UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934. For the period ended DECEMBER 31, 1996
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 934. For the transition period from ------------ to -----------
Commission File Number: 0-12104
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IMMUNOMEDICS INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 61-1009366
------------------------------- --------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
300 American Road, Morris Plains, New Jersey 07950
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
(201) 605-8200
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
[X] Yes [ ]No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
As of February 12, 1997, there were 35,988,170 shares of the registrant's common
stock outstanding.
Page 1 of 13
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IMMUNOMEDICS, INC.
INDEX
Page No.
--------
PART I - FINANCIAL INFORMATION
- ------------------------------
Item 1. Condensed Consolidated Financial Statements (Unaudited):
Condensed Consolidated Balance Sheets - 3
December 31, 1996 and June 30,1996
Condensed Consolidated Statements of Operations - 4
three and six months ended December 31, 1996 and 1995
Condensed Consolidated Statements of Cash Flows - 5
six months ended December 31, 1996 and 1995
Notes to Condensed Consolidated Financial Statements - 6
December 31, 1996
Item 2. Management's Discussion and Analysis of 9
Financial Condition and Results of Operations
PART II- OTHER INFORMATION
- --------------------------
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
- ----------
Page 2 of 13
<PAGE>
IMMUNOMEDICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1996 1996
----------- ----------
<S> <C> <C>
ASSETS
Current Assets:
Cash and Cash Equivalents $ 3,567,236 13,646,000
Marketable Securities 17,780,552 15,044,821
Inventory 706,126 193,672
Other Current Assets 1,262,109 725,291
------------ -----------
Total Current Assets 23,316,023 29,609,784
Property and Equipment, net of accumulated
depreciation of $4,269,000 and $5,372,000 at
December 31,1996 and June 30,1996, respectively 5,772,185 6,110,191
------------ -----------
$ 29,088,208 35,719,975
============ ===========
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities:
Accounts Payable 1,430,738 1,631,071
Other Current Liabilities 3,008,122 2,935,698
------------ -----------
Total Current Liabilities 4,438,860 4,566,769
------------ -----------
Commitments and Contingencies
Stockholders' Equity:
Preferred stock; $01 par value, authorized 10,000,000 shares;
Series C convertible, authorized 200,000 shares;
issued and outstanding 28,415 shares at June 30,1996 -- 284
Series D convertible, authorized 200,000 shares;
issued and outstanding 74,685 and 200,000 shares
at December 31,1996 and June 30,1996, respectively 747 2,000
Common stock; $.01 par value, authorized 50,000,000 shares;
issued and outstanding 35,519,995 and 34,305,485 shares
at December 31,1996 and June 30, 1996, respectively 355,200 343,055
Capital contributed in excess of par 93,064,776 92,894,349
Accumulated deficit (68,837,098) (62,080,861)
Accumulated net unrealized gain/(loss) on securities 65,723 (5,621)
------------ ----------
Total Stockholders' Equity 24,649,348 31,153,206
------------ ----------
$ 29,088,208 35,719,975
============ ==========
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
Page 3 of 13
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IMMUNOMEDICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1996 1995 1996 1995
----------- ---------- ----------- ----------
REVENUES:
<S> <C> <C> <C> <C>
Product sales and royalties $ 262,406 47,130 797,065 98,972
Research and development 215,147 22,500 267,647 90,000
Interest 325,757 417,315 712,058 741,699
----------- ---------- ----------- ----------
803,310 486,945 1,776,770 930,671
----------- ---------- ----------- ----------
COSTS AND EXPENSES:
Cost of goods sold 3,677 4,884 7,967 11,884
Research and development 3,364,313 3,045,006 6,637,967 6,107,960
General and administrative 946,660 606,168 1,887,073 1,288,271
----------- ---------- ----------- ----------
4,314,650 3,656,058 8,533,007 7,408,115
----------- ---------- ----------- ----------
NET LOSS $(3,511,340) (3,169,113) $(6,756,237) (6,477,444)
=========== ========== =========== ==========
NET LOSS PER SHARE $ (0.10) $ (0.10) $ (0.19) (0.20)
=========== ========== =========== ==========
Weighted average number of
shares outstanding 35,251,126 32,767,833 34,928,931 32,099,576
=========== ========== =========== ==========
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
Page 4 of 13
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IMMUNOMEDICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31,
1996 1995
Cash flows from operating activities:
<S> <C> <C>
Net loss $ (6,756,237) $ (6,477,444)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 563,516 506,874
Changes in operating assets and liabilities (1,177,181) 58,380
------------ ------------
Net cash used in operating activities (7,369,902) (5,912,190)
------------ ------------
Cash flows from investing activities:
Purchase of marketable securities (20,280,120) (15,435,391)
Proceeds from maturities of marketable securities 17,608,581 6,664,382
Additions to property and equipment (218,359) (799,997)
------------ ------------
Net cash used in investing activities (2,889,898) (9,571,006)
------------ ------------
Cash flows from financing activities:
Issuance of convertible preferred stock, net -- 9,982,500
Exercise of stock options 181,036 371,937
------------ ------------
Net cash provided by financing activities 181,036 10,354,437
------------ ------------
Decrease in cash and cash equivalents (10,078,764) (5,128,759)
Cash and cash equivalents at beginning of period 13,646,000 7,162,837
------------ ------------
Cash and cash equivalents at end of period $ 3,567,236 $ 2,034,078
============ ============
</TABLE>
Page 5 of 13
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IMMUNOMEDICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) BASIS OF PRESENTATION
---------------------
The accompanying unaudited condensed consolidated financial statements
of Immunomedics, Inc. (the "Company"), which incorporate the Company's
wholly-owned subsidiary Immunomedics, B.V., have been prepared in
accordance with generally accepted accounting principles for interim
financial information and the instructions to Form 10-Q and Rule 10-01
of Regulation S-X. Accordingly, the statements 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 of normal recurring
accruals) considered necessary for a fair presentation have been
included. The balance sheet at June 30, 1996 has been derived from the
audited financial statements at that date. Operating results for the
six-month period ended December 31, 1996 are not necessarily
indicative of the results that may be expected for the fiscal year
ending June 30, 1997.
For further information, refer to the annual financial statements and
footnotes thereto included in the Company's Form 10-K for the fiscal
year ended June 30, 1996.
(2) CASH EQUIVALENTS AND MARKETABLE SECURITIES
------------------------------------------
The Company considers all highly liquid investments with maturities of
three months or less, at the time of purchase, to be cash equivalents.
Included in other current assets at December 31, 1996 and June 30,
1996 is accrued interest earned on cash equivalents and marketable
securities of $237,000 and $181,000, respectively.
(3) INCOME TAXES
------------
The Company has never made payments of Federal or state income taxes
and does not anticipate generating book income in fiscal 1997;
therefore, no income taxes have been reflected for the six-month
period ended December 31, 1996.
(4) NET LOSS PER SHARE
------------------
Net loss per share is based upon the weighted average number of common
shares outstanding. Common share equivalents, consisting of
outstanding stock options, are not included in the computations since
the effect would be antidilutive.
Page 6 of 13
<PAGE>
IMMUNOMEDICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(5) STOCKHOLDERS' EQUITY
--------------------
On June 27, 1996, the Company completed an equity financing pursuant
to Regulation S under the Securities Act of 1933, pursuant to which
several foreign investors purchased 200,000 shares of 5% Series D
Convertible Preferred Stock (the "Series D Preferred") for
$10,000,000. The terms of the transaction allow the investors, at
their discretion, to convert the Series D Preferred into shares of the
Company's common stock during a twenty-four month period beginning in
June 1996, at a price equal to 89% of the average market price per
share over a 20-day trading period surrounding the date of conversion.
As of February 12, 1997, 171,081 shares of Series D Preferred had been
converted into 1,433,439 shares of common stock.
(6) LICENSE AND DISTRIBUTION AGREEMENTS
-----------------------------------
In April 1996, the Company entered into a U.S. Marketing and
Distribution Agreement for CEA-Scan(R) with Mallinckrodt Group Inc.
("Mallinckrodt Group"). Under the terms of the agreement, Mallinckrodt
Group will market, sell and distribute CEA-Scan(R) in the U.S. on a
consignment basis, and will commit financial resources to this effort.
The Company will retain manufacturing and co-promotional rights, will
pay Mallinckrodt Group a pre-determined amount or percentage of the
net selling price, and will potentially commit additional financial
resources to these activities.
In March 1995, the Company entered into a License Agreement with
Mallinckrodt Medical B.V. ("Mallinckrodt Medical"), pursuant to which
Mallinckrodt Medical will market, sell and distribute CEA-Scan(R)
throughout Western Europe and in specified Eastern European countries,
subject to receipt of regulatory approval in the specified countries.
In addition, the Company will manufacture CEA-Scan(R), for which
Mallinckrodt Medical will pay the Company a pre-determined royalty per
vial or a pre-determined percentage of the net selling price.
(7) COMMITMENTS AND CONTINGENCIES
-----------------------------
On February 1, 1994, the Company entered into a master lease
agreement, which was subsequently amended, pursuant to which the
Company may lease equipment for research, development and
manufacturing purposes having an aggregate acquisition cost of up to
$2,200,000. The basic lease payments under the master lease agreement
are determined based on current market rates of interest at the
inception of each equipment schedule take-down, and are payable in
monthly installments over a four-year period. The lease agreement
contains an early purchase option for each equipment schedule, at an
amount which is deemed to be fair
Page 7 of 13
<PAGE>
IMMUNOMEDICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
value, exercisable no later than ninety days before the thirty-sixth
installment is due. On November 1, 1996 and December 9, 1996, Company
exercised the early purchase options on equipment leased on February
14, 1994 and April 1, 1994, respectively. Under the lease agreement,
continued compliance with certain financial ratios is required and, in
the event of default, the Company will be required to provide an
irrevocable letter of credit which is generally equal to the
outstanding balance of lease payments due at the time of default. As
of January 31, 1997, the Company has leased equipment with a cost
basis aggregating $2,014,000 under the master lease agreement. The
Company has recorded lease expense for the three and six months ended
December 31, 1996 of $139,000 and $269,000, respectively.
Page 8 of 13
<PAGE>
IMMUNOMEDICS
PART I - ITEM 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
OVERVIEW
- --------
Except for the historical information contained herein, the following discussion
contains forward-looking statements that involve risks and uncertainties. The
Company's actual results could differ materially from those discussed here.
Factors that could cause or contribute to such differences include, but are not
limited to, those discussed herein, as well as in the Company's Annual Report on
Form 10-K for the year ended June 30, 1996, including Part I (Item 1) and Part
II (Item 7).
Since its inception, the Company has been engaged primarily in the research and
development of proprietary products relating to the detection, diagnosis and
treatment of cancer, and more recently infectious diseases. On June 28, 1996,
the FDA licensed CEA-Scan(R) for the detection of recurrent and/or metastatic
colorectal cancer. On October 4, 1996 the Company received final clearance from
the European Commission to market CEA-Scan(R) in all 15 countries comprising the
European Union. In February 1992, the Company filed with the Health Protection
Branch ("HPB") to market CEA-Scan(R) in Canada. This application remains under
active review.
The Company has also filed with the Committee for Proprietary Medicinal Products
("CPMP"), seeking approval to market LeukoScan(R), an infectious disease imaging
agent, for the detection and diagnosis of osteomyelitis in long bones and in
diabetic foot ulcer patients. On February 14, 1997, the European Commission
granted final clearance to market LeukoScan(R) in all 15 countries comprising
the European Union. On December 19, 1996, the Company submitted an application
to the U.S. Food and Drug Administration ("FDA") for approval of LeukoScan(R)
for use in patients with bone infection or with atypical appendicitis, a second
indication. On February 10, 1997, the FDA notified the Company that it had
accepted this application for filing and was commencing its review. At the
present time, the Company is continuing to negotiate with potential partners for
the distribution of LeukoScan(R) in Europe, and in the U.S., if or when the
product is approved. However, there can be no assurance that successful
arrangements will be concluded, if at all, on terms acceptable to the Company.
The Company is also engaged in developing other biopharmaceutical products,
which are in various states of development and clinical testing. The Company has
not achieved profitable operations and does not anticipate achieving profitable
operations during fiscal year 1997. The Company will continue to experience
operating losses until such time, if at all, that it is able to generate
sufficient revenues from sales of CEA-Scan(R), LeukoScan(R) and its other
proposed IN VIVO products. Further, the Company's working capital will continue
to decrease until such time, if at all, that the Company is able to generate
positive cash flow from operations or until such time, if at all, that the
Company receives an additional infusion of cash from the sale of the Company's
securities, from other financing or from corporate alliances to finance the
Company's operating expenses and capital expenditures.
Page 9 of 13
<PAGE>
RESULTS OF OPERATIONS
- ---------------------
Revenues for the six-month period ended December 31, 1996 were $1,777,000 as
compared to $931,000 for the same period in 1995, representing an increase of
$846,000. This increase was principally due to receipt of a license fee of
$500,000 from a corporate partner, sales revenues from CEA-Scan(R) following its
launch in October 1996, and higher government grant income.
Revenues for the three-month period ended December 31, 1996 were $803,000 as
compared to $487,000 for the same period in 1995, representing an increase of
$316,000. This increase was principally due to sales revenues from CEA-Scan(R)
and higher government grant income, partially offset by lower interest income
resulting from less cash available for investment.
Total operating expenses for the six-month period ended December 31, 1996 were
$8,533,000 as compared to $7,408,000 for the same period in 1995, representing
an increase of $1,125,000. Research and development costs for the six-month
period ended December 31, 1996 increased by $530,000 as compared to the same
period in 1995, principally resulting from expenses attributable to ongoing
validation of the Company's new manufacturing facility. General and
administrative costs for the six-month period ended December 31, 1996 increased
by $599,000 as compared to the same period in 1995. This increase was
principally due to operating expenses for Immunomedics, B.V., pre-launch
marketing expenses for CEA-Scan(R) and increased legal expenses. The higher
legal expenses were incurred in connection with the arbitration claim against
Pharmacia & Upjohn, Inc., which was filed in June 1996, and also in connection
with increased patent activity during the six-month period ended December 31,
1996.
Total operating expenses for the three-month period ended December 31, 1996 were
$4,315,000 as compared to $3,656,000 for the same period in 1995, representing
an increase of $659,000. Research and development costs for the three-month
period ended December 31, 1996 increased by $319,000 as compared to the same
period in 1995, for the same reasons as discussed above. Similarly, general and
administrative costs for the three-month period ended December 31, 1996
increased by $341,000 as compared to the same period in 1995, for the same
reasons as discussed above.
Net loss for the six-month period ended December 31, 1996 was $6,756,000, or
$0.19 per share, as compared to a loss of $6,477,000, or $0.20 per share, for
the same period in 1995. Net loss for the three-month period ended December 31,
1996 was $3,511,000, or $0.10 per share, as compared to a loss of $3,169,000, or
$0.10 per share, for the same period in 1995. The higher net losses of $279,000
and $342,000 for the six- and three-month periods ended December 31, 1996 as
compared to the same periods in 1995 principally resulted from higher operating
expenses, partially offset by higher revenues, as discussed above. The net loss
per share for the six- and three-month periods ended December 31, 1996 was
positively impacted by the higher weighted average number of common shares
outstanding for these periods, as compared to the same periods in 1995. The
increase in the weighted average number of common shares outstanding was
principally due to the conversion of Preferred Stock into the Company's Common
Stock (see Note 5 to Unaudited Condensed Consolidated Financial Statements).
Page 10 of 13
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
At December 31, 1996, the Company had working capital of $18,877,000, which
represents a decrease of $6,166,000 from June 30, 1996, and had no long-term
debt other than certain lease obligations (see Note 7 to Unaudited Condensed
Consolidated Financial Statements). The net decrease in working capital resulted
principally from the funding of operating expenses and capital expenditures.
On February 1, 1994, the Company entered into a master lease agreement, which
was subsequently amended, pursuant to which the Company may lease equipment for
research, development and manufacturing purposes having an aggregate acquisition
cost of up to $2,200,000. The basic lease payments under the master lease
agreement will be determined based on current market rates of interest at the
inception of each equipment schedule take-down, and payable in monthly
installments over a four-year period. The lease agreement contains an early
purchase option for each equipment schedule, at an amount which is deemed to be
fair value, exercisable no later than ninety days before the thirty-sixth
installment is due. On November 1, 1996 and December 9, 1996, the Company
exercised early purchase options on equipment leased on February 14, 1994 and
April 1, 1994, respectively. Under the lease agreement, continued compliance
with certain financial ratios is required and, in the event of default, the
Company will be required to provide an irrevocable letter of credit which is
generally equal to the outstanding balance of lease payments due at the time of
default. As of January 31, 1997 the Company has leased equipment with a cost
basis aggregating $2,014,000 under the master lease agreement (see Note 7 to
Unaudited Condensed Consolidated Financial Statements).
The Company's liquid asset position, measured by its cash, cash equivalents and
marketable securities, was $21,348,000 at December 31, 1996, representing a
decrease of $7,343,000 from June 30, 1996. This decrease was principally
attributable to the funding of operating expenses and capital expenditures as
discussed above. It is anticipated that working capital and cash, cash
equivalents and marketable securities will decrease during the remainder of
fiscal year 1997 as a result of planned operating and capital expenditures. At
present, the Company believes that its projected financial resources will be
sufficient to fund anticipated operating expenses and capital expenditures at
least through calendar year 1997. The Company intends to supplement its
financial resources from time to time as market conditions permit through
additional financing and/or through collaborative marketing and distribution
agreements. In addition, the Company continues to evaluate various programs to
raise additional capital and to seek additional revenues from the licensing of
its proprietary technology. At the present time, the Company is unable to
determine whether any of these future activities will be successful and, if so,
the terms and timing of any definitive agreements. There can be no assurance
that the Company will be able to obtain additional funds in the future.
Page 11 of 13
<PAGE>
PART II - OTHER INFORMATION:
Items 1-3 Not applicable
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits
10.24 Consulting Agreement, dated December 16, 1996,
between the Company and Rolf H. Henel.
10.25 License Agreement, dated January 21, 1997, between
the Company and the Center for Molecular Medicine
and Immunology, Inc.
(b) Reports on Form 8-K
The Company did not file a Current Report on Form 8-K
during the three-month period ended December 31, 1996.
Page 12 of 13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
IMMUNOMEDICS INC.
----------------------
(Registrant)
DATE: February 14, 1997 /s/ David M. Goldenberg
-----------------------
David M. Goldenberg,
Chairman, Chief Executive Officer and
Treasurer (Principal Executive Officer
and Principal Accounting Officer)
Page 13 of 13
CONSULTING AGREEMENT
CONSULTING AGREEMENT, dated as of December 16, 1996, between
IMMUNOMEDICS, INC., a Delaware corporation having its principal executive office
at 300 American Road, Morris Plains, New Jersey 07950 (the "Company"), and ROLF
H. HENEL having an address at 30 Foxboro Road, Wayne, New Jersey 07470
("Consultant").
The Company desires to employ Consultant on the terms and conditions
set forth herein, and Consultant desires to accept such employment.
In consideration of the foregoing and of the respective covenants and
agreements of the parties herein contained, the parties agree as follows:
1. ENGAGEMENT.
----------
1.1. The Company agrees to retain Consultant, and Consultant agrees to
serve the Company, on the terms and conditions set forth herein for the period
(the "Term") commencing on the date hereof and ending (unless sooner terminated
as hereinafter set forth) on the earlier of (a) June 1, 1997 or (b) the
appointment or election of a Chief Operating Officer of the Company, effective
as of the date of his or her commencement of employment. Subject to the
provisions of Section 6., Consultant's services shall be rendered on a
non-exclusive basis. Consultant will apply all of his skill and experience to
the performance of his duties in such engagement.
1.2. Consultant shall devote an average of two and one-half days per
week to the performance of his duties hereunder, which shall include any time
incurred by Consultant for travel outside of the Northern New Jersey area.
1.3. Consultant shall be entitled to a vacation of two weeks, with full
compensation, during the Term.
1.4. The Company shall use its best efforts to cause Consultant to be
elected as Vice-Chairman of the Board of Directors of the Company.
<PAGE>
2. DUTIES.
------
2.1. During the Term, Consultant shall act as Chief Operating Officer
of the Company and render consulting services to the Company with respect to its
businesses, operations and prospects, including, without limitation, to:
(a) assist the Board of Directors in the recruitment of a
permanent Chief Operating Officer and the delineation of the functions to be
performed by such individual.
(b) finalize and direct the implementation of the introduction of
CEA-Scan in the United States and Europe and pursue other opportunities for
expanding the geographic market for CEA-Scan geographic and the indications for
which it can be used.
(c) develop, prioritize, obtain board acceptance of and implement
a strategic plan for developing and commercializing other of the Company's
products and technology and propose and consummate agreements with third parties
in connection therewith.
(d) recruit a Chief Financial Officer, to report to the Chairman
of the Board, Chief Executive Officer and Chief Operating Officer, delineate the
functions to be performed by such individual and prioritize the tasks to be
performed.
(e) recruit additional internal and external marketing and sales
staff as are deemed necessary to realize the full potential for CEA-Scan,
Leuko-Scan and Lympho-Scan.
(f) subject to approval by Chairman of the Board and Chief
Executive Officer, propose and implement changes in organizational structure,
propose and implement strategies and policies to strengthen employee loyalty and
reduce turnover, and propose and implement middle and senior management
performance objectives for 1997 and ensure that performance and compensation
reviews are timely and professionally completed.
(g) chair regular management team meetings to ensure internal
communications and to identify business needs and generally provide assistance
to other management personnel.
-2-
<PAGE>
(h) subject to time availability and other priorities of
Consultant pursuant to this Agreement, undertake such other tasks and activities
as may be agreed with the Chairman of the Board.
2.2. In rendering his services, Consultant shall report to, and be
subject to the instructions, directions and control of, the Board of Directors,
Chairman of the Board and Chief Executive Officer of the Company.
2.3. Consultant shall render his services in person at the offices of
the Company and at other locations such as Consultant's home or as necessitated
by the performance of Consultant's duties (subject to reasonable periods of
non-availability); provided, however, that Consultant shall use his reasonable
efforts to spend at least an average of two days per week at the offices of the
Company in order that Consultant may perform certain of the functions presently
being performed by the Chief Executive Officer of the Company thereby permitting
the Chief Executive Officer to devote more time to other business activities of
the Company.
3. COMPENSATION.
------------
3.1. During the Term, Consultant shall receive for his services
hereunder a consulting fee of $17,500 per month ("Consulting Fee"), payable
monthly in arrears, commencing January 1, 1997.
3.2. Subject to approval of the Board of Directors or the Compensation
Committee thereof, concurrently with the execution of this Agreement, Consultant
shall receive a non-qualified stock option to purchase 25,000 shares of the
Company's common stock, par value $.01 per share (the "Common Stock"), pursuant
to the terms of the Company's 1992 Stock Option Plan, which option (a) shall be
exercisable at a price of $5-7/8 per share (the closing price of the Common
Stock on December 13, 1996), (b) shall vest in four equal annual installments of
6,250 shares commencing on December 15, 1997, and (c) shall expire on December
15, 2006.
3.3. Consultant shall be entitled to reimbursement for all reasonable
expenses incurred by him (and, subject to the prior approval of the Chairman of
the Board of the Company, the travel expenses of Consultant's wife when
accompanying Consultant on business travel) in performing services hereunder,
provided that Consultant
-3-
<PAGE>
properly accounts therefor in accordance with Company policy.
3.4. Consultant acknowledges that the compensation and stock options
granted to Consultant hereunder shall be in addition to and not in lieu of any
compensation or options granted or to be granted to Consultant for services as a
director of the Company during the Company's fiscal year ended June 30, 1997.
4. TERMINATION.
-----------
4.1. This Agreement shall terminate upon the death or permanent
disability of Consultant.
4.2. Either party may terminate this Agreement upon 15 days' prior
notice to the other party; provided, however, that no prior notice shall be
required by the Company to terminate this Agreement if Consultant (i) willfully
engages in conduct adverse to the Company, (ii) is guilty of any act of gross
misconduct, or (iii) commits any wrongful criminal act.
5. COMPENSATION UPON TERMINATION.
-----------------------------
5.1. Upon termination of this Agreement, the Company shall pay
Consultant his full Consulting Fee through the date of termination, and the
Company shall have no other obligations to Consultant after the date of
termination, but the Company shall retain all rights and remedies it may have
against Consultant by reason of any breach of this Agreement by Consultant.
5.2. Termination of this Agreement by the Company or Consultant, for
any reason, shall not affect in any manner Consultant's continuing obligations
under Section 6.
6. NON-COMPETE; CONFIDENTIAL INFORMATION.
-------------------------------------
6.1. Consultant recognizes that in his position as acting Chief
Operating Officer he will be performing a highly responsible role in the very
competitive biopharmaceutical industry in which trade secrets and proprietary
information have extraordinary significance. Because of the damage which would
accrue to the Company through his association with a competitor of the Company,
due to his access to the Company's trade secrets and other proprietary
information, Consultant understands that it is
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<PAGE>
important that the Company protect itself against such occurrence. Further,
Consultant recognizes that the assumption of the obligations set forth herein
are express conditions of his retention pursuant to this Agreement.
6.2. For the purposes of this Section 6, the "Company" shall means and
includes Immunomedics, Inc. and all of its existing, past, or future parents,
subsidiaries and Affiliates, and (b) "Affiliate" means a person or entity
controlling, controlled by, or under common control with, the Company.
6.3. (a) During his retention as a consultant by the Company,
Consultant shall not, directly or indirectly, enter into, participate in, engage
in, render services to, offer or sell any products or services to, manage,
operate, control, supervise, or engage in the solicitation of, any business or
activity which is competitive, or proposes to be competitive, with any line of
business or field of research or development activities in which the Company is
engaged or proposes to engage ("Competitive Activities").
(b) During a period of one year after his retention as a
consultant is terminated by the Company or by Consultant, Consultant shall not
engage in any Competitive Activities; PROVIDED, HOWEVER, that such restriction
shall relate only to activities competitive with any line of business or field
of research or development in which the Company is engaged or proposes to engage
at the time such retention ends; and PROVIDED, FURTHER, such restriction shall
relate only to activities which are similar to those which Consultant performed
for the Company.
(c) Consultant agrees that the covenants contained in clauses (a)
and (b) shall apply:
(i) to all of his business activities, whether as an individual for
his own account, as an employee, agent or consultant of or to any person or
entity, as a partner or joint venturer, as a guarantor or lender, as the
owner (direct or indirect) or the holder of an option to purchase an
interest in, or as a director, trustee or officer of, any entity (except
that he may own not more than 5% of any class of debt or equity securities
of a corporation whose securities are publicly traded on a national
securities exchange or on the NASDAQ system), or otherwise; and
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(ii) within the continental United States, which Consultant
acknowledges to be reasonable in view of his involvement with the Company
as set forth herein.
(d) During his retention by the Company as a consultant by the
Company, and for a period of one year after such retention is terminated by the
Company or by Consultant, Consultant shall not (i) induce or attempt to induce
or arrange for a third party to induce any person who has been an employee,
director or agent of the Company at any time during the immediately preceding
one year to discontinue their relationship with the Company, or (ii) solicit,
take away, attempt to take away, or otherwise interfere with the Company's
business relationship with any of its customers or suppliers.
6.4. Consultant agrees that, in the event of the termination of his
retention as a consultant to the Company, he can obtain employment in business
activities which are of a different or non-competing nature with his activities
as a consultant to the Company; and the enforcement of a remedy hereunder by way
of injunction will not prevent him from earning a reasonable livelihood.
Consultant further agrees that the covenants contained herein are necessary for
the protection of the Company's legitimate business interests and are reasonable
in scope and content.
6.5. (a) Consultant understands that his position with the Company
creates a relationship of trust and confidence between him and the Company.
Consultant agrees that he will not, at any time during or after the termination
of his retention as a consultant to the Company, communicate, disclose, or
otherwise make available to any person or entity other than the Company (except
and to the extent that such disclosure or use is necessary to carry out his
duties as a consultant to the Company), or use for his account or for the
benefit of any other person or entity, any information or materials proprietary
to the Company that relate to the business or affairs of the Company or any
client or customer of the Company, including, but not limited to, trade secrets
(in all and various stages of development) processes, methods of operation,
techniques, improvements, data, "know-how", marketing techniques and materials,
marketing and development plans, strategies, forecasts, customer lists and other
customer information (including, without limitation, current prospects, supplier
lists and supplier information), price lists, pricing policies, personnel
information, and financial information
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<PAGE>
and documentation and materials relating to any of the foregoing (collectively,
"Proprietary Information").
(b) Notwithstanding the foregoing, Proprietary Information
includes, without limitation, any and all information and materials described in
the immediately preceding paragraph, whether or not obtained by Consultant with
the knowledge and permission of the Company, whether or not developed, devised,
or otherwise created in whole or in part by Consultant's efforts, and whether or
not a matter of public knowledge unless as a result of authorized disclosure.
Consultant further agrees that he will retain such knowledge and information
which he acquires and develops during his retention as a consultant respecting
such Proprietary Information in trust for the sole and exclusive benefit of the
Company and its successors and assigns.
(c) The provisions of this Section 6.5 shall apply to Proprietary
Information obtained by the Company from any third party under an agreement that
includes restrictions on disclosure known (or which reasonably should have been
known) to Consultant.
(d) Consultant acknowledges and agrees that Proprietary
Information is of incalculable value to the Company and that the Company would
suffer irreparable damage if any Proprietary Information were improperly
disclosed.
6.6. Consultant understands that if he violates the provisions of this
Section 6 the Company will suffer irreparable damage for which money damages
alone could not adequately compensate the Company and for which the Company will
have no adequate remedy at law. The Company shall have the right, in addition to
any other rights it may have, (a) to obtain in any court of competent
jurisdiction (without the posting of bond or security) injunctive relief to
restrain any breach or threatened breach of, or otherwise to specifically
enforce, the provisions of this Section 6; (b) to hold Consultant liable for all
costs and expenses of the Company resulting from such breach (including, without
limitation, reasonable attorneys' fees and expenses in dealing with his breach
and/or any suits or actions with regard thereto). If Consultant shall breach the
provisions of this Section 6, the periods specified in Section 6.2 shall be
tolled until such relief is granted, and the duration of the period between such
breach and the granting of such relief shall be added to such period.
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<PAGE>
6.7. Consultant represents and warrants to the Company that Consultant
has not previously assumed any obligations inconsistent with those of this
Agreement.
7. MISCELLANEOUS PROVISIONS.
------------------------
7.1. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement
and understanding between the parties with respect to the employment of
Consultant by the Company and supersedes all prior agreements, arrangements and
understandings between the parties with respect thereto, including, without
limitation, the Letter Agreement, dated as of August 6, 1996, between the
Company and Consultant.
7.2. MODIFICATION. This Agreement may be amended, modified, superseded,
canceled, renewed or extended, and the terms or covenants hereof may be waived,
only by an instrument executed by the party to be charged, or in the case of a
waiver, by the party waiving compliance.
7.3. WAIVER. The failure of either party at any time or times to
require performance of any provision of this Agreement in no manner shall affect
the right at a later time to enforce the same. No waiver by either party of a
breach of any term or covenant contained in this Agreement, whether by conduct
or otherwise, in any one or more instances, shall be deemed to be or construed
as a further or continuing waiver of any such breach, or a waiver of any other
term or covenant contained in this Agreement.
7.4. NOTICES. All notices, authorizations, requests, reports,
deliveries, consents, waivers, agreements and other communications required or
permitted to be given hereunder (collectively, "Communications") shall be in
writing and shall be deemed to have been duly given when (a) delivered
personally with receipt acknowledged, (b) sent by facsimile, provided that a
copy thereof is sent the same day by first class mail, (c) sent by overnight
courier or certified mail, postage prepaid, addressed to the other party at the
following address or to such other address as
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either party may thereafter specify by notice to the other:
(a) If to the Company:
Immunomedics, Inc.
300 American Road
Morris Plains, New Jersey 07950
Attn: Chief Executive Officer
Telephone: (201) 605-8200
Facsimile: (201) 605-8282
with a copy to:
Warshaw Burstein Cohen Schlesinger & Kuh, LLP
555 Fifth Avenue
New York, NY 10017
Attention: Howard M. Cohen, Esq.
Telephone: (212) 984-7700
Facsimile: (212) 972-9150
(b) If to Consultant:
Rolf H. Henel
30 Foxboro Road
Wayne, New Jersey 07470
Telephone: (201) 872-2511
Facsimile: (201) 872-2511
All Communications shall be deemed received on the date delivered personally,
one business day after being sent by overnight courier or by facsimile or three
business days after mailing, except that a notice of change of address shall be
deemed given when actually received or upon refusal to accept delivery thereof.
7.5. GOVERNING LAW. This Agreement shall be construed in accordance
with and governed by the laws of the State of [New Jersey] applicable to
contracts made and to be performed wholly within such state.
7.6. ASSIGNABILITY. This Agreement, and Consultant's rights and
obligations hereunder, may not be assigned by Consultant. The Company may assign
its rights, together with its obligations hereunder, to a successor by merger or
to a purchaser of all or substantially all of its assets, and such rights and
obligations shall inure to, and be binding upon, any such successor.
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<PAGE>
7.7. BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective legal representatives, heirs,
successors and permitted assigns.
7.8. ARBITRATION. Any controversy or claim arising out of or relating
to this Agreement, the making, interpretation or the breach thereof, shall be
settled by arbitration in New York County, New York in accordance with the
commercial rules of the American Arbitration Association which are then
obtaining. Judgment upon the award rendered by the arbitrator may be entered in
any court having jurisdiction thereof and any party to the arbitration may, if
it so elects, institute proceedings in any court having jurisdiction for the
specific performance of any award. The powers of the arbitrator shall include,
but not be limited to, the awarding of injunctive or other equitable relief but
shall not include the power to modify or amend in any respect the provisions of
this Agreement. The arbitrator shall include in any award the amount of the
reasonable attorneys' fees and disbursements and expenses of the arbitration
incurred by the prevailing party and a direction that it be paid by the other
parties within 30 days after the making of such award. In the event that the
arbitrator does not rule in favor of the prevailing party in respect of all the
claims alleged by such party, the arbitrator shall include in any award the
portion of the amount of the reasonable attorneys' fees and disbursements and
other expenses of the arbitration incurred by the prevailing party as the
arbitrator deems just and equitable under the circumstances, together with a
direction that such amounts be paid by the other parties within 30 days thereof.
Except as provided above, each party shall bear its own attorney's fees,
disbursements and other expenses and the parties shall bear equally all other
costs and expenses of the arbitration.
7.9. SURVIVAL. The covenants, agreements, representations, and
warranties contained in or made pursuant to this Agreement shall survive
Consultant's termination of employment, irrespective of any investigation made
by or on behalf of any party.
7.10. SEVERABILITY. In case any one or more of the provisions contained
in this Agreement shall be invalid or unenforceable in any respect, the validity
and enforceability of the remaining provisions contained herein shall not in any
way be affected or impaired thereby and the parties will attempt to agree upon a
valid and enforceable provision which shall be a reasonable substitute for such
invalid and unenforceable
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<PAGE>
provision in light of the tenor of this Agreement, and, upon so agreeing, shall
incorporate such substitute provision in this Agreement.
7.11. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and each such duplicate counterpart shall constitute an original,
any one of which may be introduced in evidence or used for any other purpose
without the production of its duplicate counterpart. Moreover, notwithstanding
that any of the parties did not execute the same counterpart, each counterpart
shall be deemed for all purposes to be an original, and all such counterparts
shall constitute one and the same instrument, binding on all of the parties
hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
IMMUNOMEDICS, INC.
By: \s\ David M. Goldenberg
------------------------
David M. Goldenberg
Chairman of the Board and
Chief Executive Officer
CONSULTANT
\s\ Rolf H. Henel
---------------------------
Rolf H. Henel
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AGREEMENT
---------
AGREEMENT, dated this 21st day of January, 1997, by and between THE CENTER
FOR MOLECULAR MEDICINE AND IMMUNOLOGY, INC., a Delaware non-profit corporation
(the "Center"), and IMMUNOMEDICS, INC., a Delaware business corporation
("Immunomedics").
PREMISES
--------
The Center was organized for the purposes of engaging in scientific,
educational and clinical research in connection with immunodetection and
treatment of cancer, funded primarily through grants and research contracts with
state and federal agencies and charitable foundations. Immunomedics is a
corporation which engages in research for profit and the development and
marketing of commercially useful products through its own efforts and by
licensing third party corporations experienced in the field. Immunomedics also
intends to focus its efforts in the area of IN VIVO and IN VITRO immunological
detection and treatment of cancer and other illnesses.
For good and valuable consideration, including the mutual obligations,
responsibilities and promises included hereinafter and the foregoing premises,
the parties hereto agree as follows:
1. DEFINITIONS
-----------
For purposes of this Agreement:
1.1 "Candidate Technology" shall mean any development resulting from
research performed by the Center and to which the Center has proprietary rights,
whether exclusive or non-exclusive, which may have potential for
commercialization or use in connection with other commercial development,
including all information or special knowledge of the Center relating in any way
to manufacture, development, or use of the Candidate Technology, including but
not limited to processes, techniques, methods, products, materials and
compositions..
1.2 "Patent Rights" shall mean rights under any existing or later-filed
United States or foreign patent or patent application claiming all or part of
the Candidate Technology.
1.3 "Affiliate" shall mean any corporation at least 51% of whose voting
stock or other indicia of ownership is owned directly or indirectly by
Immunomedics.
1.4 "Immunomedics Liaison" shall mean an employee of Immunomedics
designated by it to be the recipient of all reports, submissions and notices
from the Center relating to the subject matter of this Agreement.
<PAGE>
1.5 "Candidate Technology Proposal" (hereinafter, "Proposal") shall mean a
written proposal comprising a complete description of the Candidate Technology,
including the chemical identity of relevant compositions, if known, common names
and structures, and summaries of all available data known to the Center relating
to chemical, pharmaceutical and toxicological properties, including the results
of all tests and studies. The Proposal shall also include the particulars of any
Patent Rights for the Candidate Technology. The Proposal shall include an offer
of a license to Immunomedics to commercialize all or part of the Candidate
Technology.
2. RESEARCH AND SUBMISSION OF PROPOSALS
------------------------------------
2.1 Except for research performed under a third-party agreement as set out
in paragraph 2.4, whenever the Center has developed Candidate Technology, the
Center shall submit a Proposal regarding said Candidate Technology to the
Immunomedics Liaison. Concurrent with submission of the Proposal, the Center
shall, where appropriate, provide samples of relevant compositions. Following
the submission of a Proposal, the Center agrees that Immunomedics may have
access to all information or special knowledge of the Center relating in any way
to manufacture, development, or use of the Candidate Technology (including raw
data) summarized in the Proposal, at Immunomedics' expense and at mutually
agreeable times and places.
2.2 For a period of one-hundred eighty (180) days after submission by the
Center of a Proposal, Immunomedics and its Affiliates shall have the first right
and option to negotiate, in good faith, the terms of an exclusive or
non-exclusive (as shall be determined by Immunomedics) worldwide
commercialization license (with the right to sublicense) with respect to the
particular Candidate Technology offered, provided that the Center will not grant
Immunomedics and its Affiliates an exclusive license under this Agreement on
more than twenty percent (20%) of the Proposals during any five-year term of
this Agreement. Within 180 days after submission by the Center of the Proposal
under paragraph 2.1, Immunomedics shall notify the Center in writing whether it
or any of its Affiliates intends to exercise its option to license the Candidate
Technology hereunder. During the 180-day period, the Center shall keep
Immunomedics informed of ongoing research results regarding the Candidate
Technology that is the object of the Proposal and said ongoing research results
shall be considered a part of the Proposal without restarting the 180-day
period. If such ongoing research yields a significantly different Candidate
Technology, however, the Center shall resubmit a new Proposal as set out in
paragraph 2.1.
2.3 If Immunomedics: (a) responds negatively to any Proposal; or (b) fails,
within 180
2
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days after receipt by Immunomedics of any Proposal under paragraph 2.1, to give
the Center notice of its intent to take a license in accordance with paragraph
2.2, then the Center shall be free to exploit the Candidate Technology or a
reasonably similar technology described in such Proposal, but not any other or
different technology resulting from further research or development, after the
end of the 180 day period in any manner it wishes without any further obligation
to Immunomedics.
2.4 In the event that the Center shall receive proposals from a third party
for the Center to do collaborative research, the Center shall have the right to
accept such proposal and perform such research, provided that it is not directly
related to Candidate Technology licensed by Immunomedics under this Agreement.
Any rights to license which accrue to the Center as a result of such third party
collaborative research shall remain the sole rights of the Center, anything in
this Agreement to the contrary notwithstanding, except that any such rights
which conflict with or in any way limit rights which Immunomedics already has
under any license taken according to this Agreement shall, at Immunomedics'
option, either be incorporated into existing licenses hereunder or shall not be
asserted against Immunomedics.
3. LICENSE TO IMMUNOMEDICS
-----------------------
3.1 Any non-exclusive or exclusive license granted to Immunomedics which
shall result from a Proposal under paragraph 2.1 shall be commercially
reasonable under the circumstances as determined at the time such license is
entered into, and shall represent a fair market price for the use of the
relevant technology or rights, fairly reflecting the risks incurred by
Immunomedics and the costs of subsequent research and development needed to
commercialize the Candidate Technology. The license will specify the licensed
fields of use, breadth of exclusivity, and royalties payable by the licensee.
Royalty rates will normally be based on product sales and the prevailing rates
conventionally granted in the field identified in the Proposal for Candidate
Technologies with reasonably similar commercial potential, based primarily on
the royalties payable by unrelated third parties and Immunomedics for the same
(or comparable) rights to and licenses of the same (or comparable) technology to
independent third parties under similar circumstances considering all relevant
facts, adjusted to account for material differences in contractual terms and
economic conditions in which transactions occurred. Royalty rates will be
negotiated at the time the license is entered into. Contingent royalty schemes
based on, e.g. patent issuance or non-issuance, and provisions treating the
stacking of royalties or packaging of other licensed Patent Rights may be
provided. Any such license will reserve unto the Center the royalty-free right
to use such licensed Candidate Technology for
3
<PAGE>
research and academic purposes on a non-commercial basis.
3.2 The Center shall, at Immunomedics' request, enter into a separate
license agreement with Immunomedics or with its Affiliates with regard to Patent
Rights in any given country relating to the marketing of a particular Candidate
Technology in that country. Such separate agreement will generally embody the
same terms and conditions as contained in this Agreement to the extent permitted
by the laws of such country and to the extent that said terms and conditions
apply to the rights being licensed. Immunomedics agrees to guarantee the
performance by any such Affiliate of its obligations under such separate
agreement; provided that such agreement shall grant no greater rights to
Immunomedics or its Affiliates than are granted to Immunomedics under this
Agreement.
4. CONSIDERATION
-------------
4.1 In consideration for the rights and options granted under Sections 2
and 3 hereof and subject to the other terms of this Agreement, Immunomedics
shall pay the Center an annual license fee of Two Hundred Thousand Dollars
($200,000) for so long as this Agreement or any renewals thereof shall be in
force. Such fee will be payable upon date of execution of this Agreement and
upon each anniversary thereafter.
5. FILING, PROSECUTION, AND MAINTENANCE OF PATENTS
-----------------------------------------------
5.1 The Center shall be responsible for filing, prosecution, and
maintenance fees relating to Patent Rights to each Candidate Technology it
invents or discovers. Notwithstanding the foregoing, a license agreement
hereunder may permit Immunomedics and its Affiliates to assume responsibility
for procuring and/or maintaining certain Patent Rights at Immunomedics' and/or
such Affiliates' expense.
5.2 Upon request, the Center shall promptly provide Immunomedics with
copies of all papers, specifications, amendments, replies, official actions, and
other documents relating to the filing, prosecution, and maintenance by the
Center of Patent Rights for the Candidate Technology offered in any Proposal
hereunder, subject to the obligations of confidentiality and non-use set forth
in Section 9 hereof.
6. DURATION AND TERMINATION
------------------------
6.1 This Agreement shall continue in full force and effect until a date
which shall be five years from the date first above written, unless sooner
terminated as provided herein, provided, that if during such five-year term (i)
the Center shall file a patent application or (ii) a written invention
disclosure or notice of invention shall be filed by or with the Center or a
principal
4
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investigator of the Center, with respect to technology covered by this Agreement
(except for technology developed under a third-party proposal as set out in
paragraph 2.4 of this Agreement), then subject to the submission by the Center
of a Proposal, during the five years commencing upon the date of such filing,
the rights of Immunomedics under this Agreement with respect to such technology
shall be as follows:
(a) The Center shall promptly after such filing submit a licensing
proposal to Immunomedics with respect to such technology (which shall be deemed
to be a "Proposal" under paragraph 2.1 hereof) and thereupon Immunomedics shall
have the right and option set forth in paragraph 2.2 to negotiate a license of
such technology, upon the terms and conditions set forth herein; and
(b) In the event a license is not entered into by the Center and
Immunomedics within such 180-day period, or Immunomedics earlier notifies the
Center in writing that it does not desire to obtain a license, the provisions of
paragraph 2.3 shall apply.
6.2 This Agreement may be terminated by the Center if Immunomedics shall at
any time become insolvent or make a general assignment for the benefit of
creditors, or if a petition in bankruptcy, or insolvency, or any reorganization
shall be commenced by, against, or in respect of Immunomedics and shall remain
undismissed for more than 60 days.
6.3 This Agreement is terminable by Immunomedics at any time either in
whole or in part, by giving 120 days' prior written notice to the Center.
Obligations incurred by Immunomedics with respect to Proposals as set forth in
paragraph 2.1 shall survive termination under this paragraph 8.3.
6.4 The obligations of confidentiality in Section 9 shall survive
termination of this Agreement.
6.5 At least ninety (90) days and not more than one hundred eighty (180)
days prior to the expiration of the initial term of this Agreement, without
considering any rights set forth in clauses (a) and (b) above, Immunomedics may
give to the Center written notice of its desire to renew this Agreement for an
additional five-year period. In such event, the Center and Immunomedics will,
during the sixty (60) days after receipt of such notice, attempt to agree in
good faith upon the terms and conditions of the Agreement to be in effect during
such additional five-year period. In the event that the Center and Immunomedics
shall be unable to agree upon all of such terms and conditions prior to the
expiration of the term of this Agreement, this Agreement shall terminate in
accordance with its terms.
5
<PAGE>
7. WARRANTY
--------
7.1 The Center warrants and represents that there are no outstanding
written or oral agreements inconsistent with this Agreement to which the Center
is a party; and that the Center is empowered to enter into this Agreement
without burdens, encumbrances, restraints, or limitations of any kind which
could adversely affect the rights of Immunomedics under this Agreement.
7.2 Immunomedics warrants and represents that there are no outstanding
written or oral agreements inconsistent with this Agreement to which
Immunomedics is a party and that Immunomedics is empowered to enter into this
Agreement without burdens, encumbrances, restraints or limitations of any kind
which could adversely affect the rights of the Center thereunder.
7.3 The Center warrants that at the time of submission of each Proposal
hereunder and during the 180-day option period following such submission, it
will disclose all patents and patent applications owned by a third party, of
which it is aware, which might be infringed by the commercialization practice of
the Candidate Technology which is the subject of that Proposal.
7.4 Neither Immunomedics nor the Center makes any warranties, either
express or implied, other than those explicitly recited in this Section 7.
8. PUBLICITY
---------
8.1 The Center shall not originate any publicity, news release, or other
public announcement, written or oral, whether to the public press, or otherwise,
relating to this Agreement, to any amendment hereto or to performance hereunder
or the existence of an arrangement between the parties without the prior written
approval of Immunomedics, which approval will not be unreasonably withheld.
8.2 Nothing contained herein will prevent the Center from making such
disclosures as may be required (i) in reports or documents sent to regulatory
agencies or bodies of (ii) pursuant to the requirements of applicable laws or
governmental regulations, provided that, in the event any such disclosure is
required, the Center will afford Immunomedics the prior opportunity to review
the text of such disclosure.
9. CONFIDENTIALITY
---------------
9.1 Since each party will throughout the course of the performance of this
Agreement obtain access to confidential and proprietary information of the
other, each party will hold in
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<PAGE>
strict confidence the confidential information of the other, will not use it
except for the purposes set out in this Agreement, and will treat it with the
same degree of care that it exercises with regard to its own proprietary
information. This obligation of confidentiality shall apply only to information
designated "confidential" and disclosed in writing or (if disclosed orally)
promptly confirmed in writing by notice as set out in paragraph 11.4. This
obligation of confidentiality shall not prevent either party from making such
disclosures to government bodies or agencies as are required by law, as for
example, to obtain the permission of said government body or agency to
commercialize a Candidate Technology; provided that the party making such
disclosure notifies the other party in writing regarding the disclosure,
including the identity of the body or agency to whom the disclosure was made and
the reason therefor. None of Immunomedics' confidential or proprietary
information shall be used in or be a part of any submission or proposal to a
third party under Section 2 of this Agreement.
9.2 The obligation of confidentiality set out herein shall extend for a
period of five years from the date on which the confidential information is
received by the obligated party; provided however, that such obligations shall
not apply to any information that:
(a) is or becomes publicly available through no fault of the obligated
party; or
(b) the obligated party can show was in its possession prior to the
furnishing of same by the furnishing party; or
(c) the obligated party independently develops or lawfully receives from a
third party.
10. ACKNOWLEDGMENT OF JOINT DEVELOPMENT
-----------------------------------
10.1 The parties hereby acknowledge that Dr. David M. Goldenberg will have
overlapping responsibilities for the Center and Immunomedics. For instance, Dr.
Goldenberg will presently act as the President of the Center as well as a
research scientist and will also be employed by Immunomedics as Chairman of the
Board of Directors.
10.2 The Center and Dr. Goldenberg hereby covenant that the decision as to
whether the Center has a Candidate Technology to be presented to Immunomedics
will rest solely with the Board of Trustees of the Center and that Dr.
Goldenberg shall not participate in the vote on the issue when it comes before
the Board of Trustees. Furthermore, Immunomedics and Dr. Goldenberg hereby
covenant that the decision to exercise Immunomedics' right of first refusal or
release of the Candidate Technology shall be determined solely by the majority
vote of the Board of Directors of Immunomedics or a subcommittee chosen by that
Board of Directors and that neither Dr. Goldenberg, nor any member of his
immediate family, will participate in the
7
<PAGE>
vote on the issue.
11. MISCELLANEOUS
-------------
11.1 Neither Immunomedics nor the Center shall be liable for failure due to
force majeure to perform its duties under this Agreement. As used in this
Agreement, force majeure shall mean acts of God; acts, regulations, or laws of
any government; war; civil commotion; strike, lock-out or labor disturbances;
destruction of production facilities and materials by fire, earthquake or storm;
failure of public utilities or common carriers; and any other causes beyond the
control of that party.
11.2 Both the Center and Immunomedics agree to execute whatever further
documents may be necessary to the implementation of this Agreement.
11.3 All communications, reports, payments, and notices required by this
Agreement by one party to the other shall be addressed to the parties at their
respective addresses set forth below or to such other address within the United
States as requested by either party by notice in writing to the other:
If to Immunomedics: Immunomedics, Inc.
300 American Road
Morris Plains, NJ 07950
Attn: Chairman
With a copy to: Warshaw, Burstein, Cohen
Schlesinger & Kuh
555 Fifth Avenue
New York, NY 10022
Attn: Howard Cohen, Esq.
If to the Center: The Center for Molecular Medicine
and Immunology
520 Belleville Avenue
Belleville, NJ 07109
Attn: Vice President-Administration
With a copy to: Carpenter, Bennett & Morrissey
Three Gateway Center
100 Mulberry Street
Newark, NJ 07102
Attn: Laurence Reich, Esq.
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All such notices, reports, payments and communications may be made
personally, by first class mail, postage prepaid, by facsimile or by express
courier, and shall be considered made as of the date of receipt. Such notices
shall be considered made as of 48 hours from the date of deposit with the United
States Post Office if sent by registered or certified mail, postage prepaid.
11.4 It is the mutual desire and intent of the parties to provide certainty
as to their future rights and remedies against each other by defining the extent
of their mutual undertakings as provided herein. The parties have in this
agreement incorporated all representations, warranties, covenants, commitments,
and understandings on which they have relied in entering into this Agreement,
and, except as provided for herein, neither party makes any covenant or other
commitment to the other concerning its future action. Accordingly, this
Agreement may not be modified except by a notice in writing, signed by the party
to be bound thereby.
11.5 This Agreement shall be binding upon and inure to the benefit of the
parties hereto and any successor to substantially the entire assets and business
of Immunomedics to which this Agreement relates. Neither this Agreement nor any
part of it shall be assignable by the Center without the written consent of
Immunomedics, which shall not be unreasonably withheld. Any assignee of
Immunomedics shall receive all of Immunomedics' rights and be bound by all of
Immunomedics' obligations and warranties set out in this Agreement. In the event
that this Agreement is assigned in its entirety to a successor of Immunomedics
under this paragraph 11.5, Immunomedics shall no longer have any obligations
hereunder other than to maintain the confidentiality required by Section 9 and
shall not guarantee the performance of any such assignee under this Agreement.
11.6 Any controversy or claim arising out of, or relating to this Agreement
or the breach thereof, shall be settled by arbitration in New Jersey, or any
other place mutually agreed to by the parties to this Agreement, in accordance
with the rules then in effect at the American Arbitration Association, and
judgment upon any award rendered by the arbitrator or arbitrators may be entered
in any court having jurisdiction thereof.
11.7 All matters affecting the interpretation, validity and performance of
this Agreement shall be governed by the laws of the State of New Jersey, without
regard for the choice of law provisions thereof.
11.8 Immunomedics and the Center acknowledge that any Candidate Technology
licensed hereunder is likely to have been or to be developed, in whole or in
part, with financial or other assistance from the United States of America, and
that applicable statutes, regulations and Executive Orders of the United States
of America, as well as published guidelines and
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considerations for recipients of grants and contracts from the National
Institutes of Health (NIH) and other federal departments and agencies, may
control, apply or affect the right of Immunomedics to receive any Proposal, or
take any license hereunder, and notwithstanding anything contained herein to the
contrary, the rights and obligations of the parties under this Agreement are
subject to compliance therewith to the extent controlling, applicable or
affecting the rights and obligations of the parties. For instance, it may be
necessary to disclose inventions to the NIH Health prior to submission of a
Proposal to Immunomedics pursuant to a particular NIH grant or contract. The
Center may seek Immunomedics' cooperation in submitting to NIH required
utilization reports providing a status of development, first commercialization
and amount of royalties received for an invention funded under an NIH grant or
contract. Additionally, Immunomedics understands that the Bayh-Dole Act requires
that products developed with Federal funds and used and sold in the United
States, be substantially manufactured in the United States. This paragraph shall
not be deemed to be a waiver by Immunomedics of any right it may have to contest
with the appropriate governmental authority the validity of any statutes,
regulations, Executive Orders, guidelines and considerations or their
applicability to all or any part of this Agreement or any license granted
pursuant to the provisions hereof.
11.9 This Agreement shall become effective on and as of the date first
above written and shall supercede and replace any prior agreements and
understandings between the parties as to the subject matter hereof.
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IN WITNESS WHEREOF, the Center and Immunomedics have caused this Agreement
to be executed by their respective representatives thereunto duly authorized as
of the date first above written. The signature of Dr. David M. Goldenberg also
attests to his concurrence with its terms insofar as he is personally affected
thereby.
IMMUNOMEDICS, INC. THE CENTER FOR MOLECULAR
MEDICINE AND IMMUNOLOGY, INC.
By: /s/David M. Goldenberg, Sc.D., M.D. By: /s/Raymond H. Menard, Ph.D.
-------------------------------- ----------------------------
David M. Goldenberg, Sc.D., M.D. Raymond H. Menard, Ph.D.
Chairman and CEO Vice President
STATE OF NEW JERSEY )
) ss
COUNTY OF ESSEX )
On this, the 27th day of January, 1996, before me, Lois Gillespie, the
undersigned officer, personally appeared RAYMOND H. MENARD and DAVID M.
GOLDENBERG, known to me as the persons named as signatories of the within
instrument and acknowledged that they executed the same for the purposes
contained in said instrument.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Lois A. Gillespie
----------------------
Lois A. Gillespie
Notary Public
[SEAL]
Lois A. Gillespie
A Notary Public of New Jersey
My Commission Exp. Sept. 14, 1999
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