then deliverable upon the exercise of the Option would have
been entitled upon such amalgamation, consolidation or merger and the Company
will take steps in connection with such amalgamation, consolidation or merger as
may be necessary to ensure that the provisions hereof shall thereafter be
applicable, as near as reasonably may be, in relation to any securities or
property thereafter deliverable upon the exercise of the Option. A sale of all
or substantially all of the assets of the Company for a consideration (apart
from the assumption of obligations), a substantial portion of which consists of
securities, shall be deemed a consolidation, amalgamation or merger for the
purposes of this Agreement.
<PAGE>
Page 3
15. This Agreement shall enure to the benefit of and be binding upon the
parties and upon the successors or assigns of the Company and the executors,
administrators, and legal personal representatives of the Optionee.
16. This Agreement shall be exclusively governed according to the laws of
British Columbia and the laws of Canada applicable therein. This Agreement is
subject to the exclusive jurisdiction of the courts of the said Province.
17. This Agreement may be signed by the parties in counterparts, both of
which together shall form one and the same instrument and each of which so
signed shall be deemed to be an original.
IN WITNESS WHEREOF the parties have executed this Agreement the day and year
first above written notwithstanding its actual date of execution.
SIGNED, SEALED and DELIVERED
in the presence of:
/s/ Brendan Payne /s/ Ron Kertesz
- ----------------------------- -------------------------------
Witness RON KERTESZ
IMMUNE NETWORK RESEARCH LTD.
by its Authorized Signatory:
/s/ Allen Bain
- -------------------------------
Signature
<PAGE>
AGREEMENT 12
THIS INCENTIVE STOCK OPTION AGREEMENT is made as of the 10th day of June, 1999.
BETWEEN: RONALD G. PATON
802 - 1250 Quayside Drive
New Westminster, B.C.
V3M 6E2
(the "Optionee")
AND: IMMUNE NETWORK RESEARCH LTD.
3650 Wesbrook Mall
Vancouver, B.C.
V6S 2L2
(the "Company")
WHEREAS the Optionee is a director, dependant contractor or a bona fide employee
of the Company or a subsidiary thereof, or an employee of a company under
contract to provide management services to the Company (the "Management
Company") and requires as a condition of holding such position that the parties
enter into this Agreement on the terms and conditions set forth,
THIS AGREEMENT WITNESSES that in consideration of the premises and of the
covenants and agreements therein contained the parties thereto covenant and
agree as follows:
1. The Company hereby grants to the Optionee as an incentive and in
consideration of his services and not in lieu of salary or any other
compensation, subject to the terms and conditions hereinafter set forth, the
irrevocable right and option (the "Option") to purchase from time to time up to
a total of 110,000 fully paid and non-assessable common shares in the capital
stock of the Company.
2. Subject to the provisions of paragraphs 4, 5 and 8 hereof, the Option
shall be exercisable by the Optionee in whole or in part at any time before 4:00
p.m. (Vancouver time) on June 9, 2004 (the "Expiry Date") at an exercise price
of $0.23 per share.
3. In order to exercise the Option, the Optionee shall give written notice
to the Company of his intention to exercise his Option in whole or in part, such
notice to be accompanied by cash, certified cheque, bank draft or money order
payable to the Company for the full amount of the purchase price of the share
being then purchased. When such payment is received, the Company covenants and
agrees to issue and deliver to the Optionee share certificates registered in the
name of the Optionee for the number of shares so purchased.
4. The Optionee represents and warrants that he is a director, dependant
contractor or an employee of the Company or a subsidiary thereof or an employee
of the Management Company. Subject to the provisions of paragraphs 5 and 8, the
Option shall terminate at the close of business on the date which is thirty (30)
calendar days after the Optionee ceases to be a director, dependant contractor
or an employee of the Company or a subsidiary thereof or ceases to be an
employee of the Management Company and any unexercised portion of the Option may
not be exercised by the Optionee after such time.
<PAGE>
Page 2
5. If at any time the Optionee shall be dismissed by the Company or the
Management Company for cause or if the Company's contract with the Management
Company terminates, any unexercised portion of the Option shall immediately
terminate.
6. The Optionee shall not, either during the term of his employment or while
under contract with the Company or a subsidiary thereof, or at any time
thereafter, disclose to any person, firm or corporation any confidential
information concerning the business affairs of the Company which the Optionee
may have acquired in the course of or incidental to his employment or otherwise,
whether for his own benefit, or to the detriment, or intended or probable
detriment, of the Company.
7. The Optionee shall at all times abide by all lawful directives given by
the board of directors of the Company.
8. If the Optionee should die while he is a director, dependant contractor
or an employee of the Company or a subsidiary thereof, or an employee of the
Management Company, the Option may then be exercised by his legal heirs or
personal representatives, to the same extent as if the Optionee was alive and a
director, dependant contractor or an employee of the Company or a subsidiary
thereof or of the Management Company, on or before the earlier of a period of
twelve (12) months after the Optionee's death or the Expiry Date but only for
such shares as the Optionee was entitled to at the date of the death of the
Optionee.
9. Subject to paragraph 8, the Option shall be non-transferable and
non-assignable.
10. The Optionee covenants and agrees that he will complete and deliver the
documents prescribed by the policies of the Vancouver Stock Exchange.
11. The granting and exercise of the Option by the Optionee are subject to
the required approvals of:
(a) the British Columbia Securities Commission or, if the Company is listed
thereon, the Vancouver Stock Exchange;
(b) any other regulatory authority having jurisdiction; and
(c) if the Optionee is an insider of the Company, then by the members of the
Company,
provided, however, that in the event that such approvals are not obtained within
12 months of the date of this Agreement, then this Agreement shall from that
date be null and void and of no further force and effect. For the purposes of
this Agreement, the term "insider" shall have the meaning ascribed to it in the
Securities Act, R.S.B.C. 1996, c.418.
12. In the event any of the terms of this Agreement are amended, then any
such amendments will not be effective until the Company's receipt of the
required approvals specified in paragraph 11.
13. In the event of any subdivision, consolidation or other change in the
share capital of the Company while any portion of the Option is outstanding, the
number of shares under Option to the Optionee and the exercise price thereof
shall be deemed adjusted in accordance with such subdivision, consolidation or
other change in the share capital of the Company.
<PAGE>
Page 3
14. In the event that the Company shall amalgamate, consolidate with, or
merge into another corporation, the Optionee will thereafter receive, upon
exercise of the Option, the securities or property to which a holder of the
number of shares then deliverable upon the exercise of the Option would have
been entitled upon such amalgamation, consolidation or merger and the Company
will take steps in connection with such amalgamation, consolidation or merger as
may be necessary to ensure that the provisions hereof shall thereafter be
applicable, as near as reasonably may be, in relation to any securities or
property thereafter deliverable upon the exercise of the Option. A sale of all
or substantially all of the assets of the Company for a consideration (apart
from the assumption of obligations), a substantial portion of which consists of
securities, shall be deemed a consolidation, amalgamation or merger for the
purposes of this Agreement.
15. This Agreement shall enure to the benefit of and be binding upon the
parties hereto and upon the successors or assigns of the Company and the
executors, administrators, and legal personal representatives of the Optionee.
16. This Agreement shall be governed, construed and enforced according to
the laws of the Province of British Columbia and is subject to the exclusive
jurisdiction of the courts of the said Province.
17. This Agreement may be signed by the parties hereto in several
counterparts, all of which together shall form one and the same instrument and
each of which so signed shall be deemed to be an original.
IN WITNESS WHEREOF the parties have executed this Agreement the day and year
first above written notwithstanding its actual date of execution.
SIGNED, SEALED and DELIVERED
in the presence of:
/s/ Lynda Gallagher /s/ Ronald G. Paton
- ----------------------------- -------------------------------
Witness RONALD G. PATON
IMMUNE NETWORK RESEARCH LTD.,
by its Authorized Signatory:
/s/ Allen Bain
- -------------------------------
Signature
<PAGE>
AGREEMENT 13
THIS INCENTIVE STOCK OPTION AGREEMENT is made as of the 26th day of July, 1999.
BETWEEN: DR. SULTAN KARIM, of 7640 Berkley Street, Burnaby, British
Columbia, V5E 4A7
(the "Optionee")
AND: IMMUNE NETWORK RESEARCH LTD., having its registered and
records office located at Suite 700, 625 Howe Street,
Vancouver, British Columbia, V6C 2T6
(the "Company")
WHEREAS the Optionee is a director, senior officer, consultant, dependant
contractor or a bona fide employee of the Company or a subsidiary thereof, or an
employee of a company under contract to provide management services to the
Company (the "Management Company") and requires as a condition of holding such
position that the parties enter into this Agreement on the terms and conditions
set forth,
THIS AGREEMENT WITNESSES that in consideration of the covenants and agreements
herein contained, the parties covenant and agree as follows:
1. The Company hereby grants to the Optionee as an incentive and in
consideration of his services and not in lieu of salary or any other
compensation, subject to the terms and conditions hereinafter set forth, the
irrevocable right and option (the "Option") to purchase from time to time up to
a total of 100,000 fully paid and non-assessable common shares in the capital
stock of the Company.
2. Subject to the provisions of paragraphs 4, 5 and 8 hereof, the Option
shall be exercisable by the Optionee in whole or in part at any time before 4:00
p.m. (Vancouver time) on July 25, 2004 (the "Expiry Date") at an exercise price
of $0.23 per share.
3. In order to exercise the Option, the Optionee shall give written notice
to the Company of his intention to exercise his Option in whole or in part, such
notice to be accompanied by cash, certified cheque, bank draft or money order
payable to the Company for the full amount of the purchase price of the share
being then purchased. When such payment is received, the Company covenants and
agrees to issue and deliver to the Optionee share certificates registered in the
name of the Optionee for the number of shares so purchased.
4. The Optionee represents and warrants that he is a director, senior
officer, consultant, dependant contractor or an employee of the Company or a
subsidiary thereof or an employee of the Management Company. Subject to the
provisions of paragraphs 5 and 8, the Option shall terminate at the close of
business on the date which is thirty (30) calendar days after the Optionee
ceases to be a director, senior officer, consultant, dependant contractor or an
employee of the Company or a subsidiary thereof or ceases to be an employee of
the Management Company and any unexercised portion of the Option may not be
exercised by the Optionee after such time.
5. If at any time the Optionee shall be dismissed by the Company or the
Management Company for cause or if the Company's contract with the Management
Company or with the Optionee terminates, any unexercised portion of the Option
shall immediately terminate.
<PAGE>
Page 2
6. The Optionee shall not, either during the term of his employment with the
Company or the Management Company or while under contract with the Company or a
subsidiary thereof, or at any time thereafter, disclose to any person, firm or
corporation any confidential information concerning the business affairs of the
Company which the Optionee may have acquired in the course of or incidental to
his employment or otherwise, whether for his own benefit, or to the detriment,
or intended or probable detriment, of the Company.
7. The Optionee shall at all times abide by all lawful directives given by
the board of directors of the Company.
8. If the Optionee should die while any Options are exercisable, the Option
may then be exercised by his legal heirs or personal representatives, to the
same extent as if the Optionee was alive and a director, senior officer,
consultant, dependant contractor or an employee of the Company or a subsidiary
thereof or of the Management Company, on or before the earlier of a period of
twelve (12) months after the Optionee's death or the Expiry Date but only for
such shares as the Optionee was entitled to at the date of the death of the
Optionee.
9. Subject to paragraph 8, the Option shall be non-transferable and
non-assignable.
10. The Optionee covenants and agrees that he will complete and deliver the
documents prescribed by the policies of the Vancouver Stock Exchange.
11. The granting and exercise of the Option by the Optionee are subject to
the required approvals of:
(a) the British Columbia Securities Commission or, if the Company is listed
thereon, the Vancouver Stock Exchange;
(b) any other regulatory authority having jurisdiction; and
(c) if the Optionee is an insider of the Company or a consultant, then by
the shareholders of the Company,
provided, however, that in the event that such approvals are not obtained within
12 months of the date of this Agreement, then this Agreement shall from that
date be null and void and of no further force and effect. For the purposes of
this Agreement, the term "insider" shall have the meaning ascribed to it in the
Securities Act, R.S.B.C. 1996, c.418.
12. In the event any of the terms of this Agreement are amended, then any
such amendments will not be effective until the Company's receipt of the
required approvals specified in paragraph 11.
13. In the event of any subdivision, consolidation or other change in the
share capital of the Company while any portion of the Option is outstanding, the
number of shares under Option to the Optionee and the exercise price thereof
shall be deemed adjusted in accordance with such subdivision, consolidation or
other change in the share capital of the Company.
14. In the event that the Company shall amalgamate, consolidate with, or
merge into another corporation, the Optionee will thereafter receive, upon
exercise of the Option, the securities or property to which a holder of the
number of shares then deliverable upon the exercise of the Option would have
been entitled upon such amalgamation, consolidation or merger and the Company
<PAGE>
Page 3
will take steps in connection with such amalgamation, consolidation or merger as
may be necessary to ensure that the provisions hereof shall thereafter be
applicable, as near as reasonably may be, in relation to any securities or
property thereafter deliverable upon the exercise of the Option. A sale of all
or substantially all of the assets of the Company for a consideration (apart
from the assumption of obligations), a substantial portion of which consists of
securities, shall be deemed a consolidation, amalgamation or merger for the
purposes of this Agreement.
15. This Agreement shall enure to the benefit of and be binding upon the
parties and upon the successors or assigns of the Company and the executors,
administrators, and legal personal representatives of the Optionee.
16. This Agreement shall be exclusively governed according to the laws of
British Columbia and the laws of Canada applicable therein. This Agreement is
subject to the exclusive jurisdiction of the courts of the said Province.
17. This Agreement may be signed by the parties in counterparts, both of
which together shall form one and the same instrument and each of which so
signed shall be deemed to be an original.
IN WITNESS WHEREOF the parties have executed this Agreement the day and year
first above written notwithstanding its actual date of execution.
SIGNED, SEALED and DELIVERED
in the presence of:
/s/ Brendan Payne /s/ Sultan Karim
- ----------------------------- -------------------------------
Witness DR. SULTAN KARIM
IMMUNE NETWORK RESEARCH LTD.
by its Authorized Signatory:
/s/ Allen Bain
- -------------------------------
Signature
<PAGE>
AGREEMENT 14
THIS INCENTIVE STOCK OPTION AGREEMENT is made as of the 26th day of July, 1999.
BETWEEN: TALIEH SHAHROKHI, of 2525 West 7th Avenue, Vancouver, British
Columbia, V6K 1Y8
(the "Optionee")
AND: IMMUNE NETWORK RESEARCH LTD., having its registered and
records office located at Suite 700, 625 Howe Street,
Vancouver, British Columbia, V6C 2T6
(the "Company")
WHEREAS the Optionee is a director, senior officer, consultant, dependant
contractor or a bona fide employee of the Company or a subsidiary thereof, or an
employee of a company under contract to provide management services to the
Company (the "Management Company") and requires as a condition of holding such
position that the parties enter into this Agreement on the terms and conditions
set forth,
THIS AGREEMENT WITNESSES that in consideration of the covenants and agreements
herein contained, the parties covenant and agree as follows:
1. The Company hereby grants to the Optionee as an incentive and in
consideration of his services and not in lieu of salary or any other
compensation, subject to the terms and conditions hereinafter set forth, the
irrevocable right and option (the "Option") to purchase from time to time up to
a total of 25,000 fully paid and non-assessable common shares in the capital
stock of the Company. The Option is exercisable as to 12,000 common shares
during the initial six month period of this Agreement, with the remainder
exercisable at any time thereafter until the Expiry Date (hereinafter defined).
2. Subject to the provisions of paragraphs 1, 4, 5 and 8 hereof, the Option
shall be exercisable by the Optionee in whole or in part at any time before 4:00
p.m. (Vancouver time) on July 25, 2004 (the "Expiry Date") at an exercise price
of $0.23 per share.
3. In order to exercise the Option, the Optionee shall give written notice
to the Company of his intention to exercise his Option in whole or in part, such
notice to be accompanied by cash, certified cheque, bank draft or money order
payable to the Company for the full amount of the purchase price of the share
being then purchased. When such payment is received, the Company covenants and
agrees to issue and deliver to the Optionee share certificates registered in the
name of the Optionee for the number of shares so purchased.
4. The Optionee represents and warrants that he is a director, senior
officer, consultant, dependant contractor or an employee of the Company or a
subsidiary thereof or an employee of the Management Company. Subject to the
provisions of paragraphs 5 and 8, the Option shall terminate at the close of
business on the date which is thirty (30) calendar days after the Optionee
ceases to be a director, senior officer, consultant, dependant contractor or an
employee of the Company or a subsidiary thereof or ceases to be an employee of
the Management Company and any unexercised portion of the Option may not be
exercised by the Optionee after such time.
<PAGE>
Page 2
5. If at any time the Optionee shall be dismissed by the Company or the
Management Company for cause or if the Company's contract with the Management
Company or with the Optionee terminates, any unexercised portion of the Option
shall immediately terminate.
6. The Optionee shall not, either during the term of his employment with the
Company or the Management Company or while under contract with the Company or a
subsidiary thereof, or at any time thereafter, disclose to any person, firm or
corporation any confidential information concerning the business affairs of the
Company which the Optionee may have acquired in the course of or incidental to
his employment or otherwise, whether for his own benefit, or to the detriment,
or intended or probable detriment, of the Company.
7. The Optionee shall at all times abide by all lawful directives given by
the board of directors of the Company.
8. If the Optionee should die while any Options are exercisable, the Option
may then be exercised by his legal heirs or personal representatives, to the
same extent as if the Optionee was alive and a director, senior officer,
consultant, dependant contractor or an employee of the Company or a subsidiary
thereof or of the Management Company, on or before the earlier of a period of
twelve (12) months after the Optionee's death or the Expiry Date but only for
such shares as the Optionee was entitled to at the date of the death of the
Optionee.
9. Subject to paragraph 8, the Option shall be non-transferable and
non-assignable.
10. The Optionee covenants and agrees that he will complete and deliver the
documents prescribed by the policies of the Vancouver Stock Exchange.
11. The granting and exercise of the Option by the Optionee are subject to
the required approvals of:
(a) the British Columbia Securities Commission or, if the Company is listed
thereon, the Vancouver Stock Exchange;
(b) any other regulatory authority having jurisdiction; and
(c) if the Optionee is an insider of the Company or a consultant, then by
the shareholders of the Company,
provided, however, that in the event that such approvals are not obtained within
12 months of the date of this Agreement, then this Agreement shall from that
date be null and void and of no further force and effect. For the purposes of
this Agreement, the term "insider" shall have the meaning ascribed to it in the
Securities Act, R.S.B.C. 1996, c.418.
12. In the event any of the terms of this Agreement are amended, then any
such amendments will not be effective until the Company's receipt of the
required approvals specified in paragraph 11.
13. In the event of any subdivision, consolidation or other change in the
share capital of the Company while any portion of the Option is outstanding, the
number of shares under Option to the Optionee and the exercise price thereof
shall be deemed adjusted in accordance with such subdivision, consolidation or
other change in the share capital of the Company.
14. In the event that the Company shall amalgamate, consolidate with, or
merge into another corporation, the Optionee will thereafter receive, upon
<PAGE>
Page 3
exercise of the Option, the securities or property to which a holder of the
number of shares then deliverable upon the exercise of the Option would have
been entitled upon such amalgamation, consolidation or merger and the Company
will take steps in connection with such amalgamation, consolidation or merger as
may be necessary to ensure that the provisions hereof shall thereafter be
applicable, as near as reasonably may be, in relation to any securities or
property thereafter deliverable upon the exercise of the Option. A sale of all
or substantially all of the assets of the Company for a consideration (apart
from the assumption of obligations), a substantial portion of which consists of
securities, shall be deemed a consolidation, amalgamation or merger for the
purposes of this Agreement.
15. This Agreement shall enure to the benefit of and be binding upon the
parties and upon the successors or assigns of the Company and the executors,
administrators, and legal personal representatives of the Optionee.
16. This Agreement shall be exclusively governed according to the laws of
British Columbia and the laws of Canada applicable therein. This Agreement is
subject to the exclusive jurisdiction of the courts of the said Province.
17. This Agreement may be signed by the parties in counterparts, both of
which together shall form one and the same instrument and each of which so
signed shall be deemed to be an original.
IN WITNESS WHEREOF the parties have executed this Agreement the day and year
first above written notwithstanding its actual date of execution.
SIGNED, SEALED and DELIVERED
in the presence of:
/s/ Brendan Payne /s/ Talieh Shahrokhi
- ----------------------------- ----------------------------
Witness TALIEH SHAHROKHI
IMMUNE NETWORK RESEARCH LTD.
by its Authorized Signatory:
/s/ Allen Bain
- -------------------------------
Signature
<PAGE>
AGREEMENT 15
STOCK OPTION AGREEMENT
(Director or Officer)
THIS AGREEMENT made as of the 20th day of May, 1998
BETWEEN:
JENNIFER NESTORUK
of 7731 Buller Avenue
Burnaby, British Columbia, V3J 4T1
(hereinafter called the "Optionee")
OF THE FIRST PART
AND:
IMMUNE NETWORK RESEARCH LTD., the company formed
as a result of the Amalgamation of Bobby Cadillac's
Food Corporation and Immune Network Research Ltd.,
having its principal place of business at Suite 900 -
475 Howe Street, Vancouver, British Columbia, Canada V6C 2B3
(hereinafter called the "Company")
OF THE SECOND PART
WHEREAS the Directors of the Company have authorized the granting
of options to purchase shares in the capital of the Company to certain of its
directors and officers.
NOW THEREFORE THIS AGREEMENT WITNESSES:
DEFINITION
- ----------
1. In this Agreement the term "share" or "shares" means, as the case
may be, one or more Common shares without par value in the capital stock of the
Company as constituted at the date of this Agreement.
GRANTING OF OPTION
- ------------------
2. The Company hereby irrevocably grants to the Optionee, being one
of the directors or officers of the Company, a non-assignable, non-transferable
option to purchase 60,000 shares in the capital stock of the Company
(hereinafter called the "Option") at a price of $0.15 per share (the "Option
Price") on the terms and conditions hereinafter set forth.
<PAGE>
Page 2
EXERCISE OF OPTION
- ------------------
3. Subject to paragraph 8 hereof, the Option, or any part thereof,
may be exercised by the Optionee at any time, and from time to time for a five
year period from the date hereof by notice in writing to the company to that
effect. Any such notice given to the Company (an "Exercise Notice") shall
specify the number of shares with respect to which the Option is being
exercised and shall be accompanied by a certified cheque drawn on a Canadian
chartered bank in favour of the Company in full payment of the Option Price for
the number of shares then being purchased.
DELIVERY OF SHARE CERTIFICATE
- -----------------------------
4. The Company shall, within five business days after receipt of the
Exercise Notice deliver to the Optionee a share certificate representing the
number of shares with respect to which the Option was exercised and issued as
of the date of the Exercise Notice.
5. An Exercise Notice shall be deemed to have been given, if
delivered, on the date of delivery, or if mailed, on the date of mailing. A
mailed Exercise Notice shall be sent by prepaid registered mail addressed to
the Company at its Vancouver address.
OPTION ONLY
- -----------
6. Nothing herein contained or done pursuant hereto shall obligate
the Optionee to purchase and/or pay for any shares of the Company, except those
shares in respect of which the Optionee shall have exercised all or any part of
the Option granted hereunder.
7. The Optionee shall have no rights whatsoever as a shareholder in
respect of any of the shares optioned hereunder other than in respect of
optioned shares upon which the Optionee shall have exercised all or any part of
the Option granted hereunder and which shall have been taken up and paid for in
full.
APPROVAL
- --------
8. The Option granted hereunder is subject to approval by ordinary
resolution of the members of the Company entitled to vote at a general meeting
of the Company, passed prior to the exercise of the Option or any part thereof.
FILING WITH VANCOUVER STOCK EXCHANGE
- ------------------------------------
9. This Agreement is required to be filed with the Vancouver Stock
Exchange (the "Exchange") and the Optionee hereby agrees to be bound by any
modification of the terms and conditions of the Option as may be required by
the said Exchange.
<PAGE>
Page 3
CAPITAL REORGANIZATION
- ----------------------
10. In the event the authorized capital of the Company as presently
constituted is consolidated into a lesser number of shares or subdivided into a
greater number of shares, the number of shares in respect of which the Option
remains unexercised shall be decreased or increased proportionately as the case
may be, and the then prevailing purchase price to be paid by the Optionee for
each such share shall be correspondingly decreased or increased as applicable.
In the event the Company shall determine to amalgamate or merge with any other
company or companies (and the right to do so is hereby expressly reserved)
whether by way of statutory amalgamation, sale of its assets and undertaking,
or otherwise howsoever, then and in each such event the number of shares in the
corporation resulting from such amalgamation or merger in respect of which the
Option remains unexercised shall be such number of shares in that corporation
as would have been acquired by the Optionee pursuant to the amalgamation or
merger had the Option been fully exercised immediately prior to the date of
such amalgamation or merger and the then prevailing purchase price of the
shares to be paid by the Optionee shall be correspondingly decreased or
increased as applicable.
TERMINATTON OF OPTION
- ---------------------
11. The Option is not assignable or transferable and shall terminate
on the 30th day following the date upon which the Optionee ceases to be a
director or officer of the Company; provided, however, that if such cessation
is due to the death of the Optionee, the personal representative of the
Optionee shall have the right to exercise any unexercised part of the Option
for a period of one year following the date of death of the Optionee.
AMENDMENT OF MATERIAL TERMS
- ---------------------------
12. Any amendment to the Option is subject to approval by ordinary
resolution of the members of the Company entitled to vote at a general meeting
of the Company.
TIME OF THE ESSENCE
- -------------------
13. Time shall be of the essence of this Agreement.
SUCCESSORS
- ----------
14. This Agreement shall ensure to the benefit of and be binding upon
the heirs, executors and administrators of the Optionee and the successors of
the Company.
<PAGE>
Page 4
IN WITNESS WHEREOF the parties hereto have caused these presents
to be executed as of the day and year first above written.
SIGNED, SEALED AND DELIVERED by the )
Optionee in the presence of )
)
/s/ Victor Jones )
- ----------------------------------- )
Name )
)
4121 Vine )
- ----------------------------------- ) /s/ Jennifer Nestoruk
Vancouver ) ---------------------------
- ----------------------------------- ) Jennifer Nestoruk
Address )
- ----------------------------------- )
Executive )
- ----------------------------------- )
Occupation )
The Common Seal of IMMUNE NETWORK )
RESEARCH LTD. was hereunto affixed )
in the presence of: )
)
)
)
/S/ Victor Jones )
- ----------------------------------- )
Authorized Signatory ) c/s
)
/S/ Jennifer Nestoruk )
- ------------------------------ )
Authorized Signatory )
<PAGE>
AGREEMENT 16
STOCK OPTION AGREEMENT
(Director or Officer)
THIS AGREEMENT made as of the 20th day of May, 1998
BETWEEN:
MICHAEL GRANT
of 297 Marine Drive
Logy Bay, Newfoundland
(hereinafter called the "Optionee")
OF THE FIRST PART
AND:
IMMUNE NETWORK RESEARCH LTD., the company formed
as a result of the Amalgamation of Bobby Cadillac's
Food Corporation and Immune Network Research Ltd.,
having its principal place of business at Suite 900 - 475
Howe Street, Vancouver, British Columbia, Canada V6C 2B3
(hereinafter called the "Company")
OF THE SECOND PART
WHEREAS the Directors of the Company have authorized the granting
of options to purchase shares in the capital of the Company to certain of its
directors and officers.
NOW THEREFORE THIS AGREEMENT WITNESSES:
DEFINITION
- ----------
1. In this Agreement the term "share" or "shares" means, as the case
may be, one or more Common shares without par value in the capital stock of the
Company as constituted at the date of this Agreement.
GRANTING OF OPTION
- ------------------
2. The Company hereby irrevocably grants to the Optionee, being one
of the directors or officers of the Company, a non-assignable, non-transferable
option to purchase 200,000 shares in the capital stock of the Company
(hereinafter called the "Option") at a price of $0.15 per share (the "Option
Price") on the terms and conditions hereinafter set forth.
<PAGE>
Page 2
EXERCISE OF OPTION
- ------------------
3. Subject to paragraph 8 hereof, the Option, or any part thereof,
may be exercised by the Optionee at any time, and from time to time for a five
year period from the date hereof by notice in writing to the company to that
effect. Any such notice given to the Company (an "Exercise Notice") shall
specify the number of shares with respect to which the Option is being
exercised and shall be accompanied by a certified cheque drawn on a Canadian
chartered bank in favour of the Company in full payment of the Option Price for
the number of shares then being purchased.
DELIVERY OF SHARE CERTIFICATE
- -----------------------------
4. The Company shall, within five business days after receipt of the
Exercise Notice deliver to the Optionee a share certificate representing the
number of shares with respect to which the Option was exercised and issued as
of the date of the Exercise Notice.
5. An Exercise Notice shall be deemed to have been given, if
delivered, on the date of delivery, or if mailed, on the date of mailing.
A mailed Exercise Notice shall be sent by prepaid registered mail addressed to
the Company at its Vancouver address.
OPTION ONLY
- -----------
6. Nothing herein contained or done pursuant hereto shall obligate
the Optionee to purchase and/or pay for any shares of the Company, except those
shares in respect of which the Optionee shall have exercised all or any part of
the Option granted hereunder.
7. The Optionee shall have no rights whatsoever as a shareholder in
respect of any of the shares optioned hereunder other than in respect of
optioned shares upon which the Optionee shall have exercised all or any part of
the Option granted hereunder and which shall have been taken up and paid for in
full.
APPROVAL
- --------
8. The Option granted hereunder is subject to approval by ordinary
resolution of the members of the Company entitled to vote at a general meeting
of the Company, passed prior to the exercise of the Option or any part thereof.
FILING WITH VANCOUVER STOCK EXCHANGE
- ------------------------------------
9. This Agreement is required to be filed with the Vancouver Stock
Exchange (the "Exchange") and the Optionee hereby agrees to be bound by any
modification of the terms and conditions of the Option as may be required by
the said Exchange.
<PAGE>
Page 3
CAPITAL REORGANIZATION
- ----------------------
10. In the event the authorized capital of the Company as presently
constituted is consolidated into a lesser number of shares or subdivided into a
greater number of shares, the number of shares in respect of which the Option
remains unexercised shall be decreased or increased proportionately as the case
may be, and the then prevailing purchase price to be paid by the Optionee for
each such share shall be correspondingly decreased or increased as applicable.
In the event the Company shall determine to amalgamate or merge with any other
company or companies (and the right to do so is hereby expressly reserved)
whether by way of statutory amalgamation, sale of its assets and undertaking,
or otherwise howsoever, then and in each such event the number of shares in the
corporation resulting from such amalgamation or merger in respect of which the
Option remains unexercised shall be such number of shares in that corporation
as would have been acquired by the Optionee pursuant to the amalgamation or
merger had the Option been fully exercised immediately prior to the date of
such amalgamation or merger and the then prevailing purchase price of the
shares to be paid by the Optionee shall be correspondingly decreased or
increased as applicable.
TERMINATTON OF OPTION
- ---------------------
11. The Option is not assignable or transferable and shall terminate
on the 30th day following the date upon which the Optionee ceases to be a
director or officer of the Company; provided, however, that if such cessation
is due to the death of the Optionee, the personal representative of the
Optionee shall have the right to exercise any unexercised part of the Option
for a period of one year following the date of death of the Optionee.
AMENDMENT OF MATERIAL TERMS
- ---------------------------
12. Any amendment to the Option is subject to approval by ordinary
resolution of the members of the Company entitled to vote at a general meeting
of the Company.
TIME OF THE ESSENCE
- -------------------
13. Time shall be of the essence of this Agreement.
SUCCESSORS
- ----------
14. This Agreement shall ensure to the benefit of and be binding upon
the heirs, executors and administrators of the Optionee and the successors of
the Company.
<PAGE>
Page 4
IN WITNESS WHEREOF the parties hereto have caused these presents
to be executed as of the day and year first above written.
SIGNED, SEALED AND DELIVERED by the )
Optionee in the presence of )
)
Jennifer Nestoruk )
- ---------------------------------------- )
Name )
)
7731 Buller Avenue, )
- ---------------------------------------- ) /s/ Michael Grant
Burnaby, BC ) ----------------------------
- ---------------------------------------- ) Michael D. Grant
Address )
- ---------------------------------------- )
Secretary )
- ---------------------------------------- )
Occupation )
- ---------------------------------------- )
The Common Seal of IMMUNE NETWORK )
RESEARCH LTD. was hereunto affixed in the )
presence of: )
)
)
/S/ Victor Jones )
- ---------------------------------------- )
Authorized Signatory ) c/s
)
)
/S/ Jennifer Nestoruk )
- ----------------------------------- )
Authorized Signatory )
<PAGE>
AGREEMENT 17
STOCK OPTION AGREEMENT
(Director or Officer)
THIS AGREEMENT made as of the 20th day of May, 1998
BETWEEN:
VICTOR J.E.JONES
of 4121 Vine St.
Vancouver, British Columbia, V6L 3C1
(hereinafter called the "Optionee")
OF THE FIRST PART
AND:
IMMUNE NETWORK RESEARCH LTD., the company formed
as a result of the Amalgamation of Bobby Cadillac's
Food Corporation and Immune Network Research Ltd.,
having its principal place of business at Suite 900 - 475
Howe Street, Vancouver, British Columbia, Canada V6C 2B3
(hereinafter called the "Company")
OF THE SECOND PART
WHEREAS the Directors of the Company have authorized the
granting of options to purchase shares in the capital of the Company to certain
of its directors and officers.
NOW THEREFORE THIS AGREEMENT WITNESSES:
DEFINITION
- ----------
1. In this Agreement the term "share" or "shares" means, as the
case may be, one or more Common shares without par value in the capital stock
of the Company as constituted at the date of this Agreement.
GRANTING OF OPTION
- ------------------
2. The Company hereby irrevocably grants to the Optionee, being
one of the directors or officers of the Company, a non-assignable, non-
transferable option to purchase 200,000 shares in the capital stock of the
Company (hereinafter called the "Option") at a price of $0.15 per share (the
"Option Price") on the terms and conditions hereinafter set forth.
<PAGE>
Page 2
EXERCISE OF OPTION
- ------------------
3. Subject to paragraph 8 hereof, the Option, or any part thereof,
may be exercised by the Optionee at any time, and from time to time for a five
year period from the date hereof by notice in writing to the company to that
effect. Any such notice given to the Company (an "Exercise Notice") shall
specify the number of shares with respect to which the Option is being
exercised and shall be accompanied by a certified cheque drawn on a Canadian
chartered bank in favour of the Company in full payment of the Option Price for
the number of shares then being purchased.
DELIVERY OF SHARE CERTIFICATE
- -----------------------------
4. The Company shall, within five business days after receipt of the
Exercise Notice deliver to the Optionee a share certificate representing the
number of shares with respect to which the Option was exercised and issued as
of the date of the Exercise Notice.
5. An Exercise Notice shall be deemed to have been given, if
delivered, on the date of delivery, or if mailed, on the date of mailing. A
mailed Exercise Notice shall be sent by prepaid registered mail addressed to
the Company at its Vancouver address.
OPTION ONLY
- -----------
6. Nothing herein contained or done pursuant hereto shall obligate
the Optionee to purchase and/or pay for any shares of the Company, except those
shares in respect of which the Optionee shall have exercised all or any part of
the Option granted hereunder.
7. The Optionee shall have no rights whatsoever as a shareholder in
respect of any of the shares optioned hereunder other than in respect of
optioned shares upon which the Optionee shall have exercised all or any part of
the Option granted hereunder and which shall have been taken up and paid for in
full.
APPROVAL
- --------
8. The Option granted hereunder is subject to approval by ordinary
resolution of the members of the Company entitled to vote at a general meeting
of the Company, passed prior to the exercise of the Option or any part thereof.
FILING WITH VANCOUVER STOCK EXCHANGE
- ------------------------------------
9. This Agreement is required to be filed with the Vancouver Stock
Exchange (the "Exchange") and the Optionee hereby agrees to be bound by any
modification of the terms and conditions of the Option as may be required by
the said Exchange.
<PAGE>
Page 3
CAPITAL REORGANIZATION
- ----------------------
10. In the event the authorized capital of the Company as presently
constituted is consolidated into a lesser number of shares or subdivided into a
greater number of shares, the number of shares in respect of which the Option
remains unexercised shall be decreased or increased proportionately as the case
may be, and the then prevailing purchase price to be paid by the Optionee for
each such share shall be correspondingly decreased or increased as applicable.
In the event the Company shall determine to amalgamate or merge with any other
company or companies (and the right to do so is hereby expressly reserved)
whether by way of statutory amalgamation, sale of its assets and undertaking,
or otherwise howsoever, then and in each such event the number of shares in the
corporation resulting from such amalgamation or merger in respect of which the
Option remains unexercised shall be such number of shares in that corporation
as would have been acquired by the Optionee pursuant to the amalgamation or
merger had the Option been fully exercised immediately prior to the date of
such amalgamation or merger and the then prevailing purchase price of the
shares to be paid by the Optionee shall be correspondingly decreased or
increased as applicable.
TERMINATTON OF OPTION
- ---------------------
11. The Option is not assignable or transferable and shall terminate
on the 30th day following the date upon which the Optionee ceases to be a
director or officer of the Company; provided, however, that if such cessation
is due to the death of the Optionee, the personal representative of the
Optionee shall have the right to exercise any unexercised part of the Option
for a period of one year following the date of death of the Optionee.
AMENDMENT OF MATERIAL TERMS
- ---------------------------
12. Any amendment to the Option is subject to approval by ordinary
resolution of the members of the Company entitled to vote at a general meeting
of the Company.
TIME OF THE ESSENCE
- -------------------
13. Time shall be of the essence of this Agreement.
SUCCESSORS
- ----------
14. This Agreement shall ensure to the benefit of and be binding upon
the heirs, executors and administrators of the Optionee and the successors of
the Company.
<PAGE>
Page 4
IN WITNESS WHEREOF the parties hereto have caused these presents
to be executed as of the day and year first above written.
SIGNED, SEALED AND DELIVERED by the )
Optionee in the presence of )
)
Jennifer Nestoruk )
- --------------------------------------- )
Name )
)
7731 Buller Avenue, )
- --------------------------------------- ) /S/ Victor Jones
Burnaby BC V5J 4T2 ) ------------------------
- --------------------------------------- ) Victor J.F. Jones
Victor Jones )
Address )
- --------------------------------------- )
Secretary )
- --------------------------------------- )
Occupation )
The Common Seal of IMMUNE NETWORK )
RESEARCH LTD. was hereunto affixed in the )
presence of: )
)
)
/S/ Victor Jones )
- --------------------------------------- )
Authorized Signatory ) c/s
)
)
/S/ Jennifer Nestoruk )
- --------------------------------------- )
Authorized Signatory )
<PAGE>
AGREEMENT 18
STOCK OPTION AGREEMENT
(Director or Officer)
THIS AGREEMENT made as of the 20th day of May, 1998
BETWEEN:
DONALD RIX
of 6141 St. Clair
Vancouver, British Columbia, V6N 2A6
(hereinafter called the "Optionee")
OF THE FIRST PART
AND:
IMMUNE NETWORK RESEARCH LTD., the company formed
as a result of the Amalgamation of Bobby Cadillac's
Food Corporation and Immune Network Research Ltd.,
having its principal place of business at Suite 900 - 475
Howe Street, Vancouver, British Columbia, Canada V6C 2B3
(hereinafter called the "Company")
OF THE SECOND PART
WHEREAS the Directors of the Company have authorized the granting
of options to purchase shares in the capital of the Company to certain of its
directors and officers.
NOW THEREFORE THIS AGREEMENT WITNESSES:
DEFINITION
- ----------
1. In this Agreement the term "share" or "shares" means, as the case
may be, one or more Common shares without par value in the capital stock of the
Company as constituted at the date of this Agreement.
GRANTING OF OPTION
- ------------------
2. The Company hereby irrevocably grants to the Optionee, being one
of the directors or officers of the Company, a non-assignable, non-transferable
option to purchase 200,000 shares in the capital stock of the Company
(hereinafter called the "Option") at a price of $0.15 per share (the "Option
Price") on the terms and conditions hereinafter set forth.
<PAGE>
Page 2
EXERCISE OF OPTION
- ------------------
3. Subject to paragraph 8 hereof, the Option, or any part thereof,
may be exercised by the Optionee at any time, and from time to time for a five
year period from the date hereof by notice in writing to the company to that
effect. Any such notice given to the Company (an "Exercise Notice") shall
specify the number of shares with respect to which the Option is being
exercised and shall be accompanied by a certified cheque drawn on a Canadian
chartered bank in favour of the Company in full payment of the Option Price for
the number of shares then being purchased.
DELIVERY OF SHARE CERTIFICATE
- -----------------------------
4. The Company shall, within five business days after receipt of the
Exercise Notice deliver to the Optionee a share certificate representing the
number of shares with respect to which the Option was exercised and issued as
of the date of the Exercise Notice.
5. An Exercise Notice shall be deemed to have been given, if
delivered, on the date of delivery, or if mailed, on the date of mailing. A
mailed Exercise Notice shall be sent by prepaid registered mail addressed to
the Company at its Vancouver address.
OPTION ONLY
- -----------
6. Nothing herein contained or done pursuant hereto shall obligate
the Optionee to purchase and/or pay for any shares of the Company, except those
shares in respect of which the Optionee shall have exercised all or any part of
the Option granted hereunder.
7. The Optionee shall have no rights whatsoever as a shareholder in
respect of any of the shares optioned hereunder other than in respect of
optioned shares upon which the Optionee shall have exercised all or any part of
the Option granted hereunder and which shall have been taken up and paid for in
full.
APPROVAL
- --------
8. The Option granted hereunder is subject to approval by ordinary
resolution of the members of the Company entitled to vote at a general meeting
of the Company, passed prior to the exercise of the Option or any part thereof.
FILING WITH VANCOUVER STOCK EXCHANGE
- ------------------------------------
9. This Agreement is required to be filed with the Vancouver Stock
Exchange (the "Exchange") and the Optionee hereby agrees to be bound by any
modification of the terms and conditions of the Option as may be required by
the said Exchange.
<PAGE>
Page 3
CAPITAL REORGANIZATION
- ----------------------
10. In the event the authorized capital of the Company as presently
constituted is consolidated into a lesser number of shares or subdivided into a
greater number of shares, the number of shares in respect of which the Option
remains unexercised shall be decreased or increased proportionately as the case
may be, and the then prevailing purchase price to be paid by the Optionee for
each such share shall be correspondingly decreased or increased as applicable.
In the event the Company shall determine to amalgamate or merge with any other
company or companies (and the right to do so is hereby expressly reserved)
whether by way of statutory amalgamation, sale of its assets and undertaking,
or otherwise howsoever, then and in each such event the number of shares in the
corporation resulting from such amalgamation or merger in respect of which the
Option remains unexercised shall be such number of shares in that corporation
as would have been acquired by the Optionee pursuant to the amalgamation or
merger had the Option been fully exercised immediately prior to the date of
such amalgamation or merger and the then prevailing purchase price of the
shares to be paid by the Optionee shall be correspondingly decreased or
increased as applicable.
TERMINATTON OF OPTION
- ---------------------
11. The Option is not assignable or transferable and shall terminate
on the 30th day following the date upon which the Optionee ceases to be a
director or officer of the Company; provided, however, that if such cessation
is due to the death of the Optionee, the personal representative of the
Optionee shall have the right to exercise any unexercised part of the Option
for a period of one year following the date of death of the Optionee.
AMENDMENT OF MATERIAL TERMS
- ---------------------------
12. Any amendment to the Option is subject to approval by ordinary
resolution of the members of the Company entitled to vote at a general meeting
of the Company.
TIME OF THE ESSENCE
- -------------------
13. Time shall be of the essence of this Agreement.
SUCCESSORS
- ----------
14. This Agreement shall ensure to the benefit of and be binding upon
the heirs, executors and administrators of the Optionee and the successors of
the Company.
<PAGE>
Page 4
IN WITNESS WHEREOF the parties hereto have caused these presents
to be executed as of the day and year first above written.
SIGNED, SEALED AND DELIVERED by the )
Optionee in the presence of )
)
Jennifer Nestoruk )
- ---------------------------------------- )
Name )
)
7731 Buller Avenue )
- ---------------------------------------- )
Address )
- ---------------------------------------- ) /s/Donald Rix
Burnaby, BC ) -------------------------
- ---------------------------------------- ) Donald Rix
Secretary )
- ---------------------------------------- )
Occupation )
The Common Seal of IMMUNE NETWORK )
RESEARCH LTD. was hereunto affixed in the )
presence of: )
)
)
/s/ Victor Jones )
- ---------------------------------------- ) c/s
Authorized Signatory )
)
)
/s/ Jennifer Nestoruk )
- ----------------------------------- )
Authorized Signatory )
<PAGE>
AGREEMENT 19
STOCK OPTION AGREEMENT
(Director or Officer)
THIS AGREEMENT made as of the 20th day of May, 1998
BETWEEN:
ROBERT J. GAYTON
of 5145 Ashfiled Road
West Vancouver, British Columbia, V7W 2X4
(hereinafter called the "Optionee")
OF THE FIRST PART
AND:
IMMUNE NETWORK RESEARCH LTD., the company formed
as a result of the Amalgamation of Bobby Cadillac's
Food Corporation and Immune Network Research Ltd.,
having its principal place of business at Suite 900 - 475
Howe Street, Vancouver, British Columbia, Canada V6C 2B3
(hereinafter called the "Company")
OF THE SECOND PART
WHEREAS the Directors of the Company have authorized the granting
of options to purchase shares in the capital of the Company to certain of its
directors and officers.
NOW THEREFORE THIS AGREEMENT WITNESSES:
DEFINITION
- ----------
1. In this Agreement the term "share" or "shares" means, as the case
may be, one or more Common shares without par value in the capital stock of the
Company as constituted at the date of this Agreement.
GRANTING OF OPTION
- ------------------
2. The Company hereby irrevocably grants to the Optionee, being one
of the directors or officers of the Company, a non-assignable, non-transferable
option to purchase 200,000 shares in the capital stock of the Company
(hereinafter called the "Option") at a price of $0.15 per share (the "Option
Price") on the terms and conditions hereinafter set forth.
<PAGE>
Page 2
EXERCISE OF OPTION
- ------------------
3. Subject to paragraph 8 hereof, the Option, or any part thereof,
may be exercised by the Optionee at any time, and from time to time for a five
year period from the date hereof by notice in writing to the company to that
effect. Any such notice given to the Company (an "Exercise Notice") shall
specify the number of shares with respect to which the Option is being
exercised and shall be accompanied by a certified cheque drawn on a Canadian
chartered bank in favour of the Company in full payment of the Option Price for
the number of shares then being purchased.
DELIVERY OF SHARE CERTIFICATE
- -----------------------------
4. The Company shall, within five business days after receipt of the
Exercise Notice deliver to the Optionee a share certificate representing the
number of shares with respect to which the Option was exercised and issued as
of the date of the Exercise Notice.
5. An Exercise Notice shall be deemed to have been given, if
delivered, on the date of delivery, or if mailed, on the date of mailing. A
mailed Exercise Notice shall be sent by prepaid registered mail addressed to
the Company at its Vancouver address.
OPTION ONLY
- -----------
6. Nothing herein contained or done pursuant hereto shall obligate
the Optionee to purchase and/or pay for any shares of the Company, except those
shares in respect of which the Optionee shall have exercised all or any part of
the Option granted hereunder.
7. The Optionee shall have no rights whatsoever as a shareholder in
respect of any of the shares optioned hereunder other than in respect of
optioned shares upon which the Optionee shall have exercised all or any part of
the Option granted hereunder and which shall have been taken up and paid for in
full.
APPROVAL
- --------
8. The Option granted hereunder is subject to approval by ordinary
resolution of the members of the Company entitled to vote at a general meeting
of the Company, passed prior to the exercise of the Option or any part thereof.
FILING WITH VANCOUVER STOCK EXCHANGE
- ------------------------------------
9. This Agreement is required to be filed with the Vancouver Stock
Exchange (the "Exchange") and the Optionee hereby agrees to be bound by any
modification of the terms and conditions of the Option as may be required by
the said Exchange.
<PAGE>
Page 3
CAPITAL REORGANIZATION
- ----------------------
10. In the event the authorized capital of the Company as presently
constituted is consolidated into a lesser number of shares or subdivided into a
greater number of shares, the number of shares in respect of which the Option
remains unexercised shall be decreased or increased proportionately as the case
may be, and the then prevailing purchase price to be paid by the Optionee for
each such share shall be correspondingly decreased or increased as applicable.
In the event the Company shall determine to amalgamate or merge with any other
company or companies (and the right to do so is hereby expressly reserved)
whether by way of statutory amalgamation, sale of its assets and undertaking,
or otherwise howsoever, then and in each such event the number of shares in the
corporation resulting from such amalgamation or merger in respect of which the
Option remains unexercised shall be such number of shares in that corporation
as would have been acquired by the Optionee pursuant to the amalgamation or
merger had the Option been fully exercised immediately prior to the date of
such amalgamation or merger and the then prevailing purchase price of the
shares to be paid by the Optionee shall be correspondingly decreased or
increased as applicable.
TERMINATTON OF OPTION
- ---------------------
11. The Option is not assignable or transferable and shall terminate
on the 30th day following the date upon which the Optionee ceases to be a
director or officer of the Company; provided, however, that if such cessation
is due to the death of the Optionee, the personal representative of the
Optionee shall have the right to exercise any unexercised part of the Option
for a period of one year following the date of death of the Optionee.
AMENDMENT OF MATERIAL TERMS
- ---------------------------
12. Any amendment to the Option is subject to approval by ordinary
resolution of the members of the Company entitled to vote at a general meeting
of the Company.
TIME OF THE ESSENCE
- -------------------
13. Time shall be of the essence of this Agreement.
SUCCESSORS
- ----------
14. This Agreement shall ensure to the benefit of and be binding upon
the heirs, executors and administrators of the Optionee and the successors of
the Company.
<PAGE>
Page 4
IN WITNESS WHEREOF the parties hereto have caused these presents
to be executed as of the day and year first above written.
SIGNED, SEALED AND DELIVERED by the )
Optionee in the presence of )
)
Jennifer Nestoruk )
- ---------------------------------------- )
Name )
)
7731 Buller Avenue )
- ---------------------------------------- )
Address )
- ---------------------------------------- ) /s/Robert Gayton
Burnaby, BC ) -------------------------
- ---------------------------------------- ) Robert J. Gayton
Secretary )
- ---------------------------------------- )
Occupation )
The Common Seal of IMMUNE NETWORK )
RESEARCH LTD. was hereunto affixed in the )
presence of: )
)
)
/s/ Victor Jones )
- ---------------------------------------- ) c/s
Authorized Signatory )
)
)
/s/ Jennifer Nestoruk )
- ----------------------------------- )
Authorized Signatory )
<PAGE>
Exhibit 3-3
Licensing Agreement dated April 23, 1993 with the San Diego
Regional Cancer Centre (now known at the Sidney Kimmel Cancer
Centre) to be filed by amendment
<PAGE>
Exhibit 3-4
Agreement dated December 15, 1997, as amended December 15, 1998
with ImmPheron, Inc. to be filed by amendment
<PAGE>
Exhibit 3-5
Option Agreement dated July 9, 1999 with the University of
British Columbia to be filed by amendment
<PAGE>
Exhibit 3-6
Joint Venture Agreement dated August 12, 1999 with Bridge
Pharma, Inc. to be filed by amendment
<PAGE>
Exhibit 3-7
Memorandum of Agreement dated August 23, 1999 with Skye
Boat, Ltd. to be filed by amendment
<PAGE>
Exhibit 3-8
Memorandum of Agreement dated August 17, 1999 with Inexsis
Inc. and a Management Team represented by Ping Quin to be
filed by amendment
<PAGE>
EXHIBIT 3-9
Executive Employment Agreement dated
May 21, 1999 with Allen Bain
<PAGE>
THIS EXECUTIVE EMPLOYMENT AGREEMENT is dated for reference the 21st day of May,
1999.
BETWEEN: IMMUNE NETWORK RESEARCH LTD., a company incorporated under the laws
of British Columbia, having its registered and records office
located at Suite 700, 625 Howe Street, Vancouver, British
Columbia V6C 2T6
(the "Company")
AND: ALLEN BAIN, of 2039 MacDonald Street, Vancouver, British Columbia
V6S 2L2
(the "Executive")
W H E R E A S:
A. The Company is a reporting company whose shares are posted and listed for
trading on the Vancouver Stock Exchange (the "VSE");
B. The Company wishes to retain the services of the Executive on the terms
and conditions of this Agreement,
THIS AGREEMENT WITNESSES that in consideration of the mutual covenants and
agreements hereinafter contained, the parties agree as follows:
1. EMPLOYMENT
1.1 The Company hereby employs the Executive as its president and chief
executive officer, or in such other capacity as the parties may mutually agree,
upon the terms and conditions of the Agreement.
1.2 The Executive shall carry out such duties as the Company's board of
directors may from time to time reasonably determine, including but not limited
to:
(a) ensuring that sufficient funds are available to facilitate the
implementation of the Company's goals and objectives or, if they
are not, notifying the Company's board of directors accordingly;
(b) providing his best efforts in raising equity and debt financing for the
Company's needs and to that end, preparing and making
presentations to the investment community;
(c) managing employees in the implementation of corporate strategies,
policies, procedures, financial forecasts and monitoring systems to
promote the efficient use of the Company's financial resources;
<PAGE>
Page 2
(d) developing and implementing the Company's internal policies,
procedures, rules and regulations;
(e) evaluating new business opportunities; and
(f) reporting to the Company's board of directors in the manner and
frequency as may be reasonably determined by the board of
directors.
2. TERM
2.1 The term of this Agreement shall be for a period of two years
commencing as of the date of this Agreement (the "Start Date"), subject to
earlier termination as provided for in this Agreement. This Agreement may be
renewed by mutual agreement of the parties.
2.2 In this Agreement, references to "Year" mean each 12 month period
commencing from the Start Date and each anniversary of the Start Date.
3. REMUNERATION ETC.
3.1 In consideration of the Executive's services under this Agreement, the
Company shall pay to the Executive the sum of $10,000 per month, payable in
arrears on the last business day of each month. It is intended that this salary
level be consistent with local industry standards, and therefore, it is agreed
that this amount is subject to renegotiation upon the request of either party
not earlier than six months from the Start Date.
3.2 The Executive shall be entitled to 3 weeks vacation during each Year of
this Agreement, to be taken at a time acceptable to both parties.
3.3 The Executive shall be entitled to participate in any stock option,
profit sharing, medical reimbursement, insurance or other employee benefit plan
as may be in effect from time to time subject to the participation standards
and other terms thereof. The Executive shall not have any cash entitlement
with respect to benefits the Executive has chosen not to receive.
3.4 The Company shall grant to the Executive or a company wholly owned by
him, subject to the acceptance of the VSE, stock options entitling the
Executive to purchase 500,000 common shares of the Company at an exercise price
of $0.15 per share or such other exercise price as may be required by the VSE.
Subject to VSE acceptance, the Company agrees to grant to the Executive or a
company wholly owned by him, on or near the date which is six (6) months
following the Start Date, additional stock options to increase the number of
common shares which may be purchased by the Executive pursuant to stock options
then held by him to 5% of the Company's then issued and outstanding share
capital, at a price equal to the minimum exercise price permitted by the VSE.
<PAGE>
Page 3
3.5 Subject to VSE acceptance, the Company consents to the transfer to the
Executive or a company wholly owned by him, of approximately 4.3 million common
shares currently held in escrow.
3.4 The Company shall reimburse the Executive for all reasonable and
pre-agreed expenses incurred by the Executive in furtherance of the Company's
business. The Executive shall, to the greatest extent possible, submit
statements and vouchers for all expenses claimed. The Executive acknowledges
that the Company will only reimburse those expenses that the Company considers
reasonable or to which the Company has granted prior authorization.
3.5 If the Company's board of directors should determine to insure the life
of the Executive, the Executive shall cooperate with the Company and the
insurer and do all reasonable things required to permit the placing or
continuance of such insurance coverage upon his life.
3.6 All payments to be made by the Company to the Executive and benefits
received by the Executive from the Company shall be subject to all applicable
statutory deductions for taxes, unemployment insurance and pension
contributions, and such other deductions as may be agreed upon by the parties
for private insurance, medical and dental plans.
4. CONFIDENTIAL INFORMATION
4.1 The Executive acknowledges that, in the course of providing services to
the Company, he will have access to confidential information concerning the
Company and its subsidiaries and, therefore, the Executive agrees that he will
not, either during the term of this Agreement or thereafter, divulge or utilize
to the detriment of the Company any of such confidential information so
obtained. The provisions of this section shall survive the expiry or earlier
termination of this Agreement.
5. DEVOTION OF TIME AND NON-COMPETITION
5.1 During the term and any renewal of this Agreement, the Executive shall
devote sufficient time and attention to the Company's business as may be
required to properly perform his duties hereunder.
5.2 During the term and any renewal of this Agreement and for a period of
one year thereafter, the Executive agrees that he shall not engage in any other
business activities or serve as an officer or director in any company or other
entity which is engaged in the pharmaceutical development of chemical analogs
that are closely related to those of the Company or any of its subsidiaries.
5.3 The provisions of this section shall survive the expiry or earlier
termination of this Agreement.
<PAGE>
Page 4
6. TERMINATION OF AGREEMENT
6.1 This Agreement may be terminated by the Company, without notice or
payment in lieu of notice, during the period (the "Probationary Period") which
commences on the Start Date and continues until the earlier to occur of:
(a) the date which is 90 days from the Start Date; and
(b) the date on which the Company enters into a material, binding agreement
regarding the Company's acquisition, through a purchase, license or
otherwise, of a drug discovery project.
6.2 This Agreement may be terminated by the Executive upon one month's
notice to the Company.
6.3 If this Agreement is terminated during the Probationary Period, the
Executive agrees to transfer all escrow shares then held by him as directed by
the Company's board of directors, subject to VSE acceptance, for a purchase
price equal to the Executive's acquisition cost for such escrow shares.
6.4 After the completion of the Probationary Period, this Agreement may be
terminated by the Company only as follows:
(a) for cause (as defined in subsection 6.5); or
(b) upon notice to the Executive together with a lump sum payment in an
amount equal to 50% of the Executive's then current annual
salary.
6.5 For the purposes of subsection 6.4 (a), "cause" shall mean any of the
following events:
(a) the Executive is dishonest in dealing with the Company or his conduct
is in any way prejudicial to the Company or materially and adversely
affects his ability to perform his duties hereunder;
(b) the Executive fails to perform assigned duties in a manner acceptable
to the Company, which failure is not fully remedied by the Executive
within 10 business days after notice in writing thereof has been given
by the Company to the Executive;
(c) the Executive breaches a material term of this Agreement; or
(d) the Executive is convicted of a crime involving theft or fraud.
<PAGE>
Page 5
In the event of a proposed termination pursuant to subparagraph 6.5(a) or (c),
the Company will notify the Executive of the circumstances entitling the
Company to terminate this Agreement and may, at its sole discretion, provide
the Executive with an opportunity to respond; PROVIDED that the foregoing shall
not restrict the Company from exercising its right to immediately terminate
this Agreement for any of the reasons described in this subparagraph if the
Company reasonably believes such action necessary.
6.6 Any decision by the Company to terminate this Agreement must be based
upon a resolution to that effect passed by the Company's board of directors.
6.7 If the Executive dies during the term or any renewal of this Agreement,
the Company shall pay to the estate of the Executive the compensation which
otherwise would be payable to such Executive up to the end of the month in
which the Executive's death occurs.
7. MISCELLANEOUS
7.1 All notices and other communications required or permitted by this
Agreement to be given or made by either party to the other shall be given or
made in writing and be delivered by hand or registered mail (except during a
postal disruption) to the parties at the addresses set forth in this Agreement,
or at such other address as the parties designate by notice in writing to the
other. Proof of delivery in such manner shall constitute proof of receipt.
7.2 This Agreement may not be assigned by either party without the prior
written consent of the other.
7.3 This Agreement shall be construed under and governed solely by the laws
of British Columbia and the law of Canada applicable therein.
7.4 This Agreement represents the entire agreement between the parties
regarding the Executive's employment with the Company and supersedes sections 1
and 2 of the letter agreement dated May 13, 1999 between the parties. This
Agreement may not be amended or otherwise modified except by an instrument in
writing signed by both parties.
7.5 This Agreement shall enure to the benefit of and be binding upon the
parties and their respective successors and permitted assigns.
7.6 This Agreement is subject to the Company's receipt of notice from the
VSE of their acceptance of the filing of this Agreement. Once fully executed,
the Company agrees to promptly
<PAGE>
Page 6
file this Agreement with the VSE and to use its best efforts to obtain the
required VSE acceptance.
IN WITNESS WHEREOF the parties have executed this Agreement as of the date
first above written notwithstanding its actual date of execution.
IMMUNE NETWORK RESEARCH LTD.
by its authorized signatory:
/s/ Director
SIGNED, SEALED AND DELIVERED )
by ALLEN BAIN in the presence of: )
)
/s/ B. Payne ) /s/ Allen Bain
- ----------------------------------- -----------------------
Signature ) ALLEN BAIN
Brendan Payne )
- ----------------------------------- )
Witness Name - Please Print )
2724 Fairview Crescent )
- ----------------------------------- )
Address )
Vancouver, B.C. V6T 2B9 )
- ----------------------------------- )
<PAGE>
EXHIBIT 3-10
Loan Agreement dated September 13, 1999 with Allen Bain
<PAGE>
LOAN AGREEMENT
THIS AGREEMENT is made as of the 13th day of September, 1999.
BETWEEN: IMMUNE NETWORK RESEARCH LTD., a corporation amalgamated under the
laws of British Columbia, having an office located at 3650
Wesbrook Mall, Vancouver, British Columbia, V6S 2L2
(the "Lender")
AND: ALLEN BAIN, of 2039 MacDonald Street, Vancouver, British Columbia,
V6K 3Y2
(the "Borrower")
WHEREAS the Lender has agreed to lend the Borrower the sum of $55,000 on the
terms and conditions of this Agreement,
THIS AGREEMENT WITNESSES that in consideration of the mutual covenants herein
contained, the parties agree as follows:
1. LOAN FACILITY
Subject to the terms of this Agreement, the Lender agrees to lend the Borrower
the sum of $55,000 (the "Loan").
2. INTEREST
The Borrower shall pay interest on the principal sum of the Loan outstanding
from time to time, calculated and paid annually from the date the principal sum
is advanced, at a rate equal to Revenue Canada's prescribed rate of interest in
effect from time to time.
3. COSTS
Each party shall be responsible for its own costs in respect of the Loan, this
Agreement and all related transactions.
4. REPAYMENT
The Loan and all accrued but unpaid interest thereon shall be repaid by the
Borrower not later than the date which is 18 months from the date on which the
principal sum of the Loan is advanced to the Borrower. The Lender and Borrower
agree that repayment of the Loan will be offset against amounts owing by the
Lender to the Borrower from time to time with respect to premises rented by the
Lender from the Borrower.
<PAGE>
Page 2
5. SECURITY
As security for payment of all the Borrower's indebtedness and liabilities under
this Agreement, the Borrower shall execute and deliver to the Lender:
(a) a promissory note in the form attached hereto as Schedule "A" (the
"Note"); and
(b) an agreement in the form attached hereto as Schedule AB" (the APledge
Agreement") regarding the pledge and hypothecation of 4,335,555 escrow
shares of the Lender (the AEscrow Shares") to be acquired by the
Borrower.
6. REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lender as follows:
(a) upon their execution, this Agreement, the Pledge Agreement and the Note
will constitute a legal, valid and binding obligation of the Borrower
enforceable against him in accordance with their terms;
(b) the Borrower is not in breach of or in default under any obligation in
respect of borrowed money and the execution and delivery of this
Agreement, the Pledge Agreement and the Note and the performance of
their terms will not be, or result in, a violation or breach of, or
default under, any law, agreement or instrument to which he is a party
or may be bound; and
(c) no litigation or administrative proceedings before any court or
governmental authority are presently pending, or have been threatened
in writing, against or affecting the Borrower or any of his assets
which could have a material adverse effect on his assets.
7. REGULATORY APPROVAL
This Agreement is subject to its acceptance for filing by the Vancouver Stock
Exchange.
8. NOTICES
Notices, demands and other communications required or permitted to be given in
writing hereunder must be given in writing and delivered by hand as follows:
if to the Borrower: Allen Bain
2039 MacDonald Street
Vancouver, B.C. V6K 3Y2
<PAGE>
Page 3
if to the Lender: Immune Network Research Ltd.
3650 Wesbrook Mall
Vancouver, BC V6S 2L2
Either party may from time to time change its address for notice by notice to
the other party given in the manner aforesaid, effective upon receipt. Any
change of address under this section 8 will also be a change of address with
respect to such address as it appears on any schedule or document ancillary
hereto.
9. SUCCESSORS AND ASSIGNS
This Agreement shall enure to the benefit of and be binding upon the parties
and their respective successors and permitted assigns.
10. WAIVERS
No failure or delay on the Lender's part in exercising any power or right
hereunder shall operate as a waiver thereof. The Lender's rights and remedies
hereunder are cumulative and not exclusive of any rights or remedies provided
by law. Time is to be of the essence.
11. INVALIDITY
If at any time any one or more of the provisions hereof is or becomes invalid,
illegal or unenforceable in any respect under any law, the validity, legality
and enforceability of the remaining provisions hereof shall not in any way be
affected or impaired thereby.
12. GOVERNING LAWS
This Agreement shall be governed by and interpreted in accordance with the laws
of the Province of British Columbia and the laws of Canada applicable therein.
13. AMENDMENT
This Agreement may be changed only in writing signed by both parties.
14. SCHEDULES
Each of the schedules hereto shall be deemed fully a part of this Agreement.
15. CURRENCY
All references herein to "dollars" or "$" are to Canadian dollars.
<PAGE>
Page 4
16. INDEPENDENT LEGAL ADVICE
The Borrower acknowledges that Maitland & Company represents the Lender in this
transaction and that Maitland & Company has recommended that he obtain
independent legal advice before signing this Agreement.
17. COUNTERPART EXECUTION AND DELIVERY BY FAX
This Agreement may be signed in counterparts, each of which so signed shall be
deemed to be an original, and both of which together shall constitute one and
the same instrument. This Agreement may be delivered by fax.
IN WITNESS WHEREOF the parties have executed this Agreement on the date first
above written notwithstanding its actual date of execution.
IMMUNE NETWORK RESEARCH LTD.
By its authorized signatory:
/s/ROBERT GAYTON
SIGNED, SEALED and DELIVERED
by ALLEN BAIN
in the presence of:
Name ) /s/Allen Bain
) -----------------
) Allen Bain
Address )
)
<PAGE>
SCHEDULE "A"
NON NEGOTIABLE
PROMISSORY NOTE
AMOUNT: $55,000 DUE: March ____, 2001
FOR VALUE RECEIVED the undersigned promises to pay to or to the order of IMMUNE
NETWORK RESEARCH LTD. (the "Payee"), at 3650 Wesbrook Mall, Vancouver, British
Columbia, V6S 2L2, or at such other place as the Payee may direct in writing,
the sum of $55,000 (the "Principal Sum") together with interest at a rate equal
to Revenue Canada's prescribed rate of interest in effect from time to time,
calculated and payable annually, both after and before maturity. The Principal
Sum and all accrued and unpaid interest thereon shall be due and payable in
full on March , 2001.
------
If the maker becomes insolvent or bankrupt or subject to the provisions of the
Bankruptcy Act or other similar statutes, federal or provincial, or goes into
liquidation either voluntarily or under an order of a court of competent
jurisdiction, or makes a general assignment for the benefit of his creditors or
otherwise acknowledge his insolvency, the whole Principal Sum and all interest
accrued thereon remaining unpaid shall become due and payable forthwith without
demand.
The undersigned waives presentment, demand, notice, protest and notice of
dishonour and all other demands and notices in connection with the delivery,
acceptance, performance, default or enforcement of this promissory note.
Provided that this promissory note is not in default, the maker shall have the
right to prepay the Principal Sum and accrued interest thereon in whole or in
part at any time without notice, penalty or bonus.
DATED at Vancouver, British Columbia the day of September, 1999
---------
- ------------------------------ ---------------------------
Witness Signature ALLEN BAIN
<PAGE>
SCHEDULE "B"
THIS HYPOTHECATION AND PLEDGE AGREEMENT is made as of the 13th day of
September, 1999.
BETWEEN: IMMUNE NETWORK RESEARCH LTD., a corporation amalgamated under the
laws of the Province of British Columbia, having an office located
at 3650 Wesbrook Mall, Vancouver, British Columbia, V6S 2L2
(the "Lender")
AND: ALLEN BAIN, of 2039 MacDonald Street, Vancouver, British Columbia,
V6K 3Y2
(the "Borrower")
WHEREAS:
A. The Vancouver Stock Exchange (the "Exchange") has approved the transfer
to the Borrower of 4,335,555 principal's escrow shares in the capital stock of
the Lender (the "Escrow Shares");
B. The Lender has agreed to lend the sum of $55,000 to the Borrower, on the
terms and conditions of an agreement (the "Loan Agreement") dated September 13,
1999 made between the Lender and the Borrower;
C. The Borrower has agreed to hypothecate and pledge the Escrow Shares as
collateral security for payment of the Promissory Note,
THIS AGREEMENT WITNESSES that in consideration of the mutual covenants herein
contained, the parties agree each with the other as follows:
1. The Borrower mortgages, pledges, hypothecates and charges the Escrow
Shares to the Lender, effective immediately upon the Borrower's acquisition of
the Escrow Shares, to be held by the Lender as collateral security for the
payment by the Borrower of all amounts due and owing under the Loan Agreement.
2. The Borrower covenants, agrees, represents and warrants that:
(a) he will promptly complete his acquisition of the Escrow Shares and
thereupon will be the sole and beneficial owner of the Escrow Shares
free and clear of any encumbrances, claims or options, and will have
the full right, power and authority to pledge and create a security
interest in and to the Escrow Shares;
<PAGE>
(b) if required by the Lender, he will give written notice to the Lender's
registrar and transfer agent giving them irrevocable instructions to
deliver certificates representing the Escrow Shares to Maitland &
Company, as the Escrow Shares are released from escrow;
(c) in the event of default by the Borrower (as defined in section 3
below), he will sign all required assignment agreements and instruments
to the person(s) designated by the Lender;
(d) in the event of default, the Lender will be entitled to exercise all
rights and powers and perform all acts of ownership with respect to the
Escrow Shares, and without limitation, the Lender may sell all or any
part of the Escrow Shares as a private sale, as fully and effectually
as if the Lender was the absolute owner thereof;
(e) the Lender shall not be bound under any circumstances to realize upon
any of the Escrow Shares or cause any Escrow Shares to be sold, and
shall not be responsible for any loss occasioned by any sale or by the
retention of or refusal to sell the Escrow Shares or any part thereof;
nor shall the Lender be obligated to collect or see to the payment of
interest or dividends thereon;
(f) the Lender's secretary is hereby appointed the attorney of the
Borrower for the purposes of transferring all or any part of the Escrow
Shares and the completion of all documents required to effect
transfer(s) of the Escrow Shares;
(g) in the event of default, the Lender shall not be obligated to exhaust
its recourse against the Borrower or any other party or against any
other security it might hold before realizing on or otherwise dealing
with the Escrow Shares; the Lender may realize upon the Escrow Shares
in such manner as it considers desirable, and the Lender may deal with
the Escrow Shares and the Borrower as it may see fit, without prejudice
to the right of the Lender to hold, deal with and realize on the Escrow
Shares in any manner which it considers desirable;
(h) the Lender need not give any notice in connection with, or collect or
enforce any rights under this Agreement or the Loan Agreement;
(i) he will indemnify the Lender from and against all expenses,
liabilities, claims and demands arising out of the holding of the
Escrow Shares or anything lawfully done hereunder; and
(j) he will promptly execute, acknowledge and deliver all and every such
further acts, deeds, or assurances as the Lender may reasonably require
for the better charging, pledging or securing to the Lender of the
Escrow Shares.
3. For the purposes of this Agreement, an event of default shall include:
<PAGE>
(a) a default by the Borrower in any payment of principal or interest under
the Loan Agreement; or
(b) an assignment by the Borrower for the benefit of his creditors, or a
declaration of bankruptcy against the Borrower, or the making of any
order of execution against the property of the Borrower or any part
thereof which remains unsatisfied for a period of 30 days or more.
4. Until an event of default occurs, the Borrower shall be entitled to
receive and exercise all rights associated with the Escrow Shares, including
the right to vote the same and receive dividends.
5. When the amounts due under the Loan Agreement have been paid in full,
the Lender shall execute and deliver such instruments as may be necessary to
cancel this Pledge and Hypothecation Agreement and shall advise its registrar
and transfer agent that repayment has been made if the notice described under
subsection 2(b) has been delivered.
6. This Pledge and Hypothecation Agreement is without prejudice to the
right of the Lender at its option to enforce payment of the amounts due under
the Loan Agreement, by suit or otherwise.
7. This Agreement shall bind and enure to the benefit of the heirs,
executors, administrators, successors and assigns of the parties.
8. The Borrower acknowledges that Maitland & Company represents the Lender
in this transaction and that Maitland & Company has recommended that he obtain
independent legal advice before signing this Agreement.
9. This Agreement may be signed in counterparts, each of which so signed
shall be deemed to be an original, and both of which together shall constitute
one and the same instrument. This Agreement may be delivered by fax.
IN WITNESS WHEREOF the parties have executed this Agreement as of the day and
year first above written notwithstanding its actual date of execution.
IMMUNE NETWORK RESEARCH LTD.
by its authorized signatory:
- ---------------------------
<PAGE>
SIGNED, SEALED and DELIVERED )
by ALLEN BAIN )
in the presence of: )
)
) -------------------------
Name ) ALLEN BAIN
)
Address )
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the Company certifies that it meets all of the requirements for filing on
Form 20-F and has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized.
IMMUNE NETWORK RESEARCH LTD.
By: /s/ ALLEN BAIN
--------------------------------------
ALLEN BAIN, President, Chief Executive
Officer & Director
Dated: October 28, 1999
Vancouver, British Columbia
Canada
<PAGE>
