<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 30, 1999
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
ANTIGENICS INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C> <C>
DELAWARE 2836 06-1562417
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
630 FIFTH AVENUE, SUITE 2100
NEW YORK, NEW YORK 10111
(212) 332-4774
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
GARO H. ARMEN, PH.D.
CHIEF EXECUTIVE OFFICER
ANTIGENICS INC.
630 FIFTH AVENUE, SUITE 2100
NEW YORK, NEW YORK 10111
(212) 332-4774
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
COPIES TO:
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<S> <C>
MICHAEL LYTTON, ESQ. DANIELLE CARBONE, ESQ.
PAUL KINSELLA, ESQ. SHEARMAN & STERLING
PALMER & DODGE LLP 599 LEXINGTON AVENUE
ONE BEACON STREET NEW YORK, NEW YORK 10022
BOSTON, MASSACHUSETTS 02108 (212) 848-4000
(617) 573-0100
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration number of the earlier effective
registration statement for the same offering. [ ]
---------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. [ ]
---------------
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. [ ]
---------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
============================================================================================================
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED PRICE(1) REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stock, $.01 par value per share...................... $46,000,000 $12,788
============================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) under the Securities Act of 1933.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE> 2
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
MAY NOT SELL THESE SECURITIES UNTIL THE SECURITIES AND EXCHANGE COMMISSION
DECLARES OUR REGISTRATION STATEMENT EFFECTIVE. THIS PROSPECTUS IS NOT AN
OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED NOVEMBER 30, 1999
PRELIMINARY PROSPECTUS
SHARES
ANTIGENICS INC. [LOGO]
COMMON STOCK
$ PER SHARE
- --------------------------------------------------------------------------------
- - Antigenics Inc. is offering shares of its common stock.
- - We anticipate that the initial public offering price will be between $
and $ per share.
- - This is a firm commitment initial public offering and no public market
currently exists for our shares.
- - Proposed trading symbol: Nasdaq
National Market - AGEN
----------------------
THIS INVESTMENT INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE 8.
================================================================================
<TABLE>
<CAPTION>
PER SHARE TOTAL
--------- -----------
<S> <C> <C>
Public offering price....................................... $ $
Underwriting discount....................................... $ $
Proceeds to Antigenics...................................... $ $
</TABLE>
================================================================================
The underwriters have a 30-day option to purchase up to
additional shares of common stock from us to cover over-allotments, if any.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
U.S. BANCORP PIPER JAFFRAY ROBERTSON STEPHENS
THE DATE OF THIS PROSPECTUS IS , 2000.
<PAGE> 3
[PICTURE OF VIAL OF ONCOPHAGE]
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Summary..................................................... 4
Risk Factors................................................ 8
Use of Proceeds............................................. 19
Dividend Policy............................................. 19
Forward-Looking Statements.................................. 20
Capitalization.............................................. 21
Dilution.................................................... 22
Selected Consolidated Financial Data........................ 23
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 25
Business.................................................... 31
Management.................................................. 48
Certain Relationships and Related Transactions.............. 54
Principal Stockholders...................................... 55
Description of Capital Stock................................ 56
Shares Eligible For Future Sale............................. 58
Underwriting................................................ 59
Legal Matters............................................... 60
Experts..................................................... 60
Where You Can Find More Information......................... 60
Index To Consolidated Financial Statements.................. F-1
</TABLE>
----------------------
You should rely only on the information contained in this prospectus. We have
not, and the underwriters have not, authorized any other person to provide you
with different information. This prospectus is not an offer to sell, nor is it
seeking an offer to buy, the securities in any state where the offer or sale is
not permitted. The information in this prospectus is complete and accurate as of
the date in the front cover, but the information may have changed since that
date.
In this prospectus, Antigenics Inc., together with Antigenics L.L.C., is
referred to as "we," "us" or "Antigenics," unless the context indicates
otherwise.
3
<PAGE> 5
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SUMMARY
The items in the following summary are described in more detail later in this
prospectus. This summary provides an overview of selected information and does
not contain all the information you should consider. Therefore, you should also
read the more detailed information set out in this prospectus, including the
financial information. Except as set forth in the consolidated financial
statements or as otherwise specified in this prospectus, all information in this
prospectus gives effect to:
- the $39.2 million private placement completed in November 1999; and
- the change from a limited liability company to a corporation which
will occur concurrently with this offering.
In addition, unless otherwise stated, all information in this prospectus assumes
no exercise of the underwriters' over-allotment option.
BUSINESS OF ANTIGENICS
Antigenics is engaged in the discovery and development of a family of novel
immunotherapeutics for the treatment of life threatening and chronic medical
conditions. Immunotherapeutics are drugs that work by modulating the immune
system to fight disease. We are currently evaluating our lead immunotherapeutic,
Oncophage, in six separate phase II or phase I/II clinical trials in four
different cancers, and we expect to start a pivotal phase III trial by mid-2000.
We are also developing immunotherapeutics to treat infectious diseases, such as
genital herpes, and autoimmune disorders, such as diabetes and multiple
sclerosis. Based upon our scientific and drug development skills, our technology
platform and our strategic expertise, we intend to become a leader in drug
discovery, development and commercialization.
Our immunotherapeutics are based on a specific class of proteins known as heat
shock proteins. Heat shock proteins are present in all cells throughout the body
and published research suggests that they play a central role in the generation
of immune responses. We believe that when we inject our heat shock protein-based
immunotherapeutics into patients, they elicit a powerful immune response. We
believe this immune response is capable of systemically targeting and killing
cancers or other diseased cells from which the specific heat shock proteins were
derived.
We believe our heat shock protein technology can be used broadly for the
treatment of a wide variety of diseases. Each of our heat shock protein-based
immunotherapeutics includes a heat shock protein that is constant and a
repertoire of peptides that varies depending on the target disease. For diseases
such as cancer, which vary among individuals, we use heat shock protein-peptide
complexes derived from a patient's own cancer and therefore our
immunotherapeutics are patient-specific, or autologous. For each infectious
disease which is generally caused by a common pathogen, we intend to produce a
disease-specific immunotherapeutic using that same common pathogen. Our heat
shock protein technology has been shown to stimulate the immune system to treat
cancers in a wide range of preclinical studies. In addition, over one dozen
scientific institutions world-wide have independently confirmed various aspects
of our technology platform.
Our lead immunotherapeutic, Oncophage, consists of purified, patient-specific
heat shock protein-peptide complexes and is designed to elicit an immune
response to a patient's cancer. The manufacturing process for Oncophage begins
when a patient's tumor is surgically removed and shipped frozen by overnight
courier to our manufacturing facility. Using our proprietary methods, we purify
Oncophage from the tumor tissue in a process that takes less than 10 hours. We
then ship Oncophage frozen to the hospital for administration to the patient. A
patient is initially injected with Oncophage four to six weeks after surgery.
The typical course of treatment involves a series of injections into the skin
once per week for four to six weeks.
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4
<PAGE> 6
- --------------------------------------------------------------------------------
To date, we have treated approximately 140 advanced stage cancer patients with
Oncophage in our clinical trial programs. We have initially targeted cancers for
which there are limited or no treatment alternatives and tumor types and stages
of disease that involve resectable tumors. Further, we have targeted cancers and
stages of disease that we believe can be evaluated in clinical trials with near
term endpoints to permit rapid and efficient completion of clinical trials and
submission of regulatory filings. We are currently conducting separate phase II
or phase I/II clinical trials with Oncophage for the treatment of:
- renal cell carcinoma, a type of kidney cancer;
- metastatic melanoma, a type of skin cancer;
- colorectal cancer, or cancer of the colon and rectum; and
- gastric cancer, or stomach cancer.
In addition, we are planning to start phase II clinical trials evaluating
Oncophage as a treatment for sarcoma, a type of soft tissue cancer, and low
grade indolent non-Hodgkin's lymphoma, a type of cancer that originates in the
lymph tissue. We also expect to begin a pivotal phase III trial for Oncophage as
a treatment for renal cell carcinoma by mid-2000.
Preliminary results from our completed and ongoing clinical trials indicate that
Oncophage is generally safe and well tolerated. These results also demonstrate
preliminary indications of clinical benefit in a number of patients. For
example, in renal cell carcinoma, we have shown that Oncophage has achieved a
response rate, a common measure of clinical benefit, comparable to that of the
existing approved treatment without the significant side effects associated with
that treatment. We have also shown that in all patients who responded
clinically, the number of immune cells increased after treatment with Oncophage.
Moreover, we have shown that we can manufacture Oncophage consistently and in
sufficient quantities from most tumor types.
In addition to cancer, we believe our heat shock protein derived
immunotherapeutics may be effective in treating various infectious diseases and
autoimmune disorders. Our immunotherapeutics for treating infectious diseases
will consist of heat shock proteins complexed to peptides that are produced by
disease-causing pathogens. We have targeted genital herpes as our first
infectious disease indication and are conducting preclinical studies. We
anticipate filing an Investigational New Drug Application, or IND, with the
United States Food and Drug Administration, or FDA, for genital herpes in 2000.
We are also researching the applicability of heat shock proteins to treat
autoimmune disorders like diabetes and multiple sclerosis. We have demonstrated
in a number of animal models that heat shock proteins administered in high doses
can turn off the misguided immune responses responsible for several autoimmune
disorders.
OFFICE LOCATION
Our principal operations are located in Woburn, Massachusetts and our executive
offices are located in New York, New York. The address for our executive offices
is 630 Fifth Avenue, Suite 2100, New York, New York 10111 and our telephone
number is (212) 332-4774.
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5
<PAGE> 7
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THE OFFERING
Common stock offered by us.......... shares
Common stock outstanding after this
offering.......................... shares. This number
excludes shares of common
stock issuable upon exercise of
options outstanding at ,
1999, with a weighted average
exercise price of $ per
share and shares issuable
upon exercise of warrants outstanding
at , 1999, with an
exercise price of $ per
share.
Offering price...................... $ per share
Use of proceeds..................... To fund clinical trials; to fund
research and development of our
immunotherapeutics; to increase our
manufacturing capacity; and for
general corporate purposes.
You should read our discussion under
"Use of Proceeds."
Proposed Nasdaq National Market
symbol............................ AGEN
CORPORATE BACKGROUND AND MERGER
Our business was formed in March 1994. We currently operate as a limited
liability company, Antigenics L.L.C. Concurrently with the completion of this
offering, Antigenics L.L.C. will change its structure from a limited liability
company to a corporation. This change will occur by merging Antigenics L.L.C.
with and into Antigenics Inc., a newly formed Delaware corporation. Membership
units, options and warrants in Antigenics L.L.C. will be exchanged in the merger
for shares of Antigenics Inc. common stock and options and warrants exercisable
for shares of Antigenics Inc. common stock.
This prospectus contains our trademark, Oncophage(R). Each trademark, trade name
or service mark of any other company appearing in this prospectus belongs to its
holder.
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6
<PAGE> 8
- --------------------------------------------------------------------------------
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
MARCH 31, 1994 MARCH 31, 1994
(DATE OF NINE MONTHS ENDED (DATE OF
INCEPTION) TO YEAR ENDED DECEMBER 31, SEPTEMBER 30, INCEPTION) TO
DECEMBER 31, ------------------------------------- ------------------------- SEPTEMBER 30,
1994 1995 1996 1997 1998 1998 1999 1999
-------------- ------- ------- ------- ------- ----------- ----------- --------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Revenue................... $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
Operating expenses:
Research and
development........... (112) (742) (1,569) (2,548) (5,908) (4,072) (6,926) (17,806)
General and
administrative........ (56) (2,453) (1,042) (1,375) (2,735) (1,823) (3,825) (11,486)
Depreciation and
amortization.......... (15) (40) (79) (202) (360) (273) (726) (1,422)
----- ------- ------- ------- ------- ------- -------- --------
Loss from operations...... (183) (3,235) (2,690) (4,125) (9,003) (6,168) (11,477) (30,714)
Interest income, net...... -- 8 281 481 736 580 489 1,996
Non-operating income...... -- -- 250 -- -- -- -- 250
----- ------- ------- ------- ------- ------- -------- --------
Net loss(1)............... $(183) $(3,227) $(2,159) $(3,644) $(8,267) $(5,588) $(10,988) $(28,468)
===== ======= ======= ======= ======= ======= ======== ========
UNAUDITED PRO FORMA
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Pro forma net loss(2).....
Pro forma net loss per
common share, basic and
diluted(2)..............
Pro forma weighted average
shares outstanding,
basic and diluted(2)....
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF SEPTEMBER 30, 1999
---------------------------- ----------------------------------------------
PRO FORMA,
1996 1997 1998 HISTORICAL PRO FORMA(3) AS ADJUSTED(4)
------ ------- ------- ----------- ------------- --------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents............ $9,588 $13,086 $22,168 $12,612 $50,882 $
Total current assets................. 9,639 13,246 22,447 13,226 51,496
Total assets......................... 10,041 14,090 26,636 21,280 59,550
Total current liabilities............ 883 878 2,285 2,170 2,170
Long-term liabilities, less current
portion............................ -- -- 709 2,368 2,368
Members' equity/stockholders'
equity............................. 9,158 13,212 23,641 16,742 55,012
</TABLE>
- ---------------------------------------------
(1)Since we have operated historically as a limited liability company, in
accordance with federal, state and local income tax regulations which provide
that no income taxes are levied on United States limited liability companies
and each member of the company is individually responsible for reporting the
member's share of our net income or loss, we do not provide for income taxes
in our consolidated financial statements.
(2)The pro forma consolidated statements of operations data give effect to the
change from a limited liability company to a corporation as though this event
occurred as of January 1, 1998. Each unit of members' equity outstanding will
be exchanged for shares of common stock. The pro forma consolidated
statements of operations data are unaudited and reflect adjustments which are
necessary, in our management's opinion, for a fair presentation of our
consolidated results of operations on a pro forma basis. Pro forma weighted
average shares outstanding used for computing pro forma diluted loss per
common share are the same as those used for computing pro forma basic loss
per common share because our options are not included in the calculation
since the inclusion of such potential common shares would be antidilutive.
(3)The pro forma consolidated balance sheet data give effect to the unaudited
pro forma adjustments as described in footnote (2) and the $39.2 million
private placement completed in November 1999 as though these events occurred
as of September 30, 1999. Pro forma cash and cash equivalents and
stockholders' equity do not include $653,000 in subscriptions receivable and
$293,000 of private placement expenses.
(4)The pro forma as adjusted consolidated balance sheet data give effect to the
unaudited pro forma adjustments as described in footnote (3) and are adjusted
to reflect the issuance of shares of common stock at $ per
share, after deducting our estimated offering expenses and the underwriting
discount, as though these events occurred as of September 30, 1999.
- --------------------------------------------------------------------------------
7
<PAGE> 9
RISK FACTORS
You should carefully consider the following risk factors before you decide to
buy our common stock. If any of these risks actually occur, our business,
financial condition, operating results or cash flows could be materially
adversely affected. This could cause the trading price of our common stock to
decline, and you may lose part or all of your investment.
RISKS RELATED TO OUR BUSINESS
WE DO NOT CURRENTLY GENERATE ANY REVENUE, AND WE CANNOT GUARANTEE THAT WE WILL
EVER COMMERCIALIZE ANY OF OUR IMMUNOTHERAPEUTICS AND GENERATE REVENUE IN THE
FUTURE.
WE MUST RECEIVE SEPARATE REGULATORY APPROVAL FOR EACH OF OUR
IMMUNOTHERAPEUTICS IN EACH INDICATION BEFORE THEY CAN BE SOLD COMMERCIALLY IN
THE UNITED STATES OR INTERNATIONALLY.
To obtain regulatory approvals, we must, among other requirements, complete
clinical trials demonstrating that a particular immunotherapeutic is safe and
effective. Because Oncophage is our only immunotherapeutic in clinical trials,
any delays or difficulties we encounter in these clinical trials may have a
significant adverse impact on our operations and cause our stock price to
decline significantly. We have limited clinical data. Future clinical trials may
not show that Oncophage is safe and effective. In addition, our clinical trials
of Oncophage might be delayed or halted for various reasons, including:
- Oncophage may not appear to be more effective than current
therapies;
- Oncophage may have unforeseen adverse side effects;
- the time required to determine efficacy may be longer than expected;
- patients may die during a clinical trial because their disease is
too advanced or because they experience medical problems that may
not be related to Oncophage;
- sufficient number of patients may not enroll in the trials; or
- we may not be able to produce sufficient quantities of Oncophage to
complete the trials.
We rely on third party clinical investigators to conduct our clinical trials. As
a result, we may encounter delays outside of our control.
The process of obtaining and maintaining regulatory approvals for new
therapeutic products is lengthy, expensive and uncertain. It also can vary
substantially, based on the type, complexity and novelty of the product
involved. To date, the FDA and foreign regulatory agencies have approved only a
limited number of cancer immunotherapeutics for commercial sale. Furthermore,
the FDA and foreign regulatory agencies have relatively little experience with
autologous therapies. This lack of experience may lengthen the regulatory review
process for Oncophage, increase our development costs and delay
commercialization. In addition, problems encountered with other companies'
immunotherapeutic products may slow the regulatory approval for our
immunotherapeutics. The FDA may not consider Oncophage to be an appropriate
candidate for fast track designation should we choose to seek it. Accordingly,
Oncophage or any of our other future drug candidates could take a significantly
longer time to gain regulatory approval than we expect or may never gain
approval.
BECAUSE DEVELOPMENT OF OUR IMMUNOTHERAPEUTICS FOR INFECTIOUS DISEASES AND
AUTOIMMUNE DISORDERS WILL INVOLVE A LENGTHY AND COMPLEX PROCESS, WE ARE NOT
CERTAIN WE WILL BE ABLE TO DEVELOP ANY MARKETABLE IMMUNOTHERAPEUTICS FOR THESE
INDICATIONS.
We have not completed the preclinical development of our immunotherapeutics for
any infectious disease or autoimmune disorder. We will need to conduct extensive
additional research, preclinical and clinical testing of these
immunotherapeutics prior to commercialization. This development process takes
several years and often fails to yield commercial products. For example,
regulatory authorities may not permit
8
<PAGE> 10
human testing of these immunotherapeutics and, even if human testing is
permitted, the subsequent clinical trials may not demonstrate that an
immunotherapeutic is safe and effective.
EVEN IF SOME OF OUR IMMUNOTHERAPEUTICS RECEIVE REGULATORY APPROVAL, THOSE
IMMUNOTHERAPEUTICS MAY STILL FACE SUBSEQUENT REGULATORY DIFFICULTIES.
If we receive regulatory approval to sell any of our immunotherapeutics, the FDA
or a comparable foreign regulatory agency may, nevertheless, limit the indicated
uses of that immunotherapeutic. In addition, a marketed product, its
manufacturer and the manufacturer's facilities are subject to continual review
and periodic inspections by regulatory agencies. Furthermore, the FDA and
foreign regulatory agencies may require expensive post-approval trials. The
discovery of previously unknown problems with a product, manufacturer or
facility can result in restrictions on the product or manufacturer, including
withdrawal of the product from the market. The failure to comply with applicable
regulatory approval requirements can, among other things, result in:
- warning letters;
- fines and other civil penalties;
- suspended regulatory approvals;
- refusal to approve pending applications or supplements to approved
applications;
- refusal to permit exports from the United States;
- product recalls;
- seizure of products;
- injunctions;
- operating restrictions;
- total or partial suspension of production; and/or
- criminal prosecution.
WE MAY ENCOUNTER MANUFACTURING PROBLEMS THAT LIMIT OUR ABILITY TO SUCCESSFULLY
COMMERCIALIZE OUR IMMUNOTHERAPEUTICS.
IF WE ARE UNABLE TO PURIFY HEAT SHOCK PROTEINS FROM SOME CANCER TYPES, THE
SIZE OF OUR POTENTIAL MARKET WOULD DECREASE.
Our ability to successfully commercialize an immunotherapeutic for a particular
cancer type depends on our ability to purify heat shock proteins taken from that
type of cancer. Based on our clinical trials conducted to date, in renal cell
carcinoma, we have been able to manufacture Oncophage from 98% of the tumors
delivered to our manufacturing facility; for melanoma, 90%; for colorectal
carcinoma, 100%; for gastric cancer, 71%; and for pancreatic cancer, 30%. The
relatively low rate for pancreatic cancer is due to the abundance of proteases
in pancreatic tissue. Proteases are enzymes that break down proteins. These
proteases degrade the heat shock proteins during the purification process. We
may encounter this problem or similar problems with other types of cancers as we
expand our research. If these problems cannot be overcome, the number of cancer
types that our immunotherapeutics could treat would be limited.
DELAYS IN OBTAINING REGULATORY APPROVAL OF OUR MANUFACTURING FACILITY AND
DISRUPTIONS IN OUR MANUFACTURING PROCESS MAY DELAY OR DISRUPT OUR
COMMERCIALIZATION EFFORTS.
Before we can begin commercially manufacturing our immunotherapeutics, we must
obtain regulatory approval of our manufacturing facility and process.
Manufacturing of our immunotherapeutics must
9
<PAGE> 11
comply with the FDA's current Good Manufacturing Practices requirements,
commonly known as cGMP, and foreign regulatory requirements. The cGMP
requirements govern quality control and documentation policies and procedures.
In complying with cGMP and foreign regulatory requirements, we will be obligated
to expend time, money and effort in production, recordkeeping and quality
control to assure that the product meets applicable specifications and other
requirements. Failure to comply with these requirements would subject us to
possible regulatory action and may limit the jurisdictions in which we are
permitted to sell our immunotherapeutics.
We recently transitioned the manufacturing of Oncophage from our facility in
Framingham, Massachusetts to our new facility in Woburn, Massachusetts. We have
limited manufacturing experience in this facility and unforeseen circumstances
may cause delays or disruptions in our manufacturing process. This facility will
be continuously subject to inspection by the FDA, The Commonwealth of
Massachusetts and foreign regulatory authorities. Preparing this facility for
commercial manufacturing may take longer than planned and the costs of complying
with FDA regulations may be higher than those which we have budgeted. In
addition, any material changes we make to the manufacturing process may require
approval by the FDA, The Commonwealth of Massachusetts or foreign regulatory
authorities. Obtaining these approvals could take longer than expected and could
disrupt our manufacturing process.
We are the only manufacturer of our immunotherapeutics. For the next several
years, we expect that all of our manufacturing will take place in our facility
in Woburn, Massachusetts. If this facility or the equipment in the facility is
significantly damaged or destroyed, we will not be able to quickly or
inexpensively replace our manufacturing capacity. Due to the nature of our
immunotherapeutics, a third party may not be able to manufacture our
immunotherapeutics.
We have no experience manufacturing Oncophage in the volumes that will be
necessary to support large clinical trials or commercial sales. Our present
manufacturing process may not meet our initial expectations as to:
- scheduling;
- reproducibility;
- yields;
- purity;
- costs;
- potency;
- quality; and
- other measurements of performance.
In addition, we have not demonstrated the ability to manufacture our
immunotherapeutics other than Oncophage in quantities sufficient for any
clinical trials.
IF WE ARE UNABLE TO PROTECT OUR PROPRIETARY TECHNOLOGY, TRADE SECRETS OR
KNOW-HOW, WE MAY NOT BE ABLE TO OPERATE OUR BUSINESS PROFITABLY.
IF WE FAIL TO SUSTAIN AND FURTHER BUILD OUR INTELLECTUAL PROPERTY RIGHTS,
COMPETITORS WILL BE ABLE TO TAKE ADVANTAGE OF OUR RESEARCH AND DEVELOPMENT
EFFORTS TO DEVELOP COMPETING THERAPIES.
Our success will depend, in part, on our ability to maintain protection for our
products and technologies under the patent laws of the United States and other
countries, so that we can stop others from using our inventions. Our success
also will depend on our ability to prevent others from using our trade secrets.
In addition, we must operate in a way that does not infringe, or violate, the
intellectual property rights of other parties.
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<PAGE> 12
We have exclusive rights to seven issued U.S. patents, and foreign counterpart
patents and patent applications, relating to our heat shock protein technology.
Our rights to these patents are as a result of an exclusive worldwide license
with Fordham University and one with Mount Sinai School of Medicine of New York
University. In addition, we have licensed or optioned rights to 44 pending U.S.
patent applications and foreign counterpart patents and patent applications. The
standards which the U.S. Patent and Trademark Office uses to grant patents are
not always applied predictably or uniformly, and can change. Consequently, we
cannot be certain as to the type and extent of patent claims that will be issued
to us in the future. Any patents which do issue may not contain claims which
will permit us to stop competitors from using similar technology. The standards
which courts use to interpret patents are not always applied predictably or
uniformly, and can change, particularly as new technologies develop.
Consequently, we cannot be certain as to how much protection, if any, will be
given to our patents, if we attempt to enforce them and they are challenged in
court. If we choose to go to court to stop someone else from using the
inventions claimed in our patents, that individual or company has the right to
ask the court to rule that our patents are invalid and should not be enforced
against them. These lawsuits are expensive and would consume time and other
resources, even if we were successful in stopping the violation of our patents.
In addition, there is a risk that the court will decide that our patents are not
valid and that we do not have the right to stop the other party from using the
inventions. There is also the risk that, even if the validity of our patents
were upheld, the court will refuse to stop the other party on the ground that
its activities are not covered by, that is, do not infringe, the patent.
Furthermore, a third party may claim that we are using inventions covered by
their patents and may go to court to stop us from engaging in our normal
operations and activities, such as research and development and the sale of
products. Such lawsuits are expensive and would consume time and other
resources. There is a risk that a court would decide that we are violating the
third party's patents and would order us to stop the activities covered by the
patents. In addition, there is a risk that a court will order us to pay the
other party's damages for having violated their patents.
We rely on certain proprietary trade secrets and know-how that are not
patentable. We have taken measures to protect our unpatented trade secrets and
know-how, including the use of confidentiality agreements with our employees,
consultants and certain contractors. It is possible, however, that:
- the agreements may be breached;
- we would have inadequate remedies for any breach; or
- our trade secrets will otherwise become known or be independently
developed or discovered by competitors.
WE MAY INCUR SUBSTANTIAL COSTS AS A RESULT OF LITIGATION OR OTHER PROCEEDINGS
RELATING TO PATENT AND OTHER INTELLECTUAL PROPERTY RIGHTS.
The cost to us of any litigation or other proceeding relating to intellectual
property rights, even if resolved in our favor, could be substantial. Some of
our competitors may be able to sustain the costs of complex patent litigation
more effectively than we can because of their substantially greater resources.
Uncertainties resulting from the initiation and continuation of any litigation
could have a material adverse effect on our ability to continue our operations.
Should third parties file patent applications, or be issued patents, claiming
technology also claimed by us in pending applications, we may be required to
participate in interference proceedings in the United States Patent and
Trademark Office to determine priority of invention. We, or our licensors, also
could be required to participate in interference proceedings involving our
issued patents and pending applications of another entity. An adverse outcome in
an interference proceeding could require us to cease using the technology or to
license rights from prevailing third parties. There is no guarantee that any
prevailing party would offer us a license or that any license, if made available
to us, could be acquired on commercially acceptable terms.
11
<PAGE> 13
We cannot guarantee that the practice of our technologies will not conflict with
the rights of others. We are aware of a United States patent, issued to a third
party, with claims directed to certain heat shock protein based
immunotherapeutics and their use in the field of tissue grafting. We do not
believe that our products or activities are infringing any valid claims of this
patent. We also are aware of a United States patent, issued to a different third
party, with claims directed to certain methods of making heat shock protein
products. No therapeutic methods are claimed in this patent. In any event, none
of the methods we presently use to make Oncophage are claimed in this patent.
Moreover, we do not believe that our methods of producing any of our heat shock
protein-based immunotherapeutics would infringe any valid claims of this patent.
However, we cannot guarantee that we will not be sued for infringing these, or
any other, patents. One of the patent applications licensed to us contains
claims which are substantially the same as claims in the later third party
patent. Therefore, there is a possibility that an interference will be declared.
In an interference proceeding, the party with the earliest effective filing date
has certain advantages. We believe that our claims have an earlier effective
filing date than the claims of the other patent. However, we cannot guarantee
that we would prevail in any interference proceeding that might be declared.
In some foreign jurisdictions, we could become involved in opposition
proceedings, either by opposing the validity of another's foreign patent or by
third parties opposing the validity of our foreign patents. In 1995, a European
patent, with claims directed to the use of heat shock proteins to produce or
enhance immune responses to cancer and infectious diseases, issued to the
Whitehead Institute for Biomedical Research and to the Medical Research Council.
This patent is exclusively licensed to StressGen Biotechnologies Corporation. No
attempts have been made to enforce this patent against us. Nonetheless, we are
seeking to have this patent revoked in its entirety in an opposition proceeding
in the European Patent Office. The European Patent Office has issued a
provisional, non-binding opinion that this third party patent should be revoked
in its entirety. The patent owners, in response, amended the patent claims to
exclude autologous treatment of tumors. We then argued that this third party
patent still should be revoked in its entirety. Even if the European Patent
Office changes its position and the patent is maintained with the amended
claims, we still should be free to practice our autologous cancer business in
Europe. However, the patent owners or their licensee might try to enforce the
amended patent against our infectious disease business in Europe. Any decision
to revoke the patent in its entirety, or to maintain the patent in any form, can
be appealed. It may be years before a final, non-appealable decision is reached,
during which time, the patent, with any amendments made during the opposition
proceedings, remains enforceable. Participation in the opposition proceedings
and appeals may be costly. Furthermore, if we are sued on this patent in Europe
prior to any final decision of revocation, the cost of defending ourselves could
be substantial, even if we ultimately succeed in proving that we do not infringe
any valid claims of this patent.
This European patent claims priority to a United States patent application filed
in 1988. We do not know whether this application, or any related application,
still is pending. We do not believe that any United States patent has issued
from this application and we do not know whether a United States patent will
ever issue from this patent application. If a United States patent does issue,
we do not know whether the patent will be enforceable, whether any valid claims
will cover our activities or products, or whether the patent owner will attempt
to assert the patent against us.
Earlier this year, we received correspondence from both Copernicus Therapeutics,
Inc. and its counsel alleging similarity between the companies' respective logos
and demanding that we cease using our logo. In July 1999, a response was sent to
Copernicus, stating that we have prior rights in our logo. The response to
Copernicus also stated that since the respective corporate names are vastly
different, both companies should be able to continue the use of their respective
logos without causing public confusion. At this time, no further communications
have been received from Copernicus or its counsel. Although we do not believe we
are infringing any rights owned by Copernicus, we do not know whether Copernicus
will proceed with a trademark lawsuit against us.
12
<PAGE> 14
WE ARE AN EARLY STAGE BIOTECHNOLOGY COMPANY THAT MAY NEVER BE PROFITABLE.
IF WE INCUR OPERATING LOSSES FOR LONGER THAN WE EXPECT, WE MAY BE UNABLE TO
CONTINUE OUR OPERATIONS.
We have not generated any revenues from sales, and we do not expect to generate
significant revenues for several years. We have incurred losses since we were
formed. From inception through September 30, 1999, we have generated losses
totaling $28,468,000. We expect to incur increasing and significant losses over
the next several years as we complete our Oncophage clinical trials, apply for
regulatory approvals, continue development of our technology and expand our
operations.
Our profitability will depend on the market acceptance of any of our
immunotherapeutics that receive FDA or foreign regulatory approval. The
commercial success of any of our immunotherapeutics will depend on whether:
- the immunotherapeutic is more effective than alternative treatments;
- side effects of the immunotherapeutic are acceptable to doctors and
patients;
- we produce the immunotherapeutic at a competitive price;
- we obtain sufficient reimbursement for the immunotherapeutic; and
- we have sufficient capital to market the immunotherapeutic
effectively.
Because Oncophage is autologous, or patient specific, it may be more expensive
to manufacture than conventional therapeutic products. This increased expense
may decrease our profit margins. Furthermore, because our autologous products
are novel, some doctors and patients may be reluctant to use them.
IF WE FAIL TO OBTAIN THE CAPITAL NECESSARY TO FUND OUR OPERATIONS, WE WILL BE
UNABLE TO ADVANCE OUR DEVELOPMENT PROGRAMS AND COMPLETE OUR CLINICAL TRIALS.
Developing immunotherapeutics and conducting clinical trials in multiple
indications is expensive. We plan to conduct clinical trials for many different
cancer types simultaneously, which will increase our costs. We will need to
raise additional capital:
- to fund operations;
- to continue the research and development of our immunotherapeutics;
and
- to commercialize our immunotherapeutics.
Additional financing may not be available on favorable terms or at all. If we
are unable to raise additional funds when we need them, we may be required to
delay, reduce or eliminate some or all of our development programs and some or
all of our clinical trials. We also may be forced to license technologies to
others that we would prefer to develop internally.
On September 30, 1999, we had $12,612,000 in cash and cash equivalents. We
believe that, with the proceeds from this offering and from the private
placement completed in November 1999, we will have sufficient capital to fund
our operations for the next two years. We may need to raise capital sooner,
however, due to a number of factors, including:
- an acceleration of the number, size or complexity of our clinical
trials;
- slower than expected progress in developing our immunotherapeutics;
- higher than expected costs to obtain regulatory approvals;
- higher than expected costs to pursue our intellectual property
strategy;
- higher than expected costs to further develop our manufacturing
capability; and
- higher than expected costs to develop our sales and marketing
capability.
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<PAGE> 15
BECAUSE OF THE SPECIALIZED NATURE OF OUR BUSINESS, THE TERMINATION OF
RELATIONSHIPS WITH OUR SCIENTIFIC ADVISORS OR THE DEPARTURE OF KEY MEMBERS OF
MANAGEMENT MAY PREVENT US FROM ACHIEVING OUR OBJECTIVES.
IF PRAMOD K. SRIVASTAVA, PH.D. SEVERS HIS RELATIONSHIP WITH ANTIGENICS, OUR
FUTURE DEVELOPMENT EFFORTS MAY BE HINDERED.
Since our formation, Dr. Srivastava has played a significant role in our
research efforts. Dr. Srivastava is a director of our company and acts as
chairman of our scientific advisory board. In addition, nearly all of our
intellectual property is licensed from institutions at which Dr. Srivastava
has worked. We sponsor research in Dr. Srivastava's laboratory at the
University of Connecticut Health Center in exchange for the right to license
discoveries made in that laboratory with our funding. Dr. Srivastava is a
member of the faculty of the University of Connecticut School of Medicine. The
regulations and policies of the University of Connecticut Health Center govern
the relationship between a faculty member and a commercial enterprise. These
regulations and policies prohibit Dr. Srivastava from becoming an employee of
Antigenics and may be modified in the future to further limit Dr. Srivastava's
relationship with us. While Dr. Srivastava has a consulting agreement with us,
which includes financial incentives for him to remain associated with us, we
cannot guarantee that he will remain associated with us even during the time
covered by the consulting agreement. In addition, this agreement does not
restrict his ability to compete with us after his association is terminated.
IF WE FAIL TO KEEP KEY MANAGEMENT AND SCIENTIFIC PERSONNEL, OUR ABILITY TO
DEVELOP OUR IMMUNOTHERAPEUTICS, CONDUCT CLINICAL TRIALS AND OBTAIN FINANCING
COULD BE ADVERSELY AFFECTED.
We are highly dependent on our senior management and scientific staff,
particularly Garo H. Armen, Ph.D., our chairman and chief executive officer, and
Gamil G. de Chadarevian, our vice chairman and executive vice president,
international. The competition for qualified personnel in the biotechnology
field is intense, and we rely heavily on our ability to attract and retain
qualified scientific, technical and managerial personnel. Since our
manufacturing process is unique, our manufacturing and quality control personnel
are also very important.
THE COMMERCIAL SUCCESS OF ANY OF OUR IMMUNOTHERAPEUTICS WILL DEPEND UPON THE
STRENGTH OF THE SALES AND MARKETING EFFORT AND THE AVAILABILITY OF THIRD PARTY
REIMBURSEMENT.
IF WE ARE UNABLE TO ESTABLISH SALES AND MARKETING CAPABILITIES OR ENTER INTO
AGREEMENTS WITH PHARMACEUTICAL COMPANIES TO SELL AND MARKET OUR
IMMUNOTHERAPEUTICS, OUR ABILITY TO GENERATE REVENUES WILL BE DIMINISHED.
We do not have a sales organization and have no experience in the sales,
marketing and distribution of pharmaceutical products. If Oncophage is approved
for commercial sale, we plan to market it in the United States with our own
sales force. Developing a sales force is expensive and time consuming and could
delay any product launch. We cannot be certain that we would be able to develop
this capacity. If we are unable to establish our sales and marketing capability,
we will need to enter into sales and marketing agreements to market Oncophage in
the United States. We plan to enter into these types of arrangements for sales
outside the United States. If we are unable to establish successful distribution
relationships with pharmaceutical companies, we may fail to realize the full
sales potential of our immunotherapeutics.
IF WE FAIL TO OBTAIN ADEQUATE LEVELS OF REIMBURSEMENT FOR OUR
IMMUNOTHERAPEUTICS FROM THIRD PARTY PAYORS, THE COMMERCIAL POTENTIAL OF OUR
IMMUNOTHERAPEUTICS WILL BE SIGNIFICANTLY LIMITED.
Our profitability will depend on the extent to which reimbursement for the cost
of our immunotherapeutics will be provided by government health administration
authorities, private health insurance providers and other organizations. Many
patients will not be capable of paying for our immunotherapeutics themselves.
The primary trend in the United States health care industry is toward cost
containment and decisions regarding the use of a particular treatment are
increasingly influenced by large private payors, managed
14
<PAGE> 16
care organizations, group purchasing organizations and similar organizations and
are becoming more economically focused. Furthermore, many third party payors
limit reimbursement for newly approved health care products. Cost containment
measures may prevent us from becoming profitable.
In addition, healthcare reform is an area of significant government focus. Any
reform measures, if adopted, could adversely affect:
- the pricing of immunotherapeutics in the United States or
internationally; and
- the amount of reimbursement available from governmental agencies or
other third party payors.
For example, recent proposals regarding Medicare coverage, if they take effect,
may put novel cancer therapies like Oncophage at a competitive disadvantage
compared to existing therapies.
PRODUCT LIABILITY AND OTHER CLAIMS AGAINST US MAY REDUCE DEMAND FOR OUR PRODUCTS
OR RESULT IN SUBSTANTIAL DAMAGES.
We face an inherent risk of product liability exposure related to
immunotherapeutics being tested in human clinical trials and will face an even
greater risk if any of our therapeutic products are sold commercially. We may
become subject to a product liability claim if one of our immunotherapeutics
causes, or merely appears to have caused, an injury. Regardless of merit or
eventual outcome, product liability claims may result in:
- decreased demand for our immunotherapeutics;
- injury to our reputation;
- withdrawal of clinical trial volunteers;
- costs of related litigation; and
- substantial monetary awards to plaintiffs.
Oncophage is manufactured from a patient's tumor and must be returned to the
same patient for injection. A patient may sue us if we, a hospital or a delivery
company fails to deliver the removed tumor or that patient's Oncophage. The
logistics of shipping will become more complex as the number of patients we
treat increases, and we cannot assure that all shipments will be made without
incident. In addition, administration of Oncophage at a hospital poses another
chance for delivery to the wrong patient. We do not currently have insurance
that covers loss of or damage to Oncophage and do not know whether insurance
will be available to us at a reasonable price or at all.
WE MAY BE REQUIRED TO INCUR SIGNIFICANT COSTS TO COMPLY WITH ENVIRONMENTAL LAWS
AND REGULATIONS AND OUR COMPLIANCE MAY LIMIT ANY FUTURE PROFITABILITY.
Our activities involve the use of hazardous, infectious and radioactive
materials that could be dangerous to human health, safety or the environment. As
appropriate, we store these materials and various wastes resulting from their
use at our facility pending ultimate use and disposal. We are subject to a
variety of federal, state and local laws and regulations governing the use,
generation, manufacture, storage, handling and disposal of these materials and
wastes resulting from their use. We may be required to incur significant costs
to comply with both existing and future environmental laws and regulations. In
particular, we are subject to regulation by the Occupational Safety and Health
Administration and the Environmental Protection Agency and to regulation under
the Toxic Substances Control Act and the Resource Conservation and Recovery Act.
OSHA or the EPA may adopt regulations that may affect our research and
development programs. We are unable to predict whether any agency will adopt any
regulations which could have a material adverse effect on our operations.
15
<PAGE> 17
Although our safety procedures for handling and disposing of these materials
comply with federal, state and local laws and regulations, we believe that the
risk of accidental injury or contamination from these materials cannot be
entirely eliminated. In the event of an accident, we could be held liable for
any resulting damages which could be substantial.
OUR COMPETITORS IN THE BIOTECHNOLOGY AND PHARMACEUTICAL INDUSTRIES MAY HAVE
SUPERIOR PRODUCTS, MANUFACTURING CAPABILITY OR MARKETING EXPERTISE.
Our business may fail because we face intense competition from major
pharmaceutical companies and specialized biotechnology companies engaged in the
development of immunotherapeutics and other therapeutic products directed at
cancer, infectious diseases and autoimmune disorders. Many of our competitors
have greater financial and human resources and more experience. Our competitors
may:
- develop safer or more effective immunotherapeutics and other
therapeutic products;
- implement more effective approaches to sales and marketing; or
- establish superior proprietary positions.
More specifically, if regulatory approvals are received, some of our
immunotherapeutics will compete with well-established, FDA approved therapies
that have generated substantial sales over a number of years.
We anticipate that we will face increased competition in the future as new
companies enter our markets and scientific developments surrounding
immunotherapy and other cancer therapies continue to accelerate.
WE MAY NOT BE ABLE TO KEEP UP WITH THE RAPID TECHNOLOGICAL CHANGES IN THE
BIOTECHNOLOGY AND PHARMACEUTICAL INDUSTRIES WHICH COULD MAKE OUR
IMMUNOTHERAPEUTICS OBSOLETE.
The field of biotechnology is characterized by significant and rapid
technological change. Research and discoveries by others may result in medical
insights or breakthroughs which may render our immunotherapeutics obsolete even
before they generate any revenue.
IF WE EXPERIENCE ANY PROBLEMS WITH Y2K COMPLIANCE, OUR BUSINESS MAY BE
DISRUPTED.
Beginning in the year 2000, the date fields coded in certain software products
and computer systems will need to accept four digit entries in order to
distinguish 21st century dates from the 20th century dates. This is commonly
known as the year 2000 or Y2K problem.
It is possible that our installed computer systems, software products or other
business systems, or those of our suppliers or service providers, working either
alone or in conjunction with other software systems, will not accept input of,
store, manipulate or output dates for the Y2K or subsequent years without error
or interruption. We have completed the process of determining whether there are
any critical areas of our business that are not Y2K compliant. Where
appropriate, we have taken corrective actions and implemented contingency plans
to address Y2K problems involving these areas. We estimate that the total cost
of addressing any Y2K problems will be immaterial.
Some risks associated with the Y2K problem are beyond our ability to control,
including the extent to which our suppliers and service providers can address
the Y2K problem. The failure by a third party to adequately address the Y2K
issue may have an adverse effect on their operations, which, in turn, may have
an adverse impact on us. If, for instance, our supply of electricity and/or
water is interrupted, our freezers may not be able to adequately preserve our
immunotherapeutics and our scientific experiments may be interrupted.
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<PAGE> 18
RISKS RELATING TO THE OFFERING
OUR OFFICERS AND DIRECTORS MAY BE ABLE TO BLOCK PROPOSALS FOR A CHANGE IN
CONTROL.
After this offering, our directors and officers will control approximately
% of our outstanding common stock. Due to this concentration of ownership,
directors and officers may be able to prevail on all matters requiring a
stockholder vote, including:
- the election of directors;
- the amendment of our organizational documents; or
- the approval of a merger, sale of assets or other major corporate
transaction.
THE NET PROCEEDS FROM THIS OFFERING MAY BE ALLOCATED IN WAYS WHICH YOU AND OTHER
STOCKHOLDERS MAY NOT APPROVE.
Management will have significant flexibility in applying the net proceeds of
this offering and could use these proceeds for purposes other than those
contemplated at the time of the offering.
ANTI-TAKEOVER PROVISIONS IN OUR CHARTER DOCUMENTS AND UNDER DELAWARE LAW MAY
MAKE AN ACQUISITION OF US MORE DIFFICULT.
We are incorporated in Delaware. Anti-takeover provisions of Delaware law and
our charter documents may make a change in control more difficult, even if a
change in control is desired by the stockholders. Our anti-takeover provisions
include provisions in our certificate of incorporation providing that
stockholders' meetings may only be called by the president or the majority of
the board of directors and a provision in our by-laws providing that our
stockholders may not take action by written consent. Additionally, our board of
directors has the authority to issue 1,000,000 shares of preferred stock and to
determine the terms of those shares of stock without any further action by our
stockholders. The rights of holders of our common stock are subject to the
rights of the holders of any preferred stock that may be issued. The issuance of
preferred stock could make it more difficult for a third party to acquire a
majority of our outstanding voting stock. Our charter also provides for the
classification of our board of directors into three classes. This "classified
board" generally may prevent stockholders from replacing the entire board in a
single proxy contest. In addition, our directors may only be removed from office
for cause. Delaware law also prohibits a corporation from engaging in a business
combination with any holder of 15% or more of its capital stock until the holder
has held the stock for three years unless, among other possibilities, the board
of directors approves the transaction. The board may use this provision to
prevent changes in our management. Also, under applicable Delaware law, our
board of directors may adopt additional anti-takeover measures in the future.
OUR COMMON STOCK MAY HAVE A VOLATILE PUBLIC TRADING PRICE AND LOW TRADING
VOLUME.
Prior to this offering, there will have been no public market for our equity. An
active public market for our common stock may not develop or be sustained after
this offering. We and the underwriters, through negotiations, will determine the
initial public offering price. The initial public offering price is not
necessarily indicative of the market price at which the common stock will trade
after this offering. The market prices for securities of companies comparable to
us have been highly volatile, and the market has experienced significant price
and volume fluctuations that are unrelated to the operating performance of the
individual companies. Many factors may have a significant adverse effect on the
market price of the common stock, including:
- results of our preclinical and clinical trials;
- announcement of technological innovations or new commercial products
by us or our competitors;
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<PAGE> 19
- developments concerning proprietary rights, including patent and
litigation matters;
- publicity regarding actual or potential results with respect to
products under development by us or by our competitors;
- regulatory developments; and
- quarterly fluctuations in our revenues and other financial results.
THE SALE OF A SUBSTANTIAL NUMBER OF SHARES COULD CAUSE THE MARKET PRICE OF OUR
COMMON STOCK TO DECLINE.
After this offering, we will have shares outstanding. In connection with
the private placement completed in November 1999, we are obligated to file,
approximately 90 days after the date of this prospectus, a registration
statement covering up to shares for resale. When this registration
statement is declared effective by the Securities and Exchange Commission, these
stockholders will be permitted to resell their shares on the Nasdaq National
Market. Sales of these shares or anticipation of those sales may depress our
stock price.
The sale by our company or the resale by stockholders of shares of our common
stock after this offering could cause the market price of the common stock to
decline. The shares of common stock outstanding after this offering but
not offered in this prospectus will be available for resale on the Nasdaq
National Market as follows:
- shares when a resale registration statement to be filed
approximately 90 days after the date of this prospectus is declared
effective, and
- shares one year following this offering subject to volume and
other limitations.
We intend to file a registration statement following the offering to permit the
sale of approximately 4,500,000 shares of common stock under our equity
incentive plan and 300,000 shares of common stock under our employee stock
purchase plan. As of , 1999, options to purchase
shares of our common stock upon exercise of options with a weighted average
exercise price per share of $ were outstanding. Many of these shares
are subject to vesting that generally occurs over a period of up to five years
following the date of grant. All vested options are subject to agreements with
the underwriters not to sell the shares eligible upon their exercise for 365
days after the offering. As of , 1999, warrants to purchase
shares of our common stock with an exercise price per share of
$ were outstanding.
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<PAGE> 20
USE OF PROCEEDS
The net proceeds to us from the sale of shares of common stock in this
offering at an assumed public offering price of $ per share are estimated to
be $ million after deducting the underwriting discount and estimated
offering expenses payable by us. The net proceeds to us are estimated to be
$ million if the underwriters' over-allotment option is exercised in
full.
We intend to use the net proceeds of this offering to fund clinical trials,
research, preclinical and development activities for our immunotherapeutics and
general corporate purposes, including working capital and an increase in our
administrative staff. We may also use a portion of the net proceeds to increase
our manufacturing capacity or to acquire complementary businesses or products.
We have no specific understandings, commitments or agreements with respect to
any acquisition.
We have not determined the amount of net proceeds to be used for each of these
purposes. Accordingly, we will have broad discretion to use the proceeds as we
see fit. Prior to spending the funds, we will invest the net proceeds in
short-term, investment grade, interest-bearing securities or guaranteed
obligations of the United States government.
DIVIDEND POLICY
We have never paid cash dividends. We currently intend to retain any future
earnings to finance the growth and development of our business. We do not intend
to pay cash dividends on our common stock in the foreseeable future.
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<PAGE> 21
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements, principally in the sections
entitled "Management's Discussion and Analysis of Financial Conditions and
Results of Operations" and "Business." Generally, these statements can be
identified by the use of phrases like "believe," "expect," "anticipate," "plan,"
"may," "will," "could," "estimate," "potential," "opportunity," "future,"
"project" and similar terms and include statements about our:
- product research and development activities and projected
expenditures;
- the efficacy of our immunotherapeutics in treating diseases;
- receipt of regulatory approvals;
- spending the proceeds from this offering;
- cash needs;
- plans for sales and marketing;
- results of scientific research;
- implementation of our corporate strategy;
- Y2K readiness; and
- financial performance.
These forward-looking statements may involve risks and uncertainties. Our actual
results could differ significantly from the results discussed in the
forward-looking statements. Factors that could cause or contribute to these
differences include those discussed in "Risk Factors." You should carefully
consider that information before you make an investment decision. You should not
place undue reliance on our forward-looking statements.
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<PAGE> 22
CAPITALIZATION
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
The following table sets forth, as of September 30, 1999, our historical and pro
forma capitalization and cash and cash equivalents. The pro forma capitalization
gives effect to the following transactions as if they occurred on September 30,
1999:
- the $39.2 million private placement completed in November 1999; and
- the change from a limited liability company to a corporation.
Pro forma cash and cash equivalents and stockholders' equity do not include
$653,000 in subscriptions receivable and $293,000 of private placement expenses.
The pro forma as adjusted capitalization reflects the pro forma adjustments
described in the previous sentence and the sale in this offering of
shares of common stock at an assumed initial public offering
price of $ per share and the application of our estimated net proceeds
from this offering, after deducting the underwriting discount and estimated
offering expenses payable by us. This table does not include an aggregate of
shares of common stock issuable upon exercise of stock options
outstanding as of September 30, 1999 with a weighted average exercise price of
$ per share. This table should be read in conjunction with our
consolidated financial statements and the other financial information included
in this prospectus.
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1999
------------------------------------------
PRO FORMA AS
HISTORICAL PRO FORMA ADJUSTED
----------- ----------- ------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Cash and cash equivalents............................ $ 12,612 $ 50,882 $
======== ======== =======
Long-term liabilities................................ $ 2,368 2,368
--------
Members' capital..................................... 45,210 --
Stockholders' equity
Common stock, par value $0.01 per share;
100,000,000 shares authorized,
shares issued and outstanding,
pro forma, shares issued and
outstanding, pro forma as adjusted.............. -- 83,480
Preferred stock, par value $0.01 par value per
share; 1,000,000 shares authorized, no shares
issued and outstanding, pro forma and pro forma
as adjusted..................................... -- -- --
Deficit accumulated during the development stage..... (28,468) (28,468)
-------- -------- -------
Total members'/stockholders' equity................ 16,742 55,012
-------- -------- -------
Total capitalization....................... $ 19,110 $ 57,380 $
======== ======== =======
</TABLE>
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<PAGE> 23
DILUTION
Our pro forma net tangible book value as of September 30, 1999, was $ or
$ per share of common stock. Pro forma net tangible book value per share
before this offering represents the amount of our pro forma stockholders'
equity, less intangible assets, divided by the pro forma number of shares of
common stock outstanding as of September 30, 1999 after giving effect to:
- the application of net proceeds from the $39.2 million private
placement completed in November 1999; and
- the change from a limited liability company to a corporation.
Pro forma net tangible book value per share after this offering gives effect to
the adjustments described above and to the application of net proceeds from the
sale of shares of our common stock at an assumed initial public
offering price of $ per share. As of September 30, 1999, our pro forma net
tangible book value after this offering would be $ or $ per share.
This represents an immediate increase in net tangible book value to existing
stockholders of $ per share and an immediate dilution to new investors of
$ per share. The following table illustrates the per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $
-------
Pro forma net tangible book value per share before this
offering................................................
-------
Increase in net tangible book value per share attributable
to new investors........................................
-------
Pro forma net tangible book value per share after this
offering..................................................
-------
Dilution per share to new investors......................... $
=======
</TABLE>
Assuming the exercise in full of the underwriters' over-allotment option, our
adjusted pro forma net tangible value after this offering at September 30, 1999
would have been approximately $ per share, representing an immediate
increase in pro forma tangible book value of $ per share to our existing
stockholders and an immediate dilution in pro forma net tangible book value of
$ per share to purchasers in this offering.
The following table enumerates the number of shares of common stock purchased,
the total consideration paid and the average price per share paid by our
existing stockholders. The following table also enumerates the number of shares
of common stock purchased and the total consideration paid, calculated before
deduction of the underwriting discount and estimated offering expenses, and the
average price per share paid by the new investors in this offering assuming the
sale of shares of our common stock at an assumed initial offering
price of $ per share.
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
----------------- ------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
------ ------- ------- -------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders............................... % $ % $
New investors....................................... % $ % $
------ ----- ------ ----- -------
Total...................................... 100% $ 100% $
====== ===== ====== ===== =======
</TABLE>
The tables above are calculated on a pro forma basis as of September 30, 1999
and give effect to the November 1999 private placement and the change from a
limited liability company to a corporation.
The tables above assume no exercise of the underwriters over-allotment option
and no exercise of stock options outstanding at September 30, 1999. As of
September 30, 1999, there were options outstanding to purchase a total of
shares, at a weighted average exercise price of $ per
share. To the extent that any of these options are exercised, there will be
further dilution to new investors. Please see "Capitalization," "Management --
Director Compensation," "-- Executive Compensation" and Note 5 to Antigenics'
audited consolidated financial statements and Note C to Antigenics' unaudited
consolidated financial statements.
22
<PAGE> 24
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AND PER UNIT DATA)
The selected consolidated balance sheet data set forth below, as of December 31,
1997 and 1998, and the consolidated statement of operations data for each of the
years in the three-year period ended December 31, 1998, are derived from our
audited consolidated financial statements included elsewhere in this prospectus.
The selected consolidated balance sheet data as of December 31, 1994, 1995 and
1996 and selected consolidated statement of operations data for the period from
March 31, 1994 (date of inception) to December 31, 1994 and the year ended
December 31, 1995 are derived from our audited consolidated financial statements
which are not included in this prospectus. These consolidated financial
statements of Antigenics L.L.C. have been audited by KPMG LLP, independent
certified public accountants.
The selected consolidated financial data as of September 30, 1999 and for the
nine months ended September 30, 1998 and 1999 and for the period from March 31,
1994 (date of inception) to September 30, 1999 are derived from our unaudited
consolidated financial statements which are included elsewhere in this
prospectus. The unaudited financial data includes, in our opinion, all
adjustments (consisting only of normal recurring adjustments) that are necessary
for a fair presentation of our financial position and the results of our
operations for those periods. Operating results for the nine months ended
September 30, 1999 are not necessarily indicative of the results that may be
expected for the fiscal year ending December 31, 1999. The selected consolidated
financial data should be read in conjunction with, and are qualified by
reference to, "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and our consolidated financial statements and notes to
those consolidated financial statements included elsewhere in this prospectus.
Since we have operated historically as a limited liability company, in
accordance with federal, state and local income tax regulations which provide
that no income taxes are levied on United States limited liability companies and
each member of the limited liability company is individually responsible for
reporting the member's share of our net income or loss, we do not provide for
income taxes in our consolidated financial statements.
The unaudited pro forma information set forth below reflects adjustments which
are necessary, in our management's opinion, for a fair presentation of our
consolidated financial condition and results of operations on a pro forma basis.
The unaudited pro forma net loss, basic and diluted net loss per common share
and weighted average shares outstanding for the year ended December 31, 1998 and
the nine months ended September 30, 1999 give effect to the change from a
limited liability company to a corporation and the exchange of each unit of
members' equity into shares of common stock as if they occurred on January 1,
1998.
The unaudited pro forma selected balance sheet data as of September 30, 1999
reflects the events described above as if these events occurred as of September
30, 1999 as well as the $39.2 million private placement completed in November
1999. Pro forma cash and cash equivalents and stockholders' equity do not
include $653,000 in subscriptions receivable and $293,000 of private placement
expenses.
23
<PAGE> 25
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
MARCH 31, 1994 MARCH 31, 1994
(DATE OF NINE MONTHS ENDED (DATE OF
INCEPTION) TO YEAR ENDED DECEMBER 31, SEPTEMBER 30, INCEPTION) TO
DECEMBER 31, ------------------------------------- ------------------------- SEPTEMBER 30,
1994 1995 1996 1997 1998 1998 1999 1999
-------------- ------- ------- ------- ------- ----------- ----------- --------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Revenue................... $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
Operating expenses:
Research and
development............. (112) (742) (1,569) (2,548) (5,908) (4,072) (6,926) (17,806)
General and
administrative.......... (56) (2,453) (1,042) (1,375) (2,735) (1,823) (3,825) (11,486)
Depreciation and
amortization............ (15) (40) (79) (202) (360) (273) (726) (1,422)
------- ------- ------- ------- ------- ------- --------- --------
Loss from operations...... (183) (3,235) (2,690) (4,125) (9,003) (6,168) (11,477) (30,714)
Interest income, net...... -- 8 281 481 736 580 489 1,996
Non-operating income...... -- -- 250 -- -- -- -- 250
------- ------- ------- ------- ------- ------- --------- --------
Net loss.................. $ (183) $(3,227) $(2,159) $(3,644) $(8,267) $(5,588) $ (10,988) $(28,468)
======= ======= ======= ======= ======= ======= ========= ========
Net loss per members'
equity unit, basic and
diluted................. $(10.97) $(40.92) $(25.43) $(40.71) $(86.42) $(62.06) $ (105.57)
======= ======= ======= ======= ======= ======= =========
Weighted average number of
units outstanding, basic
and diluted............. 16,675 78,854 84,876 89,525 95,673 90,032 104,079
======= ======= ======= ======= ======= ======= =========
UNAUDITED PRO FORMA
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Pro forma net loss........ $ $
Pro forma net loss per
common share, basic and
diluted................. $ $
Pro forma weighted average
shares outstanding,
basic and diluted.......
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF SEPTEMBER 30, 1999
------------------------------------------------- --------------------------
1994 1995 1996 1997 1998 HISTORICAL PRO FORMA
----- ------- ------- ------- ------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents.......... $ 129 $ 791 $ 9,588 $13,086 $22,168 $12,612 $ 50,882
Total current assets............... 163 876 9,639 13,246 22,447 13,226 51,496
Total assets....................... 239 1,124 10,041 14,090 26,636 21,280 59,550
Total current liabilities.......... 22 584 883 878 2,285 2,170 2,170
Long-term liabilities, less current
portion.......................... -- -- -- -- 709 2,368 2,368
Members' equity/stockholders'
equity........................... 217 540 9,158 13,212 23,641 16,742 55,012
</TABLE>
24
<PAGE> 26
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of the financial condition and results of operations
should be read in conjunction with our consolidated financial statements and
their notes appearing elsewhere in this prospectus.
OVERVIEW
Since our inception in March 1994, our activities have primarily been associated
with the development of our heat shock protein technology and our lead
immunotherapeutic, Oncophage. Our business activities have included:
- establishing manufacturing capabilities;
- product research and development;
- manufacturing immunotherapeutics for clinical trials;
- regulatory and clinical affairs; and
- intellectual property prosecution.
We have incurred significant losses since our inception because we have not
generated any revenues. As of September 30, 1999, we had an accumulated deficit
of $28,468,000. We expect to continue to incur net losses over the next several
years as we complete our Oncophage clinical trials, apply for regulatory
approvals, continue development of our technology and expand our operations. We
have been dependent on funding from equity and debt financings to fund our
business activities. Our financial results may vary depending on many factors,
including:
- the progress of Oncophage in the regulatory process;
- the acceleration of our other pharmaceutical candidates into
preclinical and clinical trials;
- our investment in manufacturing process development and in
manufacturing capacity for Oncophage and other product candidates;
- development of a sales and marketing staff and initial sales
activities if Oncophage is approved for commercialization; and
- the progress of our other additional research and development
efforts.
HISTORICAL RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER
30, 1998
Revenue: No revenue was generated during the nine months ended September 30,
1999 or during the nine months ended September 30, 1998.
Research and Development: Research and development expense increased 70.1% to
$6,926,000 for the nine months ended September 30, 1999 from $4,072,000 for the
nine months ended September 30, 1998. This increase was partially attributable
to the increase in the non-cash charge for options granted and earned by outside
advisors to $798,000 for the nine months ended September 30, 1999 from $124,000
for the nine months ended September 30, 1998. The remainder of the increase was
primarily due to the number of later stage Oncophage clinical trials in process,
an increase in our staff to support our expanded business activities and other
ongoing development activities. Research and development expenses consisted
primarily of compensation for our employees and outside advisors conducting
research and development work, funding paid to the University of Connecticut,
where we sponsor research, costs associated with the operation of our
manufacturing and laboratory facility and funding paid to support our Oncophage
clinical trials.
25
<PAGE> 27
General and Administrative: General and administrative expenses increased
109.8% to $3,825,000 for the nine months ended September 30, 1999 from
$1,823,000 for the nine months ended September 30, 1998. This increase was
partially due to the increase in the non-cash charge for options granted and
earned by outside advisors to $1,079,000 for the nine months ended September 30,
1999 from $58,000 for the nine months ended September 30, 1998. The remainder of
the increase was primarily due to the growth in the number of our employees to
support our expanded business operations. General and administrative expenses
consisted primarily of personnel compensation, office expenses and professional
fees.
Depreciation and Amortization: Depreciation and amortization expense increased
165.9% to $726,000 for the nine months ended September 30, 1999 from $273,000
for the nine months ended September 30, 1998. This increase was due to the
depreciation expense of our new 30,225 square foot manufacturing and laboratory
facility and related equipment.
Interest Income, net: Interest income increased 10.5% to $641,000 for the nine
months ended September 30, 1999 from $580,000 for the nine months ended
September 30, 1998. This increase was principally attributable to a higher
average cash and cash equivalents balance during the nine months ended September
30, 1999 as compared to the nine months ended September 30, 1998 due to a
$28,000,000 private equity financing completed in January 1999. Changes in
interest rates had an immaterial effect on the change in interest income.
Interest expense was $152,000 during the nine months ended September 30, 1999
due to borrowings under a credit facility to fund the construction of our
manufacturing and laboratory facility. There was no interest expense during the
nine months ended September 30, 1998.
YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997
Revenue: No revenue was generated during the year ended December 31, 1998 or
during the year ended December 31, 1997.
Research and Development: Research and development expenses increased 131.9% to
$5,908,000 for the year ended December 31, 1998 from $2,548,000 for the year
ended December 31, 1997. This increase was due primarily to the significant
increase in the number of Oncophage clinical trials in process, higher salary
costs due to an increase in the number of our employees as we expanded our
business and clinical activities, higher levels of funding paid to support our
Oncophage clinical trials, professional fees related to expansion of our
intellectual property and patent activities, and the non-cash charge for options
granted to and earned by outside advisors.
General and Administrative: General and administrative expenses increased 98.9%
to $2,735,000 for the year ended December 31, 1998 from $1,375,000 for the year
ended December 31, 1997. This increase was due to costs related to increased
personnel necessary to support our expanding business and clinical operations
and the non-cash charge for options granted and earned by outside advisors.
Depreciation and Amortization: Depreciation and amortization expense increased
78.2% to $360,000 for the year ended December 31, 1998 from $202,000 for the
year ended December 31, 1997. This increase was due to the depreciation expense
of our manufacturing and laboratory equipment.
Interest Income, net: Interest income increased 53.0% to $736,000 for the year
ended December 31, 1998 from $481,000 for the year ended December 31, 1997. This
increase was primarily attributable to a higher average cash and cash
equivalents balance during the year ended December 31, 1998 as compared to the
year ended December 31, 1997. Changes in interest rates had an immaterial effect
on the change in interest income. There was no interest expense during the years
ended December 31, 1998 and 1997.
YEAR ENDED DECEMBER 31, 1997 COMPARED TO THE YEAR ENDED DECEMBER 31, 1996
Revenue: No revenue was generated during the year ended December 31, 1997 or
during the year ended December 31, 1996.
26
<PAGE> 28
Research and Development: Research and development expenses increased 62.4% to
$2,548,000 for the year ended December 31, 1997 from $1,569,000 for the year
ended December 31, 1996. This increase was primarily due to additional personnel
in all our clinical and preclinical programs, an increase in the fee to the
research laboratory we sponsor at the University of Connecticut and higher
payments to clinics conducting our clinical trials. In addition, we incurred
higher professional fees related to the expansion of our intellectual property
and patent activities.
General and Administrative: General and administrative expenses increased 32.0%
to $1,375,000 for the year ended December 31, 1997 from $1,042,000 for the year
ended December 31, 1996. This increase was due to costs related to increased
personnel necessary to support our expanding business and clinical operations
partially offset by a decrease in the non-cash charge for options granted to and
earned by outside advisors.
Depreciation and Amortization: Depreciation and amortization expense increased
155.7% to $202,000 for the year ended December 31, 1997 from $79,000 for the
year ended December 31, 1996. This increase was due to the depreciation expense
of our manufacturing and laboratory equipment.
Interest Income, net: Interest income increased 71.2% to $481,000 for the year
ended December 31, 1997 from $281,000 for the year ended December 31, 1996. This
increase was primarily attributable to a higher average cash and cash
equivalents balance during the year ended December 31, 1997 as compared to the
year ended December 31, 1996. There was no interest expense during both the
years ended December 31, 1997 and 1996.
Non-operating Income: We recorded a non-recurring, non-operating fee of
$250,000 for the year ended December 31, 1996 relating to a potential
collaboration.
INCOME TAXES
No benefit for federal, state or local income taxes has been recorded for the
net losses we incurred in the years ended December 31, 1996, 1997 and 1998 and
no benefit for income taxes has been recorded for the period from March 31, 1994
(date of inception) through December 31, 1995. In addition, no net losses
incurred in 1999 prior to the closing of this offering will be recorded on our
federal, state or local income tax returns. Because we operated as a limited
liability company for tax purposes during these periods, and will continue to
until the closing of this offering, all taxable losses were, and will be,
allocated to the members for reporting on their income tax returns. As a result,
we will not be able to offset future taxable income, if any, against losses
incurred prior to the closing of this offering. Upon conversion from a limited
liability company to a corporation, we expect that a valuation allowance equal
to any gross deferred tax assets would be recognized as we believe that it is
more likely than not that these deferred tax assets will not be realized.
LIQUIDITY AND CAPITAL RESOURCES
We have incurred annual operating losses since inception and at September 30,
1999, we had incurred an accumulated deficit of $28,468,000. Since our
inception, we have financed our operations primarily through various private
placements of equity, interest income earned on cash and cash equivalent
balances and debt provided through a credit line secured by some of our
manufacturing and laboratory assets. From our inception through September 30,
1999, we have raised aggregate equity proceeds of $40,322,000 and have borrowed
$3,424,000 under our $5,000,000 credit facility. In addition, in November 1999,
we raised gross proceeds of $39,216,000 through a private placement of equity.
As part of the November 1999 private placement, we issued warrants that expire
September 30, 2002. The exercise price of these warrants is $ per share.
Upon the closing of this offering, we expect some of these warrants will be
converted, on a net exercise basis, into shares of common stock and that
warrants to purchase shares of common stock will remain outstanding.
We expect that the proceeds from the November 1999 private placement of equity,
the proceeds from this offering, and current working capital will fund our
capital expenditures and growing operations over the next two years. Our future
capital requirements
27
<PAGE> 29
include, but are not limited to, supporting our Oncophage clinical trial efforts
and continuing our other research and development programs. Satisfying our
long-term liquidity needs will require the successful commercialization of
Oncophage or other products and may require additional capital.
Our cash and cash equivalents at September 30, 1999 were $12,612,000, a decrease
of $9,556,000 from December 31, 1998. The primary use of cash during the nine
months ended September 30, 1999 was to finance operations, including our
Oncophage clinical trials, and capital expenditures for the establishment of our
manufacturing and laboratory facility.
Net cash used in operating activities for the years ended December 31, 1996,
1997 and 1998 was $1,473,000, $3,518,000 and $6,377,000, and for the nine months
ended September 30, 1999 was $9,416,000 compared to $5,508,000 for the nine
months ended September 30, 1998. The increase resulted from the increase in the
number and size of our Oncophage clinical trials and general expansion of our
operations.
Net cash used in investing activities for the years ended December 31, 1996,
1997 and 1998 was $231,000, $619,000 and $3,676,000, and for the nine months
ended September 30, 1999 was $4,592,000 compared to $1,047,000 for the nine
months ended September 30, 1998. The investments were primarily for the
construction of our manufacturing and laboratory facility and equipment,
furniture and fixtures. Our new manufacturing and laboratory facility in Woburn,
Massachusetts was partially financed through the $5,000,000 credit facility
discussed below and available cash balances.
Net cash provided by financing activities was $10,500,000, $7,635,000 and
$19,134,000 for the years ended December 31, 1996, 1997 and 1998, and $4,451,000
for the nine months ended September 30, 1999 compared to $6,525,000 for the nine
months ended September 30, 1998. Since inception, our primary source of
financing has been from equity investments. During 1996, 1997 and 1998, equity
contributions from private placements and, in 1998, exercises of options,
totaled approximately $10,500,000, $7,635,000 and $18,225,000 and $2,212,000 for
the nine months ended September 30, 1999 compared to $6,525,000 for the nine
months ended September 30, 1998. We raised gross proceeds of $39,216,000 in
November 1999 through a private placement of equity. At September 30, 1999, we
have outstanding $3,149,000 under a $5,000,000 credit facility to finance the
construction of our manufacturing and laboratory facility and the purchase of
related equipment. Loans that are drawn down on the credit facility are secured
by specific assets, including leasehold improvements, which they finance.
YEAR 2000 COMPLIANCE
The following constitutes "Year 2000 Readiness Disclosure" under the Year 2000
Information and Readiness Disclosure Act of 1998.
The year 2000 issue, or Y2K, refers to potential problems with computer systems
or any equipment with computer chips or software that use dates where the date
has been stored as just two digits. On January 1, 2000, any clock or date
recording mechanism incorporating date sensitive software which uses only two
digits to represent the year may recognize a date using "00" as the year 1900
rather than the year 2000. This could result in a system failure or
miscalculations causing disruption of operations, including, among other things,
a temporary inability to process transactions, perform laboratory analyses, or
engage in similar business activities.
We are a biopharmaceutical company and our proposed product candidates are not
software or computer based. Therefore, our proposed products are not directly
impacted by the Y2K problem. Our exposure to potential risks from this problem
involves computer and information technology systems, and other systems which
include embedded technology using date sensitive programs such as for:
- heating, ventilation, air conditioning, or HVAC;
- scientific instrumentation;
- manufacturing and laboratory equipment; and
- laboratory facilities.
28
<PAGE> 30
Our internal information systems consist of off-the-shelf accounting and e-mail
systems, off-the-shelf application programs such as spreadsheet, word
processing, graphics, database management, and presentation software, and some
instrumentation/data acquisition software. Non-informational technology systems
consist of HVAC and telecommunications.
We have completed the process of determining whether there are any critical
areas of our business that are not year 2000 compliant. We estimate that the
total cost of addressing any year 2000 problems will be immaterial. We believe
our worst case scenario relating to year 2000 risks includes a power
interruption and a lack of supplies to support our clinical trials. We are
implementing a contingency plan to cover these situations including expanding
our supplies inventory and maintaining a generator at our manufacturing facility
for the supply of electrical power.
We have taken actions to minimize the impact of the Y2K problem on our systems
and operations, excluding a systemic failure outside our control, such as a
prolonged loss of electrical, water or telephone service. We have inventoried
and reviewed our systems, scientific instrumentation, and laboratory facilities,
including querying third parties that have a material relationship with us, to
ascertain Y2K compliance. Our review included examining information from our
equipment and software vendors, literature supplied with software, and test
evaluations of our systems. Based upon our work and knowledge to date, which
included updating various software programs, we believe that the risk is minimal
that our internal systems, scientific instrumentation, and laboratory facilities
will be materially impacted by Y2K non-compliance disruptions. Most of our
existing systems, scientific instrumentation, and laboratory facilities are Y2K
compliant or are expected to be Y2K compliant by December 31, 1999.
Vendors for our off-the-shelf applications, including our accounting and e-mail
systems, have informed us that their products are Y2K compliant. To date, our
review has not disclosed otherwise. We have no reason to believe that these
applications are not Y2K compliant. If these applications are not Y2K compliant,
we expect, but cannot be certain, that the vendors will make appropriate
upgrades available to all of their customers at no cost or at minimal cost. We
believe that if it were necessary to replace our off-the-shelf software
applications, this software could be replaced at reasonable costs.
With regard to third party risks, we continue to assess Y2K risks. Third parties
include research partners, manufacturers, research organizations and clinical
study administrators. Our vendors and suppliers have indicated that they will
make every effort to be Y2K compliant before December 31, 1999, but that no
guarantees can be given.
The majority of our material third party contracts relate to sites for clinical
trials of our product candidates and research and development. We believe that
it would be difficult, time consuming, and costly to find alternative clinical
sites and research arrangements. We will continue to work with third parties to
identify and resolve any problems with Y2K compliance.
In a worst case scenario, we could experience delays in receiving research and
development and manufacturing supplies as well as managing and accessing data on
patients enrolled in clinical studies. These delays could slow clinical
development and research and development programs, or impact our ability to
effectively manage and monitor these programs. These delays could have an
adverse impact on our stock price. Based on the information and assessments to
date, no contingency plans have been developed.
Any Y2K compliance problems which arise could materially and adversely affect
our business, results of operations or cash flow. We will continue to identify
all Y2K problems that could materially adversely affect our business operations
and develop contingency plans, if possible. However, it is not possible to
determine with complete certainty that all Y2K problems affecting us or third
parties which have a material relationship with us have been identified. It is
not possible to insure economically against all conceivable risks.
29
<PAGE> 31
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
In the normal course of business, we are exposed to fluctuations in interest
rates as we seek debt financing to make capital expenditures. We do not use
derivative instruments or hedging to manage our exposures.
The information below summarizes our market risks associated with debt
obligations as of September 30, 1999. Fair values included herein have been
estimated taking into consideration the nature and terms of each instrument and
the prevailing economic and market conditions at September 30, 1999. The table
presents cash flows by year of maturity and related interest rates based on the
terms of the debt.
<TABLE>
<CAPTION>
ESTIMATED YEAR OF MATURITY
FAIR CARRYING -------------------------------------------
VALUE AMOUNT 1999 2000 2001 2002
---------- ---------- -------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Long-term debt........... $3,351,000 $3,149,000 $781,000 $906,000 $1,050,000 $412,000
Fixed interest rates from 13.954% to 15.084%
</TABLE>
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities", which establishes accounting and reporting
standards for derivative instruments, including derivatives instruments embedded
in other contracts, and for hedging activities. SFAS No. 133 is effective for
all of our fiscal quarters beginning January 1, 2001. This statement is not
expected to affect us as we currently do not use derivative instruments or
engage in hedging activities.
30
<PAGE> 32
BUSINESS
OVERVIEW
Antigenics is engaged in the discovery and development of novel
immunotherapeutic drugs for the treatment of life threatening and chronic
medical conditions. Our immunotherapeutics are based on a specific class of
proteins known as heat shock proteins and their ability to modulate the immune
system. We are currently evaluating our lead immunotherapeutic, Oncophage, in
six clinical trials for the treatment of four different cancers, and we expect
to start our first pivotal clinical trial by mid-2000. We are also developing
immunotherapeutics to treat infectious diseases, such as genital herpes, and
autoimmune diseases, such as diabetes and multiple sclerosis. Based upon our
scientific and drug development skills, our technology platform and our
strategic expertise, we intend to become a leader in drug discovery, development
and commercialization.
THE IMMUNE SYSTEM
The immune system is the body's natural defense mechanism to prevent and combat
disease. The immune system differentiates between normal tissue, or "self,"
versus diseased tissue or "non-self." When a competent immune system recognizes
diseased cells, a series of steps ensues resulting in the elimination of these
cells. There are two types of immune response: antibody-based and T cell-based.
Antibody-based immune response is primarily involved in the prevention of
diseases. Antibodies are proteins produced by the body in response to disease
causing agents known as pathogens. Antibodies bind to pathogens, including
viruses and bacteria, and block their ability to infect cells. Preventive
vaccines that trigger an antibody-based immune response have been very
successful in reducing the incidence of several deadly diseases, including
smallpox, polio and measles. These vaccines consist of weakened or attenuated
pathogens that stimulate the production of antibodies. However, these types of
vaccines have not been effective in the prevention or treatment of many serious
diseases, including cancer, herpes, tuberculosis, hepatitis and HIV.
T cell-based immune response, on the other hand, is primarily involved in
combating diseases, such as cancers or infections. T cells are specialized white
blood cells that are normally produced by the body to kill cancer cells and
infected cells. T cell-based immune response begins when specialized immune
cells called dendritic cells capture antigens, which are the identifying
structural components of cancers and pathogens. Once inside dendritic cells,
antigens are broken down into small fragments called peptides that are
subsequently displayed on the surface of the dendritic cell. T cells continually
scan the surface of dendritic cells for peptides. If T cells recognize displayed
peptides as foreign or non-self, they replicate rapidly and then search for and
kill other diseased cells containing those same peptides. This T cell-based
immune response is enhanced by hormones known as cytokines that activate various
components of the immune system.
Significant scientific evidence suggests that cancers and infections trigger a T
cell-based immune response during the initial course of their progression. This
immune response, however, is not always sufficient to eradicate the disease.
Tumor cells, for example, hide their antigens and produce substances that
suppress the patient's immune response.
To date, efforts to develop immunotherapeutics that sufficiently overcome this
suppression of the immune system and stimulate T cells to selectively and
accurately target and kill diseased cells have failed due to one or both of the
following:
- the inability of drug developers to identify the appropriate
antigens that identify diseases such as a particular person's
cancer; and
- the inability to present these relevant antigens to activate T cells
to selectively destroy diseased cells.
We believe our immunotherapeutics specifically address these issues.
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<PAGE> 33
OUR TECHNOLOGY PLATFORM
INTRODUCTION
We are the pioneers in activating T cells using purified heat shock
protein-peptide complexes. In individuals who develop cancer, infections and
autoimmune disorders, the immune system fails in its normal function. Our
immunotherapeutics are designed to restore this function and treat these life
threatening or chronic disease conditions.
We believe our immunotherapeutics will be applicable to the treatment of all
cancer types and several types of infectious diseases and autoimmune disorders.
Our immunotherapeutics consist of two components: a variable component,
consisting of small protein fragments called peptides, which is necessary for
the targeting of specific diseases; and a constant component, consisting of a
heat shock protein, which is necessary for the activation of a T cell-based
immune response to the targeted disease. In the case of cancer, which is a
highly variable disease from one patient to another, we purify heat shock
protein-peptide complexes from each patient's own tumor tissue. Our cancer
immunotherapeutics are therefore specific to each patient. In contrast, for each
infectious disease which is generally caused by a common pathogen, we use a
human heat shock protein complexed to peptides derived from the target pathogen.
Our immunotherapeutics for infectious diseases therefore will be
disease-specific rather than patient-specific. Our immunotherapeutic for
autoimmune disorders will be generic, meaning it will be intended for the
treatment of all disorders that result in T cells attacking healthy tissue.
The principle upon which our technology platform is based extends back over 50
years when scientists began using genetically identical laboratory animals to
study the immune response to cancer. Researchers demonstrated that animals
vaccinated with attenuated tumor cells are immune to subsequent injections of
live tumor cells, and further that this immunity to cancer is tumor-specific.
Twenty years ago, the chairman of our scientific advisory board, Pramod
Srivastava, discovered that cancers harbor molecular factors known as heat shock
proteins which are responsible for conferring immunity to cancer. Consistent
with the observation that immunity generated with attenuated tumor cells is
tumor-specific, we discovered that heat shock proteins elicit immunity only to
the tumor from which they are purified.
HEAT SHOCK PROTEINS
Heat shock proteins are a class of proteins that play a major role in
transporting peptides, including antigens, within a cell and are thus often
called chaperones. In this capacity, heat shock proteins bind to the entire
antigenic repertoire or fingerprint of the cell in which they reside. Heat shock
proteins are present in all cells of all organisms from bacteria to mammals and
their structure and function are similar across these diverse life forms.
Published research suggests that heat shock proteins play a central role in the
generation of immune responses. This role includes coordinating the breakdown
and transport of peptides from the point of their generation inside cells to
their ultimate display on the cell's surface for recognition by T cells.
Although heat shock proteins inside tumor cells and pathogen-infected cells help
display antigens to the immune system, tumors and pathogens simultaneously
employ strategies to evade immune responses. In some cases, this evasion of
immune responses results in disease progression.
The ability of heat shock proteins to chaperone peptides is key to our
technology platform. When we purify heat shock proteins from tumor cells or
pathogen-infected cells according to our manufacturing protocols, the heat shock
proteins remain complexed, or bound, to the entire repertoire of peptides
produced by the tumor or pathogen. These purified heat shock protein-peptide
complexes isolated from diseased cells are our immunotherapeutics.
We believe that when these purified heat shock protein-peptide complexes are
injected into the skin, they stimulate a powerful T cell-based immune response
capable of targeting and killing cancers and pathogen-infected cells from which
these complexes were derived. Our immunotherapeutics are injected into the skin
to take advantage of the high concentration of dendritic cells in this region.
These dendritic cells express receptors that specifically recognize heat shock
proteins; therefore, our immunotherapeutics are efficiently captured and
processed by dendritic cells. Once inside dendritic cells, heat shock
protein-peptide complexes separate and the peptides are displayed on the surface
of the dendritic cell where they can be recognized by T cells.
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<PAGE> 34
Dendritic cells expressing cancer-specific or pathogen-specific peptides
activate T cells that are capable of specifically targeting and killing diseased
cells throughout the body that express those same peptides. The interaction of
heat shock proteins with their receptors on dendritic cells also leads to
secretion of cytokines by the dendritic cells which further stimulate the immune
system.
THE MECHANISM OF HEAT SHOCK PROTEIN-INDUCED IMMUNE RESPONSE
STEP 1. Injection of purified heat shock protein-peptide complexes into skin
|
\|/
-
STEP 2. Heat shock protein-peptide complexes bind to receptor on surface of
dendritic cell and are subsequently internalized
|
\|/
-
STEP 3. Heat shock proteins and peptides separate inside dendritic cell
|
\|/
-
STEP 4. Peptides are presented on the surface of dendritic cell for recognition
by T cells. Upon recognition, T cells are activated to kill diseased
cells, such as tumor or pathogen-infected cells, expressing those same
peptides. Heat shock proteins also stimulate dendritic cells to release
cytokines which activate natural killer cells and enhance the immune
response
<TABLE>
<S> <C>
Heat shock protein receptor Dendritic cell
Heat shock protein Peptide presented on surface of dendritic cell
Peptide chaperoned by heat shock protein
</TABLE>
[GRAPH]
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<PAGE> 35
Our immunotherapeutics are designed to stimulate the immune system to recognize
the entire antigenic fingerprint of a tumor or pathogen. Due to this
characteristic, we believe our immunotherapeutics will:
- trigger the immune system to recognize and destroy all tumor or
pathogen-infected cells in the body; and
- make it difficult for tumors or pathogens to escape recognition by
the immune system.
We believe that the re-presentation of peptides by dendritic cells triggers a
more potent immune response than that achieved by the presentation of these same
peptides by the tumor or pathogen-infected cell.
Our preclinical studies with heat shock protein immunotherapeutics have
demonstrated a beneficial effect in preventing or treating 13 types of cancer in
three different species. The cancer types tested include cancers of the skin,
colon, lung and other tissues. Further, our immunotherapeutics show therapeutic
benefit in animals with metastatic disease, which is when cancer has spread
beyond the primary tumor to distant regions of the body. Metastatic disease is
often responsible for the relapse and ultimate death of patients with cancer.
OUR PRODUCTS UNDER DEVELOPMENT
INTRODUCTION
The chart below summarizes the indications and status for each of our products
and development programs. We use "HSPPC" as an abbreviation for "heat shock
protein-peptide complex." The number following HSPPC is the molecular weight of
the heat shock protein used in the product. For cancer applications, we call
HSPPC-96 "Oncophage."
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRODUCT INDICATION STATUS
- ------- ---------- ------
<S> <C> <C>
CANCER
Oncophage Renal cell carcinoma Phase II trial ongoing
Phase I/II trial completed
Melanoma Phase II trial ongoing
Phase I/II trial completed
Colorectal carcinoma Phase II trial enrollment completed
Gastric cancer Phase I/II trial ongoing
Pancreatic cancer Phase I trial completed
Low grade indolent non-Hodgkin's lymphoma Phase II trial planned
Sarcoma Phase II trial planned
HSPPC-70-C Various cancers Research
HSPPC-90-C Various cancers Research
HSPPC-56-C Various cancers Research
INFECTIOUS DISEASES
HSPPC-96-GH Genital herpes Preclinical
HSPPC-70-GH Genital herpes Preclinical
HSPPC-56-I Various infectious diseases Research
HSPPC-70-I Various infectious diseases Research
AUTOIMMUNE DISORDERS
gp96 Type 1 diabetes Research
Multiple sclerosis Research
</TABLE>
- --------------------------------------------------------------------------------
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<PAGE> 36
OUR CANCER IMMUNOTHERAPEUTICS
Background. The American Cancer Society expects that approximately 1.2 million
new cases of cancer will be diagnosed in the United States in 1999. Cancer is
the second leading cause of death in the United States, resulting in an
estimated 563,100 deaths in 1999. The American Cancer Society reports that since
1990 nearly 12 million cases of cancer have been diagnosed and nearly 5 million
people have died from this disease in the United States.
Cancer results from the uncontrolled proliferation of abnormal cells.
Eventually, these cells form a mass referred to as a tumor. As the tumor grows,
it pushes outward, often invading adjacent tissues and organs and interfering
with their normal function. In addition, small groups of cells may break away
from the primary tumor and spread or metastasize. Tumors produced at distant
sites are referred to as metastatic tumors.
The uncontrolled proliferation of cancer cells is due to alterations, or
mutations, in a cell's DNA. Mutations can take place when a gene is exposed to
radiation or particular drugs or chemicals, or when some as yet unexplained
internal change occurs. The mutations in DNA also lead to production of
antigens. Because mutations occur randomly, the antigenic fingerprint of each
person's cancer is unique.
Studies in animals have confirmed that a unique repertoire of antigens is
associated with each primary tumor. As cancers metastasize, they continue to
mutate, potentially producing new antigens not found in the primary tumor of the
same patient. However, we believe that a significant overlap exists between the
antigenic fingerprint of the metastatic cells and the primary tumor of the same
patient.
Current Treatments. Surgery, chemotherapy and radiotherapy are the three most
commonly used methods for treating cancer. A cancer patient often receives a
combination of these treatments depending upon the type of cancer and the extent
of the disease. Surgery is curative only when tumors are detected at relatively
early stages of growth and can be fully excised. Unfortunately, most tumors
metastasize when they are very small, ultimately causing relapse and death in
many cancer patients. The use of chemotherapy or radiotherapy sometimes improves
survival rates; however, these treatments have significant limitations.
High rates of treatment failure and limitations posed by severe side effects and
tumor resistance have compelled researchers to focus on alternative strategies
of cancer treatment. Immunotherapeutics have the ability to target and destroy
widely disseminated disease without damaging normal tissue. In addition,
immunotherapeutics do not have many of the shortcomings of traditional cancer
treatments.
Our Approach. We purify our cancer immunotherapeutics from resected portions of
a patient's tumor. Our cancer immunotherapeutics are patient-specific and
therefore incorporate the entire antigenic fingerprint of each patient's own
tumor. Because our cancer immunotherapeutics contain overlapping antigens
present in both the primary and metastatic tumors, we believe they will be
effective in treating all the tumor cells that remain in the body that are
derived from the primary tumor.
ONCOPHAGE
Oncophage is our lead cancer immunotherapeutic. It is being evaluated in four
different cancers in six separate phase II or phase I/II clinical trials.
Oncophage consists of purified, patient-specific heat shock protein-peptide
complexes designed to elicit a T cell-based immune response to a patient's
cancer. After surgical removal of a patient's tumor, the hospital or clinic
ships a portion of the tumor tissue frozen by overnight courier to our facility.
We purify Oncophage from the tumor tissue using our proprietary manufacturing
process in less than ten hours. Depending on the dose, we require a minimum of
one to three grams of tumor tissue to yield a sufficient amount of Oncophage for
a typical course of treatment.
We formulate Oncophage in sterile buffered saline and package it in standard
single injection vials in our manufacturing facility. We subject the final
immunotherapeutic to extensive quality control testing including sterility
testing of each lot. We ship the product frozen via overnight courier back to
the hospital.
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<PAGE> 37
We have developed sophisticated tracking systems and procedures designed to
ensure correct delivery of Oncophage to the appropriate patient.
ONCOPHAGE MANUFACTURING PROCESS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
STARTING MATERIAL MANUFACTURING FINAL PRODUCT
Tumor tissue Sample of tissue Heat shock protein- Product frozen
removed by ---- shipped frozen to our --- peptide complexes --- and shipped to
surgery manufacturing purified from hospital/clinic for
facility tumor tissue at patient treatment
our facility
</TABLE>
- --------------------------------------------------------------------------------
There are several benefits associated with the production and administration of
our autologous product:
- we can sterilize Oncophage through simple terminal filtration;
sterility is required for FDA approval of a product that will be
injected into humans;
- the scheduling of production at our central facility is flexible
because we purify Oncophage from frozen tumor samples;
- our final product can be administered when the patient is ready to
begin treatment because Oncophage is frozen and has a current
shelf-life of at least six months; and
- Oncophage consists of a purified protein which can be consistently
produced from most tumor types.
A patient initially receives Oncophage four to six weeks after surgical removal
of the patient's primary or metastatic tumor. The typical course of treatment
consists of a series of injections into the skin administered once per week for
four to six weeks. Patients may be treated with more than one course of
Oncophage based on the advice of their oncologist.
ONCOPHAGE COURSE OF TREATMENT
[CHART]
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
4-6 week Repeat course of Oncophage treatment
recovery upon request
Surgery --- Oncophage once per --- Follow up ---
week for 4-6 weeks
</TABLE>
- --------------------------------------------------------------------------------
Although we believe Oncophage will be applicable to the treatment of all cancer
types, our initial focus is on cancers that are resistant to available treatment
options. Further, we chose types of cancer and stages of disease that typically
yield tumors that can be removed by surgery. Additionally, in order to complete
clinical trials rapidly and file for regulatory approval, we have selected
cancers and stages of disease that are evaluable in clinical trials with near
term endpoints.
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<PAGE> 38
We filed an IND for Oncophage in November 1996 that the FDA allowed on December
20, 1996. To date, we have treated approximately 140 advanced stage, metastatic
cancer patients with Oncophage in our clinical programs. We started enrolling
patients in our first clinical trial at the Memorial Sloan-Kettering Cancer
Center in New York, New York in November 1997.
We believe the collective results from these clinical programs show that
Oncophage is generally safe and well tolerated. These results also demonstrate
preliminary indications of clinical benefit in a number of these patients.
Moreover, we have shown that Oncophage can generate an anti-tumor immunological
response. In addition, we believe Oncophage can be made consistently and in
sufficient quantities from most human cancer tissue.
The investigators participating in our clinical programs have documented tumor
regressions using standard response criteria. A complete response means that all
tumor tissue has disappeared and the patient appears to be disease free. A
partial response means that evaluable tumor tissue has shrunk by at least 50%. A
minor response means that the tumor has shrunk by 25-50%. Stable disease means
that the tumor has either shrunk or grown by less than 25%. Progressive disease
means that the tumor has grown by more than 25%.
The investigators also documented survival. The median survival refers to the
time at which 50% of patients diagnosed with a particular cancer are alive.
Renal Cell Carcinoma
Background. Renal cell carcinoma is the most common type of kidney cancer.
According to the American Cancer Society, there will be about 30,000 new cases
of kidney cancer in the United States in 1999. Approximately 11,900 people are
expected to die from the disease during 1999. Of the 30,000 patients diagnosed
with kidney cancer, approximately 85% have the specific type of kidney cancer
known as renal cell carcinoma. By the time renal cell carcinoma is diagnosed in
these patients, about one-third of them have developed metastatic disease.
The median survival of patients with metastatic renal cell carcinoma is
approximately 12 months. For patients with metastatic disease, the only FDA
approved treatment is intravenous high-dose interleukin-2, a human cytokine. The
response rate, which includes partial responses and complete responses, of
patients who are treated with high-dose interleukin-2 is approximately 15%.
Treatment with high-dose interleukin-2 is generally associated with severe
adverse effects. These side effects often can lead to discontinuation of
treatment. Although not FDA-approved for the treatment of renal cell carcinoma,
a lower-dose subcutaneous administration of interleukin-2, either alone or in
combination with other cytokines, has become a treatment option. This treatment
regimen has been the subject of a number of small studies with widely varying
outcomes. Generally, side effects using the subcutaneous route of administration
have been milder than those associated with high-dose, intravenous treatment.
Our Clinical Program. In our phase I/II trial, we enrolled patients with
measurable metastatic renal cell carcinoma. This trial was conducted at the M.D.
Anderson Cancer Center in Houston, Texas. These patients did not receive prior
or concurrent cancer therapy. After surgical removal of their primary tumors,
patients were treated at one of three dose levels of Oncophage: 2.5 micrograms,
25 micrograms or 100 micrograms. We treated 38 patients, of whom 34 could be
evaluated with standard radiology measurements.
Of the 34 evaluable patients, 13 patients responded or had stable disease. Four
patients achieved a partial response and one patient achieved a minor response.
The other eight patients showed stabilization of their disease. Three of these
patients had been stable in excess of 10 months. The response rate in this
trial, which does not include patients with a minor response or stable disease,
was 12% and no adverse effects were associated with treatment with Oncophage.
The median survival in this trial has not yet been reached; this means that more
than half of the patients are still alive with an average follow up time of 12
months.
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<PAGE> 39
While the analysis of immunological results is still ongoing, testing to date
shows that in four out of five patients who responded clinically, the number of
T cells increased after treatment with Oncophage. Further, in all patients who
responded clinically, the number of natural killer cells increased after
treatment with Oncophage.
Our phase I/II trial also showed Oncophage to be generally safe and well
tolerated by patients. Sixty-three percent of our patients went on to receive
more than one course of treatment with Oncophage.
We were able to prepare Oncophage successfully from approximately 98% of renal
cancer carcinoma samples received at our manufacturing facility for this phase
I/II trial. Based on this result, we believe we should be able to manufacture
Oncophage for nearly all renal cell carcinoma patients whose tumors can be
surgically removed.
Based on the results from our phase I/II clinical trial, we have initiated a 60
patient phase II trial for patients with metastatic renal cell carcinoma at the
M.D. Anderson Cancer Center. For this trial, the dose of Oncophage has been set
at 25 micrograms and patients receive one dose once a week for four weeks,
followed by one dose every two weeks. Some patients may also receive an
injection of subcutaneous interleukin-2 if they have not had an adequate
response after three months of treatment with Oncophage. We anticipate that we
will complete this phase II trial in the first quarter of 2000. Based on the
analysis of the results from the phase I/II and phase II trials, we anticipate
that we will start a pivotal trial for renal cell carcinoma by the middle of
2000.
Melanoma
Background. Melanoma is the most serious form of skin cancer. According to the
American Cancer Society, there will be about 44,200 new cases of melanoma in the
United States in 1999. Approximately 7,300 people are expected to die from the
disease during 1999. The incidence of melanoma is growing at 5-7% per year,
which is substantially faster than the growth in incidence rates of other
cancers. Advanced or metastatic melanoma, also known as stage III or IV, is
treated with surgery, radiation therapy, immunotherapy, or chemotherapy
depending on the case. Approximately 20% of all melanoma patients at the time of
their first diagnosis have stage III or stage IV disease. Overall survival of
patients with melanoma has not improved significantly with existing treatments.
The median survival of patients with stage III melanoma varies widely according
to published literature. At the M.D. Anderson Cancer Center, the median survival
of patients with late stage III melanoma is 24 months. According to published
literature, patients with stage IV melanoma have a median survival of about
seven months. Although various treatment options are practiced, the only FDA
approved drug therapies for patients with metastatic melanoma are high dose
intravenous interleukin-2 and alpha interferon, another human cytokine.
Our Clinical Program. We have treated 36 patients in a phase I/II clinical
trial evaluating Oncophage as a treatment for late stage III and early stage IV
metastatic melanoma. Eighty-three percent of the patients in our trial were
previously treated with chemotherapy, radiotherapy, and alpha interferon. The
trial is being conducted at the M.D. Anderson Cancer Center. After surgery to
remove a portion of the tumor, patients were treated with 2.5 micrograms, 25
micrograms or 100 micrograms of Oncophage.
In this trial, we treated 25 patients with stage IV disease and 11 patients with
stage III disease. Among the 25 patients with stage IV disease, 12 patients were
"adjuvant patients." This means that these patients had all of their detectable
melanoma tissue resected before they received treatment with Oncophage. Of these
12 patients, 11 patients are free of disease at a median of 13 months after
surgery. Not enough time has elapsed to appropriately report on the 8 patients
in the adjuvant setting with stage III disease.
In our melanoma trial, we also treated 16 stage III and stage IV patients with
"residual disease." These are patients who have had only part of their disease
resected, leaving them with visible disease at the time of Oncophage treatment.
In this group of patients, there was one stage IV patient who, after initial
progression of his disease, experienced a mixed response. This patient's largest
metastatic lesion
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<PAGE> 40
disappeared completely but the smaller lesions progressed. There were also two
other stage IV patients who experienced stabilization of their disease following
initial progression of disease.
At the time of this analysis, 81% of all the patients who have been treated in
this study are alive. Further analysis of the results from this trial is
ongoing.
To date, the trial has shown Oncophage to be generally safe and well tolerated
by patients. In addition, we have been able to successfully prepare Oncophage
from approximately 92% of melanoma samples received at our manufacturing
facility for this phase I/II trial. Based on this result, we believe we should
be able to manufacture our product for nearly all melanoma patients from whom
adequate amount of tumors can be surgically removed.
In addition to our phase I/II trial at the M.D. Anderson Cancer Center, we are
also currently enrolling patients in a phase II trial for melanoma at the
Istituto dei Tumori in Milan, Italy. We anticipate treating 40 patients during
this trial at 5 or 50 micrograms of Oncophage. The purpose of this trial is to
confirm the route of administration of Oncophage.
Colorectal Cancer
Background. Colorectal cancer is cancer of the colon or rectum. According to
the American Cancer Society, there will be about 129,400 new cases of colorectal
cancer in the United States in 1999. Approximately 56,600 people are expected to
die from the disease during 1999.
For patients whose disease has not spread to other parts of the body, surgery
remains the most common treatment and can be curative in about two thirds of
these cases. For patients whose disease has metastasized to other parts of the
body, treatment options are limited and the patients' prognosis is poor.
Patients who present with recurrence of advanced disease may have their
metastatic lesions removed by surgery. The median survival for these patients is
approximately 12 months. Conventional cancer treatments such as chemotherapy and
radiation have shown limited benefit in treating colorectal cancer.
Our Clinical Program. We have completed enrollment of a 30 patient phase II
clinical trial evaluating Oncophage as a treatment for metastatic colorectal
cancer. The trial is being conducted at the Istituto dei Tumori. After surgery
to remove their metastatic tumors, patients are treated with 2.5 micrograms, 25
micrograms or 100 micrograms of Oncophage.
Analysis of the results from this trial is ongoing. To date, the trial has shown
Oncophage to be generally safe and well tolerated by patients. In addition, we
have been able to successfully prepare Oncophage from 100% of colorectal cancer
samples received at our manufacturing facility for this trial. Based on this
result, we believe we should be able to manufacture our product for nearly all
colorectal cancer patients whose tumors can be surgically removed.
Gastric Cancer
Background. Gastric cancer is cancer of the stomach. According to the American
Cancer Society, there will be about 21,900 new cases of gastric cancer in the
United States in 1999. Approximately 13,500 people are expected to die from the
disease during 1999. The treatment options for gastric cancer are surgery,
chemotherapy and radiation. Biological therapies are currently in clinical
trials. For patients with resectable disease, improvements in surgical
techniques have led to increased survival. Despite these advances, as well as
the development of multi-drug chemotherapy regimens, the median survival for
patients with advanced gastric cancer, according to published research, is
approximately seven months.
Our Clinical Program. We are currently enrolling patients in a 30 patient phase
I/II clinical trial evaluating Oncophage as a treatment for metastatic gastric
cancer. The trial is being conducted at the Johannes Gutenberg-University
Hospital in Mainz, Germany. After surgery to remove their tumors, patients are
treated with 2.5 micrograms or 15 micrograms of Oncophage. Although enrollment
is still
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<PAGE> 41
ongoing, to date, the trial has shown Oncophage to be generally safe and well
tolerated by patients. In addition, we have been able to successfully prepare
Oncophage from approximately 71% of gastric cancer samples received at our
manufacturing facility for this trial. Based on this result, we believe we
should be able to manufacture our product for the majority of gastric cancer
patients whose tumors can be surgically removed.
Pancreatic Cancer
Background. Pancreatic cancer is the fourth leading cause of cancer death in
the United States. According to the American Cancer Society, there will be about
28,600 new cases of pancreatic cancer in the United States in 1999.
Approximately 28,600 people are expected to die from the disease during 1999.
The treatment options for pancreatic cancer are surgery and chemotherapy. For
resectable disease, a patient undergoes surgery and may receive chemotherapy as
a follow up treatment. At the Memorial Sloan-Kettering Cancer Center, patients
who have had resection of their disease, are reported to have a median survival
of 14 months. For unresectable disease, patients are treated with chemotherapy.
The median survival time for patients with unresectable disease is less than six
months.
Our Clinical Program. In early 1999, we completed a pilot phase I clinical
trial evaluating Oncophage as a treatment for resectable pancreatic cancer. The
trial was conducted at the Memorial Sloan-Kettering Cancer Center and enrolled
15 patients. After surgery to remove their primary tumor, five of the fifteen
patients were treated with 5 micrograms of Oncophage.
Two out of five patients generated a T cell mediated immune response to their
tumor after treatment with Oncophage. These two patients are alive and disease
free at 11 and 22 months, respectively, since surgery. A third patient is known
to be free of disease at 24 months after surgery. The fourth patient is alive
with recurrent disease at 11 months and the fifth patient died seven months
after surgery.
The trial showed Oncophage to be generally safe and well tolerated by patients.
We successfully prepared Oncophage from 5 of 15 pancreatic cancer samples
received in our manufacturing facility. It was not possible to prepare Oncophage
from the remaining specimens due to the presence of enzymes in the pancreatic
tissue that break down proteins, including heat shock proteins. Based upon our
process development advances, we anticipate that a modified process will improve
our rate of success for purifying Oncophage from pancreatic tumors.
Low Grade Indolent Non-Hodgkin's Lymphoma
Background. Non-Hodgkin's lymphoma is cancer that originates in lymph tissue.
According to the American Cancer Society, there will be about 56,800 new cases
of non-Hodgkin's lymphoma in the United States in 1999. Approximately 25,700
people are expected to die from the disease during 1999. Approximately 40% of
patients with non-Hodgkin's lymphoma have low grade indolent disease, which is a
slow growing, often fatal, lymphoma.
The treatment for patients with non-Hodgkin's lymphoma has traditionally been
chemotherapy. Recently, the FDA approved one new antibody therapy for low grade
non-Hodgkin's lymphoma.
Our Clinical Program. We are in the process of initiating a 35 patient phase II
clinical trial evaluating Oncophage as a treatment for low grade non-Hodgkin's
lymphoma. The trial will be conducted at the M.D. Anderson Cancer Center.
Patients will be treated with 25 micrograms of Oncophage after surgical removal
of tumor tissue.
Sarcoma
Background. Soft tissue sarcomas are cancerous tumors that can develop from
fat, muscle, nerve, joint, blood vessel, or deep skin tissues. According to the
American Cancer Society, there will be about 7,800
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<PAGE> 42
new cases of soft tissue sarcomas in the United States in 1999. Approximately
4,400 people are expected to die from the disease during 1999.
The treatment options for sarcoma are surgery, chemotherapy or targeted
radiotherapy. For resectable disease, a patient undergoes surgery and receives
chemotherapy or targeted radiotherapy as follow up treatments. For unresectable
disease, patients are treated with a combination of chemotherapy and
radiotherapy.
Our Clinical Program. We are in the process of initiating a 35 patient phase II
clinical trial evaluating Oncophage as a treatment for soft tissue sarcomas. The
trial will be conducted at Memorial Sloan-Kettering Cancer Center and may be
expanded to include other sites. Patients will be treated with 25 micrograms of
Oncophage after surgical removal of tumor tissue.
Other Cancer Immunotherapeutics
In addition to Oncophage, we are currently researching several other autologous
cancer immunotherapeutics using different heat shock proteins including
HSPPC-70, HSPPC-90, and HSPPC-56. These immunotherapeutics have demonstrated
efficacy in animal cancer models.
OUR INFECTIOUS DISEASE IMMUNOTHERAPEUTICS
Background. Infectious diseases are illnesses caused by microorganisms, like
viruses, bacteria and parasites, and include tuberculosis, hepatitis, genital
herpes and HIV. While a number of viral and bacterial diseases are treated
effectively with antiviral agents and antibiotics, a growing concern is the
emergence of new strains of pathogens that have developed resistance to all
available drugs.
Our Approach. Our immunotherapeutics for treating infectious diseases will
consist of heat shock proteins complexed to peptides that are produced by the
pathogen causing the infection. Typically, each infectious disease is caused by
a specific pathogen. Consequently, our infectious disease immunotherapeutics
will be common to all patients with a particular infection and will not be
patient-specific. We currently produce these immunotherapeutics from cells
infected with the target pathogen. This manufacturing procedure has enabled
testing of our immunotherapeutics in preclinical studies and should enable
production of sufficient quantities to begin human clinical trials. Another
technique to manufacture our immunotherapeutics involves binding specific
peptides with heat shock proteins in vitro. The peptides can be generated in
microorganisms or they may be produced synthetically.
OUR INFECTIOUS DISEASE IMMUNOTHERAPEUTIC MANUFACTURING PROCESS
[GRAPH]
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Starting Material Manufacturing Final Product
Mammalian cell lines \ Heat shock protein-peptide \ Product frozen
infected with pathogen ---| complexes (purified from cell ---| and shipped to
of interest and grown / lines or produced in vitro) / hospital/clinic for
in bioreactors patient treatment
or
Heat shock proteins
and pathogen specific
peptides produced
synthetically or in
microorganisms
</TABLE>
- --------------------------------------------------------------------------------
41
<PAGE> 43
Genital Herpes. Genital herpes is a contagious viral infection that affects an
estimated 45 million Americans. Doctors estimate that as many as 500,000 new
cases may occur each year in the United States. Genital herpes is currently
treated with palliative antiviral agents that reduce further replication of the
virus. The challenge of antiviral therapy lies not only in treatment of the
symptoms during the first and recurrent episodes but also in the long-term
suppression of the herpes virus in patients with frequent recurrences. We expect
to file an IND for this indication in 2000.
OUR AUTOIMMUNE DISORDER IMMUNOTHERAPEUTIC
Background. Autoimmune disorders result from an inappropriate immune response
that targets and destroys normal tissue. While it is not known definitively what
triggers autoimmune responses, both genetic and environmental factors are
probably involved in this process. Several autoimmune disorders, including
diabetes and multiple sclerosis, result in the proliferation of misdirected T
cells that attack normal tissues. We believe that a therapeutic product that can
turn off misdirected T cell responses could treat these disorders.
Our Approach. We have demonstrated in animal models that heat shock proteins
administered at higher doses than those required for treating cancer and
infectious diseases can turn off misguided T cells that destroy healthy tissue
in animals with certain autoimmune disorders. We are currently researching the
application of heat shock proteins to treat autoimmune diseases like diabetes
and multiple sclerosis. The source of heat shock proteins used in our autoimmune
disorders immunotherapeutic will be human cells. Our immunotherapeutic could
also be made using recombinant DNA techniques.
OUR AUTOIMMUNE DISORDER IMMUNOTHERAPEUTIC MANUFACTURING PROCESS
[GRAPH]
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Starting Material \ Manufacturing \ Final Product
Mammalian cells ---| Heat shock protein-peptide ---| Product frozen and
or / complexes purified / shipped to
recombinant DNA from cell lines hospital/clinic for
or patient treatment
recombinantly produced
</TABLE>
- --------------------------------------------------------------------------------
MANUFACTURING
We manufacture our own immunotherapeutic products in a 30,225 square foot
manufacturing and research and development facility located in Woburn,
Massachusetts. We are in the process of preparing this facility for the
commercialization of Oncophage.
Our process development group is currently working on improving the process by
which heat shock protein-based immunotherapeutics are manufactured. Efforts in
this area to date have resulted in a two-fold reduction in the time required to
purify Oncophage from individual patient's tumors and a 40% increase in the
quantity of Oncophage we can produce from a particular tumor mass. These efforts
in our cancer program should also benefit preparation of our heat shock
protein-based immunotherapeutics for treatment of infectious diseases.
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SALES AND MARKETING
To commercially market our immunotherapeutic products once the necessary
regulatory approvals are obtained, we must either develop our own sales and
marketing force or enter into arrangements with third parties. Currently, our
sales and marketing plans consist of the following:
- Commercialize cancer immunotherapeutics in the United States
through our own sales force. We believe that we can build a United
States sales force to market our cancer immunotherapeutics due to
the concentration of the United States oncology market.
- Form collaborations with pharmaceutical companies for
commercializing cancer immunotherapeutics outside the United
States. For example, we have entered into an agreement with Sigma
Tau, under which they have agreed to pay for two clinical trials in
return for rights which include an option to enter into an
agreement to market Oncophage in Italy, Spain, Portugal and
Switzerland. We have also signed an agreement for marketing
Oncophage in Israel.
- Form collaborations with pharmaceutical companies for infectious
diseases and autoimmune disorders. Unlike cancer, the number of
doctors and health care institutions prescribing treatments for
infectious diseases and autoimmune disorders is large and
fragmented and will require a large sales force to effectively
market our products.
OUR INTELLECTUAL PROPERTY PORTFOLIO
We devote significant resources to protecting and expanding our intellectual
property portfolio. We seek to protect our core technologies through a
combination of patents, trade secrets, and know-how. As a result of an exclusive
worldwide license with Fordham University and one with Mount Sinai School of
Medicine, we have exclusive rights to seven issued U.S. patents, and foreign
counterpart patents and patent applications, relating to our heat shock protein
technology. Prior to directing the Center for Immunotherapy of Cancer at the
University of Connecticut, Dr. Srivastava, the Chairman of our Scientific
Advisory Board, was an assistant professor of immunology at Mount Sinai School
of Medicine, and, then, a professor of immunology at Fordham University.
We also have licensed rights to 44 pending U.S. patent applications, and
corresponding foreign counterpart patents and applications, from Mount Sinai
School of Medicine of New York University, Fordham University, Duke University,
and the University of Miami. Under the license agreements with these
institutions, we have exclusive, worldwide rights to inventions using heat shock
proteins in the treatment and prevention of cancer, infectious diseases,
autoimmune disorders, and other indications. If we commercialize any of the
inventions, we will pay the licensors a royalty on sales of the commercialized
product. In addition, pursuant to a research agreement with the University of
Connecticut Health Center, we have agreed to provide funding, through December
31, 2002, to the laboratory directed by Dr. Srivastava at the University. In
return, we have an option to obtain an exclusive license to new inventions as
that term is defined in the research agreement, with the royalty rates and other
terms to be determined by negotiation between the parties. We also have an
option to obtain an exclusive license to certain types of "improvement"
inventions as that term is defined in the research agreement, at already-
determined royalty rates, but with the other terms to be determined by
negotiation between the parties. To date, we have exercised options to license
three patent applications.
It is worth noting that:
- patent applications in the United States are maintained in secrecy
until patents issue;
- patent applications in other countries generally are not published
until 18 months after they are first filed in any country;
- publication of technological developments in the scientific or
patent literature often lags behind the date of these developments;
and
- searches of prior art may not reveal all relevant prior inventions.
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<PAGE> 45
Although we have licensed seven issued United States patents and 44 pending
United States patent applications, we cannot be certain that our licensors'
inventors were the first to invent the subject matter covered by these patent
and patent applications or that they were the first to file patent applications
for those inventions or that these patent rights would not be rendered invalid
or unpatentable.
REGULATORY CONSIDERATIONS
The preclinical and clinical testing, manufacturing, labeling, storage, record
keeping, advertising, promotion, export, marketing and distribution, among other
things, of our immunotherapeutics are subject to extensive regulation by
governmental authorities in the United States and other countries. In the United
States, pharmaceutical products are subject to rigorous review by the FDA under
the Federal Food, Drug, and Cosmetic Act, the Public Health Service Act and
other federal statutes and regulations. Non-compliance with applicable
requirements can result in fines, recall or seizure of products, total or
partial suspension of production, refusal of the government to approve marketing
applications or allow us to enter into supply contracts, and criminal
prosecution. The FDA also has the authority to revoke previously granted
marketing authorizations.
In order to obtain approval of a new product from the FDA, we must, among other
requirements, submit proof of safety and efficacy as well as detailed
information on the manufacture and composition of the product. In most cases,
this proof entails extensive preclinical, clinical and laboratory tests. This
testing, the preparation of necessary applications and processing of those
applications by the FDA are expensive and typically take several years to
complete. We cannot assure that the FDA will act quickly or favorably in
reviewing these applications, and we may encounter significant difficulties or
costs in our efforts to obtain FDA approvals that could delay or preclude us
from marketing any products we may develop. The FDA may also require
post-marketing testing and surveillance to monitor the effects of approved
products or place conditions on any approvals that could restrict the commercial
applications of these products. Product approvals may be withdrawn if compliance
with regulatory standards is not maintained or if problems occur following
initial marketing. With respect to patented products or technologies, delays
imposed by the governmental approval process may materially reduce the period
during which we will have the exclusive right to exploit them.
The first stage of the FDA approval process for a new biologic or drug involves
completion of preclinical studies and the submission of the results of these
studies to the FDA, together with proposed clinical protocols, manufacturing
information, analytical data and other information, in an investigational new
drug application, which must become effective before human clinical trials may
commence. The investigational new drug application will automatically become
effective 30 days after receipt by the FDA, unless the FDA before that time
requests an extension to review the application, or raises concerns or questions
about the conduct of the trials as outlined in the application. In the latter
case, the sponsor of the application and the FDA must resolve any outstanding
concerns before clinical trials can proceed. We cannot guarantee that submission
of an investigational new drug application will result in FDA authorization to
commence clinical trials in any given case.
Preclinical studies involve laboratory evaluation of product characteristics and
animal studies to assess the efficacy and safety of the product. Preclinical
studies are regulated by the FDA under a series of regulations called the
current "Good Laboratory Practices" regulations. Violations of these regulations
can, in some cases, lead to invalidation of the studies, requiring those studies
to be replicated.
After the investigational new drug application becomes effective, human clinical
trials may commence. Human clinical trials are typically conducted in three
sequential phases, but the phases may overlap. Phase I trials consist of testing
the product in a small number of patients or healthy volunteers, primarily for
safety at one or more doses. In phase II, in addition to safety, the efficacy of
the product is evaluated in a patient population somewhat larger than phase I
trials. Phase III trials typically involve additional testing for safety and
clinical efficacy in an expanded population at geographically dispersed test
sites. A clinical plan, or "protocol," accompanied by the approval of the
institution participating in the trials, must be
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submitted to the FDA prior to commencement of each clinical trial. The FDA may
order the temporary or permanent discontinuation of a clinical trial at any
time.
The results of the preclinical and clinical testing, together with, among other
things, detailed information on the manufacture and composition of the product,
are submitted to the FDA in the form of a new drug application or, in the case
of a biologic, a biologics license application. In a process which generally
takes several years, the FDA reviews this application and, when and if it
decides that adequate data is available to show that the new compound is both
safe and effective and that other applicable requirements have been met,
approves the drug or biologic for marketing. The amount of time taken for this
approval process is a function of a number of variables, including the quality
of the submission and studies presented, the potential contribution that the
compound will make in improving the treatment of the disease in question, and
the workload at the FDA. We cannot guarantee that any of our immunotherapeutics
will successfully proceed through this approval process or will be approved in
any specific period of time, or at all.
The Food and Drug Administration Modernization Act of 1997 was enacted, in part,
to ensure the availability of safe and effective drugs, biologics and medical
devices by expediting the FDA review process for new products. The Modernization
Act establishes a statutory program for the approval of fast track products,
including biologics. The fast track provisions essentially codify the FDA's
accelerated approval regulations for drugs and biologics. A fast track product
is defined as a new drug or biologic intended for the treatment of a serious or
life-threatening condition that demonstrates the potential to address unmet
medical needs for this condition. Under the fast track program, the sponsor of a
new drug or biologic may request the FDA to designate the drug or biologic as a
fast track product at any time during the clinical development of the product.
The Modernization Act specifies that the FDA must determine if the product
qualifies for fast track designation within 60 days of receipt of the sponsor's
request. Approval of a marketing application for a fast track product can be
based on an effect on a clinical endpoint or on a surrogate endpoint that is
reasonably likely to predict clinical benefit. Approval of an application for a
fast track product may be subject to:
- post-approval studies to validate the surrogate endpoint or confirm
the effect on the clinical endpoint; and
- prior review of all promotional materials.
If a preliminary review of the clinical data suggests that a fast track product
may be effective, the FDA may initiate review of sections of a marketing
application for a fast track product before the application is complete. This
rolling review is available if the applicant provides a schedule for submission
of remaining information and pays applicable user fees. However, the time
periods specified under the Prescription Drug User Fee Act concerning timing
goals to which the FDA has committed in reviewing an application, do not begin
until the complete application is submitted.
We may request fast track designation for our immunotherapeutics. We cannot
predict whether the FDA will grant that designation nor can we predict the
ultimate impact, if any, of the fast track process on the timing or likelihood
of FDA approval of our immunotherapeutics.
The FDA may, during its review of a new drug application or biologics license
application, ask for additional test data. If the FDA does ultimately approve
the product, it may require post-marketing testing, including potentially
expensive phase IV studies, and surveillance to monitor the safety and
effectiveness of the drug. In addition, the FDA may in some circumstances impose
restrictions on the use of the drug that may be difficult and expensive to
administer, and may require prior approval of promotional materials.
Before approving a new drug application or biologics license application, the
FDA will inspect the facilities at which the product is manufactured and will
not approve the product unless the manufacturing facilities are in compliance
with current Good Manufacturing Practices. In addition, the manufacture,
holding, and
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<PAGE> 47
distribution of a product must be in compliance with current Good Manufacturing
Practices. Manufacturers must continue to expend time, money, and effort in the
area of production and quality control and record keeping and reporting to
ensure full compliance with those requirements. The labeling, advertising,
promotion, marketing and distribution of a drug or biologic product must be in
compliance with FDA regulatory requirements. Failure to comply with applicable
requirements can lead to the FDA demanding that production and shipment cease,
and, in some cases, that products be recalled, or to enforcement actions that
can include seizures, injunctions, and criminal prosecution. These failures can
also lead to FDA withdrawal of approval to market the product.
We are also subject to regulation by the Occupational Safety and Health
Administration and the Environmental Protection Agency and to regulation under
the Toxic Substances Control Act, the Resource Conservation and Recovery Act and
other regulatory statutes, and may in the future be subject to other federal,
state or local regulations. Either or both of OSHA or the EPA may promulgate
regulations that may affect our research and development programs. We are unable
to predict whether any agency will adopt any regulation which could have a
material adverse effect on our operations.
Sales of pharmaceutical products outside the United States are subject to
foreign regulatory requirements that vary widely from country to country.
Whether or not FDA approval has been obtained, approval of a product by
comparable regulatory authorities of foreign countries must be obtained prior to
the commencement of marketing the product in those countries. The time required
to obtain this approval may be longer or shorter than that required for FDA
approval. The foreign regulatory approval process includes all the risks
associated with FDA regulation set forth above as well as country-specific
regulations.
COMPETITION
Competition in the pharmaceutical and biotechnology industries is intense. Many
pharmaceutical or biotechnology companies have products on the market and are
actively engaged in the research and development of products for the treatment
of cancer, infectious diseases and autoimmune disorders. In addition, many
competitors focus on immunotherapy as a treatment for cancer, infectious
diseases and autoimmune disorders. In particular, some of these companies are
developing autologous cancer vaccines. Others are focusing on developing heat
shock protein products. We compete for funding, access to licenses, personnel
and third-party collaborations. In addition, many competitors have substantially
greater financial, manufacturing, marketing, sales, distribution and technical
resources, and more experience in research and development, clinical trials and
regulatory matters, than we do. If a competing company were to develop, or
acquire rights to, a more efficacious therapeutic product for the same diseases
targeted by us, or one which offers significantly lower costs of treatment, our
products could be rendered noncompetitive or obsolete.
Significant levels of research in biotechnology, medicinal chemistry and
pharmacology occur in academic institutions, governmental agencies and other
public and private research institutions. These entities have become
increasingly active in seeking patent protection and licensing revenues for
their research results. They also compete with us in recruiting and retaining
skilled scientific talent.
FACILITIES
We lease approximately 30,225 square feet of laboratory space in Woburn,
Massachusetts under a lease agreement that terminates in August 2003. We have an
option to renew for an additional five-year period with the landlord's consent.
Our executive offices are located in New York, New York, in an office building
in which we lease approximately 8,000 square feet from an affiliated party. The
agreement terminates in December 2006. You should read the discussion under
"Certain Relationships and Related Transactions" regarding our executive
offices. Finally, we lease a 2,000 square foot manufacturing facility in
Framingham, Massachusetts under a lease agreement that terminates in December
1999.
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EMPLOYEES
As of October 31, 1999, we had 67 employees, of whom ten have Ph.D.s and one has
an M.D.; three are clinical staff, 21 are manufacturing and quality control
staff, 21 are research and development staff, and 22 are management or
administrative staff. None of our employees is subject to a collective
bargaining agreement. We believe that our relations with our employees are good.
LEGAL PROCEEDINGS
Other than our opposition of a European patent discussed under "Risk Factors,"
we are not currently a party to any material legal proceedings or claims. You
should read the discussion of our opposition of this European patent under "Risk
Factors."
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MANAGEMENT
EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES
Set forth below is certain information regarding our executive officers,
directors and key employees, including their age as of November 1, 1999:
<TABLE>
<CAPTION>
NAME AGE TITLE
- ---- --- -----
<S> <C> <C>
Garo Armen, Ph.D......................... 46 Chairman of the Board, Chief Executive
Officer
Pramod Srivastava, Ph.D.................. 44 Director, Chairman of Scientific Advisory
Board
Gamil de Chadarevian..................... 47 Vice Chairman of the Board, Executive
Vice President International
Elma Hawkins, Ph.D....................... 43 Senior Vice President
Dirk Reitsma, M.D........................ 50 Vice President of Clinical Affairs
Neal Gordon, Ph.D........................ 38 Vice President of Operations
Donald Panoz............................. 64 Director, Honorary Chairman
Noubar Afeyan, Ph.D.(1)(2)............... 37 Director
Edward Brodsky(1)........................ 70 Director
Tom Dechaene(2).......................... 40 Director
Martin Taylor(1)(2)...................... 47 Director
</TABLE>
- ---------------------------------------------
(1)Member of the Compensation Committee
(2)Member of the Audit Committee
The size of the board of directors is currently set at eight members.
Antigenics' certificate of incorporation provides for a classified board of
directors consisting of three classes, with each class being as nearly equal in
number as possible. The term of one class expires and their successors are
elected for a term of three years at each annual meeting of the stockholders.
Antigenics has designated three class I directors, Messrs. de Chadarevian,
Brodsky and Taylor, three class II directors, Messrs. Panoz, Afeyan and
Srivastava, and two class III directors, Messrs. Armen and Dechaene. These class
I, class II and class III directors will serve until the annual meetings of
stockholders to be held in 2000, 2001 and 2002, respectively, and until their
respective successors are duly elected and qualified, or until their earlier
resignation or removal. Officers are appointed by the board of directors until
the next annual meeting of the board of directors.
GARO ARMEN, PH.D. co-founded Antigenics in 1994 and has been the Chairman of the
board and Chief Executive Officer since inception. Dr. Armen was previously a
Senior Vice President of Research for Dean Witter Reynolds, focusing on the
chemical and pharmaceutical industries. Dr. Armen has also served as an
Associate Professor at the Merchant Marine Academy and as a research associate
at the Brookhaven National Laboratory. He currently serves as a director of Elan
Corporation, Plc. and Color Kinetics Inc. Dr. Armen received his Ph.D. degree in
physical chemistry from the City University of New York in 1979. Since 1990, Dr.
Armen has been the managing general partner of Armen Partners, L.P., an
investment partnership specializing in public and private healthcare and
biotechnology investments.
PRAMOD SRIVASTAVA, PH.D. co-founded Antigenics in 1994 and has served as the
Chairman of the scientific advisory board since inception. Dr. Srivastava is the
Director of the Center for Immunotherapy of Cancer and Infectious Diseases at
the University of Connecticut. Dr. Srivastava has held positions at Fordham
University and the Mount Sinai School of Medicine. His postdoctoral training was
performed at Yale University and the Sloan-Kettering Institute for Cancer
Research. Dr. Srivastava serves on the Scientific Advisory Council of the Cancer
Research Institute, New York, and has been a member of the Experimental
Immunology Study Section of the National Institutes of Health of the United
States
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Government since 1994. Dr. Srivastava is a past recipient of the First
Independent Research Support & Transition Award of the National Institutes of
Health (1987), the Irma T. Hirschl Scholar Award (1988), the Investigator Award
of the Cancer Research Institute, New York (1991), the Mildred Scheel
Lectureship (1994), and the Sigma Tau Foundation Speakership (1996). In 1997, he
was inducted into the Roll of Honor of the International Union against Cancer
and was listed in the Who's Who in Science and Engineering. He is among the
twenty founding members of the Academy of Cancer Immunology. Dr. Srivastava
earned his Ph.D. in Biochemistry from the Centre for Cellular and Molecular
Biology, Hyderabad, India. Dr. Srivastava is a director of Iconics, Inc.
GAMIL DE CHADAREVIAN has served as the Vice Chairman of the Board since 1995 and
as Executive Vice President International since 1998. Until April of 1998, he
was Managing Director of Special Projects of Alza International, responsible for
creating new business opportunities in Europe. From 1992 to 1993, Mr. de
Chadarevian was the Vice President of Corporate Development for Corange London
Limited. Prior to 1992, Mr. de Chadarevian held positions at Pasfin Servizi
Finanziara SpA, GEA Consulenza and Credit Suisse. He is also co-founder and
serves as an advisor to several private health care companies in the United
States and Europe. Mr. de Chadarevian received a Lic. Oec. Publ. Degree from the
University of Zurich in Switzerland. Mr. de Chadarevian is the co-founder and
currently the Vice Chairman of Iconics, Inc. and Cambria Tech. Ltd.
ELMA HAWKINS, PH.D. has served as Senior Vice President since August 1998. From
July 1996 through August 1998, Dr. Hawkins served as the Chief Operating Officer
of the company. Prior to her employment by Antigenics, Dr. Hawkins served in a
number of senior positions at Genzyme Corporation, including Director of
Corporate Development. Dr. Hawkins has also held positions in preclinical and
clinical research at Warner-Lambert/Parke-Davis and at the Center for the Study
of Drug Development at Tufts Medical School. Dr. Hawkins holds a Ph.D. in
Medicinal Chemistry from the University of Alabama and an M.B.A. from Boston
University. Dr. Hawkins is a director of Nalari Computing Corporation.
DIRK REITSMA, M.D. has served as Vice President of Clinical Affairs and Medical
Director since April 1997. From 1990 to 1997, Dr. Reitsma was employed by
Ciba-Geigy, where he managed the clinical development of several biologic
compounds and other new drugs. Dr. Reitsma was responsible for the phase III
trials of Aredia in breast cancer, and for their regulatory submissions to the
FDA. Prior to that, Dr. Reitsma was employed by Organon in Rockville, Maryland,
where he worked on various biologics, including human monoclonal antibodies and
on the submission of the regulatory filing for Bacillus Calmette Guerin, also
known as BCG, for superficial bladder cancer. Dr. Reitsma practiced internal
medicine and oncology at the Bergwegiekenhuis in Rotterdam prior to joining
Organon. He received his M.D. from the Erasmus University in Rotterdam, The
Netherlands.
NEAL GORDON, PH.D. has served as Vice President of Operations since May 1999.
Prior to this position he served as Vice President Process Development since
July 1998. Previously, he was Senior Director of Chromatography R&D at
PerSeptive Biosystems, a division of PE Corp., formerly Perkin-Elmer
Corporation. Over his ten-year career at PerSeptive, Dr. Gordon was involved in
the development and application of innovative technologies for the purification
and analysis of biopolymers, most notably the development of the BioCAD(R)
Chromatography Workstation. Dr. Gordon received his Ph.D. in Biochemical
Engineering from the Massachusetts Institute of Technology and a Bachelors
degree in Chemical Engineering from McGill University.
DONALD PANOZ has been a director since 1995 and is the Honorary Chairman of the
board of directors. In 1969, Mr. Panoz founded Elan Corporation, Plc., a
pharmaceutical research and development company. Mr. Panoz was Chairman and
Chief Executive Officer of Elan Corporation from 1969 until his retirement in
1996. Mr. Panoz is currently a Lecturer of Pharmacy at the University of
Georgia. In January 1995, Mr. Panoz was named Honorary Irish Consulate General
to Bermuda. Mr. Panoz attended Pittsburgh University and Duquesne University in
Pennsylvania.
NOUBAR AFEYAN, PH.D. has been a director since 1998. Dr. Afeyan is Chairman and
CEO of the NewcoGen Group and is also a partner at One Liberty Ventures. Dr.
Afeyan was Senior Vice President
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<PAGE> 51
and Chief Business Officer of PE Corp. until August 1999. Prior to its
acquisition by PE Corp., Dr. Afeyan was the Chairman and Chief Executive Officer
of PerSeptive Biosystems, a company that he founded in 1987 to develop,
manufacture and market instruments and chemical reagents used to purify, analyze
and synthesize biomolecules. Dr. Afeyan served as Chairman of the Board of
ChemGenics Pharmaceuticals, Inc. during 1996 and 1997. He is also a member of
the board of directors of two private companies. Dr. Afeyan received his
undergraduate degree in Chemical Engineering from McGill University and his
Ph.D. in Biochemical Engineering from the Massachusetts Institute of Technology.
EDWARD BRODSKY has been a director since 1995. Mr. Brodsky has been a partner of
the law firm of Proskauer Rose LLP since 1992 and was previously a partner at
the firm of Spengler Carlson Gubar Brodsky & Frisching. Mr. Brodsky and his firm
represent Antigenics in legal matters. Mr. Brodsky is currently a director of
Giant Cement Holding, Inc. and UIS, Inc.. He received his LL.B. from New York
University School of Law.
TOM DECHAENE has been a director since 1999. Mr. Dechaene has been with Deutsche
Bank since 1991 and is currently a director in the Principal Investments Group
within the Equity Capital Markets division. This group specializes in minority
investments in fast growing private companies in information technology,
communications, new media and healthcare on a global basis. Mr. Dechaene is a
director of Color Kinetics Inc. and Iconics, Inc. Mr. Dechaene holds a law
degree from Ghent University, Belgium, an MBA from INSEAD, France and a degree
in Applied Economics from the University of Antwerp.
MARTIN TAYLOR has been a director since June 1999. From 1993 until 1998, Mr.
Taylor held the position of Chief Executive Officer of Barclays Bank Plc. Mr.
Taylor is presently a member of the Council for Science and Technology and,
since November 1999, has been chairman of the W.H. Smith Group Plc. In October
1999, he became an advisor to Goldman Sachs International. He was educated at
Balliol College, Oxford University.
SCIENTIFIC ADVISORY BOARD
Our scientific advisory board is comprised of internationally recognized
scientists in the fields of immunology, oncology, genetics and drug delivery.
The scientific advisory board advises our management on strategic issues related
to our scientific development program. Dr. Srivastava chairs the board which
consists of the following other individuals:
JOSHUA LEDERBERG, PH.D. has been a member of the scientific advisory board since
1996 and is the board's Honorary Chairman. In 1958, at the age of 33, Dr.
Lederberg received the Nobel Prize in Physiology of Medicine for his work in the
field of bacterial genetics. Dr. Lederberg is currently the Sackler Foundation
Scholar and Professor- and President-Emeritus at The Rockefeller University, in
New York City, where he is researching the interrelationships of DNA
conformation and mutagenesis. Previously, Dr. Lederberg was a professor of
genetics at Stanford University. A member of the National Academy of Sciences
and a charter member of its Institute of Medicine, Dr. Lederberg has served as
chairman of the President's Cancer Panel and has chaired a comprehensive study
of emergent infections sponsored by the Institute of Medicine, intended to
counteract complacency about the threats from many infectious diseases. He has
also received the United States National Medal of Science. Dr. Lederberg has
served on the board of the Procter & Gamble Co., and continues as a part-time
consultant to several financial and pharmaceutical research and development
institutions. He received his Ph.D. from Yale University.
SIR WALTER BODMER, PH.D. has been a member of the scientific advisory board
since 1996 and he is currently the board's Vice Chairman. Sir Walter currently
serves as the Principal of Herford College, Oxford University. Previously, he
was the Director-General of the Imperial Cancer Research Fund and was Director
of Research at the Fund from 1979 to 1991. He is a Foreign Associate of the
United States National Academy of Sciences and a Foreign Honorary Member of the
American Academy of Arts and Sciences. He is also a Trustee of Sir John Soane's
Museum and the first President of the International Federation of Associations
for the Advancement of Science and Technology. In 1995, Sir Walter was appointed
Chancellor of the University of Salford. Sir Walter was the second President of
the Human
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Genome Organization and is a past President of the British Association for the
Advancement of Science and of the Royal Statistics Society. He has served as
Chairman of the BBC Science Consultative Group and as Vice-President of the
Royal Institution. Sir Walter has recently completed his term as Chairman of the
Trustees of the Natural History Museum, having served as a Trustee for ten
years. He received a Ph.D. from Cambridge University.
HANS-GEORG RAMMENSEE, PH.D. has been a member of the scientific advisory board
since 1999. Dr. Rammensee is currently the Chair of Immunology at the University
of Tubingen, where he has served in various capacities since 1987. From 1993
until 1996, he was Head, Department of Tumorvirus-Immunology, German Cancer
Research Center, Heidelberg, where he was also on the faculty of Theoretical
Medicine. From 1987 until 1993, Dr. Rammensee was Head, Laboratory for
Immunology at the Max Planck Institute for Biology. Since 1987, Dr. Rammensee
has been Coeditor of Immunogenetics and, since 1991, Coeditor of European
Journal of Immunology. Dr. Rammensee is also Speaker for the Graduate Committee
for Cell Biology in Medicine at the University of Tubingen and a Member of the
Evaluation Committee for the Cooperation Program in Cancer Research between the
German Cancer Research Center in Heidelberg and the Ministry of Science in
Israel. From 1992 through 1997, Dr. Rammensee was a Member of the
"Hinterzartener Kreis", a committee of the German Research Council. Dr.
Rammensee has been the recipient of numerous awards including the Heinz Maier
Leibnitz Award of the German Federal Ministry of Science (1988), the Wilhelm and
Maria Meyenburg Award of the German Cancer Research Center (1991), the Gottfried
Wilhelm Leibnitz Award of the German Research Council (1991), the Avery
Landsteiner Award of the Society for Immunology (1992), the Robert Koch Award of
the Robert Koch Foundation (1993), the Paul Ehrlich and Ludwig Darmstaedter
Award of the Paul Ehrlich Foundation (1996) and the Rose Payne Distinguished
Scientist Award of the American Society for Histocompatibility and
Immunogenetics (1997). Dr. Rammensee received his Ph.D. from the University of
Tubingen in 1982, where he studied minor histocompatibility antigens in immune
response.
FELIX THEEUWES, PH.D. has been a member of the scientific advisory board since
1996. Dr. Theeuwes is currently the Chairman and Chief Scientist of Durect
Corporation, which is an affiliate of Alza Corporation. Prior to his current
position, Dr. Theeuwes was Chief Scientist at Alza Corporation. Dr. Theeuwes was
with Alza from 1970, directing research, technology development and product
development for a variety of controlled drug delivery systems. Dr. Theeuwes
holds more than 220 United States patents and has published more than 80
articles and book chapters. In 1980, Dr. Theeuwes was named Inventor of the Year
by the Peninsula Patent Law Association. In 1983, he was the recipient of the
Award for the Advancement of Industrial Pharmacy. He was the Busse Lecturer at
the University of Wisconsin in 1981 and, in 1985, the Third Annual Sidney
Riegelman Lecturer at the University of California, San Francisco. He is a
Fellow of the American Association of Pharmaceutical Scientists, and, in 1993,
he became the first recipient of Alza Corporation's Founder's Award. Dr.
Theeuwes is currently a member of the board of directors of both Vinifera, Inc.
and Durect Corporation. He received his undergraduate and graduate education in
physics at the University of Leuven, Belgium, with a D.Sc. degree in 1966. From
1966 to 1970 he served as a post-doctoral fellow and visiting research assistant
professor in the Department of Chemistry, University of Kansas.
AUDIT COMMITTEE
The audit committee makes recommendations to the board of directors about the
selection of independent auditors, reviews the results and scope of the audit
and other services provided by our independent auditors, and evaluates our
internal controls. The audit committee consists of Messrs. Taylor, Dechaene and
Afeyan.
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<PAGE> 53
COMPENSATION COMMITTEE
The compensation committee reviews and approves the compensation and benefits
for our executive officers, administers our stock option plans and makes
recommendations to the board of directors about compensation matters. The
compensation committee consists of Messrs. Taylor, Brodsky and Afeyan.
EXECUTIVE COMPENSATION
The following table summarizes the compensation paid to or earned during the
fiscal year ended December 31, 1998 by our chief executive officer and all of
our other executive officers whose salary and bonus exceeded $100,000. We refer
to these persons as the named executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
1998 ANNUAL COMPENSATION
COMPENSATION -----------------
----------------------- SHARES UNDERLYING
NAME AND PRINCIPAL POSITION SALARY($) BONUS($) OPTIONS(#)
- --------------------------- ---------- --------- -----------------
<S> <C> <C> <C>
Garo H. Armen, Ph.D., Chief Executive Officer....... -- --
Elma Hawkins, Ph.D., Senior Vice President.......... $200,000 $20,000
Neal Gordon, Ph.D., Vice President of Operations.... $ 57,272(1) $28,750
</TABLE>
- ---------------------------------------------
(1)Dr. Gordon commenced employment with Antigenics in July 1998.
1998 OPTION GRANTS
The following table contains certain information regarding stock option grants
during the twelve months ended December 31, 1998 by us to the named executive
officers:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF STOCK
SECURITIES PERCENT OF TOTAL PRICE APPRECIATION
UNDERLYING OPTIONS GRANTED EXERCISE OR BASE FOR OPTION TERM(1)
OPTIONS TO EMPLOYEES PRICE EXPIRATION ---------------------
NAME GRANTED(#) IN FISCAL YEAR ($/SHARE) DATE 5%($) 10%($)
- ---- ---------- ---------------- ---------------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Garo H. Armen, Ph.D.,
Chief Executive
Officer................. -- -- -- -- -- --
Elma Hawkins, Ph.D.,
Senior Vice President... -- -- -- -- -- --
Neal Gordon, Ph.D., Vice
President of
Operations.............. 7/08
</TABLE>
- ---------------------------------------------
(1)The dollar amounts under these columns are the result of calculations at the
5% and 10% rates set by the SEC and, therefore, are not intended to forecast
possible future appreciation, if any, in the price of the underlying common
stock. No gain to the optionees is possible without an increase in price of
the common stock, which will benefit all stockholders proportionately. In
order to realize the potential values set forth in the 5% and 10% columns of
this table, the per share price of the common stock would have to be
$ and $ , or approximately % and % above the respective
exercise or base price shown, based on an assumed initial public offering
price of $ per share.
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<PAGE> 54
OPTION EXERCISES AND YEAR-END OPTION VALUES
The following table provides information about the number of shares issued upon
option exercises by the named executive officers during the year ended December
31, 1998, and the value realized by the named executive officers. The table also
provides information about the number and value of options held by the named
executive officers at December 31, 1998. As our common stock is not publicly
traded, a readily ascertainable market value is not available.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
YEAR-END(#) AT FISCAL YEAR END($)(1)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Garo H. Armen, Ph.D., Chief
Executive Officer........... -- --
Elma Hawkins, Ph.D., Senior
Vice President.............. -- --
Neal Gordon, Ph.D., Vice
President of Operations..... -- --
</TABLE>
- ---------------------------------------------
(1)Based on the difference between the option exercise price and an assumed
initial public offering price of $ per share of common stock.
EMPLOYMENT AGREEMENTS
Under an employment agreement dated June 1, 1998, Antigenics agreed to employ
Elma Hawkins, Ph.D. as Senior Vice President for one year at an annual base
salary of $200,000, which is subject to performance and merit based increases.
Pursuant to the agreement, Dr. Hawkins was issued options to purchase
shares of the company's common stock at an exercise price of
$ per share vesting over three years. The agreement is automatically
renewed for successive one-year periods unless either party terminates the
agreement. If Dr. Hawkins is terminated without cause as that term is defined in
the agreement, she is entitled to her base salary through the end of the
one-year term during which the termination occurs. If Dr. Hawkins is terminated
either because her position of Senior Vice President is eliminated or because
there is a change in control of Antigenics, we are obligated to pay her cash or
Antigenics common stock equal to one year's base salary.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As a limited liability company, a compensation committee consisting of Messrs.
Afeyan and Brodsky reviewed salaries and incentive compensation for our
employees and consultants. The compensation committee of the board of directors
of Antigenics Inc. consists of Messrs. Taylor, Brodsky and Afeyan. Although none
of the compensation committee members are officers or employees of Antigenics,
each of Garo Armen, our chairman and chief executive officer, and Gamil de
Chadarevian, our vice chairman and executive vice president international, have
previously participated in compensation discussions with the committee. None of
our executive officers serves as a member of the board of directors or
compensation committee of any entity that has one or more executive officers
serving on our compensation committee. Mr. Brodsky, however, is a partner of
Proskauer Rose LLP, a law firm that provides legal services to Antigenics.
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<PAGE> 55
DIRECTOR COMPENSATION
We reimburse directors for out-of-pocket and travel expenses incurred while
attending board of director and committee meetings. Directors have been awarded
options to purchase up to shares of common stock at exercise prices
ranging from $ to $ .
EMPLOYEE BENEFIT PLANS
1999 EQUITY INCENTIVE PLAN
Antigenics's equity plan authorizes the grant of incentive stock options within
the meaning of Section 422 of the Internal Revenue Code of 1986, as amended, and
nonqualified stock options for the purchase of an aggregate of 4,500,000 shares
(subject to adjustment for stock splits and similar capital changes) of common
stock to Antigenics's employees and, in the case of non-qualified stock options,
to consultants of Antigenics or any affiliate, as defined in the equity plan.
The board of directors has appointed the compensation committee to administer
the equity plan. Upon the closing of this offering, shares of common
stock were subject to outstanding options granted under the equity plan, leaving
shares available for issuance under future grants under the equity
plan.
1999 EMPLOYEE STOCK PURCHASE PLAN
Antigenics has also adopted an employee stock purchase plan under which
employees may purchase shares of common stock at a discount from fair market
value. There are 300,000 shares of common stock reserved for issuance under the
purchase plan. The purchase plan is intended to qualify as an employee stock
purchase plan within the meaning of Section 423 of the Internal Revenue Code of
1986, as amended. Rights to purchase common stock under the purchase plan are
granted at the discretion of the compensation committee, which determines the
frequency and duration of individual offerings under the plan and the dates when
stock may be purchased. Eligible employees participate voluntarily and may
withdraw from any offering at any time before stock is purchased. Participation
terminates automatically upon termination of employment. The purchase price per
share of common stock in an offering will not be less than 85% of the lesser of
its fair market value at the beginning of the offering period or on the
applicable exercise date and may be paid through payroll deductions, periodic
lump sum payments or a combination of both. The purchase plan terminates on
November 15, 2009. As of November 15, 1999, no shares of common stock had been
issued under the purchase plan.
401(K) PLAN
We sponsor a 401(k) plan for all of our employees. Employees are eligible to
participate after they have completed one year of service with us. Participants
may contribute up to 15% of their current compensation, with a maximum of
$10,000 each year. Each participant is fully vested in his or her salary
contributions and related earnings and losses. We match 100% of the
participant's contribution and our matching contributions vest over four years.
We have discretion to change that amount at any time.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Antigenics currently leases office space at cost from GHA Management Corporation
which is wholly owned by Garo Armen, Ph.D. Dr. Armen is the chairman and chief
executive officer of Antigenics and we use the office space for our corporate
headquarters. The payments to GHA Management totaled approximately $77,000,
$143,000 and $211,000 for the years ended December 31, 1996, 1997 and 1998,
respectively. Under the current agreement, payments will be approximately
$312,000 annually until the agreement expires in December 2006. Antigenics
believes that the terms of the current agreement are at least as favorable as
terms it could have obtained in an arm's length transaction with an independent
third party. In addition, we have letters of credit for the benefit of GHA
Management Corporation in connection with this lease in the amount of $375,000.
These letters of credit expire in January 2000. You should also read the
discussion regarding Mr. Brodsky's relationship with the law firm of Proskauer
Rose LLP under "Management -- Compensation Committee Interlocks and Insider
Participation."
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<PAGE> 56
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of our common stock as of , 1999, and as adjusted
to reflect the sale of shares of common stock in this offering, by:
- each person, or group of affiliated persons, who is known by us to
beneficially own more than 5% of the common stock;
- each of our directors;
- each of our named executive officers; and
- all of our directors and current executive officers as a group.
Except as otherwise noted, the persons or entities in this table have sole
voting and investing power with respect to all the shares of common stock
beneficially owned by them subject to community property laws, where applicable.
The "Number of Shares Beneficially Owned" column below is based on
shares of common stock outstanding at , 1999, and shares of
common stock outstanding after the offering. Shares of common stock subject to
options that are currently exercisable or exercisable within 60 days of
, 1999 are deemed to be outstanding and to be beneficially owned by
the person holding the options for the purpose of computing the percentage
ownership of the person but are not treated as outstanding for the purpose of
computing the percentage ownership of any other person.
<TABLE>
<CAPTION>
PERCENTAGE OF TOTAL
NUMBER OF SHARES --------------------
BENEFICIALLY BEFORE AFTER
BENEFICIAL OWNER(1) OWNED OFFERING OFFERING
- ------------------- ---------------- -------- --------
<S> <C> <C> <C>
STOCKHOLDERS OWNING APPROXIMATELY 5% OR MORE:
Lawrence Feinberg.............................
c/o Oracle Partners LP
712 Fifth Avenue, 45th Floor
New York, New York 10019
DIRECTORS AND EXECUTIVE OFFICERS
Garo H. Armen, Ph.D...........................
Pramod Srivastava, Ph.D.......................
Gamil de Chadarevian..........................
Elma Hawkins, Ph.D............................
Neal Gordon, Ph.D.............................
Donald Panoz..................................
Noubar Afeyan, Ph.D...........................
Edward Brodsky................................
Tom Dechaene..................................
Martin Taylor.................................
All current executive officers and directors
as a group (10 persons)....................
</TABLE>
- ---------------------------------------------
* Indicates less than 1%
(1) Unless otherwise indicated, the address of each shareholder is Antigenics
Inc., 630 Fifth Avenue, New York, New York 10111.
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<PAGE> 57
DESCRIPTION OF CAPITAL STOCK
Immediately following the closing of this offering, the authorized capital stock
of Antigenics will consist of 100,000,000 shares of common stock, $0.01 par
value per share, and 1,000,000 shares of preferred stock, $0.01 par value per
share. After the closing of this offering and giving effect to the issuance of
shares of common stock and the merger of Antigenics L.L.C. with
and into Antigenics Inc., there will be:
- shares of common stock outstanding;
- options to purchase shares of common stock
outstanding of which will be exerciseable upon the
closing of this offering;
- warrants to purchase shares of common stock
outstanding, all of which will be exercisable upon the closing of
this offering; and
- no shares of preferred stock outstanding.
COMMON STOCK
Subject to preferences that may apply to shares of preferred stock outstanding
at the time, the holders of outstanding shares of common stock are entitled to
receive dividends out of assets legally available therefor as the board may from
time to time determine. Each stockholder is entitled to one vote for each share
of common stock held on all matters submitted to a vote of stockholders.
Cumulative voting for the election of directors is not provided for in
Antigenics' certificate of incorporation, which means that the holders of a
majority of the shares voted can elect all of the directors then standing for
election. The common stock is not entitled to preemptive rights and is not
subject to conversion or redemption. Each outstanding share of common stock is,
and all shares of common stock to be outstanding upon completion of this
offering will be, fully paid and nonassessable.
PREFERRED STOCK
Pursuant to Antigenics' certificate of incorporation, the board of directors has
the authority, without further action by the stockholders, to issue up to
1,000,000 shares of preferred stock in one or more series and to fix the
designations, powers, preferences, privileges, and relative participating,
optional or special rights as well as the qualifications, limitations or
restrictions of those shares, including dividend rights, conversion rights,
voting rights, terms of redemption and liquidation preferences, any or all of
which may be greater than the rights of the common stock. The board of
directors, without stockholder approval, is able to issue preferred stock with
voting, conversion or other rights that could adversely affect the voting power
and other rights of the holders of common stock. Preferred stock could thus be
issued quickly with terms calculated to delay or prevent a change in control of
Antigenics or make removal of management more difficult. Additionally, the
issuance of preferred stock may have the effect of decreasing the market price
of the common stock, and may adversely affect the voting and other rights of the
holders of common stock. At present, there are no shares of preferred stock
outstanding.
ANTI-TAKEOVER PROVISIONS
Delaware Law
Section 203 of the Delaware General Corporation Law is applicable to corporate
takeovers of Delaware corporations. Subject to exceptions enumerated in Section
203, Section 203 provides that a corporation shall not engage in any business
combination with any "interested stockholder" for a three-year period following
the date that the stockholder becomes an interested stockholder unless:
- prior to that date, the board of directors of the corporation
approved either the business combination or the transaction that
resulted in the stockholder becoming an interested stockholder;
- upon consummation of the transaction that resulted in the
stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the
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<PAGE> 58
corporation outstanding at the time the transaction commenced,
though some shares may be excluded from the calculation; and
- on or subsequent to that date, the business combination is approved
by the board of directors of the corporation and by the affirmative
votes of holders of at least two-thirds of the outstanding voting
stock that is not owned by the interested stockholder.
Except as specified in Section 203, an interested stockholder is generally
defined to include any person who, together with any affiliates or associates of
that person, beneficially owns, directly or indirectly, 15% or more of the
outstanding voting stock of the corporation, or is an affiliate or associate of
the corporation and was the owner of 15% or more of the outstanding voting stock
of the corporation, any time within three years immediately prior to the
relevant date. Under certain circumstances, Section 203 makes it more difficult
for an interested stockholder to effect various business combinations with a
corporation for a three-year period, although the stockholders may elect not to
be governed by this section, by adopting an amendment to our certificate of
incorporation or by-laws, effective 12 months after adoption. Antigenics'
certificate of incorporation and its by-laws do not exclude Antigenics from the
restrictions imposed under Section 203. It is anticipated that the provisions of
Section 203 may encourage companies interested in acquiring Antigenics to
negotiate in advance with the board since the stockholder approval requirement
would be avoided if a majority of the directors then in office excluding an
interested stockholder approve either the business combination or the
transaction that resulted in the stockholder becoming an interested stockholder.
These provisions may have the effect of deterring hostile takeovers or delaying
changes in control of Antigenics, which could depress the market price of the
common stock and which could deprive stockholders of opportunities to realize a
premium on shares of the common stock held by them.
Charter and By-law Provisions
Our certificate of incorporation and by-laws contain provisions that could
discourage potential takeover attempts and make more difficult attempts by
stockholders to change management. Antigenics' certificate of incorporation
provides that stockholders may not take action by written consent but may only
act at a stockholders' meeting, and that special meetings of the stockholders of
Antigenics may only be called by the president or a majority of the board and
requires advance notice of business to be brought by a stockholder before the
annual meeting. The certificate of incorporation includes provisions classifying
the board of directors into three classes with staggered three-year terms. In
addition, our directors may only be removed from office for cause. Under the
certificate of incorporation and by-laws, the board of directors may enlarge the
size of the board and fill any vacancies on the board. The by-laws provide that
nominations for directors may not be made by stockholders at any annual or
special meeting unless the stockholder intending to make a nomination notifies
us of its intention a specified period in advance and furnishes certain
information.
REGISTRATION RIGHTS
In connection with the private placement completed in November 1999, we granted
registration rights with respect to shares of common stock sold
in that private placement. Pursuant to these registration rights, we are
obligated to file, approximately 90 days after the date of this prospectus, a
registration statement covering these shares of common stock for resale. All
expenses incurred in connection with this registration, other than any
underwriters' discounts and commissions, will be borne by Antigenics.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our common stock is American Stock Transfer
& Trust Company.
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<PAGE> 59
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no market for the common stock and we
cannot assure you that a liquid trading market for the common stock will develop
or be sustained after this offering. Future sales of substantial amounts of
common stock, including shares issued upon exercise of outstanding options and
warrants, in the public market after this offering or the anticipation of those
sales could adversely affect market prices prevailing from time to time and
could impair our ability to raise capital through sales of our equity
securities. Sales of substantial amounts of common stock of Antigenics in the
public market or the anticipation of these sales could adversely affect the
prevailing market price of the common stock and the ability of Antigenics to
raise equity capital in the future.
After the closing of this offering, Antigenics will have outstanding
shares of common stock, which includes shares issued upon the
conversion of warrants issued in the November 1999 and assumes no exercise of
the underwriters' over-allotment option and no exercise of outstanding options.
Of these shares, the shares sold in this offering will be freely tradable
without restriction under the Securities Act unless purchased by "affiliates" of
Antigenics as that term is defined in Rule 144 under the Securities Act. An
additional shares are expected to be covered by a registration
statement we will file approximately 90 days following this offering. The
remaining restricted shares held by existing stockholders are subject
to various lock-up agreements providing that, with limited exceptions, the
stockholder will not offer, sell, contract to sell, grant an option to purchase,
effect a short sale or otherwise dispose of or engage in any hedging or other
transaction that is designed or reasonably expected to lead to a disposition of
any shares of common stock or any option to purchase common stock or any
securities exchangeable for or convertible into common stock for a period of one
year after the date of this prospectus. Though these shares may be eligible for
earlier sale under the provisions of the Securities Act, none of these shares
will be saleable until 365 days after the date of this prospectus as a result of
these lock-up agreements. Beginning 365 days after the date of this prospectus,
restricted shares will be eligible for sale in the United States
public market, subject to volume and other limitations. In addition, as of
, 1999, there were outstanding options to purchase shares
of common stock, none of which options are expected to be exercised prior to the
closing of the offering. We expect that concurrently with the closing of this
offering warrants to purchase common stock will be converted, on a net exercise
basis, into shares of common stock and that warrants to purchase an
additional shares of common stock will be outstanding. All of the
shares issued upon exercise will be subject to lock-up agreements.
In general, under Rule 144 as currently in effect, a person, or persons whose
shares are aggregated, who has beneficially owned restricted shares for at least
one year is entitled to sell within any three-month period up to that number of
shares that does not exceed the greater of: (1) 1% of the number of shares of
common stock then outstanding, which is approximately shares, or (2)
the average weekly trading volume of the common stock during the four calendar
weeks preceding the filing of a Form 144 with respect to the sale. Sales under
Rule 144 are also subject to certain "manner of sale" provisions and notice
requirements and to the requirement that current public information about
Antigenics be available. Under Rule 144(k), a person who is not deemed to have
been an affiliate of Antigenics at any time during the three months preceding a
sale, and who has beneficially owned the shares proposed to be sold for at least
two years, including the holding period of any prior owner except an affiliate,
is entitled to sell those shares without complying with the manner of sale,
public information, volume limitation or notice provisions of Rule 144.
Rule 701 permits resales of qualified shares held by some affiliates in reliance
upon Rule 144 but without compliance with some restrictions, including the
holding period requirement, of Rule 144. Any employee, officer or director of or
consultant to Antigenics who purchased his or her shares pursuant to a written
compensatory plan or contract may be entitled to rely on the resale provisions
of Rule 701. Rule 701 further provides that non-affiliates may sell shares in
reliance on Rule 144 without having to comply with the holding period, public
information, volume limitation or notice provisions of Rule 144. All holders of
Rule 701 shares of common stock are required to wait until 90 days after the
date of this prospectus before selling shares. However, all shares issued
pursuant to Rule 701 are subject to lock-up agreements and will only become
eligible for sale at the expiration of the 365-day lock-up.
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<PAGE> 60
UNDERWRITING
Subject to certain terms and conditions contained in an underwriting agreement,
the underwriters named below, for whom U.S. Bancorp Piper Jaffray Inc. and
BancBoston Robertson Stephens Inc. are acting as representatives, have severally
agreed to purchase the number of shares of common stock from us set forth
opposite their names below:
<TABLE>
<CAPTION>
UNDERWRITERS NUMBER OF SHARES
- ------------ ----------------
<S> <C>
U.S. Bancorp Piper Jaffray Inc..............................
BancBoston Robertson Stephens Inc...........................
Total.............................................
========
</TABLE>
The underwriting agreement provides that the obligations of the several
underwriters to purchase shares of common stock are subject to the approval of
certain legal matters by counsel and to certain other conditions. If any of the
shares of common stock are purchased by the underwriters pursuant to the
underwriting agreement, all such shares of common stock (other than the shares
of common stock covered by the over-allotment option described below) must be so
purchased.
We have been advised by the underwriter representatives that the underwriters
propose to offer the shares of common stock to the public initially at the price
to the public set forth on the cover page of this prospectus and to certain
dealers (who may include the underwriters) at such price less a concession not
to exceed $ per share. The underwriters may allow, and such dealers may
reallow, discounts not in excess of per share to any other underwriter
and certain other dealers.
We have granted to the underwriters an option to purchase up to
additional shares of common stock at the initial public offering price
less the underwriting discount solely to cover over-allotments. Such option may
be exercised in whole or in part from time to time during the 30-day period
after the date of this prospectus. To the extent that the underwriters exercise
such option, each of the underwriters will be committed, subject to certain
conditions, to purchase a number of option shares proportionate to such
underwriter's initial commitment as indicated in the preceding table. If the
underwriters exercise their option in full, the total price to the public would
be $ , the total underwriting discount would be $ and total proceeds
to us would be $ .
We, together with certain of our stockholders and our executive officers and
directors, have agreed not to directly or indirectly offer, pledge, sell,
contract to sell, sell any option or contract to purchase or grant any option,
right or warrant to purchase or otherwise transfer or dispose of any shares of
common stock or any securities convertible into or exercisable or exchangeable
for common stock, or enter into any swap or other arrangement that transfers all
or a portion of the economic consequences associated with the ownership of such
common stock, or to cause a registration statement covering any shares of common
stock to be filed, for a period of 365 days after the date of this prospectus
without the prior written consent of the underwriters, subject to limited
exceptions. See "Shares Eligible for Future Sale."
Prior to this offering, there has been no established trading market for the
common stock. The initial price to the public for the common stock offered by us
will be determined by negotiation among and the underwriter representatives and
us. The factors to be considered in determining the initial price to the public
will include the history of and the prospects for the industry in which we
compete, the ability of our management, our past and present operations, our
prospects for future earnings, the general condition of the securities markets
at the time of this offering and the recent market prices of securities of
generally comparable companies. We will apply to list our common stock on the
Nasdaq National Market.
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<PAGE> 61
The underwriters do not intend to make sales to accounts over which they
exercise discretionary authority in excess of 5% of the number of shares of
common stock offered hereby.
In connection with this offering, the underwriters may engage in transactions
that stabilize, maintain or otherwise affect the price of the common stock.
Specifically, the underwriters may over-allot this offering, creating a
syndicate short position. Underwriters may bid for and purchase shares of common
stock in the open market to cover syndicate short positions. In addition, the
underwriters may bid for and purchase shares of common stock in the open market
to stabilize the price of the common stock. These activities may stabilize or
maintain the market price of the common stock above independent market levels.
These transactions may be effected on the Nasdaq National Market or otherwise.
The underwriters are not required to engage in these activities and may end
these activities at any time.
In connection with this offering, some underwriters and selling group members
may also engage in passive market making transactions in the common stock on the
Nasdaq National Market. Passive market making consists of displaying bids on the
Nasdaq National Market limited by the prices of independent market makers and
effecting purchases limited by those prices in response to order flow. Rule 103
of Regulation M promulgated by the SEC limits the amount of net purchases that
each passive market maker may make and the displayed size of each bid. Passive
market making may stabilize the market price of the common stock at a level
above that which might otherwise prevail in the open market and, if commenced,
may be discontinued at any time.
At our request, the underwriters have reserved for sale, at the initial public
offering price, up to shares of common stock for our directors,
officers, employees and business associates. The number of shares of common
stock available for sale to the general public will be reduced to the extent
those persons purchase any of the reserved shares. Any reserved shares that are
not purchased will be offered by the underwriters to the general public on the
same basis as the other shares in this offering.
We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act.
LEGAL MATTERS
The validity of the common stock offered by this prospectus will be passed upon
for us by Palmer & Dodge LLP, Boston, Massachusetts. Certain legal matters in
connection with this offering will be passed upon for the underwriters by
Shearman & Sterling, New York, New York.
EXPERTS
The consolidated financial statements of Antigenics L.L.C. and subsidiary as of
December 31, 1997 and 1998, and for each of the years in the three-year period
ended December 31, 1998, and for the period from March 31, 1994 (date of
inception) to December 31, 1998, have been included herein and in the
registration statement in reliance upon the report of KPMG LLP, independent
certified public accountants, appearing elsewhere herein, and upon the authority
of said firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form S-1 with the SEC for the stock we
are offering by this prospectus. This prospectus does not include all of the
information contained in the registration statement. You should refer to the
registration statement and its exhibits for additional information. While we
have disclosed the material terms of any of our contracts, agreements or other
documents referenced in this prospectus, you should refer to the exhibits
attached to the registration statement for copies of the actual contract,
agreement or other document. When we complete this offering, we will also be
required to file annual, quarterly and special reports, proxy statements and
other information with the SEC.
60
<PAGE> 62
You can read our SEC filings, including the registration statement, over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and copy
any document we file with the SEC at its public reference facilities at 450
Fifth Street, NW, Washington, DC 20549, 7 World Trade Center, Suite 1300, New
York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. You may also obtain copies of the documents at
prescribed rates by writing to the Public Reference Section of the SEC at 450
Fifth Street, NW, Washington, DC 20549. Please call the SEC at 1-800-SEC-0330
for further information on the operation of the public reference facilities. Our
SEC filings are also available at the office of the Nasdaq National Market. For
further information on obtaining copies of our public filings at the Nasdaq
National Market you should call (212) 656-5060.
61
<PAGE> 63
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Consolidated Financial Statements:
Independent Auditors' Report.............................. F-2
Consolidated Balance Sheets as of December 31, 1997 and
1998................................................... F-3
Consolidated Statements of Operations for the years ended
December 31, 1996, 1997 and 1998 and for the period
from March 31, 1994 (date of inception) to December 31,
1998................................................... F-4
Consolidated Statements of Members' Equity for the years
ended December 31, 1996, 1997 and 1998 and for the
period from March 31, 1994 (date of inception) to
December 31, 1998...................................... F-5
Consolidated Statement of Cash Flows for the years ended
December 31, 1996, 1997 and 1998 and for the period
from March 31, 1994 (date of inception) to December 31,
1998................................................... F-6
Notes to Consolidated Financial Statements................ F-7
Unaudited Consolidated Interim Financial Statements:
Consolidated Balance Sheet as of September 30, 1999....... F-16
Consolidated Statement of Operations for the nine months
ended September 30, 1998 and 1999, and for the period
from March 31, 1994 (date of inception) to September
30, 1999............................................... F-17
Consolidated Statements of Members' Equity for the nine
months ended September 30, 1999, and for the period
from March 31, 1994 (date of inception) to September
30, 1999............................................... F-18
Consolidated Statements of Cash Flows for the nine months
ended September 30, 1998 and 1999, and for the period
from March 31, 1994 (date of inception) to September
30, 1999............................................... F-19
Notes to Unaudited Consolidated Financial Statements...... F-20
</TABLE>
F-1
<PAGE> 64
INDEPENDENT AUDITORS' REPORT
The Members and Board of Managers
Antigenics L.L.C.:
We have audited the accompanying consolidated balance sheets of Antigenics
L.L.C. and subsidiary (a Delaware limited liability company in the development
stage and a successor operating company) as of December 31, 1997 and 1998, and
the related consolidated statements of operations, members' equity and cash
flows for each of the years in the three-year period ended December 31, 1998 and
the period from March 31, 1994 (date of inception) to December 31, 1998. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Antigenics L.L.C.
and subsidiary as of December 31, 1997 and 1998, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1998 and the period from March 31, 1994 (date of inception)
to December 31, 1998, in conformity with generally accepted accounting
principles.
/s/ KPMG LLP
Short Hills, New Jersey
October 28, 1999
F-2
<PAGE> 65
ANTIGENICS L.L.C.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND 1998
<TABLE>
<CAPTION>
1997 1998
----------- ------------
<S> <C> <C>
ASSETS
Cash and cash equivalents................................... $13,086,402 $ 22,168,049
Prepaid expenses............................................ 138,994 230,632
Other assets................................................ 20,138 21,189
Due from related party...................................... -- 27,605
----------- ------------
Total current assets................................... 13,245,534 22,447,475
Plant and equipment, net.................................... 783,655 4,106,183
Other assets................................................ 46,237 74,071
Organization costs, less accumulated amortization of $21,587
and $28,174 in 1997 and 1998, respectively................ 14,472 7,885
----------- ------------
Total assets........................................... $14,089,898 $ 26,635,614
=========== ============
LIABILITIES AND MEMBERS' EQUITY
Accounts payable............................................ $ 245,602 $ 2,036,814
Accrued liabilities......................................... 570,869 48,134
Due to related party........................................ 61,658 --
Current portion, long-term debt............................. -- 200,497
----------- ------------
Total current liabilities.............................. 878,129 2,285,445
Long-term debt.............................................. -- 709,006
Members' capital -- no stated value; 93,354 and 104,024
units issued.............................................. 22,424,501 43,223,509
Subscription notes receivable............................... -- (2,102,000)
Deficit accumulated during development stage................ (9,212,732) (17,480,346)
----------- ------------
Total members' equity.................................. 13,211,769 23,641,163
Commitments and contingencies
----------- ------------
Total liabilities and members' equity.................. $14,089,898 $ 26,635,614
=========== ============
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE> 66
ANTIGENICS L.L.C.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998 AND
FOR THE PERIOD FROM MARCH 31, 1994 (DATE OF INCEPTION)
TO DECEMBER 31, 1998
<TABLE>
<CAPTION>
MARCH 31,
1994
(DATE OF
INCEPTION) TO
DECEMBER 31,
1996 1997 1998 1998
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Revenue............................ $ -- $ -- $ -- $ --
Expenses:
Research and development......... (1,568,903) (2,547,799) (5,908,160) (10,879,904)
General and administrative....... (1,042,033) (1,375,444) (2,734,947) (7,660,804)
Depreciation and amortization.... (78,856) (202,090) (360,285) (696,347)
----------- ----------- ----------- ------------
Total operating loss.......... (2,689,792) (4,125,333) (9,003,392) (19,237,055)
Other income:
Non-operating income............. 249,988 -- -- 249,988
Interest income.................. 281,245 481,179 735,778 1,506,721
----------- ----------- ----------- ------------
Net loss...................... $(2,158,559) $(3,644,154) $(8,267,614) $(17,480,346)
=========== =========== =========== ============
Net loss per members' equity unit,
basic and diluted................ $ (25.43) $ (40.71) $ (86.42)
=========== =========== ===========
Weighted average members' units
outstanding, basic and diluted... 84,876 89,525 95,673
=========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 67
ANTIGENICS L.L.C.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF MEMBERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998 AND
THE PERIOD FROM MARCH 31, 1994 (DATE OF INCEPTION)
TO DECEMBER 31, 1998
<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED
SUBSCRIPTION DURING
MEMBERS' NOTES DEVELOPMENT
UNITS CAPITAL RECEIVABLE STAGE TOTAL
------- ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
Balance at March 31, 1994... -- $ -- $ -- $ -- $ --
Net loss.................... -- -- -- (183,440) (183,440)
Issuance of units........... 65,200 400,010 -- -- 400,010
------- ----------- ----------- ------------ -----------
Balance at December 31,
1994...................... 65,200 400,010 -- (183,440) 216,570
Net loss.................... -- -- -- (3,226,579) (3,226,579)
Issuance of units........... 6,000 1,500,000 (150,000) -- 1,350,000
Grant of members' equity
units..................... 8,800 2,200,000 -- -- 2,200,000
------- ----------- ----------- ------------ -----------
Balance at December 31,
1995...................... 80,000 4,100,010 (150,000) (3,410,019) 539,991
Net loss.................... -- -- -- (2,158,559) (2,158,559)
Grant and recognition of
options................... -- 276,676 -- -- 276,676
Payment of subscription
notes receivable.......... -- -- 150,000 -- 150,000
Issuance of units........... 9,512 10,600,000 (250,000) -- 10,350,000
------- ----------- ----------- ------------ -----------
Balance at December 31,
1996...................... 89,512 14,976,686 (250,000) (5,568,578) 9,158,108
Net loss.................... -- -- -- (3,644,154) (3,644,154)
Payment of subscription
notes receivable.......... -- -- 250,000 -- 250,000
Grant and recognition of
options................... -- 62,815 -- -- 62,815
Issuance of units........... 3,842 7,385,000 -- -- 7,385,000
------- ----------- ----------- ------------ -----------
Balance at December 31,
1997...................... 93,354 22,424,501 -- (9,212,732) 13,211,769
Net loss.................... -- -- -- (8,267,614) (8,267,614)
Grant and recognition of
options................... -- 472,023 -- -- 472,023
Exercise of options......... 224 250,000 -- -- 250,000
Issuance of units........... 10,446 20,076,985 (2,102,000) -- 17,974,985
------- ----------- ----------- ------------ -----------
Balance at December 31,
1998...................... 104,024 $43,223,509 $(2,102,000) $(17,480,346) $23,641,163
======= =========== =========== ============ ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 68
ANTIGENICS L.L.C.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998 AND
FOR THE PERIOD FROM MARCH 31, 1994 (DATE OF INCEPTION)
TO DECEMBER 31, 1998
<TABLE>
<CAPTION>
MARCH 31,
1994
(DATE OF
INCEPTION) TO
DECEMBER 31,
1996 1997 1998 1998
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss............................ $(2,158,559) $(3,644,154) $(8,267,614) $(17,480,346)
Adjustments to reconcile net loss to
net cash used in operating
activities:
Depreciation and amortization.... 78,856 202,090 360,285 696,347
Members' equity options.......... 276,676 62,815 472,023 811,514
Members' equity grant............ -- -- -- 2,200,000
Changes in operating assets and
liabilities:
Other assets..................... (1,792) (64,583) (28,885) (95,260)
Prepaid assets................... (10,734) (87,927) (91,638) (230,632)
Organization costs............... -- -- -- (32,934)
Accounts payable................. 246,357 (553,263) 1,791,212 2,036,814
Accrued liabilities.............. 66,865 504,004 (522,735) 48,134
Due to/from related party, net... 29,788 63,361 (89,263) (27,605)
----------- ----------- ----------- ------------
Net cash used in operating
activities.................. (1,472,543) (3,517,657) (6,376,615) (12,073,968)
----------- ----------- ----------- ------------
Cash flows from investing activities:
Purchase of plant and equipment..... (231,262) (622,504) (3,704,168) (4,809,423)
Proceeds from the sale of plant and
equipment........................ -- 4,000 27,942 31,942
----------- ----------- ----------- ------------
Net cash used in investing
activities.................. (231,262) (618,504) (3,676,226) (4,777,481)
----------- ----------- ----------- ------------
Cash flows from financing activities:
Members' equity contributions....... 10,500,000 7,635,000 17,974,985 37,859,995
Exercise of members' equity
options.......................... -- -- 250,000 250,000
Proceeds from debt.................. -- -- 909,503 909,503
----------- ----------- ----------- ------------
Net cash provided by financing
activities..................... 10,500,000 7,635,000 19,134,488 39,019,498
----------- ----------- ----------- ------------
Net increase in cash and cash
equivalents......................... 8,796,195 3,498,839 9,081,647 22,168,049
Cash and cash equivalents at beginning
of period........................... 791,368 9,587,563 13,086,402 --
----------- ----------- ----------- ------------
Cash and cash equivalents at end of
period.............................. $ 9,587,563 13,086,402 22,168,049 22,168,049
=========== =========== =========== ============
Non-cash investing and financing
activities:
Members' equity contributions
financed by notes receivable..... $ 250,000 $ -- $ 2,102,000 $ 2,102,000
=========== =========== =========== ============
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE> 69
ANTIGENICS L.L.C.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) ORGANIZATION AND BUSINESS
The business was formed on March 31, 1994 through the creation of a Delaware
corporation. In July 1995, the founders of the Delaware corporation formed
Antigenics L.L.C. (together with its subsidiary, Antigenics or the Company), a
Delaware limited liability company, and subsequently transferred to the Company
all of the assets, liabilities, properties and rights of the Delaware
corporation in exchange for an initial 81.5% equity interest in the Company. The
accounting for this recapitalization was recorded at the Delaware corporation's
historical cost. In connection with the recapitalization, the Company also
raised $1,500,000 (including $150,000 of subscription notes receivable) in a
private equity transaction in exchange for a 7.5% initial ownership interest and
a further 11% initial ownership interest was exchanged for services rendered to
the Company by certain outside advisors, the value of which was recognized as a
non-cash expense of $2,200,000 during 1995.
The Company is developing immunotherapeutics for the treatment of cancer,
infectious diseases and autoimmune disorders based on the Company's proprietary
heat shock protein technology. The Company's research has demonstrated that when
purified heat shock protein-peptide complexes are injected into the skin, they
trigger an immune response against cancers and infectious diseases. Antigenics
seeks to create immunotherapeutics to "jump-start" patients' immune systems into
destroying diseased cells in the body.
Antigenics is primarily engaged in the development of its heat shock protein
technology and its lead immunotherapeutic product, Oncophage(R). The related
business activities include product research and development activities,
regulatory and clinical affairs, establishing manufacturing capabilities, pilot
stage production for clinical trials, and administrative and corporate
development activities. As of December 31, 1998, the Company has not commenced
commercial operations and, accordingly, is in the development stage.
Consequently, the Company is subject to all the risks inherent in the
establishment of a new business. The Company has incurred annual operating
losses since inception and, as a result, at December 31, 1998 has a deficit
accumulated during the development stage of approximately $17.5 million. The
Company's operations during development have been funded principally by members'
equity. While the Company believes that its working capital resources are
sufficient to satisfy its liquidity requirements over the next 12 months,
satisfying the Company's long-term liquidity needs will require the successful
commercialization of Oncophage or other products and additional members' equity.
The Company's immunotherapeutics require clinical trials and approvals from
regulatory agencies as well as acceptance in the marketplace. As of February 17,
1999, the Company had begun seven clinical trials in four cancer indications,
two of which have been completed, and three of which are in Phase II. Although
the Company believes its patents, patent rights and patent applications are
valid, the invalidation of its patents or failure of certain of its pending
patent applications to issue as patents could have a material adverse effect
upon its business. The Company competes with specialized biotechnology
companies, major pharmaceutical and chemical companies and universities and
research institutions. Many of these competitors have substantially greater
resources than does the Company.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) BASIS OF PRESENTATION
The Company's consolidated financial statements include the accounts of
Antigenics L.L.C. and its wholly-owned subsidiary. All significant intercompany
balances and transactions have been eliminated in consolidation.
F-7
<PAGE> 70
ANTIGENICS L.L.C.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(b) USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
(c) CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments purchased with maturities at
acquisition of three months or less to be cash equivalents. Cash equivalents at
December 31, 1997 and 1998 consist of investments in money market accounts which
are unrestricted as to withdrawal or use.
(d) PLANT AND EQUIPMENT
Plant and equipment are carried at cost. Depreciation is computed using the
straight-line method over the estimated useful lives of the assets. Amortization
of leasehold improvements is computed over the shorter of the lease term or
estimated useful life of the asset. Additions and improvements are capitalized,
while repairs and maintenance are charged to expense as incurred.
(e) ORGANIZATION COSTS
Organization costs, consisting primarily of legal fees, are being amortized
using the straight-line method over a five-year period.
(f) LONG-LIVED ASSETS
The Company's policy is to record long-lived assets at cost, amortizing these
costs over the expected useful lives of the related assets. In accordance with
Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for the
Impairment of Long-lived Assets and for Long-lived Assets to be Disposed of,"
these assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amounts of the assets may not be
recoverable. The assets are evaluated for continuing value and proper useful
lives by comparison to expected undiscounted future cash flows. If such assets
are considered to be impaired, the impairment to be recognized is measured by
the amount by which the carrying amount of the assets exceed the fair value of
the assets, calculated as expected discounted future cash flows. Assets to be
disposed of are reported at the lower of the carrying amount or fair value less
costs to sell.
(g) FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of a financial instrument represents the amount at which the
instrument could be exchanged in a current transaction between willing parties,
other than in a forced sale or liquidation. Significant differences can arise
between the fair value and carrying amounts of financial instruments that are
recognized at historical cost amounts. The estimated fair values of all of the
Company's financial instruments, excluding debt, approximate their carrying
amounts in the consolidated balance sheets. The fair value of the Company's
long-term debt was derived by evaluating the nature and terms of each term note
and considering the prevailing economic and market conditions at the balance
sheet date. The carrying amount of debt, including current portions, is
approximately $910,000 at December 31, 1998 and the fair value is estimated to
be approximately this amount.
F-8
<PAGE> 71
ANTIGENICS L.L.C.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(h) ACCRUED LIABILITIES
Accrued liabilities consist of the following at December 31, 1997 and 1998:
<TABLE>
<CAPTION>
1997 1998
-------- --------
<S> <C> <C>
Sponsored research..................................... $475,000 $ --
Other.................................................. 95,869 48,134
-------- --------
$570,869 $ 48,134
======== ========
</TABLE>
(i) MEMBERS' EQUITY OPTION PLAN
The Company accounts for options granted to employees and directors in
accordance with Accounting Principles Board (APB) Opinion No. 25, "Accounting
for Stock Issued to Employees," and related interpretations. As such,
compensation expense is recorded on fixed members' equity option grants only if
the current fair value of the underlying unit exceeds the exercise price of the
option at the date of grant.
The Company accounts for members' equity options granted to non-employees on a
fair value basis in accordance with SFAS No. 123, "Accounting for Stock-Based
Compensation" and Emerging Issues Task Force Issue No. 96-18, "Accounting for
Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in
Conjunction with Selling, Goods or Services". As a result, the non-cash charge
to operations for non-employee options with vesting or other performance
criteria is affected each reporting period by changes in the fair value of the
Company's members' equity units.
As required, the Company also provides pro forma net loss and pro forma net loss
per members' equity unit disclosures for employee and director members' equity
option grants as if the fair-value-based method defined in SFAS No. 123 had been
applied (see Note 5).
(j) RESEARCH AND DEVELOPMENT
Research and development expenditures are expensed as incurred.
(k) INCOME TAXES
As a Delaware limited liability company, no federal, state and local income
taxes are levied on the Company. Each member of the Company is individually
responsible for reporting his or her share of the Company's net income or loss
on their personal tax returns. Therefore, no provision for income taxes and no
deferred tax assets or liabilities are recognized in the accompanying
consolidated financial statements.
(l) NET LOSS PER MEMBERS' EQUITY UNIT
Basic earnings or loss per members' equity unit (EPU) is computed using the
weighted average number of members' equity units outstanding during the period
being reported on. Diluted EPU reflects the potential dilution that could occur
if securities or other contracts to issue members' equity units were exercised
or converted into members' equity units at the beginning of the period being
reported on and the effect was dilutive. Net loss and weighted average members'
equity units used for computing diluted EPU were the same as that used for
computing basic EPU for each of the years ended December 31, 1996, 1997 and 1998
because the Company's members' equity options were not included in the
calculation since the inclusion of such potential members' equity units would be
antidilutive.
F-9
<PAGE> 72
ANTIGENICS L.L.C.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(m) SEGMENT INFORMATION
The Company is managed and operated as one business. The entire business is
managed by a single management team that reports to the chief executive officer.
The Company does not operate separate lines of business or separate business
entities with respect to any of its product candidates. Accordingly, the Company
does not prepare discrete financial information with respect to separate product
areas or by location and does not have separately reportable segments as defined
by SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information".
(n) RECENT ACCOUNTING PRONOUNCEMENTS
In April 1998, the American Institute of Certified Public Accountants issued
Statement of Position (SOP) 98-5, "Reporting on the Costs of Start-Up
Activities", which requires the costs of start-up activities and organization
costs be expensed as incurred. The adoption of SOP 98-5 by the Company effective
January 1, 1999 will be immaterial to the Company's consolidated financial
statements.
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities", which
establishes accounting and reporting standards for derivative instruments,
including derivatives instruments embedded in other contracts, and for hedging
activities. SFAS No. 133 is effective for all the Company's fiscal quarters
beginning January 1, 2001. This statement is not expected to affect the Company
as it currently does not have derivative instruments or engage in hedging
activities.
(3) PLANT AND EQUIPMENT, NET
Plant and equipment, net at December 31, 1997 and 1998 consists of the
following:
<TABLE>
<CAPTION>
ESTIMATED
DEPRECIABLE
1997 1998 LIVES
---------- ---------- -------------
<S> <C> <C> <C>
Furniture, fixtures and other.............. $ 299,580 $ 486,933 3 to 10 years
Laboratory and manufacturing equipment..... 621,187 1,426,427 3 to 10 years
Leasehold improvements..................... 180,128 224,580 2 to 5 years
Construction in progress................... -- 2,639,181
---------- ----------
1,100,895 4,777,121
Less accumulated depreciation and
amortization............................. 317,240 670,938
---------- ----------
$ 783,655 $4,106,183
========== ==========
</TABLE>
(4) MEMBERS' EQUITY
Antigenics has one class of members' equity. All equity members' vote their
equity interests in proportion to their respective unit interest in the Company.
Net profits and losses of the Company for each fiscal year are allocated to the
capital accounts of the members as described in the limited liability company
agreement, generally in proportion to their respective unit ownership interests.
No members are liable for any obligations of the Company or are required to
contribute any additional capital related to the deficits incurred.
Since the formation of the Company in 1995 (see note 1), the Company has raised
capital through private placement equity transactions. During 1996, the Company
completed a private placement offering of
F-10
<PAGE> 73
ANTIGENICS L.L.C.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
approximately 9,500 members' equity units in exchange for $10,600,000.
Subscription notes receivable of $250,000 at December 31, 1996, which represent
promissory notes from members in consideration of their equity contributions,
were satisfied in full during 1997.
During 1997, the Company commenced a private placement offering, which resulted
in approximately 3,800 members' equity units being sold for approximately
$7,385,000 during 1997 and approximately 10,400 members' equity units being sold
for approximately $20,077,000 during 1998. This offering was completed during
early 1999 and resulted in an aggregate of approximately $27,572,000 being
received by the Company over the three-year period.
Subscription notes receivable of $2,102,000 at December 31, 1998, which
represent promissory notes from members in consideration of their equity
contributions, were satisfied in full during 1999.
(5) EQUITY OPTIONS
In March 1996, the board of managers approved an equity-based incentive
compensation plan (the Plan). Pursuant to the provisions of the Plan, the board
of managers may grant options to directors, employees and outside advisors to
purchase members' equity units of the Company. At the date of grant, the board
of managers sets the terms of the options including the exercise price and
vesting period. The options granted through December 31, 1998 have vesting
periods ranging up to five years. Options generally have a contractual life of
ten years. A maximum of 7% of total equity, inclusive of the options granted,
may be granted as options (approximately 7,800 options as of December 31, 1998).
The following summarizes activity for options granted to directors and
employees:
<TABLE>
<CAPTION>
OPTIONS WEIGHTED WEIGHTED
MEMBERS' EXERCISABLE AVERAGE AVERAGE
EQUITY AT END OF GRANT-DATE EXERCISE
OPTIONS YEAR FAIR VALUE PRICE
-------- ----------- ---------- --------
<S> <C> <C> <C> <C>
Outstanding December 31, 1995............ --
Granted................................ 2,200 $ 121 $ 250
Exercised.............................. -- -- --
-----
Outstanding December 31, 1996............ 2,200 1,500
=====
Granted................................ 276 468 759
Exercised.............................. -- -- --
-----
Outstanding December 31, 1997............ 2,476 1,733
=====
Granted................................ 690 845 1,241
Exercised.............................. -- -- --
===== ====== ======
Outstanding December 31, 1998............ 3,166 2,022
===== =====
</TABLE>
Compensation expense recognized with respect to options issued to employees and
directors is immaterial as the exercise price set by the board of managers
generally is at an amount equal to or greater than the fair value of the
members' equity units at the date of the option grant.
F-11
<PAGE> 74
ANTIGENICS L.L.C.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following summarizes activity for options granted to outside advisors:
<TABLE>
<CAPTION>
OPTIONS WEIGHTED WEIGHTED
MEMBER EXERCISABLE AVERAGE AVERAGE
EQUITY AT END OF GRANT-DATE EXERCISE
OPTIONS YEAR FAIR VALUE PRICE
------- ----------- ---------- --------
<S> <C> <C> <C> <C>
Outstanding December 31, 1995.............. --
Granted.................................. 2,574 $ 171 $ 344
Exercised................................ -- -- --
-----
Outstanding December 31, 1996.............. 2,574 1,449
=====
Granted.................................. -- -- --
Exercised................................ -- -- --
-----
Outstanding December 31, 1997.............. 2,574 1,857
=====
Granted.................................. 1,115 1,023 549
Exercised................................ (224) 298 250
----- ====== ======
Outstanding December 31, 1998.............. 3,465 1,921
===== =====
</TABLE>
The 1996 option grants include 517 options granted to outside advisors with an
exercise price which is determined based on fair value of the underlying units
as the options vest. Compensation expense for these options is recognized as of
the vesting date when the exercise price becomes known. In 1998, 138 of such
options vested at an exercise price of approximately $1,118 per unit.
The charge to operations related to options granted to outside advisors totaled
approximately $277,000, $63,000 and $472,000 for the years ended December 31,
1996, 1997 and 1998, respectively. At December 31, 1998, unrecognized expense
for options granted to outside advisors which have not vested is approximately
$703,000; such expense will be recognized over the remaining vesting period and
is subject to change during the vesting period based upon the fair value of the
Company's members' equity units.
A summary of options outstanding and exercisable, excluding the 1996 options
described above, as of December 31, 1998, follows:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
-------------------------------------------- OPTIONS EXERCISABLE
WEIGHTED AVE. ----------------------------
RANGE OF NUMBER REMAINING WEIGHTED AVE. NUMBER WEIGHTED AVE.
EXERCISE PRICES OUTSTANDING LIFE (YEARS) EXERCISE PRICE EXERCISABLE EXERCISE PRICE
- --------------------- ----------- ------------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
$ 250 - $ 750 5,258 7.73 $ 301 3,972 $ 250
$ 751 - $1,250 840 8.92 1,118 171 1,118
$1,251 - $1,750 -- -- -- -- --
$1,751 - $2,250 154 9.74 2,077 -- --
----- -----
6,252 4,143
===== =====
</TABLE>
The Company accounts for options granted to employees and directors under APB
Opinion No. 25. Had compensation cost for options granted to employees and
directors been determined consistent with SFAS
F-12
<PAGE> 75
ANTIGENICS L.L.C.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
No. 123, the Company's pro forma net loss and pro forma net loss per members'
equity unit would have been as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1997 1998
------------ ------------ ------------
<S> <C> <C> <C>
Net loss:
As reported............................... $(2,158,559) $(3,644,154) $(8,267,614)
Pro forma................................. (2,342,028) (3,694,280) (8,370,709)
=========== =========== ===========
Net loss per members' equity unit:
As reported............................... $ (25.43) $ (40.71) $ (86.42)
Pro forma................................. (27.59) (41.27) (87.49)
=========== =========== ===========
</TABLE>
The effects of applying SFAS No. 123, for either recognizing or disclosing
compensation cost under such pronouncement, may not be representative of the
effects on reported net income or loss for future years. The fair value of each
option granted is estimated on the date of grant using an option-pricing model
with the following weighted average assumptions:
<TABLE>
<CAPTION>
1996 1997 1998
---- ---- ----
<S> <C> <C> <C>
Estimated volatility........................................ 38% 57% 61%
Expected life in years -- employee and director options..... 6 6 6
Risk-free interest rate..................................... 6.3% 6.3% 5.4%
Dividend yield.............................................. 0% 0% 0%
</TABLE>
The Company estimates volatility for purposes of computing compensation expense
on outside advisor options and for disclosure purposes using the volatility of
public companies that the Company considers comparable. The expected life used
to estimate the fair value of outside advisor options is equal to the
contractual life of the option granted.
(6) COMMITMENTS
In November 1994, the Company's predecessor entered into a Patent License
Agreement (Mount Sinai Agreement) with the Mount Sinai School of Medicine (Mount
Sinai). Through the Mount Sinai Agreement, the Company has obtained the
exclusive licenses to the patent rights which resulted from the research and
development performed by Dr. Pramod Srivastava, a director of the Company. Under
the Mount Sinai Agreement, the Company agreed to pay Mount Sinai a nominal
royalty on related product sales (as defined in the Mount Sinai Agreement)
through the last expiration date of the patents under the Mount Sinai Agreement
(2015). In addition to these royalty payments, Mount Sinai was issued a nominal
equity interest.
During 1995, Dr. Srivastava moved his research to Fordham University (Fordham).
The Company's predecessor entered into a Patent License Agreement (Fordham
Agreement) with Fordham, agreeing to reimburse Fordham for all approved costs
incurred in the performance of the research. The Company's predecessor has also
agreed to pay Fordham a nominal royalty on related product sales, as defined,
through the last expiration date of the patents under the Fordham Agreement.
This agreement ended in mid-1997. During 1995, 1996 and 1997, the direct and
indirect costs incurred by the Company related to this agreement were
approximately $546,000, $926,000 and $902,000, respectively, and are included in
research and development expenses in the consolidated statements of operations
for such years.
F-13
<PAGE> 76
ANTIGENICS L.L.C.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In February 1998, the Company entered into a research agreement with the
University of Connecticut Health Center (UConn) and Dr. Srivastava. The
agreement has a term of approximately five years and calls for payments to UConn
totaling a minimum of $5,000,000, payable quarterly at the rate of $250,000
(contingent on the continuing employment of Dr. Srivastava by UConn). In
addition, as research was begun by Dr. Srivastava in 1997, the Company agreed to
pay approximately $475,000 for these previous services and expensed such amount
as research and development during 1997. Research and development expense in the
accompanying 1998 consolidated statement of operations includes approximately
$1,000,000 of costs incurred under the UConn agreement. Royalties at varying
rates are due to UConn upon commercialization of a product utilizing technology
discovered during the research agreement.
In 1996, Antigenics entered into an agreement with Sloan-Kettering Institute for
Cancer Research (Sloan Kettering) to conduct clinical studies. The Company is
required to pay Sloan Kettering $10,000 for administration and start up costs
and $4,000 per patient in the study.
On December 2, 1997, Antigenics entered into two agreements with The University
of Texas M.D. Anderson Cancer Center (M.D. Anderson) to conduct clinical
studies. The Company is required to pay M.D. Anderson a total of approximately
$538,000 for expenses for the clinical study of approximately 90 patients and
other related costs payable in four installments. In addition, on March 20, 1998
the Company entered into another clinical study with M.D. Anderson. Under such
1998 agreement, the Company is required to pay M.D. Anderson a total of
approximately $118,000 for the study of 30 patients and other related costs
payable in four installments.
In 1998, Antigenics entered into an agreement with the Johannes Gutenberg
Universitat Mainz Klinikum (Universitat) to conduct additional clinical studies.
The Company is required to pay the Universitat approximately $279,000 for
expenses for the clinical study of approximately 30 patients. The first
installment was paid upon signing the agreement.
In 1998, Antigenics entered into an agreement, as amended, with Sigma-Tau
Farmaceutiche Riunite SpA (Sigma-Tau) to conduct clinical studies in Italy,
Spain, Portugal and Switzerland. Under the agreement, Sigma-Tau is required to
reimburse Antigenics for all costs incurred in relation to the clinical studies.
In return, Antigenics has granted Sigma-Tau the exclusive right to negotiate a
marketing and development agreement (the Development Agreement) for the
exclusive use of Antigenics' patent rights and their product, and the right of
first offer to negotiate licenses for other medical uses of their product, in
Italy, Spain, Portugal and Switzerland. The Development Agreement has not been
finalized. No costs associated with these clinical studies were incurred during
1998.
For the years ended December 31, 1996, 1997 and 1998, approximately $10,000,
$4,000 and $255,000, respectively, has been expensed in the accompanying
consolidated statements of operations related to the above mentioned clinical
studies.
(7) RELATED PARTY TRANSACTIONS
The Company rents office space for its New York City headquarters on a
month-to-month basis and utilizes certain office services of an entity which is
wholly-owned by the Company's chief executive officer and chairman of the board.
Such transactions are recorded at the affiliate's cost and amounted to
approximately $293,000, $557,000 and $211,000 for the years ended December 31,
1996, 1997 and 1998, respectively. From time to time the Company also pays
general and administrative costs on behalf of the affiliated entity for which
the Company is reimbursed on a current basis. As of December 31, 1998, the
affiliated entity was indebted to the Company for $27,605 of costs paid on the
affiliated entity's behalf. As
F-14
<PAGE> 77
ANTIGENICS L.L.C.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
of December 31, 1997, the Company was indebted to the affiliated entity for
$61,658 for rent and administrative services.
During 1997 and renewed each year thereafter, the Company obtained stand by
letters of credit for the benefit of the related party in the amount of $375,000
in connection with the related party's lease of the New York City office space.
These letters expire in January 2000.
(8) LEASES
The Company leases administrative (see Note 7), laboratory and office facilities
under various month-to-month and long-term lease arrangements. Rent expense,
exclusive of the amounts included in Note 7, was approximately $134,000 and
$685,000 for the years ended December 31, 1997 and 1998, respectively.
The future minimum rental payments under the Company's lease of its Woburn,
Massachusetts manufacturing and laboratory facility, which expires in 2003, are
as follows:
<TABLE>
<S> <C>
Year ending December 31:
1999......................................... $ 447,516
2000......................................... 447,516
2001......................................... 447,516
2002......................................... 447,516
2003......................................... 279,698
----------
$2,069,762
==========
</TABLE>
(9) DEBT
In November 1998, the Company entered into a $3 million credit facility
(increased to $5 million in May 1999) with a financial institution pursuant to
which the Company can draw down amounts to make or refinance certain capital
expenditures. As the Company utilizes the credit facility, separate term notes
will be executed. Each term loan will have a term of forty-two months and the
interest rate is fixed at the closing of each term loan. Each loan is
collateralized by the equipment, fixtures, and improvements acquired with the
proceeds of the loan.
On December 30, 1998, the Company closed its first term loan under the credit
facility for approximately $910,000; the loan bears interest on the remaining
balance at 13.954%.
The aggregate maturities of the term loan for each of the five years subsequent
to December 31, 1998 are as follows: 1999 -- $200,497; 2000 -- $230,335;
2001 -- $264,613; 2002 -- $214,059.
(10) SUBSEQUENT EVENT
On June 21, 1999, Antigenics entered into another agreement with M.D. Anderson
to conduct clinical studies. The Company is required to pay M.D. Anderson a
total of approximately $277,000 for the clinical study of approximately 40
patients and other related costs payable in installments of over two years.
(11) PRO FORMA INCOME TAX PROVISION (UNAUDITED)
As discussed in Note 2(k), the Company is not subject to income taxes and
therefore does not provide for income taxes in its consolidated financial
statements. Had the Company been organized as a tax paying entity for the year
ended December 31, 1998, there would be no pro forma income tax provision
because of a loss before income taxes and the need to recognize a valuation
allowance on all gross deferred tax assets. Given the Company's past history of
incurring operating losses, management believes that it is more likely than not
that any deferred tax assets will not be realized.
F-15
<PAGE> 78
ANTIGENICS L.L.C.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30,
1999
-------------
<S> <C>
ASSETS
Cash and cash equivalents................................... $ 12,611,690
Prepaid expenses............................................ 196,424
Other assets................................................ 418,065
------------
Total current assets.............................. 13,226,179
Plant and equipment, net.................................... 7,979,666
Other assets................................................ 74,071
------------
Total assets...................................... $ 21,279,916
============
LIABILITIES AND MEMBERS' EQUITY
Accounts payable............................................ $ 986,552
Accrued liabilities......................................... 394,502
Due to related party........................................ 7,994
Current portion, long-term debt............................. 781,061
------------
Total current liabilities......................... 2,170,109
Long-term debt.............................................. 2,367,578
Members' capital -- no stated value; 104,086 units issued... 45,210,542
Deficit accumulated during development stage................ (28,468,313)
------------
Total members' equity............................. 16,742,229
Commitments and contingencies...............................
------------
Total liabilities and members' equity............. $ 21,279,916
============
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
F-16
<PAGE> 79
ANTIGENICS L.L.C.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1999, AND
FOR THE PERIOD FROM MARCH 31, 1994 (DATE OF INCEPTION)
TO SEPTEMBER 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31,
1994
(DATE OF
NINE MONTHS ENDED SEPTEMBER 30, INCEPTION) TO
------------------------------- SEPTEMBER 30,
1998 1999 1999
------------- -------------- -------------
<S> <C> <C> <C>
Revenue........................................... $ -- $ -- $ --
Expenses:
Research and development........................ (4,072,149) (6,925,828) (17,805,732)
General and administrative...................... (1,822,867) (3,825,120) (11,485,924)
Depreciation and amortization................... (272,822) (726,038) (1,422,385)
----------- ------------ ------------
Total operating loss.................... (6,167,838) (11,476,986) (30,714,041)
Other income/(expense):
Non-operating income............................ -- -- 249,988
Interest expense................................ -- (151,653) (151,653)
Interest income................................. 580,352 640,672 2,147,393
----------- ------------ ------------
Net loss................................ $(5,587,486) $(10,987,967) $(28,468,313)
=========== ============ ============
Net loss per members' equity unit, basic and
diluted......................................... $ (62.06) $ (105.57)
=========== ============
Weighted average members' units outstanding, basic
and diluted..................................... 90,032 104,079
=========== ============
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
F-17
<PAGE> 80
ANTIGENICS L.L.C.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF MEMBERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND
THE PERIOD FROM MARCH 31, 1994 (DATE OF INCEPTION)
TO SEPTEMBER 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED
SUBSCRIPTION DURING
MEMBERS' NOTES DEVELOPMENT
UNITS CAPITAL RECEIVABLE STAGE TOTAL
------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Balance at March 31, 1994........ -- $ -- $ -- $ -- $ --
Net loss......................... -- -- -- (183,440) (183,440)
Issuance of units................ 65,200 400,010 -- -- 400,010
------- ----------- ----------- ------------ ------------
Balance at December 31, 1994..... 65,200 400,010 -- (183,440) 216,570
Net loss......................... -- -- -- (3,226,579) (3,226,579)
Issuance of units................ 6,000 1,500,000 (150,000) -- 1,350,000
Grant of members' equity units... 8,800 2,200,000 -- -- 2,200,000
------- ----------- ----------- ------------ ------------
Balance at December 31, 1995..... 80,000 4,100,010 (150,000) (3,410,019) 539,991
Net loss......................... -- -- -- (2,158,559) (2,158,559)
Grant and recognition of
options........................ -- 276,676 -- -- 276,676
Payment of subscription notes
receivable..................... -- -- 150,000 -- 150,000
Issuance of units................ 9,512 10,600,000 (250,000) -- 10,350,000
------- ----------- ----------- ------------ ------------
Balance at December 31, 1996..... 89,512 14,976,686 (250,000) (5,568,578) 9,158,108
Net loss......................... -- -- -- (3,644,154) (3,644,154)
Payment of subscription notes
receivable..................... -- -- 250,000 -- 250,000
Grant and recognition of
options........................ -- 62,815 -- -- 62,815
Issuance of units................ 3,842 7,385,000 -- -- 7,385,000
------- ----------- ----------- ------------ ------------
Balance at December 31, 1997..... 93,354 22,424,501 -- (9,212,732) 13,211,769
Net loss......................... -- -- -- (8,267,614) (8,267,614)
Grant and recognition of
options........................ -- 472,023 -- -- 472,023
Exercise of options.............. 224 250,000 -- -- 250,000
Issuance of units................ 10,446 20,076,985 (2,102,000) -- 17,974,985
------- ----------- ----------- ------------ ------------
Balance at December 31, 1998..... 104,024 43,223,509 (2,102,000) (17,480,346) 23,641,163
Net loss......................... -- -- -- (10,987,967) (10,987,967)
Payment of subscription notes
receivable..................... -- -- 2,102,000 -- 2,102,000
Grant and recognition of
options........................ -- 1,877,033 -- -- 1,877,033
Issuance of units................ 62 110,000 -- -- 110,000
------- ----------- ----------- ------------ ------------
Balance at September 30, 1999.... 104,086 $45,210,542 $ -- $(28,468,313) $ 16,742,229
======= =========== =========== ============ ============
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
F-18
<PAGE> 81
ANTIGENICS L.L.C.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1999 AND
FOR THE PERIOD FROM MARCH 31, 1994 (DATE OF INCEPTION)
TO SEPTEMBER 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31,
1994
(DATE OF
SEPTEMBER 30, INCEPTION) TO
--------------------------- SEPTEMBER 30,
1998 1999 1999
----------- ------------ -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss...................................... $(5,587,486) $(10,987,967) $(28,468,313)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization.............. 272,822 726,038 1,422,385
Members' equity options.................... 181,734 1,877,033 2,688,546
Members' equity grant...................... -- -- 2,200,000
Changes in operating assets and liabilities:
Other assets............................... (28,536) (396,876) (492,136)
Prepaid assets............................. 21,631 34,208 (196,424)
Organization costs......................... -- -- (32,934)
Accounts payable........................... 109,740 (1,050,262) 986,552
Accrued liabilities........................ (497,572) 346,368 394,502
Due to/from related party, net............. 19,409 35,599 7,994
----------- ------------ ------------
Net cash used in operating activities.... (5,508,258) (9,415,859) (21,489,828)
----------- ------------ ------------
Cash flows from investing activities:
Purchase of plant and equipment............... (1,047,274) (4,591,636) (9,401,059)
Proceeds from the sale of plant and
equipment.................................. -- -- 31,942
----------- ------------ ------------
Net cash used in investing activities.... (1,047,274) (4,591,636) (9,369,117)
----------- ------------ ------------
Cash flows from financing activities:
Members' equity contributions................. 6,525,000 2,212,000 40,071,995
Exercise of members' equity options........... -- -- 250,000
Proceeds from debt............................ -- 2,514,656 3,424,160
Repayments of debt............................ -- (275,520) (275,520)
----------- ------------ ------------
Net cash provided by financing
activities............................ 6,525,000 4,451,136 43,470,635
----------- ------------ ------------
Net (decrease) increase in cash and cash
equivalents................................... (30,532) (9,556,359) 12,611,690
Cash and cash equivalents at beginning of
period........................................ 13,086,402 22,168,049 --
----------- ------------ ------------
Cash and cash equivalents at end of period...... $13,055,870 12,611,690 12,611,690
=========== ============ ============
Supplemental cash flow information:
Interest paid................................. $ -- $ 151,653 $ 151,653
=========== ============ ============
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
F-19
<PAGE> 82
ANTIGENICS L.L.C.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(A) BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments, consisting only of normal
recurring adjustments, considered necessary for a fair presentation have been
included. Operating results for the nine-month period ended September 30, 1999
are not necessarily indicative of the results that may be expected for the year
ended December 31, 1999. For further information, refer to the Company's
consolidated financial statements for the year ended December 31, 1998 and
footnotes thereto included elsewhere in this prospectus.
(B) ACCOUNTING FOR ORGANIZATIONAL COSTS
In April 1998, the American Institute of Certified Public Accountants issued
Statement of Position (SOP) 98-5, "Reporting on the Costs of Start-Up
Activities", which requires that the costs of start-up activities and
organization costs be expensed as incurred. The Company adopted the provisions
of SOP 98-5 effective January 1, 1999; the adoption had an immaterial effect on
the Company's consolidated financial statements.
(C) EQUITY OPTIONS
During the nine months ended September 30, 1999, the Company granted 1,620
members' equity options to employees and directors with exercise prices at or
above the fair value of the underlying units at the date of grant (exercise
prices ranging from $1,118 to $2,077 per unit). In addition, the Company granted
1,321 members' equity options to outside advisors of which 482 options vested
immediately and the remainder vest over periods of up to three years. The
outside advisors' options were granted at exercise prices ranging from $1,118 to
$2,402 per unit.
For the nine months ended September 30, 1998 and 1999, the charge to operations
related to options granted to and earned by outside advisors totaled
approximately $182,000 and $1,877,000, respectively. At September 30, 1999,
unrecognized expense for options granted to outside advisors which have not
vested is approximately $1,932,000; such expense will be recognized over the
remaining vesting period and is subject to change each reporting period based
upon the fair value of the Company's members' equity units.
(D) COMMITMENTS
On June 21, 1999, Antigenics entered into another agreement with M.D. Anderson
to conduct clinical studies. The Company is required to pay M.D. Anderson a
total of approximately $277,000 for the clinical study of approximately 40
patients and other related costs payable in installments over two years.
Under Antigenics' agreement with Sigma-Tau Farmaceutiche Riunite SpA (Sigma-Tau)
to conduct clinical studies in Italy, Sigma-Tau is required to reimburse
Antigenics for all costs incurred in relation to the clinical studies. During
1999, Antigenics incurred approximately $266,000 of costs on behalf of Sigma-
Tau associated with this agreement. This amount is included in other assets in
the accompanying consolidated balance sheet.
F-20
<PAGE> 83
ANTIGENICS L.L.C.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(E) RELATED PARTY TRANSACTIONS
In November 1999, the Company signed a long-term lease agreement for its New
York City headquarters with an entity wholly-owned by the Company's chief
executive officer and chairman of the board. The lease expires in December 2006
and requires annual rental payments of approximately $312,000 equal to the
related party's cost.
(F) SUBSEQUENT EVENTS
Private Placement of Members' Equity
In November 1999, the Company raised gross proceeds of approximately $39.2
million from the sale of approximately 16,327 members' equity units through a
private equity placement and incurred approximately $293,000 of private
placement expenses. As of November 29, 1999, the Company has a subscriptions
receivable of approximately $653,000 related to the private placement. Each
member participating in this private placement received a warrant to purchase an
additional 10% of the units acquired in this offering, rounded to the nearest
whole number, at a price of approximately $2,402 per unit. The warrants expire
September 30, 2002. The warrants permit conversion on a net exercise basis upon
the completion of an initial public offering (IPO) of the Company's equity. Each
member participating in this private placement also received registration rights
in the event of an IPO.
Initial Public Offering
In November 1999, the Company created a subsidiary, Antigenics Inc. in
contemplation of the Company's IPO. The board of directors of Antigenics Inc.
authorized the filing of a registration statement with the Securities and
Exchange Commission (SEC) to sell shares of its common stock in connection with
the proposed IPO. Concurrently with the completion of the IPO, the Company will
be converted from a limited liability company to a corporation through a merger
with and into Antigenics Inc. All members will exchange their respective member
interests for shares of common stock in Antigenics Inc. If the IPO is not
completed, the conversion to the corporation will not take place.
Adoption of Employee Stock Purchase Plan
In connection with the proposed IPO, the board of directors of Antigenics Inc.
approved an employee stock purchase plan. Under the plan, employees may purchase
shares of common stock at a discount from fair market value. There are 300,000
shares of common stock reserved for issuance under the purchase plan. The
purchase plan is intended to qualify as an employee stock purchase plan within
the meaning of Section 423 of the Internal Revenue Code of 1986, as amended.
Rights to purchase common stock under the purchase plan are granted at the
discretion of the compensation committee, which determines the frequency and
duration of individual offerings under the plan and the dates when stock may be
purchased. Eligible employees participate voluntarily and may withdraw from any
offering at any time before stock is purchased. Participation terminates
automatically upon termination of employment. The purchase price per share of
common stock in an offering will not be less than 85% of the lesser of its fair
market value at the beginning of the offering period or on the applicable
exercise date and may be paid through payroll deductions, periodic lump sum
payments or a combination of both. The plan terminates on November 15, 2009.
F-21
<PAGE> 84
ANTIGENICS L.L.C.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Adoption of Equity Incentive Plan
In connection with the proposed IPO, the board of directors of Antigenics Inc.
approved an employee equity incentive plan. Antigenics' equity incentive plan
authorizes the grant of incentive stock options within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended, and nonqualified stock
options for the purchase of an aggregate of 4,500,000 shares (subject to
adjustment for stock splits and similar capital changes) of common stock to
Antigenics' employees and, in the case of non-qualified stock options, to
consultants and directors of Antigenics Inc. or any affiliate, as defined in the
equity plan. The board of directors has appointed the compensation committee to
administer the equity plan. Members' equity options outstanding under the
Company's current equity-based incentive compensation plan will be exchanged for
stock options under the new equity incentive plan at the closing of the IPO.
(G) PRO FORMA INCOME TAX PROVISION
The Company is not subject to income taxes and therefore does not provide for
income taxes in its consolidated financial statements. Had the Company been
organized as a tax paying entity for the nine-month period ended September 30,
1999, there would be no pro forma income tax provision because of a loss before
income taxes and the need to recognize a valuation allowance on all gross
deferred tax assets. Given the Company's past history of incurring operating
losses, management believes that it is more likely than not that any deferred
tax assets will not be realized.
F-22
<PAGE> 85
SHARES
ANTIGENICS INC.
COMMON STOCK
[LOGO OF ANTIGENICS INC.]
-------------------------------
PROSPECTUS
-------------------------------
Until 2000, all dealers that effect transactions in these
securities, whether or not participating in this offering, may be required to
deliver a prospectus. This is in addition to the dealers' obligation to deliver
a prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
U.S. Bancorp Piper Jaffray
Robertson Stephens
, 2000
<PAGE> 86
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than underwriting
discounts and commissions, payable by the Registrant in connection with the sale
of common stock being registered. All amounts are estimates except the
registration fee and the NASD filing fee.
<TABLE>
<CAPTION>
AMOUNT
TO BE
PAID
--------
<S> <C>
Registration fee............................................ $ 12,788
NASD filing fee............................................. 5,100
Nasdaq National Market listing fee.......................... *
Printing and engraving...................................... *
Legal fees and expenses..................................... *
Accounting fees and expenses................................ 200,000
Transfer Agent fees......................................... 3,500
Miscellaneous............................................... *
--------
Total............................................. $
========
</TABLE>
- ---------------
* To be filed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law provides that a corporation
may indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, other than an action
by or in the right of the corporation, by reason of the fact that the person is
or was a director, officer, employee or agent of the corporation or is or was
serving at the corporation's request as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise,
against expenses, including attorneys' fees, judgments, fines and amounts paid
in settlement actually and reasonably incurred by the person in connection with
the action, suit or proceeding if the person acted in good faith and in a manner
the person reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe the person's conduct was unlawful. The power to
indemnify applies to actions brought by or in the right of the corporation as
well, but only to the extent of expenses, including attorneys' fees but
excluding judgments, fines and amounts paid in settlement, actually and
reasonably incurred by the person in connection with the defense or settlement
of the action or suit. And with the further limitation that in these actions no
indemnification shall be made in the event of any adjudication of negligence or
misconduct in the performance of his duties to the corporation, unless a court
believes that in light of all the circumstances indemnification should apply.
Article V of Antigenics' By-laws provides that Antigenics shall, to the extent
legally permitted, indemnify each person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding by reason of the fact that he is or was, or has agreed to become, a
director or officer of Antigenics, or is or was serving, or has agreed to serve,
at the request of Antigenics, as a director, officer or trustee of, or in a
similar capacity with, another corporation, partnership, joint venture, trust or
other enterprises. The indemnification provided for in Article V is expressly
not exclusive of any other rights to which those seeking indemnification may be
entitled under any law, agreement or vote of stockholders or disinterested
directors or otherwise, and shall inure to the benefit of the heirs, executors
and administrators of such persons.
II-1
<PAGE> 87
Section 145(g) of the Delaware General Corporation Law and Article V of By-laws
of Antigenics provide that the company shall have the power to purchase and
maintain insurance on behalf of its officers, directors, employees and agents,
against any liability asserted against and incurred by such persons in any such
capacity.
Antigenics has entered into indemnification agreements with each of its
directors and executive officers and has obtained insurance covering its
directors and officers against losses and insuring Antigenics against certain of
its obligations to indemnify its directors and officers.
Section 102(b)(7) of the General Corporation Law of the State of Delaware
provides that a corporation may eliminate or limit the personal liability of a
director to the corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, provided that such provisions shall not
eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the General Corporation Law
of the State of Delaware, or (iv) for any transaction from which the director
derived an improper personal benefit. No such provision shall eliminate or limit
the liability of a director for any act or omission occurring prior to the date
when such provision becomes effective.
Pursuant to the Delaware General Corporation Law, Section 7 of Article FIFTH of
the Certificate of Incorporation of Antigenics eliminates a director's personal
liability for monetary damages to Antigenics and its shareholders for breach of
fiduciary duty as a director, except in circumstances involving a breach of the
director's duty of loyalty to Antigenics or its shareholders, acts or omissions
not in good faith, intentional misconduct, knowing violations of the law,
self-dealing or the unlawful payment of dividends or repurchase of stock.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
We have sold and issued the following securities in the previous three years.
In 1996, we completed a private placement offering of equity interests in
Antigenics L.L.C. equal to 10.6% of the total post-offering equity interests in
the L.L.C. for an aggregate sale price of $10,600,000.
In January 1999, we completed a private placement offering of equity interests
in Antigenics L.L.C. equal to 13.8% of the total post-offering equity interests
in the L.L.C. for an aggregate sales price of $27,572,000.
In November 1999, we completed a private placement offering of (i) equity
interests in Antigenics L.L.C. equal to 13.56% of the total post-offering equity
interests in the L.L.C. and (ii) warrants to purchase equity interests in the
L.L.C. equal to 1.36% of the total post-offering equity interests in the L.L.C.
The equity interests and warrants were sold for an aggregate of approximately
$39,200,000.
All of the above sales of L.L.C. equity interests were made in reliance on the
exemption from registration under Section 4(2) of the Securities Act of 1933, as
amended, as transactions not involving a public offering.
We have from time to time granted options to purchase equity interests in
Antigenics L.L.C. These options have a weighted average exercise price of
per one percent equity interest in the L.L.C. and are, in the aggregate,
exercisable for % of the total equity interests in the L.L.C. assuming all
of these options are exercised. The options were issued in reliance upon
exemptions from registration pursuant to either Section 4(2) of the Securities
Act of 1933, as amended, or Rule 701 promulgated under the Securities Act of
1933, as amended.
Concurrently with the closing of this offering, the registrant will merge with
Antigenics, L.L.C. Members of the L.L.C. will receive shares of the registrant's
common stock in exchange for their equity interests at a rate of
shares per percentage equity interest, for an aggregate of approximately
shares of common stock. The issuance of the registrant's common stock
upon contribution of the equity interests
II-2
<PAGE> 88
in the L.L.C. will be made in reliance on the exemption from registration under
Section 4(2) of the Securities Act of 1933 and Rule 506 thereunder as a
transaction not involving a public offering.
The registrant retained two placement agents in connection with the November
1999 private placement who received aggregate compensation of $217,769 in cash
and $76,298 in members' equity for their services. There were no underwriters
employed in connection with any of the other transactions set forth in Item 15.
For additional information concerning these equity investment transactions,
reference is made to the information contained under the caption "Certain
Relationships and Related Transactions" in the form of prospectus included
herein.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
See the Exhibit Index, which is incorporated herein by reference.
(b) Financial Statement Schedules
None.
Schedules not listed above have been omitted because the information required to
be set forth therein is not applicable or is shown in the consolidated financial
statements or notes thereto.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions referenced in Item 14 of this Registration
Statement or otherwise, the registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes to provide to the underwriter at
the closing specified in the underwriting agreements, certificates in such
denominations and registered in such names as required by the underwriter to
permit prompt delivery to each purchaser.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to 424(b)(1) or (4), or 497(h) under
the Securities Act shall be deemed to be part of this registration statement as
of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-3
<PAGE> 89
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the Town of Woburn,
Commonwealth of Massachusetts, on November 30, 1999.
ANTIGENICS INC.
By: /s/ GARO ARMEN
------------------------------------
Garo H. Armen
Chief Executive Officer and
Chairman of the Board of Directors
POWER OF ATTORNEY
We, the undersigned officers and directors of Antigenics Inc., hereby severally
constitute and appoint Garo H. Armen, Ph.D. and Edward Brodsky, and each of them
singly, our true and lawful attorneys-in-fact, with full power to them in any
and all capacities, to sign any amendments to this Registration Statement, and
any related Rule 462(b) registration statement or amendment thereto, and to file
the same, with exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, hereby ratifying and confirming all
that each of said attorneys-in-fact may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ GARO ARMEN Chief Executive Officer and November 30, 1999
- --------------------------------------------------- Chairman of the Board of
Garo Armen, Ph.D. Directors (Principal
Executive Officer and
Principal Financial and
Accounting Officer)
/s/ PRAMOD SRIVASTAVA Director November 30, 1999
- ---------------------------------------------------
Pramod Srivastava, Ph.D.
/s/ NOUBAR AFEYAN Director November 30, 1999
- ---------------------------------------------------
Noubar Afeyan, Ph.D.
/s/ EDWARD BRODSKY Director November 30, 1999
- ---------------------------------------------------
Edward Brodsky
/s/ GAMIL DE CHADAREVIAN Director November 30, 1999
- ---------------------------------------------------
Gamil de Chadarevian
/s/ TOM DECHAENE Director November 30, 1999
- ---------------------------------------------------
Tom Dechaene
/s/ DONALD PANOZ Director November 30, 1999
- ---------------------------------------------------
Donald Panoz
/s/ MARTIN TAYLOR Director November 30, 1999
- ---------------------------------------------------
Martin Taylor
</TABLE>
II-4
<PAGE> 90
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- -----------------------
<C> <S>
1.1+ Form of Underwriting Agreement.
2.1+ Form of Agreement and Plan of Merger of Antigenics Inc. and
Antigenics L.L.C.(1)
3.1 Certificate of Incorporation of Antigenics Inc.
3.2 By-laws of Antigenics Inc.
4.1 Form of Common Stock Certificate.
4.2+ Form of Warrant to purchase interests, together with a list
of holders.
5.1+ Opinion of Palmer & Dodge LLP.
10.1* 1999 Equity Incentive Plan.
10.2* 1999 Employee Stock Purchase Plan.
10.3 Founding Scientist's Agreement between Antigenics and Pramod
K. Srivastava dated March 28, 1995.
10.4 Form of Indemnification Agreement between Antigenics and its
directors and executive officers. These agreements are
materially different only as to the signatories and the
dates of execution.
10.5 Lease Agreement between Antigenics and Cummings Property
Management, Inc. dated May 28, 1998, as amended on December
10, 1998.
10.6 License Agreement between GHA Management Corporation and
Antigenics dated November 12, 1999.
10.7 Master Loan and Security Agreement between Antigenics and
Finova Technology Finance, Inc. dated November 19, 1998.
(Schedules have been omitted but will be furnished to the
Commission upon its request).
10.8 Patent License Agreement between Antigenics and Mount Sinai
School of Medicine dated November 1, 1994, as amended on
June 5, 1995.(2)
10.9 Sponsored Research and Technology License Agreement between
Antigenics and Fordham University dated March 28, 1995, as
amended on March 22, 1996.(2)
10.10 Research Agreement between Antigenics and The University of
Connecticut Health Center dated February 18, 1998.(2)
10.11 License Agreement between Antigenics and Duke University
dated March 4, 1999.(2)
10.12 License Agreement between Antigenics and University of Miami
dated April 12, 1999.(2)
10.13 Letter Agreement between Antigenics and Sigma-Tau Industrie
Farmaceutiche Riunite SpA dated June 3, 1998.(2)
10.14 Letter Agreement between Antigenics and Medison Pharma Ltd.
dated November 15, 1999.(2)
10.15+ Amendment to Letter Agreement between Antigenics and
Sigma-Tau Industrie Farmaceutiche Riunite SpA dated October
20, 1999.
10.16* Employment Agreement between Antigenics and Elma Hawkins,
Ph.D. dated June 1, 1998.
10.17+* Antigenics 401(k) Plan.
23.1 Consent of KPMG LLP.
23.2+ Consent of Palmer & Dodge LLP. Included in the opinion to be
filed by amendment as Exhibit 5.1.
24.1 Power of Attorney. Included on signature page hereto.
27.1 Financial Data Schedule (available in EDGAR format only).
</TABLE>
- ---------------------------------------------
* Indicates a management contract or compensatory plan.
(1)As proposed to be filed with the Secretary of State of the State of Delaware
concurrently with the closing of the offering.
(2)This Exhibit has been filed separately with the Commission pursuant to an
application for confidential treatment. The confidential portions of this
Exhibit have been omitted and are marked by an asterisk.
+ To be filed by amendment.
<PAGE> 1
EXHIBIT 3.1
-----------
CERTIFICATE OF INCORPORATION
OF
ANTIGENICS INC.
The undersigned, for the purpose of forming a corporation under the
laws of the State of Delaware, hereby certifies as follows:
FIRST: The name of the corporation is Antigenics Inc.
SECOND: The address of the registered office of the Corporation in the
State of Delaware is 1209 Orange Street, in the City of Wilmington, New Castle
County, Delaware. The name of its registered agent at such address is The
Corporation Trust Company.
THIRD: The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
FOURTH: The Corporation shall be authorized to issue one hundred one
million (101,000,000) shares of capital stock, which shall be divided into one
hundred million (100,000,000) shares of Common Stock, par value $0.01 per share,
and one million (1,000,000) shares of Preferred Stock, par value $0.01 per
share.
The following is a statement of the designations, preferences, voting
powers, qualifications, special or relative rights and privileges in respect of
the authorized capital stock of the Corporation.
PREFERRED STOCK
---------------
The Board of Directors is authorized, subject to limitations prescribed
by law and the provisions of this Article FOURTH, to provide by resolution for
the issuance of the shares of Preferred Stock in one or more series, and by
filing a certificate pursuant to the applicable law of the State of Delaware, to
establish from time to time the number of shares to be included in each such
series, and to fix the designations, powers, preferences and rights of the
shares of each such series and the qualifications, limitations or restrictions
thereof.
The authority of the Board with respect to each series shall include,
but shall not be limited to, determination of the following:
(a) The number of shares constituting that series and the distinctive
designation of that series;
<PAGE> 2
(b) The dividend rate, if any, on the shares of that series, whether
dividends shall be cumulative, and if so, from which date or dates, and the
relative rights of priority, if any, of payment of dividends on shares of the
series;
(c) Whether that series shall have voting rights, in addition to the
voting rights provided by law, and, if so, the terms of such voting rights;
(d) Whether that series shall have conversion privileges, and, if so,
the terms and conditions of such conversion, including provision for adjustment
of the conversion rate in such events as the Board of Directors shall determine;
(e) Whether or not the shares of that series shall be redeemable, and
if so, the terms and conditions of such redemption, including the date or dates
upon or after which they shall be redeemable, and the amount per share payable
in case of redemption, which amount may vary under different conditions and at
different redemption dates;
(f) Whether that series shall have a sinking fund for the redemption or
purchase of shares of that series, and if so, the terms and amount of such
sinking fund;
(g) The rights of the shares of that series in the event of voluntary
or involuntary liquidation, dissolution or winding up of the Corporation, and
the relative rights of priority, if any, of payment of shares of that series;
(h) Any other relative rights, preferences and limitations of that
series.
COMMON STOCK
------------
The Common Stock is subject to the rights and preferences of the
Preferred Stock as hereinbefore set forth or authorized.
Subject to the provisions of any applicable law or of the by-laws of
the Corporation, as from time to time amended, with respect to the fixing of a
record date for the determination of stockholders entitled to vote, and except
as otherwise provided herein or by law or by the resolution or resolutions
providing for the issue of any series of Preferred Stock, the holders of
outstanding shares of Common Stock shall have exclusive voting rights for the
election of directors and for all other purposes, each holder of record of
shares of Common Stock being entitled to one vote for each share of Common Stock
standing in his name on the books of the Corporation.
Subject to the rights of any one or more series of Preferred Stock, the
holders of Common Stock shall be entitled to receive such dividends from time to
time as may be declared by the Board of Directors out of any funds of the
Corporation legally available for the payment of such dividends.
In the event of the liquidation, dissolution, or winding up of the
Corporation, whether voluntary or involuntary, after payment shall have been
made to the holders of the Preferred Stock of the full amount to which they are
entitled, the holders of Common Stock shall be
2
<PAGE> 3
entitled to share ratably according to the number of shares of Common Stock held
by them in all remaining assets of the Corporation available for distribution to
its stockholders.
ISSUANCE
- --------
Subject to the provisions of this Certificate of Incorporation and
except as otherwise provided by law, the shares of stock of the Corporation,
regardless of class, may be issued for such consideration and for such corporate
purposes as the Board of Directors may from time to time determine.
FIFTH: The following provisions are inserted for the management of the
business and for the conduct of the affairs of the Corporation:
1. The directors shall be divided into three classes, as nearly equal
in number as the then total number of directors constituting the entire Board
permits, with the term of office of one class expiring each year. The initial
Class I directors elected by the stockholders of the Corporation shall hold
office for a term expiring at the 2000 annual meeting of stockholders; the
initial Class II directors elected by the stockholders of the Corporation shall
hold office for a term expiring at the 2001 annual meeting of stockholders; and
the initial Class III directors elected by the stockholders of the Corporation
shall hold office for a term expiring at the 2002 annual meeting of
stockholders. At each such annual meeting of stockholders and at each annual
meeting thereafter, successors to the class of directors whose term expires at
that meeting shall be elected for a term expiring at the third annual meeting
following their election and until their successors shall be elected and
qualified, subject to prior death, resignation, retirement or removal. If the
number of directors is changed, any increase or decrease shall be apportioned
among the classes so as to maintain the number of directors in each class as
nearly equal as possible, but in no event will a decrease in the number of
directors shorten the term of any incumbent director. Notwithstanding the
foregoing, and except as otherwise required by law, whenever the holders of any
one or more series of Preferred Stock shall have the right, voting separately as
a class, to elect one or more directors of the Corporation, the election, terms
of office and other features of such directorships shall be governed by the
terms of the vote establishing such series, and such directors so elected shall
not be divided into classes pursuant to this Article FIFTH unless expressly
provided by such terms. This Section 1 of Article FIFTH may not be amended,
revised or revoked, in whole or in part, except by the affirmative vote of the
holders of 80% of the voting power of the shares of all classes of stock of the
Corporation entitled to vote for the election of directors, considered for the
purposes of this Article FIFTH as one class of stock.
2. Each director chosen to fill a vacancy in the Board of Directors
shall be elected to complete the term of office of the director who is being
succeeded. In the case of any election of a new director to fill a directorship
created by an enlargement of the Board, the Board shall in such election assign
the class of directors to which such additional director is being elected, and
each director so elected shall hold office for the same term as the other
members of the class to which the director is assigned.
3
<PAGE> 4
3. Except as otherwise determined by the Board of Directors in
establishing a series of Preferred Stock as to directors elected by holders of
such series, at any special meeting of the stockholders called at least in part
for the purpose, any director or directors may, by the affirmative vote of the
holders of at least a majority of the stock entitled to vote for the election of
directors, be removed from office for cause. The provisions of this subsection
shall be the exclusive method for the removal of directors. This Section 3 of
Article FIFTH may not be amended, revised or revoked, in whole or in part,
except by the affirmative vote of the holders of 80% of the voting power of the
shares of all classes of stock of the Corporation entitled to vote for the
election of directors, considered for the purposes of this Article FIFTH as one
class of stock.
4. Elections of directors need not be by ballot.
5. The Board of Directors of the Corporation is expressly authorized to
adopt, amend or repeal the by-laws of the Corporation.
6. A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or that involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived an improper
personal benefit. If the Delaware General Corporation Law is amended after
approval by the stockholders of this Article FIFTH to authorize corporate action
further eliminating or limiting the personal liability of directors, then the
liability of a director of the Corporation shall be eliminated or limited to the
fullest extent permitted by the Delaware General Corporation Law, as so amended
from time to time.
Any repeal or modification of this Article FIFTH shall not increase the
personal liability of any director of this Corporation for any act or occurrence
taking place before such repeal or modification, nor otherwise adversely affect
any right or protection of a director of the Corporation existing at the time of
such repeal or modification.
7. Meetings of stockholders may be held anywhere within or without the
State of Delaware. The books of the Corporation may be kept outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the by-laws of the Corporation.
SIXTH: No action required to be taken or that may be taken at any
annual or special meeting of stockholders of the Corporation may be taken by
written consent without a meeting, and the power of stockholders to consent in
writing, without a meeting, to the taking of any action is specifically denied.
This Article SIXTH may not be amended, revised or revoked, in whole or
in part, except by the affirmative vote of the holders of 80% of the voting
power of the shares of all classes of stock of the Corporation entitled to vote
for the election of directors, considered for the purposes of this Article SIXTH
as one class of stock.
4
<PAGE> 5
SEVENTH: The Corporation reserves the right to amend, alter, change or
repeal any provisions contained in this Restated Certificate of Incorporation in
the manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders are granted subject to this reservation.
5
<PAGE> 6
IN WITNESS WHEREOF, the undersigned have duly executed this Certificate
of Incorporation in the name and on behalf of Antigenics, Inc. on the tenth day
of November, 1999 and the statements contained herein are affirmed as true under
penalties of perjury.
/s/ Paul M. Kinsella
----------------------------------------
Paul M. Kinsella, Sole Incorporator
Mailing Address: Palmer & Dodge LLP
One Beacon Street
Boston, MA 02108
6
<PAGE> 1
EXHIBIT 3.2
BY-LAWS
OF
ANTIGENICS INC.
Adopted by the Incorporator on November 10, 1999
ARTICLE I
STOCKHOLDERS
SECTION 1. PLACE OF MEETINGS. All meetings of stockholders shall be
held at the principal office of the corporation or at such other place as may be
named in the notice.
SECTION 2. ANNUAL MEETING. The annual meeting of stockholders for the
election of directors and the transaction of such other business as may properly
come before the meeting shall be held on such date and at such hour and place as
the directors or an officer designated by the directors may determine. If the
annual meeting is not held on the date designated therefor, the directors shall
cause the meeting to be held as soon thereafter as convenient.
SECTION 3. SPECIAL MEETINGS. Special meetings of the stockholders may
be called at any time by the President or a majority of the Board of Directors.
SECTION 4. NOTICE OF MEETINGS. Except where some other notice is
required by law, written notice of each meeting of stockholders, stating the
place, date and hour thereof and the purposes for which the meeting is called,
shall be given by the Secretary under the direction of the Board of Directors or
the President, not less than ten nor more than sixty days before the date fixed
for such meeting, to each stockholder of record entitled to vote at such
meeting. Notice shall be given personally to each stockholder or left at his or
her residence or usual place of business or mailed postage prepaid and addressed
to the stockholder at his or her address as it appears upon the records of the
corporation. In case of the death, absence, incapacity or refusal of the
Secretary, such notice may be given by a person designated either by the
Secretary or by the person or persons calling the meeting or by the Board of
Directors. A waiver of such notice in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent to such notice. Attendance of a person at a meeting of
stockholders shall constitute a waiver of notice of such meeting, except when
the stockholder attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the stockholders need be
specified in any written waiver of notice. Except as required by statute, notice
of any adjourned meeting of the stockholders shall not be required.
SECTION 5. RECORD DATE. The Board of Directors may fix in advance a
record date for the determination of the stockholders entitled to notice of or
to vote at any meeting of stockholders, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock,
or for the purpose of any other lawful action. Such record date shall not be
more than 60 nor less than 10 days before the date of such meeting, nor more
than 60 days before any other action to which such record date relates. If no
record date is fixed, the record date for
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determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day before the day on
which notice is given, or, if notice is waived, at the close of business on the
day before the day on which the meeting is held, and the record date for
determining stockholders for any other purpose shall be at the close of business
on the day on which the Board of Directors adopts the resolution relating to
such purpose. A determination of stockholders of record entitled to notice of or
to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
SECTION 6. NOMINATION OF DIRECTORS. Only persons who are nominated in
accordance with the following procedures shall be eligible for election as
directors at any annual or special meeting of stockholders. Nominations of
persons for election as directors may be made only by or at the direction of the
Board of Directors, or by any stockholder entitled to vote for the election of
directors at the meeting in compliance with the notice procedures set forth in
this Section 6. Such nominations, other than those made by or at the direction
of the Board of Directors, shall be made pursuant to timely notice in writing to
the Chairman of the Board, if any, the President or the Secretary. To be timely,
a stockholder's notice shall be delivered to or mailed and received at the
principal executive offices of the corporation by the close of business on the
Advance Notice Date. For the purposes of these by-laws, the "Advance Notice
Date" shall be one of the following:
(a) in the case of an annual meeting only, the date 75 days before the
anniversary date of the prior year's meeting, if (i) there was an
annual meeting in the prior year and (ii) the date of the current
year's annual meeting is not more than 30 days before or after the
anniversary date of the prior year's annual meeting; or
(b) if clause (a) does not apply, the date 45 days prior to the date of
the current year's annual meeting or a special meeting if at least 60
days' notice or prior public disclosure of the date of the current
year's annual meeting or the special meeting is given or made; or
(c) if neither clause (a) nor clause (b) applies, the date 15 days
after the day on which notice of the date of the current year's annual
meeting or the special meeting was mailed or public disclosure was
made.
Such stockholder's notice shall set forth (a) as to each person whom the
stockholder proposes to nominate for election or re-election as a director, (i)
the name, age, business address and residence address of the person, (ii) the
principal occupation or employment of the person, (iii) the class and number of
shares of capital stock of the corporation that are beneficially owned by the
person and (iv) any other information relating to the person that is required to
be disclosed in solicitations for proxies for election of directors pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended, or any
successor provision thereto; and (b) as to the stockholder giving the notice,
(i) the name and record address of such stockholder and (ii) the class and
number of shares of capital stock of the corporation that are beneficially owned
by such stockholder.
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The chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and if the chairman should so determine, he or she shall so
declare to the meeting and the defective nomination shall be disregarded.
SECTION 7. ADVANCE NOTICE OF BUSINESS AT ANNUAL MEETINGS. At any annual
meeting of the stockholders, only such business shall be conducted as shall have
been properly brought before the meeting. To be brought properly before an
annual meeting, business must be either (a) specified in the notice of meeting
(or any supplement thereto) given by or at the direction of the President or the
Board of Directors, (b) otherwise properly brought before the meeting by or at
the direction of the Board of Directors, or (c) properly brought before the
meeting by a stockholder. In addition to any other applicable requirements, for
business to be brought properly before an annual meeting by a stockholder, the
stockholder must have given timely notice thereof in writing to the Chairman of
the Board, if any, the President or the Secretary. To be timely, a stockholder's
notice must be delivered to or mailed and received at the principal executive
offices of the corporation by the close of business on the Advance Notice Date
as defined in Section 6 of Article I hereof. A stockholder's notice shall set
forth as to each matter the stockholder proposes to bring before the annual
meeting (a) a brief description of the business desired to be brought before the
annual meeting and the reasons for conducting such business at the annual
meeting, (b) the name and record address of the stockholder proposing such
business, (c) the class and number of shares of the corporation that are
beneficially owned by the stockholder and (d) any material interest of the
stockholder in such business.
Notwithstanding anything in these by-laws to the contrary, no business
shall be conducted at the annual meeting except in accordance with the
procedures set forth in this Section 7, PROVIDED, HOWEVER, that nothing in this
Section 7 shall be deemed to preclude discussion by any stockholder of any
business properly brought before the annual meeting in accordance with said
procedure.
The chairman of an annual meeting shall, if the facts warrant,
determine and declare to the meeting that business was not properly brought
before the meeting in accordance with the foregoing procedure, and if the
chairman should so determine, he or she shall so declare to the meeting and any
such business not properly brought before the meeting shall not be transacted.
SECTION 8. VOTING LIST. The officer who has charge of the stock ledger
of the corporation shall make or have made, at least 10 days before every
meeting of stockholders, a complete list of the stockholders, arranged in
alphabetical order and showing the address of each stockholder and the number of
shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder for any purpose germane to the meeting,
during ordinary business hours, for a period of at least 10 days before the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present. The stock
ledger shall be the only evidence as to who are the stockholders entitled to
examine the stock ledger, the list required by this section or the books of the
corporation, or to vote at any meeting of stockholders.
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SECTION 9. QUORUM OF STOCKHOLDERS. At any meeting of the stockholders,
the holders of a majority in interest of all stock issued and outstanding and
entitled to vote upon a question to be considered at the meeting, present in
person or represented by proxy, shall constitute a quorum for the consideration
of such question, but in the absence of a quorum a smaller group may adjourn any
meeting from time to time. When a quorum is present at any meeting, a majority
of the votes properly cast shall, except where a different vote is required by
law, by the Certificate of Incorporation or by these by-laws, decide any
question brought before such meeting. Any election by stockholders shall be
determined by a plurality of the vote cast by the stockholders entitled to vote
at the election.
SECTION 10. PROXIES AND VOTING. Unless otherwise provided in the
Certificate of Incorporation, each stockholder shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for each share of the
capital stock held of record by such stockholder, but no proxy shall be voted or
acted upon after three years from its date, unless said proxy provides for a
longer period. Persons holding stock in a fiduciary capacity shall be entitled
to vote the shares so held, and persons whose stock is pledged shall be entitled
to vote unless in the transfer by the pledgor on the books of the corporation
the pledgee shall have been expressly empowered to vote thereon, in which case
only the pledgee or the pledgee's proxy may represent said stock and vote
thereon. Shares of the capital stock of the corporation belonging to the
corporation or to another corporation, a majority of whose shares entitled to
vote in the election of directors is owned by the corporation, shall neither be
entitled to vote nor be counted for quorum purposes.
SECTION 11. CONDUCT OF MEETING. Meetings of the stockholders shall be
presided over by one of the following officers in the order specified and if
present and acting: the Chairman of the Board, if any, the Vice Chairman of the
Board, if any, the President, a Vice-President (and, in the event there be more
than one person in any such office, in the order of their seniority), or, if
none of the foregoing is in office and present and acting, a chairman designated
by the Board of Directors or, in the absence of such designation, a chairman
chosen by the stockholders at the meeting. The Secretary of the corporation, if
present, or an Assistant Secretary, shall act as secretary of every meeting, but
if neither the Secretary nor an Assistant Secretary is present the chairman of
the meeting shall appoint a secretary of the meeting.
The Board of Directors may adopt such rules, regulations and procedures
for the conduct of the meeting of stockholders as it shall deem appropriate.
Except to the extent inconsistent with such rules and regulations as adopted by
the Board of Directors, the chairman of the meeting shall have the right and
authority to prescribe such rules, regulations and procedures and to do all such
acts as, in the judgement of such chairman, are appropriate for the proper
conduct of the meeting. Such rules, regulations or procedures, whether adopted
by the Board of Directors or prescribed by the chairman of the meeting, may
include, without limitation, (i) the establishment of an agenda or order of
business for the meeting, (ii) rules and procedures for maintaining order at the
meeting and the safety of those present, (iii) limitations on attendance at or
participation in the meeting to stockholders of record of the corporation, their
duly authorized and constituted proxies or such other persons as the chairman of
the meeting shall determine, (iv) restrictions on entry to the meeting after the
time fixed for the commencement thereof, and (v) limitations on the time
allotted to questions or comments by participants. Unless and to the extent
determined by the Board of Directors or the chairman of the meeting, meetings of
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stockholders shall not be required to be held in accordance with the rules of
parliamentary procedure.
ARTICLE II
DIRECTORS
SECTION 1. GENERAL POWERS. The business and affairs of the corporation
shall be managed by or under the direction of a Board of Directors, who may
exercise all of the powers of the corporation that are not by law required to be
exercised by the stockholders. In the event of a vacancy in the Board of
Directors, the remaining directors, except as otherwise provided by law, may
exercise the powers of the full Board until the vacancy is filled.
SECTION 2. NUMBER; ELECTION; TENURE AND QUALIFICATION. Subject to any
restrictions contained in the Certificate of Incorporation, the number of
directors that shall constitute the whole Board shall be fixed by resolution of
the Board of Directors but in no event shall be less than one. The directors
shall be elected in the manner provided in the Certificate of Incorporation, by
such stockholders as have the right to vote thereon. The number of directors may
be increased or decreased by action of the Board of Directors. Directors need
not be stockholders of the corporation.
SECTION 3. ENLARGEMENT OF THE BOARD. Subject to any restrictions
contained in the Certificate of Incorporation, the number of the Board of
Directors may be increased at any time, such increase to be effective
immediately unless otherwise specified in the resolution, by vote of a majority
of the directors then in office.
SECTION 4. VACANCIES. Unless and until filled by the stockholders and
except as otherwise determined by the Board of Directors in establishing a
series of Preferred Stock as to directors elected by the holders of such series,
any vacancy in the Board of Directors, however occurring, including a vacancy
resulting from an enlargement of the Board and an unfilled vacancy resulting
from the removal of any director, may be filled by vote of a majority of the
directors then in office although less than a quorum, or by the sole remaining
director. Each director so chosen to fill a vacancy shall serve for a term
determined in the manner provided in the Certificate of Incorporation. When one
or more directors shall resign from the Board, effective at a future date, a
majority of the directors then in office, including those who have so resigned,
shall have the power to fill such vacancy or vacancies, the vote thereon to take
effect when such resignation or resignations shall become effective. If at any
time there are no directors in office, then an election of directors may be held
in accordance with the General Corporation Law of the State of Delaware.
SECTION 5. RESIGNATION. Any director may resign at any time upon
written notice to the corporation. Such resignation shall take effect at the
time specified therein, or if no time is specified, at the time of its receipt
by the Chairman of the Board, if any, the President or the Secretary.
SECTION 6. REMOVAL. Directors may be removed from office only as
provided in the Certificate of Incorporation. The vacancy or vacancies created
by the removal of a director
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may be filled by the stockholders at the meeting held for the purpose of removal
or, if not so filled, by the directors in the manner provided in Section 4 of
this Article II.
SECTION 7. COMMITTEES. The Board of Directors may, by resolution or
resolutions passed by a majority of the whole Board of Directors, designate one
or more committees, each committee to consist of one or more directors of the
corporation. The Board of Directors may designate one or more directors as
alternate members of any committee to replace any absent or disqualified member
at any meeting of the committee. In the absence or disqualification of any
member of any such committee, the member or members thereof present at any
meeting and not disqualified from voting, whether or not such member or members
constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of such absent or disqualified
member. The Board of Directors shall have the power to change the members of any
such committee at any time, to fill vacancies therein and to discharge any such
committee, either with or without cause, at any time.
Any such committee, to the extent permitted by law and to the extent
provided in the resolution of the Board of Directors or in these by-laws, shall
have and may exercise all the powers and authority of the Board of Directors in
the management of the business and affairs of the corporation, and may authorize
the seal of the corporation to be affixed to all papers that may require it.
A majority of all the members of any such committee may fix its rules
of procedure, determine its action and fix the time and place, whether within or
without the State of Delaware, of its meetings and specify what notice thereof,
if any, shall be given, unless the Board of Directors shall otherwise by
resolution provide. Each committee shall keep regular minutes of its meetings
and make such reports as the Board of Directors may from time to time request.
SECTION 8. MEETINGS OF THE BOARD OF DIRECTORS. Regular meetings of the
Board of Directors may be held without call or formal notice at such places
either within or without the State of Delaware and at such times as the Board
may by vote from time to time determine. A regular meeting of the Board of
Directors may be held without call or formal notice immediately after and at the
same place as the annual meeting of the stockholders, or any special meeting of
the stockholders at which a Board of Directors is elected.
Special meetings of the Board of Directors may be held at any place
either within or without the State of Delaware at any time when called by the
Chairman of the Board, if any, the President, the Secretary or two or more
directors. Reasonable notice of the time and place of a special meeting shall be
given to each director unless such notice is waived by attendance or by written
waiver in the manner provided in these by-laws for waiver of notice by
stockholders. Notice may be given by, or by a person designated by, the
Secretary, the person or persons calling the meeting, or the Board of Directors.
No notice of any adjourned meeting of the Board of Directors shall be required.
In any case it shall be deemed sufficient notice to a director to send notice by
mail at least seventy-two hours, or by telegram or fax at least forty-eight
hours, before the meeting, addressed to such director at his or her usual or
last known business or home address.
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Directors or members of any committee may participate in a meeting of
the Board of Directors or of such committee by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and participation by such means shall
constitute presence in person at such meeting.
SECTION 9. QUORUM AND VOTING. A majority of the total number of
directors shall constitute a quorum, except that when a vacancy or vacancies
exist in the Board, a majority of the directors then in office (but not less
than one-third of the total number of the directors) shall constitute a quorum.
A majority of the directors present, whether or not a quorum is present, may
adjourn any meeting from time to time. The vote of a majority of the directors
present at any meeting at which a quorum is present shall be the act of the
Board of Directors, except where a different vote is required by law, by the
Certificate of Incorporation or by these by-laws.
SECTION 10. COMPENSATION. The Board of Directors may fix fees for their
services and for their membership on committees, and expenses of attendance may
be allowed for attendance at each meeting. Nothing herein contained shall be
construed to preclude any director from serving the corporation in any other
capacity, as an officer, agent or otherwise, and receiving compensation
therefor.
SECTION 11. ACTION WITHOUT MEETING. Any action required or permitted to
be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting and without notice if a written consent thereto
is signed by all members of the Board of Directors or of such committee, as the
case may be, and such written consent is filed with the minutes of proceedings
of the Board of Directors or of such committee.
ARTICLE III
OFFICERS
SECTION 1. TITLES. The officers of the corporation shall consist of a
President, a Secretary, a Treasurer and such other officers with such other
titles as the Board of Directors shall determine, who may include without
limitation a Chairman of the Board, a Vice-Chairman of the Board and one or more
Vice-Presidents, Assistant Treasurers or Assistant Secretaries.
SECTION 2. ELECTION AND TERM OF OFFICE. The officers of the corporation
shall be elected annually by the Board of Directors at its first meeting
following the annual meeting of the stockholders. Each officer shall hold office
until his or her successor is elected and qualified, unless a different term is
specified in the vote electing such officer, or until his or her earlier death,
resignation or removal.
SECTION 3. QUALIFICATION. Unless otherwise provided by resolution of
the Board of Directors, no officer, other than the Chairman or Vice-Chairman of
the Board, need be a director. No officer need be a stockholder. Any number of
offices may be held by the same person, as the directors shall determine.
SECTION 4. REMOVAL. Any officer may be removed, with or without cause,
at any time, by resolution adopted by the Board of Directors.
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SECTION 5. RESIGNATION. Any officer may resign by delivering a written
resignation to the corporation at its principal office or to the Chairman of the
Board, if any, the President or the Secretary. Such resignation shall be
effective upon receipt or at such later time as may be specified therein.
SECTION 6. VACANCIES. The Board of Directors may at any time fill any
vacancy occurring in any office for the unexpired portion of the term and may
leave unfilled for such period as it may determine any office other than those
of President, Treasurer and Secretary.
SECTION 7. POWERS AND DUTIES. The officers of the corporation shall
have such powers and perform such duties as are specified herein and as may be
conferred upon or assigned to them by the Board of Directors and shall have such
additional powers and duties as are incident to their office except to the
extent that resolutions of the Board of Directors are inconsistent therewith.
SECTION 8. PRESIDENT AND VICE-PRESIDENTS. Except to the extent that
such duties are assigned by the Board of Directors to the Chairman of the Board,
or in the absence of the Chairman or in the event of his or her inability or
refusal to act, the President shall be the chief executive officer of the
corporation and shall have general and active management of the business of the
corporation and general supervision of its officers, agents and employees, and
shall see that all orders and resolutions of the Board of Directors are carried
into effect. The President shall preside at each meeting of the stockholders and
the Board of Directors unless a Chairman or Vice-Chairman of the Board is
elected by the Board and is assigned the duty of presiding at such meeting.
The Board of Directors may assign to any Vice-President the title of
Executive Vice-President, Senior Vice-President or any other title selected by
the Board of Directors. In the absence of the President or in the event of his
or her inability or refusal to act, the duties of the President shall be
performed by the Executive Vice-President, if any, Senior Vice President, if
any, or Vice President, if any, in that order (and, in the event there be more
than one person in any such office, in the order of their seniority), and when
so acting, such officer shall have all the powers of and be subject to all the
restrictions upon the President.
SECTION 9. SECRETARY AND ASSISTANT SECRETARIES. The Secretary shall
attend all meetings of the Board of Directors and of the stockholders and record
all the proceedings of such meetings in a book to be kept for that purpose,
shall give, or cause to be given, notice of all meetings of the stockholders and
special meetings of the Board of Directors, shall maintain a stock ledger and
prepare lists of stockholders and their addresses as required and shall have
custody of the corporate seal, which the Secretary or any Assistant Secretary
shall have authority to affix to any instrument requiring it and attest by any
of their signatures. The Board of Directors may give general authority to any
other officer to affix and attest the seal of the corporation.
Any Assistant Secretary may, in the absence of the Secretary or in the
event of the Secretary's inability or refusal to act, perform the duties and
exercise the powers of the Secretary.
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SECTION 10. TREASURER AND ASSISTANT TREASURERS. The Treasurer shall
have the custody of the corporate funds and securities, shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
corporation and shall deposit all moneys and other valuable effects in the name
and to the credit of the corporation in such depositories as may be designated
by or pursuant to resolution of the Board of Directors. The Treasurer shall
disburse the funds of the corporation as may be ordered by the Board of
Directors, the Chairman of the Board, if any, or the President, taking proper
vouchers for such disbursements, and shall render to the Chairman of the Board,
if any, the President and the Board of Directors, at its regular meetings or
whenever they may require it, an account of all transactions and of the
financial condition of the corporation.
Any Assistant Treasurer may, in the absence of the Treasurer or in the
event of his or her inability or refusal to act, perform the duties and exercise
the powers of the Treasurer.
SECTION 11. BONDED OFFICERS. The Board of Directors may require any
officer to give the corporation a bond in such sum and with such surety or
sureties as shall be satisfactory to the Board of Directors upon such terms and
conditions as the Board of Directors may specify, including without limitation a
bond for the faithful performance of the duties of such officer and for the
restoration to the corporation of all property in his or her possession or
control belonging to the corporation.
SECTION 12. SALARIES. Officers of the corporation shall be entitled to
such salaries, compensation or reimbursement as shall be fixed or allowed from
time to time by the Board of Directors or any committee thereof appointed for
the purpose.
ARTICLE IV
STOCK
SECTION 1. CERTIFICATES OF STOCK. One or more stock certificates,
signed by the Chairman or Vice-Chairman of the Board of Directors or by the
President or a Vice-President and by the Treasurer or an Assistant Treasurer or
the Secretary or an Assistant Secretary, shall be issued to each stockholder
certifying the number of shares owned by the stockholder in the corporation. Any
or all signatures on any such certificate may be facsimiles. In case any
officer, transfer agent or registrar who shall have signed or whose facsimile
signature shall have been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, it may
be issued by the corporation with the same effect as if he or she were such
officer, transfer agent or registrar at the date of issue.
Each certificate for shares of stock that are subject to any
restriction on transfer pursuant to the Certificate of Incorporation, the
by-laws, applicable securities laws, or any agreement among any number of
stockholders or among such holders and the corporation shall have conspicuously
noted on the face or back of the certificate either the full text of the
restriction or a statement of the existence of such restriction.
SECTION 2. TRANSFERS OF SHARES OF STOCK. Subject to the restrictions,
if any, stated or noted on the stock certificates, shares of stock may be
transferred on the books of the
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corporation by the surrender to the corporation or its transfer agent of the
certificate representing such shares properly endorsed or accompanied by a
written assignment or power of attorney properly executed, and with such proof
of authority or the authenticity of signature as the corporation or its transfer
agent may reasonably require. The corporation shall be entitled to treat the
record holder of stock as shown on its books as the owner of such stock for all
purposes, including the payment of dividends and the right to vote with respect
to that stock, regardless of any transfer, pledge or other disposition of that
stock, until the shares have been transferred on the books of the corporation in
accordance with the requirements of these by-laws.
SECTION 3. LOST CERTIFICATES. A new stock certificate may be issued in
the place of any certificate theretofore issued by the corporation and alleged
to have been lost, stolen, destroyed or mutilated, upon such terms in conformity
with law as the Board of Directors shall prescribe. The directors may, in their
discretion, require the owner of the lost, stolen, destroyed or mutilated
certificate, or the owner's legal representatives, to give the corporation a
bond, in such sum as they may direct, to indemnify the corporation against any
claim that may be made against it on account of the alleged loss, theft,
destruction or mutilation of any such certificate, or the issuance of any such
new certificate.
SECTION 4. FRACTIONAL SHARE INTERESTS. The corporation may, but shall
not be required to, issue fractions of a share. If the corporation does not
issue fractions of a share, it shall (i) arrange for the disposition of
fractional interests by those entitled thereto, (ii) pay in cash the fair value
of fractions of a share as of the time when those entitled to receive such
fractions are determined, or (iii) issue scrip or warrants in registered or
bearer form, which shall entitle the holder to receive a certificate for a full
share upon the surrender of such scrip or warrants aggregating a full share. A
certificate for a fractional share shall, but scrip or warrants shall not unless
otherwise provided therein, entitle the holder to exercise voting rights, to
receive dividends thereon, and to participate in any of the assets of the
corporation in the event of liquidation. The Board of Directors may cause scrip
or warrants to be issued subject to the conditions that they shall become void
if not exchanged for certificates representing full shares before a specified
date, or subject to the conditions that the shares for which scrip or warrants
are exchangeable may be sold by the corporation and the proceeds thereof
distributed to the holders of scrip or warrants, or subject to any other
conditions that the Board of Directors may impose.
SECTION 5. DIVIDENDS. Subject to the provisions of the Certificate of
Incorporation, the Board of Directors may, out of funds legally available
therefor, at any regular or special meeting, declare dividends upon the capital
stock of the corporation as and when they deem expedient.
ARTICLE V
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The corporation shall, to the extent legally permissible, indemnify
each person who may serve or who has served at any time as a director or officer
of the corporation or of any of its subsidiaries, or who at the request of the
corporation may serve or at any time has served as a director, officer or
trustee of, or in a similar capacity with, another organization or an employee
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benefit plan, against all expenses and liabilities (including counsel fees,
judgments, fines, excise taxes, penalties and amounts payable in settlements)
reasonably incurred by or imposed upon such person in connection with any
threatened, pending or completed action, suit or other proceeding, whether
civil, criminal, administrative or investigative, in which he may become
involved by reason of his serving or having served in such capacity (other than
a proceeding voluntarily initiated by such person unless he is successful on the
merits, the proceeding was authorized by the corporation or the proceeding seeks
a declaratory judgment regarding his own conduct); provided that no
indemnification shall be provided for any such person with respect to any matter
as to which he shall have been finally adjudicated in any proceeding not to have
acted in good faith in the reasonable belief that his action was in the best
interests of the corporation or, to the extent such matter relates to service
with respect to any employee benefit plan, in the best interests of the
participants or beneficiaries of such employee benefit plan; and provided,
further, that as to any matter disposed of by a compromise payment by such
person, pursuant to a consent decree or otherwise, the payment and
indemnification thereof have been approved by the corporation, which approval
shall not unreasonably be withheld, or by a court of competent jurisdiction.
Such indemnification shall include payment by the corporation of expenses
incurred in defending a civil or criminal action or proceeding in advance of the
final disposition of such action or proceeding, upon receipt of an undertaking
by the person indemnified to repay such payment if he shall be adjudicated to be
not entitled to indemnification under this article, which undertaking may be
accepted without regard to the financial ability of such person to make
repayment.
A person entitled to indemnification hereunder whose duties include
service or responsibilities as a fiduciary with respect to a subsidiary or other
organization shall be deemed to have acted in good faith in the reasonable
belief that his action was in the best interests of the corporation if he acted
in good faith in the reasonable belief that his action was in the best interests
of such subsidiary or organization or of the participants or beneficiaries of,
or other persons with interests in, such subsidiary or organization to whom he
had a fiduciary duty.
Where indemnification hereunder requires authorization or approval by
the corporation, such authorization or approval shall be conclusively deemed to
have been obtained, and in any case where a director of the corporation approves
the payment of indemnification, such director shall be wholly protected, if:
1. the payment has been approved or ratified (l) by a majority
vote of a quorum of the directors consisting of persons who are not at that time
parties to the proceeding, (2) by a majority vote of a committee of two or more
directors who are not at that time parties to the proceeding and are selected
for this purpose by the full board (in which selection directors who are parties
may participate), or (3) by a majority vote of a quorum of the outstanding
shares of stock of all classes entitled to vote for directors, voting as a
single class, which quorum shall consist of stockholders who are not at that
time parties to the proceeding; or
2. the action is taken in reliance upon the opinion of
independent legal counsel (who may be counsel to the corporation) appointed for
the purpose by vote of the directors or in the manner specified in clauses (l),
(2) or (3) of subparagraph (i); or
3. the payment is approved by a court of competent
jurisdiction; or
11
<PAGE> 12
4. the directors have otherwise acted in accordance with the
standard of conduct set forth in the Delaware General Corporation Law.
Any indemnification or advance of expenses under this article shall be
paid promptly, and in any event within 30 days, after the receipt by the
corporation of a written request therefor from the person to be indemnified,
unless with respect to a claim for indemnification the corporation shall have
determined that the person is not entitled to indemnification. If the
corporation denies the request or if payment is not made within such 30 day
period, the person seeking to be indemnified may at any time thereafter seek to
enforce his rights hereunder in a court of competent jurisdiction and, if
successful in whole or in part, he shall be entitled also to indemnification for
the expenses of prosecuting such action. Unless otherwise provided by law, the
burden of proving that the person is not entitled to indemnification shall be on
the corporation.
The right of indemnification under this article shall be a contract
right inuring to the benefit of the directors, officers and other persons
entitled to be indemnified hereunder and no amendment or repeal of this article
shall adversely affect any right of such director, officer or other person
existing at the time of such amendment or repeal.
The indemnification provided hereunder shall inure to the benefit of
the heirs, executors and administrators of a director, officer or other person
entitled to indemnification hereunder. The indemnification provided hereunder
may, to the extent authorized by the corporation, apply to the directors,
officers and other persons associated with constituent corporations that have
been merged into or consolidated with the corporation who would have been
entitled to indemnification hereunder had they served in such capacity with or
at the request of the corporation.
The right of indemnification under this article shall be in addition to
and not exclusive of all other rights to which such director or officer or other
persons may be entitled. Nothing contained in this article shall affect any
rights to indemnification to which corporation employees or agents other than
directors and officers and other persons entitled to indemnification hereunder
may be entitled by contract or otherwise under law.
The corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, trustee, employee or agent of another corporation,
partnership, joint venture, trust, other enterprise or employee benefit plan
against any liability asserted against such person and incurred by such person
in any such capacity or arising out of such person's status as such, whether or
not the corporation would have the power to indemnify such person against such
liability under the provisions of the General Corporation Law of the State of
Delaware.
ARTICLE VI
GENERAL PROVISIONS
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<PAGE> 13
SECTION 1. FISCAL YEAR. Except as otherwise designated from time to
time by the Board of Directors, the fiscal year of the corporation shall begin
on the first day of January and end on the last day of December.
SECTION 2. CORPORATE SEAL. The corporate seal shall be in such form as
shall be approved by the Board of Directors. The Secretary shall be the
custodian of the seal, and a duplicate seal may be kept and used by each
Assistant Secretary and by any other officer the Board of Directors may
authorize.
SECTION 3. CERTIFICATE OF INCORPORATION. All references in these
by-laws to the Certificate of Incorporation shall be deemed to refer to the
Certificate of Incorporation of the corporation, as in effect from time to time.
SECTION 4. EXECUTION OF INSTRUMENTS. The President, the Treasurer and
the Secretary shall have power to execute and deliver on behalf and in the name
of the corporation any instrument requiring the signature of an officer of the
corporation, including deeds, contracts, mortgages, bonds, notes, debentures,
checks, drafts and other orders for the payment of money. In addition, the Board
of Directors, the President, the Treasurer and the Secretary may expressly
delegate such powers to any other officer or agent of the corporation.
SECTION 5. VOTING OF SECURITIES. The President, the Treasurer and the
Secretary, and each other person authorized by the Board of Directors, each
acting singly, may waive notice of, and act as, or appoint any person or persons
to act as, proxy or attorney-in-fact for this corporation (with or without power
of substitution) at any meeting of stockholders or owners of other interests of
any other corporation or organization the securities of which may be held by
this corporation. In addition, the Board of Directors, the President and the
Treasurer may expressly delegate such powers to any other officer or agent of
the corporation.
SECTION 6. EVIDENCE OF AUTHORITY. A certificate by the Secretary, an
Assistant Secretary or a temporary secretary as to any action taken by the
stockholders, directors, a committee or any officer or representative of the
corporation shall, as to all persons who rely on the certificate in good faith,
be conclusive evidence of that action.
SECTION 7. TRANSACTIONS WITH INTERESTED PARTIES. No contract or
transaction between the corporation and one or more of the directors or
officers, or between the corporation and any other corporation, partnership,
association or other organization in which one or more of the directors or
officers are directors or officers or have a financial interest, shall be void
or voidable solely for that reason or solely because the director or officer is
present at or participates in the meeting of the Board of Directors or a
committee of the Board of Directors that authorizes the contract or transaction
or solely because the vote of any such director is counted for such purpose, if:
(1) The material facts as to the relationship or interest and as to the
contract or transaction are disclosed or are known to the Board of Directors or
such committee, and the Board or committee in good faith authorizes the contract
or transaction by the affirmative votes of a majority of the disinterested
directors, even though the disinterested directors be less than a quorum; or
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<PAGE> 14
(2) The material facts as to the relationship or interest and as to the
contract or transaction are disclosed or are known to the stockholders entitled
to vote thereon, and the contract or transaction is specifically approved in
good faith by vote of the stockholders; or
(3) The contract or transaction is fair to the corporation as of the
time it is authorized, approved or ratified by the Board of Directors, a
committee of the Board of Directors or the stockholders.
Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or of a committee
that authorizes the contract or transaction.
SECTION 8. BOOKS AND RECORDS. The books and records of the corporation
shall be kept at such places within or without the State of Delaware as the
Board of Directors may from time to time determine.
ARTICLE VII
AMENDMENTS
SECTION 1. BY THE BOARD OF DIRECTORS. These by-laws may be altered,
amended or repealed or new by-laws may be adopted by the affirmative vote of a
majority of the directors present at any regular or special meeting of the Board
of Directors at which a quorum is present.
SECTION 2. BY THE STOCKHOLDERS. These by-laws may be altered, amended
or repealed or new by-laws may be adopted by the affirmative vote of the holders
of a majority of votes properly cast at any regular meeting of stockholders, or
at any special meeting of stockholders, provided notice of such alteration,
amendment, repeal or adoption of new by-laws shall have been stated in the
notice of such special meeting.
14
<PAGE> 1
Exhibit 4.1
<TABLE>
<S> <C>
COMMON STOCK COMMON STOCK
NUMBER SHARES
ANTIGENICS INC.
ANTIGENICS INC.
CUSIP [ ]
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFIES THAT
is the owner of
FULLY PAID AND NON ASSESSABLE SHARES OF COMMON STOCK, $.01 PAR VALUE, OF
ANTIGENICS INC. (hereinafter called the "Corporation"), transferable on the books of the Corporation by the holder hereof in person
or by duly authorized attorney, upon surrender of this certificate properly endorsed. This certificate and the shares represented
hereby are issued and shall be held subject to all the provisions of the laws of the State of Delaware, the Certificate of
Incorporation and By-Laws of the Corporation and all amendments thereto, to which the holder of this certificate by acceptance
hereof assents.
This Certificate is not valid until countersigned by the Transfer Agent and registered by the Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers.
Dated:
SEAL
__________________________________________________ ______________________________________________
PRESIDENT SECRETARY
Countersigned and Registered:
AMERICAN STOCK TRANSFER & TRUST COMPANY
New York, NY
Transfer Agent
and Registrar
By_____________________________________________________
Authorized Signature
</TABLE>
<PAGE> 2
THE CORPORATION IS AUTHORIZED TO ISSUE MORE THAN ONE CLASS OR SERIES OF
STOCK. THE CORPORATION WILL FURNISH WITHOUT CHARGE TO ANY STOCKHOLDER, UPON
REQUEST, A STATEMENT OF THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE
PARTICIPATING, OPTIONAL, OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR
SERIES THEREOF AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH
PREFERENCES AND/OR RIGHTS.
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with
right of survivorship and
not as tenants in common
UNIF GIFT MIN ACT - _____________ Custodian ______________
(Cust) (Minor)
under Uniform Gifts to Minors
Apt_______________________________________
(State)
Additional abbreviations may also be used though not in the above list.
For value received, ______________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- ------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
__________________________________________________________________________shares
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
________________________________________________________________________Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated _________________________
----------------------------------
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH
THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE
IN EVERY PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER.
SIGNATURE(S) GUARANTEED:
- -------------------------------------------------------------------------
THE SIGNATURE SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR
INSTITUTION, (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS
AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE
MEDALLION PROGRAM), PURSUANT TO
S.E.C. RULE 17Ad-15.
<PAGE> 1
EXHIBIT 10.1
ANTIGENICS INC.
1999 EQUITY INCENTIVE PLAN
Section 1. PURPOSE
The purpose of the Antigenics Inc. 1999 Equity Incentive Plan (the
"Plan") is to attract and retain directors, key employees and consultants of the
Company and its Affiliates, to provide an incentive for them to achieve
long-range performance goals, and to enable them to participate in the long-term
growth of the Company.
Section 2. DEFINITIONS
"Affiliate" means any business entity that directly, or indirectly
through one or more intermediaries, controls, is controlled by or is under
common control with the Company. For purposes hereof, "Control" (and with
correlative meanings, the terms "controlled by" and "under common control with")
shall mean the possession of the power to direct or cause the direction of the
management and policies of the Company, whether through the ownership of voting
stock, by contract or otherwise. In the case of a corporation "control" shall
mean, among other things, the direct or indirect ownership of more than fifty
percent (50%) of its outstanding voting stock.
"Award" means any Option, Stock Appreciation Right or Restricted Stock
awarded under the Plan.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor to such Code.
"Committee" means a committee of not less than two members of the Board
appointed by the Board to administer the Plan. If a Committee is authorized to
grant Options to a Reporting Person or a "covered employee" within the meaning
of Section 162(m) of the Code, each member shall be a "non-employee director" or
the equivalent within the meaning of Rule 16b-3 under the Securities Exchange
Act of 1934, as amended from time to time, or any successor law, and an "outside
director" or the equivalent within the meaning of Section 162(m) of the Code,
respectively. Until such committee is appointed, "Committee" means the Board.
"Common Stock" or "Stock" means the Common Stock, $0.01 par value, of
the Company.
"Company" means Antigenics Inc.
"Designated Beneficiary" means the beneficiary designated by a
Participant, in a manner determined by the Committee, to receive amounts due or
exercise rights of the Participant in the event of the Participant's death. In
the absence of an effective designation by a Participant, "Designated
Beneficiary" shall mean the Participant's estate.
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<PAGE> 2
"Effective Date" means November 15, 1999.
"Fair Market Value" means, with respect to Common Stock or any other
property, the fair market value of such property as determined by the Committee
in good faith or in the manner established by the Committee from time to time.
"Incentive Stock Option" means an option to purchase shares of Common
Stock awarded to a Participant under Section 6 that is intended to meet the
requirements of Section 422 of the Code or any successor provision.
"Nonstatutory Stock Option" means an option to purchase shares of
Common Stock awarded to a Participant under Section 6 that is not intended to be
an Incentive Stock Option.
"Option" means an Incentive Stock Option or a Nonstatutory Stock
Option.
"Participant" means a person selected by the Committee to receive an
Award under the Plan.
"Reporting Person" means a person subject to Section 16 of the
Securities Exchange Act of 1934 or any successor provision.
"Restricted Period" means the period of time selected by the Committee
during which an Award may be forfeited to the Company pursuant to the terms and
conditions of such Award.
"Restricted Stock" means shares of Common Stock subject to forfeiture
awarded to a Participant under Section 8.
"Stock Appreciation Right" or "SAR" means a right to receive any excess
in value of shares of Common Stock over the exercise price awarded to a
Participant under Section 7.
Section 3. ADMINISTRATION
The Plan shall be administered by the Committee. The Committee shall
have authority to adopt, alter and repeal such administrative rules, guidelines
and practices governing the operation of the Plan as it shall from time to time
consider advisable, and to interpret the provisions of the Plan. The Committee's
decisions shall be final and binding. To the extent permitted by applicable law,
the Committee may delegate to one or more executive officers of the Company the
power to make Awards to Participants who are not Reporting Persons or covered
employees and all determinations under the Plan with respect thereto, provided
that the Committee shall fix the maximum amount of such Awards for all such
Participants and a maximum for any one Participant.
Section 4. ELIGIBILITY
All employees, directors and consultants of the Company or any
Affiliate capable of contributing significantly to the successful performance of
the Company, other than a person who has irrevocably elected not to be eligible,
are eligible to be Participants in the Plan.
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<PAGE> 3
Incentive Stock Options may be granted only to persons eligible to receive such
Options under the Code.
Section 5. STOCK AVAILABLE FOR AWARDS
(a) Subject to adjustment under subsection (b), Awards may be made
under the Plan for up to 4,500,000 shares of Common Stock. If any Award in
respect of shares of Common Stock expires or is terminated unexercised or is
forfeited without the Participant having had the benefits of ownership (other
than voting rights), the shares subject to such Award, to the extent of such
expiration, termination or forfeiture, shall again be available for award under
the Plan. Common Stock issued through the assumption or substitution of
outstanding grants from an acquired company shall not reduce the shares
available for Awards under the Plan. Shares issued under the Plan may consist in
whole or in part of authorized but unissued shares or treasury shares.
(b) In the event that the Committee determines that any stock dividend,
extraordinary cash dividend, creation of a class of equity securities,
recapitalization, reorganization, merger, consolidation, split-up, spin-off,
combination, exchange of shares, warrants or rights offering to purchase Common
Stock at a price substantially below fair market value, or other similar
transaction affects the Common Stock such that an adjustment is required in
order to preserve the benefits or potential benefits intended to be made
available under the Plan, then the Committee (subject, in the case of Incentive
Stock Options, to any limitation required under the Code) shall equitably adjust
any or all of (i) the number and kind of shares in respect of which Awards may
be made under the Plan, (ii) the number and kind of shares subject to
outstanding Awards, and (iii) the award, exercise or conversion price with
respect to any of the foregoing, and if considered appropriate, the Committee
may make provision for a cash payment with respect to an outstanding Award,
provided that the number of shares subject to any Award shall always be a whole
number.
(c) Subject to adjustment under Subsection (b): (i) the maximum number
of shares of Common Stock with respect to which Options and Stock Appreciation
Rights may be granted to any Participant in the aggregate in any calendar year
shall not exceed 1,000,000 shares, and (ii) the maximum number of shares of
Common Stock that may be granted as Restricted Stock, with respect to which
performance goals apply, to any Participant in the aggregate in any calendar
year shall not exceed 1,000,000 shares.
Section 6. STOCK OPTIONS
(a) Subject to the provisions of the Plan, the Committee may award Incentive
Stock Options and Nonstatutory Stock Options and determine the number of shares
to be covered by each Option, the option price therefor and the conditions and
limitations applicable to the exercise of the Option. The terms and conditions
of Incentive Stock Options shall be subject to and comply with Section 422 of
the Code or any successor provision and any regulations thereunder, and no
Incentive Stock Option may be granted hereunder more than ten years after the
Effective Date.
3
<PAGE> 4
(b) The Committee shall establish the option price at the time each
Option is awarded, which price shall not be less than 100% of the Fair Market
Value of the Common Stock on the date of award with respect to Incentive Stock
Options. Nonstatutory Stock Options may be granted at such prices as the
Committee may determine.
(c) Each Option shall be exercisable at such times and subject to such
terms and conditions as the Committee may specify in the applicable Award or
thereafter. The Committee may impose such conditions with respect to the
exercise of Options, including conditions relating to applicable federal or
state securities laws, as it considers necessary or advisable.
(d) No shares shall be delivered pursuant to any exercise of an Option
until payment in full of the option price therefor is received by the Company.
Such payment may be made in whole or in part in cash or, to the extent permitted
by the Committee at or after the award of the Option, by delivery of a note or
shares of Common Stock owned by the optionee, including Restricted Stock, or by
retaining shares otherwise issuable pursuant to the Option, in each case valued
at their Fair Market Value on the date of delivery or retention, or such other
lawful consideration as the Committee may determine.
Section 7. STOCK APPRECIATION RIGHTS
(a) Subject to the provisions of the Plan, the Committee may award SARs
in tandem with an Option (at or after the award of the Option), or alone and
unrelated to an Option. SARs in tandem with an Option shall terminate to the
extent that the related Option is exercised, and the related Option shall
terminate to the extent that the tandem SARs are exercised.
(b) The Committee shall fix the exercise price of each SAR or specify
the manner in which the price shall be determined. SARs granted in tandem with
Options shall have an exercise price not less than the exercise price of the
related Option. SARs granted alone and unrelated to an Option may be granted at
such exercise prices as the Committee may determine.
Section 8. RESTRICTED STOCK
(a) Subject to the provisions of the Plan, the Committee may award
shares of Restricted Stock and determine the duration of the Restricted Period
during which, and the conditions under which, the shares may be forfeited to the
Company and the other terms and conditions of such Awards. The Committee may
establish performance goals for the granting or lapse of risk of forfeiture of
Restricted Stock. Such performance goals may be based on earnings per share,
revenues, sales or expense targets of the Company or any subsidiary, division or
product line thereof, stock price or such other business criteria as the
Committee may determine. Shares of Restricted Stock may be issued for no cash
consideration or such minimum consideration as may be required by applicable
law.
(b) Shares of Restricted Stock may not be sold, assigned, transferred,
pledged or otherwise encumbered, except as permitted by the Committee, during
the Restricted Period. Shares of Restricted Stock shall be evidenced in such
manner as the Committee may determine. Any certificates issued in respect of
shares of Restricted Stock shall be registered in the name of the Participant
and unless otherwise determined by the Committee, deposited by the Participant,
together with a stock power endorsed in blank, with the Company. At the
expiration of the
4
<PAGE> 5
Restricted Period, the Company shall deliver such certificates to the
Participant or if the Participant has died, to the Participant's Designated
Beneficiary.
Section 9. GENERAL PROVISIONS APPLICABLE TO AWARDS
(a) Documentation. Each Award under the Plan shall be evidenced by a
writing delivered to the Participant or agreement executed by the Participant
specifying the terms and conditions thereof and containing such other terms and
conditions not inconsistent with the provisions of the Plan as the Committee
considers necessary or advisable to achieve the purposes of the Plan or to
comply with applicable tax and regulatory laws and accounting principles.
(b) Committee Discretion. Each type of Award may be made alone, in
addition to or in relation to any other type of Award. The terms of each type of
Award need not be identical, and the Committee need not treat Participants
uniformly. Except as otherwise provided by the Plan or a particular Award, any
determination with respect to an Award may be made by the Committee at the time
of award or at any time thereafter.
(c) Settlement. The Committee shall determine whether Awards are
settled in whole or in part in cash, Common Stock, other securities of the
Company, Awards or other property. The Committee may permit a Participant to
defer all or any portion of a payment under the Plan, including the crediting of
interest on deferred amounts denominated in cash and dividend equivalents on
amounts denominated in Common Stock.
(d) Dividends and Cash Awards. In the discretion of the Committee, any
Award under the Plan may provide the Participant with (i) dividends or dividend
equivalents payable currently or deferred with or without interest, and (ii)
cash payments in lieu of or in addition to an Award.
(e) Termination of Employment or Service on the Board. The Committee
shall determine the effect on an Award of the disability, death, retirement or
other termination of employment or service on the Board of a Participant and the
extent to which, and the period during which, the Participant's legal
representative, guardian or Designated Beneficiary may receive payment of an
Award or exercise rights thereunder.
(f) Change in Control. In order to preserve a Participant's rights
under an Award in the event of a change in control of the Company (as defined by
the Committee), the Committee in its discretion may, at the time an Award is
made or at any time thereafter, take one or more of the following actions: (i)
provide for the acceleration of any time period relating to the exercise or
realization of the Award, (ii) provide for the purchase of the Award upon the
Participant's request for an amount of cash or other property that could have
been received upon the exercise or realization of the Award had the Award been
currently exercisable or payable, (iii) adjust the terms of the Award in a
manner determined by the Committee to reflect the change in control, (iv) cause
the Award to be assumed, or new rights substituted therefor, by another entity,
or (v) make such other provision as the Committee may consider equitable to
Participants and in the best interests of the Company.
(g) Loans. The Committee may authorize the making of loans or cash
payments to Participants in connection with any Award under the Plan, which
loans may be secured by any
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<PAGE> 6
security, including Common Stock, underlying or related to such Award (provided
that such Loan shall not exceed the Fair Market Value of the security subject to
such Award), and which may be forgiven upon such terms and conditions as the
Committee may establish at the time of such loan or at any time thereafter.
(h) Withholding Taxes. The Participant shall pay to the Company, or
make provision satisfactory to the Committee for payment of, any taxes required
by law to be withheld in respect of Awards under the Plan no later than the date
of the event creating the tax liability. In the Committee's discretion, the
minimum tax obligations required by law to be withheld in respect of Awards may
be paid in whole or in part in shares of Common Stock, including shares retained
from the Award creating the tax obligation, valued at their Fair Market Value on
the date of retention or delivery. The Company and its Affiliates may, to the
extent permitted by law, deduct any such tax obligations from any payment of any
kind otherwise due to the Participant.
(i) Foreign Nationals. Awards may be made to Participants who are
foreign nationals or employed outside the United States on such terms and
conditions different from those specified in the Plan as the Committee considers
necessary or advisable to achieve the purposes of the Plan or to comply with
applicable laws.
(j) Amendment of Award. The Committee may amend, modify or terminate
any outstanding Award, including substituting therefor another Award of the same
or a different type, changing the date of exercise or realization and converting
an Incentive Stock Option to a Nonstatutory Stock Option, provided that the
Participant's consent to such action shall be required unless the Committee
determines that the action, taking into account any related action, would not
materially and adversely affect the Participant.
(k) Transferability. In the discretion of the Committee, any Award may
be made transferable upon such terms and conditions and to such extent as the
Committee determines, provided that Incentive Stock Options may be transferable
only to the extent permitted by the Code. The Committee may in its discretion
waive any restriction on transferability.
Section 10. MISCELLANEOUS
(a) No Right To Employment or Service on the Board. No person shall
have any claim or right to be granted an Award, and the grant of an Award shall
not be construed as giving a Participant the right to continued employment or
service on the Board. The Company expressly reserves the right at any time to
dismiss a Participant free from any liability or claim under the Plan, except as
expressly provided in the applicable Award.
(b) No Rights As Stockholder. Subject to the provisions of the
applicable Award, no Participant or Designated Beneficiary shall have any rights
as a stockholder with respect to any shares of Common Stock to be distributed
under the Plan until he or she becomes the holder thereof. A Participant to whom
Common Stock is awarded shall be considered the holder of the Stock at the time
of the Award except as otherwise provided in the applicable Award.
(c) Effective Date. Subject to the approval of the stockholders of the
Company, the Plan shall be effective on the Effective Date. Before such
approval, Awards may be made under the Plan expressly subject to such approval.
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<PAGE> 7
(d) Amendment of Plan. The Board may amend, suspend or terminate the
Plan or any portion thereof at any time, subject to any stockholder approval
that the Board determines to be necessary or advisable.
(e) Governing Law. The provisions of the Plan shall be governed by and
interpreted in accordance with the laws of Delaware.
-----------------------------------------
This Plan was approved by the Board of Directors on November 15, 1999.
This Plan must be approved by the stockholders prior to November 15, 2000.
7
<PAGE> 1
EXHIBIT 10.2
ANTIGENICS INC.
1999 EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE.
This 1999 Employee Stock Purchase Plan (the "Plan") is adopted by
Antigenics Inc. (the "Company") to provide Eligible Employees who wish to become
shareholders of the Company an opportunity to purchase shares of Common Stock,
par value $0.01 per share, of the Company ("Common Stock"). The Plan is intended
to qualify as an "employee stock purchase plan" under Section 423 of the
Internal Revenue Code of 1986, as amended (the "Code"), and the provisions of
the Plan shall be construed so as to extend and limit participation in a manner
consistent with the requirements of Section 423; provided that, if and to the
extent authorized by the Board, the fact that the Plan does not comply in all
respects with the requirements of Section 423 shall not affect the operation of
the Plan or the rights of Employees hereunder.
2. CERTAIN DEFINITIONS.
As used in this Plan:
(a) "Board" means the Board of Directors of the Company, and
"Committee" means the Compensation Committee of the Board or such other
committee as the Board may appoint from time to time to administer the Plan.
(b) "Coordinator" means the officer of the Company or other person
charged with day-to-day supervision of the Plan as appointed from time to time
by the Board or the Committee.
(c) "Designated Beneficiary" means a person designated by an Employee
in the manner prescribed by the Committee or the Coordinator to receive certain
benefits provided in this Plan in the event of the death of the Employee.
(d) "Eligible Employee" with respect to any Offering hereunder means
any Employee who, as of the Offering Commencement Date for such Offering:
(i) has been a Full-time Employee of the Company or any of its
Subsidiaries for not less than 90 days; and
(ii) would not, immediately after any right to acquire Shares
in such Offering is granted, own stock or rights to purchase stock possessing
five percent (5%) or more of the total combined voting power or value of all
classes of stock of the Company or of any subsidiary corporation, determined in
accordance with Section 423.
(e) "Employee" means an employee (as that term is used in Section 423)
of the Company or any of its Subsidiaries.
<PAGE> 2
(f) "Fair Market Value" of a Share shall mean the fair market value of
a share of Common Stock, as determined by the Committee.
(g) "Full-time Employee" is an Employee whose customary employment is
for more than (i) 20 hours per week and (ii) five months, in the calendar year
during which the respective Offering Commencement Date occurs.
(h) "Offering" is an offering of Shares pursuant to Section 5 of the
Plan.
(i) "Offering Commencement Date" means the date on which an Offering
under the Plan commences, and "Offering Termination Date" means the date on
which an Offering under the Plan terminates.
(j) "Purchase Date" means each date on which the rights granted under
the Plan may be exercised for the purchase of Shares.
(k) "Section 423" and subdivisions thereof refer to Section 423 of the
Code or any successor provision(s).
(l) "Shares" means the shares of Common Stock issuable under the Plan.
(m) "Subsidiary" means a subsidiary corporation, as defined in Section
424 of the Code, of the Company the Employees of which are designated by the
Board of Directors or the Committee as eligible to participate in the Plan.
3. ADMINISTRATION OF THE PLAN.
The Committee shall administer, interpret and apply all provisions of
the Plan as it deems necessary or appropriate, subject, however, at all times to
the final jurisdiction of the Board of Directors. The Board may in any instance
perform any of the functions of the Committee hereunder. The Committee may
delegate administrative responsibilities to the Coordinator, who shall, for
matters involving the Plan, be an ex officio member of the Committee.
Determinations made by the Committee and approved by the Board of Directors with
respect to any provision of the Plan or matter arising in connection therewith
shall be final, conclusive and binding upon the Company and upon all
participants, their heirs or legal representatives.
4. SHARES SUBJECT TO THE PLAN.
The maximum aggregate number of Shares that may be purchased upon
exercise of rights granted under the Plan shall be 300,000. Appropriate
adjustments in such amount, the number of Shares covered by outstanding rights
granted hereunder, the securities that may be purchased hereunder, the Exercise
Price, and the maximum number of Shares or other securities that an employee may
purchase (pursuant to Section 8 below) shall be made to give effect to any
mergers, consolidations, reorganizations, recapitalizations, stock splits, stock
dividends or other relevant changes in the capitalization of the Company
occurring after the effective date of the Plan; provided that any fractional
Share otherwise issuable hereunder as a result of such an adjustment shall be
adjusted downward to the nearest full Share. Any agreement of merger or
consolidation involving the Company will include appropriate provisions for
protection of the
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then existing rights of participating employees under the Plan. Either
authorized and unissued Shares or treasury Shares may be purchased under the
Plan. If for any reason any right under the Plan terminates in whole or in part,
Shares subject to such terminated right may again be subjected to a right under
the Plan.
5. OFFERINGS; PARTICIPATION.
(a) From time to time, the Company, by action of the Committee, will
grant rights to purchase Shares to Eligible Employees pursuant to one or more
Offerings, each having an Offering Commencement Date, an Offering Termination
Date, and one or more Purchase Dates as designated by the Committee. No Offering
may last longer than twenty-seven (27) months or such longer period as may then
be consistent with Section 423. The Committee may limit the number of Shares
issuable in any Offering, either before or during such Offering.
(b) Participation in each Offering shall be limited to Eligible
Employees who elect to participate in such Offering in the manner, and within
the time limitations, established by the Committee. No person otherwise eligible
to participate in any Offering under the Plan shall be entitled to participate
if he or she has elected not to participate. Any such election not to
participate may be revoked only with the consent of the Committee.
(c) An Employee who has elected to participate in an Offering may make
such changes in the level of payroll deductions as the Committee may permit from
time to time, or may withdraw from such Offering, by giving written notice to
the Company before any Purchase Date. No Employee who has withdrawn from
participating in an Offering may resume participation in the same Offering, but
he or she may participate in any subsequent Offering if otherwise eligible.
(d) Upon termination of a participating Employee's employment for any
reason, including retirement but excluding death or disability (as defined in
Section 22(e)(3) of the Code) while in the employ of the Company or a
Subsidiary, such Employee will be deemed to have withdrawn from participation in
all pending Offerings.
(e) Upon termination of a participating Employee's employment because
of disability or death, the Employee or his or her Designated Beneficiary, if
any, as the case may be, shall have the right to elect, with respect to each
Offering in which the Employee was then participating, by written notice given
to the Coordinator within 30 days after the date of termination of employment
(but not later than the next applicable Purchase Date for each Offering), either
(i) to withdraw from such Offering or (ii) to exercise the Employee's right to
purchase Shares on the next Purchase Date of such Offering to the extent of the
accumulated payroll deductions or other contributions in the Employee's account
at the date of termination of employment. If no such election with respect to
any Offering is made within such period, the Employee shall be deemed to have
withdrawn from such Offering on the date of termination of employment. The
foregoing election is not available to any person, such as a legal
representative, as such, other than the Employee or a Designated Beneficiary.
6. EXERCISE PRICE.
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The rights granted under the Plan shall be exercised and Shares shall
be purchased at a price per Share (the "Exercise Price") determined by the
Committee from time to time; provided that the Exercise Price shall not be less
than eighty-five percent (85%) of the Fair Market Value of a Share on (a) the
respective Offering Commencement Date or (b) the respective Purchase Date,
whichever is lower.
7. EXERCISE OF RIGHTS; METHOD OF PAYMENT.
(a) Participating Employees may pay for Shares purchased upon exercise
of rights granted hereunder through regular payroll deductions, by lump sum cash
payment, by delivery of shares of Common Stock valued at Fair Market Value on
the date of delivery, or a combination thereof, as determined by the Committee
from time to time. No interest shall be paid upon payroll deductions or other
amounts held hereunder (whether or not used to purchase Shares) unless
specifically provided for by the Committee. All payroll deductions and other
amounts received or held by the Company under this Plan may be used by the
Company for any corporate purpose, and the Company shall not be obligated to
segregate such amounts.
(b) Subject to any applicable limitation on purchases under the Plan,
and unless the Employee has previously withdrawn from the respective Offering,
rights granted to a participating Employee under the Plan will be exercised
automatically on the Purchase Date of the respective Offering coinciding with
the Offering Termination Date, and the Committee may provide that such rights
may at the election of the Employee be exercised on one or more other Purchase
Dates designated by the Committee within the period of the Offering, for the
purchase of the number of whole Shares that may be purchased at the applicable
Exercise Price with the accumulated payroll deductions or other amounts
contributed by such Employee as of the respective Purchase Date. Fractional
Shares will not be issued under the Plan, and any amount that would otherwise
have been applied to the purchase of a fractional Share shall be retained and
applied to the purchase of Shares in the following Offering unless the
respective Employee elects otherwise. The Company will deliver to each
participating Employee a certificate representing the shares of Common Stock
purchased within a reasonable time after the Purchase Date.
(c) Any amounts contributed by an Employee or withheld from the
Employee's compensation that are not used for the purchase of Shares, whether
because of such Employee's withdrawal from participation in an Offering
(voluntarily, upon termination of employment, or otherwise) or for any other
reason, except as provided in Section 7(b), shall be repaid to the Employee or
his or her Designated Beneficiary or legal representative, as applicable, within
a reasonable time thereafter unless the Employee is eligible to and does elect
to apply such amounts to the purchase of Shares in the next Offering to commence
after the date of withdrawal.
(d) The Company's obligation to offer, sell and deliver Shares under
the Plan at any time is subject to (i) the approval of any governmental
authority required in connection with the authorized issuance or sale of such
Shares, (ii) satisfaction of the listing requirements of any national securities
exchange or securities market on which the Common Stock is then listed, and
(iii) compliance, in the opinion of the Company's counsel, with all applicable
federal and state securities and other laws.
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8. LIMITATIONS ON PURCHASE RIGHTS.
(a) Any provision of the Plan or any other employee stock purchase plan
of the Company or any subsidiary (collectively, "Other Plans") to the contrary
notwithstanding, no Employee shall be granted the right to purchase Common Stock
(or other stock of the Company and any subsidiary) under the Plan and all Other
Plans at a rate that exceeds an aggregate of $25,000 (or such other maximum as
may be prescribed from time to time by Section 423) in Fair Market Value of such
stock (determined at the time the rights are granted) for each calendar year in
which any such right is outstanding.
(b) An Employee's participation in any one or a combination of
Offerings under the Plan shall not exceed such additional limits as the
Committee may from time to time impose.
9. TAX WITHHOLDING.
Each participating Employee shall pay to the Company or the applicable
Subsidiary, or make provision satisfactory to the Committee for payment of, any
taxes required by law to be withheld in respect of the purchase or disposition
of Shares no later than the date of the event creating the tax liability. In the
Committee's discretion and subject to applicable law, such tax obligations may
be paid in whole or in part by delivery of Shares to the Company, including
Shares purchased under the Plan, valued at Fair Market Value on the date of
delivery. The Company or the applicable Subsidiary may, to the extent permitted
by law, deduct any such tax obligations from any payment of any kind otherwise
due to the Employee or withhold Shares purchased hereunder, which shall be
valued at Fair Market Value on the date of withholding.
10. PARTICIPANTS' RIGHTS AS SHAREHOLDERS AND EMPLOYEES.
(a) No participating Employee shall have any rights as a shareholder in
the Shares covered by a right granted hereunder until such right has been
exercised, full payment has been made for such Shares, and the Share certificate
is actually issued.
(b) Each Employee is an employee-at-will (that is to say that either
the Employee or the Company or any Subsidiary may terminate the employment
relationship at any time for any reason or no reason at all) unless and only to
the extent provided in a written employment agreement for a specified term
executed by the chief executive officer of the Company or his duly authorized
designee or the authorized signatory of any Subsidiary. Neither the adoption,
maintenance, nor operation of the Plan nor any grant of rights hereunder shall
confer upon any Employee any right with respect to the continuance of his/her
employment with the Company or any Subsidiary nor shall they interfere with the
rights of the Company or Subsidiary to terminate any Employee at any time or
otherwise change the terms of employment, including, without limitation, the
right to promote, demote or otherwise re-assign any Employee from one position
to another within the Company or any Subsidiary.
11. RIGHTS NOT TRANSFERABLE.
Rights under the Plan are not assignable or transferable by a
participating Employee other than by will or the laws of descent and
distribution and, during the Employee's lifetime, are
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exercisable only by the Employee. The Company may treat any attempted inter
vivos assignment as an election to withdraw from all pending Offerings.
12. AMENDMENTS TO OR TERMINATION OF THE PLAN.
The Board shall have the right to amend, modify or terminate the Plan
at any time without notice, subject to any stockholder approval that the Board
determines to be necessary or advisable; provided that the rights of Employees
hereunder with respect to any ongoing or completed Offering shall not be
adversely affected.
13. GOVERNING LAW.
Subject to overriding federal law, the Plan shall be governed by and
interpreted consistently with the laws of the State of Delaware.
14. EFFECTIVE DATE AND TERM.
This Plan will become effective on November 15, 1999, and no rights
shall be granted hereunder after November 15, 2009.
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EXHIBIT 10.3
FOUNDING SCIENTISTS AGREEMENT
AGREEMENT dated as of March 28, 1995 by and between Antigenics, Inc., a
Delaware corporation having its principal place of business at Armen Partners,
L.P., 30 Rockefeller Plaza, Suite 4220, New York, New York 10112 (the
"Company"), and Pramod K. Srivastava (the "Founding Scientist").
WHEREAS, the Founding Scientist has been and is engaged in research,
development and teaching activities relating to the use of heat shock proteins
for the development of therapeutic and/or prophylactic vaccines for cancer and
infectious diseases (the "Field") at Mt. Sinai School of Medicine ("Mt. Sinai")
and Fordham University ("Fordham");
WHEREAS, the Founding Scientist desires to be the founding scientist of
the Company and to assign to the Company to the extent permitted by Fordham or
any other employer or funding agency certain intellectual property rights and,
with the assistance of the Company, to facilitate Mt. Sinai and Fordham (or any
other university or institution with which the Founding Scientist shall become
affiliated) to exclusively license the intellectual property rights in the Field
owned by Mt. Sinai, Fordham or any other employer or funding agency as a result
of the Founding Scientist's research and development in the Field and the
Company desires to obtain the rights to commercialize the results of such
research and development;
WHEREAS, the Company has issued to the Founding Scientist 380 shares of
its common stock, $.01 par value (the "Common Stock"), of the Company,
representing 38% of the total Common Stock of the Company initially issued to
the Founding Scientist and the other founders of the Company, in consideration
of the agreements herein specified;
WHEREAS, the Founding Scientist and the Company agree that certain
information regarding the Company's product research and development, its
business planning and marketing strategy, and other Company proprietary
information and trade secrets relating to the products, services and business of
the Company that the Founding Scientist may obtain during the course of his
activities under that certain Sponsored Research and Technology License
Agreement between the Company and Fordham dated the date hereof (the "Sponsored
Research and Technology License Agreement") should be used exclusively for the
benefit of the Company;
NOW, THEREFORE, in consideration of the mutual covenants and conditions
herein contained, the parties hereto agree as follows:
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1. TERM. The term of this Agreement shall commence as of the date of
this Agreement and unless terminated earlier as a result of the death, physical
incapacity or mental incompetence of the Founding Scientist or under Section 10
hereof, it shall continue in effect for a period of ten (10) years (the "Initial
Term"). The term of this Agreement shall be extended beyond the Initial Term for
one or more additional one (1) year periods (individually, an "Additional Term")
unless either party desires NOT to extend the term of this Agreement for an
Additional Term, in which case such party shall give the other party at least
thirty (30) days' prior written notice of his or its intention not to extend the
Agreement for an Additional Term.
As used in this Agreement, the term of the Agreement shall include the Initial
Term and any Additional Terms.
2. RESTRICTIONS ON THE DISCLOSURE OF PROPRIETARY INFORMATION.
(A) PROPRIETARY INFORMATION. For purposes of this Agreement,
the term "Proprietary Information" shall mean all knowledge and information
which the Founding Scientist has acquired or may acquire as a result of, or
related to, his relationship with the Company concerning the Company's business,
finances, operations, strategic planning, research and development activities,
products, molecules, organisms, laboratory materials, prototypes, software
programs, firmware, designs, systems, improvements, applications, processes,
trade secrets, services, cost and pricing policies, and including, but not
limited to, information relating to formulae, diagrams, schematics, notes, data,
memoranda, methods, know-how, techniques, inventions, and purchasing,
merchandising and selling strategies. Notwithstanding the foregoing sentence,
but subject to Section 3 hereof, such Proprietary Information does not include
(i) information which is or becomes publicly available (except as may be
disclosed by the Founding Scientist in violation of this Agreement), or (ii)
information acquired by the Founding Scientist from a third-party source other
than the Company or any of its employees, consultants or shareholders, which
source legally acquired such information directly from the Company or elsewhere.
(B) NONDISCLOSURE OBLIGATION. The Founding Scientist agrees
that he will not at any time, either during or after the term of this Agreement,
without the prior written consent of the President or Board of Directors of the
Company, divulge or disclose to anyone outside the Company, or appropriate for
his own use or the use of any third party, any such Proprietary Information, and
will not during his engagement by the Company hereunder, or at any time
thereafter, disclose or use or attempt to use any such Proprietary Information
for his own benefit, or the benefit of any third party, or in any manner which
may injure or cause loss or may be calculated to injure or cause loss to the
Company. The Founding Scientist's obligations contained in this subsection 2(B)
shall lapse on the fifth anniversary of the termination of this Agreement.
3. ASSIGNMENT OF PROPRIETARY INFORMATION.
(A) INFORMATION. In consideration of this Agreement, the sale
of Common Stock of the Company to the Founding Scientist and the parties' mutual
interest in the Field, the Founding Scientist agrees that the term "Information"
shall include all inventions, discoveries, know-how, technical information,
improvements and other information relating to the Field
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which, during the term of or prior to this Agreement, are or were made,
conceived (whether or not reduced to practice) or become known to the Founding
Scientist and the Founding Scientist further agrees that Proprietary Information
shall include the Information.
INSTITUTIONALLY-FUNDED RESEARCH. The parties hereto
acknowledge that the Founding Scientist is and may become obligated to make
certain disclosures to and assign all rights therein including certain patents
and patent applications covering Information developed pursuant to research
funded by the National Institutes of Health ("NIH") or other U.S. government or
non-governmental agency to Fordham or another institution. Subject to the
foregoing obligation, all patents and patent applications covering the
Information shall be assigned by the Founding Scientist to the Company and the
Founding Scientist agrees to execute all documents and take all other actions
necessary to transfer title to such patents and patent applications to the
Company. With respect to NIH or other sponsored research, the Founding Scientist
and the Company agree to use best efforts to facilitate licensing of such
Information to the Company by Fordham or any other institution.
DISCLOSURE AND PATENT PROSECUTION. The Founding Scientist
agrees that he will promptly disclose to the Company any and all such
Information in a manner that will enable the Company to use effectively the
Information, and that, upon request of the Company, he will execute and deliver
any and all documents or instruments and take any other action which the Company
shall deem necessary to assign to and vest in the Company (subject to Section
3(B) hereof), to perfect copyright and patent protection with respect to, to
procure licenses to, or to protect the Company's interest in, all of its rights
and interests in and to such Information. The obligations of this Section 3 to
take any such actions shall continue beyond the termination of this Agreement
with respect to such Information and shall be binding upon his heirs, legal
representatives, successors and assigns. The Company agrees to pay all copyright
and patent fees and expenses incurred by the Founding Scientist for any
assistance rendered to the Company pursuant to the foregoing.
4. PUBLICATIONS. Nothing in this Agreement shall prevent the Founding
Scientist from submitting for publication to any academic journal or periodical
the results of research relating to the Field. So long as the Founding Scientist
is subject to a non-disclosure obligation under Section 2 hereof, the Founding
Scientist shall deliver, at least 30 days prior to any such submission for
publication, to the Company the manuscript to be so submitted. The Founding
Scientist shall cooperate in a timely manner with the Company in taking any and
all actions necessary to perfect copyright and patent protection with respect
to, or to protect the Company's interest in, any Information that the Company
may deem to be disclosed in such manuscript.
5. LICENSE AGREEMENTS; FUNDING. It is the expectation of the parties
that the Sponsored Research and Technology License Agreement will be executed
concurrently herewith and will provide the Company with an exclusive worldwide
license to the results of the Founding Scientist's research and development in
the Field at Fordham for a royalty set forth in such Sponsored Research and
Technology License Agreement. The Company and the Founding Scientist further
agree to use best efforts to obtain such a license from Mt. Sinai. The Company
agrees that it will fund the Founding Scientist's research and development in
the Field at Fordham or any other university or institution with which the
Founding Scientist shall become affiliated during the three (3) years beginning
effective as of November 1, 1994 at a quarterly
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rate of $100,000 per quarter, and that negotiations between the parties for
funding beyond said three (3) year period will commence within the year prior to
the expiration of said three (3) year period. It is the parties' expectation
that the Sponsored Research and Technology Agreement will reflect a commitment
of such funding to the Founding Scientist's laboratory at Fordham which will
terminate on the earlier of October 31, 1997 or the date upon which the Founding
Scientist terminates his employment with Fordham.
6. CONFLICT OF INTEREST WITH RESPECT TO EQUITY POSITION. To avoid the
appearance of a conflict of interest for so long as such a conflict is of
concern to the Founding Scientist, the Company will not object to the
establishment by the Founding Scientist of a blind trust to hold the Founding
Scientist's Common Stock.
7. CONSULTANCY. After the Company closes an equity financing of the
Company of $2,000,000 or more of funds invested by parties other than the
existing stockholders of the Company or their affiliates, the Company will enter
into a consulting arrangement with the Founding Scientist on mutually
satisfactory terms providing for the payment of consultant fees to the Founding
Scientist at a per diem rate of $1,500 for up to three days per month of the
Founding Scientist's consulting time which will be in addition to the Founding
Scientist's obligations to Fordham.
8. ABSENCE OF CONFLICTING AGREEMENTS. The Company does not desire to
acquire from the Founding Scientist any trade secret, confidential know-how or
confidential information that he may have acquired from others. Accordingly, the
Founding Scientist represents and warrants that subject to his duties and
obligations under the terms of his employment by Fordham or any other
institution he is free to divulge to the Company, without any obligation to, or
violation of any right of others, any and all information, know-how, technical
information, practices and techniques which the Founding Scientist will be and
is required to describe, demonstrate, divulge or in any other manner make known
to the Company under this Agreement. The Founding Scientist represents and
warrants that he is not a party to and he is not aware that Fordham is a party
to any agreement or arrangement, whether oral or written, which would constitute
a conflict of interest with this Agreement or would prevent him from carrying
out his obligations to the Company under this Agreement. The Founding Scientist
further covenants not to enter into any such agreement or arrangement during the
term hereof.
9. RESTRICTION ON SOLICITATION. During any period in which the Founding
Scientist works on projects for the Company under the Sponsored Research and
Technology License Agreement and for a period of one year thereafter, the
Founding Scientist shall not recruit or otherwise solicit, entice or induce any
employees of the Company or any of its subsidiaries or affiliates to terminate
their employment with, or otherwise cease their relationships with the Company
or any of its subsidiaries or affiliates, in order to engage in any activity for
any business, firm, corporation or any other entity that conducts research with
respect to, develops, produces or manufactures any products or techniques or
provides services similar to those developed, produced, manufactured or provided
by the Company.
10. FOUNDING SCIENTIST'S AFFILIATION WITH ANOTHER UNIVERSITY. If the
Founding Scientist shall become affiliated with a university or institution
other than Fordham, the Founding Scientist and the Company agree and undertake
to use best efforts and negotiate in
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good faith to obtain the same or substantially similar arrangements for himself
and the Company with such other university relating to sponsored research for
the Company and a worldwide exclusive license to the intellectual property
produced in respect of such sponsored research as are provided for herein and in
the Sponsored Research and Technology License Agreement with Fordham. If the
Founding Scientist and the Company shall be unable to obtain such arrangements,
the Company may terminate this Agreement and for a two-year period after any
such termination, the Founding Scientist will not, without the Company's prior
written consent, directly or indirectly, alone or as a partner, joint venturer,
officer, director, employee, consultant, agent, independent contractor or
stockholder of any company or business, engage in any business activity which is
directly or indirectly in competition in the United States with any of the
products or services being researched, developed, sold or otherwise provided by
the Company at such time. The ownership by the Founding Scientist of not more
than three percent of the shares of stock of any corporation having a class of
equity securities actively traded on a national securities exchange or on NASDAQ
shall not be deemed, in and of itself, to violate the prohibitions of this
paragraph.
11. GENERAL.
(A) This Agreement constitutes the entire Agreement between
the parties relative to the subject matter hereof, and supersedes all proposals
or agreements, written or oral, and all other communications between the parties
relating to the subject matter of this Agreement.
(B) No provision of this Agreement shall be waived, amended,
modified, superseded, canceled, renewed or extended except in a written
instrument signed by the party against whom any of the foregoing actions is
asserted. Any waiver shall be limited to the particular instance and for the
particular purpose when and for which it is given.
(C) The invalidity, illegality or unenforceability of any
provision of this Agreement shall in no way affect the validity, legality or
enforceability of any other provision of this Agreement.
(D) This Agreement and all rights and obligations hereunder
are personal to the Founding Scientist and may not be transferred or assigned by
the Founding Scientist at any time. The Company may assign its rights, together
with its obligations hereunder, to any affiliate or successor in connection with
any consolidation, merger, sale, transfer or other disposition of all or
substantially all of the Company's business and assets. In the event of any
consolidation or merger of the Company with or into any other corporation, or
the sale or conveyance of all or substantially all of the assets of the Company
to another corporation, the surviving or acquiring corporation shall be entitled
to all rights and benefits provided under this Agreement, and become obligated
to perform all of the terms and conditions hereof. The foregoing
notwithstanding, the Company may transfer its Proprietary Information without
limitation.
(E) Either party may terminate upon a material breach by the
other party of any of their obligations set forth herein upon sixty (60) days'
written notice; provided that if during said sixty (60) days the party so
notified cures the breach then this Agreement shall remain in full force and
effect. For purposes of this section 11(E) a material breach by the Company
shall be
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defined as a failure to make the minimum payments set forth in Section 5 hereof
and any payment required to be made under the terms of the Founding Scientist's
consultancy set forth in Section 7 hereof. In addition, the Founding Scientist
may terminate this Agreement on thirty (30) days' written notice in the event
that funding of the Founding Scientist's research and development is not
extended, at the same level, beyond the three (3) years contemplated in Section
5 hereof.
(F) This Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the
internal laws of the State of New York.
(G) All notices provided for in this Agreement shall be given
in writing and shall be effective when either served by personal delivery,
express overnight courier service, or by registered or certified mail, return
receipt requested, addressed to the parties at their respective addresses herein
set forth, or to such other address or addresses as either party may later
specify by written notice to the other.
(H) This Agreement may be executed in duplicate counterparts,
which, when taken together, shall constitute one instrument and each of which
shall be deemed to be an original instrument.
(I) The provisions of Sections 2, 3, 4, 8, 9 and 10 shall
survive the termination or expiration of this Agreement for the periods set
forth herein as a continuing agreement of the Company and the Founding
Scientist; provided, however that the provisions of Sections 9 and 10 shall not
survive if the Founding Scientist has terminated the Agreement for a material
breach pursuant to the provisions of Section 11(E) hereof.
(J) The parties agree that a breach of the provisions of
Sections 2, 3, 4, 8, 9 and 10 hereof by the Founding Scientist will cause
irreparable damage to the Company and that in the event of such breach the
Company shall have, in addition to any and all remedies of law, the right to an
injunction, specific performance or other equitable relief to prevent the
violation of the Founding Scientist's obligations hereunder. Nothing herein
contained shall be construed as prohibiting the Company or the Founding
Scientist from pursuing any other remedies available to either for breach by the
other under this Agreement or applicable law.
(K) The parties agree that each provision of this Agreement
shall be treated as a separate and independent clause, and the unenforceability
of any one clause shall in no way impair the
(L) enforceability of any of the other clauses herein.
Moreover, if any one or more of the provisions of this Agreement shall for any
reason be held to be exclusively broad as to scope, activity or subject so as to
be unenforceable at law, such provisions shall be construed by the appropriate
judicial body by limiting and reducing it or them, so as to be enforceable to
the maximum extent compatible with the applicable law as it shall then appear.
(M) The Company agrees to pay the Founding Scientist's
reasonable legal fees and expenses in connection with the preparation and
negotiation of this agreement not to exceed $2,500.
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[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY.]
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IN WITNESS WHEREOF, parties have executed this Agreement as of the day
and year first above written.
ANTIGENICS, INC.
By: /s/ Garo H. Armen
----------------------------------------
President
FOUNDING SCIENTIST
/s/ Pramod K. Srivastava
--------------------------------------------
Pramod K. Srivastava
3805 Greystone Avenue
Riverdale, NY 10463
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EXHIBIT 10.4
ANTIGENICS INC.
INDEMNIFICATION AGREEMENT
-------------------------
This Agreement dated ______________________ is between Antigenics Inc.
(the "Company"), a Delaware corporation, and ______________________ (the
"Indemnitee"), who is [an officer][a director][an officer and director] of the
Company. Its purpose is to provide the maximum protection for the Indemnitee
against personal liability arising out of his or her service to the Company so
as to encourage the continuation of such service and the effective exercise of
his or her business judgment in connection therewith.
The parties hereto agree as follows:
1. Definitions. For purposes of this Agreement, the following terms
shall have the meanings hereafter assigned to them:
(a) CHANGE IN CONTROL: a change in control of the Company of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), whether or not the Company is in fact
required to comply therewith; provided, that, without limitation, such a change
in control shall be deemed to have occurred if:
(i) any "person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act), other than the Company, any
trustee or other fiduciary holding securities under an employee benefit
plan of the Company or a corporation owned, directly or indirectly, by
the stockholders of the Company in substantially the same proportions
as their ownership of stock of the Company is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 30%
or more of the combined voting power of the Company's then outstanding
securities; or
(ii) during any period of twenty-four (24)
consecutive months (not including any period prior to the date of this
Agreement), individuals who at the beginning of such period constitute
the Company's Board of Directors (the "Board") and any new director
(other than a director designated by a person who has entered into an
agreement with the Company to effect a transaction described in
paragraphs (i), (ii) or (iii) of this Section 1(a)) whose election by
the Board or nomination for election by the stockholders of the Company
was approved by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at the beginning of such
period or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority thereof; or
(iii) the stockholders of the Company approve a
merger or consolidation of the Company with any other corporation,
other than (A) a merger or consolidation which would result in the
voting securities of the Company outstanding
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immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity) at least 50% of the combined voting securities of the
Company or such surviving entity outstanding immediately after such
merger or consolidation or (B) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in
which no "person" (as hereinabove defined) acquires 30% or more of the
combined voting power of the Company's then outstanding securities; or
(iv) the stockholders of the Company approve a plan
of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's
assets.
(b) CLAIM: any threatened, pending or completed action, suit
or proceeding, or any inquiry or investigation, whether instituted by the
Company or any other party that the Indemnitee in good faith believes might lead
to the institution of any such action, suit or proceeding, whether civil,
criminal, administrative, investigative or other.
(c) EXPENSES: include attorneys' fees and all other costs,
expenses and obligations paid or incurred in connection with investigating,
defending, being a witness in or participating in (including on appeal), or
preparing to defend, be a witness in or participate in, any Claim relating to
any Indemnifiable Event.
(d) INDEMNIFIABLE EVENT: any event or occurrence related to
the fact that the Indemnitee is or was a director, officer, employee, agent or
fiduciary of the Company, or is or was serving at the request of the Company as
a director, officer, employee, trustee, agent or fiduciary of another
corporation, partnership, joint venture, employee benefit plan, trust or other
enterprise, or by reason of anything done or not done by the Indemnitee in any
such capacity.
(e) POTENTIAL CHANGE IN CONTROL: shall be deemed to have
occurred if:
(i) the Company enters into an agreement, the
consummation of which would result in the occurrence of a Change in
Control;
(ii) any person (as hereinabove defined), including
the Company, publicly announces an intention to take or consider taking
actions which if consummated would constitute a Change in Control;
(iii) any person (as hereinabove defined), other than
the Company, any trustee or other fiduciary holding securities under an
employee benefit plan of the Company or a corporation owned, directly
or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company (A) is or
becomes the beneficial owner, (B) discloses directly or indirectly to
the Company or publicly a plan or intention to become the beneficial
owner, or (C) makes a filing under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, with respect to securities to
become the beneficial owner, directly or indirectly, of securities
representing 9.9% or more of the combined voting power of the
outstanding voting securities of the Company; or
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<PAGE> 3
(iv) the Board adopts a resolution to the effect
that, for purposes of this Agreement, a potential change in control of
the Company has occurred.
(f) REVIEWING PARTY: The person or body appointed by the Board
pursuant to Section 2(b), which shall not be or include a person who is a party
to the particular Claim for which the Indemnitee is seeking indemnification.
2. Basic Indemnification Arrangement. (a) In the event that the
Indemnitee was, is or becomes a party to or witness or other participant in, or
is threatened to be made a party to or witness or other participant in, a Claim
by reason of (or arising in part out of) an Indemnifiable Event, the Company
shall indemnify the Indemnitee to the fullest extent permitted by law as soon as
practicable, but in any event no later than thirty days after written demand is
presented to the Company, against all Expenses, judgments, fines, penalties and
amounts paid in settlement (including all interest, assessments and other
charges paid or payable in connection with or in respect of such Expenses,
judgments, fines, penalties or amounts paid in settlement) of such Claim. If so
requested by the Indemnitee, the Company shall advance (within ten business days
of such request) all Expenses to the Indemnitee (an "Expense Advance").
Notwithstanding anything in this Agreement to the contrary, prior to a Change in
Control, the Indemnitee shall not be entitled to indemnification pursuant to
this Agreement in connection with any Claim initiated by the Indemnitee against
the Company or any director or officer of the Company (otherwise than to enforce
his or her rights under this Agreement) unless the Company has consented in
writing to the initiation of such Claim.
(b) In the event of any demand by the Indemnitee for
indemnification hereunder or under the Company's Certificate of Incorporation or
By-laws, the Board shall designate a Reviewing Party, who shall, if there has
been a Change of Control of the Company, be the special independent counsel
referred to in Section 3 hereof. The obligations of the Company under Section
2(a) shall be subject to the condition that the Reviewing Party shall not have
determined (in a written opinion, in any case in which the special independent
counsel referred to in Section 3 hereof is involved) that the Indemnitee is not
permitted to be indemnified under applicable law, and the obligation of the
Company to make an Expense Advance pursuant to Section 2(a) shall be subject to
the condition that, if, when and to the extent that the Reviewing Party
determines that the Indemnitee is not permitted to be so indemnified under
applicable law, the Company shall be entitled to be reimbursed by the Indemnitee
(who hereby agrees to reimburse the Company) for all such amounts theretofore
paid. If the Indemnitee has commenced legal proceedings in a court of competent
jurisdiction to secure a determination that the Indemnitee may be indemnified
under applicable law, any determination made by the Reviewing Party that the
Indemnitee is not permitted to be indemnified under applicable law shall not be
binding, and the Indemnitee shall not be required to reimburse the Company for
any Expense Advance until a final judicial determination is made with respect
thereto (as to which all rights of appeal therefrom have been exhausted or
lapsed). If there has been no determination by the Reviewing Party or if the
Reviewing Party determines that the Indemnitee is not permitted to be
indemnified in whole or in part under applicable law, the Indemnitee shall have
the right to commence litigation in any court in the state of Delaware having
subject matter jurisdiction thereof and in which venue is proper seeking an
initial determination by the court or challenging any such determination by the
Reviewing Party or any aspect thereof, and the Company hereby
3
<PAGE> 4
consents to service of process and to appear in any such proceeding. Any
determination by the Reviewing Party otherwise shall be conclusive and binding
on the Company and the Indemnitee.
3. Change in Control. The Company agrees that if there is a Change in
Control of the Company, then with respect to all matters thereafter arising
concerning the rights of the Indemnitee to indemnity payments and Expense
Advances under this Agreement or any other agreement or under the Company's
Certificate of Incorporation or By-laws now or hereafter in effect relating to
Claims for Indemnifiable Events, the Company shall seek legal advice only from
special independent counsel selected by the Indemnitee and approved by the
Company (which approval shall not be unreasonably withheld) who has not
otherwise performed services for the Company within the last ten years (other
than in connection with such matters) or for the Indemnitee. Such counsel, among
other things, shall render its written opinion to the Company and the Indemnitee
as to whether and to what extent the Indemnitee is permitted to be indemnified
under applicable law. The Company agrees to pay the reasonable fees of the
special independent counsel and to indemnify such counsel against any and all
expenses (including attorneys' fees), claims, liabilities and damages relating
to this Agreement or its engagement pursuant hereto.
4. Establishment of Trust. In the event of a Potential Change in
Control, the Company may create a trust for the benefit of the Indemnitee
(either alone or together with one or more other indemnitees) and from time to
time fund such trust in such amounts as the Board may determine to satisfy
Expenses reasonably anticipated to be incurred in connection with investigating,
preparing for and defending any Claim relating to an Indemnifiable Event, and
all judgments, fines, penalties and settlement amounts of all Claims relating to
an Indemnifiable Event from time to time paid or claimed, reasonably anticipated
or proposed to be paid. The terms of any trust established pursuant hereto shall
provide that upon a Change in Control (i) the trust shall not be revoked or the
principal thereof invaded, without the written consent of the Indemnitee, (ii)
the trustee shall advance, within ten business days of a request by the
Indemnitee, all Expenses to the Indemnitee (and the Indemnitee hereby agrees to
reimburse the trust under the circumstances under which the Indemnitee would be
required to reimburse the Company under Section 2(b) of this Agreement), (iii)
the trustee shall promptly pay to the Indemnitee all amounts for which the
Indemnitee shall be entitled to indemnification pursuant to this Agreement or
otherwise, and (iv) all unexpended funds in such trust shall revert to the
Company upon a final determination by the Reviewing Party or a court of
competent jurisdiction, as the case may be, that the Indemnitee has been fully
indemnified under the terms of this Agreement. The trustee shall be a person or
entity satisfactory to the Indemnitee. Nothing in this Section 4 shall relieve
the Company of any of its obligations under this Agreement.
5. Indemnification for Additional Expenses. The Company shall indemnify
the Indemnitee against all expenses (including attorneys' fees) and, if
requested by the Indemnitee, shall (within ten business days of such request)
advance such expenses to the Indemnitee, which are incurred by the Indemnitee in
connection with any claim asserted against or action brought by the Indemnitee
for (i) indemnification or advance payment of Expenses by the Company under this
Agreement or any other agreement or Company By-law or provision of the Company's
Certificate of Incorporation now or hereafter in effect relating to Claims for
Indemnifiable Events or (ii) recovery under any directors' and officers'
liability insurance
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<PAGE> 5
policies maintained by the Company, regardless of whether the Indemnitee
ultimately is determined to be entitled to such indemnification, advance expense
payment or insurance recovery, as the case may be.
6. Partial Indemnity, Etc. If the Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for a portion of
the Expenses, judgments, fines, penalties and amounts paid in settlement of a
Claim but not for the total amount thereof, the Company shall indemnify the
Indemnitee for the portion thereof to which the Indemnitee is entitled.
Notwithstanding any other provision of this Agreement, to the extent that the
Indemnitee has been successful on the merits or otherwise in defense of Claims
relating to an Indemnifiable Event or in defense of any issue or matter therein,
including dismissal without prejudice, the Indemnitee shall be indemnified
against all Expenses incurred in connection therewith.
7. Burden of Proof. In connection with any determination by the
Reviewing Party or otherwise as to whether the Indemnitee is entitled to be
indemnified hereunder, the burden of proof shall be on the Company to establish
that the Indemnitee is not so entitled.
8. No Presumption. For purposes of this Agreement, the termination of
any claim, action, suit or proceeding, by judgment, order, settlement (whether
with or without court approval) or conviction, or upon a plea of nolo
contendere, or its equivalent, shall not create a presumption that the
Indemnitee did not meet any particular standard of conduct or have any
particular belief or that a court has determined that indemnification is not
permitted by applicable law. In addition, neither the failure of the Reviewing
Party to have made a determination as to whether the Indemnitee has met any
particular standard of conduct or had any particular belief, nor an actual
determination by the Reviewing Party that the Indemnitee has not met such
standard of conduct or did not have such belief, prior to the commencement of
legal proceedings by the Indemnitee to secure a judicial determination that the
Indemnitee should be indemnified under applicable law shall be a defense to the
Indemnitee's claim or create a presumption that the Indemnitee has not met any
particular standard of conduct or did not have any particular belief.
9. Non-exclusivity, Etc. The rights of the Indemnitee hereunder shall
be in addition to any other rights the Indemnitee may have under the Company's
Certificate of Incorporation and By-laws or the Delaware General Corporation Law
or otherwise. To the extent that a change in the Delaware General Corporation
Law (whether by statute or judicial decision) permits greater indemnification by
agreement than would be afforded currently under the Company's Certificate of
Incorporation and By-laws and this Agreement, it is the intent of the parties
hereto that the Indemnitee shall enjoy by this Agreement the greater benefits
afforded by such change.
10. Liability Insurance. To the extent the Company maintains an
insurance policy or policies providing directors' and officers' liability
insurance, the Indemnitee shall be covered by such policy or policies, in
accordance with its or their terms, to the maximum extent of the coverage
available for any Company director or officer.
11. Amendments, Etc. No supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by both of the parties
hereto. No waiver of any of the
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<PAGE> 6
provisions of this Agreement shall constitute a waiver of any other provisions
hereof (whether or not similar) nor shall such waiver constitute a continuing
waiver.
12. Subrogation. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of the Indemnitee, who shall execute all such papers and do all such
things as may be necessary or desirable to secure such rights.
13. No Duplication of Payments. The Company shall not be liable under
this Agreement to make any payment in connection with any Claim made against the
Indemnitee to the extent the Indemnitee has otherwise received payment (under
any insurance policy, provision of the Company's Certificate of Incorporation,
Company By-law or otherwise) of the amounts otherwise indemnifiable hereunder.
14. Binding Effect, Etc. This Agreement shall be binding and inure to
the benefit of and be enforceable by the parties hereto and their respective
successors, assigns, including any direct or indirect successor by purchase,
merger, consolidation or otherwise to all or substantially all of the business
or assets of the Company, spouses, heirs, and personal and legal
representatives. The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation, liquidation or otherwise) to all
or substantially all of the business or assets of the Company by written
agreement expressly to assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. As used in this Agreement, "Company"
shall mean the Company as hereinbefore defined and any successor to its business
or assets aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise. This Agreement shall continue in effect
regardless of whether the Indemnitee continues to serve as an officer or
director of the Company or of any other enterprise at the Company's request.
15. Severability. The provisions of this Agreement shall be severable
in the event that any of the provisions hereof (including any provision within a
single section, paragraph or sentence) are held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, and the remaining
provisions shall remain enforceable to the fullest extent permitted by law.
16. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed in such state without giving effect to the
principles of conflicts of laws.
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ANTIGENICS INC.
By:______________________________
Title:___________________________
_________________________________
(Indemnitee)
7
<PAGE> 1
EXHIBIT 10.5
CUMMINGS PROPERTIES MANAGEMENT, INC.
STANDARD FORM
COMMERCIAL LEASE
In consideration of the covenants herein contained, Cummings Properties
Management, Inc., hereinafter called LESSOR, does hereby lease to ANTIGENICS,
L.L.C. (A DE L.L.C.), 630 FIFTH AVENUE, SUITE 2170, NEW YORK, NY 10111
hereinafter called LESSEE, the following described premises, hereinafter called
the leased premises: APPROXIMATELY 30,225 SQUARE FEET AT 34-A COMMERCE WAY,
WOBURN, MA 01801 TO HAVE AND HOLD the leased premises for a term of FIVE (5)
YEARS commencing at noon on AUGUST 15, 1998 and ending at noon on AUGUST 14,
2003 unless sooner terminated as herein provided. LESSOR and LESSEE now covenant
and agree that the following terms and conditions shall govern this lease during
the term hereof and for such further time as LESSEE shall hold the leased
premises.
1. RENT. LESSEE shall pay to LESSOR base rent at the rate of FOUR
HUNDRED TWELVE THOUSAND TWO HUNDRED TEN 412,210 U.S. dollars per year, drawn on
a U.S. bank, payable in advance in monthly installments of $34,350.83 on the
first day in each calendar month in advance, the first monthly payment to be
made upon LESSEE's execution of this lease, including payment in advance of
appropriate fractions of a monthly payment for any portion of a month at the
commencement or end of said lease term. All payments shall be made to LESSOR or
agent at 200 West Cummings Park, Woburn, Massachusetts 01801, or at such other
place as LESSOR shall from time to time in writing designate. If the "Cost of
Living" has increased as shown by the Consumer Price Index (Boston,
Massachusetts, all items, all urban consumers), U.S. Bureau of Labor Statistics,
the amount of base rent due during each calendar year of this lease and any
extensions thereof shall be annually adjusted in proportion to any increase in
the Index. All such adjustments shall take place with the rent due on January 1
of each year during the lease term. The base month from which to determine the
amount of each increase in the Index shall be January 1998, which figure shall
be compared with the figure for November 1998, and each November thereafter to
determine the percentage increase (if any) in the base rent to be paid during
the following calendar year. In the event that the Consumer Price Index as
presently computed is discontinued as a measure of "Cost of Living" changes, any
adjustment shall then be made on the basis of a comparable index then in general
use.
2. SECURITY DEPOSIT. LESSEE shall pay to LESSOR a security deposit in
the amount of SIXTY FIVE THOUSAND (65,000.00) U.S. dollars upon the execution of
this lease by LESSEE, which shall be held as security for LESSEE's performance
as herein provided and refunded to LESSEE without interest at the end of this
lease, subject to LESSEE's satisfactory compliance with the conditions hereof.
LESSEE may not apply the security deposit to payment of the last month's rent.
In the event of any default or breach of this lease by LESSEE, LESSOR may
immediately apply the security deposit first to any unamortized improvements
completed for LESSEE's occupancy, then to offset any outstanding invoice or
other payment due to LESSOR, with the balance applied to outstanding rent. If
all or any portion of the security deposit is applied to cure a default or
breach during the term of the lease, LESSEE shall be responsible for restoring
said deposit forthwith, and failure to do so shall be considered a substantial
default under the lease. LESSEE's failure to remit the full security deposit or
any portion thereof when due shall also constitute a substantial lease default.
Until such time as LESSEE pays the security deposit and first month's rent,
LESSOR may declare this lease null and void for failure of consideration.
3. USE OF PREMISES. LESSEE shall use the leased premises only for the
purpose of OFFICE, PROCESSING, MANUFACTURING AND RELATED RESEARCH AND
DEVELOPMENT ACTIVITIES
4. ADDITIONAL RENT. LESSEE shall pay to LESSOR as additional rent a
proportionate share (based on square footage leased by LESSEE as compared with
the total leaseable footage of the building of which the leased premises are a
part) of any increase in the real estate taxes levied against the land and
building of which the leased premises are a part (hereinafter called the
building), whether such increase is caused by an increase in the tax rate, or
the assessment on the property, or a change in the method of determining real
estate taxes. LESSEE shall make payment within thirty (30) days of written
notice from LESSOR that such increased taxes are payable and any additional rent
shall be prorated should the lease terminate before the end of any tax year. The
base from which to determine the amount of any increase in taxes shall be the
rate and the assessment in effect as of July 1, 1997.
5. UTILITIES.LESSEE shall provide equipment per LESSOR's building
standard specifications to heat the leased premises in season and to cool all
office areas between May 1 and November 1. LESSEE shall pay all charges for
utilities used on the leased premises, including electricity, gas, oil, water
and sewer. LESSEE shall pay the utility provider or LESSOR, as applicable, for
all such utility charges as determined by separate meters serving the leased
premises. LESSEE shall also pay LESSOR a proportionate share of any other fees
and charges relating in any way to utility use at the building. No plumbing,
construction or electrical work of any type shall be done without LESSOR's prior
written approval and LESSEE obtaining the appropriate municipal permit.
<PAGE> 2
6. COMPLIANCE WITH LAWS. LESSEE acknowledges that no trade,
occupation, activity or work shall be conducted in the leased premises or use
made thereof which may be unlawful, improper, noisy, offensive, or contrary to
any applicable statute, regulation, ordinance or bylaw. LESSEE shall keep all
employees working in the leased premises covered by Worker's Compensation
Insurance and shall obtain any licenses and permits necessary for LESSEE's
occupancy. LESSEE shall be responsible for causing the leased premises and any
alternations by LESSEE which are allowed hereunder to be in full compliance with
any applicable statute, regulation, ordinance or bylaw.
7. FIRE, CASUALTY, EMINENT DOMAIN. Should a substantial portion of
the leased premises, or of the property of which they are a part, be
substantially damaged by fire or other casualty, or be taken by eminent domain,
LESSOR may elect to terminate this lease. When such fire, casualty or taking
renders the leased premises substantially unsuitable for their intended use, a
just and proportionate abatement of rent shall be made, and LESSEE may elect to
terminate this lease if: (a) LESSOR fails to give written notice within thirty
(30) days of intention to restore the leased premises or (b) LESSOR fails to
restore the leased premises to a condition substantially suitable for their
intended use within ninety (90) days of said fire, casualty or taking. LESSOR
reserves all rights for damages or injury to the leased premises for any taking
by eminent domain, except for damage to LESSEE's property or equipment.
8. FIRE INSURANCE. LESSEE shall not permit any use of the leased
premises which will adversely affect or make voidable any insurance on the
property of which the leased premises are a part, or on the contents of said
property, or which shall be contrary to any law or regulation from time to time
established by the Insurance Services Office (or successor), local Fire
Department, LESSOR's insurer, or any similar body. LESSEE shall on demand
reimburse LESSOR and all other tenants all extra insurance premiums caused by
LESSEE's use of the leased premises. LESSEE shall not vacate the leased premises
or permit same to be unoccupied other than during LESSEE's customary
non-business days or hours.
9. MAINTENANCE OF PREMISES. LESSOR will be responsible for all
structural maintenance of the leased premises and for the normal daytime
maintenance of all space heating and cooling equipment, sprinklers, doors,
locks, plumbing and electric wiring, but specifically excluding damage caused by
the careless, malicious, willful, or negligent acts of LESSEE or others,
chemical, water or corrosion damage from any source, and maintenance of any non
"building standard" leasehold improvements. LESSEE agrees to maintain at its
expense all other aspects of the leased premises in the same condition as they
are at the commencement of the term or as they may be put in during the term of
this lease, normal wear and tear and damage by fire or other casualty only
expected, and whenever necessary, to replace light bulbs, plate glass and other
glass therein, acknowledging that the leased premises are now in good order and
the light bulbs and glass whole. LESSEE will properly control or vent all
solvents degreasers, smoke, odors , etc. and shall not cause the area
surrounding the leased premises to be in anything other than a neat and clean
condition, depositing all waste in appropriate receptacles. LESSEE shall be
solely responsible for any damage to plumbing equipment sanitary lines or any
other portion of the building which results from the discharge or use of any
acid or corrosive substance by LESSEE. LESSEE shall not permit the leased
premises to be overloaded, damaged, stripped or defaced, nor suffer any waste,
and will not keep animals within the leased premises If the leased premises
include any wooden mezzanine type space, the floor capacity of such space is
suitable only for office use, light storage or assembly work. LESSEE will
protect any carpet with plastic or masonite chair pads under any rolling chairs.
Unless heat is provided at LESSOR's expense, LESSEE shall maintain sufficient
heat to prevent freezing of pipes or other damage. Any increase in air
conditioning equipment or electrical capacity or any installation or maintenance
of equipment which is necessitated by some specific aspect of LESSEE's use of
the leased premises shall be LESSEE's sole responsibility at LESSEE's expense
and subject to LESSOR's prior written consent. All maintenance provided by
LESSOR shall be during LESSOR's normal business hours.
10. ALTERATIONS. LESSEE shall not make structural alterations or
additions of any kind to the leased premises, but may make nonstructural
alterations provided LESSOR consents thereto in writing. All such allowed
alterations shall be at LESSEE's expense and shall conform with LESSOR's
construction specifications. If LESSOR or LESSOR's agent provides any services
or maintenance for LESSEE in connection with such alterations or otherwise under
this lease, any just invoice will be promptly paid. LESSEE shall not permit any
mechanics' liens, or similar liens, to remain upon the leased premises in
connection with work of any character performed or claimed to have been
performed at the direction of LESSEE and shall cause any such lien to be
released or removed forthwith without cost to LESSOR. Any alterations or
additions shall become part of the leased premises and the property of LESSOR.
Any alterations completed by LESSOR or LESSEE shall be LESSOR's "building
standard" unless noted otherwise. LESSOR shall have the right at any time to
change the arrangement of parking areas stairs walkways or other common areas of
the building, PROVIDED SUCH CHANGES DO NOT MATERIALLY INTERFERE WITH LESSEE'S
INTENDED USE.
11. ASSIGNMENT OR SUBLEASING. LESSEE shall not assign this lease or
sublet or allow any other firm or individual to occupy the whole or any part of
the leased premises without LESSOR's prior written consent. * Notwithstanding
such assignment or subleasing, LESSEE shall remain liable to LESSOR for the
payment of all rent and for the full performance of the covenants and conditions
of this lease. LESSEE shall pay LESSOR promptly for legal and administrative
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expenses incurred by LESSOR in connection with any consent requested hereunder
by LESSEE. *WHICH SHALL NOT BE UNREASONABLY WITHHELD.
12. SUBORDINATION. This lease shall be subject and subordinate to any
and all mortgages and other instruments in the nature of a mortgage, now or at
any time hereafter, and LESSEE shall, when requested, promptly execute and
deliver such written instruments as shall be necessary to show the subordination
of this lease to said mortgages or other such instruments in the nature of a
mortgage.
13. LESSOR'S ACCESS. LESSOR or agents of LESSOR may at any reasonable
time enter to view the leased premises, to make repairs and alterations as
LESSOR should elect to do for the leased premises, the common areas or any other
portions of the building, to make repairs which LESSEE is required but has
failed to do and to show the leased premises to others.
14. SNOW REMOVAL. The plowing of snow from all roadways and
unobstructed parking areas shall be at the sole expense of LESSOR. The control
of snow and ice on all walkways, steps and loading areas serving the leased
premises and all other areas not readily accessible to plows shall be the sole
responsibility of LESSEE. Notwithstanding the foregoing, however, LESSEE shall
hold LESSOR and OWNER harmless from any and all claims by LESSEE's agents,
representatives, employees, callers or invitees for damage or personal injury
resulting in et way from snow or ice on any area serving the leased premises.
15. ACCESS AND PARKING. LESSEE shall have the right without
additional charge to use parking facilities provided for the leased premises in
common with others entitled to the use thereof. Said parking areas plus any
stairs, corridors, walkways, elevators or other common areas (hereinafter
collectively called the common areas) shall in all cases be considered a part of
the leased premises when they are used by LESSEE or LESSEE's employees, agents,
callers or invitees. LESSEE will not obstruct in any manner any portion of the
building or the walkways or approaches to the building, and will conform to all
rules and regulations now or hereafter made by LESSOR for parking, and for the
care, use, or alteration of the building, its facilities and approaches. LESSEE
further warrants that LESSEE will not permit any employee or visitor to violate
this or any other covenant or obligation of LESSEE. No unattended parking will
be permitted between 7:00 PM and 7:00 AM without LESSOR's prior written approval
and from December 1 through March 31 annually, such parking shall be permitted
only in those areas specifically designated for assigned overnight parking.
Unregistered or disabled vehicles, or storage trailers of any type, may not be
parked at any time. LESSOR may tow, at LESSEE's sole risk and expense, any
misparked vehicle belonging to LESSEE or LESSEE's agents, employees, invitees or
callers, at any time. LESSOR shall not be responsible for providing any security
services for the leased premises.
16. LIABILITY. LESSEE shall be solely responsible as between LESSOR
and LESSEE for deaths or personal injuries to all persons whomsoever occurring
in or on the leased premises (including any common areas that are considered
part of the leased premises hereunder) from whatever cause arising, and damage
to property to whomsoever belonging arising out of the use, control, condition
or occupation of the leased premises by LESSEE; and LESSEE agrees to indemnify
and save harmless LESSOR and OWNERS from any and all liability, including but
not limited to costs, expenses, damages, causes of action, claims, judgments and
attorney's fees caused by or in any way growing out of any matters aforesaid,
except for death, personal injuries or property damage directly resulting from
the sole negligence of LESSOR.
17. INSURANCE. LESSEE will secure and carry at its own expense a
commercial general liability policy insuring LESSEE, LESSOR and OWNER against
any claims based on bodily injury (including death) or property damage arising
out of the condition of the leased premises (including any common areas that are
considered part of the leased premises hereunder) or their use by LESSEE such
policy to insure LESSEE, LESSOR and OWNER against any claim up to One Million
(1,000,000) Dollars in the case of any one accident involving bodily injury
(including death), and up to One Million (1,000,000) Dollars against any claim
for damage to property. LESSOR and OWNER shall be included in each such policy
as additional insureds using ISO FORM CG 20 26 11 85 or some other form approved
by LESSOR. LESSEE will file with LESSOR prior to occupancy certificates and any
applicable riders or endorsements showing that such insurance is in force, and
thereafter will file renewal certificates prior to the expiration of any such
policies. All such insurance certificates shall provide that such policies shall
not be cancelled without at least ten (10) days prior written notice to each
insured. In the event LESSEE shall fail to provide or maintain such insurance at
any time during the term of this lease, then LESSOR may elect to contract for
such insurance at LESSEE's expense.
18. SIGNS. LESSOR authorizes and LESSEE at LESSEE's expense agrees to
erect promptly upon commencement of this lease, signage for the leased premises
in accordance with LESSOR's building standards for style, size, location, etc.
LESSEE shall obtain the prior written consent of LESSOR before erecting any sign
on the leased premises, which consent shall include approval as to size,
wording, design and location. LESSOR may remove and dispose of any sign not
approved, depicted or displayed in conformance with this lease.
3
<PAGE> 4
19. BROKERAGE. LESSEE warrants and represents to LESSOR that LESSEE
has dealt with no broker or third person with respect to this lease, and LESSEE
agrees to indemnify LESSOR against any brokerage claims arising by virtue of
this lease. LESSOR warrants and represents to LESSEE that LESSOR has employed no
exclusive broker or agent in connection with the letting of the leased premises.
20. DEFAULT AND ACCELERATION OF RENT. In the event that: (a) any
assignment for the benefit of the creditors, trust mortgage, receivership or
other insolvency shall be made or instituted with respect to LESSEE or LESSEE's
property; (b) LESSEE shall default in the observance or performance of any
LESSEE's covenants, agreements or obligations hereunder, other than substantial
monetary payments as provided below, and such default shall not be corrected
within ten (10) days after written notice thereof; or (c) LESSEE vacates the
leased premises, then LESSOR shall have the right thereafter while such default
continues and without demand or further notice, to re-enter and take possession
of the leased premises, to declare the term of this lease ended, and to remove
LESSEE's effects, without being guilty of any manner of trespass, and without
prejudice to any remedies which might be otherwise used for arrears of rent or
other default or breach of the lease. If LESSEE shall default in the payment of
the security deposit, rent, taxes, substantial invoice from LESSOR or LESSOR's
agent for goods and/or services or other sum herein specified, and such default
shall continue for ten (10) days after written notice thereof, and, because both
parties agree that nonpayment of said sums when due is a substantial breach of
the lease, and, because the payment of rent in monthly installments is for the
sole benefit and convenience of LESSEE, then in addition to the foregoing
remedies the entire balance of rent which is due hereunder shall become
immediately due and payable as liquidated damages. LESSOR without being under
any obligation to do so and without thereby waiving any default, may remedy same
for the account and at the expense of LESSEE. If LESSOR pays or incurs any
obligations for the payment of money in connection therewith, such sums paid or
obligations incurred plus interest and costs, shall be paid to LESSOR by LESSEE
as additional rent. Any sums received by LESSOR from or on behalf of LESSEE at
any time shall be applied first to any unamortized improvements completed for
LESSEE's occupancy, then to offset any outstanding invoice or other payment due
to LESSOR, with the balance applied to outstanding rent. LESSEE agrees to pay
reasonable attorney's fees and/or administrative costs incurred by LESSOR in
enforcing any or all obligations of LESSEE under this lease at any time. LESSEE
shall pay LESSOR interest at the rate of eighteen (18) percent per annum on any
payment from LESSEE to LESSOR which is past due.
21. NOTICE. Any notice from LESSOR to LESSEE relating to the leased
premises or to the occupancy thereof shall be deemed duly served when left at
the leased premises addressed to LESSEE, or served by constable, or sent to the
leased premises by certified mail, return receipt requested, postage prepaid,
addressed to LESSEE. Any notice from LESSEE to LESSOR relating to the leased
premises or to the occupancy thereof shall be deemed duly served when served by
constable, or delivered to LESSOR by certified mail, return receipt requested,
postage prepaid, addressed to LESSOR at 200 West Cummings Park, Woburn, MA 01801
or at LESSOR's last designated address. No oral notice or representation shall
have any force or effect. Time is of the essence in the service of any notice.
22. OCCUPANCY. In the event that LESSEE takes possession of said
leased premises prior to the start of the lease term, LESSEE will perform and
observe all of LESSEE's covenants from the date upon which LESSEE takes
possession except the obligation for the payment of extra rent for any period of
less than one month. LESSEE shall not remove LESSEE's goods or property from the
leased premises other than in the ordinary and usual course of business, without
having first paid and satisfied LESSOR for all rent which may become due during
the entire term of this lease. In the event that LESSEE continues to occupy or
control all or any part of the leased premises after the agreed termination of
this lease without the written permission of LESSOR, then LESSEE shall be liable
to LESSOR for any and all loss, damages or expenses incurred by LESSOR, and all
other terms of this lease shall continue to apply except that rent shall be due
in fully monthly installments at a rate of one hundred fifty (150) percent of
that which would otherwise be due under this lease, it being understood between
the parties that such extended occupancy is as a tenant at sufferance and is
solely for the benefit and convenience of LESSEE and as such has greater rental
value. LESSEE's control or occupancy of all or any part of the leased premises
beyond noon on the last day of any monthly rental period shall constitute
LESSEE's occupancy for an entire month and increased rent as provided in this
section shall be due and payable immediately in advance. LESSOR's acceptance of
any payments from LESSEE during such extended occupancy shall not alter LESSEE's
status as a tenant at sufferance.
23. FIRE PREVENTION. LESSEE agrees to use every reasonable precaution
against fire and agrees to provide and maintain approved, labeled fire
extinguishers, emergency lighting equipment, and exit signs and complete any
other modifications within the leased premises as required or recommended by the
Insurance Services Office (or successor organization), OSHA, the local Fire
Department, or any similar body.
24. OUTSIDE AREA. Any goods, equipment, or things of any type or
description held or stored in any common area without LESSOR's prior written
consents shall be deemed, abandoned and may be removed by LESSOR at LESSEE's
expense without notice. LESSEE shall maintain a building standard size dumpster
in a location approved by LESSOR, which dumpster shall be provided and serviced
at LESSEE's expense by whichever disposal firm may from time to time be
designated by LESSOR. Alternatively, if a shared dumpster or compactor is
provided by LESSOR, LESSEE shall pay its proportionate share of any costs
associated therewith.
4
<PAGE> 5
25. ENVIRONMENT. LESSEE will so conduct and operate the leased
premises as not to interfere in any with the use and enjoyment of other portions
of the same or neighboring buildings by others by reason of odors, smoke,
exhaust, smells, noise, pets, accumulation or garbage or trash, vermin or other
pests, or otherwise, and will at its expense employ a professional pest control
service if necessary. LESSEE agrees to maintain efficient and effective devices
for preventing damage to heating equipment from solvents, degreasers, cutting
oils, propellants, etc. which may be present at the lease premises. No hazardous
materials or wastes shall be stored, disposed of, or allowed to remain at the
leased premises at any time, and LESSEE shall be solely responsible for any and
all corrosion or other damage associated with the use, storage and/or disposal
of same by LESSEE.
26. RESPONSIBILITY. Neither, LESSOR nor OWNER shall be held liable to
anyone for loss or damage caused in any way by the use, leakage, seepage or
escape of water from any source, or for the cessation of any service rendered
customarily to said premises or buildings, or agreed to by the terms of this
lease, due to any accident, the making of repairs, alterations or improvements,
labor difficulties, weather conditions, mechanical breakdown, trouble or
scarcity in obtaining fuel, electricity, service or supplies from the sources
from which they are usually obtained for said building, or any cause beyond
LESSOR's immediate control.
27. SURRENDER. LESSEE shall at the termination of this lease remove
all of LESSEE's goods and effects from the leased premises. LESSEE shall deliver
to LESSOR the leased premises and all keys and locks thereto, all fixtures and
equipment connected therewith, and all alterations, additions and improvements
made to or upon the leased premises, whether completed by LESSEE, LESSOR or
others, including but not limited to any offices, partitions, window blinds,
floor coverings (including computer floors), plumbing and plumbing fixtures, air
conditioning equipment and ductwork of any type, exhaust fans or heaters, water
coolers, burglar alarms, telephone wiring, telephone equipment, air or gas
distribution piping, compressors, overhead cranes, hoists, trolleys or
conveyors, counters, shelving or signs attached to walls or floors, all
electrical work, including but not limited to lighting fixtures of any type,
wiring, conduit, EMT, transformers, distribution panels, bus ducts, raceways,
outlets and disconnects, and furnishings or equipment which have been bolted,
welded, nailed, screwed, glued or otherwise attached to any wall, floor,
ceiling, roof, pavement or ground, or which have been directly wired to any
portion of the electrical system or which have been plumbed to the water supply,
drainage or venting systems serving the leased premises. LESSEE shall deliver
the leased premises sanitized from any chemicals or other contaminants, and
broom clean and in the same condition as they were at the commencement of this
lease or any prior lease between the parties of the leased premises, or as they
were modified during said term with LESSOR's written consent, reasonable wear
and tear and damage by fire or other casualty only excepted. In the event of
LESSEE's failure to remove any of LESSEE's property from the leased premises
upon termination of the lease, LESSOR is hereby authorized, without liability to
LESSEE for loss or damage thereto, and at the sole risk of LESSEE, to remove and
store any such property at LESSEE'S expense, or to retain same under LESSOR's
control, or to sell at public or private sale without notice, any or all of the
property not so removed and to apply the net proceeds of such sale to the
payment of any sum due hereunder, or to destroy such abandoned property. I no
case shall the leased premises be deemed surrendered to LESSOR until the
termination date provided herein or such other date as may be specified in a
written agreement between the parties, notwithstanding the delivery of any keys
to LESSOR.
28. GENERAL. (a) The invalidity or unenforceability of any provision
of this lease shall not affect or render invalid or unenforceable any other
provision hereof (b) The obligations of this lease shall run with the land, and
this lease shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, except that LESSOR and OWNER shall
be liable only for obligations occurring while lessor, owner, or master lessee
of the premises. (c) Any action or proceeding arising out of the subject matter
of this lease shall be brought by LESSEE within one year after the cause of
action has occurred and only in a court of the Commonwealth of Massachusetts.
(d) If LESSOR is acting under or as agent for any trust or corporation, the
obligations of LESSOR shall be binding upon the trust or corporation, but not
upon any trustee, officer, director, shareholder, or beneficiary of the trust or
corporation individually. (e) If LESSOR is not the owner (OWNER) of the lease
premises, LESSOR represents that said OWNER has agreed to be bound by the terms
of this lease unless LESSEE is in default hereof. (f) This lease is made and
delivered in the Commonwealth of Massachusetts, and shall be interpreted,
construed and enforced in accordance with the laws thereof. (g) This lease was
the result of negotiations between the parties of equal bargaining strength, and
when executed by both parties shall constitute the entire agreement between the
parties, superseding all prior oral and written agreements. (h) Notwithstanding
any other statements herein, LESSOR makes no warranty, express or implied,
concerning the suitability of the leased premises for LESSOR's intended use. (i)
LESSEE agrees that if LESSOR does not deliver possession of the leased premises
as herein provided for any reason, LESSOR shall not be liable for any damages to
LESSEE for such failure, but LESSOR agrees to use reasonable efforts to deliver
possession to LESSEE at the earliest possible date. A proportionate abatement of
rent, excluding the cost of any amortized improvements to the leased premises,
for such time as LESSEE may be deprived of possession of the leased premises,
except where a delay in delivery is caused in any way by LESSEE, shall be
LESSEE's sole remedy. (j) Neither the submission of this lease form, nor the
prospective acceptance of the security deposit and/or rent shall constitute a
reservation of or option for the leased premises, or an offer to lease, it being
expressly understood and agreed that this lease shall not bind either party in
any manner whatsoever until it has been executed by both parties. (k) LESSEE
shall not be entitled to exercise any option contained herein if LESSEE is at
that time in default of any terms or conditions hereof. ((l) Except as otherwise
provided herein, LESSOR, OWNER and LESSEE shall not be liable for any special,
incidental, indirect or consequential damages, including but not limited to lost
profits or loss of
5
<PAGE> 6
business, arising out of or in any manner connected with performance or
nonperformance under this lease, even if any party has knowledge of the
possibility of such damages. (m) The headings in this lease are for convenience
only and shall not be considered part of the terms hereof. (n) No endorsement by
LESSEE on any check shall bind LESSOR in any way. (o) LESSOR and LESSEE hereby
waive any and all rights to a jury trial in any proceeding in any way arising
out of this lease.
29. [THIS PARAGRAPH SHALL NOT APPLY]
30. WAIVERS, ETC. No consent or waiver, express or implied, by
LESSOR, to or of any breach of any covenant, condition or duty of LESSEE shall
be construed as a consent or waiver to or of any other breach of the same or any
other covenant, condition or duty. If LESSEE is several persons, several
corporations or partnerships, LESSEE's obligations are joint or partnership and
also several. Unless repugnant to the context, "LESSOR" and `LESSEE" mean the
person or persons, natural or corporate, named above as LESSOR and LESSEE
respectively, and their respective heirs, executors, administrators, successors
and assigns.
31. AUTOMATIC FIVE-YEAR EXTENSIONS. This lease, including all terms,
conditions, escalations, etc. shall be automatically extended for additional
successive periods of five (5) years each unless LESSOR or LESSEE shall serve
written notice, either party to the other, of either party's desire not to so
extend the lease. The time for serving such written notice shall be not more
than twelve (12) months or less than six (6) months prior to the expiration of
the then current lease period. Time is of the essence.
32. ADDITIONAL PROVISIONS. (Continued on attached rider(s) if
necessary.)
- See Attached Rider.
IN WITNESS WHEREOF, LESSOR AND LESSEE have hereunto set their hands
and common seals and intend to be legally bound hereby this 29th day of May,
1998.
LESSOR: CUMMINGS PROPERTIES MANAGEMENT, INC. LESSEE: ANTIGENICS, L.L.C.
By: /s/ W.S. Cummings By: /s/ Garo Armen
------------------------------ ----------------------------
GARO ARMEN
6
<PAGE> 7
CUMMINGS PROPERTIES MANAGEMENT, INC.
STANDARD FORM
RIDER TO LEASE
The following additional provisions are incorporated into and made a part of the
attached lease:
A. The attached lease and the additional provisions of this Rider are
subject to LESSEE and LESSOR reaching mutual agreement on a plan for
construction and on the amount of modifications to be funded by
LESSOR and amortized and paid for by LESSEE over the term of the
lease. LESSEE shall use its best efforts to deliver to Lessor a plan
within two weeks after full execution of the lease.
B. LESSOR, at LESSOR's cost, shall construct standard office space
according to said plan before or about the time LESSEE takes
possession of the leased premises. Said space shall be air
conditioned, carpeted and completed with painted drywall partitions,
acoustical tile ceilings, recessed lighting, chrome pendent fire
protection sprinklers, and 110V convenience electrical wall outlets
at regular intervals.
C. LESSOR, if requested to do so by LESSEE and at LESSEE's sole expense,
shall make modifications necessitated by LESSEE's use of the leased
premises according to said plan. These alterations shall be
considered "nonbuilding standard" for maintenance purposes pursuant
to Section 9 of the lease. At LESSEE's request, the charges for
certain modifications agreed to in advance and completed by LESSOR or
Lessor's agents may be incorporated into the lease by separate
amendment to be attached hereto. The cost shall be amortized into the
rent, based on a level payment structure, over a 60 month period
using a 10.5% annual interest rate, and shall be paid monthly by
LESSEE together with the monthly rental payment.
D If LESSOR should make any modifications and amortize the cost thereof
under the preceding paragraph, then LESSEE shall provide LESSOR with
an additional security deposit equal to two (2) payments of the
monthly amortized cost.
E. * The leased premises consists of approximately 20,797 square feet of
ground level space and approximately 9,428 square feet of mezzanine
level office space.
F. * With reference to Section 25 above, no hazardous materials or
hazardous wastes shall be used, processed, stored, or disposed of in
any manner or form within the leased premises or any extension
thereof in violation of any applicable local, state, or federal law,
rule or regulation. LESSEE shall be solely responsible for and shall
indemnify and hold LESSOR harmless from any and all liability, damage
or personal injury associated with any use, processing, storage, or
disposal of such materials.
G. * As of the termination date of this lease, LESSEE, at LESSEE's sole
expense, shall return the leased premises free from any and all
hazardous materials, hazardous wastes, biological, radiological,
chemical or other contamination or any other materials that are in
any way harmful to anyone, and shall be solely responsible for
remedying any and all damage, removing any and all contamination, and
properly disposing of any hazardous materials, hazardous wastes and
contamination. In addition, LESSEE, at LESSEE's sole expense, shall
engage an independent and accredited industrial hygiene consultant to
certify that as of the termination date of this lease, the entire
leased premises and any extension thereof utilized in any way by
LESSEE is free from any biological, radiological, chemical or other
contamination and is in no way damaged as a result of LESSEE's use of
the premises. Said certification shall also specify that the premises
are then fully suitable for unrestricted, unconditional future use
and occupation by others. Time is of the essence.
H. * The maximum cumulative Cost of Living increase during the initial
term of the lease (only) shall not exceed an average of 7% per
calendar year.
I. * LESSEE shall have the right to assign this lease or sublet the
leased premises to an affiliated corporation, namely a corporation in
which LESSEE owns at least a 50 percent interest, a corporation which
owns at least a 50 percent interest in LESSEE, a corporation which is
under common control with LESSEE, a corporation with which LESSEE
merges, or a corporation which is formed as a result of a merger or
consolidation involving LESSEE, without further consent from LESSOR,
provided LESSEE serves LESSOR with prior written notice to that
effect. The provisions of Section 11 shall govern said assignment in
all other respects.
J. * LESSEE acknowledges and agrees that the leased premises may not be
substantially completed as of the commencement date of the lease.
Notwithstanding this delay in delivery of possession, LESSEE's
obligation to pay monthly rent shall commence as of the commencement
date of the lease without any abatement.
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<PAGE> 8
K. * In the event that LESSOR is unable to obtain a building permit for
the modifications at the leased premises for the purposes set forth
in Section 3 above, LESSOR shall have the right, at its sole expense,
to appeal any such decision. If LESSOR declines to prosecute said
appeal or if any such decision is upheld after all applicable appeals
have been exhausted, then LESSEE may cancel this lease by serving
LESSOR with 30 days prior written notice to that effect, and neither
party shall have any further obligation to the other. Cancellation of
the lease shall be LESSEE's exclusive remedy for any failure by
LESSOR to obtain a building permit or otherwise in connection with
this paragraph.
L. LESSOR will use reasonable efforts to substantially complete, except
for punch list items, the modifications to the leased premises
described in Paragraph B above eight (8) weeks following full
execution of this lease, payment in full of the first month's rent
and security deposits under Section 2 and Paragraph D above, approval
of all final plans and specifications and, if applicable, full
execution of the lease amendment referred to in Paragraph C above.
LESSOR: CUMMINGS PROPERTIES MANAGEMENT, INC. LESSEE: ANTIGENICS, L.L.C.
By: /s/ W.S. Cummings By: /s/ Garo Armen
------------------------------------- ---------------------------
Garo Armen
Date: 5/29/98
-----------------------------------
8
<PAGE> 9
CUMMINGS PROPERTY MANAGEMENT, INC.
STANDARD FORM
AMENDMENT TO LEASE #1
In connection with a lease currently in effect between the parties at
34-A Commerce Way, Woburn, Massachusetts, executed on May 29, 1998 and
terminating August 14, 2003 and in consideration of the mutual benefits to be
derived herefrom, Cummings Properties Management, Inc., LESSOR, and Antigenics,
L.L.C. LESSEE, hereby agree to amend said lease as follows:
1. Notwithstanding the provisions of Section 27 of the lease, LESSOR hereby
authorizes LESSEE to remove (1) certain fixtures, equipment and other
personal property supplied and installed by LESSEE, including without
limitation all those items set forth in Exhibit A attached hereto, and
(2) such additional fixtures, equipment and other personal property that
are hereafter supplied and installed by LESSEE, if LESSEE has
satisfactorily complied with all other conditions of this lease and
completes said removal on a timely basis prior to the end of the lease
term. In the event LESSEE removes any key components of a building
system as provided in this amendment, LESSEE shall remove the entire
system including without limitation associated piping, conduit,
ductwork, and wiring, except as otherwise excluded in Section 2 below.
Time is of the essence.
2. Notwithstanding the preceding paragraph and Exhibit A, LESSEE shall
specifically not disturb or remove any of the following items: all
components of the electrical and natural gas systems, except LESSEE may
remove one 500 kW standby generator and replace it with a fully
operational 100 kW standby generator; all underground, sanitary and
potable water plumbing and anything else below the surface of the
concrete floor or the exterior ground; all bathroom fixtures; the 4"
water meter, all backflow preventers; and all fire suppression,
detection or annunciation system(s), except LESSEE may remove fire
extinguishers supplied and installed by LESSEE.
3. In consideration of LESSOR's consent to removal of the foregoing items,
the parties agree that the rent shall be increased as provided for below
during the initial term of the lease and any extension terms.
4. The parties acknowledge and agree that a rent credit was incorporated
into the annual base rent in Section 1 of the lease in consideration of
LESSOR not being required to complete, at a cost incorporated into the
base rent, certain building standard modifications that LESSOR would
typically do. LESSEE acknowledges and agrees that this rent credit was a
just and sufficient amount, and LESSEE waives any and all claims that it
may now have or may ever have arising in any way out of the amount of
said credit.
All other terms, conditions and covenants of the present lease shall
continue to apply, except that adjusted base rent shall be increased $30,000.00
annually, from a total of $412,210.00 to a new annual total of $442,210.00 or
$36,850.83 per month. Annual base rent for purposes of computing any future
escalations thereon shall be $442,210.00. This amendment
9
<PAGE> 10
shall be effective August 15, 1998 and shall continue through the balance of the
lease and any extensions thereof unless further modified by with amendment(s).
In Witness Whereof, LESSOR and LESSEE have hereunto set their hands and common
seals this 10th day of December, 1998.
LESSOR: CUMMINGS PROPERTIES LESSEE: ANTIGENICS, L.L.C.
MANAGEMENT, INC.
By: /s/ Douglas Stephens By: /s/ Garo Armen
-------------------------------- -------------------------------
Executive Vice President Garo Armen
10
<PAGE> 11
EXHIBIT A
ANTIGENICS REMOVABLE EQUIPMENT LIST
STRUCTURAL STEEL (Structural steel is defined as the structural steel holding
and supporting the non-building standard air handling equipment. It does not
include the steel that is part of the structural integrity of the building.)
DOORS AND HARDWARE
Security Hardware
Electromagnetic Locks
Quarantine Doors (qty =4)
ACOUSTICAL CALLINGS
Clean Room
Washable Metal Face
ACCESSORIES
Pass-thrus
Fire Extinguisher Cabinets
Bumper & Corner Guards
Window Treatments
Lockers
Darkroom Door
CASEWORK
Cabinets, counters, tables, fume hoods, plumbing fixtures, except as
otherwise excluded in Amendment to Lease #1, shelving, eyewashes,
BSC*
COLD ROOMS (incl. Evap and condensers)
PLUMBING SYSTEM
Major Equipment
S.S. Sinks in Gown Degown
11
<PAGE> 12
Potable Water Heater (qty = 1 of 2 only)
Gas-Fired nonpotable Water Heater (qty = 1)
pH Neutralization System(above ground components only)
Eye & Shower Washes
Mixing Valves for Tempered water
Quenches
Non Potable System**
Tempered Water System**
Acid Waste System** (above ground components only)
PROCESS SYSTEM**
Major Equipment
See attached equipment list
See attached instrument list
RODI Water System**
WFI System**
Clean Steam System**
Compressed Air System**
Chilled Water (to Plate Chillers) System**
Chilled water (to other than Plate Chiller) System**
Vacuum System**
Plant Steam System**
Medical Gas (N2, 02, C02) System**
Instrumental & Controls System**
HVAC SYSTEM
Major Equipment
12
<PAGE> 13
Air Handling Units (qty=3)
Exhaust and Supply Fans (qty =28)
Hot Water Rehost Calls (qty = 43)
Expansion Tank
Electric Humidifiers (qty =6)
Atomizing Humidifiers (qty = 2)
Hot Water Boilers (qty =2)
Hot Water Pumps (qty = 2)
Electric Unit Heaters (qty =2)
Hot Water Unit Heaters(qty = 8)
See attached instrument list
HEPA Filters
Dampers (fire, smoke, control)
Registers, Grills, & Diffusers
Air Compressor for Atomizing Humidifier
DDC Control Panel for BMS
Air Distribution System**
Hot Water System**
Building Management System**
MISCELLANEOUS SYSTEMS
Telephone/ Data System**
Environmental Data Acquilation system**
Security System**
* All equipment listed in the attached Equipment List and Instrument
list shall be considered appended to this list.
13
<PAGE> 14
** All piping, ductwork, and miscellaneous components installed in the
system which are not specifically identified, shall be considered part of the
system.
14
<PAGE> 15
Antigenics LLC
34 Commerce Way
Woburn, MA
Lease Rider Schedule
October 1998
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Attached to
Equipment Quantity Manufacturer Model Building
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fume Hood - 6' 1 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Refrigerator/Freezer 1 VWR
- ------------------------------------------------------------------------------------------------------------------------------------
BSC 4' 1 Nuaire NU 425-600 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
BSC 4' 1 Baker SG-400 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Cyro Safe 1 Cyro Safe SBA2
- ------------------------------------------------------------------------------------------------------------------------------------
Table Top Centrifuge 1 Sorvall RT7
- ------------------------------------------------------------------------------------------------------------------------------------
10 Liter Bio-Reactor 1 B. Braun Biostat B Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Refrigerator/Freezer 1 VWR R415G
- ------------------------------------------------------------------------------------------------------------------------------------
3 Stacked Incubator (115v) 1 Belco 7728-09005 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Shelves 4 Belco 7728-40035 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
9 Deck Roller Apparatus 1 Belco 7630-06509 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Refrigerated Incubator -ldoor-3 1 Belco 7728-01005 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Microscope 1 l Olympus CK2
- ------------------------------------------------------------------------------------------------------------------------------------
1 Inverted Microscope 1 Olympus CH3ORF 100
- ------------------------------------------------------------------------------------------------------------------------------------
Water Bath 1 Precision 180
- ------------------------------------------------------------------------------------------------------------------------------------
Centrifuge 1 Sorvall RC5C Plus
- ------------------------------------------------------------------------------------------------------------------------------------
B5C-6' 1 Nuaire NU 425-600 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
BSC-4' 2 Baker SG-400 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Table Top Centrifuge 1 Beckman GPR 349702
- ------------------------------------------------------------------------------------------------------------------------------------
Centrifuge 1 Beckman Avanti J-20
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE> 16
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Attached to
Equipment Quantity Manufacturer Model Building
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Freezer-80 1 Harris EL-21V-85
- ------------------------------------------------------------------------------------------------------------------------------------
Refrigerator/Freezer 1 VWR R415G
- ------------------------------------------------------------------------------------------------------------------------------------
Microscope Inverted 1 Nikon TMS TMS 212168
- ------------------------------------------------------------------------------------------------------------------------------------
Microscope Inverted 1 Nikon TMS TMS 212168
- ------------------------------------------------------------------------------------------------------------------------------------
Microscope 1 Olympus CH3ORF100
- ------------------------------------------------------------------------------------------------------------------------------------
Water Bath - Recirculating 1 VWR 1112
- ------------------------------------------------------------------------------------------------------------------------------------
Water Bath 1 Precision 180
- ------------------------------------------------------------------------------------------------------------------------------------
Stacked Incubators - 2' - C02 1 Forma Scient. 3250 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Stacked Incubators 2' C02 1 Nuaire NU-2700 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Stacked Incubators - 2' - C02 1 Forma Scient. 3250 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
9 Deck Roller Apparatus 1 Belco 7630-06509 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Refrigerated Incubator -1door-3' 1 Belco 7728-01005 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
BSC -6' 1 Baker SG-600 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Fume Hood - 6' 1 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Centrifuge 1 Beckman Avanti J-20
- ------------------------------------------------------------------------------------------------------------------------------------
Table Top Centrifuge 1 Beckman Alegra #6 366802
- ------------------------------------------------------------------------------------------------------------------------------------
Refrigerator 4 degree 1 VWR R421G
- ------------------------------------------------------------------------------------------------------------------------------------
Freezer-80 1 Harris EL-21V-85
- ------------------------------------------------------------------------------------------------------------------------------------
Refrigerator/Freezer 1 VWR R415G
- ------------------------------------------------------------------------------------------------------------------------------------
Cold Box 1 Lab. Research Products, CHR-47
- ------------------------------------------------------------------------------------------------------------------------------------
Elect. Power Supply 2 VWR 135
- ------------------------------------------------------------------------------------------------------------------------------------
Elect. Workstations 2 BioRad Mini Transbiot I Mini
Pro 2
- ------------------------------------------------------------------------------------------------------------------------------------
UV Spectrophotometer 1 Beckman DU 640
- ------------------------------------------------------------------------------------------------------------------------------------
Milliflex- 100 Pump 2 Watson Mallow 302 S/RL
- ------------------------------------------------------------------------------------------------------------------------------------
Bio Cad 1 PE Biosystems 700 E
- ------------------------------------------------------------------------------------------------------------------------------------
Analytical HPLC 1 ? ?
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE> 17
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Attached to
Equipment Quantity Manufacturer Model Building
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mass Spec 1 PE Biosystems Yes
- ------------------------------------------------------------------------------------------------------------------------------------
BSC - 4' 1 Baker SG-400 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Animal Racks (VENTILATED) 4 Lab Products 59005 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Animal Racks (VENTILATED) 3 Lab Products 59005 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Polycarb Hi Temp Rat Cages 200 @ 10/lot Allentown PC1O198HT Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Rat Wire Lids 200 @ 10/lot Allentown WRL 1O19RMB Yes
- ------------------------------------------------------------------------------------------------------------------------------------
3 x 5 Hanging Card Holders 500 Allentown HH35MB Yes
- ------------------------------------------------------------------------------------------------------------------------------------
BSC- 4' 1 Baker SG-400 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Animal Racks (VENTILATED) 2 Lab Products 59006 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Animal Racks (VENTILATED) 2 Lab Products 59006 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Polycarb Hi/Temp Mouse 200 @ 10/lot Allentown PC7115HT
- ------------------------------------------------------------------------------------------------------------------------------------
Mouse Wire Bar Lid 200 @ 10/lot Allentown WBLL71155MD
- ------------------------------------------------------------------------------------------------------------------------------------
BSC-4 1 Baker SG-400 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Refrigerator/Freezer 1 Frigidare FPES19TP
- ------------------------------------------------------------------------------------------------------------------------------------
Table Top Centrifuge 1 Beckman GPR 349702
- ------------------------------------------------------------------------------------------------------------------------------------
Microscope 1 Olympus CH3O
- ------------------------------------------------------------------------------------------------------------------------------------
Drug Cabinet 1 Standard Standard Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Freezer - 20 1 VWR U202OG
- ------------------------------------------------------------------------------------------------------------------------------------
Animal Racks (NV) (MOUSE) 2 Allentown IPC7115URT30 (98 Mice Yes
each)
- ------------------------------------------------------------------------------------------------------------------------------------
Animal Racks (nv) (G-Pig)* 2 Allentown IPC1019SURT30 (30 Yes
G-pig each)
- ------------------------------------------------------------------------------------------------------------------------------------
Animal Racks (nv) (G-pig)* 8 Allentown IPCIO198URT3O (30 Yes
G-pig each)
- ------------------------------------------------------------------------------------------------------------------------------------
Change-over cages 100 Allentown PC 1098 RTG (high Yes
temp)
- ------------------------------------------------------------------------------------------------------------------------------------
Wire Racks 11 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Freezer-80 3 Harris EL-21V-85 Ultra Low
- ------------------------------------------------------------------------------------------------------------------------------------
Freezer-80 3 Harris EL-21V-85 Ultra Low
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE> 18
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Attached to
Equipment Quantity Manufacturer Model Building
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Freezer-80 3 Harris EL-21V-85 Ultra Low
- ------------------------------------------------------------------------------------------------------------------------------------
____ Room Box/Freezer 1
- ------------------------------------------------------------------------------------------------------------------------------------
Wire Racks 4
- ------------------------------------------------------------------------------------------------------------------------------------
Cold Room Box 1
- ------------------------------------------------------------------------------------------------------------------------------------
Wire Racks 4
- ------------------------------------------------------------------------------------------------------------------------------------
Irradiator 1 JH Shepard 143-68 S# 2065 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Autoclave GMP 1 Getinge Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Glasswasher 2 Lancer Yes
- ------------------------------------------------------------------------------------------------------------------------------------
BSC -6' 2 Baker SG-400 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Fume Hood - 6' 1 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Table Top Centrifuge 1 Beckman BK362114
- ------------------------------------------------------------------------------------------------------------------------------------
Centrifuge 1 Sorvall RC5C Plus
- ------------------------------------------------------------------------------------------------------------------------------------
Ultra Centrifuge 1 Sorvall DISC 90
- ------------------------------------------------------------------------------------------------------------------------------------
Fac Scan Machine 1 Becton Dickinson Fac Scan
- ------------------------------------------------------------------------------------------------------------------------------------
Cold Box 1 Lab Research Products, CHR 147
Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
HPLC 1 ?
- ------------------------------------------------------------------------------------------------------------------------------------
Refrigerator/Freezer 1 Whirlpool E+20+K
- ------------------------------------------------------------------------------------------------------------------------------------
Freezer-80 1 Harris EL-21V-85
- ------------------------------------------------------------------------------------------------------------------------------------
Freezer-20 1 Gibson
- ------------------------------------------------------------------------------------------------------------------------------------
Refrigerator 4 degree 1 VWR R421 G
- ------------------------------------------------------------------------------------------------------------------------------------
Stacked Incubator 1 Forma Scient. 3250
- ------------------------------------------------------------------------------------------------------------------------------------
Water Bath 1 Precision 180
- ------------------------------------------------------------------------------------------------------------------------------------
Shaker 1 New Brunswick Innova 4000
- ------------------------------------------------------------------------------------------------------------------------------------
Elect. Power Supply 1 Pharmacia ECPS-3000/150
- ------------------------------------------------------------------------------------------------------------------------------------
Elect. Workstations 1 BioRaD N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Trilux Benchtop Radioactivity 1 EG & G Wallac 1450 MicroBeta Trilux
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
18
<PAGE> 19
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Attached to
Equipment Quantity Manufacturer Model Building
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Elisa Plate Washer 1 Biorad ?
- ------------------------------------------------------------------------------------------------------------------------------------
Elisa Plate Reader 1 Biorad Benchmark
- ------------------------------------------------------------------------------------------------------------------------------------
Tabletop Centrifuge (Refrigerated) 1 Savant ?
- ------------------------------------------------------------------------------------------------------------------------------------
Microcentrifuge 1 Eppendorf ?
- ------------------------------------------------------------------------------------------------------------------------------------
Computer for Trilux 1
- ------------------------------------------------------------------------------------------------------------------------------------
Microscope 1 Zeiss 40967 9799521531
- ------------------------------------------------------------------------------------------------------------------------------------
BSC -6' 2 Nuaire Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Fume Hood - 4' 1 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Centrifuge 1 Sorvall RC5C Plus
- ------------------------------------------------------------------------------------------------------------------------------------
Centrifuge 1 Beckman Avanti J-20
- ------------------------------------------------------------------------------------------------------------------------------------
Ultra Centrifuge 1 Sorvall Disc 90
- ------------------------------------------------------------------------------------------------------------------------------------
Ultra Centrifuge 1 Beckman LE 80K
- ------------------------------------------------------------------------------------------------------------------------------------
Cold Box 1 Lab. Research Inc. CHR-47
- ------------------------------------------------------------------------------------------------------------------------------------
Freezer -80 1 Harris EL-21V-85
- ------------------------------------------------------------------------------------------------------------------------------------
Refrigerator/Freezer 1 Magic Chef RB-212P
- ------------------------------------------------------------------------------------------------------------------------------------
Microscopes 1 Meiji
- ------------------------------------------------------------------------------------------------------------------------------------
Microscopes 1 Olympus
- ------------------------------------------------------------------------------------------------------------------------------------
UV Spectrophotometer 1 1 Beckman DU 640
- ------------------------------------------------------------------------------------------------------------------------------------
Milliflex - 100 Pump 2 Watson Marlow 101U/R
- ------------------------------------------------------------------------------------------------------------------------------------
Milliflex - 100 Pump 1 Master Flex 7523-20
- ------------------------------------------------------------------------------------------------------------------------------------
Milliflex - 100 Pump 1 Master Flex 7523-20
- ------------------------------------------------------------------------------------------------------------------------------------
HPLC 1 BIOSEPRA 700504 PROSYS
- ------------------------------------------------------------------------------------------------------------------------------------
Cold Plate for BSC 2 Polar Tap, Inc. PT-MED PROTOTYPE
- ------------------------------------------------------------------------------------------------------------------------------------
Elect. Power Supply 4 BioRad 200
- ------------------------------------------------------------------------------------------------------------------------------------
Elect. Workstations 4 BioRad Mini Transblott Mini
Pro 2
- ------------------------------------------------------------------------------------------------------------------------------------
Fluorescent UV Plate Reader 1 ? ?
- ------------------------------------------------------------------------------------------------------------------------------------
BSC - 6' 1 Nuaire Yes
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE> 20
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Attached to
Equipment Quantity Manufacturer Model Building
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pass Thru Autoclave nGMP 1 Consolidated SR-24EMCB Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Autoclave GMP - 1 door 1 Getinge GE6915AR-1 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Glasswasher 1 Lancer 1400SS PRO Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Depyrogenation Oven 1 Gruenberg L34HW2 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Canopy Hood with Curtain 1 ? ? Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Top Loading Balance 1 VWR PB302
- ------------------------------------------------------------------------------------------------------------------------------------
BSC - 4' 1 Baker SG-400 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Ultra Centrifuge 1 Beckman LE-80K
- ------------------------------------------------------------------------------------------------------------------------------------
10 Liter Bio-Reactor 1 B. Braun Biostat B
- ------------------------------------------------------------------------------------------------------------------------------------
50 Liter Bio-Reactor 1 B. Braun Biostat D Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Inverted Microscopes 1 Olympus CK2
- ------------------------------------------------------------------------------------------------------------------------------------
Refrigerator/Freezer 1 VWR R415G
- ------------------------------------------------------------------------------------------------------------------------------------
Cyro Safe 1 Cyro Safe SBA2
- ------------------------------------------------------------------------------------------------------------------------------------
9 Deck Roller Apparatus 1 Belco 7630-06509
- ------------------------------------------------------------------------------------------------------------------------------------
Refrigerated Incubator -ldoor-3' 1 Belco 7728-01005
- ------------------------------------------------------------------------------------------------------------------------------------
Water Bath 1 Precision 180
- ------------------------------------------------------------------------------------------------------------------------------------
Sonicator 1 ? ?
- ------------------------------------------------------------------------------------------------------------------------------------
Table Top Centrifuge 1 Beckman ?
- ------------------------------------------------------------------------------------------------------------------------------------
10 Liter Bioreactor Vessel & Probes 1 Braun ? Yes
- ------------------------------------------------------------------------------------------------------------------------------------
BSC - 4' (EXHAUSTED) 1 Baker SG-400 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Fume Hood - 4' 1 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Refrig/Freezer 1 VWR 415G Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Lucite Box Hoods 3 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Halogen Lights 3 VWR Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Bottle Washer 1 Hoplab 1021 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Rack Washer 1 Basil RW4600 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Cage Wash Racks 1 Allentown CWRO8 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
20
<PAGE> 21
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Attached to
Equipment Quantity Manufacturer Model Building
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Autoclave nGMP 1 Consolidated SR-24 DMCV Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Autologous Mouse Racks 2 Allentown IPC7115URT98 (98 Mice Yes
each)
- ------------------------------------------------------------------------------------------------------------------------------------
Toxicology G-pig Racks 3 Allentown IPCIO198URT30 (30 Yes
G-pig each)
- ------------------------------------------------------------------------------------------------------------------------------------
ID Mouse 1 Lab Products 59006 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Wire Racks 4 Metro Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Animal Racks (nv)(MOUSE)* 2 Allentown IPC7115URT98 (98 Mice Yes
each)
- ------------------------------------------------------------------------------------------------------------------------------------
Animal Racks (nv) (MOUSE)* 3 Allentown IPC7115URT98 (98 Mice Yes
each)
- ------------------------------------------------------------------------------------------------------------------------------------
Change over Cages 180 @ 30/Lot Allentown PC7115RTG Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Change over Cages 220 @ 30/Lot Allentown PC7115RTG Yes
- ------------------------------------------------------------------------------------------------------------------------------------
BSC-6 2 Baker SG-400 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
BSC -6 2 Baker SG-400 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Fume Hood - 6'* 1 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Refrigerator 4 degree 1 VWR R421G
- ------------------------------------------------------------------------------------------------------------------------------------
Freezer-80 1 Harris EL21V-85
- ------------------------------------------------------------------------------------------------------------------------------------
Freezer-20 1 VWR U2O2OG
- ------------------------------------------------------------------------------------------------------------------------------------
Elect. Power Supply 2 BioRad ?
- ------------------------------------------------------------------------------------------------------------------------------------
Elect. Workstations 2 BioRad ?
- ------------------------------------------------------------------------------------------------------------------------------------
Digital Camera 1 ? ?
- ------------------------------------------------------------------------------------------------------------------------------------
UV Spectrophotometer 1 Beckman DU640
- ------------------------------------------------------------------------------------------------------------------------------------
Total Organic Computer 1 ? ?
- ------------------------------------------------------------------------------------------------------------------------------------
Milliflex - 100 Pump 1 ? ?
- ------------------------------------------------------------------------------------------------------------------------------------
LAL 5000 & Computer 1 ? ?
- ------------------------------------------------------------------------------------------------------------------------------------
Stacked Incubactor 2 ? ?
- ------------------------------------------------------------------------------------------------------------------------------------
Stacked Incubactor 2 ? ?
- ------------------------------------------------------------------------------------------------------------------------------------
SMA Viable Particle Counter tpump 1 VAI SMA-CC-2
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
21
<PAGE> 22
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Attached to
Equipment Quantity Manufacturer Model Building
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SMA Viable Particle Counter 1 VAI SMA-CC-1
- ------------------------------------------------------------------------------------------------------------------------------------
Extra SMA counters 3 VAI ?
- ------------------------------------------------------------------------------------------------------------------------------------
Viable Particle Counter 1 ? ?
- ------------------------------------------------------------------------------------------------------------------------------------
Particle Counter 1 Met One ?
- ------------------------------------------------------------------------------------------------------------------------------------
Sensor 2 Pump (Bioburden) 1 ? ?
- ------------------------------------------------------------------------------------------------------------------------------------
HPLC 1 ? ?
- ------------------------------------------------------------------------------------------------------------------------------------
Microscope 1 ? ?
- ------------------------------------------------------------------------------------------------------------------------------------
IR 1 ? ?
- ------------------------------------------------------------------------------------------------------------------------------------
GC 1 ? ?
- ------------------------------------------------------------------------------------------------------------------------------------
BSC -6' 10 Baker SG-400 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
BSC -4' 2 Baker SG-400 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Centrifuge 5 Beckman Avanti J-20
- ------------------------------------------------------------------------------------------------------------------------------------
Ultra Centrifuge 5 Beckman LE-80K
- ------------------------------------------------------------------------------------------------------------------------------------
Microscopes 10 Olympus CH30
- ------------------------------------------------------------------------------------------------------------------------------------
Freezer-80 1 Harris EL-21V-85
- ------------------------------------------------------------------------------------------------------------------------------------
Freezer -80 2 Harris EL-21V-85
- ------------------------------------------------------------------------------------------------------------------------------------
Refrigerator/Freezer 3 VWR R415G
- ------------------------------------------------------------------------------------------------------------------------------------
Cold Plate 10 Polar Tap Inc. PT-MED PROTOTYPE
- ------------------------------------------------------------------------------------------------------------------------------------
Blenders 10 ? ?
- ------------------------------------------------------------------------------------------------------------------------------------
Homogenizers 8 ? ?
- ------------------------------------------------------------------------------------------------------------------------------------
Homogenizers 2 ? ?
- ------------------------------------------------------------------------------------------------------------------------------------
SMA Viable Particle Counter 1 pump.
- ------------------------------------------------------------------------------------------------------------------------------------
2 counters 1 VAI SMA-CC-2
- ------------------------------------------------------------------------------------------------------------------------------------
Extra SMA counters 2 VAI ?
- ------------------------------------------------------------------------------------------------------------------------------------
Electrophoresis Work Station 10 ? ?
- ------------------------------------------------------------------------------------------------------------------------------------
Electrophoresis Power Supply 5 Labcono (VWR) 27366-000
- ------------------------------------------------------------------------------------------------------------------------------------
Shaker Tables 4 VWR ?
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE> 23
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Attached to
Equipment Quantity Manufacturer Model Building
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DU Spectrometer 2 Beckman DU
- ------------------------------------------------------------------------------------------------------------------------------------
DU Spectrometer 1 Beckman DU
- ------------------------------------------------------------------------------------------------------------------------------------
Top Loading Balance 10 VWR 11302-062
- ------------------------------------------------------------------------------------------------------------------------------------
pH Meters 4 VWR 34 103-220
- ------------------------------------------------------------------------------------------------------------------------------------
Stir Plates 10 VWR 33020-230
- ------------------------------------------------------------------------------------------------------------------------------------
Pass Thru Autoclave GMP 1 Getinge GE6915AR-2 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Depyrogenation Ovens 2 Gruenberg L34HV72 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Refrigerator/Freezer 1 VWR R415G
- ------------------------------------------------------------------------------------------------------------------------------------
Laminar Flow Hood 4' 1 ? ? Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Laminar Flow Hood 6' 1 Baker EG6320 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Cold Box 5' 1 ? ?
- ------------------------------------------------------------------------------------------------------------------------------------
Biosafety Cabinet 6 4 Baker SG 400 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Biosafety Cabinet 4 4 Baker SG-400 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Centrifuge 1 Beckman Avanti J-20
- ------------------------------------------------------------------------------------------------------------------------------------
Canopy Hood with Curtain 1 ? ? Yes
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Note: Attached to Building as defined by the Cummings/Antigenics lease for
Commerce way dated August 15, 1998 section 27.
23
<PAGE> 1
EXHIBIT 10.6
LICENSE AGREEMENT
-----------------
THIS LICENSE AGREEMENT ("License") is made on this 12th day of November,
1999, by and between GHA MANAGEMENT CORPORATION, a New York corporation
(hereinafter called "Licensor"), and ANTIGENICS INC., a Delaware corporation and
its affiliates, including but not limited to ANTIGENICS, LLC (hereinafter
collectively referred to as "Licensee").
Reference is made to a Lease dated December 6, 1995, between Licensor, as
Tenant, and Rockefeller Center Properties, as Landlord, as amended pursuant to
that certain First Amendment to Lease dated October 23, 1996 by and between RCPI
Trust as successor to Rockefeller Center Properties (hereinafter called
"Landlord") for space on the 9th floor and 21st floor of the building
(hereinafter "Building") known as 630 Fifth Avenue (hereinafter "Premises"), and
comprising a part of Rockefeller Center, in the Borough of Manhattan, New York,
N.Y., as more particularly described in the Lease (the Lease and the First
Amendment thereto are hereinafter collectively referred to as the "Lease").
WHEREAS, the Licensor and Licensee have agreed that Licensor will license
to Licensee the Premises consisting of approximately ninety-six percent (96%) of
the rentable square footage described in the Lease ("Licensed Premises") and
more particularly described in EXHIBIT A attached hereto and made a part hereof;
and
WHEREAS, the Lease provides that Licensor may enter into license agreements
with Licensee, without Landlord's consent, pursuant to which Licensee may occupy
the Licensed Premises for general office use.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and for the mutual covenants
contained herein, the parties agree as follows.
1. LICENSE; COMMENCEMENT DATE. Licensor licenses to Licensee, and
Licensee licenses from Licensor, the Licensed Premises, for the term commencing
at noon on November 12, 1999 ("Commencement Date").
2. EXPIRATION DATE. This License shall expire on the date specified as
the expiration date by the Lease.
3. CONDITION OF THE SUBLEASED PREMISES. The Licensed Premises are
licensed to Licensee in their condition on the date hereof and Licensor has made
no representations, warranties or promises with respect to the Licensed Premises
or the suitability thereof for the uses contemplated by this License. Licensee
agrees to accept possession of the Licensed Premises on the Commencement Date
"as is," in the same condition as it is on the date hereof.
<PAGE> 2
4. PAYMENT FOR LICENSE. Licensee shall pay Licensor ninety-six percent
(96%) of the total rent payable under the Lease ("License Payment"). The License
Payment shall be drawn on a U.S. bank, payable in advance in equal monthly
installments on the Commencement Date and thereafter on the first day of each
calendar month in advance. The License Payment shall be prorated for any partial
month at the beginning of the License Term. The License Payment shall be payable
without demand, notice, set-off, or counterclaim at Licensor's address set forth
above or at such other places as may be set forth in notices, from time to time,
from Licensor to Licensee.
5. USE. The Licensee shall use the Licensed Premises only for the uses
permitted by the Lease.
6. SUBORDINATE TO LEASE. This License and all of its terms, covenants,
representations, warranties, agreements and conditions are in all respects
subject and subordinate to the Lease, which Lease has been submitted to and
examined by Licensee.
7. LICENSEE OBLIGATIONS UNDER LEASE. For so long as the Lease remains in
full force and effect, Licensee agrees to perform, fulfill, and observe all of
the covenants, agreements, obligations, conditions, representations, warranties,
terms and provisions imposed upon Licensor as Tenant of the Licensed Premises
under the Lease except for the amount of the License Payment which shall be
governed by this License.
8. TERMINATION. This License shall terminate upon the termination of the
Lease for any reason whatsoever, without any liability therefor on the part of
Licensor to Licensee with the same force and effect as if the date of such
termination had been provided expressly in this License as the day of the
expiration hereof. In the event of such termination or expiration of this
License, Licensee shall remove any and all personal property contained in the
Licensed Premises and surrender possession of the Licensed Premises in the same
condition as the condition on the Commencement Date on or before the Expiration
Date.
9. BROKERAGE REPRESENTATIONS. Licensor represents and warrants that it
has not dealt with any broker in connection with this License and will indemnify
and hold harmless Licensee from and against any loss or expense suffered by
Licensee as a result of such dealings with any broker. Licensee represents and
warrants that it has not dealt with any broker in connection with this License
and will indemnify and hold harmless each of Licensor from and against any loss
and expenses suffered by either of them as a result of such dealings with any
broker.
10. NOTICES. Any notice required hereunder shall be deemed to have been
given if delivered Certified Mail, Return Receipt Requested, or by overnight
courier such as Federal Express, to:
If to Landlord: RCPI Trust
c/o Tishman Speyer Properties, L.P.
45 Rockefeller Plaza
New York, New York 10111
2
<PAGE> 3
If to Licensor: GHA Management Corporation
630 Fifth Avenue
New York, New York 10111
Attention: Garo Armen
With a copy to: Palmer & Dodge LLP
One Beacon Street
Boston, Massachusetts 02108
Attention: Michael Lytton
If to Licensee: Antigenics Inc.
630 Fifth Avenue
New York, NY 10111
Attention: Garo Armen
Any party may change its address for notice by notifying the other
parties as aforesaid.
11. ENTIRE AGREEMENT. All prior understandings and agreements between the
parties are merged within this License, which alone fully and completely sets
forth the understanding of the parties, and this License may not be changed or
terminated orally or in any manner other than by an agreement in writing and
signed by the party against whom enforcement of the change or termination is
sought.
12. BINDING EFFECT. The covenants and agreements herein contained shall
bind and inure to the benefit of Licensor and Licensee and their respective
successors and assigns.
13. GOVERNING LAW. The License and all rights and remedies thereunder
shall be governed by the law of the State of New York.
3
<PAGE> 4
IN WITNESS WHEREOF the parties hereto set their hands and seals this 12th
day of November, 1999.
LICENSOR:
ATTEST: GHA MANAGEMENT CORPORATION
/s/ Jeffrey Rona By: /s/ Garo Armen
- ---------------------------- -----------------------------------
Garo Armen, Ph.D.
Chief Executive Officer
LICENSEE:
ATTEST: ANTIGENICS INC.
/s/ Jeffrey Rona By: /s/ Garo Armen
- ---------------------------- -----------------------------------
Garo Armen, Ph.D.
Chief Executive Officer
4
<PAGE> 5
EXHIBIT A
---------
LICENSED PREMISES
-----------------
<PAGE> 1
EXHIBIT 10.7
MASTER LOAN AND SECURITY AGREEMENT
Master Loan and Security Agreement No. S7020, dated November 19, 1998
FINOVA TECHNOLOGY FINANCE, INC. ("we," "us" or "FINOVA") is willing to make a
loan (the "Loan") to ANTIGENICS, LLC ("you" or "Borrower") under the terms and
conditions contained in this Master Loan and Security Agreement (this "Master
Agreement"). The Loan will be secured by the Collateral described in any
schedule to this Agreement (a "Schedule"). The Collateral also includes any
replacement parts, additions and accessories that you may add to the Collateral,
as well as any proceeds of sale, lease or rental of the Collateral. We may treat
any Schedule as a separate loan and security agreement containing all of the
provisions of this Loan and Security Agreement.
1. THE CREDIT
We may make the Loan in more than one advance (an "Advance", each of which shall
be evidenced by a "Schedule"). All of the Schedules, taken together, will make
up the Loan. We will only make the Loan to you if all the conditions in this
Master Agreement have been met to our satisfaction. We will rely on your
representations and warranties, contained in this Master Agreement, in making
the Loan. The terms of this Agreement will each apply to the Loan.
- - USE OF PROCEEDS. You will use the proceeds of the Loan to pay for the
Collateral. We may pay the Supplier (whom you have chosen) of the
Collateral directly from the Loan proceeds. The Supplier will deliver the
Collateral to you at your expense. You will properly install the
Collateral at your expense at the location(s) indicated in the Schedule.
If you have already paid for the Collateral, we will pay the Loan proceeds
to you or to another person that you may designate in writing.
- - NOTES. Your obligation to repay the Loan and to pay interest on the Loan
will be evidenced by Notes. Each Note will be dated the date of the
Schedule to which the Advance evidenced by the Note is related.
- - TERM. The Term of each Schedule (and the related Advance) begins upon the
date that we make payment for the Collateral covered under each Schedule
(the "Closing Date"). The Term continues until you fully perform all of
your obligations under this Agreement and each Schedule and the related
Note(s) If the Collateral is not delivered, installed and accepted by you
by the date indicated in the Schedule, we may terminate this Agreement and
the Schedule as to the Collateral that was not delivered, installed and
accepted by giving you 10 days written notice of termination.
- - LOAN ACCOUNT. We will keep a loan account on our books and records (which
are computerized) for the Loan. We will record all payments of principal
and interest in the loan account. Unless the entries in the loan account
are clearly in error, the loan account will definitively indicate the
outstanding principal balance and accrued interest on the Loan. We may
send you loan account statements from time to time or upon your request.
<PAGE> 2
- - PAYMENTS. The scheduled loan payments (the "Payments") are indicated on
the Schedule. The Payments are payable periodically as specified on the
Schedule from time to time (for example, monthly). The Schedule also
indicates whether the Payments are payable "in advance" or "in arrears."
You agree that you owe us the total of all of these Payments over the Term
of the Schedule.
- - FIRST PAYMENT. The first Payment is due at the beginning of the Term or at
a later date that we agree to in writing. Subsequent Payments are due on
the thirtieth day of each successive period (except the next following
period if Payments are payable in arrears) until you pay us in full all of
the Payments and any other charges or expenses you owe us.
- - INTEREST. Prior to maturity of a Schedule, you will pay us interest on
each Schedule at the Interest Rate indicated in the Schedule. "Maturity"
means the scheduled maturity or any earlier date on which we accelerate
the Loan. The Payment amount indicated in the Schedule includes interest
at this Interest Rate. Interest is calculated in advance using a year of
360 days with twelve months of 30 days.
- - DEFAULT INTEREST RATE. After Maturity of the Loan you will pay us interest
at a rate of four (4%) percent per year above the Interest Rate. This is
referred to as the "Default Rate."
- - INTERIM PAYMENT. If an Advance is made on a day other than the thirtieth
or thirty-first day of a period, you will also pay us an interim Payment
on the first Payment date. The interim Payment will be for the period from
the beginning of the Term until the twenty-ninth day of the period in
which the Advance is made, unless the Advance is made on the thirty-first
day of a period. If the Advance is made on the thirty-first day of a
period, the interim Payment will be for the period from the beginning of
the Term through and including the twenty-ninth day of the next following
period. The Interim Payment will be calculated the same way as the regular
Payments but pro rata on a daily basis for the number of days for which
the interim Payment is due.
- - USURY. You and we intend to obey the law. If the Interest Rate charged
would exceed the maximum legal rate, you will only have to pay the maximum
legal rate. You do not have to pay any excess interest over and above the
maximum legal rate of interest. However, if it later becomes legal for you
to pay all or part of any excess interest, you will then pay it to us upon
our request.
- - PAYMENT DETAILS. You will make all payments due under this Master
Agreement by 12:00 P.M., Connecticut time, on the day they are due. You
will make all payments in US Dollars (US$) in immediately available funds.
We do not have to make or give "presentment, demand, protest or notice" to
get paid. You waive "presentment, demand, protest and notice."
- - APPLICATION OF PAYMENTS. Each payment under this Master Agreement is to be
applied in the following order: first, to any fees, costs, expenses and
charges you may owe us; second, to any interest due; and third to the
principal balance.
-2-
<PAGE> 3
- - PREPAYMENT. You may not prepay the Loan, in whole or in part, unless this
is specifically permitted by Exhibit A to this Agreement. If prepayment is
permitted by Exhibit A to this Master Agreement, you will give us at least
30 days advance written notice of prepayment. You will pay us the
prepayment premium indicated in the Schedule(s). You will also pay us all
accrued and unpaid interest through the date of prepayment, as well as all
outstanding fees, costs, expenses and charges then due. Of course, you
will also pay the entire outstanding principal balance of the Loan. Once
you give us a notice of prepayment, that notice is final and irrevocable.
If we accelerate the Loan following an Event of Default, you will also owe
us a prepayment premium calculated as if the Loan were prepaid on the date
of acceleration. If no prepayment is permitted, the premium due upon
acceleration will be five (5%) percent of the outstanding principal
balance.
- - YOUR OBLIGATION TO PAY US ALL PAYMENTS IS ABSOLUTE AND UNCONDITIONAL. YOU
ARE NOT EXCUSED FROM MAKING THE PAYMENTS, IN FULL, FOR ANY REASON. YOU
AGREE THAT YOU HAVE NO DEFENSE FOR FAILURE TO MAKE THE PAYMENTS AND YOU
WILL NOT MAKE ANY COUNTERCLAIMS OR SETOFFS TO AVOID MAKING THE PAYMENTS.
2. SECURITY INTEREST
- - You grant us a security interest in the Collateral. The Collateral secures
the full and timely payment and performance of all of your obligations to
us and to FINOVA Capital Corporation under this Master Agreement and any
other agreement, loan or lease that you may have with us or FINOVA Capital
Corporation (the "Obligations"). You also grant us a security interest in
any additional collateral identified in any Schedule. Any additional
collateral is considered to be "Collateral" and it secures all of the
Obligations.
- - If we request, you will put labels supplied by us stating "PROPERTY OF
FINOVA" on the Collateral where they are clearly visible.
- - You give us permission to add to this Master Agreement or any Schedule the
serial numbers and other information about the Collateral.
- - You give us permission to file this Master Agreement or a Uniform
Commercial Code financing statement, at your expense, in order to perfect
our security interest in the Collateral. You also give us permission to
sign your name on the Uniform Commercial Code financing statements where
this is permitted by law.
- - You will pay our cost to do searches for other filings or judgments
against you or your affiliates. You will also pay any filing, recording or
stamp fees or taxes resulting from filing this Agreement or a Uniform
Commercial Code financing statement. You will also pay our fees in effect
from time to time for documentation, administration and Termination of
this Master Agreement.
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- - At your expense, you will defend our first priority security interest in
the Collateral against, and keep the Collateral free of, any legal
process, liens, other security interests, attachments, levies and
executions. You will give us immediate written notice of any legal
process, liens, attachments, levies or executions, and you will indemnify
us against any loss that results to us from these causes.
- - You will notify us at least 15 days before you change the address of your
principal executive office.
- - You will promptly sign and return additional documents that we may request
in order to protect our first priority security interest in the
Collateral.
- - The Collateral is personal property and will remain personal property. You
will not incorporate it into real estate and will not do anything that
will cause the Collateral to become part of real estate or a fixture.
3. CONDITIONS OF LENDING
- - See our Commitment Letter to you dated November 16, 1998, which you and we
consider to be a part of this Master Agreement. The terms and conditions
of the Commitment Letter continued following the making of the first
Advance. However, if there is a conflict between the terms and conditions
of this Master Agreement, any schedule or any Note and the terms and
conditions of the Commitment Letter, then you and we agree that the terms
and conditions of this Agreement, the Schedules and the Notes control over
the Commitment Letter terms and conditions.
- - Before we disburse any proceeds of any Advance, we also require the
following:
* That no payment is past due to us under any other agreement, loan or lease
that you or any guarantor have with us or with FINOVA Capital Corporation.
* That we have received all the documents we requested, including the signed
Schedule, Note and Delivery and Acceptance Certificate.
* that there has been no material adverse change in your financial
condition, business, operations or prospects, or that of any guarantor,
from the financial condition that you disclosed to us in your application
for credit.
4. REPRESENTATIONS AND WARRANTIES
You represent and warrant to us as follows:
- - All financial information and other information that you or any guarantor
have given us is true and complete. You or any guarantor have not failed
to tell us anything that would make the financial information misleading.
There has been no material adverse change in your financial condition,
business, operations or prospects, or the financial condition of any
guarantor, or the financial condition of any guarantor, from the financial
condition that you disclosed to us in your application for credit.
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- - You have supplied us with information about the Collateral. You promise to
us that the amount of our Advance as to each item of Collateral is no more
than the fair and usual price for this kind of Collateral, taking into
account any discounts, rebates and allowances that you or any affiliate of
yours may have given for the Collateral.
- - You have complied with all "environmental laws" and will continue to
comply with all "environmental laws." No "hazardous substances" are used,
generated, treated, stored or disposed of by you or at your properties
except in compliance with all environmental laws. "Environmental laws"
mean all federal, state or local environmental laws and regulations,
including the following laws: CERCLA, RCRA, Hazardous Materials Transport
Act and The Federal Water Pollution Control Act. "Hazardous substances"
means all hazardous or toxic wastes, materials or substances, as defined
in the environmental laws, as well as oil, flammable substances, asbestos
that is or could become friable, urea formaldehyde insulation,
polychlorinated biphenyls and radon gas.
- - You have taken all action necessary including but not limited to due
inquiry and due diligence to assure that there will be no material adverse
change to your business by reason of the advent of the year 2000,
including without limitation that all computer-based systems, embedded
microchips and other processing capabilities effectively recognize and
process dates after April 1, 1999.
5. COVENANTS
You agree to do the following things (or not to do the following things if so
stated) until full payment of all amounts due to us under this Agreement, the
Schedules and the Notes:
CARE, USE, LOCATION AND ALTERATION OF THE COLLATERAL
- - You will make sure that the Collateral is maintained in good operating
condition, and that it is serviced, repaired and overhauled when this is
necessary to keep the Collateral in good operating condition. All
maintenance must be done according to the Supplier's or Manufacturer's
requirements or recommendations. All maintenance must also comply with any
legal or regulatory requirements.
- - You will maintain service logs for the Collateral and permit us to inspect
the Collateral, the service logs and service reports. You give us
permission to make copies of the service logs and service reports.
- - We will give you prior notice if we, or our agent, want to inspect the
Collateral or the service logs or service reports. We may inspect it
during regular business hours. You will pay our travel, meals and lodging
costs to inspect the Collateral, but only for one inspection ear. If we
find during an inspection that you are not complying with this Master
Agreement, you will pay our travel, meals and lodging costs, our salary
costs, and the costs and fees of our agents for reinspection. You will
promptly cure any problems with the Collateral that are discovered during
our inspection.
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- - You will use the Collateral only for business purposes. You will obey all
legal and regulatory requirements in your use of the Collateral.
- - You will make all additions, modifications and improvements to the
Collateral that are required by law or government regulation. Otherwise,
you will not alter the Collateral without our written permission. You will
replace all worn, lost, stolen or destroyed parts of the Collateral with
replacement parts that are as good or better than the original parts. The
new parts will become subject to our security interest upon replacement.
- - You will not remove the Collateral from the location indicated in the
Schedule without our written permission.
YEAR 2000 COMPLIANT
- - You shall take all action necessary including but not limited to due
inquiry and due diligence with critical business partners to assure that
there will be no material adverse change to your business by reason of the
advent of the year 2000, including without limitation that all
computer-based systems, embedded microchips and other processing
capabilities effectively recognize and process dates after April 1, 1999.
At our request, you shall provide to us assurance reasonably acceptable to
us that your computer-based systems, embedded microchips and other
processing capabilities are year 2000 compatible.
RISK OF LOSS
- - You have the complete risk of loss or damage to the Collateral. Loss or
damage to the Collateral will not relieve you of your obligation to make
the Payments.
- - If any Collateral is lost or damaged, you have two choices (although if
you are in default under this Master Agreement, we and not you will have
the two choices). The choices are:
(1) Repair or replace the damaged or lost Collateral so that, once again, the
Collateral is in good operating condition and we have a perfected first
priority security interest in it.
(2) Pay us the present value (as of the date of payment) of the remaining
Payments. We will calculate the present value using a discount rate of
five (5%) percent per year. Once you have paid us this amount and any
other amount that you may owe us, we will release our security interest in
the damaged or lost Collateral and you (or your insurer) may keep the
Collateral for salvage purposes, on an "AS IS WHERE IS" basis.
INSURANCE
- - Until you have made all Payments to us under this Master Agreement, the
Schedules and the Notes, you will keep the Collateral insured. The amount
of insurance, the coverage, and the insurance company must be acceptable
to us.
- - If you do not provide us with written evidence of insurance that is
acceptable to us, we may buy the insurance ourselves, at your expense. You
will promptly pay us the cost of this
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insurance. We have no obligation to purchase any insurance. Any insurance
that we purchase will be our insurance, and not yours.
- - Insurance proceeds may be used to repair or replace damaged or lost
Collateral or to pay us the present value of the Payments, as provided
above.
- - You appoint us as your "attorney-in-fact" to make claims under the
insurance policies, to receive payments under the insurance policies, and
to endorse your name on all documents, checks or drafts relating to
insurance claims for Collateral.
TAXES
- - You will pay all sales, use, excise, stamp, documentary and ad valorum
taxes, license, recording and registration fees, assessments, fines,
penalties and similar charges imposed on the ownership, possession, use,
lease or rental of the equipment or on the Loan.
- - You will pay all taxes (other than our federal or state net income taxes)
imposed on your or on us regarding the Payments.
- - You will reimburse us for any of these taxes that we pay or advance.
- - You will file and pay for any personal property taxes on the Collateral.
FINANCIAL STATEMENTS
- - During the Term you will promptly give copies of any filings you make with
the Securities and Exchange Commission (SEC). You and any guarantor will
also provide us with the following financial statements:
* Quarterly balance sheet and statements of earnings and cash flow - within
45 days after the end of your first three fiscal quarters in each fiscal
year. These will be certified by the chief financial officer. You will
also deliver to us, together with your quarterly financial statements, a
certificate executed by your chief financial officer, to the effect that
since the date of the previous certificate delivered to us, there has been
no default under this Master Agreement or, if the same cannot be so
certified, the reasons surrounding the same.
* Annual balance sheet and statements of earnings and cash flow - within 90
days after the end of each fiscal year. These will be audited by
independent auditors acceptable to FINOVA. Their audit report must be
unqualified.
These financial statements will be prepared according to generally accepted
accounting principles, consistently applied.
All financial statements and Sec filings that you or any guarantor provide us
will be true and complete. They will not fail to tell us anything that would
make them misleading.
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6. DEFAULTS
You are in default if any of the following happens:
- - You do not pay us, when it is due or within seven (7) days thereafter, any
payment or other payment that you owe us under this Master Agreement, any
Schedule, Note or that you owe us under this Master Agreement, any
Schedule, Note or that you owe under any other agreement, loan or lease
that you have with us or with FINOVA Capital Corporation.
- - Any of the financial information that you give us is not true and complete
in all material respects, or you fail to tell us anything that would make
the financial information misleading in any material respect.
- - You do something you are not permitted to do, or you fail to do anything
that is required of you, under this Master Agreement, any schedule or nay
other lease, loan or other financial arrangement that you have with us.
- - An event or default occurs for any other lease, loan or obligation of
yours (or any guarantor) that exceeds $50,000.
- - You or any guarantor file bankruptcy, or involuntary bankruptcy is filed
against you or any guarantor.
- - You or any guarantor are subject to any other insolvency proceeding other
than bankruptcy (for example, a receivership action or an assignment for
the benefit of creditors).
- - Without our permission, you or any guarantor sell all or a substantial
part of its assets, merge or consolidate, or a majority of your voting
stock or interests (or any guarantor's voting stock or interests) is
transferred.
- - There is a material adverse change in your financial condition, business
or operations, or that of any guarantor, from the condition that you
disclosed to us in your application for credit.
REMEDIES, DEFAULT INTEREST, LATE FEES
If you are in default we may exercise one or more of our "remedies." Each of our
remedies is independent. We may exercise any of our remedies, all of our
remedies or none of our remedies. We may exercise them in any order we choose.
Our exercise of any remedy will not prevent us from exercising any other remedy
or be an "election of remedies." If we do not exercise a remedy, or if we delay
in exercising a remedy, this does not mean that we are forgiving your default or
that we are giving up our right to exercise the remedy. Our remedies allow us to
do one or more of the following:
- - "Accelerate" this Loan balance under any or all Notes. This means that we
may require you to immediately pay us all Payments for the entire Term for
any or all Schedules.
- - Require you to immediately pay us all amounts that you are required to pay
us for the entire Term of any other agreements, loans or leases that you
have with us.
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- - Sue you for all Payments and other amounts you owe us plus the Prepayment
Premium (see Section 1 above).
- - Require you at your expense to assemble the Collateral at a location we
request in the Untied States of America.
Remove and repossess the Collateral from where it is located, without demand or
notice, or make the Collateral inoperable. We have your permission to remove any
physical obstructions to removal of the Collateral. We may also disconnect and
separate all Collateral from other property. No court order, court hearing or
"legal process" will be required for us to repossess the Collateral. You will
not be entitled to any damages resulting form removal or repossession of the
Collateral. We may use, ship, store, repair or lease any Collateral that we
repossess. We may sell any repossessed Collateral at private or public sale. You
give us permission to show the Collateral to buyers at your location free of
charge during normal business hours. If we do this, we do not have to remove the
Collateral from your location. If we repossess the Collateral and sell it we
will give you credit for the net sale price, after subtracting our costs of
repossessing and selling the Collateral. If we rent the Collateral to somebody
else, we will give you credit for the net rent received, after subtracting our
costs of repossessing and renting the Collateral, but the credit will be
discounted to present value using a discount rate equal to the Default Rate. The
credit will be applied against what you owe us under this Master Agreement, the
Schedules, the Notes and any other agreements, loans or leases that you have
with us. If the credit exceeds the amount you owe under this Master Agreement,
the Schedule, the Notes and any other agreements, loans or leases that you have
with us, we will refund the amount of the excess to you.
- - Return conditions: Following an Event of Default, at our request you will
return the Collateral, freight and insurance prepaid by you, to us at a
location we request in the United States of America. It will be returned
in good operating condition, as required by Section 5 above. The
Collateral will not be subject to any liens when it is returned. All
advertising insignia will be removed and the finish will be painted or
blended so that nobody can see that advertising insignia used to be there.
* You will pack or crate the Collateral for shipping in the original
containers, or comparable ones. You will do this carefully and follow all
recommendations of the Supplier and the Manufacturer as to packing or
crating.
* You will also return to us the plans, specifications, operating manuals,
software documentation, discs, warranties and other documents furnished by
the Manufacturer or Supplier. You will also return to us all service logs
and service reports, as well as all written materials that you may have
concerning the maintenance and operation of the Collateral.
* At our request, you will provide us with up to 60 days free storage of the
Collateral at your location, and will let us (or our agent) have access to
the Collateral in order to inspect it and sell it.
* You will pay us what it costs us to repair the Collateral if you do not
return it in the required condition.
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You will also pay us for the following:
- - All our expenses of enforcing our remedies. This includes all our expenses
to repossess, store, ship, repair and sell the Collateral.
- - Our reasonable attorney's fees and expenses.
- - Default interest on everything you owe us from the date of your default to
the date on which we are paid in full at the Default Rate.
You realize that the damages we could suffer as a result of your default are
very uncertain. This is why we have agreed with you in advance on the Default
Rate to be used in calculating the payments you will owe us if you default. You
agree that, for these reasons, the payments you will owe us if you default are
"agreed" or "liquidated" damages. You understand that these payments are not
"penalties" or "forfeitures."
LATE FEES. You will pay us a late fee whenever you pay any amount that you owe
us more than ten (10) days after it is due. You will pay the late fee within one
month after the late Payment was originally due. The late fee will be five (5%)
percent of the late Payment. If this exceeds the highest legal amount we can
charge you, you will only be required to pay the highest legal amount. The late
fee is intended to reimburse us for our collection costs that are caused by late
Payment. It is charged in addition to all other amounts you are required to pay
us, including Default Interest.
7. EXPENSES AND INDEMNITIES
PERFORMING YOUR OBLIGATIONS IF YOU DO NOT
- - If you do not perform one or more of your obligations under this Master
Agreement or a Schedule or Note, we may perform it for you. We will notify
you in writing at least ten (10) days before we do this. We do not have to
perform any of your obligations for you. If we do choose to perform them,
you will pay us all of our expenses to perform them, you will pay us all
of our expenses to perform the obligations. You will also reimburse us for
any money that we advance to perform your obligations, together with
interest at the Default Rate on that amount. These will be additional
"Payments" that you will owe us and you will pay them at the same time
that your next Payment is due.
- - You will indemnify us, defend us and hold us harmless for any and all
claims, expenses and attorney's fees concerning or arising from the
Collateral, this Agreement, or any Schedule or Note, or your breach of any
representation or warranty. It includes any claims concerning the
manufacture, selection, delivery, possession, use, operation or return of
the Collateral.
- - This obligation of yours to indemnify us continues even after the Term is
over.
8. MISCELLANEOUS
WE MAY ASSIGN OR GRANT A SECURITY INTEREST IN THIS AGREEMENT, ANY SCHEDULE, ANY
NOTE OR ANY PAYMENTS WITHOUT YOUR PERMISSION. THE
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PERSON TO WHOM WE ASSIGN IS CALLED THE "ASSIGNEE." THE ASSIGNEE WILL NOT HAVE
ANY OF OUR OBLIGATIONS UNDER THIS MASTER AGREEMENT. YOU WILL NOT BE ABLE TO
RAISE ANY DEFENSE, COUNTERCLAIM OR OFFSET AGAINST THE ASSIGNEE.
AFTER ASSIGNMENT YOU MAY "QUIETLY ENJOY" THE USE OF THE COLLATERAL SO LONG AS
YOU ARE NOT IN DEFAULT.
UNLESS YOU RECEIVE OUR WRITTEN PERMISSION, YOU MAY NOT ASSIGN OR TRANSFER YOUR
RIGHTS UNDER THIS MASTER AGREEMENT OR ANY SCHEDULE. YOU ALSO ARE NOT ALLOWED TO
LEASE OR RENT THE COLLATERAL OR LET ANYBODY ELSE USE IT UNLESS WE GIVE YOU OUR
WRITTEN PERMISSION.
WE DID NOT MANUFACTURE OR SUPPLY THE COLLATERAL. WE ARE NOT A DEALER IN THE
COLLATERAL. INSTEAD, YOU CHOSE THE COLLATERAL.
WE DO NOT MAKE ANY WARRANTY AS TO THE COLLATERAL. WE DO NOT MAKE ANY WARRANTY AS
TO "MERCHANTABILITY" OR "SUITABILITY" OR "FITNESS FOR A PARTICULAR PURPOSE" OR
"NONINFRINGEMENT" OF ANY PATENT, COPYRIGHT OR OTHER INTELLECTUAL PROPERTY RIGHT.
WE WILL NOT BE RESPONSIBLE FOR ANY LOSS, DAMAGE, OR INJURY TO YOU OR ANYBODY
ELSE AS A RESULT OF ANY DEFECTS, HIDDEN OR OTHERWISE, IN THE COLLATERAL UNDER
"STRICT LIABILITY" LAWS OR ANY OTHER LAWS.
WE WILL NOT BE RESPONSIBLE FOR ANY INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES,
LOSS OF PROFITS OR GOODWILL.
If the Collateral is unsatisfactory, you will continue to pay us all Payments
and other amounts you are required to pay us. You must seek repair or
replacement of the equipment solely from the Manufacturer or Supplier and not
from us. Neither the Manufacturer nor the Supplier is our "agent," so they
cannot speak for us and they are not allowed to make any changes in this Master
Agreement or any Schedule or Note, or give up any of our rights.
ACCEPTANCE BY FINOVA, GOVERNING LAW, JURISDICTION, VENUE, SERVICE OF PROCESS,
WAIVER OF JURY TRIAL.
THIS MASTER AGREEMENT WILL ONLY BE BINDING WHEN WE HAVE ACCEPTED IT IN WRITING.
THIS MASTER AGREEMENT IS GOVERNED BY THE SUBSTANTIVE LAWS OF THE STATE OF
ARIZONA (NOT INCLUDING THE "CHOICE OF LAW" DOCTRINE), THE STATE IN WHICH OUR
OFFICE IS LOCATED IN WHICH FINAL APPROVAL OF THE TERMS OR CONDITIONS OF THIS
MASTER AGREEMENT OCCURRED AND FROM WHICH DISBURSEMENT OF THE LOAN PROCEEDS WILL
BE ORDERED. HOWEVER, IF THIS MASTER AGREEMENT IS UNENFORCEABLE UNDER ARIZONA
LAW. IT
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WILL INSTEAD BE GOVERNED BY THE LAWS OF THE STATE IN WHICH THE COLLATERAL IS
LOCATED.
YOU MAY ONLY SUE US IN A FEDERAL OR STATE COURT THAT IS LOCATED IN MARICOPA
COUNTY, ARIZONA. THIS APPLIES TO ALL LAWSUITS UNDER ALL LEGAL THEORIES,
INCLUDING CONTRACT, TORT AND STRICT LIABILITY. YOU CONSENT TO THE PERSONAL
JURISDICTION OF THESE ARIZONA COURTS. YOU WILL NOT CLAIM THAT MARICOPA COUNTY
ARIZONA, IS AN "INCONVENIENT FORUM" OR THAT IT IS NOT A PROPER "VENUE."
WE MAY SUE YOU IN ANY COURT THAT HAS JURISDICTION. WE MAY SERVE YOU WITH PROCESS
IN A LAWSUIT BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO YOUR ADDRESS
INDICATED AFTER YOUR SIGNATURE BELOW.
YOU AND WE EACH WAIVE ANY RIGHT YOU OR WE MAY HAVE TO A JURY TRIAL IN ANY
LAWSUIT BETWEEN YOU AND US.
BOARD MEETINGS. You will provide us with the minutes of the meetings of your
board of directors.
NOTICES. We may give you written notice in person, by mail, by overnight
delivery service, or by fax. Notice will be sent to your address below your
signature. Mail notice will be effective three (3) days after we mail with
prepaid postage to the address stated. Overnight delivery notice requires a
receipt and tracking number. Fax notice requires a receipt from the sending
machine showing that it has been sent to your fax number and received.
You may give us notice the same way that we may give you notice.
This Master Agreement benefits our successors and assigns. This Master Agreement
benefits our successors and assigns. This Master Agreement benefits only those
successors and assigns of yours that we have approved in writing.
This Master Agreement binds your successors and assigns. This Master Agreement
binds only those successors and assigns of ours that clearly assume our
obligations in writing.
TIME IS OF THE ESSENCE OF THIS MASTER AGREEMENT
This Master Agreement, all of the Schedules and the Notes and the Commitment
Letter are together the entire agreement between you and us concerning the
Collateral.
Only an employee of FINOVA who is authorized by corporate resolution or policy
may modify or amend this Loan or any Schedule or Note on our behalf, an this
must be in writing. Only he or she may give up any of our rights, and this must
be in writing. If more than one person is the Borrower under this Agreement,
then each of you is jointly an severally liable for your obligations under this
Master Agreement.
This Master Agreement is only for your benefit and for our benefit, as well as
our successors and assigns. It is not intended to benefit any other person.
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If any provision in this Master Agreement is unenforceable, then that provision
must be deleted. Only unenforceable provisions are to be deleted. The rest of
this Master Loan Agreement will remain as written.
PUBLICITY. We may make press releases and publish a tombstone announcing this
transaction and its total amount. You may not publicize this transaction in any
way without our prior written consent.
LENDER: BORROWER:
FINOVA TECHNOLOGY FINANCE, INC. ANTIGENICS, LLC
10 WATERSIDE DRIVE 630 FIFTH AVENUE, SUITE 2170
FARMINGTON, CT 06032-3065 NEW YORK, NY 10111
BY: /s/ Linda A. Mischitto BY: /s/ Garo Armen
------------------------------- --------------------------------------
PRINTED NAME: Linda A. Mischitto PRINTED NAME: Garo H. Armen
TITLE: Director, Contract TITLE: Chairman of the Board of Managers
Administration and Chief Executive Officer
----------------------------- -----------------------------------
FAX NUMBER: (860) 676-1814 Taxpayer ID# 13-3769335
-----------------------------
DATE ACCEPTED: December 8, 1998 FAX NUMBER: (212) 332-4778
--------------------- ------------------------------
DATED: December 4, 1998
-----------------------------------
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<PAGE> 14
STATE OF NEW YORK
COUNTY OF NEW YORK
I acknowledge that Garo Armen, who stated that he/she/ is
_______________ of the Borrower named above, signed this Master Loan and
Security Agreement in my presence today: December 4, 1998. He/She acknowledged
to me that his/her signature on this Master Loan and Security Agreement was
authorized by a valid resolution or other valid authorization from Borrower's
board of Directors or other governing body.
/s/ Michelle Barr
-----------------------------------
Notary Public
[SEAL]
Michelle Barr
Notary Public, State of New York
No. 01BA5042457
Qualified in Westchester County
Commission Expires April 24, 1999
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<PAGE> 15
Exhibit A
THERE SHALL BE NO PREPAYMENT ALLOWED UNDER THIS MASTER AGREEMENT.
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<PAGE> 16
PROMISSORY NOTE NO. 1
$935,745.00 December 30, 1998
ANTIGENICS, LLC ("you") promise to pay to the order of FINOVA TECHNOLOGY
FINANCE, INC. ("we," "us" or "FINOVA") the principal amount of Nine Hundred
Thirty-Five Thousand, Seven Hundred Forty-Five and 00/100 Dollars ($935,745.00),
together with interest on the unpaid principal balance at the interest rate per
annum and on the dates and as otherwise provided in the "Master Agreement" and
"Schedule" referred to below.
If the interest rate charged would exceed the maximum legal rate, you will only
have to pay the maximum legal rate. You do not have to pay any excess interest
over and above the maximum legal rate of interest. However, if it later becomes
legal for you to pay all or part of any excess interest, you will then pay it to
us upon our request.
You will make all payments in US Dollars at our offices at 10 Waterside Drive,
Farmington, Connecticut 06032-3065, or to another address that we request in
writing All payments will be made in immediately available funds.
This Note is secured by a Master Loan and Security Agreement dated November 19,
1998 (the "Master Agreement"), between you and FINOVA, and by the Collateral and
other collateral listed in the attached Schedule (the "Schedule"), dated the
same date as this Note. This Note may be accelerated by us upon a payment
default or upon another default under the Master Agreement.
TIME IS OF THE ESSENCE.
If you do not make a payment when it is due, you will also pay us a late charge
of ten (10%) of the amount past due. Your interest rate will be increased by 4%
per annum, over and above your regular interest rate if payment is not made at
the scheduled or accelerated Maturity of this Note. You will also pay all of our
costs of collection, including our reasonable attorney's fees and expenses. If
we accelerate this Note, you will also owe a prepayment premium, as set forth in
Exhibit A to the Master Agreement.
You waive diligence, presentment, formalities of demand, protest or notice of
nonpayment or dishonor or any other notice as to this Note.
THIS NOTE IS GOVERNED BY THE SUBSTANTIVE LAWS (AND NOT THE CONFLICT OF LAWS
PROVISIONS) OF THE STATE OF ARIZONA, THE STATE IN WHICH OUR OFFICE IS LOCATED IN
WHICH FINAL APPROVAL OF THE TERMS AND CONDITIONS OF THIS NOTE OCCURRED AND FROM
WHICH THE ORDER TO PAY THE LOAN FUNDS WAS MADE. YOU CONSENT TO THE JURISDICTION
OF ANY FEDERAL OR STATE COURT LOCATED IN THE STATE OF ARIZONA. YOU WAIVE TRIAL
BY JURY.
<PAGE> 17
You represent to us that the proceeds of the loan evidenced by this Note are
being used to finance (or refinance) your purchase of the Collateral described
in the Schedule, and that the Collateral will only be used for business
purposes.
ANTIGENICS, LLC. ATTEST:
[SEAL]
By /s/ Garo Armen
-------------------------------------
Name Garo Armen
-----------------------------------
Title CEO
----------------------------------
Date 12/18/98 /s/ Jeffrey Rona
----------------------------------- -----------------------------------
[Assistant] Secretary
FTF Promissory Note & Schedule
<PAGE> 18
PROMISSORY NOTE NO. 2
$267,622.00 February 26, 1999
ANTIGENICS, LLC ("you") promise to pay to the order of FINOVA CAPITAL
CORPORATION ASSIGNEE OF FINOVA TECHNOLOGY FINANCE, INC. ("we," "us" or "FINOVA")
the principal amount of Two Hundred Sixty-Seven Thousand, Six Hundred Twenty-Two
and 00/100 Dollars (S267,622.00), together with interest on the unpaid principal
balance at the interest rate per annum and on the dates and as otherwise
provided in the "Master Agreement" and "Schedule" referred to below.
If the interest rate charged would exceed the maximum legal rate, you will only
have to pay the maximum legal rate. You do not have to pay any excess interest
over and above the maximum legal rate of interest. However, if it later becomes
legal for you to pay all or part of any excess interest, you will then pay it to
us upon our request.
You will make all payments in US Dollars at our offices at 10 Waterside Drive,
Farmington, Connecticut 06032-3065, or to another address that we request in
writing. All payments will be made in immediately available funds.
This Note is secured by a Master Loan and Security Agreement dated November 19,
1998 (the "Master Agreement"), between you and FINOVA, and by the Collateral and
other collateral listed in the attached Schedule (the "Schedule"), dated the
same date as this Note. This Note may be accelerated by us upon a payment
default or upon another default under the Master Agreement.
TIME IS OF THE ESSENCE.
If you do not make a payment when it is due, you will also pay us a late charge
often (10%) of the amount past due. Your interest rate will be increased by 4%
per annum, over and above your regular interest rate if payment is not made at
the scheduled or accelerated Maturity of this Note. You will also pay all of our
costs of collection, including our reasonable attorney's fees and expenses. If
we accelerate this Note, you will also owe a prepayment premium, as set forth in
Exhibit A to the Master Agreement.
You waive diligence, presentment, formalities of demand, protest or notice of
nonpayment or dishonor or any other notice as to this Note.
THIS NOTE IS GOVERNED BY THE SUBSTANTIVE LAWS (AND NOT THE CONFLICT OF LAWS
PROVISIONS) OF THE STATE OF ARIZONA, THE STATE IN WHICH OUR OFFICE IS LOCATED IN
WHICH FINAL APPROVAL OF THE TERMS AND CONDITIONS OF THIS NOTE OCCURRED AND FROM
WHICH THE ORDER TO PAY THE LOAN FUNDS WAS MADE. YOU CONSENT TO THE JURISDICTION
OF ANY FEDERAL OR STATE COURT LOCATED IN THE STATE OF ARIZONA. YOU WAIVE TRIAL
BY JURY.
<PAGE> 19
You represent to us that the proceeds of the loan evidenced by this Note are
being used to finance (or refinance) your purchase of the Collateral described
in the Schedule, and that the Collateral will only be used for business
purposes.
ANTIGENICS, LLC. ATTEST:
[SEAL]
By /s/ Garo Armen
-------------------------------------
Name Garo Armen
-----------------------------------
Title CEO
----------------------------------
Date 2/23/99 /s/ Jeffrey Rona
----------------------------------- -----------------------------------
[Assistant] Secretary
FTF Promissory Note & Schedule
<PAGE> 20
PROMISSORY NOTE NO. 3
$134,775.80 April _____, 1999
ANTIGENICS, LLC ("you") promise to pay to the order of FINOVA CAPITAL
CORPORATION ASSIGNEE OF FINOVA TECHNOLOGY FINANCE, INC. ("we," "us" or "FINOVA")
the principal amount of One Hundred Thirty-Four Thousand, Seven Hundred
Seventy-Five and 80/100 Dollars ($134,775.80), together with interest on the
unpaid principal balance at the interest rate per annum and on the dates and as
otherwise provided in the "Master Agreement" and "Schedule" referred to below.
If the interest rate charged would exceed the maximum legal rate, you will only
have to pay the maximum legal rate. You do not have to pay any excess interest
over and above the maximum legal rate of interest. However, if it later becomes
legal for you to pay all or part of any excess interest, you will then pay it to
us upon our request.
You will make all payments in US Dollars at our offices at 10 Waterside Drive,
Farmington, Connecticut 06032-3065, or to another address that we request in
writing. All payments will be made in immediately available funds.
This Note is secured by a Master Loan and Security Agreement dated November 19,
1998 (the "Master Agreement"), between you and FINOVA, and by the Collateral and
other collateral listed in the attached Schedule (the "Schedule"), dated the
same date as this Note. This Note may be accelerated by us upon a payment
default or upon another default under the Master Agreement.
TIME IS OF THE ESSENCE.
If you do not make a payment when it is due, you will also pay us a late charge
often (10%) of the amount past due. Your interest rate will be increased by 4%
per annum, over and above your regular interest rate if payment is not made at
the scheduled or accelerated Maturity of this Note. You will also pay all of our
costs of collection, including our reasonable attorney's fees and expenses. If
we accelerate this Note, you will also owe a prepayment premium, as set forth in
Exhibit A to the Master Agreement.
You waive diligence, presentment, formalities of demand, protest or notice of
nonpayment or dishonor or any other notice as to this Note.
THIS NOTE IS GOVERNED BY THE SUBSTANTIVE LAWS (AND NOT THE CONFLICT OF LAWS
PROVISIONS) OF THE STATE OF ARIZONA, THE STATE IN WHICH OUR OFFICE IS LOCATED IN
WHICH FINAL APPROVAL OF THE TERMS AND CONDITIONS OF THIS NOTE OCCURRED AND FROM
WHICH THE ORDER TO PAY THE LOAN FUNDS WAS MADE. YOU CONSENT TO THE JURISDICTION
OF ANY FEDERAL OR STATE COURT LOCATED IN THE STATE OF ARIZONA. YOU WAIVE TRIAL
BY JURY.
<PAGE> 21
You represent to us that the proceeds of the loan evidenced by this Note are
being used to finance (or refinance) your purchase of the Collateral described
in the Schedule, and that the Collateral will only be used for business
purposes.
ANTIGENICS, LLC. ATTEST:
[SEAL]
By /s/ Garo Armen
-------------------------------------
Name Garo Armen
-----------------------------------
Title CEO
----------------------------------
Date 4/23/99 /s/ Jeffrey Rona
----------------------------------- -----------------------------------
[Assistant] Secretary
FTF Promissory Note & Schedule
<PAGE> 22
PROMISSORY NOTE NO. 4
$432,980.45 May 30, 1999
ANTIGENICS, LLC ("you") promise to pay to the order of FINOVA CAPITAL
CORPORATION ASSIGNEE OF FINOVA TECHNOLOGY FINANCE, INC. ("we," "us" or "FINOVA")
the principal amount of Four Hundred Thirty-Two Thousand, Nine Hundred Eighty
and 45/100 Dollars ($432,980.45), together with interest on the unpaid principal
balance at the interest rate per annum and on the dates and as otherwise
provided in the "Master Agreement" and "Schedule" referred to below.
If the interest rate charged would exceed the maximum legal rate, you will only
have to pay the maximum legal rate. You do not have to pay any excess interest
over and above the maximum legal rate of interest. However, if it later becomes
legal for you to pay all or part of any excess interest, you will then pay it to
us upon our request.
You will make all payments in US Dollars at our offices at 10 Waterside Drive,
Farmington, Connecticut 06032-3065, or to another address that we request in
writing. All payments will be made in immediately available funds.
This Note is secured by a Master Loan and Security Agreement dated November 19,
1998 (the "Master Agreement"), between you and FINOVA, and by the Collateral and
other collateral listed in the attached Schedule (the "Schedule"), dated the
same date as this Note. This Note may be accelerated by us upon a payment
default or upon another default under the Master Agreement.
TIME IS OF THE ESSENCE.
If you do not make a payment when it is due, you will also pay us a late charge
often (10%) of the amount past due. Your interest rate will be increased by 4%
per annum, over and above your regular interest rate if payment is not made at
the scheduled or accelerated Maturity of this Note. You will also pay all of our
costs of collection, including our reasonable attorney's fees and expenses. If
we accelerate this Note, you will also owe a prepayment premium, as set forth in
Exhibit A to the Master Agreement.
You waive diligence, presentment, formalities of demand, protest or notice of
nonpayment or dishonor or any other notice as to this Note.
THIS NOTE IS GOVERNED BY THE SUBSTANTIVE LAWS (AND NOT THE CONFLICT OF LAWS
PROVISIONS) OF THE STATE OF ARIZONA, THE STATE IN WHICH OUR OFFICE IS LOCATED IN
WHICH FINAL APPROVAL OF THE TERMS AND CONDITIONS OF THIS NOTE OCCURRED AND FROM
WHICH THE ORDER TO PAY THE LOAN FUNDS WAS MADE. YOU CONSENT TO THE JURISDICTION
OF ANY FEDERAL OR STATE COURT LOCATED IN THE STATE OF ARIZONA. YOU WAIVE TRIAL
BY JURY.
<PAGE> 23
You represent to us that the proceeds of the loan evidenced by this Note are
being used to finance (or refinance) your purchase of the Collateral described
in the Schedule, and that the Collateral will only be used for business
purposes.
ANTIGENICS, LLC. ATTEST:
[SEAL]
By /s/ Garo Armen
-------------------------------------
Name Garo Armen
-----------------------------------
Title CEO
----------------------------------
Date 5/25/99 /s/ Jeffrey Rona
----------------------------------- -----------------------------------
[Assistant] Secretary
FTF Promissory Note & Schedule
<PAGE> 24
PROMISSORY NOTE NO. 5
$204,100.26 June 29, 1999
ANTIGENICS, LLC ("you") promise to pay to the order of FINOVA CAPITAL
CORPORATION ASSIGNEE OF FINOVA TECHNOLOGY FINANCE, INC. ("we," "us" or "FINOVA")
the principal amount of Two Hundred Four Thousand, One Hundred and 26/100
Dollars ($204,100.26), together with interest on the unpaid principal balance at
the interest rate per annum and on the dates and as otherwise provided in the
"Master Agreement" and "Schedule" referred to below.
If the interest rate charged would exceed the maximum legal rate, you will only
have to pay the maximum legal rate. You do not have to pay any excess interest
over and above the maximum legal rate of interest. However, if it later becomes
legal for you to pay all or part of any excess interest, you will then pay it to
us upon our request.
You will make all payments in US Dollars at our offices at 10 Waterside Drive,
Farmington, Connecticut 06032-3065, or to another address that we request in
writing. All payments will be made in immediately available funds.
This Note is secured by a Master Loan and Security Agreement dated November 19,
1998 (the "Master Agreement"), between you and FINOVA, and by the Collateral and
other collateral listed in the attached Schedule (the "Schedule"), dated the
same date as this Note. This Note may be accelerated by us upon a payment
default or upon another default under the Master Agreement.
TIME IS OF THE ESSENCE.
If you do not make a payment when it is due, you will also pay us a late charge
often (10%) of the amount past due. Your interest rate will be increased by 4%
per annum, over and above your regular interest rate if payment is not made at
the scheduled or accelerated Maturity of this Note. You will also pay all of our
costs of collection, including our reasonable attorney's fees and expenses. If
we accelerate this Note, you will also owe a prepayment premium, as set forth in
Exhibit A to the Master Agreement.
You waive diligence, presentment, formalities of demand, protest or notice of
nonpayment or dishonor or any other notice as to this Note.
THIS NOTE IS GOVERNED BY THE SUBSTANTIVE LAWS (AND NOT THE CONFLICT OF LAWS
PROVISIONS) OF THE STATE OF ARIZONA, THE STATE IN WHICH OUR OFFICE IS LOCATED IN
WHICH FINAL APPROVAL OF THE TERMS AND CONDITIONS OF THIS NOTE OCCURRED AND FROM
WHICH THE ORDER TO PAY THE LOAN FUNDS WAS MADE. YOU CONSENT TO THE JURISDICTION
OF ANY FEDERAL OR STATE COURT LOCATED IN THE STATE OF ARIZONA. YOU WAIVE TRIAL
BY JURY.
<PAGE> 25
You represent to us that the proceeds of the loan evidenced by this Note are
being used to finance (or refinance) your purchase of the Collateral described
in the Schedule, and that the Collateral will only be used for business
purposes.
ANTIGENICS, LLC. ATTEST:
[SEAL]
By /s/ Garo Armen
-------------------------------------
Name Garo Armen
-----------------------------------
Title CEO
----------------------------------
Date 6/24/99 /s/ Jeffrey Rona
----------------------------------- -----------------------------------
[Assistant] Secretary
FTF Promissory Note & Schedule
<PAGE> 26
PROMISSORY NOTE NO. 6
$125,118.06 July 30, 1999
ANTIGENICS, LLC ("you") promise to pay to the order of FINOVA CAPITAL
CORPORATION ASSIGNEE OF FINOVA TECHNOLOGY FINANCE, INC. ("we." "us" or "FINOVA")
the principal amount of One Hundred Twenty-Five Thousand, One Hundred Eighteen
and 06/100 Dollars ($125,118.06), together with interest on the unpaid principal
balance at the interest rate per annum and on the dates and as otherwise
provided in the "Master Agreement" and "Schedule" referred to below.
If the interest rate charged would exceed the maximum legal rate, you will only
have to pay the maximum legal rate. You do not have to pay any excess interest
over and above the maximum legal rate of interest. However, if it later becomes
legal for you to pay all or part of any excess interest, you will then pay it to
us upon our request.
You will make all payments in US Dollars at our offices at 10 Waterside Drive,
Farmington, Connecticut 06032-3065, or to another address that we request in
writing. All payments will be made in immediately available funds.
This Note is secured by a Master Loan and Security Agreement dated November 19,
1998 (the "Master Agreement"), between you and FINOVA, and by the Collateral and
other collateral listed in the attached Schedule (the "Schedule"), dated the
same date as this Note. This Note may be accelerated by us upon a payment
default or upon another default under the Master Agreement.
TIME IS OF THE ESSENCE.
If you do not make a payment when it is due, you will also pay us a late charge
often (10%) of the amount past due. Your interest rate will be increased by 4%
per annum, over and above your regular interest rate if payment is not made at
the scheduled or accelerated Maturity of this Note. You will also pay all of our
costs of collection, including our reasonable attorney's fees and expenses. If
we accelerate this Note, you will also owe a prepayment premium, as set forth in
Exhibit A to the Master Agreement.
You waive diligence, presentment, formalities of demand, protest or notice of
nonpayment or dishonor or any other notice as to this Note.
THIS NOTE IS GOVERNED BY THE SUBSTANTIVE LAWS (AND NOT THE CONFLICT OF LAWS
PROVISIONS) OF THE STATE OF ARIZONA, THE STATE IN WHICH OUR OFFICE IS LOCATED IN
WHICH FINAL APPROVAL OF THE TERMS AND CONDITIONS OF THIS NOTE OCCURRED AND FROM
WHICH THE ORDER TO PAY THE LOAN FUNDS WAS MADE. YOU CONSENT TO THE JURISDICTION
OF ANY FEDERAL OR STATE COURT LOCATED IN THE STATE OF ARIZONA. YOU WAIVE TRIAL
BY JURY.
<PAGE> 27
You represent to us that the proceeds of the loan evidenced by this Note are
being used to finance (or refinance) your purchase of the Collateral described
in the Schedule, and that the Collateral will only be used for business
purposes.
ANTIGENICS, LLC. ATTEST:
[SEAL]
By /s/ Garo Armen
-------------------------------------
Name Garo Armen
-----------------------------------
Title CEO
----------------------------------
Date 7/29/99 /s/ Jeffrey Rona
----------------------------------- -----------------------------------
[Assistant] Secretary
FTF Promissory Note & Schedule
<PAGE> 28
PROMISSORY NOTE NO. 7
$1,049,533.81 August 26, 1999
ANTIGENICS, LLC ("you") promise to pay to the order of FINOVA CAPITAL
CORPORATION ASSIGNEE OF FINOVA TECHNOLOGY FINANCE, INC. ("we," "us" or "FINOVA")
the principal amount of One Million Forty-Nine Thousand Five Hundred
Thirty-Three and 81/100 Dollars ($l.049.533.81), together with interest on the
unpaid principal balance at the interest rate per annum and on the dates and as
otherwise provided in the "Master Agreement" and "Schedule" referred to below.
If the interest rate charged would exceed the maximum legal rate, you will only
have to pay the maximum legal rate. You do not have to pay any excess interest
over and above the maximum legal rate of interest. However, if it later becomes
legal for you to pay all or part of any excess interest, you will then pay it to
us upon our request.
You will make all payments in US Dollars at our offices at 10 Waterside Drive,
Farrnington, Connecticut 06032-3065, or to another address that we request in
writing. All payments will be made in immediately available funds.
This Note is secured by a Master Loan and Security Agreement dated November 19,
1998 (the "Master Agreement"), between you and FINOVA, and by the Collateral and
other collateral listed in the attached Schedule (the "Schedule"), dated the
same date as this Note. This Note may be accelerated by us upon a payment
default or upon another default under the Master Agreement.
TIME IS OF THE ESSENCE.
If you do not make a payment when it is due, you will also pay us a late charge
often (10%) of the amount past due. Your interest rate will be increased by 4%
per annum, over and above your regular interest rate if payment is not made at
the scheduled or accelerated Maturity of this Note. You will also pay all of our
costs of collection, including our reasonable attorney's fees and expenses. If
we accelerate this Note, you will also owe a prepayment premium, as set forth in
Exhibit A to the Master Agreement.
You waive diligence, presentment, formalities of demand, protest or notice of
nonpayment or dishonor or any other notice as to this Note.
THIS NOTE IS GOVERNED BY THE SUBSTANTIVE LAWS (AND NOT THE CONFLICT OF LAWS
PROVISIONS) OF THE STATE OF ARIZONA, THE STATE IN WHICH OUR OFFICE IS LOCATED IN
WHICH FINAL APPROVAL OF THE TERMS AND CONDITIONS OF THIS NOTE OCCURRED AND FROM
WHICH THE ORDER TO PAY THE LOAN FUNDS WAS MADE. YOU CONSENT TO THE JURISDICTION
OF ANY FEDERAL OR STATE COURT LOCATED IN THE STATE OF ARIZONA. YOU WAIVE TRIAL
BY JURY.
<PAGE> 29
You represent to us that the proceeds of the loan evidenced by this Note are
being used to finance (or refinance) your purchase of the Collateral described
in the Schedule, and that the Collateral will only be used for business
purposes.
ANTIGENICS, LLC. ATTEST:
[SEAL]
By /s/ Garo Armen
-------------------------------------
Name Garo Armen
-----------------------------------
Title CEO
----------------------------------
Date 8/20/99 /s/ Jeffrey Rona
----------------------------------- -----------------------------------
[Assistant] Secretary
FTF Promissory Note & Schedule
<PAGE> 30
PROMISSORY NOTE NO. 8
$244,383.80 August 26, 1999
ANTIGENICS, LLC ("you") promise to pay to the order of FINOVA CAPITAL
CORPORATION ASSIGNEE OF FINOVA TECHNOLOGY FINANCE, INC. ("we," "us" or "FINOVA")
the principal amount of Two Hundred Twenty-Four Thousand, Three Hundred
Eighty-Three and 80/100 Dollars ($224,383.80), together with interest on the
unpaid principal balance at the interest rate per annum and on the dates and as
otherwise provided in the "Master Agreement" and "Schedule" referred to below.
If the interest rate charged would exceed the maximum legal rate, you will only
have to pay the maximum legal rate. You do not have to pay any excess interest
over and above the maximum legal rate of interest. However, if it later becomes
legal for you to pay all or part of any excess interest, you will then pay it to
us upon our request.
You will make all payments in US Dollars at our offices at 10 Waterside Drive,
Farmington, Connecticut 06032-3065, or to another address that we request in
writing. All payments will be made in immediately available funds.
This Note is secured by a Master Loan and Security Agreement dated November 19,
1998 (the "Master Agreement"), between you and FINOVA, and by the Collateral and
other collateral listed in the attached Schedule (the "Schedule"), dated the
same date as this Note. This Note may be accelerated by us upon a payment
default or upon another default under the Master Agreement.
TIME IS OF THE ESSENCE.
If you do not make a payment when it is due, you will also pay us a late charge
often (10%) of the amount past due. Your interest rate will be increased by 4%
per annum, over and above your regular interest rate if payment is not made at
the scheduled or accelerated Maturity of this Note. You will also pay all of our
costs of collection, including our reasonable attorney's fees and expenses. If
we accelerate this Note, you will also owe a prepayment premium, as set forth in
Exhibit A to the Master Agreement.
You waive diligence, presentment, formalities of demand, protest or notice of
nonpayment or dishonor or any other notice as to this Note.
THIS NOTE IS GOVERNED BY THE SUBSTANTIVE LAWS (AND NOT THE CONFLICT OF LAWS
PROVISIONS) OF THE STATE OF ARIZONA, THE STATE IN WHICH OUR OFFICE IS LOCATED IN
WHICH FINAL APPROVAL OF THE TERMS AND CONDITIONS OF THIS NOTE OCCURRED AND FROM
WHICH THE ORDER TO PAY THE LOAN FUNDS WAS MADE. YOU CONSENT TO THE JURISDICTION
OF ANY FEDERAL OR STATE COURT LOCATED IN THE STATE OF ARIZONA. YOU WAIVE TRIAL
BY JURY
<PAGE> 31
You represent to us that the proceeds of the loan evidenced by this Note are
being used to finance (or refinance) your purchase of the Collateral described
in the Schedule, and that the Collateral will only be used for business
purposes.
ANTIGENICS, LLC. ATTEST:
[SEAL]
By /s/ Garo Armen
-------------------------------------
Name Garo Armen
-----------------------------------
Title CEO
----------------------------------
Date 8/20/99 /s/ Jeffrey Rona
----------------------------------- -----------------------------------
[Assistant] Secretary
FTF Promissory Note & Schedule
<PAGE> 1
EXHIBIT 10.8
PATENT LICENSE AGREEMENT
This Patent License Agreement (the "Agreement") is made and entered as
of the 1st day of November, 1994 by and between Antigenics, Inc., a Delaware
corporation having its principal place of business c/o Armen Partners, L.P., 135
East 57th Street, 30th Floor, New York, N.Y. 10022 ("Antigenics"), and Mount
Sinai School of Medicine, located at One Gustave L. Levy Place,. New York, NY
10029 ("MSSM").
RECITALS:
WHEREAS, Dr. Pramod K. Srivastava ("Dr. Srivastava") was formerly on
the faculty of and performed research and development at. MSSM in the area of
the use of heat shock proteins for the development of therapeutic and
prophylactic vaccines for cancer and infectious diseases;
WHEREAS, Antigenics desires to obtain and MSSM desires to grant
exclusive licenses to the patent rights which resulted from Dr. Srivastava's
research and development efforts in heat shock proteins at MSSM;
NOW, THEREFORE, in consideration of the mutual covenants expressed
herein and other good and valuable consideration, Antigenics and MSSM hereby
agree as follows;
1. LICENSE OF PATENT RIGHTS.
(a) DEFINITIONS OF PATENT RIGHTS. "MSSM Patent Rights" shall
be defined as U.S. patent application serial nos. [ ]* and all U.S.
patents which issue therefrom, including without limitation, any continuations,
divisionals, continuations-in-part, reissues, reexaminations and related foreign
applications and patents issuing therefrom or patents which are owned by MSSM
based on Pramod Srivastava's work conducted at MSSM prior to January 1, 1994.
For purposes of this Agreement, the term "Licensed Products" shall be defined as
products covered by the MSSM Patent Rights.
(b) GRANT OF LICENSE. In consideration if the royalty set out
in Section 2(a) and other consideration set forth in Section 2(b), MSSM hereby
grants to Antigenics a worldwide, exclusive license to all MSSM Patent Rights.
In consideration of the mutual covenants herein contained, MSSM hereby agrees to
execute and deliver all documents and instruments and to take any other action
on a best efforts basis which Antigenics shall deem necessary to perfect patent
protection in the United States and in foreign countries with respect to, or to
perfect said exclusive license to the MSSM Patent Rights in Antigenics.
________________________
* This portion of the Exhibit has been omitted pursuant to a Request for
Confidential Treatment under Rule 406 of the Securities Act of 1933, as amended.
The complete Exhibit, including the portions for which confidential treatment
has been requested, has been filed separately with the Securities Exchange
Commission.
<PAGE> 2
(c) RIGHT TO SUBLICENSE. Antigenics may not grant sublicenses
to the MSSM Patent Rights without the prior written consent of MSSM.
(d) PROTECTION OF MT. SINAI PATENT RIGHTS. MSSM hereby agrees
that upon request of Antigenics, authorized officials of MSSM will execute and
deliver any and all documents or instruments and take any other action which
Antigenics shall deem necessary to transfer and vest an exclusive license in
Antigenics, to perfect copyright and patent protection with respect to, or to
protect Antigenics' interest in, all of its rights and interests in and to such
MSSM Patent Rights. Antigenics shall have the right to prepare, file and
prosecute, by counsel of its choice, any U.S. and foreign patent applications
covering inventions arising out of the MSSM Patent Rights. Antigenics shall
prepare, file and prosecute any such patent applications at its own expense. In
the event that Antigenics elects not to apply for patent protection in a foreign
country, or fails to prosecute U.S. patent applications, MSSM shall have the
right to prepare and file its own patent application at MSSM's expense. Without
limiting the generality of the foregoing, MSSM specifically agrees to execute
all documents, and take any other actions necessary to perfect filing of such
patent applications in the U.S. Patent and Trademark Office and in such foreign
Patent Offices as Antigenics shall choose to file. MSSM agrees to notify
Antigenics of any Patent Office actions taken after execution of this Agreement
which affect the Patent Rights to the extent that MSSM is aware of such Patent
Office actions. MSSM will use its best efforts to assist Antigenics with
responses to such Patent Office actions. The obligations of this Section 1(d)
shall be binding upon the successors and assigns of MSSM. Antigenics agrees to
pay all copyright and patent fees and reasonable expenses incurred by MSSM for
any assistance rendered to Antigenics pursuant to the foregoing.
(e) NIH AND OTHER INSTITUTIONAL FUNDING. MSSM and Antigenics
each acknowledges that certain of the research and development efforts that are
embodied in MSSM Patent Rights were funded in whole or in part by institutions
other than MSSM, including the National Institutes of Health and the Cancer
Research Institute (the "Institutions").
MSSM represents and warrants that it has taken and will take any
actions required by such Institutions or applicable law to be taken to obtain
ownership right, title and interest in any MSSM Patent Rights to be licensed
hereunder. Both Antigenics and MSSM agree to comply with all laws, regulations
and requirements of NIH or any other government agency with respect to research
sponsored by such agency and MSSM Patent Rights resulting therefrom. Without
limiting the foregoing, if required by law, Antigenics agrees to manufacture in
the United States Licensed Products which are to be sold in the United States.
2. ROYALTIES; EQUITY INTEREST.
(a) ROYALTIES. For the rights and privileges granted under
this Agreement, Antigenics shall pay to MSSM a royalty of [ ]*
on Net Sales of Licensed Products from the date hereof until the date the last
patent embodying or using the
________________________
* This portion of the Exhibit has been omitted pursuant to a Request for
Confidential Treatment under Rule 406 of the Securities Act of 1933, as amended.
The complete Exhibit, including the portions for which confidential treatment
has been requested, has been filed separately with the Securities Exchange
Commission.
2
<PAGE> 3
Patent Rights has expired. For purposes of this Agreement "Net Sales" shall mean
sales that are net of any take-backs and/or trade discounts or allowances
whether Licensed Products are sold by Antigenics or another party with which
Antigenics has a marketing agreement. Royalties are payable for sales of
Licensed Products only if a patent has been issued or is pending which covers
the country or countries in which such Licensed Products are sold. If and only
for so long as gross margins on Net Sales of Licensed Products [ ]*,
Antigenics shall pay MSSM a royalty of [ ]* of Net Sales of such
Licensed Products.
On or before the forty-fifth (45th) day following each fiscal quarter,
Antigenics shall submit to MSSM full and accurate statements showing the
quantity, description and Net Sales of Licensed Products distributed and/or sold
during the preceding fiscal quarter, including any additional information kept
in the ordinary course of business by Antigenics, which is appropriate to enable
an independent determination of the amount due hereunder. All payments then due
MSSM shall be made simultaneously with the submission of the statements. Such
quarterly statements shall be submitted only when they reflect any sales.
Antigenics shall inform MSSM within thirty (30) days of the first sale of
Licensed Products. In addition, Antigenics will provide MSSM with audited
financial statements within ninety (90) days of the end of Antigenics' fiscal
year provided, however, that Antigenics shall not be required to deliver audited
financial statements until such time as there are sales of Licensed Products.
(b) EQUITY INTEREST. For the rights and privileges granted
under this Agreement, in-addition to the royalty described in Section 2(a),
Antigenics shall, [
]*.
3. DUE DILIGENCE.
Antigenics represents and warrants that it will use due diligence to
make Licensed Products commercially available. Antigenics will use its best
efforts to reach the following milestones:
(i) [
]*.
(ii) [ ]*.
________________________
* This portion of the Exhibit has been omitted pursuant to a Request for
Confidential Treatment under Rule 406 of the Securities Act of 1933, as amended.
The complete Exhibit, including the portions for which confidential treatment
has been requested, has been filed separately with the Securities Exchange
Commission.
3
<PAGE> 4
(iii) [
]*.
(iv) [
]*.
(v) [
]*.
(vi) [
]*.
(vii) [
]*.
(viii) [
]*.
Antigenics will notify MSSM as to the status of the milestones outlined
in this Section 30 days prior to the date of each milestone. If at any time MSSM
is of the opinion that Antigenics is not using due diligence to make Licensed
Products commercially available, as outlined above, MSSM shall notify Antigenics
to that effect, and Antigenics shall have six (6) months after such notice
within which to cure or to make arrangements satisfactory to MSSM. If at the end
of the six (6) month period MSSM and Antigenics cannot agree that Antigenics is
using due diligence, then MSSM may, at its option, convert the exclusive license
described in section 1(b) to a non-exclusive license upon thirty (30) days'
notice to Antigenics. At such time as the exclusive license becomes
non-exclusive, MSSM's obligations pursuant to Section 1(d) shall terminate.
Notwithstanding the foregoing, Antigenics' obligation to pay royalties pursuant
to Section 2(a) shall not terminate upon any conversion of the exclusive license
to a non-exclusive license.
4. INDEMNIFICATION. Antigenics shall indemnify, defend and hold
harmless, MSSM, its directors, officers, employees and agents (the
"Indemnitees") from and against any liability, damage, loss or expense
(including reasonable attorney's fees) incurred or imposed upon Indemnitees
arising in connection with any claim, suit, action, loss, settlement, demand or
judgment that arises, directly or indirectly, out of the design, manufacture,
sale, use, distribution or promotion by Antigenics or any of its licensees,
affiliates or agents of any product, process or service developed pursuant to
this Agreement or arising out of the acts or omissions of Antigenics committed
in the course of the performance of this Agreement. Antigenics'
________________________
* This portion of the Exhibit has been omitted pursuant to a Request for
Confidential Treatment under Rule 406 of the Securities Act of 1933, as amended.
The complete Exhibit, including the portions for which confidential treatment
has been requested, has been filed separately with the Securities Exchange
Commission.
4
<PAGE> 5
obligation to protect, defend, indemnify and hold harmless hereunder shall
survive the expiration and termination of the Agreement.
Antigenics agrees to obtain product liability insurance covering claims
arising or resulting from the design, manufacture, sale, use, distribution or
promotion f the Licensed Products prior to the time human clinical trials o the
Licensed Products are commenced. The amount of such product liability insurance
will be acceptable to MSSM and consistent with industry practice for companies
which are similar to Antigenics and institutions which are similar to MSSM. Such
insurance shall be underwritten by insurers acceptable to MSSM, and shall list
MSSM as an additional named insured.
5. NON-DISCLOSURE.
Unless required by law, MSSM agrees that it will not at any time,
either during or after the term of this Agreement, without the prior written
consent of Antigenics, divulge or disclose to anyone outside, or appropriate for
its own use or lie use of any third party, any financial or patent-related
information received from Antigenics after execution of this Agreement which is
marked "Confidential" (such information shall be referred to as "Confidential
Information"), and will not during the term hereof, or at any time thereafter,
disclose or use or attempt to use any such Confidential Information for its own
benefit, or the benefit of any third party, or in any manner which may injure or
cause loss or may be calculated to injure or cause loss to Antigenics. MSSM's
obligations contained in this subsection 5 shall lapse on the termination of
this Agreement.
6. GENERAL.
(a) ENTIRE AGREEMENT. This Agreement constitutes the entire
Agreement between the parties relative to the subject matter hereof, and
supersedes all proposals or agreements, written or oral, and all other
communications between the parties relating to the subject matter of this
Agreement.
(c) SEVERABILITY. The parties agree that each provision of
this Agreement shall be treated as a separate and independent clause, and the
unenforceability of any one clause shall in no way impair the enforceability of
any of the other clauses herein. Moreover, if any one or more of the provisions
of this Agreement shall for any reason be held to be exclusively broad as to
scope, activity or subject so as to be enforceable at law, such provisions shall
be construed by the appropriate judicial body by limiting and reducing it or
them, so as to be enforceable to the maximum extent compatible with the
applicable law as it shall then appear.
(d) ASSIGNMENT. Antigenics may assign its rights, together
with its obligations hereunder, to any affiliate or successor in connection with
any consolidation, merger, sale, transfer or other disposition of all or
substantially all of Antigenics' business and assets. In the event of an
consolidation or merger of Antigenics' with or into any other corporation, or
the sale or conveyance of -all or substantially all of the assets of Antigenics
to another corporation, the surviving or acquiring corporation shall be entitled
to the rights and benefits provided under this Agreement, and become obligated
to perform all of the terms and conditions hereof. The foregoing
notwithstanding, Antigenics may also transfer its rights hereunder with the
consent of MSSM which consent shall not be withheld unreasonably.
5
<PAGE> 6
(e) GOVERNING LAW. This Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall be governed by,
the internal laws of the State of New York.
(f) NOTICE. All notices provided for in this Agreement shall
be given in writing and shall be effective when either served by personal
delivery, express overnight courier service, or by registered or certified mail,
return receipt requested, addressed to the parties at their respective address s
herein set forth, or to such other address or addresses as either party may
later specify by written notice to the other.
(g) SURVIVAL. The provisions set forth in Sections 4, 5, and 6
shall survive the termination or expiration of this Agreement for the periods
set forth herein as a continuing agreement of the parties hereto.
(h) REMEDIES. The parties agree that a breach of the
provisions of Section 5 of this Agreement by either party will cause irreparable
damage to the other party and that in the event of such breach the party who has
suffered the breach shall have, in addition to any and all remedies of law, the
right to an injunction, specific performance or other equitable relief to
prevent the violation of the other party's obligations hereunder. Nothing herein
contained shall be construed as prohibiting either party from pursuing any other
remedies available to either for breach by the other under this Agreement or
applicable law.
(i) TERM. The term of this Agreement shall be until the last
patent embodying or using the MSSM Patent Rights has expired. MSSM may terminate
this agreement if after at least sixty (60) days' written notice by MSSM to
Antigenics, Antigenics shall continue to fail to pay any royalties then due
under Section 2(a). The termination of this Agreement will not relieve
Antigenics of its obligations to make any payments required hereunder.
(j) USE OF NAME. Except where required by law, Antigenics may
not use the name "Mount Sinai School of Medicine", the MSSM logo or the MSSM
insignia in any advertisement, commercial or product literature without the
express written consent of MSSM. If Antigenics is required by law to use the
name "Mount Sinai School of Medicine", Antigenics will only use such name in
connection with factually correct information. The "Mount Sinai School of
Medicine" name may be used in connection with fundraising activities of
Antigenics with MSSM's consent, which consent may not be unreasonably withheld.
This Agreement may be executed in duplicate counterparts, which, when
taken together, shall constitute one instrument and each of which shall be
deemed to be an original instrument.
6
<PAGE> 7
IN WITNESS WHEREOF, parties have executed this Agreement as of the day
and year first above written.
ANTIGENICS, INC.
By: /s/ Garo H. Armen
-----------------------------------
President
MOUNT SINAI SCHOOL OF MEDICINE
By: /s/ Nathan Kase
-----------------------------------
Title Dean MSSM
----------------------------
7
<PAGE> 8
AMENDMENT TO
PATENT LICENSE AGREEMENT
BY AND BETWEEN
ANTIGENICS, INC.
AND
MOUNT SINAI SCHOOL OF MEDICINE
THIS AMENDMENT TO THE PATENT LICENSE AGREEMENT ("AMENDMENT"), effective
as of June 5, 1995 ("EFFECTIVE DATE"), is made and entered into by and between
ANTIGENICS, INC., a Delaware corporation having a principal place of business
c/o Armen Partners, 135 East 57th Street, 30th Floor, New York, New York 10022,
("Antigenics") and MOUNT SINAI SCHOOL OF MEDICINE, having a principal of
business at One Gustave L. Levy Place, New York, New York 10029 ("MSSM").
WHEREAS Antigenics and MSSM entered into a Patent License Agreement
("License Agreement") effective as of November 1, 1994 pursuant to which
Antigenics obtained a worldwide, exclusive license under the MSSM Patent Rights
(as defined in the License Agreement); and
WHEREAS Antigenics and MSSM desire to amend the License Agreement to
provide for modification of the obligations of the parties.
NOW, THEREFORE, in consideration of the mutual covenants and premises
herein contained, the parties hereto agree as follows:
1. RIGHT TO SUBLICENSE
Section 1(c) of the License Agreement is hereby amended to read in its
entirety as follows:
(c) RIGHT TO SUBLICENSE. Antigenics may grant sublicenses to
the MSSM Patent Rights; provided that, at least ten (10) business days
prior to the effective date of any such sublicense, Antigenics, in
accordance with Section 6(f), shall provide written notice to MSSM of
Antigenics' intention to grant such sublicense, such notice to be
provided for the purpose of obtaining MSSM's consent. MSSM agrees that
such consent shall not be unreasonably withheld. In addition, MSSM may
provide comments to Antigenics relating to the terms and conditions of
such sublicense. In the event that MSSM provides no comments to
Antigenics in writing within five (5) business days after receipt of
Antigenics' written notice, MSSM will be deemed to have given consent
to such sublicense. In the event that MSSM provides comments to
Antigenics in writing within five (5) business days after receipt of
Antigenics' written notice, Antigenics shall consider such comments in
good faith and shall in incorporate such comments into the sublicense
to the extent necessary to provide that Antigenics complies with its
obligations to MSSM under the License Agreement.
8
<PAGE> 9
2. OTHER PROVISIONS
All provisions of the License Agreement not expressly modified by this
Amendment shall remain in full force and effect.
9
<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have caused authorized their
duly authorized representatives to execute this Amendment.
ANTIGENICS, INC. MOUNT SINAI SCHOOL OF MEDICINE
("Antigenics") ("MSSM")
By: /s/ Garo H. Armen By: /s/ Nathan Kase
-------------------------------- ---------------------------------
Name: Garo H. Armen Name: Nathan Kase
-------------------------------- ---------------------------------
Title: Chairman and CEO Title: Dean
-------------------------------- ---------------------------------
10
<PAGE> 1
EXHIBIT 10.9
SPONSORED RESEARCH AND
TECHNOLOGY LICENSE AGREEMENT
This Sponsored Research and Technology License Agreement (the
"Agreement") is made and entered into this 28th day of March, 1995 by and
between Antigenics, Inc., a Delaware corporation having its principal place of
business c/o Armen Partners, L.P., 30 Rockefeller Plaza, Suite 4220, New York,
N.Y. 10011 ("Antigenics"), and Fordham University, located at 441 East Fordham
Rd., Bronx, New York 10458-5153 ("Fordham").
R E C I T A L S:
WHEREAS, Dr. Pramod K. Srivastava ("Dr. Srivastava") is currently on
the faculty of and performing research and development at Fordham in the area of
the use of heat shock proteins for the development of therapeutic and
prophylactic vaccines for cancer and infectious diseases (the "Field");
WHEREAS, Antigenics desires to sponsor, support and fund Dr.
Srivastava's research and development efforts at Fordham in the Field and obtain
exclusive rights to the intellectual property which has resulted to date from
his research and development efforts in the Field at Fordham and which may
result from his continuing research and development efforts in the Field at
Fordham; and
WHEREAS, Fordham desires to obtain funding for Dr. Srivastava's
research and development efforts in the Field and to support the
commercialization of the results of such efforts;
NOW, THEREFORE, in consideration of the mutual covenants expressed
herein and other good and valuable consideration, Antigenics and Fordham hereby
agree as follows:
1. Sponsored Research.
(A) PERIOD OF PERFORMANCE; TERM. This Agreement shall begin on
the date hereof and shall continue in effect for a period of three (3) years
(the "Initial Term"). The term of this Agreement shall be extended beyond the
Initial Term for one or more additional one (1) year periods (individually, an
"Additional Term") unless either party desires not to extend the term of this
Agreement for an additional term, in which case such party shall give the other
party at least thirty (30) days' prior written notice of his or its intention
not to extend the Agreement for an Additional Term. As used in this Agreement,
the term of the Agreement shall include the Initial Term and any Additional
Terms. Notwithstanding the foregoing, Antigenics may terminate this agreement on
thirty (30) days' prior notice if Dr. Srivastava dies, becomes incapacitated or
otherwise incapable of performing his duties at Fordham or if Dr. Srivastava
becomes affiliated with a university or institution other than Fordham. The
termination of this Agreement will not relieve Antigenics of its obligation to
make any payments due but unpaid on the date of termination.
<PAGE> 2
(B) STATEMENT OF WORK. Fordham agrees to use its best efforts
to facilitate the performance by Dr. Srivastava and his laboratory personnel at
Fordham of the project set forth and described on EXHIBIT A attached hereto (the
"Project").
(C) RESEARCH SUPPORT. Antigenics will supply the equipment to
be associated with the Project as set forth and described on EXHIBIT B hereto.
All such property supplied by Antigenics will be the property of Antigenics.
Antigenics will pay Fordham [
]*. The parties agree to update EXHIBIT B from time to time and at least
annually as of November 1 of each year during the term hereof. No update of
EXHIBIT B will be effective unless executed by each of the parties hereto.
(D) PAYMENT. An initial payment of [ ]* has been paid
to Fordham covering the quarter commencing November 1, 1994 and ending January
31, 1995. An additional payment of [ ]* will be made upon execution of
this Agreement covering the quarter commencing. February 1, 1995 and ending
April 30, 1995. The remaining quarterly payments of [ ]* will be payable
in advance as of the first day of the quarter commencing May 1, 1995.
Notwithstanding the foregoing, Fordham shall reimburse to Antigenics the pro
rata portion of any quarterly payment paid if this Agreement shall terminate
within a quarter for which payment has been made in advance.
2. LICENSE OF INTELLECTUAL PROPERTY.
(A) DEFINITION OF INTELLECTUAL PROPERTY. "Intellectual
Property" shall mean all inventions, discoveries, know-how, technical
information, improvements and other information which are or were conceived
(whether or not reduced to practice) and/or made or become known (i) by
employees of Fordham, including Dr. Srivastava, (ii) jointly by employees of
Fordham and employees of Antigenics, if any, or (iii) by employees of or
consultants to Antigenics, if any, at Dr. Srivastava's Fordham laboratory in the
Field or resulting or arising from or in connection with the performance of the
Project hereunder.
(B) GRANT OF LICENSE. In consideration of the research support
set out in Section 1(C) hereinabove and other good and valuable consideration,
Fordham hereby grants to Antigenics a worldwide, exclusive license to all
Intellectual Property resulting or arising from or in connection with the
performance of the Project hereunder, including all patents and patent
applications and specifically the patent applications described in subsection
2(C) hereof.
(C) PROTECTION OF INTELLECTUAL PROPERTY RIGHTS. Fordham hereby
agrees that it will promptly disclose to Antigenics any and all of such
intellectual Property in a manner that will enable Antigenics to use effectively
such Intellectual Property, and that, upon request of
_________________________
* This portion of the Exhibit has been omitted pursuant to a Request for
Confidential Treatment under Rule 406 of the Securities Act of 1933, as amended.
The complete Exhibit, including the portions for which confidential treatment
has been requested, has been filed separately with the Securities Exchange
Commission.
2
<PAGE> 3
Antigenics, authorized officials of Fordham will execute and deliver any and all
documents or instruments and take any other action which Antigenics shall deem
necessary to transfer and vest an exclusive license in Antigenics, to perfect
copyright and patent protection with respect to, or to protect Antigenics'
interest in, all of its rights and interests in and to such Intellectual
Property. Antigenics shall have the right to prepare, file and prosecute, at its
own expenses, by counsel of its choice, any U.S. and foreign patent applications
covering inventions arising out of the Intellectual Property. Without limiting
the generality of the foregoing, Fordham specifically agrees to execute all
documents, to ensure the cooperation of its employees, and take any other
actions necessary to perfect filing of such patent applications in the U.S.
Patent and Trademark Office and in such foreign Patent Offices as Antigenics
shall choose to file. The obligations of this Section 2 shall continue beyond
the termination of this agreement with respect to such Intellectual Property and
shall be binding upon the successors and assigns of Fordham. Antigenics agrees
to pay all copyright and patent fees and expenses incurred by Fordham for any
assistance rendered to Antigenics pursuant to the foregoing.
(D) RIGHT TO SUBLICENSE. Antigenics may not grant sublicenses
to the Intellectual Property without the prior written consent of Fordham which
consent shall not be unreasonably withheld. Notwithstanding the foregoing,
Antigenics may grant sublicenses to the Intellectual Property to its affiliates
without the prior written consent of Fordham.
(E) NIH AND OTHER INSTITUTIONAL FUNDING. Fordham and
Antigenics each acknowledges that certain of the research and development,
efforts that are embodied in certain of the Intellectual Property to which
Antigenics will receive exclusive license rights hereunder were funded in whole
or in part by institutions other than Fordham, including the National Institutes
of Health and the Cancer Research Institute (the "Institutions"). The parties
also acknowledge that the Project may be partially funded by other Institutions.
Fordham hereby represents and warrants that it has taken and will take any
actions required by such Institutions or applicable law to be taken to obtain
ownership right, title and interest in any Intellectual Property to be licensed
hereunder. During the term hereof, both Antigenics and Fordham agree to comply
with all laws, regulations and requirements of NIH or any other government
agency with respect to research sponsored by such agency and Intellectual
Property resulting therefrom. Each party agrees to indemnify and hold harmless
the other party in the event of a breach of the provisions of this Section 2(E).
3. ROYALTIES. For the rights and privileges granted under this
Agreement, Antigenics shall pay to Fordham a royalty of [ ]*on Net Sales of any
product covered by any patent based on the Intellectual Property licensed
hereunder from the date hereof until the date the last such patent has expired.
For purposes of this Agreement "Net Sales" shall mean sales that are net of any
take-backs and/or trade discounts or allowances whether products are sold by
Antigenics or another party with which Antigenics has a marketing agreement.
Royalties are payable for sales of products only if a patent has been issued or
is pending which covers the country or countries in which such products are
sold.
_________________________
* This portion of the Exhibit has been omitted pursuant to a Request for
Confidential Treatment under Rule 406 of the Securities Act of 1933, as amended.
The complete Exhibit, including the portions for which confidential treatment
has been requested, has been filed separately with the Securities Exchange
Commission.
3
<PAGE> 4
On or before the forty-fifth (45th) day following each fiscal quarter,
Antigenics shall submit to Fordham full and accurate statements showing the
quantity, description and Net Sales of any products distributed and/or sold
during the preceding fiscal quarter and covered by the foregoing royalty payment
obligation, including any additional information kept in the ordinary course of
business by Antigenics, which is appropriate to enable an independent,
determination of the amounts due hereunder. All payments then due Fordham shall
be made simultaneously with the submission of the statements. Such quarterly
statements shall be submitted only when they reflect any sales. Antigenics shall
inform Fordham within thirty (30) days of the first such sale. In addition,
Antigenics will provide Fordham with audited financial statement within ninety
(90) days of the end of Antigenics' fiscal year provided, however, that
Antigenics shall not be required to deliver-audited financial statements until
such time as there are sales hereunder.
4. ACKNOWLEDGMENT OF AGREEMENT BETWEEN ANTIGENICS AND DR. SRIVASTAVA.
Fordham hereby acknowledges that Dr. Srivastava will enter into an agreement or
agreements with Antigenics which will provide, among other things, for Dr.
Srivastava to receive an equity interest in Antigenics and to consult for
Antigenics.
5. MUTUAL NON-DISCLOSURE.
(A) PROPRIETARY INFORMATION. For purposes of this Agreement,
the term "Proprietary Information" shall mean all knowledge and information
which each party hereto has acquired or may acquire as a result of, or related
to the performance of the terms of this Agreement concerning the other party's
business, finances, operations, strategic planning, research and development
activities, products, molecules, organisms, laboratory materials, prototypes,
software programs, firmware, designs, systems, improvements, applications,
processes, trade secrets, services, cost and pricing policies, and including,
but not limited to, information relating to formulae, diagrams, schematics,
notes, data, memoranda, methods, know-how, techniques, inventions, and
purchasing, merchandising and selling strategies. Notwithstanding the foregoing
sentence such Proprietary Information does not include (i) information which is
or becomes publicly available (excepts as may be disclosed by either party in
violation of this Agreement), or (ii) information acquired by either party from
a third-party source, other than the other party or any of its employees,
consultants or shareholders, which source legally acquired such information from
the party for whom the information is Proprietary Information.
(B) NONDISCLOSURE OBLIGATION. Each party agrees that it will
not at any time, either during or after the term of this Agreement, without the
prior written consent of the other party, divulge or disclose to anyone outside
of the other party, or appropriate for his own use or the use of any third
party, any such Proprietary Information, and will not during the term hereunder,
or at any time thereafter, disclose or use or attempt to use any such
Proprietary Information for his own benefit, or the benefit of any third party,
or in any manner which may injure or cause loss or may be calculated to injure
or cause loss to the other party. Each party's obligations contained in this
subsection 5(B) shall lapse on the fifth anniversary of the termination of this
Agreement. Each party shall obtain from personnel, agents or other
representatives employed or engaged by it to perform any work hereunder an
agreement which contains the provisions of this Section 5.
4
<PAGE> 5
6. ANTIGENICS COLLABORATION. Subject to the nondisclosure obligations
of Section 5 hereof, Antigenics agrees that during the term hereof it will share
with the Fordham employees working on the Project hereunder the results of
research and development efforts of Antigenics employees in the Field for the
purpose of enhancing the performance of the Project hereunder.
7. PUBLICATIONS. Nothing in this Agreement shall prevent Fordham from
submitting for publication to any academic journal or periodical the results of
research relating to the Field or to which the services provided by Fordham to
Antigenics hereunder shall then pertain. So long as Fordham is subject to a
non-disclosure obligator under Section 5 hereof, Fordham shall deliver at least
30 days prior to any such submission for publication, to Antigenics a final form
of the manuscript to be so submitted. Notwithstanding the foregoing obligation
to deliver publications to Antigenics prior to submission for publication,
Fordham does not need to obtain Antigenics' approval of any manuscript prior to
publication of the manuscript. Fordham shall cooperate in a timely manner with
Antigenics in taking any and all actions necessary to perfect copyright and
patent protection with respect to, or to protect Antigenics' interest in, any
Proprietary Information or Intellectual Property that Antigenics may deem to be
disclosed in such manuscript.
8. CONSULTATION WITH NON-COMMERCIAL ENTITIES. Subject to all the
provisions hereof, nothing herein shall preclude Fordham or employees of Fordham
working on the Project hereunder from consulting in the Field with
non-commercial entities and institutions.
9. GENERAL. This Agreement constitutes the entire Agreement between the
parties relative to the subject matter hereof, and supersedes all proposals or
agreements, written or oral, and all other communications between the parties
relating to the subject matter of this Agreement.
No provision of this Agreement shall be waived, amended, modified,
superseded, cancelled, renewed or extended except in a written instrument signed
by the party against whom any of the foregoing actions is asserted. Any waiver
shall be limited to the particular instance and for the particular purpose when
and for which it is given.
The invalidity, illegality or unenforceability of any provision of this
Agreement shall in no way affect the validity, legality or enforceability of any
other provision of this Agreement.
This Agreement, the Project to be performed and all rights hereunder
may not be transferred or assigned by Fordham at any time. Antigenics may assign
its rights, together with its obligations hereunder, to any affiliate or
successor in connection with any consolidation, merger, sale, transfer or other
disposition of all or substantially all, of Antigenics' business and assets. In
the event of any consolidation or merger of Antigenics' with or into any other
corporation, or the sale or conveyance of all or substantially all of the assets
of Antigenics to another corporation, the surviving or acquiring corporation
shall he entitled to the rights and benefits of the services provided under this
Agreement, and become obligated to perform all of the terms and conditions
hereof. The foregoing notwithstanding, Antigenics may transfer its Proprietary
Information without limitation.
5
<PAGE> 6
This Agreement shall be construed and enforced in accordance with, and
the rights of the parties shall be governed by, the internal laws of the State
of New York.
All notices provided for in this Agreement shall be given in writing
and shall be effective when either served by personal delivery, express
overnight courier service, or by registered or certified mail, return receipt
requested, addressed to the parties at their respective addresses herein set
forth, or to such other address or addresses as either party may later specify
by written notice to the other.
This Agreement may be executed in duplicate counterparts, which, when
taken together, shall constitute one instrument and each of which shall he
deemed to be an original instrument.
The provisions of Sections 2, 3, 5 and 7 shall survive the termination
or expiration of this Agreement for the periods set forth herein as a continuing
agreement of the parties hereto.
The parties agree that a breach of the provisions of Sections 2, 3, 5
and 7 of this Agreement by either party will cause irreparable damage to the
other party and that in the event of such breach either party shall have, in
addition to any and all remedies of law, the right to an injunction, specific
performance or other equitable relief to prevent the violation of the other
party's obligations hereunder. Nothing herein contained shall he construed as
prohibiting either party from pursuing any other remedies available to either
for breach by the other under this Agreement or applicable law.
The parties agree that each provision of this Agreement shall be
treated as a separate and independent clause, and the unenforceability of any
one clause shall in no way impair the enforceability of any of the other clauses
herein. Moreover, if any one or more of the provisions of this Agreement shall
for any reason be held to be exclusively broad as to scope, activity or subject
so as to be unenforceable at law, such provisions shall be construed by the
appropriate judicial body by limiting and reducing it or them, so as to be
enforceable to the maximum extent compatible with the applicable low as it shall
then appear.
(REMAINDER OF PAGE LEFT BLANK INTENTIONALLY.)
6
<PAGE> 7
IN WITNESS WHEREOF, parties have executed this Agreement as of the day
and year first above written.
ANTIGENICS, INC.
By: /s/ Garo H. Armen
------------------------------------
President
FORDHAM UNIVERSITY
By: [AUTHORIZED SIGNATORY]
------------------------------------
Title:
------------------------------
7
<PAGE> 8
EXHIBIT A
---------
THE PROJECT
[
]*.
_________________________
* This portion of the Exhibit has been omitted pursuant to a Request for
Confidential Treatment under Rule 406 of the Securities Act of 1933, as amended.
The complete Exhibit, including the portions for which confidential treatment
has been requested, has been filed separately with the Securities Exchange
Commission.
i
<PAGE> 9
EXHIBIT B
---------
[
]*.
_________________________
* This portion of the Exhibit has been omitted pursuant to a Request for
Confidential Treatment under Rule 406 of the Securities Act of 1933, as amended.
The complete Exhibit, including the portions for which confidential treatment
has been requested, has been filed separately with the Securities Exchange
Commission.
ii
<PAGE> 10
AMENDMENT TO
SPONSORED RESEARCH AND
TECHNOLOGY LICENSE AGREEMENT
BY AND BETWEEN
ANTIGENICS, INC.
AND
FORDHAM UNIVERSITY
THIS AMENDMENT TO THE SPONSORED RESEARCH AND TECHNOLOGY LICENSE
AGREEMENT ("AMENDMENT"), effective as of March 22, 1996 ("EFFECTIVE DATE"), is
made and entered into by and between ANTIGENICS, INC., a Delaware corporation
having a principal place of business c/o Armen Partners, L.P., 630 Fifth Avenue,
Suite #918, New York, New York 10111, ("Antigenics") and FORDHAM UNIVERSITY,
having a principal of business at 441 East Fordham Road, Bronx, New York 10458
("Fordham").
WHEREAS Antigenics and Fordham entered into a Sponsored Research and
Technology License Agreement ("License Agreement") effective as of March 28,
1995 pursuant to which Antigenics (i) agreed to fund certain research activities
by Dr. Pramod K. Srivastava at Fordham, and (ii) obtained a worldwide, exclusive
license under Intellectual Property (as defined in thc License Agreement); and
WHEREAS Antigenics and Fordham desire to amend the License Agreement to
provide for modification of the obligations of the parties.
NOW, THEREFORE, in consideration of the mutual covenants and premises
herein contained, the parties hereto agree as follows:
1. GRANT
Section 2(B) of the License Agreement is hereby amended to read in its
entirety as follows:
(B) GRANT OF LICENSE. In consideration of the research support
set out in Section 1(C) hereinabove and other good and valuable
consideration, Fordham hereby grants to Antigenics a worldwide,
exclusive license to all Intellectual Property, including without
limitation all patents and patent applications therein.
2. RIGHT TO SUBLICENSE
Section 2(D) of the License Agreement is hereby amended to read in its
entirety as follows:
(D) RIGHT TO SUBLICENSE. Antigenics may grant sublicenses to
the Intellectual Property; provided that, at least ten (10) business
days prior to the effective date of any such sublicense, Antigenics
shall provide written notice to Fordham of Antigenics'
iii
<PAGE> 11
intention to grant such sublicense, such notice to be provided in
accordance with the provisions of Section 9. Fordham may provide
comments to Antigenics relating to the terms and conditions of such
sublicense. In the event that Fordham provides comments to Antigenics,
Antigenics shall consider such comments in good faith; provided that
such comments are received by Antigenics within ten (10) business days
after Fordham's receipt of Antigenics written notice. Antigenics
acknowledges that it is aware of, and will take fully into account the
distinctive history, tradition and mission of Fordham, in its
evaluation and selection of sublicensees under the Intellectual
property. Antigenics agrees that the economic terms and conditions of
any sublicense granted by Antigenics will be at least as favorable as
the economic terms and conditions of the license between Fordham and
Antigenic relating to the Intellectual Property. In addition,
Antigenics agrees that it will include in any sublicense granted by
Antigenics the condition that in the event of any event of, or filing
for, bankruptcy, arrangement among creditors or any other procedure
sounding in insolvency, the sublicense, to the extent permitted by
applicable law, will be immediately terminated and of no further force
or effect.
3. OTHER PROVISIONS
All provisions of the License Agreement not expressly modified by this
Amendment shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized representatives to execute this Amendment.
ANTIGENICS, INC. FORDHAM UNIVERSITY
("Antigenics") ("FORDHAM")
By: /s/ Garo H. Armen By: /s/ Robert W. Charrubba
--------------------------------- ---------------------------------
Name: Garo H. Armen Name: Robert W. Charrubba
-------------------------------- --------------------------------
Title: Chairman & CEO Title: VP for Academic Affairs
------------------------------- -------------------------------
4
<PAGE> 1
EXHIBIT 10.10
RESEARCH AGREEMENT
This Agreement is made by and between:
Antigenics, L.L.C., a limited liability company organized and existing under the
laws of the State of Delaware, having an office at 630 Fifth Avenue, Suite #
2170, New York, NY 10111, hereinafter referred to as Sponsor.
and
The University of Connecticut Health Center, an agency of the State of
Connecticut, having a business address at 263 Farmington Avenue, Farmington,
Connecticut, 06030, hereinafter referred to as UCHC.
and
Pramod Srivastava, Ph.D., Professor of Immunology, and Director, Center for
Immunotherapy of Cancer and Infectious Diseases, University of Connecticut
Health Center, having a business address at MC-1601, University of Connecticut
Health Center, 263 Farmington Avenue, Farmington, Connecticut, 06030,
hereinafter referred to as Principal Investigator.
The purpose of this Agreement is to promote the increase of useful
knowledge relating to a project entitled, "Use of heat shock proteins for the
development of therapeutic and prophylactic vaccines for cancer and infectious
diseases."
IT IS AGREED:
1.0 The UCHC agrees to undertake certain research (hereinafter referred to
as the Project) specifically described in the attached proposal
(Appendix A) which by reference is incorporated into this Agreement,
and such other work as may be mutually agreed upon in a duly executed
amendment to this Agreement.
2.0 The Project and all work assignments shall be carried out under the
direction of the Principal Investigator, while employed by UCHC, and by
other research staff employed by UCHC (e.g. technician, graduate
student, postdoctoral follow, staff assistant, hereinafter collectively
referred to as Personnel), as assigned by Principal Investigator.
3.0 The Project covered by this Agreement shall commence on February 12,
1998 and shall extend for a period of 58.5 months, expiring on December
31, 2002.
4.0 UCHC agrees to furnish such available facilities as it shall determine
necessary for the work to be done on this Project. During the term of
this Agreement, UCHC and the Principal Investigator will permit, upon
reasonable notice and at reasonable times, representatives of Sponsor
to observe research facilities utilized for and research performed by
Principal Investigator pursuant to this Agreement.
<PAGE> 2
5.0 Sponsor agrees to pay UCHC the sum of [ ]* for this Project in
accordance with the agreed budget (Appendix B), plus any agreed to
excess costs as evidenced by a writing signed by both parties; payments
to be made as follows:
[ ]* Payable upon execution of Agreement
[ ]* Payable by no later than May 15, 1998
[ ]* Payable by no later than August 15, 1998
[ ]* Payable by no later than November 15, 1998
Payments for all subsequent years shall be due by no later than
February 15, May 15, August 15, and November 15 of each year.
Sponsor further agrees to pay preaward costs incurred by Dr. Srivastava
upon submission of an invoice in an amount not to exceed [ ]*.
Payment of said preaward costs shall be made within ten day of
Sponsor's receipt of the invoice.
5.1 Payments are to be made to:
University of Connecticut Health Center
Grant and Contract Administration
ASB3, MC 5335
263 Farmington Ave.
Farmington, CT 06030
Attn.: Ken Landorf, Manager
IRS No.: 52-1725543
6.0 The Principal Investigator shall furnish Sponsor with written reports
on the progress of the work on dates as mutually agreed upon and a
final report on the entire Project within ninety (90) days after
termination of this Agreement.
7.0 The data and information accruing from the Project may be published in
writing or orally presented by the Principal Investigator, but Sponsor
shall be provided with a copy of any proposed written manuscript at
least thirty (30) day prior to submission or the text of any oral
disclosure at least fourteen (14) days prior to its presentation and
shall have thirty (30) days in the case of written manuscripts and
fourteen (14) days in the case of oral presentations for review of
patentable items or items deemed confidential and proprietary as
defined in Article 8.0.
7.1 If Sponsor believes that any planned publication contains a
patentable development, publication, or presentation shall be
delayed for a reasonable time to permit the filing of a patent
application(s). If the patent application is prepared under
direction of UCHC, counsel approved by the Sponsor from the
list of firms
______________________
* This portion of the Exhibit has been omitted pursuant to a Request for
Confidential Treatment under Rule 406 of the Securities Act of 1933, as amended.
The complete Exhibit, including the portions for which confidential treatment
has been requested, has been filed separately with the Securities Exchange
Commission.
2
<PAGE> 3
having Professional Employment Agreements with the Attorney
General of the State of Connecticut for the purposes of patent
preparation, prosecution and maintenance of University of
Connecticut inventions conceived or reduced to practice in the
conduct of the Project shall be used. Sponsor shall have the
right to elect to use its own counsel who will then conduct
such patent preparation, prosecution, and maintenance. If
Sponsor elects to use its own counsel, said counsel shall be
subject to UCHC approval, which approval shall not be
unreasonably withheld. When such election has been approved by
UCHC, Sponsor, and Sponsor's counsel, or their agents shall
provide UCHC and its agents on a timely basis with copies of
all correspondence and patent application submissions
(including but not limited to parent, continuation,
continuation-in-part or reissue applications) by and between
Sponsor and Sponsor's counsel and/or agents and the U.S.
Patent and Trademark Office. Notwithstanding the preceding
service requirement, Sponsor and Sponsor's counsel and/or
agents shall make diligent efforts to provide all such
correspondence and applications to UCHC or UCHC's agents prior
to their submission and shall to the extent practicable
consult with UCHC and its agents regarding the form of such
submissions. UCHC acknowledges and approves Sponsor's election
to use as patent counsel the firm of Pennie and Edmonds, New
York, NY.
7.2 Sponsor shall reimburse UCHC for all costs associated with
UCHC's filing, prosecution and maintenance of patents arising
form this work pursuant to Sponsor's request that is carried
out by UCHC counsel. If Sponsor has elected to use it's own
counsel and UCHC has approved such election, Sponsor shall
directly pay all costs associated with the preparation,
submission and maintenance of the resulting patent carried out
by its counsel.
7.3 UCHC and the Principal Investigator shall not disclose to
other or publish any information disclosed to the Principal
Investigator by Sponsor which is confidential within the
meaning of Article 8.0 without the prior written approval of
Sponsor.
8.0 UCHC and Principal Investigator agree to hold in confidence all
information which Sponsor may wish to disclose to Principal
Investigator in writing and marked "CONFIDENTIAL" under this Agreement
except:
a. technical information which at the time of disclosure
publicly known or available;
b. technical information which after disclosure is
published or otherwise becomes publicly known or
available through no fault of Principal Investigator;
c. technical information which was in the possession of
the Principal Investigator at the time of disclosure
and was not acquired from Sponsor under an obligation
of confidence.
3
<PAGE> 4
9.0 Sponsor shall retain patent rights to all of its technologies currently
protected by existing patents or pending patent applications, and for
technologies developed by Sponsor outside the terms of this Agreement.
9.1 Pursuant to the work performed under this Agreement UCHC shall
retain patent rights to all new technologies developed as a
result of intellectual contributions of UCHC's faculty or
staff or involving the use of UCHC facilities or resources.
9.2 UCHC shall provide Sponsor with a copy of each written
invention disclosure of intellectual property conceived or
developed in the conduct of the Project within forty five (45)
days of its submittal to the UCHC, in sufficient detail so as
to enable one skilled in the art to understand the subject
matter of the invention. The UCHC shall also notify Sponsor
immediately of any potential statutory bar, including but not
limited to, the dates of any publication, presentation or
other disclosure of the intellectual property accruing to the
project.
9.3 For new inventions, other than incremental improvements which
are dominated by existing patents or pending patent
applications for which Sponsor holds a license, UCHC agrees to
grant and hereby grants to Sponsor an option to secure a
royalty-bearing exclusive license, including the right to
grant sublicenses, under reasonable terms with the right to
make, use and sell, have made, have used, import and offer for
sale the claimed invention of any patent or patent application
which is based on any invention conceived or reduced to
practice in the conduct of the Project, subject to Article 9.1
above. The license (and all sublicenses) will include a
royalty rate in an amount [
]*. Such
option shall be in effect and exercisable for each invention
within [ ]* from the date of filing a U.S.
patent application on each such invention. Upon exercise of
such option, the terms and conditions of the license will be
negotiated in good faith by the parties. In the absence of
agreement [ ]*, which time shall be
extended upon mutual written agreement, the dispute shall be
submitted to a mutually acceptable third-party mediator, which
period of mediation shall not exceed 90 days or such longer
period as may be mutually acceptable to the parties.
9.4 For inventions which are incremental improvements dominated by
existing patents or pending patent applications for which
Sponsor holds a license, UCHC agrees to grant and hereby
grants to Sponsor an option to secure a royalty-bearing
exclusive license with the right to make, use and sell, have
made, have used, import and offer for sale the claimed
invention conceived or reduced to practice in
______________________
* This portion of the Exhibit has been omitted pursuant to a Request for
Confidential Treatment under Rule 406 of the Securities Act of 1933, as amended.
The complete Exhibit, including the portions for which confidential treatment
has been requested, has been filed separately with the Securities Exchange
Commission.
4
<PAGE> 5
the conduct of the Project. Such option shall be in effect and
exercisable within [ ]* from the date of filing
a U.S. Patent Application on each such invention. In the case
of Licensed Products that incorporate the UCHC Technology but
are dominated by patent applications licensed by Sponsor from
one other third party, Sponsor shall pay UCHC a royalty
calculated at the rate of [ ]* of Net Sales of Licensed
Product. In the case of Licensed Products that incorporate the
UCHC technology but are dominated by patent applications
licensed by Sponsor from two or more third parties, Sponsor
shall pay UCHC a royalty calculated at the rate of [ ]*
of Net Sales of Licensed Product. Upon exercise of such
option, the remaining terms and conditions of the license will
be negotiated in good faith by the parties. In the absence of
agreement within[ ]* from the date of exercise of
such option, which time period shall be extended upon mutual
written agreement, the dispute shall be submitted to a
mutually acceptable third-party mediator, which period of
mediation shall not exceed 90 days.
9.5 For the purposes of this Article 9 the terms, Licensed Product
and Net Sales shall be defined as follows:
o Affiliates are defined as any entity which controls, is
controlled by or is under common control with Licensee. An
entity shall be regarded as in control of another entity if it
owns or controls more than fifty percent (50%) of the voting
power of such entity.
o Licensed Product(s) means any method, procedure, process,
product, or component part thereof conceived or developed by
UCHC in the conduct of the Project whose manufacture, sale,
use, importation, or offer for sale is covered by the claim of
a pending patent application or which could be construed to
infringe the licensed patent in the absence of the license.
o Net Sales means total billings for Licensed Product(s),
determined in accordance with generally accepted accounting
principles, sold by Licensee, its Affiliates and sublicensees,
less: (a) discounts allowed in amounts customary in the trade;
(b) sales, tariff duties and/or use taxes directly imposed and
with reference to particular sales; (c) outbound
transportation prepaid or allowed; and (d) amounts allowed or
credited on returns. Licensed Products shall be considered
"sold" when billed out or invoiced. Sales of Licensed
Product(s) between or among Licensee, its Affiliates and
sublicensees shall not be subject to any royalty hereunder,
and in such cases royalties shall be calculated upon
Licensee's or its Affiliates' or sublicensees' Net Sales to an
independent third party. Licensee shall be responsible for
payment of any royalty accrued on Net Sales of Licensed
Products to such independent third party through Licensee's
Affiliates or
______________________
* This portion of the Exhibit has been omitted pursuant to a Request for
Confidential Treatment under Rule 406 of the Securities Act of 1933, as amended.
The complete Exhibit, including the portions for which confidential treatment
has been requested, has been filed separately with the Securities Exchange
Commission.
5
<PAGE> 6
sublicensees. Royalties shall accrue hereunder only once in
respect of the same unit of the Licensed Product.
9.6 As to all licenses which may be granted by UCHC to Sponsor
under the terms of this Agreement, UCHC retains a perpetual
royalty-free non-exclusive right to use the licensed property,
product, procedure or process and to use the licensed UCHC
technology for basic and clinical research, and the
educational purposes of the UCHC, and not for any commercial
purpose.
10.0 UCHC and Sponsor agree that the Principal Investigator and Personnel
are acting as employees of UCHC and not as agents or employees of
Sponsor.
11.0 No advertising or publicity matter having or containing any reference
to either party shall be used by the other party without advanced
written authorization. Notwithstanding the afore-stipulated
restrictions, Sponsor may use publications containing the name of UCHC
and other documentation (abstracts, poster presentations, etc.) which
are generally accessible to the public without the further review and
consent of UCHC. All other advertising and publicity matter shall be
submitted to the Office of the Vice Chancellor for Research for review
prior to its use or public release. Said documentation shall be
reviewed expeditiously, and in no event shall such review be
unreasonably delayed. In addition, UCHC may disclose the sponsorship,
title, duration and total budget of this project in UCHC's "Annual
Report of Research and Scholarly Activity," and in such other reports
as may be required by the UCHC's Administration, Board of Trustees or
by the Board of Governors of Higher Education.
12.0 UCHC agrees that there shall be no change in the Principal Investigator
without prior written approval of Sponsor.
13.0 It is understood that the Project may be extended for additional
periods of time under terms mutually agreed upon in writing in a duly
executed amendment to this Agreement.
13.1 Renewal proposals shall be submitted by UCHC to Sponsor at
least ninety (90) days prior to the expiration of this
Agreement.
13.2 Sponsor agrees to give UCHC notice of its intention to
continue the Project not less than sixty (60) days prior to
the expiration date specified in Article 3.0 hereof or in a
later amendment to this Agreement.
14.0 If UCHC is unable to fulfill the terms of this Agreement, then UCHC may
terminate the Agreement by giving sixty (60) days notice to Sponsor. If
Pramod Srivastava is unable to continue as Principal Investigator, or
terminates his employment by UCHC, Sponsor shall have the right to
terminate this Agreement by giving thirty (30) days notice to UCHC.
14.1 Upon termination of this Agreement, unexpended funds
appropriate by Sponsor to UCHC shall be returned to Sponsor
except for outstanding, unpaid commitments to a third
party(ies) or to Personnel engaged in the conduct of the
Project which
6
<PAGE> 7
cannot be canceled or otherwise terminated. Upon issuance of
notice, UCHC shall not enter into any material new commitments
or obligations related to the Project without consent of the
Sponsor.
14.2 Termination of this Agreement shall not affect the rights and
obligations of the parties in inventions conceived or made in
the conduct of the Project prior to termination.
15.0 This Agreement shall be binding upon and inure to the benefit of the
respective parties and their successors.
16.0 This Agreement shall be governed by and construed according to the laws
of the State of Connecticut; including, but not limited to the
following:
a. Non-discrimination Section 4.1 14a of the General
Statutes of Connecticut, as amended. UCHC in its
employment practices under this grant Agreement will
not discriminate or permit discrimination against any
person or group of persons on the grounds of race,
color, religious creed, age, marital status, national
origin, sex, mental retardation, or physical
disability (including but not limited to blindness)
unless it is shown that such disability prevents
performance of the work involved, in any manner
prohibited by the laws of the United States or of the
State of Connecticut.
17.0 UCHC is authorized to enter into this Agreement under Section 10a-104,
10a-110 to 10a-l10g of the General Statutes of Connecticut as amended
to date.
18.0 Sponsor agrees to indemnify, hold harmless, and pay all legal and other
costs or losses incurred by Principal Investigator and Personnel, as
investigator(s) in this study, and UCHC as the host institution,
against any claim or legal cause of action brought against Principal
Investigator, Personnel and UCHC arising out of the use by Sponsor, or
by any party acting on behalf of or under authorization from Sponsor,
sale or other disposition by Sponsor, or by any party acting on behalf
of or under authorization from Sponsor of products made as a result of
work conducted under this Agreement.
UCHC agrees to notify Sponsor as soon as it becomes aware of a claim or
action and to cooperate with and to authorize Sponsor to carry out sole
management and defense and settlement of such claim or defend against
any actions brought or filed against its trustees, officers, agents and
employees with respect to the subject of indemnity contained herein,
whether such claims or actions are rightfully brought or filed.
Neither UCHC, nor its trustees, officers, agents or employees shall
compromise or settle any claim or suit related to the Project of this
Agreement without the prior written approval of Sponsor.
This Agreement will govern claims brought subsequent to the termination
date of this Agreement. This provision shall survive the completion or
termination of this project since it cannot be presently ascertained
when the last claim will be filed.
7
<PAGE> 8
19.0 Any notice required to be given hereunder shall be considered properly
given if sent by certified letter, first class mail, postage prepaid,
to the respective address of each party indicated at the beginning of
this Agreement, or to such address as the addressee shall have last
furnished in writing to the addressor in like manner.
20.0 Sections 7, 8, 9, 11, 15, 16, 18 and 19 shall survive termination or
expiration of this Agreement.
21.0 It is understood that UCHC and the Principal Investigator and Personnel
may be or become involved in other activities and projects which entail
commitments to other sponsors; however, UCHC represents and warrants
that the Principal Investigator and Personnel are not presently
performing, and will not perform during the term of this Agreement,
research relating to the Project (see Appendix A) that is sponsored by
a commercial, for-profit, third party to whom UCHC is obligated to
grant rights in any invention or discovery resulting therefrom,
excluding Government rights pursuant to 35 U.S.C. ss.ss. 200 et seq.
resulting from federal grant funding or a similar reservation of rights
pursuant to grant funding from the State of Connecticut or other
non-profit entities.
22.0 The Project will not be conducted in collaboration with a researcher
who is not associated with UCHC, unless Sponsor has given prior written
approval of such collaboration.
23.0 The parties hereto have caused this Agreement to be executed by duly
authorized representatives effective as of the later date indicated
below.
ANTIGENICS, L.L.C. - "SPONSOR"
/s/ Garo Armen 2/18/98
- ------------------------------ ------------------------------
(Signature) (Date)
Name: Garo Armen
------------------------
Title: CEO
-----------------------
UNIVERSITY OF CONNECTICUT HEALTH CENTER - "UCHC"
/s/ Leonard Paplauskas 2/17/98
- ------------------------------ ------------------------------
(Signature) (Date)
Name: Leonard P. Paplauskas
Title: Assistant Vice Chancellor for Research
8
<PAGE> 9
/s/ Pramod Srivastava 2/16/98
- ------------------------------ ------------------------------
(Signature) (Date)
Name: Pramod Srivastava, Ph.D.
Title: Professor, Center for Immunotherapy of Cancer and Infectious Disease
9
<PAGE> 10
APPENDIX A
SCOPE OF WORK
<PAGE> 11
Scope of work for ANTIGENICS grant
[
]*
[
]*
______________________
* This portion of the Exhibit has been omitted pursuant to a Request for
Confidential Treatment under Rule 406 of the Securities Act of 1933, as amended.
The complete Exhibit, including the portions for which confidential treatment
has been requested, has been filed separately with the Securities Exchange
Commission.
<PAGE> 12
[
]*
______________________
* This portion of the Exhibit has been omitted pursuant to a Request for
Confidential Treatment under Rule 406 of the Securities Act of 1933, as amended.
The complete Exhibit, including the portions for which confidential treatment
has been requested, has been filed separately with the Securities Exchange
Commission.
<PAGE> 13
[
]*
______________________
* This portion of the Exhibit has been omitted pursuant to a Request for
Confidential Treatment under Rule 406 of the Securities Act of 1933, as amended.
The complete Exhibit, including the portions for which confidential treatment
has been requested, has been filed separately with the Securities Exchange
Commission.
<PAGE> 14
APPENDIX B
BUDGET
<PAGE> 15
[
]*
______________________
* This portion of the Exhibit has been omitted pursuant to a Request for
Confidential Treatment under Rule 406 of the Securities Act of 1933, as amended.
The complete Exhibit, including the portions for which confidential treatment
has been requested, has been filed separately with the Securities Exchange
Commission.
<PAGE> 1
EXHIBIT 10.11
LICENSE AGREEMENT
THIS LICENSE AGREEMENT (this "AGREEMENT") is made and entered into this 1st
day of March, 1999, by and between DUKE UNIVERSITY, a not-for-profit corporation
organized and existing under the laws of the State of North Carolina
(hereinafter called "DUKE'), having a mailing address at Office of Science and
Technology, Duke University, Room 230, North Building, Box 90083, Durham, North
Carolina 27708, and ANTIGENICS, LLC, a limited liability company organized and
existing under the laws of the State of Delaware (hereinafter called
"ANTIGENICS"), having a mailing address at 630 Fifth Avenue, Suite 2170, New
York, New York 10111.
WHEREAS, Christopher Nicchitta, Smita Nair, and Eli Gilboa (hereinafter
called the "INVENTORS") are inventors of an invention within the PATENT RIGHTS
(as hereinafter defined) and described generally in DUKE Office of Science and
Technology File #1526 (hereinafter called the "1526 INVENTION");
WHEREAS, the INVENTORS have assigned their entire right, title and interest
in, to, and under the PATENT RIGHTS to DUKE;
WHEREAS, DUKE is the sole owner of the entire right, title and interest in,
to, and under the PATENT RIGHTS;
WHEREAS, DUKE has the right to grant licenses under the PATENT RIGHTS;
WHEREAS, DUKE wishes to have LICENSED PRODUCTS (as hereinafter defined)
developed and commercialized for the public benefit; and
WHEREAS, ANTIGENICS wishes to develop and commercialize LICENSED PRODUCTS
for the public benefit.
NOW THEREFORE, in consideration of the premises above and the faithful
performance of the covenants herein contained, the parties agree as follows:
ARTICLE 1 - DEFINITIONS
1.01 - For the purposes of this AGREEMENT, and solely for that purpose, the
terms and phrases set forth in this Section 1.01 in capital letters shall be
defined as follows:
a. "FIELD" shall mean all uses of the LICENSED PRODUCTS.
b. "PATENT RIGHTS" shall mean the U.S. patent application filed
February 26, 1999, and all U.S. and foreign patent applications
filed, or to be filed, to protect the 1526 INVENTION, as well as
all substitutes, continuations, continuations-in-part, divisions,
and renewals thereof, all
<PAGE> 2
U.S. or foreign patents now issued or hereafter issuing thereon,
and all reexaminations, extensions, and reissues, thereof, and
the inventions therein.
c. "VALID CLAIM" means a claim of an issued patent which has not
lapsed or become abandoned or been declared invalid or
unenforceable by a court of competent jurisdiction or an
administrative agency for which there is no right of appeal or
for which the right of appeal is waived.
d. "LICENSED PRODUCT" shall mean any product, the use, sale, offer
for sale, manufacture, or importation of which, if unlicensed,
would infringe one or more VALID CLAIMS of an application, if
issued, or a patent within the PATENT RIGHTS.
e. "NET SALES" shall mean the total invoiced sales of LICENSED
PRODUCTS sold by ANTIGENICS, or its AFFILIATES, or sublicensees,
less the following sums actually paid or credited by ANTIGENICS
as shall be detailed in ANTIGENICS' reports made pursuant to
Section 5.02 of this AGREEMENT:
(a) trade, quantity or cash discounts or commissions allowed in
amounts customary in the trade;
(b) any tax, excise or other governmental charge upon or
measured by the production, sale, transportation, delivery
or use and duties imposed on the import of LICENSED PRODUCTS
included in such amount;
(c) credits or allowances, if given or made for LICENSED
PRODUCTS, price adjustments, returns, rejections, recalls or
destructions (voluntarily made by or requested or made by an
appropriate government agency, subdivision or department) of
LICENSED PRODUCTS previously delivered.
LICENSED PRODUCTS used by ANTIGENICS for its own use in the
FIELD, LICENSED PRODUCTS sold to Affiliates, and internal sales
for use in service businesses in arms length transactions shall
be considered to be NET SALES for purposes of computing royalty
obligations, except that LICENSED PRODUCTS used for non-revenue
producing activities, including but not limited to promotional
items or field trials, shall not be considered to be NET SALES.
For purposes of this definition, a LICENSED PRODUCT shall be
considered sold when billed out to a customer other than
ANTIGENICS or its AFFILIATES.
In the event a LICENSED PRODUCT is sold in combination with other
active components, NET SALES, for purposes of determining
royalties on
2
<PAGE> 3
the combination will be calculated by multiplying NET SALES of
the combination by the fraction A/(A+B), in which A is the
invoiced price of the LICENSED PRODUCT if sold separately, and B
is the invoiced price of the other active components in the
combination if sold separately. If the LICENSED PRODUCTS and the
other active components in the combination are not sold
separately, then royalties on the combination will be calculated
by the same method, in which A is the direct cost of
manufacturing the LICENSED PRODUCT and B is the direct cost of
manufacturing the other active components. However, in no case
shall the calculated fraction A/(A+B) be less than [ ]*.
f. "AFFILIATE" shall mean any entity which, directly or indirectly,
owns or controls, is owned or controlled by, or is under common
ownership or control with a party hereto. An entity shall be
regarded as in control of another entity if it, directly or
indirectly, owns or controls more than fifty percent (50%) of the
voting power of the entity, except that in any country where the
local law does not permit a U.S. entity to own or control at
least fifty percent (50%) of the voting power of an entity
organized under its laws, an entity shall be regarded as in
control of a party hereto if it, directly or indirectly, owns or
controls the maximum percentage permitted by local law.
g. "EFFECTIVE DATE" shall mean the date first set forth above.
ARTICLE 2 - LICENSE
2.01 - DUKE hereby grants to ANTIGENICS and ANTIGENICS hereby accepts from
DUKE, subject to the terms and conditions of this AGREEMENT, an exclusive
worldwide license, with the right to grant sublicenses, to make, have made, use,
offer to sell, sell, and import LICENSED PRODUCTS under the PATENT RIGHTS during
the term of this AGREEMENT, unless sooner terminated as hereinafter provided.
2.02 - Any sublicense granted by ANTIGENICS shall incorporate substantially
the same terms and conditions of Articles 10, 17, 18, and 19 and Section 2.03 of
this AGREEMENT, which terms shall be binding upon each sublicensee. Royalties
paid to DUKE for NET SALES of LICENSED PRODUCTS by sublicensees shall be equal
to the royalties that would have been paid to DUKE if LICENSED PRODUCTS were
sold directly by ANTIGENICS. ANTIGENICS agrees to be responsible for the payment
to DUKE of royalties on funds received by ANTIGENICS from its sublicensees and
for using commercially reasonable efforts to enforce the terms of the sublicense
agreements. If, for any reason, this AGREEMENT is terminated, ANTIGENICS agrees
to assign all such sublicenses directly to DUKE.
- --------------
* This portion of the Exhibit has been omitted pursuant to a Request for
Confidential Treatment under Rule 406 of the Securities Act of 1933, as amended.
The complete Exhibit, including the portions for which confidential treatment
has been requested, has been filed separately with the Securities Exchange
Commission.
3
<PAGE> 4
2.03 - It is agreed that, notwithstanding any provisions herein, DUKE is
free to use the LICENSED PRODUCTS for its own non-commercial educational,
teaching, and research purposes without restriction and without payment of
royalties or other fees to ANTIGENICS.
2.04 - Within thirty (30) days following the execution of this AGREEMENT
and thereafter during the period of this AGREEMENT, DUKE agrees to provide
ANTIGENICS with copies of all information it may have or later obtain relative
to the PATENT RIGHTS, and copies of any and all patents or patent applications
owned or controlled by DUKE covering the PATENT RIGHTS or the use of the PATENT
RIGHTS or processes for the manufacture of the LICENSED PRODUCTS, including all
U.S. and foreign patent office actions received and amendments filed, in any,
relative thereto.
ARTICLE 3 - ROYALTIES ON NET SALES OF LICENSED PRODUCTS
3.01 - As consideration for the license granted by DUKE to ANTIGENIC
pursuant to Section 2.01 of this AGREEMENT, ANTIGENICS shall pay to DUKE
royalties at the rate of [ ]* of NET SALES of LICENSED PRODUCTS sold by
ANTIGENICS, its AFFILIATES, and its sublicensees, during the prior six (6) month
period ending December 31st and June 30th, such royalties to paid to DUKE prior
to February 28th and August 31st of each year, respectively.
3.02 - ANTIGENICS shall pay to DUKE a minimum annual royalty of [ ]*
prior to February 28th of each year, starting with the second February 28th
after the earlier of (i) the first approval for sale by the U.S. Food and Drug
Administration ("F.D.A."), or a comparable regulatory authority in a foreign
country, of a LICENSED PRODUCT, or (ii) the first sale of a LICENSED PRODUCT
that does not require F.D.A. or comparable foreign approval, but only if the
LICENSED PRODUCT so approved is actually sold by ANTIGENICS, its AFFILIATES, or
sublicensees.
ARTICLE 4 - MILESTONE BASED ROYALTIES
4.01 - As further consideration for the license granted by DUKE to
ANTIGENICS in Section 2.01 of this AGREEMENT, ANTIGENICS shall pay to DUKE
milestone based royalties within thirty (30) days of the attainment by
ANTIGENICS, its AFFILIATES, or its sublicensees of the commercial milestones
specified below. No such milestone payments shall be credited towards other
royalties or minimum royalties due by ANTIGENICS to DUKE under this AGREEMENT.
a. [ ]*.
- --------------------
* This portion of the Exhibit has been omitted pursuant to a Request for
Confidential Treatment under Rule 406 of the Securities Act of 1933, as amended.
The complete Exhibit, including the portions for which confidential treatment
has been requested, has been filed separately with the Securities Exchange
Commission.
4
<PAGE> 5
b. [
]*.
c. [
]*.
ARTICLE 5 - RECORDS AND REPORTS
5.01 - ANTIGENICS shall deliver to DUKE prior to February 28th and August
31st of each year a written account of the NET SALES of LICENSED PRODUCTS made
during the prior six (6) month period ending December 31st and June 30th,
respectively, upon which royalties are due hereunder. Such reports shall include
a calculation of royalties by LICENSED PRODUCT and by country in substantially
the format provided in APPENDIX A hereto.
5.02 - ANTIGENICS shall keep and maintain complete and accurate book and
records containing an accurate accounting of all data in sufficient detail to
enable verification of earned royalties and other payments hereunder. ANTIGENICS
shall preserve such books and records for five (5) years after the sales
recorded were actually made. Upon reasonable notice from DUKE, ANTIGENICS shall
permit an independent certified public accountant selected by DUKE (except one
to whom ANTIGENICS has some reasonable objection) to have access during ordinary
business hours to such of ANTIGENICS' records as may be necessary to determine,
in respect of any quarter ending not more than two (2) years prior to the date
of such notice, the correctness of any report and/or payment made under this
AGREEMENT. Such certified public accountant shall execute a written
non-disclosure agreement reasonably acceptable to ANTIGENICS.
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES
6.01 - ANTIGENICS represents and warrants to DUKE as follows:
a. ANTIGENICS has all necessary legal power to enter into and
perform its obligations under this Agreement and has taken all
necessary legal action under the laws of the State of Delaware
and its articles of organization and operating agreement to
authorize the execution of this Agreement and the consummation of
the transactions contemplated hereunder.
6.02 - DUKE represents and warrants to ANTIGENICS as follows:
- -----------------
* This portion of the Exhibit has been omitted pursuant to a Request for
Confidential Treatment under Rule 406 of the Securities Act of 1933, as amended.
The complete Exhibit, including the portions for which confidential treatment
has been requested, has been filed separately with the Securities Exchange
Commission.
5
<PAGE> 6
a. DUKE has all necessary legal power to enter into and perform its
obligations under this Agreement and has taken all necessary
legal action under the laws of the State of North Carolina, its
charter, and bylaws to authorize the execution of this Agreement
and the consummation of the transactions contemplated hereunder.
b. DUKE legally and beneficially owns and controls all of the
INVENTORS' right, title, and interest in, to, and under the
PATENT RIGHTS, free and clear of all liens and encumbrances and,
to the best of DUKE's knowledge, no other party legally or
beneficially owns or controls any right, title, or interest in,
to, or under the PATENT RIGHTS, and the PATENT RIGHTS are free
and clear of all liens and encumbrances.
c. To the best of DUKE's knowledge, there are no outstanding options
or rights in any third party to any of the PATENT RIGHTS or to
acquire any rights or licenses to any of the PATENT RIGHTS.
d. There is no action, suit, claim, proceeding, or governmental
investigation pending or, to the best of DUKE's knowledge,
threatened against DUKE, with respect to any of the PATENT RIGHTS
either at law or in equity, before any court or administrative
agency or before any governmental department, commission, board,
bureau, agency or instrumentality, whether United States or
foreign.
e. As used in this Section 3.02, the expression "to the best of
DUKE's knowledge" means that, after an examination of documents
in the files of DUKE's Office of Science and Technology and due
inquiry of the INVENTORS and the personnel of DUKE's Office of
Science and Technology, DUKE has found no reason to believe that
the statements set forth in this Section 3.02 are false or
misleading.
ARTICLE 7 - DUE DILIGENCE REQUIREMENTS
7.01 - Throughout the term of this AGREEMENT, and subject to the exercise
of its reasonable business judgment, ANTIGENICS shall use commercially
reasonable diligence to: (i) perform research and development to bring LICENSED
PRODUCTS to market, (ii) develop manufacturing capabilities, (iii) market
LICENSED PRODUCTS, and (iv) sublicense the PATENT RIGHTS for applications that
ANTIGENICS will not pursue.
7.02 - Within twelve (12) months of the execution of this AGREEMENT,
ANTIGENICS will demonstrate to DUKE that ANTIGENICS is using commercially
reasonable diligence to establish a research effort to develop LICENSED
PRODUCTS. For the purposes of the preceding sentence, commercially reasonable
diligence shall mean that either (i) at least one of ANTIGENICS employee has
dedicated sufficient time to perform appropriate research to develop LICENSED
PRODUCTS for a period of at least six (6) months or (ii) ANTIGENICS has
established a research agreement with another academic or commercial party, such
agreement specifying that at least one ANTIGENICS employee will dedicate
sufficient time to
6
<PAGE> 7
perform appropriate research to develop LICENSED PRODUCTS for at least one year.
Furthermore, ANTIGENICS shall continue to conduct the research in the use of
calreticulin in vaccines during the term of this AGREEMENT that ANTIGENICS was
conducting prior to the EFFECTIVE DATE, provided that continuing such research
remains commercially reasonable.
7.03 - Within two (2) months of the EFFECTIVE DATE, ANTIGENICS will meet
with the INVENTORS and DUKE to discuss ways to further develop the 1526
INVENTION. Neither this Section 7.03 nor the discussions referred to in the
preceding sentence shall create any obligation on the part of ANTIGENICS to
enter into any agreement.
ARTICLE 8 - PATENTS
8.01 - DUKE shall have the sole responsibility to file and prosecute U.S.
and foreign patent applications covering any patentable invention within the
PATENT RIGHTS; to prosecute and defend such applications against third party
oppositions; and upon grant of any patent covering inventions included within
the PATENT RIGHTS, to maintain such patent in full force. DUKE agrees to
consider in good faith ANTIGENICS' advice as to the selection of appropriate
legal counsel and jurisdictions within which to file and prosecute such patent
applications and maintain such patents. DUKE shall keep ANTIGENICS advised as to
the filing and prosecution of such applications and the maintenance of such
patents by forwarding to ANTIGENICS (i) copies of all documents relating to such
filing and prosecution, in sufficient time to review such documents and comment
thereon, and (ii) all official correspondence relating thereto, promptly.
ANTIGENICS agrees to provide DUKE with all commercially reasonable assistance in
the filing and prosecution of such U.S. and foreign patent applications and the
maintenance of such patents.
8.02 - DUKE shall request from ANTIGENICS a written list of foreign
countries in which ANTIGENICS wishes DUKE to prosecute and maintain the PATENT
RIGHTS ("DESIGNATED COUNTRIES"), and DUKE shall proceed to prosecute and
maintain the PATENT RIGHTS in the DESIGNATED COUNTRIES. ANTIGENICS shall
reimburse DUKE for all expenses associated with prosecution and maintenance of
patent applications and patents related to the PATENT RIGHTS in the DESIGNATED
COUNTRIES, such reimbursement to be made within thirty (30) days of being
invoiced. DUKE shall be free, at its own option and expense, to file patents in
foreign countries that are not DESIGNATED COUNTRIES. ANTIGENICS shall have no
rights under Article 2 of this AGREEMENT to make, have made, use, sell, or offer
for sale LICENSED PRODUCTS in countries that are not DESIGNATED COUNTRIES and no
obligation to reimburse DUKE for patent expenses incurred in pursuing patent
protection in countries that are not DESIGNATED COUNTRIES.
8.03 - DUKE shall pay for all expenses associated with the filing,
prosecution, and issuance of U.S. patent applications within the PATENT RIGHTS,
and ANTIGENICS shall reimburse DUKE for all such expenses within thirty (30)
days of receipt of an invoice therefor from DUKE, provided, however, that
ANTIGENICS shall not be obligated to reimburse DUKE
7
<PAGE> 8
in excess of [ ]*for such expenses. If such filing, prosecution, and
issuance expenses exceed [ ]* DUKE shall not be obligated to continue filing
and prosecuting U.S. patent applications within the PATENT RIGHTS, and
ANTIGENICS shall not be obligated to reimburse DUKE for additional expenses
associated with the filing, prosecution, and issuance of U.S. patent
applications within the PATENT SIGHTS. In the event that expenses for filing,
prosecution, and issuance of U.S. patent applications within the PATENT RIGHTS
exceed [ ]* DUKE and ANTIGENICS shall determine in good faith whether to
continue filing and prosecution of U.S. patent applications within the PATENT
RIGHTS and how such expenses of filing, prosecution, and issuance shall be
financed by the parties.
8.04 - DUKE shall pay for all expenses associated with the maintenance of
all issued U.S. patents within the PATENT RIGHTS, and ANTIGENICS shall reimburse
DUKE for all such maintenance expenses within thirty (30) days of receipt of an
invoice therefor from DUKE.
8.05 - ANTIGENICS may, at its sole option, elect to discontinue
reimbursement of expenses incurred during filing or prosecution of any
individual patent application within the PATENT RIGHTS or maintenance of any
individual patent within the PATENT RIGHTS within the United States or any
DESIGNATED COUNTRY which ANTIGENICS is otherwise obligate to reimburse DUKE for
pursuant to Sections 8.02, 8.03, or 8.04 above, by providing DUKE with written
notice that it no longer shall reimburse DUKE for such expenses. However, any
rights granted to ANTIGENICS in Article 2 of this AGREEMENT shall be revoked
with respect to such individual patent application or patent that ANTIGENICS so
elects in writing not to reimburse DUKE for, such revocation of rights to become
effective immediately upon receipt by DUKE of written notice from ANTIGENICS
that it no longer wishes to reimburse DUKE for expenses for a given patent
application or patent which ANTIGENICS would otherwise be obligated to reimburse
DUKE for pursuant to Sections 8.02, 8.03, or 8.04 above.
ARTICLE 9 - INFRINGEMENT BY THIRD PARTIES
9.01 - Upon learning of the infringement of the PATENT RIGHTS by a third
party, the party learning of such infringement shall promptly inform the other
party in writing of that fact along with any evidence available to it pertaining
to the infringement. ANTIGENICS may at its own expense take whatever steps are
necessary to stop the infringement and recover damages, including but not
limited to the right bring any legal action for infringement and defend any
counterclaim of invalidity or action of a third party for declaratory judgment
for non-infringement or non interference. ANTIGENICS may settle such suits
solely in its own name and solely at its own expense and through counsel of its
own choice.
9.02 - DUKE shall provide to ANTIGENICS all reasonable assistance and
cooperation requested by ANTIGENICS with respect to the legal actions described
in Section 9.01.
- ---------------
* This portion of the Exhibit has been omitted pursuant to a Request for
Confidential Treatment under Rule 406 of the Securities Act of 1933, as amended.
The complete Exhibit, including the portions for which confidential treatment
has been requested, has been filed separately with the Securities Exchange
Commission.
8
<PAGE> 9
ANTIGENICS shall keep DUKE informed of the steps taken by ANTIGENICS and the
progress of any legal actions taken by ANTIGENICS.
9.03 - ANTIGENICS shall pay to DUKE royalties pursuant to Section 3.01 on
any such damages recovered as consideration for lost sales of LICENSED PRODUCTS
that are in excess of legal expenses incurred by ANTIGENICS in enforcing its
PATENT RIGHTS. Any punitive damages awarded shall be divided equally by the
parties.
9.04 - If ANTIGENICS does not undertake, within sixty (60) days of notice,
to enforce the PATENT RIGHTS against the infringing party, and if ANTIGENICS is
not currently engaged in litigation involving the PATENT RIGHTS, DUKE shall have
the right, at its own expense to take whatever steps are necessary to stop the
infringement and recover damages, and shall be entitled to retain damages so
recovered, after reimbursing ANTIGENICS for any of its expenses in cooperating
with DUKE in prosecuting such infringement.
ARTICLE 10 - LAWS AND REGULATIONS
10.01 - ANTIGENICS shall use commercially reasonable efforts to comply with
all foreign, federal, state, and local laws, regulations, rules, and orders
applicable to the testing, production, transportation, packaging, labeling,
export, sale, and use of the LICENSED PRODUCTS.
10.02 - ANTIGENICS shall use commercially reasonable efforts to comply with
all U.S. export laws and regulations applicable to this AGREEMENT and
ANTIGENICS' activities hereunder.
ARTICLE 11 - PUBLICATION
11.01 - ANTIGENICS agrees that the right of publication in scientific
journal or to present orally at professional conferences or meetings the 1526
INVENTION and related information within the PATENT RIGHTS shall reside in the
INVENTORS. DUKE shall use reasonable efforts to provide ANTIGENICS a review copy
of such publication or the text of any propose presentation sixty (60) days in
advance of submission for publication or public presentation for the sole
purpose of DUKE and ANTIGENICS filing a patent application prior to such
publication or public presentation. In the event that ANTIGENICS wishes to have
patent applications filed in order to protect the subject matter to be
disclosed, ANTIGENICS may request that DUKE cause the INVENTORS to delay
publication or public presentation for no more than ninety (90) days, and DUKE
shall comply in causing the INVENTORS to delay such publication or public
presentation. ANTIGENICS shall also have the right to publish and/or co-author
any publication relating to the 1526 INVENTION based upon data developed by
ANTIGENICS.
ARTICLE 12 - DURATION AND TERMINATION
12.01 - This AGREEMENT shall become effective upon the EFFECTIVE DATE, and
unless sooner terminated in accordance with this Article 12, shall remain in
full force and effect for the longer of: (i) the life of the last-to-expire of
the patents included in the PATENT RIGHTS; or (ii) ten (10) years from the
EFFECTIVE DATE hereof.
9
<PAGE> 10
12.02 - ANTIGENICS may terminate this AGREEMENT without cause by giving
DUKE written notice at least sixty (60) days prior to such termination.
12.03 - Either party may immediately terminate this AGREEMENT for fraud,
willful misconduct, or illegal conduct of the other party, that materially
adversely affects such party, upon written notice of same to that other party.
12.04 - Except as provided in Section 12.03 above, if either party commits
a breach of any material obligation under this AGREEMENT, the non-breaching
party may terminate this AGREEMENT, upon sixty (60) days written notice to the
breaching party. Such notice must contain a full description of the event or
occurrence constituting a breach of this AGREEMENT. If the breach is not cured
within that time, the termination will be effective as of the end of the sixty
(60) day cure period.
12.05 - Upon the termination of this AGREEMENT, ANTIGENICS shall notify
DUKE of the amount of LICENSED PRODUCTS ANTIGENICS then has on hand and
ANTIGENICS shall then have a license to use, offer for sale, and sell that
amount of LICENSED PRODUCTS, but no more, provided ANTIGENICS shall pay the
royalty thereon at the rate and at the time provided for herein.
12.05 - If during the term of this Agreement, ANTIGENICS shall become
bankrupt or insolvent or if the business of ANTIGENICS shall be placed in the
hands of a receiver or trustee, whether by the voluntary act of ANTIGENICS or
otherwise, or if ANTIGENICS shall .ease to exist as an active business, this
AGREEMENT shall immediately terminate as though as a result of ANTIGENICS'
uncured breach, and DUKE shall have all the remedies and rights available to it
for termination with cause; provided, however, that this provision shall not
apply to a reorganization of ANTIGENICS under Chapter 11 of the United States
Bankruptcy Code.
12.06 - Articles 10, 17, and 19 shall all survive the termination of this
AGREEMENT.
12.07 - The rights provided in this Article 12 shall be in addition to, and
without prejudice to, any other rights which the parties may have with respect
to any breach or violations of the provision of this AGREEMENT.
ARTICLE 13 - LAW TO GOVERN
13.01 - This AGREEMENT shall be construed and enforced in accordance with
the laws of the State of North Carolina.
ARTICLE 14 - NOTICES
14.01 - Notice hereunder shall be deemed sufficient if personally
delivered, if given by registered mail, postage prepaid, or by national
overnight courier, charges prepaid, and in each instance addressed to the party
to receive such notice at the address given below, or such other address as may
hereafter be designated by notice in writing.
10
<PAGE> 11
<TABLE>
<CAPTION>
DUKE ANTIGENICS
<S> <C>
Office of Science and Technology Antigenics, LLC
Duke University 630 Fifth Avenue
Room 230, North Building New York, New York 10111
Box 90083 Attn.: Jeffrey Rona
Durham, North Carolina 27708
Attn.: Andrew E. Balber, Ph.D.
With a copy to:
Office of the University Counsel Pennie & Edmonds LLP
Duke University Medical Center 1155 Avenue of the Americas
DUMC Box 3024 New York, New York 10036
2400 Pratt Street, Suite 4000 Attn.: Adriane M. Antler, Ph.D
Durham, North Carolina 27710
</TABLE>
14.02 - Information and transactions exchanged between the parties in
relation to financial consideration contemplated under this AGREEMENT, including
but not limited to royalty reports and payments, shall be tendered to the
following offices of each party respectively:
<TABLE>
<CAPTION>
DUKE ANTIGENICS
<S> <C>
Office of Science and Technology Antigenics, LLC
Room 230, North Building 630 Fifth Avenue
Box 90083 New York, New York 10111
Durham, North Carolina 27708 Attn.: Jeffrey Rona
Attn.: Financial Administrator
</TABLE>
ARTICLE 15 - ASSIGNMENT
15.01 - This AGREEMENT shall be binding upon and inure to the benefit of
the respective successors and assigns of the parties hereto. This Agreement may
not be assigned except by a written agreement signed by both parties, except
that without such consent ANTIGENICS may assign this Agreement to an AFFILIATE
or to an entity assuming all or substantially all of its business to which the
LICENSED PRODUCTS relate.
ARTICLE 16 - INDEMNITY INSURANCE, REPRESENTATIONS, STATUS
16.01 - ANTIGENICS agrees to indemnify, hold harmless and defend DUKE, its
officers, employees, and agents, against any and all claims, suits, losses,
damages, costs, fees, and expenses asserted by third parties, both government
and non-government, resulting from or arising out of the use, sale, or
manufacture of the LICENSED PRODUCTS, except as may arise out of DUKE's own
gross negligence or willful misconduct.
11
<PAGE> 12
16.02 - ANTIGENICS shall maintain in full force, at its sole cost and
expense, general liability insurance coverage and, with respect to the LICENSED
PRODUCTS, if any, product liability insurance coverage, in amounts customary for
businesses similarly situated in the ANTIGENICS' industry. DUKE shall have the
right to ascertain from time to time that such coverage exists, such right to be
exercised in a commercially reasonable manner. In lieu of said coverage, DUKE
agrees to consider the existence of an adequate self-insurance program as an
acceptable alternative.
16.03 - NOTHING IN THIS AGREEMENT SHALL BE DEEMED TO BE A REPRESENTATION OR
WARRANTY BY DUKE OF THE VALIDITY OF ANY OF THE PATENTS OR THE ACCURACY, SAFETY,
EFFICACY, OR USEFULNESS, FOR ANY PURPOSE, OF ANY PATENT RIGHTS. DUKE SHALL HAVE
NO OBLIGATION, EXPRESS OR IMPLIED, TO SUPERVISE, MONITOR, REVIEW OR OTHERWISE
ASSUME RESPONSIBILITY FOR THE PRODUCTION, MANUFACTURE, TESTING, MARKETING OR
SALE OF ANY LICENSED PRODUCT, AND, EXCEPT AS MAY ARISE FROM DUKE'S GROSS
NEGLIGENCE OR INTENTIONAL MISCONDUCT, DUKE SHALL HAVE NO LIABILITY WHATSOEVER TO
ANTIGENICS OR ANY THIRD PARTIES FOR OR ON ACCOUNT OF ANY INJURY, LOSS, OR
DAMAGE, OF ANY KIND OR NATURE, SUSTAINED BY, OR ANY DAMAGE ASSESSED OR ASSERTED
AGAINST, OR ANY OTHER LIABILITY INCURRED BY OR IMPOSED UPON ANTIGENICS OR ANY
OTHER PERSON OR ENTITY, ARISING OUT OF OR IN CONNECTION WITH OR RESULTING FROM:
a. the production, use, or sale of any LICENSED PRODUCT by
ANTIGENICS or its sublicensees; or
b. any advertising or other promotional activities by ANTIGENIC with
respect to any of the foregoing.
16.04 - Neither party hereto is an agent of the other party for any purpose
whatsoever. The relationship of DUKE and ANTIGENICS established hereunder shall
be that of independent contractors and, except as expressly provided herein,
nothing contained in this AGREEMENT shall be construed to: (i) give either party
the power to direct or control any activities of the other, (ii) constitute the
parties as partners, joint venturers, co-owners or otherwise as participants in
a joint or common undertaking, or (iii) allow either party to create or assume
any obligation on behalf of the other for any purpose whatsoever.
ARTICLE 17 - USE OF A PARTY'S NAME
17.01 - Neither party will, without the prior written consent of the other
party:
a. use in advertising, publicity or otherwise, any trade-name,
personal name, trademark, trade device, service mark, symbol, or
any abbreviation, contraction or simulation thereof owned by the
other party; or
b. represent, either directly or indirectly, that any product or
service of the other party is a product or service of the
representing party or that it is
12
<PAGE> 13
made in accordance with or utilizes the information or documents
of the other party.
ARTICLE 18 - SEVERANCE, WAIVER AND ALTERATION
18.01 - Each clause of this AGREEMENT is a distinct and severable clause
and if any clause is deemed illegal, void or unenforceable, the validity,
legality or enforceability of any other clause or portion of this AGREEMENT will
not be affected thereby, unless the part or parts which are illegal, void, or
unenforceable shall substantially impair the value of the entire AGREEMENT as to
either party.
18.02 - The failure of a party in any instance to insist upon the strict
performance of the terms of this AGREEMENT will not be construed to be a waiver
or relinquishment of any of the terms of this AGREEMENT, either at the time of
the party's failure to insist upon strict performance or at any time in the
future, and such terms will continue in full force and effect.
18.03 - Any alteration, modification, or amendment to this AGREEMENT must
be in writing and signed by both parties.
ARTICLE 19 - CONFIDENTIALITY
19.01 - "CONFIDENTIAL INFORMATION" shall mean any information conspicuously
labeled "confidential" or "proprietary" by the disclosing party or, if such
information is communicated orally, is identified as confidential at the time of
its disclosure and confirmed as such in writing within thirty (30) days of its
disclosure. ANTIGENICS and DUKE each recognize that the other's CONFIDENTIAL
INFORMATION constitutes highly valuable information. ANTIGENICS and DUKE agree
that during the term of this AGREEMENT and until the later of five (5) years
after the EFFECTIVE DATE or two (2) years after the effective date of
termination of this AGREEMENT, they:
a. will keep confidential the other's CONFIDENTIAL INFORMATION by
taking whatever action each would take to preserve the
confidentiality of its own CONFIDENTIAL INFORMATION;
b. will only disclose that part of the other's CONFIDENTIAL
INFORMATION that is necessary for those officers, employees,
independent contractors, or agents who need to know to carry out
their responsibilities under this Agreement;
c. will not disclose the other's CONFIDENTIAL INFORMATION to any
third parties under any circumstance without written permission
from the other party and taking commercially reasonable
precautions to preserve the confidentiality of such CONFIDENTIAL
INFORMATION;
d. will not use the CONFIDENTIAL INFORMATION except as provided in
this Agreement; and
13
<PAGE> 14
e. will, within sixty (60) days of the request of the disclosing
party upon termination of this Agreement, return all the
CONFIDENTIAL INFORMATION disclosed to the other party pursuant to
this Agreement, save that the RECEIVING PARTY (hereinafter called
the "RECEIVING PARTY") and its legal counsel may each keep one
(1) copy of such CONFIDENTIAL INFORMATION for their records.
19.02 - Neither party shall be bound by the obligations of Section 19.01
hereof if the CONFIDENTIAL INFORMATION received from the other party:
a. is already known or available to the public or known or available
to the RECEIVING PARTY thereof;
b. has become known or available to the public through no fault of
the RECEIVING PARTY thereof;
c. is nonconfidentially disclosed to the RECEIVING PARTY by a third
party legally entitled to disclose the CONFIDENTIAL INFORMATION;
d. is required by law to be disclosed, provided commercially
reasonable measures are taken to preserve its confidentiality; or
e. is independently developed by the RECEIVING PARTY thereof, as
evidenced by written documentation.
19.03 - Except as required by law or legally advisable, neither party may
disclose the terms of this AGREEMENT without the written consent of the other
party, which consent shall not be unreasonably withheld.
ARTICLE 20 - TRANSFER OF MATERIALS
20.01 - Any transfer of materials between DUKE and ANTIGENICS in connection
with this AGREEMENT shall be made under the terms of a materials transfer
agreement mutually acceptable to the parties.
ARTICLE 21 - TITLES
21.01 - All titles and headings contained in this AGREEMENT are inserted
only as a matter of convenience and reference. They do not define, limit, extend
or describe the scope of this AGREEMENT or the intent of any of its provisions.
ARTICLE 22 - ENTIRE UNDERSTANDING
22.01 - This AGREEMENT represents the entire understanding between the
parties with respect to the subject matter hereof, and supersedes all other
agreements, express or implied, between the parties concerning the 1526
INVENTION, and the PATENT RIGHTS.
14
<PAGE> 15
ARTICLE 23 - FORCE MAJEURE
23.01 - Any delays in or failure by either party in performance of any
obligations hereunder shall be excused if and to the extent caused by such
occurrences beyond such party's reasonable control, including but not limited to
such occurrences as acts of God, earthquakes, strikes or other labor
disturbances, war, and other causes which cannot reasonably be controlled by the
party who failed to perform.
ARTICLE 24 - COUNTERPARTS
24.01 - This AGREEMENT may be signed in counterparts which, when taken
together, shall constitute one and the same document.
[SIGNATURE PAGE FOLLOWS]
15
<PAGE> 16
IN WITNESS WHEREOF, the parties have caused these presents to be executed
in duplicate as of the date and year first above written.
SEAL DUKE UNIVERSITY
By: /s/ Robert Taber
-------------------------------
Robert Taber
Director, Office of Science &
Technology
Date: 3/3/99
-----------------------------
SEAL ANTIGENICS, LLC
By: /s/ Garo Armen
-------------------------------
Title: CEO
----------------------------
Date: 3/4/99
-----------------------------
16
<PAGE> 17
Appendix A
License Agreement for 1526 INVENTION
ROYALTY REPORT for period ending _____________
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
County Product Sales in Sales in Sales in Sales in Sales in Sales in TOTAL Reductions TOTAL NET TOTAL
(Month) (Month) (Month) (Month) (Month) (Month) GROSS to Sales(2) SALES ROYALTY DUE
SALES(1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
SubTOTAL x Country
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
SubTOTAL x Country
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
GRANT TOTAL
- ------------------------------------------------------------------------------------------------------------------------------------
----------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
TOTAL Royalty Credits
-----------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
---------------
(1) Includes sales by Affiliates or by sublicensees of Antigenics.
(2) Note that Reductions to Sales are limited by the definition of Net
Sales as set forth in Section 1.01(e) of Article 1 of the License
Agreement.
<PAGE> 18
<TABLE>
<CAPTION>
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<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ROYALTIES PAID
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</TABLE>
18
<PAGE> 1
EXHIBIT 10.12
LICENSE AGREEMENT
-----------------
This License Agreement (the "Agreement") is entered into and made effective
this 12th day of April, 1999, (the "Effective Date") between UNIVERSITY OF MIAMI
and its School of Medicine, whose principal place of business is at 1600 N.W.
10th Avenue, Miami, Florida 33136 (hereinafter referred to as "LICENSOR") and
ANTIGENICS LLC, a Delaware limited liability company, whose principal place of
business is at 630 Fifth Avenue, New York, New York (hereinafter referred to as
"LICENSEE").
WITNESSETH
WHEREAS, LICENSOR is the sole owner of the Inventions described and
claimed in U.S. patent application serial number [
]*; and,
WHEREAS, LICENSOR wishes to obtain United States patents, and foreign
counterparts, and to have the Inventions commercially marketed; and,
WHEREAS, LICENSOR warrants that it possesses the right to license the
aforestated patents to be obtained and the right to market the Products; and,
WHEREAS, LICENSOR wishes the LICENSEE to obtain the subject patent and
to market the Products; and,
WHEREAS, LICENSEE desires to acquire the exclusive license in the
Territory, with the right to sublicense, under the Patent Rights (as defined in
Paragraph 1.3 below) for the purposes of making, having made, using, selling,
importing and offering for sale the Products and practicing the Inventions
disclosed and claimed in the Patent Rights;
NOW THEREFORE, For these and other valuable considerations, the
receipt of which is hereby acknowledged, the parties agree as follows:
1. DEFINITIONS:
1.1 "Affiliate" shall mean any corporation or other business entity
controlled by, controlling or under common control with LICENSOR or LICENSEE.
For this purpose, "control" shall mean direct or indirect beneficial ownership
of at least a fifty percent (50%) of the voting stock of, or at least a fifty
percent (50%) interest in the income of such corporation or other business
entity, or such other relationship as in fact, constitutes actual control.
- -------------
* This portion of the Exhibit has been omitted pursuant to a Request for
Confidential Treatment under Rule 406 of the Securities Act of 1933, as amended.
The complete Exhibit, including the portions for which confidential treatment
has been requested, has been filed separately with the Securities Exchange
Commission.
1
<PAGE> 2
1.2 "Sublicensee" as used in this Agreement shall mean any third
party to whom LICENSEE has granted a license to make, have made, use, sell,
import or offer for sale the Product under the Patent Rights, provided said
third party has agreed in writing with LICENSEE to accept the conditions and
restrictions agreed to by LICENSEE in Sections 6 (Indemnification), 13 (Marking
and Standards) and 17 (Certificate of Insurance) of this Agreement.
1.3 "Patent Rights" shall mean and collectively include United States
patent application serial number[
]* and United States patent application serial
number [ ]*
and the inventions therein; and all applications claiming priority to any of the
foregoing applications under 35 U.S.C. ss. 119(e), and all continuations,
continuations-in-part, divisions and renewals of any of such applications; all
foreign counterparts of the foregoing; and all United States and foreign patents
which may be granted thereon, and all reissues and extensions thereof.
1.4 "Products" shall mean and collectively include any product which:
(a) is covered by an issued, unexpired claim or a pending claim
contained in the Patent Rights;
(b) is manufactured by using a process which is covered by an
issued, unexpired claim or a pending claim contained in the
Patent Rights.
1.5 "Processes" shall mean and collectively include any process which
is covered by an issued, unexpired claim or pending claim contained in the
Patent Rights.
1.6 "Net Sales" shall mean the sum of all amounts invoiced on account
of sale of Products by LICENSEE and its Affiliates to non-affiliated third party
purchasers of Products, if invoiced separately, (a) cash discounts to purchasers
allowed in amounts customary in the trade, (b) amounts for transportation or
shipping charges to purchasers, (c) credits for returns, allowances or trades,
and (d) taxes and duties levied on the sale of Products, whether absorbed by
Licensee or pa d by the purchaser. In the event a Product is sold in combination
with another active component(s), Net Sales, for purposes of determining
royalties on the combination will be calculated by multiplying Net Sales of the
combination by the fraction A/(A+B), in which A is the invoiced price of the
Product if sold separately, and B is the invoiced price of the other active
component(s) in the combination if sold separately. If the Products and the
other active component(s) in the combination are not sold separately, then
royalties on the combination will be calculated by the same method, in which A
is the direct cost of manufacturing the Product and B
- -------------
* This portion of the Exhibit has been omitted pursuant to a Request for
Confidential Treatment under Rule 406 of the Securities Act of 1933, as amended.
The complete Exhibit, including the portions for which confidential treatment
has been requested, has been filed separately with the Securities Exchange
Commission.
2
<PAGE> 3
is the direct cost of manufacturing the other active component(s). However, in
no case shall the calculated fraction A/(A+B) be less than [ ]*.
1.7 "Territory" shall mean the entire world.
1.8 "Inventions" shall mean the inventions disclosed and claimed in
United States patent application serial number [
]* and U.S. patent application serial number [
]*.
1.9 "Confidential Information" shall mean all information related to
the Patent Rights or to the business, plans and/or technology of LICENSEE which
is disclosed by one party to the other, to the extent that such information, as
of the date of disclosure, is not (a) known to the receiving party; (b)
disclosed in published literature; (c) generally available to industry; or (d)
obtained by the receiving party from a third party without binder of secrecy,
PROVIDED, HOWEVER, that such third party has no confidentiality obligations to
the disclosing party or to any of its Affiliates relating to the disclosed
information.
1.10 "Net Royalties" shall mean the net royalties on all Net Sales of
Products actually received by LICENSEE or its Affiliate(s), including the
receipt of lump sums as advances against royalties, from non-affiliated
licensees in connection with the licensing of any Patent Rights.
2. GRANT:
2.1 In consideration for payment of royalties and other good and
valuable consideration, LICENSOR hereby grants to LICENSEE and its Affiliates
the exclusive license in the Territory with the right to grant sublicenses to
others, under the Patent Rights, to make, have made, use, sell, import and offer
for sale Products and to practice Processes.
2.2 LICENSOR grants to the LICENSEE the authority to make application
for Patents, in the name of the LICENSOR; all expenses of obtaining and
maintaining said patents obtained and maintained by LICENSEE shall be paid by
LICENSEE.
2.3 LICENSOR retains the non-exclusive right to use the Inventions
solely for its own internal, non-commercial research purposes. LICENSOR shall be
permitted to transfer Products only to academic researchers at non-profit
institutions pursuant to a written Material Transfer Agreement whereby the
researcher and his institution agree: (a) to use the transferred Product only
for the researcher's own, noncommercial research purposes and not for research
- -------------
* This portion of the Exhibit has been omitted pursuant to a Request for
Confidential Treatment under Rule 406 of the Securities Act of 1933, as amended.
The complete Exhibit, including the portions for which confidential treatment
has been requested, has been filed separately with the Securities Exchange
Commission.
3
<PAGE> 4
sponsored by a third party to whom an obligation to grant commercial rights
exists, and (b) not to further transfer the Product.
3. TERM:
The term of this Agreement shall be until the later of (a) 15 years
from the Effective Date of this Agreement, and (b) the expiration of the last to
expire of all patents within the Patent Rights.
4. UNITED STATES LAWS:
4.1 This Agreement is subject to all of the terms and conditions of
Public Law 96-517 as amended, and LICENSEE agrees to take all action necessary
on its part as LICENSEE to enable LICENSOR to satisfy its obligation thereunder,
relating to Inventions.
4.2 It is understood that LICENSOR is subject to United States laws
and regulations controlling the export of technical data, computer software,
laboratory prototypes and other commodities (including the Arms Export Control
Act, as amended and the Export Administration Act of 199), and that its
obligations hereunder are contingent on compliance with applicable United States
export laws and regulations. The transfer of certain technical data and
commodities may require a license from the cognizant agency of the United States
Government and/or written assurances by LICENSEE that LICENSEE shall not export
data or commodities to certain foreign countries without prior approval of such
agency. LICENSOR neither represents that a license shall not be required nor
that, if required, it shall be issued.
5. PATENT PROTECTION AND INFRINGEMENT:
5.1 LICENSEE, during the term of this Agreement, is responsible for
the filing, payment and the prosecution of all patents and applications and
maintenance fees covered by this Agreement. If LICENSEE elects not to file or
prosecute such an application (except where such application is abandoned in
favor of prosecuting the invention claimed therein in a related application) or
maintain such patent, LICENSEE shall so notify the LICENSOR at least forty-five
(45) days in advance of the relevant deadline, in which event the LICENSOR shall
have the right to file or prosecute such applications and to maintain such
patent entirely at its own expense and such application or patent shall no
longer be deemed included within the Patent Rights.
5.2 Each party shall promptly notify the other party in writing of
any third party claim of patent infringement of which it has received notice and
which may be asserted against LICENSEE or LICENSOR, its Affiliates and any
Sublicensees because of the manufacture, use, promotion and sale of Product by
LICENSEE, its Affiliates or Sublicensees.
5.3 LICENSEE will defend, indemnify and hold harmless LICENSOR, its
Trustees, officers, directors, employees and its Affiliates against any and all
judgments and damages arising from any and all third party claims of patent
infringement which may be asserted against LICENSOR, and its Affiliates because
of the manufacture, use, promotion and sale of Products by LICENSEE or its
Affiliates or Sublicensees. Except as provided herein below, LICENSEE will bear
all costs and expenses incurred in connection with the defense of any such
claims or as a result of any settlement made or judgment rendered on the basis
of such claims.
4
<PAGE> 5
LICENSOR shall have no further liability to LICENSEE for any loss or damages
LICENSEE may incur as a result of any invalidity of LICENSOR'S Patent Rights
except where due to gross negligence or intentional misconduct of LICENSOR.
LICENSEE shall defend and control negotiation of settlement of any such claim
with counsel of LICENSEE'S choosing. LICENSOR agrees to cooperate fully in the
defense of any such claim and may participate in the defense with counsel of
LICENSOR'S choosing, such separate counsel to be at LICENSOR'S expense. LICENSEE
shall have no liability to defend any such claim unless it receives written
notification of such claim by LICENSOR promptly after LICENSOR has actual
knowledge of such claim, is given exclusive control of the defense and
settlement thereof, and is provided with all reasonable assistance in connection
therewith by LICENSOR. Notwithstanding the foregoing, any such settlement that
adversely affects the validity or scope of the Patent Rights will require the
approval of LICENSOR, which approval will not be unreasonably withheld.
5.4 Upon learning of any infringement of Patent Rights by third
parties in any country, LICENSEE and LICENSOR will promptly inform each other,
as the case may be, in writing of that fact and will supply the other with any
available evidence pertaining to the infringement. LICENSEE at its own expense
shall have the right but not the obligation to take whatever steps are necessary
to stop the infringement at its expense and recover damages therefore, and will
be entitled to retain all damages so recovered and LICENSOR will cooperate fully
in connection therewith. In the event that LICENSEE elects not to take whatever
steps are necessary to stop the infringement, LICENSEE will so notify LICENSOR,
and upon such notification and in the event that LICENSEE is not at the time a
party to a litigation involving a claim of infringement of the Patent Rights,
LICENSOR shall have the right to bring suit against the infringer, and LICENSEE
will cooperate fully in connection therewith. In the event that LICENSOR and
LICENSEE mutually agree to bring suit, costs and expenses shall be shared
equally and any recovery in excess of expenses shall be shared equally; the
parties agree to cooperate fully with each other in connection therewith.
5.4.1 ROYALTY PAYMENTS DURING ENFORCEMENT OF PATENT RIGHTS. In
the event that LICENSEE shall undertake the enforcement and/or defense
of the Patent Rights by litigator either solely or jointly with the
LICENSOR as provided above, LICENSEE may withhold up to[ ]* of the
royalties otherwise thereafter due LICENSOR hereunder and apply the
same toward reimbursement of its expenses, including reasonable
attorneys' fees, in connection therewith, PROVIDED, HOWEVER that
royalties due LICENSOR pursuant to Section 8.1(a) hereof shall not be
reduced to less than [ ]* on Net Sales. Any recovery of damages by
LICENSEE for any such suit, as provided above, shall be applied first
in satisfaction of any unreimbursed expenses and legal fees of
LICENSEE relating to the suit, and next toward the reimbursement of
LICENSOR for any royalties past due or withheld. The balance remaining
from any such recovery shall be retained
- -------------
* This portion of the Exhibit has been omitted pursuant to a Request for
Confidential Treatment under Rule 406 of the Securities Act of 1933, as amended.
The complete Exhibit, including the portions for which confidential treatment
has been requested, has been filed separately with the Securities Exchange
Commission.
5
<PAGE> 6
in its entirety by LICENSEE except where as provided hereinabove,
LICENSOR and LICENSEE have mutually brought suit.
5.5 LICENSOR shall have no responsibility with respect to LICENSEE'S
own trademarks and tradename.
6. INDEMNIFICATION:
6.1 Except as provided in Paragraphs 5.4 and 5.4.1, LICENSEE agrees
to release, indemnify and hold harmless the LICENSOR, its Trustees, officers,
faculty, employees and students against any and all losses, expenses, claims,
actions, lawsuits and judgments thereon (including attorney's fees through the
appellate levels) which may be brought against LICENSOR, its Trustees, officers,
faculty, employees or students as a result of or arising out of any act of
negligence or willful misconduct of LICENSEE, its agents, or employees relating
to this Agreement, or arising out of the use, production, manufacture, sale,
lease, consumption or advertisement by LICENSEE of Products. LICENSEE shall
defend and control negotiation of settlement of any such claim with counsel of
LICENSEE'S choosing. LICENSOR agrees to cooperate fully in the defense of any
such clam and may participate in the defense with counsel of LICENSOR'S
choosing, such separate counsel to e at LICENSOR'S expense. LICENSEE shall have
no liability to defend any such claim unless it receives written notification of
such claim by LICENSOR promptly after LICENSOR has actual knowledge of such
claim, is given exclusive control of the defense and settlement thereof, and is
provided with all reasonable assistance in connection therewith by LICENSOR.
Notwithstanding the foregoing, any such settlement that adversely affects the
validity or scope of the Patent Rights will require the approval of LICENSOR,
which approval will not be unreasonably withheld.
7. WARRANTIES:
EXCEPT AS EXPRESSLY SET FORTH HEREIN LICENSOR MAKES NO WARRANTIES,
EXPRESS OR IMPLIED, AND HEREBY DISCLAIMS ALL SUCH WARRANTIES, AS TO ANY MATTER
WHATSOEVER, INCLUDING, WITHOUT LIMITATION, THE CONDITION OF ANY INVENTIONS OR
PRODUCTS, WHETHER TANGIBLE OR INTANGIBLE, LICENSED UNDER THIS AGREEMENT; OR THE
MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE OF THE INVENTIONS OR
PRODUCTS; OR THAT THE USE OF THE PRODUCTS WILL NOT INFRINGE ANY PATENT,
COPYRIGHTS, TRADEMARKS, OR OTHER RIGHTS. LICENSOR SHALL NOT BE LIABLE FOR ANY
DIRECT, CONSEQUENTIAL, OR OTHER DAMAGES SUFFERED BY ANY LICENSEE OR ANY THIRD
PARTIES RESULTING FROM THE USE, PRODUCTION, MANUFACTURE, SALE, LEASE,
CONSUMPTION, OR ADVERTISEMENT OF THE PRODUCTS BY LICENSEE.
The provisions of this Section shall continue beyond the termination
of this Agreement.
8. ROYALTIES:
8.1 In consideration of the license herein granted, LICENSEE shall
pay royalties to LICENSOR as follows:
6
<PAGE> 7
(a) For the rights and privileges granted under this Agreement,
LICENSEE shall pay to LICENSOR a royalty of [ ]*on Net
Sales of Products which at the time and place of
manufacture, embody or are made in accordance with one or
more claims of any valid, issued, unexpired patent or
pending patent application within the Patent Rights, subject
to any credits permitted hereunder. Notwithstanding the
foregoing, in the event that claim(s) in such pending
application do not issue in a patent in the respective
country within five (5) years after the filing date of such
pending application in such country, LICENSEE'S obligation
to pay LICENSOR such royalties on account of such claim(s)
shall cease, until such time as such claim(s) issue.
(b) SHARE OF NET ROYALTY INCOME. In the event that LICENSEE
grants licenses to any non-affiliated third parties under
the Patent Rights at any time during the term of this
Agreement, then for each sublicense LICENSEE agrees to pay
LICENSOR additional royalties at the rate of [ ]* on
all Net Royalties collected by LICENSEE and its Affiliate(s)
(including dollar equivalents in foreign funds), subject to
any credits permitted hereunder.
8.1.1 Offset Against Royalties.
(a) In the event that LICENSEE or its Affiliate(s) either:
(i) manufactures, uses, or sells a Product which
contains or is combined with another product which is
covered by inventions or technology duly licensed to
LICENSEE by a third party, or
(ii) cannot manufacture or sell a particular Product
without infringing the patent of a third party, LICENSEE
shall have tee right to negotiate with the third party for a
license under the third party's patent rights; and
then LICENSEE shall have the right to reduce LICENSEE'S
royalty payments to LICENSOR by the amount which LICENSEE is
obligated to pay such third party for such patent license,
PROVIDED, HOWEVER, that such reduction does not reduce the
royalties to an
- -------------
* This portion of the Exhibit has been omitted pursuant to a Request for
Confidential Treatment under Rule 406 of the Securities Act of 1933, as amended.
The complete Exhibit, including the portions for which confidential treatment
has been requested, has been filed separately with the Securities Exchange
Commission.
7
<PAGE> 8
amount less than [ ]* the amount which would otherwise
be due LICENSOR pursuant to the provisions of Section 8.1
hereof.
(b) LICENSEE shall have the right to credit its expense for the
filing, prosecution and defense of applications and
maintenance of patents within Patent Rights against
royalties otherwise due LICENSOR pursuant to Section 8.1.
8.2 All payments shall be made hereunder in U.S. dollars; provided
however, that if the proceeds of the sales upon which such royalty payments are
based are received by the LICENSEE in a foreign currency or other form that is
not convertible or exportable in dollars, and the LICENSEE does not have ongoing
business operations or bank accounts in the country in which the currency is not
convertible or exportable, the LICENSEE shall pay such royalties in the currency
of the country in which such sales were made by depositing such royalties in
LICENSOR'S name in a bank designated by LICENSOR in such country. Royalties in
dollars shall be computed by converting the royalty in the currency of the
country in which the sales were made at the exchange rate for dollars prevailing
at the close of the business day of the LICENSEE'S quarter for which royalties
are being calculated as published the following day in the Wall Street Journal
(or, if it ceases to be published, a comparable publication to be agreed upon
from time to time by the parties), and with respect to those countries for which
rates are not published in the Wall Street Journal, the exchange rate fixed for
such date by the appropriate United States governmental agency.
8.3 In the event the royalties set forth herein are higher than the
maximum royalties permitted by the law or regulations of a particular country,
the royalty payable for sales in such country shall be equal to the maximum
permitted royalty under such law or regulation.
8.4 In the event that any taxes, withholding or otherwise, are levied
by any taxing authority in connection with accrual or payment of any royalties
payable to LICENSOR under this Agreement, the LICENSEE shall have the right to
pay such taxes to the local tax authorities on behalf of LICENSOR and the
payment to LICENSOR of the net amount due after reduction by the amount of such
taxes, shall fully satisfy the LICENSEE'S royalty obligations under this
Agreement.
9. BEST EFFORTS:
9.1 Subject to the exercise of LICENSEE'S reasonable business
judgment, LICENSEE will use its best efforts to manufacture, market and sell the
Products in the Territory and will exert its best efforts to create a demand for
the Products.
- -------------
* This portion of the Exhibit has been omitted pursuant to a Request for
Confidential Treatment under Rule 406 of the Securities Act of 1933, as amended.
The complete Exhibit, including the portions for which confidential treatment
has been requested, has been filed separately with the Securities Exchange
Commission.
8
<PAGE> 9
9.2 LICENSEE agrees to submit reports, upon LICENSOR'S request not
more than once annually following the Effective Date, as to its efforts to
develop markets for the Products. Such reports shall include assurance by
LICENSEE of its intent to actively develop commercial embodiments of the
inventions of the Patent Rights subject to the exercise of LICENSEE'S reasonable
business judgment, and a summary of its efforts in this regard.
10. REPORTS AND RECORDS:
10.1 Commencing one (1) year after the first sale, the LICENSEE shall
furnish to LICENSOR a report in writing specifying during the preceding calendar
quarter (a) the number or amount of Products sold hereunder by LICENSEE, and/or
its Affiliates or Sublicensees, (b) the total billings for all Products sold,
(c) deductions as applicable in Paragraph 1.6, (d) amount of Net Royalties
collected, (e) total royalties due, and (f) names and addresses of all
Sublicensees. Such reports shall be due within forty-five (45) days following
the last day of each calendar quarter in each year during the term of this
Agreement. Each such report shall be accompanied by payment in full of the
amount due LICENSOR in United States dollars calculated in accordance with
Paragraph 8.1 hereof.
10.2 For a period of three (3) years from the date of each report
pursuant to Paragraph 10.2, LICENSEE shall keep records adequate to verify each
such report and accompanying payment made to LICENSOR under this Agreement, and
an independent Certified Public Accountant or Accounting Firm selected by
LICENSOR and acceptable to LICENSEE may have access, on reasonable notice during
regular business hours, not to exceed once per year, to such records to verify
such reports and payments. Such Accountant or Accounting Firm shall not disclose
to LICENSOR any information other than that information relating solely to the
accuracy of, or necessity for, the reports and payments made hereunder The fees
and expense of the Certified Public Accountant or Accounting Firm performing
such verification shall be borne by LICENSOR unless in the event that the audit
reveals an underpayment of royalty by more than ten percent (10%), in which case
the cost of the audit shall be paid by LICENSEE.
11. REPRESENTATIONS AND WARRANTIES: The following provisions relate
to representations and warranties by the parties.
11.1 BY LICENSEE. LICENSEE represents and warrants to LICENSOR as
follows:
11.1.1 CORPORATE POWER. LICENSEE has all necessary corporate
power to enter into and perform its obligations under this Agreement
and as taken all necessary action under the laws of the State of
Delaware and its articles of organization and operating agreement to
authorize the execution and consummation of this Agreement.
11.2 BY LICENSOR. LICENSOR represents and warrants to LICENSEE as
follows:
11.2.1 CORPORATE POWER. LICENSOR has all necessary corporate
power to enter into and perform its obligations under this agreement
and has taken all
9
<PAGE> 10
necessary corporate action under the laws of the State of Florida and
its charter and by-laws to authorize the execution and consummation of
this Agreement.
11.2.2 OWNERSHIP. Subject to (a) any statutory rights of the
United States Government under 35 U.S.C. Sections 200 et seq.,
LICENSOR acknowledges that LICENSOR either legally and/or beneficially
owns and controls the entire right, title and interest in and to the
Patent Rights including the right to preclude the unauthorized
disclosure or use of the foregoing.
11.2.3 NO OPTIONS. There are no outstanding options or rights in
any third party to any of the Patent Rights or to acquire any rights
or licenses to any of the Patent Rights.
11.2.4 NO LITIGATION. To the best of LICENSOR'S knowledge, there
is no action, suit, claim, proceeding or governmental investigation
pending or threatened against LICENSOR with respect to any of the
Patent Rights either at law or in equity, before any court or
administrative agency or before any governmental department,
commission, board, bureau, agency or instrumentality, whether United
States or foreign.
12. CONFIDENTIAL INFORMATION. The following provisions relate to
restrictions on the disclosure and use of Confidential Information by the
parties:
12.1 Confidential Information shall be marked confidential, or, if
disclosed orally, shall be summarized in a writing marked confidential by the
disclosing party and such summary shall be given to the receiving party within
thirty (30) days after oral disclosure.
12.2 CONFIDENTIALITY. Until the later of (a) five years from the
Effective Date of this Agreement, or (b) two years from the effective date of
termination, LICENSEE and LICENSOR each agrees
(a) to treat as confidential and not disclose to any third pan
all Confidential Information disclosed to it by the other
party; and
(b) not to use such Confidential Information;
except as authorized by this Agreement.
12.3 RELEASE FROM RESTRICTIONS. All information which is characterized
as Confidential Information shall cease to be confidential and LICENSEE and/or
LICENSOR shall be released from their respective obligations under Paragraph
12.2 hereof on the date when, through no fault or omission of the party seeking
such release, such information becomes (a) disclosed in published literature; or
(b) generally available to industry; or (c) obtained by the party seeking such
release from a third party without binder of secrecy, PROVIDED, HOWEVER, that
such third party has no confidentiality obligations to the other party.
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<PAGE> 11
12.4 CONFLICT. In the event of any conflict between this Agreement and
the terms of the Confidentiality Non-Disclosure Agreement dated December 29,
1997 between the parties, the terms of this Agreement shall govern.
13. MARKING AND STANDARDS:
13.1 In accordance with applicable law, LICENSEE agrees to mark and
obligate Sublicensees to mark Products (or their containers or labels) sold in
the United States with proper patent notice as specified under the patent laws
of the United States and will also satisfy the marking standards of each foreign
country in which patent protection is sought and products are sold.
13.2 LICENSEE further agrees to maintain satisfactory standards in
respect to the nature of the Products manufactured and/or sold by LICENSEE.
LICENSEE agrees that all Products manufactured and/or sold by it shall be of a
quality which is appropriate to products of the type here involved LICENSEE
agrees that similar provisions shall be included in its sublicenses under the
Patent Rights.
14. ASSIGNMENT:
14.1 This Agreement is not assignable by LICENSEE without the prior
written consent of LICENSOR at its sole discretion, except that LICENSEE may
freely assign this Agreement to an Affiliate or to a party assuming
substantially all of LICENSEE's business to which Products relate. Notice to
LICENSOR shall be given within thirty (30) days after such an assignment in
order to allow LICENSOR to comply with its affected obligations under this
Agreement.
14.2 This Agreement shall extend to and be binding upon the successors
and legal representatives and permitted assigns of LICENSOR and LICENSEE.
15. NOTICE:
Any notice, payment, report or other correspondence (hereinafter
collectively referred to as "Correspondence") required or permitted to be given
hereunder shall be mailed by certified mail or delivered by hand to the party to
whom such Correspondence is required or permitted to be given hereunder. If
mailed, any such notice shall be deemed to have been given when mailed as
evidenced by the postmark at point of mailing. If delivered by hand, any such
Correspondence shall be deemed to have been given when received by the party to
whom such Correspondence is given, as evidenced by written and dated receipt of
the receiving party.
11
<PAGE> 12
All Correspondence to LICENSEE shall be addressed as follows:
Antigenics LLC
630 Fifth Avenue, Suite 2170
New York, NY 10111
Attn: Garo Armen, Chief Executive Officer
All Correspondence to LICENSOR shall be addressed, in duplicate, as
follows:
FOR NOTICE: University of Miami
School of Medicine
Research and Graduate Studies
P.O. Box 016960 (R64)
1600 N.W. 10th Avenue
Miami, Florida 33101
Attention: Dr. Norman H. Altman
Assistant Vice President
Business Affairs
327 Max Orovitz Building
1507 Levante Avenue
Coral Gables, Florida 33124-1432
Attention: Mr. Alan J. Fish
FOR NOTICE AND PAYMENT:
Director
Office of Technology Transfer
P.O. Box 016960 (M811)
Miami, FL 33101
Attention: Dr. Gary S. Margules
Either party may change the address to which Correspondence to it is to be
addressed by notification as provided herein in this paragraph.
16. TERMINATION:
16.1 LICENSOR and LICENSEE shall each have the right to terminate this
Agreement if the other party commits a material breach of an obligation under
this Agreement or provides an intentionally false report and continues in
default for more than two (2) months after receiving written notice of such
default or intentionally false report. Such termination shall be effective upon
further written notice to the breaching party after failure by the breaching
party to cure such default. If LICENSOR commits a material breach or defaults,
then LICENSEE has no duty to continue the payment of royalties as set forth in
Section 8 of this Agreement.
16.2 The license and rights granted in this Agreement have been
granted on the basis of the special capability of LICENSEE to perform research
and development work leading to the manufacture and marketing of the Products.
Accordingly, to the extent enforceable under
12
<PAGE> 13
law, LICENSEE covenants and agrees that in the event any proceedings under the
Bankruptcy Act or any amendment thereto, be commenced by or against LICENSEE,
and, if against LICENSEE, said proceedings shall no be dismissed with prejudice
before either an adjudication in bankruptcy or the confirmation of a composition
arrangement, or plan of reorganization, or in the event LICENSEE shall be
adjudged insolvent or make an assignment for the benefit of its creditors, or if
a writ of attachment or execution be levied upon the license hereby created and
not be released or satisfied within ten (10) days thereafter, or if a receiver
be appointed in any proceeding or action to which LICENSEE is a party with
authority to exercise any of the rights or privileges granted hereunder, any
such event shall be deemed to constitute a breach of this Agreement by LICENSEE,
and LICENSOR, at the election of LICENSOR, but not otherwise, ipso facto, and
without notice or other action by LICENSOR, shall have the right to terminate
this Agreement.
16.3 LICENSEE shall have the right to terminate this Agreement in
whole or in part with respect to any patent or application within Patent Rights
upon sixty (60) days notice.
16.4 Any termination of this Agreement shall be without prejudice to
LICENSOR'S right to recover all amounts accruing to LICENSOR prior to such
termination and cancellation. Except as otherwise provided, should this
Agreement be terminated for any reason, LICENSEE shall retain no rights, express
or implied, under the Patent Rights, nor have the right to recover any royalties
paid LICENSOR hereunder. Upon termination, LICENSEE shall have the surviving
right under this Agreement to dispose of Products then in its possession and to
complete existing contracts for such products, so long as contracts are
completed within six (6) months from the date of termination, subject to the
payment of royalties to LICENSOR as provided in Section 8 hereof.
17. CERTIFICATE OF INSURANCE:
17.1 LICENSEE and LICENSOR each agree to carry and keep in force, each
at its expense, general liability insurance with limits not less than one
million dollars ($1,000,000) per person and three million dollars ($3,000,000)
aggregate to cover liability for damages on account of bodily or personal injury
or for any cause. Such insurance shall not be canceled for any cause without at
least thirty (30) days prior written notice to the other party. LICENSEE'S
insurance shall contain an endorsement naming LICENSOR as an additional insured
with respect to this Agreement. LICENSEE shall provide a certificate of
insurance stating the limits of coverage. Such insurance shall be written to
cover claims during the term of this Agreement. The insurance certificate shall
be sent to the University of Miami, attention Mr. William Coombs, 333 Max
Orovitz Building, 1507 Levante Avenue, Coral Gables, Florida 33124-1437.
17.2 LICENSEE shall keep in force product liability insurance with
limits not less than five million dollars ($5,000,000) in the event of human
subject testing of a Product. Such insurance shall not be canceled for any cause
without at least thirty (30) days prior written notice to the other party
LICENSEE'S insurance shall contain an endorsement naming LICENSOR as an
additional insured with respect to this Agreement. LICENSEE shall provide a
certificate of insurance stating the limits of coverage. Such insurance shall be
written to cover claims incurred, discovered, manifested or made during or after
the expiration of this Agreement. The insurance certificate shall be sent to the
University of Miami, attention Mr. William Coombs, 333 Max Orovitz Building,
1507 Levante Avenue, Coral Gables, Florida 33124-1437.
13
<PAGE> 14
18. USE OF NAME:
Except as may be required by law, LICENSEE shall not use the name of
the University of Miami, or any of its employees, or any adaptation thereof, in
any publication, including advertising, promotional or sales literature without
the prior written consent of Mr. Alan J. Fish, Assistant Vice President of
Business Services, 327 Max Orovitz Bldg., 1507 Levante Avenue, Coral Gables, FL
33124-1432. Except as may be required by law, LICENSOR shall not use the name of
Antigenics LLC, or any of its employees, or any adaptation thereof, in any
publication, including advertising, promotional or sales literature without the
prior written consent of the Chief Executive Officer of Antigenics LLC, 630
Fifth Avenue, Suite 2170, New York, NY 10111.
19. GOVERNING LAW:
This Agreement shall be governed by and interpreted in accordance with
the laws of the State of Florida.
20. CAPTIONS:
The captions and Paragraph/Section headings of this Agreement are
solely for the convenience of reference and shall not affect its interpretation.
21. SEVERABILITY:
Should any part or provision of this Agreement be held unenforceable
or in conflict with the applicable laws or regulations of any jurisdiction, the
invalid or unenforceable part or provision shall be replaced with a provision
which accomplishes, to the extent possible, the original business purpose of
such part or provision in valid and enforceable manner, and the remainder of the
Agreement shall remain binding upon the parties hereto.
22. SURVIVAL:
22.1 The provisions of Sections 5.3, 6, 7 and 12 shall survive the
termination or expiration of this Agreement and shall remain in full force and
effect.
22.2 The provisions of this Agreement which do not survive termination
or expiration hereof (as the case may be) shall, nonetheless, be controlling on,
and shall be used in construing and interpreting, the rights and obligations of
the parties hereto with regard to any dispute, controversy or claim which may
arise under, out of, in connection with, or relating to this Agreement.
23. AMENDMENT:
No amendment or modification of the terms of this Agreement shall be
binding on either party unless in a prior writing signed by an authorized
officer of each party.
14
<PAGE> 15
24. WAIVER:
No failure or delay on the part of a party in exercising any right
hereunder will operate as a waiver of, or impair, any such right. No single or
partial exercise of any such right will preclude any other or further exercise
thereof or the exercise of any other right. No waiver of any such right will be
deemed a waiver of any other right hereunder.
25. ENTIRE AGREEMENT:
This Agreement constitutes the entire agreement between the parties
hereto respecting the subject matter hereof, and supercedes and terminates all
prior agreements respecting the subject matter hereof, whether written or oral,
and may be amended only by an instrument in writing executed by both parties
hereto.
[SIGNATURE PAGE FOLLOWS]
15
<PAGE> 16
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized to be
effective as of the Effective Date.
ANTIGENICS LLC
Date: ____________________ By: /s/ Garo H. Armen
----------------------------------
Garo H. Armen
-------------------------------------
Name
Chairman and Chief Executive Officer
-------------------------------------
Title
UNIVERSITY OF MIAMI
Date: 4/19/99 By: /s/ Alan J. Fish
----------------------------------
Alan J. Fish
-------------------------------------
Name
Asst. Vice President Business Services
--------------------------------------
Title
16
<PAGE> 1
EXHIBIT 10.13
June 3, 1998
Sigma-Tau Industrie Farmaceutiche Riunite SpA
Via Pontina km 30,400
00040 POMEZIA
ITALY
Gentlemen:
We refer to our recent discussions regarding a potential scientific and business
cooperation between Antigenics L.L.C. ("Antigenics") and Sigma-Tau Industrie
Farmaceutiche Riunite SpA (the "Company") in Italy (the "Territory") with regard
to Antigenics' proprietary technology on the use of Heat Shock Proteins ("HSP")
for the use of HSP to boost and modulate the immune system against cancer (the
"Technology").
The following outlines our thinking on our discussions to date.
BASIC TERMS OF THE COOPERATION ("LETTER AGREEMENT")
1. The Company shall carry out at its own expense two Phase lB clinical
trials sometimes referred to in the regulatory documents as Phase I/II)
in the Territory, whose scope and operational protocol will be
Identified and approved by Antigenics (the "Trials"). It is understood
that the Company shall buy the Product, as hereinafter defined,
necessary for the conduct of the Trials directly or indirectly from
Antigenics, at a reasonable price to be agreed upon in good faith [
]*, within 120 (one hundred and twenty) days from
the date of signature of this Letter Agreement The Trials will commence
upon the grant of the required authorizations by the Italian Ministry
of Health.
2. In consideration of the Company undertaking and financing the Trials,
Antigenics hereby grants to the Company the exclusive right (the
"Right") to negotiate a marketing and development agreement (the
"Development Agreement") for the exclusive use of Antigenics' patent
rights (the "Patent Rights") and the Technology for the purpose of
using, marketing and selling any active compound (the "Compound")
and/or any pharmaceutical specialty for the treatment of cancer (the
"Product") in the Territory. Antigenics and the Company will negotiate
in good faith and professionally so as to finalize the Development
Agreement within the Target Date (as hereinafter defined). Terms and
conditions for a possible extension of the Territory will be discussed
in good faith between the parties, if so requested by the Company,
within 12 (twelve) months from the date of this Letter Agreement; it
being understood, however, that such
- --------------------
* This portion of the Exhibit has been omitted pursuant to a Request for
Confidential Treatment under Rule 406 of the Securities Act of 1933, as amended.
The complete Exhibit, including the portions for which confidential treatment
has been requested, has been filed separately with the Securities Exchange
Commission.
<PAGE> 2
discussion would not preclude Antigenics from any activity whatsoever,
including discussions, transactions, or agreements with others
concerning countries other than the Territory.
3. The Right shall expire at a date (the "Target Date") which shall be the
earliest of (i) the date on which the Development Agreement is duly
authorized, executed and delivered by the parties, (ii) six months from
the completion of the second Trial, if the parties agree to only one
Trial, then six months from the completion of the first and only Trial,
(iii) twenty-four months from the enrollment of the first patient in
the first Trial, (iv) twenty-four months from the date of this Letter
Agreement if required authorization to conduct the first Trial has not
yet been granted by the appropriate Italian authorities, (v) twelve
months from the hold imposed by the Italian Authorities on the Trials
for any reason, or (vi) twenty-four months from the date of this Letter
Agreement if no patients have been enrolled.
4. Antigenics also grants the Company the right of first offer to
negotiate licenses for other medical uses of the Technology in the
Territory. However, this shall in no way preclude Antigenics from
previously or concurrently discussing such licenses for the Technology
and Antigenics is not precluded from entering into an agreement, at any
time, with others, provided that such discussions and agreements are
meant to cover countries with a population larger than the Territory,
and including the Territory.
5. It is anticipated that the Development Agreement shall provide that the
Company shall initially purchase all its requirements of the Compound
and/or the Product in finished form ready for use directly or
indirectly from Antigenics at a price to be set forth in the
Development Agreement. It is anticipated that the supply price of the
Compound and/or the Product, respectively, will [
]*. [
]*.
6. The Development Agreement shall also provide for the possibility for
the Company to manufacture or have the Compound/Product manufactured in
the Territory upon appropriate terms and conditions including a royalty
to Antigenics.
- --------------------
* This portion of the Exhibit has been omitted pursuant to a Request for
Confidential Treatment under Rule 406 of the Securities Act of 1933, as amended.
The complete Exhibit, including the portions for which confidential treatment
has been requested, has been filed separately with the Securities Exchange
Commission.
<PAGE> 3
7. All clinical information resulting from or relating to the Trials shall
be promptly delivered to Antigenics upon expiration of the Right.
8. Each party will provide the other with access to all information
requested to allow the other to carry out the Trials and to evaluate
and negotiate the Development Agreement. Before the start of the
Trials, a protocol will be established for the regular exchange of
clinical information between the two parties as the Trials are being
conducted.
9. In consideration of the foregoing:
(i) RELEASE OF INFORMATION. No party shall release information to
the public concerning this Letter Agreement, the Development
Agreement, or any other transaction contemplated hereby
without the prior written consent of the other party, and each
party shall consult with the other as to the form and
substance of any press release or other public disclosure, if
any. Nothing contained herein shall prevent any party from
disclosing any information to officers, directors, trustees,
employees and representatives of either party in connection
with discussion concerning the Development Agreement or from
disclosing any information required to be disclosed in
accordance with any law, regulation or order of a court or
regulatory agency of competent jurisdiction.
(ii) ACCESS. Each party shall make its management and other
employees, agents and authorized representatives (including
counsel and independent public accountants) available, as
appropriate, to confer relating to the Development Agreement;
and as appropriate, subject to the disclosing parties'
approval, which approval shall not unreasonably be withheld,
each party shall disclose and make available all books, paper,
and records related to the Development Agreement.
(iii) CONFIDENTIALITY. Except as otherwise provided In Paragraph 9
(i) hereof, all information furnished to any party under this
Letter Agreement shall be treated as confidential and each
party shall preserve the confidentiality of such information.
If the Right expires without the Development Agreement being
executed, all documents and other materials containing,
reflecting and referring to such information shall promptly be
returned to the party that provided it. The obligations under
this paragraph shall not apply to any information which: (a)
was already in the possession of a party prior to the
disclosure thereof hereunder, (b) was then generally known to
the public, (c) became known to the public through no fault of
the party receiving the information, (d) was disclosed to the
receiving party by an unaffiliated third party who was not
bound by an obligation of confidentiality to the party
providing the confidential information hereunder. The
obligations under this paragraph 9(iii) shall be replaced by
corresponding obligations laid down in the Development
Agreement. In the event that the Development Agreement is not
executed by the parties hereto the obligations under this
paragraph 9(iii) shall extend for seven years as of the date
of this Letter Agreement.
<PAGE> 4
This Letter Agreement shall be governed by and construed and enforced in
accordance with the laws of the state of New York, without regard to the
conflicts of law principle thereof. In the event of any dispute, New York courts
shall have exclusive jurisdiction of such dispute.
Antigenics and the Company mutually acknowledge their common interest and
intention to implement the provisions of this Letter Agreement and to consult
with each other in the event of major, unforeseeable events which might hamper
the finalization of the Development Agreement.
If the foregoing correctly expresses our understanding, please so indicate by
signing and dating the enclosed copy of this Letter Agreement and returning it
to the undersigned.
Sincerely.
ANTIGENICS, L.L.C.
By: /s/ Garo H. Armen
-------------------------------
Name: Garo H. Armen
-------------------------------
Title: Chairman & CEO
-------------------------------
Agreed to:
SIGMA-TAU INDUSTRIE FARMACEUTICHE RIUNITE SPA
By: /s/ Claudio Cavazza
-------------------------------
Name: Claudio Cavazza
-------------------------------
Title: President
-------------------------------
<PAGE> 1
EXHIBIT 10.14
[ANTIGENICS LOGO]
ANITGENICS
November 15, 1999
Medison Pharma Ltd.
10 Hashiloach St. P.O.B. 7090
Petach-Tikva 49170
Israel
Dear Mr. Jakobsohn:
We refer to our recent discussions regarding a potential Licensing and
Distribution Relationship between Antigenics LLC ("Antigenics") and Medison
Pharma Ltd. ("Medison") in Israel with regard to Antigenics' proprietary
technology utilizing Heat Shock Proteins ("HSP") for the boosting and modulating
of the immune system of humans against cancer (the "Technology").
The following outline the general terms and conditions of a Licensing and
Distribution Relationship:
1. Antigenics' shall grant Medison a license for the Technology in
Israel solely for the purposes outlined in this Letter Agreement.
2. In each of Antigenics' Phase III Trials, Antigenics will include a
limited number of clinical sites in Israel. Antigenics' obligation
will cease if it is determined by both companies that there are
insufficient sites available to accrue the appropriate number of
patient's according to Antigenics' timelines.
3. All data, clinical and otherwise, generated in the Israeli sites
will be property of Antigenics.
4. Medison shall be Antigenics' exclusive sales and marketing agent
for the Israeli market.
5. For the Israeli market, Medison will be responsible[ ]*
for preparing and filing all regulatory documents and providing
whatever support is necessary to obtain regulatory approval in
Israel.
6. Medison shall be responsible for obtaining any necessary
reimbursement approvals.
- --------------------
* This portion of the Exhibit has been omitted pursuant to a Request for
Confidential Treatment under Rule 406 of the Securities Act of 1933, as amended.
The complete Exhibit, including the portions for which confidential treatment
has been requested, has been filed separately with the Securities Exchange
Commission.
<PAGE> 2
7. After regulatory approval, Medison shall be responsible for all
sales and marketing efforts and expenses.
8. Antigenics shall receive [ ]* of Net Sales and Medison shall
receive [ ]* of Net Sales.
9. Medison and its affiliates shall make an equity investment of [
]* in Antigenics LLC 1999 Private Placement and will be
entitled to all the rights granted to the other investors as
detailed in the Private Placement Memorandum dated 8/31/99, the
Subscription Agreement and the Limited Liability Company
Agreement.
10. Your rights and obligations will be subject to typical termination
provisions, however, the Agreement will not contain a change in
control termination provision.
11. The term of the agreement shall be 7 years.
Prior to the initiation of Antigenics' first Phase III trial in cancer,
Antigenics and Medison shall negotiate and sign a License and Distribution
Agreement acceptable to both parties. That agreement shall contain terms and
conditions typical to for an agreement of that type, including appropriate
termination provisions and best efforts clauses.
This Letter Agreement shall be governed by and construed and enforced in
accordance with the laws of the state of New York, without regard to the
conflicts of law principles thereof. In the event of any dispute, New York
courts shall have exclusive jurisdiction of such dispute.
If the foregoing correctly expresses our understanding, please so indicate by
signing and dating the enclosed copy of this Letter Agreement and returning it
to the undersigned.
Sincerely,
Antigenics LLC
By: /s/ Garo H. Armen
------------------------------------
Name: Garo H. Armen
------------------------------------
Title: Chairman and Chief Executive Officer
------------------------------------
- --------------------
* This portion of the Exhibit has been omitted pursuant to a Request for
Confidential Treatment under Rule 406 of the Securities Act of 1933, as amended.
The complete Exhibit, including the portions for which confidential treatment
has been requested, has been filed separately with the Securities Exchange
Commission.
<PAGE> 3
Medison
By: /s/ Mier Jakobsohn /s/ Shmuel Berkovich
------------------------
Name: /s/ Mier Jakobsohn /s/ Shmuel Berkovich
------------------------
Title: General Manager General Manager
------------------------
<PAGE> 1
EXHIBIT 10.16
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this Agreement) dated as of June 1, 1998, between
ANTIGENICS L.L.C., a Delaware limited liability company (the "LLC"), and ELMA
HAWKINS (Employee").
WITNESSETH:
WHEREAS, the LLC desires to employ Employee as Senior Vice President
and Employee desires to accept such employment, under the terms and conditions
set forth in this Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
1. EMPLOYMENT. Subject to the terms and conditions hereof, the
LLC hereby employs Employee as a Senior Vice President during the term hereof as
hereinafter described, and Employee hereby accepts such employment.
2. TERM OF EMPLOYMENT. Unless earlier terminated pursuant to
Section 6 hereof, the term of employment of Employee under this Agreement shall
be for a period of one (1) year from the date hereof. At the end of such term,
and at the end of each succeeding one year term (the end of each one year term
an "Anniversary"), this Agreement shall automatically be renewed for a term of
one (1) year unless either party gives the other party notice not more than
sixty (60) nor less than thirty (30) days prior to the Anniversary of its intent
to terminate this Agreement. If such notice is given, this Agreement shall
terminate on the Anniversary.
3. DUTIES. During the term of her employment by the LLC, Employee
shall serve as-a Senior Vice President. In such capacity, Employee shall serve
at the pleasure of the LLC as a Senior Vice President. Employee shall at all
times report to the Chief Executive Officer, and Employee shall keep the Chief
Executive Officer fully apprised of all of Employees activities. Employee shall
perform her duties hereunder faithfully, diligently and to the best of her
ability, and shall devote all of her business time to the LLC's business.
4. COMPENSATION.
4.1 BASE SALARY. The LLC shall pay Employee a base salary ("Base
Salary") at the rate of $200,000 per annum, with the understanding that Employee
shall be eligible for all future performance or merit-based increases in Base
Salary. Base Salary shall be payable in accordance with the standard payroll
practices of the LLC in effect from time to time.
4.2 INCENTIVE EQUITY PLAN. In connection with her employment
hereunder, Employee has been granted an option under the LLCs Incentive Equity
Plan. The terms and conditions of such option are set forth in the form of
Option Agreement attached hereto as EXHIBIT A, copies of which have been
executed and delivered by the LLC and Employee as of the date hereof.
<PAGE> 2
5. OTHER BENEFITS.
5.1 VACATION. Employee shall be entitled to up to four (4) weeks
of paid vacation each calendar year. Such vacation shall be taken only at such
time or times as the Chief Executive Officer may approve. If Employee does not
use all four weeks of vacation time in any one calendar year, employee will
abide by employer policy in using vacation in successive calendar year.
5.2 BENEFIT PROGRAMS. During the term of her employment, Employee
shall be entitled to participate in all employee benefit programs of the LLC in
effect from time to time.
6. TERMINATION OF EMPLOYMENT.
6.1 GENERAL. The employment of Employee may be terminated by the
LLC at any time during the term hereof for "Cause" (as defined below), without
"Cause" or as a result of Employee's "Permanent Disability" (as defined below)
or death.
6.2 CERTAIN DEFINITIONS. For purposes of this Agreement:
(a) "Cause" means one or more of the following:
(1) any willful or intentional act of Employee
that could reasonably be expected to have the effect of injuring the reputation,
business or business relationships of the LLC;
(2) conviction of Employee (including a
conviction on a nolo contendere plea) of any felony (other than a traffic
violation), or of any crime or offense which involves property or money of the
LLC or moral turpitude, or Employee's incarceration following any conviction
which restricts or limits the ability of Employee to perform her duties
hereunder;
(3) Employee's refusal or repeated failure or
neglect to perform her duties as set forth herein; or
(4) any other conduct of Employee that
constitutes a willful, intentional or material breach of this Agreement.
(b) "Permanent Disability" means the inability of
Employee, even with reasonable accommodation, to perform the essential functions
of her position hereunder for at least 90 consecutive days or for at least 120
days in any 365-day period as a result of physical or mental disability.
6.3 TERMINATION WITHOUT CAUSE. If Employee's employment hereunder
is terminated by the LLC other than due to "Cause" or Employee's Permanent
Disability, then the LLCs sole liability and obligation to Employee shall be to
continue to make Base Salary payments to Employee until the end of the
Anniversary in accordance with the LLC's standard payroll practices.
Notwithstanding the foregoing, if Employee's employment hereunder is terminated
by the LLC because (i) more than 50% of the outstanding units of equity
interests in the LLC (the
-2-
<PAGE> 3
"Units") are sold to an unaffiliated third party or (ii) the LLC eliminates the
position of Senior Vice President, the LLC's sole liability and obligation to
Employee shall be, at Employee's option, to (x) make Base Salary payments to
Employee for one year in accordance with the LLC's standard payroll practices or
(y) distribute to Employee Units that are valued in the aggregate at $[200,000].
The Units shall be distributed on a schedule corresponding to the amount of Base
Salary Employee would have received if Employee's Base Salary was being paid in
accordance with the LLC's standard payroll practices, rounded to the nearest
Unit. Employee shall have no rights as a Member of the LLC with respect to any
Units distributed pursuant to this Section 6.3 until Employee has duly executed
and delivered a copy of the LLC's Limited Liability Company Agreement as then in
effect. The parties acknowledge that it would be difficult to calculate the
amount of damages that Employee would suffer as a result of such termination,
and the severance payment provided for in this Section 6.3 is intended to be a
reasonable estimate of such damages and to be Employee's exclusive remedy under
this Agreement. Except as provided in this Agreement, neither Employee nor her
estate or beneficiaries shall have any rights or claims against the LLC by
reason of any termination of the employment of Employee hereunder.
6.4 VOLUNTARY TERMINATION, TERMINATION DUE TO CAUSE, PERMANENT
DISABILITY OR DEATH. If Employee's employment hereunder is voluntarily
terminated by Employee, is terminated by the LLC due to Cause, or is terminated
due to Employee's Permanent Disability or death, then the LLC's sole liability
and obligation to Employee shall be to pay Employee her accrued and unpaid Base
Salary in addition to any accrued and unused vacation time through the date of
such termination.
6.5 REQUIREMENT TO MITIGATE. If Employee's employment hereunder is
terminated by the LLC other than due to "Cause" or Employee's Permanent
Disability, then Employee shall be required to mitigate damages otherwise
obtainable from the LLC pursuant to Section 6.3 hereof, as a result of the LLC's
breach of this Agreement, and any compensation income received by Employee after
such termination shall reduce the amount payable in accordance with Section 6.3.
7. CONFIDENTIALITY, NON-COMPETITION AND RELATED MATTERS.
7.1 CONFIDENTIAL INFORMATION. Employee shall not, directly or
indirectly, during the period she is engaged as an employee to the LLC and
during the three-year period thereafter (such period of employment plus such
three-year period being hereinafter referred to as the "Restrictive Period"),
disclose to anyone or use (except as authorized in the regular course of the
LLC's business) any information acquired during her employment with the LLC or
thereafter with respect to any of the LLC's confidential information (including
information relating to the development of the LLC's inventions, processes,
formulae, and any other information that is not then generally available to the
public, all of which Employee acknowledges to be confidential).
7.2 COVENANT NOT TO COMPETE. Employee shall not, during the period
she is engaged as an employee to the LLC and during the one-year period
thereafter, directly or indirectly, engage or become interested in (as owner,
stockholder, partner, director, officer, employee, consultant, agent or
otherwise) any business which is involved in the study, development, marketing
or sale of autologous cell-derived cancer vaccines. Employee acknowledges that
this
-3-
<PAGE> 4
provision is necessary for the LLC's protection and is reasonable since she is
able to obtain employment or otherwise provide services to companies whose
businesses or proposed businesses are not related to the study, development,
marketing or sale of autologous cell-derived cancer vaccines. If, however, any
provision of this paragraph is held to be unenforceable because of the duration,
scope or absence of geographical limits of the restriction, the court making
that determination shall modify that provision to the extent necessary to make
it valid. Ownership of less than 5% of the securities of any class of a
corporation registered under section 12(b) or 12(g) of the Securities Exchange
Act of 1934 shall not be considered a violation of the provisions of this
paragraph.
7.3 NON-SOLICITATION OF EMPLOYEES. Employee shall not, during the
Restrictive Period, directly or indirectly employ or retain, solicit the
employment or retention of, or be associated with any entity that employs or
retains or solicits the employment or retention of, any person who was an
employee of the LLC at any time during Employee's employment or during the
Restrictive Period.
7.4 SET-OFF. If Employee shall, after termination of her
employment hereunder, breach any provision of Section 7.1, 7.2 or 7.3 hereof,
the LLC may set-off against the amounts otherwise payable to Employee pursuant
to Section 6.3 hereof, the amount of the damages suffered by it as a result of
such breach. Any amounts withheld from Employee by the LLC pursuant to this
Section 7.4 shall be deposited with an escrow agent to be determined by the LLC
(which escrow agent shall be reasonably satisfactory to Employee) pending a
determination of the LLC's right to make such set-off. The parties shall agree
to the escrow agent's standard terms and conditions, and the fees and expenses
associated with such escrow agent shall be borne equally by the LLC and
Employee.
8. INJUNCTIVE RELIEF: Without limiting the remedies available to
the LLC, Employee acknowledges that a breach of the covenants contained in
Sections 7.1, 7.2 and 7.3 hereof may result in material irreparable injury to
the LLC for which there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and that, in the event
of such a breach or threat thereof, the LLC shall be entitled to seek and obtain
a temporary restraining order and/or a preliminary or permanent injunction,
without the necessity of showing actual damage and without any bond or other
security being required, restraining Employee from engaging in activities
prohibited by such Section or such other relief as may be required to
specifically enforce any of the covenants in such Sections 7.1, 7.2 and 7.3
hereof. If the LLC decides to seek and obtain such a temporary restraining order
and/or a preliminary or permanent injunction, it shall notify Employee at least
24 hours in advance of such actions.
9. ASSIGNMENT. This Agreement shall be binding upon and inure to
the benefit of the heirs and representatives of Employee and the assigns and
successors of the LLC, but neither this Agreement nor any rights or obligations
hereunder shall be assignable or otherwise subject to hypothecation by Employee
(except by will or by operation of the laws of intestate succession) or by the
LLC, except that the LLC may assign this Agreement to any successor (whether by
merger, purchase or otherwise) to all or substantially all of the stock, assets
or businesses of the LLC, if such successor expressly agrees to assume the
obligations of the LLC hereunder.
-4-
<PAGE> 5
10. NOTICES. Any notice required or permitted to be given under
this Agreement shall be in writing and shall be deemed sufficiently given if
delivered in person, or mailed by certified first class mail, postage prepaid,
or sent by a reputable overnight courier service, addressed to the party to be
notified at the address(es) specified below (or such other address as may be
specified by notice in this manner):
Notice to LLC:
c/o Antigenics, Inc.
630 Fifth Avenue, Suite 2100
New York, New York 10111
Attention: Chief Executive Officer
with a copy to:
Proskauer Rose LLP
1585 Broadway
New York, New York 10036-8299
Attention: Edward Brodsky, Esq.
Notice to Employee:
Elma Hawkins
963 Lowell Road
Concord, Massachusetts 01742
Notices shall be deemed given as of the date delivered or the date entrusted to
the United States postal service or courier service.
11. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
12. HEADINGS. The headings in this Agreement are for convenience
only and in no way define, limit, or describe the scope or intent of any
provision of this Agreement.
13. WAIVER. The waiver by either party of noncompliance by the
other party of any term or provision of this Agreement shall not be construed as
a waiver of any other non-compliance.
14. SEVERABILITY. If any one or more of the provisions contained
in this Agreement shall be held to be invalid, illegal, or unenforceable in any
respect, such invalidity, illegality, or unenforceability shall not affect any
other provisions hereof.
15. GOVERNING OF LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
ITS CONFLICTS OF LAWS RULES OR PRINCIPLES.
[END OF TEXT]
-5-
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to he
duly executed as of the day and year first above written.
ANTIGENICS L.L.C.
By: /s/ Garo Armen
-------------------------------
Authorized Signatory
/s/ Elma S. Hawkins
-----------------------------------
Elma Hawkins
-6-
<PAGE> 7
ANTIGENICS L.L.C.
EQUITY OPTION AGREEMENT
ANTIGENICS, dated as of July 1, 1996 between Antigenics L.L.C., a
Delaware limited liability company (the "Company"), and Elma Hawkins (the
"Optionee").
WHEREAS, concurrently with the execution of this agreement, Optionee is
entering into an employment agreement with the Company;
WHEREAS, the Company has granted to the Optionee the options (the
"Options") to purchase an aggregate equity interest in the Company equal to 800
Units of the equity interests in the Company (the "Option Interests"), subject
to the terms and conditions set forth in the Company's Incentive Equity Plan
(the "Plan") and the additional terms and conditions set forth below.
NOW, THEREFORE, the Company and the Optionee agree as follows:
1. DEFINITIONS AND INTERPRETATION. Terms defined in the Plan and
not otherwise defined herein shall have the same meanings when used herein. In
the event of any inconsistency between the terms of the Plan and this Agreement,
the terms of the Plan shall control.
2. EXERCISE. The Options shall be exercised by written notice to
the Company (to the attention of the Corporate Secretary) accompanied by (i)
payment in full of the Purchase Price, (ii) any payment or other action required
to satisfy the tax withholding requirement, if any. Payment of the Purchase
Price shall be made in cash (including check, bank draft, or money order) or
with the Committee's prior written approval, by delivery of a promissory note of
the Optionee, such promissory note to be on such terms as are specified by the
Board, or by a combination of cash and the Optionee's promissory note.
3. VESTING; EXPIRATION. The Options shall be exercisable as to
200 Units immediately, as to 200 Units from and after the first anniversary of
the date hereof, as to 200 Units from and after the second anniversary of the
date hereof and as to the remaining 200 Units from and after the third
anniversary of the date hereof. The options shall thereafter remain exercisable
prior to their expiration or earlier termination as provided herein or under the
Plan. The options shall expire on the tenth anniversary of the date hereof or
earlier, as provided in the Plan.
4. PURCHASE PRICE; ADJUSTMENTS. The Purchase Price of the Options
is $250.00 per Unit. The Option Interests issuable upon exercise of the Option
and the Purchase Price shall be subject to adjustment in accordance with the
Plan.
5. NO RIGHTS AS MEMBER. The Optionee shall have no rights as a
Member of the Company with respect to the Option Interests until after an Option
has been exercised and the Optionee has duly executed and delivered a copy of
the LLC Agreement.
-7-
<PAGE> 8
6. MISCELLANEOUS. This agreement shall be governed by and
construed in accordance with the internal laws of the State of New York. The
Option and this Agreement may not be transferred or assigned by the Optionee
other than by will or the laws of descent and distribution, and during the
lifetime of the Optionee, the Option may be exercised only by the Optionee or
the Optionee's guardian or legal representative. This Agreement shall bind and
inure to the benefit of the parties hereto and the successors and assigns of the
Company and, to the extent provided above, the executors, administrators,
legatees and heirs of the Optionee. Except as set forth in the Plan, neither
this Agreement nor any provision hereof may be amended, modified, changed,
discharged, terminated or waived orally or by any course of dealing or purported
course of dealing, but only by an agreement in writing signed by the Optionee
(or, following the death of the Optionee, by such person or persons as may be
entitled hereunder or under the Plan to exercise the Option) and the Company. No
such agreement shall extend to or affect any provision of this Agreement not
expressly amended, modified, changed, discharged, terminated or waived or impair
any right consequent on such a provision.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
ANTIGENICS L.L.C.
By: /s/ Garo Armen
-------------------------------
Authorized Signatory
/s/ Elma S. Hawkins
-----------------------------------
Elma Hawkins, Optionee
-8-
<PAGE> 1
EXHIBIT 23.1
The Members and Board of Managers
Antigenics L.L.C.:
We consent to the use of our report included herein and to the references to our
firm under the headings "Selected Consolidated Financial Data" and "Experts" in
the prospectus and registration statement.
/s/ KPMG LLP
Short Hills, New Jersey
November 29, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE DECEMBER
31, 1998 CONSOLIDATED FINANCIAL STATEMENTS AND THE SEPTEMBER 30, 1999 UNAUDITED
CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER>1
<CURRENCY> U.S. DOLLAR (1)
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1999
<PERIOD-START> JAN-01-1998 JAN-01-1999
<PERIOD-END> DEC-31-1998 SEP-30-1999
<EXCHANGE-RATE> 1 1
<CASH> 22,168,049 12,611,690
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 22,447,475 13,226,179
<PP&E> 4,777,121 7,981,005
<DEPRECIATION> (670,938) (1,389,092)
<TOTAL-ASSETS> 26,635,614 21,279,916
<CURRENT-LIABILITIES> 2,285,445 2,170,109
<BONDS> 709,006 2,367,578
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 23,641,163 16,742,229
<TOTAL-LIABILITY-AND-EQUITY> 26,635,614 21,279,916
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> (9,003,392) (11,476,986)
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 735,778 489,019
<INCOME-PRETAX> (8,267,614) (10,987,967)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (8,267,614) (10,987,967)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (8,267,614) (10,987,967)
<EPS-BASIC> (86.42) (105.57)
<EPS-DILUTED> (86.42) (105.57)
</TABLE>
