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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g)
of the Securities Exchange Act of 1934
PHOTOGEN TECHNOLOGIES, INC.
(Name of Small Business Issuer in its charter)
NEVADA 36-4010347
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7327 OAK RIDGE HIGHWAY, SUITE B
KNOXVILLE, TN 37931
(Address of principal executive offices) (Zip Code)
(423) 769-4012
(Issuer's telephone number)
Securities to be registered under Section 12(b) of the Act:
Title of each class to be Name of each exchange on which
so registered each class is to be registered
NONE NONE
Securities to be registered under Section 12(g) of the Act:
COMMON STOCK
(Title of class)
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PART I.
ITEM 1. DESCRIPTION OF BUSINESS.
OVERVIEW OF COMPANY
Photogen Technologies, Inc. (the "Company"), through its
wholly-owned subsidiary Photogen, Inc., is a development stage company
focused on creating photodynamic-related health care products based on its
proprietary simultaneous two photon excitation technology. The Company has
discovered new methods for using laser-generated light to activate
photoactive agents within deep tissue sufficient to produce a range of
beneficial therapeutic and diagnostic outcomes. These technologies involve
methods, materials and devices that may be used to produce light and
photoactive agents that will destroy diseased cells, remove tissue, or
identify and diagnose disease. The Company and its business are subject to
certain Risk Factors summarized below.
The Company is the successor by merger to Bemax Corporation
("Bemax"). Bemax was a California corporation organized on June 25, 1984 to
develop and market computer printer products. Bemax completed a public
offering in April 1985 of 1,000,000 Units (consisting of one share of common
stock and one warrant to acquire an additional share of common stock) at a
price of $1.00 per Unit. None of the warrants were exercised and all have
since expired. Bemax remained in the development stage and, due to lack of
capital, it ceased operations in November 1988. From 1988 through May 1997,
the Company (and its predecessors) remained inactive while seeking and
evaluating possible acquisition candidates.
In October 1994, Bemax issued 21,595,704 shares (all share amounts
in this paragraph are adjusted to reflect a subsequent two-for-one reverse
stock split) of common stock to Theodore Tannebaum for $1,000,002, resulting
in Mr. Tannebaum owning 95% of Bemax's outstanding common stock. In December
1994, Bemax issued an aggregate of 6,478,700 shares of common stock for a
total of $300,000 to Robert J. Weinstein, M.D. and another investor. In March
1995, Bemax merged into its newly-formed wholly-owned Nevada subsidiary named
M T Financial Group, Inc. ("M T Financial"). M T Financial was the surviving
corporation and Bemax thereby changed its state of incorporation from
California to Nevada. As part of that merger, each two shares of Bemax
common stock were converted into one share of M T Financial common stock.
M T Financial learned of the possibility of acquiring Photogen in
February 1997. At that time, Photogen was organized as a Tennessee limited
liability company. As part of the acquisition, the limited liability company
dissolved and transferred its assets to its five members, who in turn
transferred those assets to Photogen, Inc. (a newly organized Tennessee
corporation) and the five members of the limited liability company became
equal shareholders of Photogen, Inc. Photogen, Inc. then merged with a
subsidiary of M T Financial and became M T Financial's wholly-owned
subsidiary. In connection with M T Financial's acquisition of Photogen, the
following occurred (in addition to certain other material events discussed
elsewhere in this Form 10-SB and the Company's filings with the Securities
and Exchange Commission):
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- M T Financial changed its name to "Photogen Technologies, Inc."
- In exchange for their interest in Photogen, Inc., the Company
issued shares to the five Photogen principals, resulting in
their ownership of 67% of the Company's outstanding common
stock; Mr. Tannebaum, Dr. Weinstein and two other investors
retained beneficial ownership of 30% of the outstanding
common stock; and the public (approximately 450 stockholders)
retained 3% of the outstanding common stock.
- Drs. Wachter, Fisher, Dees, Weinstein and Mr. Smolik were elected
to the Board of Directors of the Company and Photogen, Inc.;
Drs. Wachter and Weinstein and Mr. Smolik were elected to the
Executive Committee; and Mr. Smolik became Chief Executive
Officer of both entities.
- The Company's Articles of Incorporation and By-laws were amended
to implement unanimous voting requirements by the Board of
Directors and Executive Committee regarding certain extraordinary
events.
- Dr. Weinstein and two other investors purchased additional shares
of common stock for an aggregate of $1,803,450 and, with
Mr. Tannebaum, made a capital contribution to the Company so that
its cash and cash equivalents equaled $3,000,000.
Since May 1997, the Company has obtained laboratory space,
commenced animal research studies and engaged in the other activities
described below.
BUSINESS OF THE COMPANY
The photodynamic therapeutic process combines a photoactive agent
(a drug) with light at a specific wavelength in a manner that produces a
therapeutic effect. The photodynamic process is designed to destroy
undesirable or diseased cells. Photodynamic therapy is of great interest
because it offers the potential for non-invasive treatment of diseases like
cancer while avoiding chemotherapy, radiation therapy, surgery and the
discomfort and hazards associated with these treatments.
THE PHOTODYNAMIC PROCESS IN GENERAL. In the early 1900's,
scientists began to explore the phenomenon that certain compounds produced
tissue irritation after being exposed to sunlight. These early observations
resulted in two important medical applications of light and photoactive
agents: laser surgery and photodynamic treatment of disease. Subsequently,
light delivered by a laser has been used in "bloodless" surgery and other
applications ranging from removing tattoos to removing wrinkles. The first
application of photodynamic therapy was the use of the photoactive agent
Psoralen and ultraviolet light to treat severe cases of psoriasis. Photofrin
II is a recently approved photoactive agent used with red light to treat
esophageal cancer and non-small cell lung
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cancer. Psoralen and Photofrin II, both of which were developed and are owned
by others, are the only therapeutic photoactive agents currently approved by
the United States Food and Drug Administration (the "FDA").
Photodynamic therapies may be delivered without surgery,
chemotherapy, or radiation therapy. The Company believes that photodynamic
treatments may be administered multiple times without creating a resistant
or more virulent form of the disease, may be easily administered and cost
less than conventional treatments, and may avoid or postpone the pain and
complications of conventional therapy.
Each photoactive agent has unique chemical and biological
characteristics, and requires light of a specific wavelength to produce a
therapeutic effect. The activated agent has a short life and impacts only
those cells containing the agent that are exposed to the required light
energy. For example, Psoralen is inactive in the absence of light. However,
ultraviolet light at 350-400 nm (nanometers) transforms Psoralen into a
highly toxic biological compound that binds (intercalates) DNA, making it
impossible for the cell to survive. Photofrin II has a different chemical
structure and therefore requires light of a different wavelength to produce
its therapeutic effect. Photofrin II is activated with light at 630 nm, and
reacts with oxygen in the cell to produce a short-lived compound called
singlet oxygen. Singlet oxygen is extremely toxic and destroys all cellular
components that it contacts.
Photoactive agents used by the Company's competitors are activated
when the agent absorbs a single unit of light energy (a photon) at the
required wavelength. This process of activation is called "single photon
absorption." Lasers or high-intensity lamps are commonly used to provide
light with the necessary energy. Single photon absorption is a linear
process, activating photoactive agents present in any tissue or cell in the
path of the light beam. Since the beam -- and therefore the site of
activation -- cannot be limited to diseased cells or tissues, any control of
the activation site must be achieved by physically restricting where the
light is directed. Furthermore, damage can occur in nonselected tissue which
is in the line of the laser's light beam. For this reason, competitors'
applications have been limited to topical treatments or to treatments in
which the diseased tissue is reached through invasive endoscopes, catheters
or similar devices.
The ability to non-invasively treat diseased cells deep within
tissue is further limited by the natural tendency of tissue components to
absorb and scatter light. Tissue components such as water, blood, proteins
and melanin all absorb and scatter light energy at different wavelengths. In
essence, scatter occurs when light (photons) bounces off various tissue
components. Both absorption and scatter reduce energy in the light beam
available to activate photoactive agents. This reduction can be so
significant as to limit the effective treatment depth to a few millimeters or
less.
The amount of light energy lost to absorption and scatter varies
with the wavelength of the light: the longer the wavelength, the less the
absorption and scatter. The depth of treatment achieved with light at 1000 nm
will be many times greater than that achieved with light at 500 nm. The
Company's tests suggest that natural absorption and scatter for light used to
activate Psoralen
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and Photofrin II (at wavelengths up to 630 nm) is still significant and
limits depth of treatment to a few millimeters. This limitation is especially
important in the treatment of large tumors where the light may not be able to
penetrate the entire tumor mass or where diseased cells are located
centimeters deep within the body. Photodynamic processes that use longer
wavelength light hold the promise of deeper penetration without requiring
invasive treatment.
THE COMPANY'S TECHNOLOGY. The Company has discovered methods for
using light energy to activate photoactive agents that address many of the
limitations of current photodynamic therapy processes based on single
photon absorption. The Company's technologies produce and use a special
beam of light to activate photoactive agents, thus offering improvements in
the areas of photodynamic therapy and photodynamic imaging. Each of the
Company's technologies described in this section are in the experimental or
development stage; and the description of these technologies involves forward
looking statements that are subject to the Risk Factors described below.
The Company's technologies contained within its patent applications
currently filed or expected to be filed with the United States Patent and
Trademark Office are:
- Simultaneous two photon excitation
- Fast pulsed, high peak power delivery of light
- Cellular targeting
- Signal processing
1. SIMULTANEOUS TWO PHOTON EXCITATION. The Company's light
beam is special in that it contains photons at approximately one half the
energy of the photons conventionally used to activate photoactive agents
in single photon absorption processes. The Company's technology is based
on "simultaneous two photon excitation:" a beam that uses two photons of
longer wavelength light to activate photoactive agents so that absorption
and scatter are significantly reduced. The Company expects simultaneous two
photon excitation to accomplish non-invasive treatment at depths greater
than those achieved by the current single photon absorption processes
used by its competitors.
For example, Psoralen, when activated with single photon
absorption, requires light energy (one photon) at 350-400 nm. Psoralen can
be activated using simultaneous two photon excitation with two photons each
at 700-800 nm. Photofrin II, activated with single photon absorption,
requires one 400-630 nm photon; but when activated with simultaneous two
photon excitation, it requires two photons each at 800-1260 nm. In both
cases, excitation occurs through absorption of two photons to reach the
same activated state reached with one photon at shorter wavelengths. The
Company's alternative procedure is designed to achieve the same level of
activation and the same level of therapeutic effectiveness as single
photon activation.
Simultaneous two photon excitation provides the potential to
control or limit the site of agent activation. Single photon absorption is
a linear process, activating photoactive agents all along the light beam
path. Because simultaneous excitation requires two photons to activate
the photoactive agent, it is a nonlinear process. The rate at which the
photoactive agent is activated is a
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function of the square of photon concentration and can be substantially
limited to the focus of a beam where the power is high. This feature,
together with the use of optics to focus the beam, enables three dimensional
control over the activation site without incidental activation or destruction
of healthy cells outside the target area. The ability to limit activation
of a photoactive agent to a defined three dimensional space will improve
the overall safety and efficacy of photodynamic therapy.
Activating photoactive agents with two lower energy, longer
wavelength photons should allow the safe use of many previously
unacceptable photoactive agents. These agents, when activated using single
photon absorption processes, require light between 350-500 nm. Light at
these wavelengths falls in the ultraviolet or visible range and may increase
the chance of developing skin cancer. For example, Psoralen, presently
activated with 350-400 nm, can be activated using simultaneous two photon
excitation at 700-800 nm without exposing the patient to ultraviolet light.
The Company believes this new ability will expand the applications for
Psoralen beyond treating psoriasis. Like Psoralen, other photoactive
compounds activated with ultraviolet light may also become candidates for
simultaneous two photon activation, yielding useful new photoactive agents.
The human body also contains its own mixture of photoactive
agents that can be used to produce a desirable therapeutic effect. These
photoactive agents are used in laser surgery, skin resurfacing, hair removal
and eye surgery. Typically, a laser is used to provide light energy at a
certain wavelength. Water, blood, proteins and other compounds absorb this
light and convert the energy to highly localized heat. The targeted
tissue's temperature quickly rises, causing cells to explode or burn at the
point of illumination. These same photoactive agents within the body can be
activated with simultaneous two photon excitation, allowing the Company's
process to also be useful for surgical applications. The Company has not
demonstrated this technology in animal or human models, but expects to do
so in its upcoming animal trials.
2. FAST PULSED DELIVERY OF LIGHT ENERGY. The method by
which the light energy is packaged and delivered contributes to the safety
and efficacy of simultaneous two photon excitation. The Company uses fast
pulsed, high peak power laser light to activate photoactive agents.
This capability is most significant when used in laser surgery.
Despite the current success of lasers for surgery, the Company believes
there is a need for devices that offer reduced damage to adjacent cells,
better spatial control and improved treatment margins. The Company
believes that the use of fast pulsed, high peak power lasers may provide
valuable enhancements to current procedures. For example, fast pulsed
laser light can be used to activate water in cells to
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quickly destroy cells. This capability is especially useful in surgery and
in the removal of surface cells. The expected advantage of this approach is
that there may be much less damage to adjacent cells, less
post-procedure swelling and faster healing. The Company has not yet
demonstrated this technology in animal or human models, but expects to do so
in its upcoming animal trials.
3. CELLULAR TARGETING. The Company has demonstrated, IN
VITRO (in other words, "outside the body," as in a test tube, petri dish or
similar medium), the ability to add a targeting molecule to a photoactive
agent, use the targeting molecule to deliver the photoactive agent to a
specific cellular target, and then activate the photoactive agent to destroy
the cell. Increasing the specificity of the photoactive agent is another way
to enhance overall treatment specificity. Company scientists are continuing
to pursue development of targeted photoactive agents that will allow
cell-specific delivery and treatment. The Company has not demonstrated this
technology in animal or human clinical trials.
4. PROPRIETARY PHOTOACTIVE AGENTS. Company scientists are
exploring development of new photoactive agents that are preferentially
absorbed in diseased cells and may be activated with the Company's
simultaneous two photon excitation technology at wavelengths that should
increase tissue treatment depth. This technology is in the experimental stage
and has not been demonstrated in animal or human clinical trials.
5. IMAGING AND SIGNAL PROCESSING. Simultaneous two photon
excitation, ultrafast pulsed lasers and cellular targeting, when combined
with signal processing technology described in the Company's patent
application, may enable the development of a safe, sensitive diagnostic
imaging procedure. Such a laser-based procedure would avoid exposing a
patient to harmful x-rays and enable improved early detection of diseases
such as breast cancer. The Company has identified one promising candidate
that appears to meet its performance criteria.
To date, x-rays have been the most popular tool for discovering
many forms of cancer and other diseases. The danger and limitations of
x-rays are well known; unfortunately, no other imaging technique has so far
been able to replace x-rays. A safe and improved alternative to x-rays for
soft tissue imaging is important because it can provide the early detection
of disease. In the case of breast cancer, x-ray mammography can only
detect suspicious masses at sizes greater than 0.5 cm, and it cannot
distinguish between a benign calcification or a malignant tumor.
There are a number of alternative techniques being developed,
but none the Company is aware of offers the potential sensitivity of a
laser-based imaging system. A laser imaging system has the potential to
identify suspicious masses and provide a diagnosis at the same time. The
Company's imaging process will require the use of a cell-specific,
fluorescent imaging agent. When the agent is administered to the patient,
it should travel to and concentrate in the diseased tissue. Laser light is
used to activate the imaging agent so that it can fluoresce and produce a
detectable signal and a three-dimensional image of the tissue. If the
imaging agent is specific for a certain type of cancer, for example, and a
mass is found, the diagnostician may conclude that the mass must be
cancerous because the imaging agent would attach only to cancerous tissue.
Therefore, detection and diagnosis are possible in one procedure. Problems
faced by developers of competing laser
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imaging systems result from detecting light emitted by tissue and
converting the detected signals into two or three dimensional images. While
there are many software processes that convert signals to images (a
process called tomography) the Company believes these laser processes have so
far been unable to produce images that meet the requirements for
sensitivity and early detection. The Company is not aware of any laser
mammography devices currently approved by the FDA.
The Company's two photon imaging technology has been
demonstrated only on a small IN VITRO basis, and has not been
demonstrated in animal or clinical trials.
PATENTS AND STATUS. In October 1996, Photogen filed two patent
applications with the United States Patent and Trademark Office. The first
patent application relates to therapeutic methods, and the second application
relates to imaging methods. Both patent applications involve the use of
simultaneous two photon excitation, fast-pulsed, high peak power delivery of
light energy and cellular targeting. The imaging patent application also
contains technology with respect to signal processing. The Patent and
Trademark Office notified the Company that its therapy application could be
divided into three applications and could not proceed as just one
application. The Company elected to first pursue the application covering
its method of treating tissue with simultaneous two photon excitation of
photoactive agents. The Company received a written notice of allowance from
the Patent and Trademark Office allowing over 60 claims on this first
application. The other inventions are expected to be pursued in divisional
applications. The Company is not aware of any developments at the Patent and
Trademark Office regarding its other divisional patent application or
regarding its imaging technology. See "Risk Factors -- Uncertainties
Regarding Patent Matters," below.
The Company has also sought patent protection for the technologies
reflected in its therapy and imaging patent applications in India and under
the Patent Cooperation Treaty, which covers countries in Europe and such
other countries as Japan, Korea, China, Brazil and others.
BUSINESS STRATEGY
OBJECTIVES. The Company's overall objective is to leverage its
knowledge in photophysics and biochemistry and its proprietary technologies
through contractual collaborations with third parties and to thereby produce
products and generate revenues.
The Company's business strategy to achieve this goal is summarized
below:
1. Utilize contractual collaborations with third parties to access
the skills and resources required to design, test, obtain
regulatory approval, manufacture, sell and support light
delivery and imaging systems and surgical laser devices that
incorporate two photon excitation and the Company's other
technologies.
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2. Focus initial product development on surgical laser devices and
laser activation systems that can be used to activate existing
photoactive agents. Follow development of these activation
systems with future development of the Company's photoactive
agents, targeting agents and deep tissue applications.
3. Focus the Company's internal efforts on demonstrating the
Company's technology in appropriate animal and human models,
developing activation procedures for existing photoactive
agents, cellular targeting and imaging agents, and
demonstrating the efficacy of the Company's imaging technology.
The Company does not expect to achieve revenues from operations in
the near future. The Company's first revenues, if any, are expected to derive
from licensing fees and royalties from collaborative relationships.
Thereafter, if and when the Company develops a saleable product, the Company
expects to generate revenues from product sales. The Company's objectives and
business strategy are subject to change based on numerous factors, including
the results of preclinical and clinical testing, the availability of suitable
collaborative relationships, the nature of competition, regulatory
requirements and the availability of capital. The Company's ability to
implement its business strategy and achieve revenues is subject to certain
Risk Factors, described below.
POTENTIAL PRODUCT APPLICATIONS. Currently, the Company has not
developed any products, and the Company's ability to do so is subject to
certain Risk Factors described below. The Company believes its technologies
have potential applications in the following three market areas:
- Photodynamic treatment of diseases
- Diagnostic imaging
- Surgical laser devices
Potential products that service these markets are identified in Table I below:
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TABLE I
POTENTIAL MARKETS AND PRODUCTS
MARKET POTENTIAL PRODUCTS
Photodynamic treatment of diseases Photoactive agents
Light delivery systems
Cell-specific targeting agents
Delivery of treatment services to
patients
Diagnostic imaging Laser based imaging systems
Imaging agents
Cell and disease specific targeting
agents
Surgical lasers Surgical laser devices
Treatment tools
Delivery of treatment services to
patients
Table II provides a partial listing of the types of diseases that
may be treated with photodynamic therapies.
TABLE II
EXAMPLES OF APPLICATIONS FOR PHOTODYNAMIC THERAPY
GENERAL DISEASE CATEGORY SPECIFIC CONDITION
Cancer Barrets Esophagus
Non-small cell lung cancer
Non melanoma skin cancer
Melanoma
Breast cancer
Prostate cancer
Colorectal cancer
Skin disease Psoriasis
Actinic keratosis
Opthamology Age related macular degeneration
Cardiovascular Plaque removal
Restinosis
AIDS Kaposis sarcoma
Infectious Disease Contained bacterial infections
Fungal infections
Viral infections
Parasitic infections
GOVERNMENT REGULATIONS
All of the products the Company presently contemplates developing
will require approval of the United States Food and Drug Administration
("FDA") for sales and use within the United States and of comparable foreign
agencies for sales outside the United States. The FDA and comparable
regulatory agencies impose substantial requirements on the manufacturing and
marketing of pharmaceutical products and medical devices. These agencies and
other entities
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regulate, among other things, research and development activities and the
testing, manufacture, quality control, safety, effectiveness, labeling,
storage, record keeping, approval, advertising and promotion of the Company's
proposed products. At present the Company has made no submissions to the FDA
regarding any of its proposed products. See "Risk Factors -- Unproven Safety
and Efficacy; No Clinical Trials," below.
The process required by the FDA before the Company's products may
be marketed in the U.S. generally involves the following: (i) preclinical
laboratory and animal tests; (ii) submission of an application which must
become effective before clinical trials may begin; (iii) adequate and
well-controlled human clinical trials to establish the safety and efficacy of
the product in its intended indication; and (iv) FDA approval of the
application.
For pharmaceutical products, preclinical tests include laboratory
evaluation of the product, its chemistry, formulation and stability, as well
as animal studies to assess the potential safety and efficacy of the product.
If the FDA is satisfied with the results and data from preclinical tests, it
will authorize human trials. Human clinical trials are typically conducted in
three sequential phases which may overlap. Each of the three phases involves
testing and study of specific aspects of the effects of the pharmaceutical on
human subjects, including testing for safety, dosage tolerance, side effects,
absorption, metabolism, distribution, excretion and clinical efficacy. The
FDA recently announced a new policy intended to accelerate the approval
process for cancer therapies, and the Company intends to explore ways to take
advantage of that accelerated process.
Historically, obtaining FDA approval for photodynamic therapies
has been a significant challenge. Not only must the photoactive agent be
approved as a drug, but the laser activation system must also be approved as
a medical device. The FDA has dealt with this "combination product" by
delegating authority for overall approval to the drug side of the agency.
Accordingly, when a photodynamic therapy agent is approved as a drug, it is
approved for a specific indication under its specific labeling. Only one
laser is approved to deliver the treatment, and currently Photofrin II has
been approved for use in treating esophageal cancer and non-small cell lung
cancer. The Company's competitors have reported progress with the FDA
regarding the new drugs SnET2 and ALA (aminolevuline acid). Both drugs are in
Phase II/III clinical trials.
The FDA is also gaining experience with lasers through the many
510(k) and premarket approval submissions for non-photodynamic therapy laser
applications. Medical devices can be cleared for commercial distribution
through a notification to the FDA under Section 510(k) of the applicable
statute. The 510(k) notification must demonstrate to the FDA that the device
is as safe and effective or substantially equivalent to a legally marketed
device that was or is currently on the United States market and therefore does
not require premarket approval. Certain devices that sustain human life, are of
substantial importance in preventing impairment of human health, or which
present a potential unreasonable risk of illness or injury, are subject to
special controls through a premarket approval ("PMA") process in order to
obtain marketing clearance. The Company plans to capitalize on existing
knowledge about photoactive drugs and medical lasers by developing initial
treatments
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based on existing photoactive agents. The Company hopes that combining its
techniques with the body of information already in existence will reduce
product approval times.
The testing and approval process requires substantial time,
effort, and financial resources, and there can be no assurance that any
approval will be granted on a timely basis, if at all. Success in preclinical
or early stage clinical trials does not assure success in later stage
clinical trials. The FDA or the research institution sponsoring the trials
may suspend clinical trials or may not permit trials to advance from one
phase to another at any time on various grounds, including a finding that the
subjects or patients are being exposed to an unacceptable health risk. Once
issued, a product approval may be withdrawn if compliance with regulatory
standards is not maintained or if problems occur after the product reaches
the market. If regulatory approval of a product is granted, such approval
may impose limitations on the indicated uses for which a product may be
marketed. In addition, the FDA may require testing and surveillance programs
to monitor the effectiveness of approved products that have been
commercialized, and the agency has the power to prevent or limit further
marketing of a product based on the results of these post-marketing programs.
Further, later discovery of previously unknown problems with a product may
result in restrictions on the product, including its withdrawal from the
market. Marketing the Company's products abroad will require similar
regulatory approvals and is subject to similar risks.
The Company, in the ordinary course of business, must also comply
with a variety of other governmental regulations. These regulations impose,
among other things, standards of conduct, recordkeeping, labeling and
reporting. Specific regulations affecting the Company's current and proposed
operations are local environmental discharge requirements, good laboratory
practices governing use of biological substances, good manufacturing
practices regarding the manufacture of drugs and other products, animal care
and use regulations, labor and general business practices laws and
regulations for the use of lasers. The Company does not presently anticipate
the cost of compliance in these areas to present a major obstacle to the
Company achieving its goals.
Another form of regulation that will impact the Company's business
are the recent developments in health care reimbursement and delivery
practices as a means to better control health care costs. See "Risk Factors
- -- Uncertainties Regarding Reimbursement and Health Care Reform," below. The
Company views these changes as a potential benefit to its business.
Photodynamic therapy and laser based procedures are usually less complicated
and costly than traditional surgery and radiation and can be applied in an
outpatient setting. For these reasons, it is possible that photodynamic
therapy may become a preferred procedure by health insurers and other third
party payors.
COMPETITION
The industry in which the Company operates is intensely
competitive, and there is rapid change with respect to technology for the
diagnosis and treatment of diseases. Existing or future pharmaceutical and
laser companies, government entities and universities may create developments
that accomplish similar functions to the Company's technologies in ways that
are less
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expensive, receive faster regulatory approval, or receive greater market
acceptance than the Company's products. See "Risk Factors -- Substantial
Competition," below.
The Company's competitors generally have greater capital resources
and access to capital; greater internal resources for activities in research
and development, clinical testing and trials, production and distribution;
existing collaborative relationships with third parties; and have made
greater progress in the preclinical and clinical testing of their products.
In addition, the Company's competitors may be disinclined to form
collaborative relationships with the Company directly, or to permit their
collaborative partners to work with the Company. See "Risk Factors --
Reliance on Third Parties, Collaborative Relationships and Employees," below.
The Company is aware of one competitor, QLT Phototherapeutics, that has
already received FDA approval for use of its proprietary photoactive agent,
Photofrin II, in treatment of esophageal cancer and non-small cell lung cancer.
Other competitors, namely Miravant, Inc. and Dusa Pharmaceuticals, have advanced
their proprietary photoactive agents to Phase II/III clinical trials.
The Company believes that its unique technologies may offset to an
extent the disadvantages from its competitive position. The Company's
technology, based on the two photon excitation model, may change the
traditional emphasis in photodynamic therapy from the drug to the light
delivery source. The Company believes this may enable it to add value to
existing and future products of drug manufacturers. In addition, the unique
properties of the Company's laser activation process may give it a
competitive advantage over other light delivery methods that require invasive
procedures.
RISK FACTORS
The Company cannot provide assurances that it will successfully
achieve its goals or the commercial development of its technology in the
foreseeable future. The Company's success in this regard must at this time be
deemed speculative. This Form 10-SB contains forward-looking statements which
involve risks, uncertainties and other factors that may cause the Company's
actual results or performance to differ materially from any results or
performance expressed or implied by such forward-looking statements. Factors
that could cause or contribute to those differences include the following:
DEVELOPMENT STAGE COMPANY; NO PRODUCTS. The Company and its
technology are in an early stage of development. The Company does not have
any products for sale and has not generated revenues from sales. The Company
does not expect to achieve revenues for at least several years. The products
currently contemplated for development by the Company will require
significant additional research and development, preclinical and clinical
testing and regulatory approval prior to commercialization. There can be no
assurances that the Company's research or product development efforts will be
successfully completed, or that any resulting products will be successfully
transformed into marketable products, that required regulatory approvals can
be obtained, that products can be manufactured at an acceptable cost and with
appropriate quality, that
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any approved products can be successfully marketed, or that any products will
be favorably accepted in the market.
HISTORY OF LOSSES; NO ASSURANCE OF FUTURE PROFITS; NO DIVIDENDS.
The Company and its predecessors have not declared or paid any cash dividends
to stockholders, and the Company does not expect to do so in the foreseeable
future. The Company expects to incur substantial and increasing losses for at
least the next several years as its financial resources are used for research
and development, preclinical and clinical testing and regulatory activities,
manufacturing, marketing and related expenses. The Company cannot provide
assurances that it will be able to achieve profitability in the future.
UNPROVEN SAFETY AND EFFICACY; NO CLINICAL TRIALS. None of the
Company's proposed drug and device products have completed the extensive
preclinical and clinical testing for efficacy and safety in animals and
humans required for regulatory approval prior to commercial use. This process
may take at least several years, and the Company may encounter problems or
delays. If clinical trials are successful, there can be no assurances that
the Company's proposed products will demonstrate sufficient safety or
efficacy to warrant approval by the FDA or other domestic or foreign
regulatory authorities or that any approvals will cover the clinical
indications for which the Company may seek approval. See "Government
Regulations," above.
RELIANCE ON THIRD PARTIES, COLLABORATIVE RELATIONSHIPS AND
EMPLOYEES. The Company does not have manufacturing or clinical testing
facilities for its proposed products. The Company intends to enter into
collaborative relationships with third parties in connection with the
research and development, preclinical and clinical testing, manufacturing,
marketing and distribution of its proposed products. The Company initially
will also be dependent on third parties for supply of laser products and for
supplies of photodynamic drugs. There can be no assurances that the Company
will be able to negotiate acceptable collaborative and supply arrangements or
that collaborative arrangements will result in marketable products. In
addition, there can be no assurances that collaborative relationships will
not limit or restrict the Company or give the Company an adequate supply of
necessary resources. Further, there can be no assurances that the Company's
collaborative partners will not develop or pursue alternative technologies
either on their own or with others, including the Company's competitors, as a
means of developing or marketing products for the diseases targeted by the
collaborative programs and the Company's proposed products. The Company is
also highly dependent upon six employees for scientific and management
expertise.
SUBSTANTIAL ADDITIONAL FINANCING REQUIRED. The Company has
incurred negative cash flows from operations since its inception and will
expend substantial funds in connection with its research and development
programs. The Company will require substantial additional funding (the amount
of which cannot be accurately estimated at this time; however, the amount
could be at least $50 million) to continue or undertake its research and
development activities, clinical testing and manufacturing, marketing, sales,
distribution and administrative activities. Depending on market conditions,
the Company will attempt to raise additional capital through equity and debt
offerings,
-13-
<PAGE>
collaborative relationships and other available sources. No assurances can be
given that additional funds will be available on acceptable terms (if at all)
or the extent of dilution to existing stockholders that may result from such
offerings. See "Management's Discussion and Analysis or Plan of Operation,"
below.
SUBSTANTIAL COMPETITION. Many of the Company's competitors have
substantially greater financial, technical and human resources than the
Company and, alone or with collaborative partnerships, have substantially
greater experience in developing products, conducting preclinical or clinical
testing, obtaining regulatory approvals and manufacturing and marketing. See
"Competition," above.
UNCERTAINTIES REGARDING REIMBURSEMENT AND HEALTH CARE REFORM.
Third party payors (including health insurers, managed care entities and
similar organizations) are increasingly challenging the price of medical
procedures and services and establishing protocols which may limit
physicians' selections of products and procedures. The extent to which third
party payors will provide reimbursement for health care procedures and
services (especially those using innovative technologies) is uncertain, and
there can be no assurances that adequate reimbursement coverage will be
available to enable the Company to achieve market acceptance of its proposed
products or to maintain price levels sufficient for realization of an
appropriate return on its proposed products. See "Government Regulations,"
above.
UNCERTAINTIES REGARDING PATENT MATTERS. The Company's success will
depend, in part, on its ability to obtain, assert and defend its patents,
protect trade secrets and operate without infringing the proprietary rights
of others. There is a risk that some of the Company's patent applications
will not result in issued patents; and there is a risk that any issued
patents will not provide the Company with proprietary protection or
competitive advantages, will be designed around by others, will be challenged
by others and held to be invalid or unenforceable or that the patents of
others will have a material adverse effect on the Company. The Company's
current technology and any related patents are subject to two Confirmatory
Licenses in favor of the United States Government as required by applicable
regulations, in which the Company granted an irrevocable license to the
Government to use the technology under certain circumstances and granted
certain "march-in rights" (permitting the Department of Energy to make use of
the technology under certain circumstances). The Company also seeks to
protect its proprietary technology and processes in part by confidentiality
agreements; however, there can be no assurances that these agreements will
not be breached, that the Company will have adequate remedies for any breach,
or that the Company's trade secrets will not otherwise become known or be
independently discovered by competitors. See "Business of the Company --
Patents and Status," above.
CONTROL BY EXISTING STOCKHOLDERS. As of October 31, 1997, the
Company's officers, directors and principal stockholders beneficially owned
approximately 95% of the outstanding common stock. The Company's principal
stockholders are also parties to a Voting Agreement concerning the election
of certain designees to the Board of Directors of the Company and Photogen,
Inc. These stockholders will be able to elect the Company's directors and
will have the ability to
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<PAGE>
influence significantly the Company and the direction of its business and
affairs. Such concentration of ownership may delay or prevent a change in
control of the Company, and may also result in the scarcity of outstanding
shares currently available for purchase on the open markets. These factors
may affect the market and the market price for the common stock in ways that
do not reflect the intrinsic value of the Company's stock. See "Security
Ownership of Certain Beneficial Owners and Management," below.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
Since the Company acquired Photogen, Inc., the Company has been
principally engaged in the research and development of drugs and medical
device products for use in photodynamic therapy. The Company has not
completed development of any product at this time. The Company has not
generated revenues from the sale of any proposed products or other
operations, and has continued to experience losses. The Company's revenue
for the nine months ended September 30, 1997 was $84,395 and resulted
primarily from investment income on the proceeds from the sale of common
stock in the Company's recent restructuring. The Company's net loss for the
nine months ended September 30, 1997 was $225,280. The losses are
attributable primarily to expenses related to pursuing patent protection for
the Company's technology, acquiring equipment and commencing animal studies,
and other general and administrative costs. The Company expects to continue
to incur losses for at least the next several years as it engages in research
and development, clinical testing, regulatory approval activities and the
manufacture and sale of any products that the Company may develop. Portions
of the discussion in this Item contain forward looking statements and are
subject to the Risk Factors described above.
The Company is exploring the possibility of obtaining additional
interim financing, in the range of $5 million, through a private placement of
common stock. However, these plans are in the preliminary stages and the
Company has not identified any potential investor or price for its shares if
it were to proceed with such an offering. See "Risk Factors -- Substantial
Additional Financing Required," above.
The Company has received a formal written notice of allowance on
the first of three divisional patent applications. This first patent covers
the area of simultaneous two photon excitation in a variety of applications.
The Company believes this patent establishes the beginning of a strong
proprietary position in an exciting new technology. The Company recently
filed the second and third divisional applications. The Company is continuing
to pursue patent protection for its imaging technology with the U. S. Patent
and Trademark Office, and in India and under the Patent Cooperation Treaty
(covering countries in Europe, Japan, Korea, China, Brazil and others). The
Company is not aware of any developments with respect to the U.S. Patent and
Trademark Office's consideration of its imaging patent application. See "Risk
Factors --Uncertainties Regarding Patent Matters," above.
The Company has executed a contract to conduct animal studies
which seek to demonstrate the efficacy of the Company's technology in animal
models, including
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<PAGE>
the spatial control, safety, multiple agent activation and depth of
penetration of the laser. The animal studies began during the fourth quarter
of 1997. The total cost of this contract is $178,100.
The Company is occupying approximately 4,000 square feet of office
and laboratory space in Knoxville, Tennessee. The Company pays a monthly
rental of $4,680 for the facility (including certain equipment) plus charges
for utilities and similar items. The Company is proceeding to equip its laser
research and development laboratory with certain laser equipment systems made
available by a large laser manufacturer. The Company intends to purchase or
lease certain additional equipment for approximately $175,000. The Company
has received, installed and started-up a laser system required for conduct of
animal studies. To date, $72,000 has been invested in office and laboratory
equipment. The Company expects to spend an additional $100,000 to acquire the
instruments necessary to support animal and human clinical trials, and
development of its proprietary photoactive agent and targeting systems. The
Company is now negotiating supply of a second laser system from a large laser
manufacturer. The Company hopes to obtain this laser on terms similar to the
first laser.
The Company anticipates expenditures for additional employees and
equipment to be minimal until the results of the animal testing are known.
The animal studies contract includes the Company's use of personnel employed
by the testing facility. For that reason, the Company believes it has enough
cash resources for its currently anticipated needs during the next twelve
months and will not have to raise additional funds; however, as noted above,
the Company is exploring raising approximately $5 million and complete
development and commercialization of the Company's technology will require
substantial additional funds. During the next twelve months, the Company will
continue with animal trials and evaluation of its proprietary photoactive
agent candidates. See "Risk Factors," above.
ITEM 3. DESCRIPTION OF PROPERTY.
The Company's executive offices and laboratory consists of
approximately 4,000 square feet in Knoxville, Tennessee. Approximately 1,000
square feet of the facility are subject to a Lease Agreement between
Photogen, Inc. and the landlord. The Company leases the balance of space in
this facility under a Consent and Assignment of Lease from Genase, L.L.C.
and, therefore, is subject to Genase, L.L.C.'s Master Lease with P.C. Powell
and Wilma Powell (several directors of the Company are associated with
Genase, L.L.C. -- see "Certain Relationships and Related Transactions,"
below). The Company's lease also entitles it to use certain scientific
equipment located in this facility. The property and equipment are in good
condition. In the opinion of management, the Company's interest in the
facility is adequately covered by insurance. The Company pays a monthly
rental of $4,680 for the facility (including certain equipment) plus charges
for utilities and similar items. The initial term of the lease is through
July 1, 1998 and the Company has two options to renew the lease for
additional terms of three years each. The Company also has an option to
purchase the facility at any time during the term of the lease or any renewal
period. There are no present plans for further improvement or development of
the leased space, although the Company may acquire or lease additional
facilities or equipment as needed.
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<PAGE>
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth the beneficial ownership of the
Company's common stock by directors and executive officers, and any person or
group known to the Company to be the owner of more than five percent of the
Company's shares.
<TABLE>
<CAPTION>
AMOUNT AND
NAME AND ADDRESS NATURE OF BENEFICIAL PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER OWNERSHIP OF CLASS
- -------------- ------------------- -------------------- --------
<S> <C> <C> <C>
Common Stock John Smolik 4,800,000 1 13.33
7327 Oak Ridge Highway
Suite B
Knoxville, TN 37931
Common Stock Eric A. Wachter, Ph.D. 4,800,000 1 13.33
7327 Oak Ridge Highway
Suite B
Knoxville, TN 37931
Common Stock Craig Dees, Ph.D. 4,800,000 1 13.33
7327 Oak Ridge Highway
Suite B
Knoxville, TN 37931
Common Stock Walter G. Fisher, Ph.D. 4,800,000 1 13.33
7327 Oak Ridge Highway
Suite B
Knoxville, TN 37931
Common Stock Timothy Scott, Ph.D. 4,800,000 1 13.33
7327 Oak Ridge Highway
Suite B
Knoxville, TN 37931
Common Stock Robert J. Weinstein, M.D. and
Lois Weinstein (Joint Tenants) 3,455,421 9.60
875 N. Michigan Avenue
Suite 2930
Chicago, IL 60611-1901
Common Stock Theodore Tannebaum 3,450,421 9.58
875 N. Michigan Avenue
Suite 2930
Chicago, IL 60611-1901
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND
NAME AND ADDRESS NATURE OF BENEFICIAL PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER OWNERSHIP OF CLASS
- -------------- ------------------- -------------------- --------
<S> <C> <C> <C>
Common Stock Stuart P. Levine 3,426,921 9.52
875 N. Michigan Avenue
Suite 2930
Chicago, IL 60611-1901
Common Stock All directors and executive officers 22,655,421 62.93
as a group (5 persons)
</TABLE>
__________________
(1) Each individual granted five-year warrants to the following principals
of Aurora Capital Corp.: (i) S. Fuchs to acquire 180,000 of their
shares (for an aggregate of 900,000 shares), (ii) J. Margolis to acquire
8,000 of their shares (for an aggregate of 40,000 shares) and (iii)
S. Ross to acquire 4,000 of their shares (for an aggregate of 20,000
shares). See paragraph 4(b) under "Recent Sales of Unregistered
Securities", below.
As part of the Photogen acquisition, Drs. Wachter, Dees, Fisher,
Scott and Mr. Smolik (the "Tennessee Stockholders") entered into a Voting
Agreement with Mr. Tannebaum, Dr. Weinstein and certain other Chicago-based
stockholders (the "Chicago Stockholders"). The Tennessee Stockholders and
Chicago Stockholders together currently own beneficially 95% of the Company's
outstanding common stock. The Voting Agreement provides that the Tennessee
Stockholders and Chicago Stockholders will vote their shares of common stock
(i) in accordance with the unanimous recommendation of the Board of Directors
with respect to any amendments to the Articles of Incorporation or Bylaws,
(ii) to fix the number of directors at five, (iii) to elect to the Board of
Directors four persons nominated by the Tennessee Stockholders and one person
nominated by the Chicago Stockholders (and to remove any such director at the
request of the stockholders who nominated him), and (iv) to fix the number of
directors on the Board's Executive Committee at three, two of whom will be
selected by the Tennessee Stockholders and one of whom will be selected by
the Chicago Stockholders. Certain extraordinary transactions will require
approval of all five of the Company's directors. In addition, the Company
will agree to comparable voting requirements and restrictions with respect to
Photogen, Inc. in its capacity as sole stockholder of that corporation. The
Voting Agreement has a term of 15 years, so long as the Tennessee
Stockholders and Chicago Stockholders are the beneficial owners of 20% or
more of the Company's outstanding common stock during that period. The
Tennessee Stockholders and Chicago Stockholders together control management
of the Company; see "Risk Factors -- Control By Existing Stockholders," above.
There are no arrangements known to the Company which may result in
a change of control of the Company.
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<PAGE>
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The following table and text sets forth the names and positions of
all directors and executive officers of the Company and their positions and
offices with the Company. Each of the directors will serve a one year term
which will expire at the next annual meeting of shareholders and until his
successor is elected and qualified, or until his earlier death, retirement,
resignation or removal. Officers generally serve at the discretion of the
Board of Directors. A brief discussion of the business experience of each
director and executive officer during the past five years is set forth
following the table. None of these individuals is a director of any other
company subject to the reporting requirements under the federal securities
laws.
<TABLE>
<CAPTION>
NAME AGE POSITION DIRECTOR SINCE
- ---- --- -------- --------------
<S> <C> <C> <C>
John Smolik 49 Chairman of the Board; President; May 16, 1997
Chief Executive Officer; Chief
Financial Officer
Eric A. Wachter, Ph.D. 35 Director and Secretary/Treasurer May 16, 1997
Walter G. Fisher, Ph.D. 35 Director May 16, 1997
Craig Dees, Ph.D. 44 Director May 16, 1997
Robert J. Weinstein, M.D. 51 Director February 28, 1997
</TABLE>
JOHN T. SMOLIK has served as President and Chief Executive Officer
and Chairman of the Board since May 16, 1997, and was elected Chief Financial
Officer on November 21, 1997. He is primarily responsible for day to day
activities of developing and implementing plans, strategies and relationships
necessary to accomplish both the short and long term goals of the Company.
Mr. Smolik has over 25 years of experience in pharmaceutical, medical
diagnostic and industrial enzyme businesses. Mr. Smolik is one of the
founders of Photogen L.L.C., Genase L.L.C. and Genencor International. During
the five years prior to becoming an officer of the Company, he was associated
with Genase, served as Senior Management Consultant for QualPro, Inc., and
was a principal in his management consulting firm, JTS Associates. He has an
M.B.A. from the University of Connecticut and a B.S. in chemical engineering
from the University of Washington.
ERIC A. WACHTER, Ph.D. has served as a director since May 16,
1997. He is primarily responsible for developing and demonstrating the
functional feasibility of the laser system hardware, including focusing and
targeting. He is also responsible for development of nontherapeutic laser
applications. He received a Ph.D. in chemistry from the University of
Wisconsin-Madison and a B.S. in chemistry (cum laude) in the honors program,
Indiana University, Bloomington. Dr. Wachter is one of the founders of
Photogen L.L.C. and for the five years prior to May 1997 he was associated
with the Oak Ridge National Laboratory. Dr. Wachter is a physical-analytical
chemist who concentrates in the fields of biochemistry, optical spectroscopy
and instrumentation research and development. He has numerous technical
publications in these fields along with two U.S. Patents, numerous pending
patent applications and numerous patent disclosures.
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<PAGE>
WALTER G. FISHER, Ph.D. has served as a director since May 16,
1997. He is primarily responsible for developing specific laser activation
requirements for photoactive drugs, and for demonstrating imaging
feasibility. He received a Ph.D. in chemistry from Purdue University and a
B.S. in chemistry from the University of Cincinnati. Dr. Fisher is one of the
founders of Photogen L.L.C. and for the five years prior to May 1997 he was
associated with the Oak Ridge National Laboratory. Dr. Fisher is a
physical-analytical chemist who concentrates in the related fields of
molecular spectroscopy, non-lineal laser physics and photochemistry. He has a
number of technical publications in these fields with one issued U.S.Patent,
several pending patent applications and patent disclosures.
CRAIG DEES, Ph.D. has served as a director since May 16, 1997. He
is primarily responsible for researching and developing photodynamic therapy
protocols, photoactive pharmaceuticals, and targeting systems, as well as for
demonstrating the safety and efficacy of that technology in animals. He
received a Ph.D. in molecular biology from the School of Veterinary Medicine,
University of Wisconsin-Madison, an M.S. in immunology, School of Veterinary
Medicine, Auburn University and a B.S. in microbiology, Brigham Young
University. Dr. Dees is one of the founders of Photogen L.L.C. and for the
five years prior to May 1997 he was associated with the Oak Ridge National
Laboratory. Dr. Dees is a molecular biologist who concentrates in the related
fields of molecular virology, microbiology, immunology and biochemistry. He
has many technical publications in these fields, patents and numerous patent
disclosures.
ROBERT J. WEINSTEIN, M.D. has served as a director since February
28, 1997. For the last five years, Dr. Weinstein served as Chief Executive
Officer of HMO America, Inc. and subsequently held the same position in
United HealthCare of Illinois when United HealthCare acquired HMO America in
1993. On January 1, 1996 he became a consultant to United HealthCare
Corporation. He is a graduate of the Chicago Medical School.
Until the effectiveness of this Form 10-SB, the Company's officers
and directors have not been subject to compliance with Section 16(a) of the
Securities Exchange Act of 1934.
ITEM 6. EXECUTIVE COMPENSATION.
The following table sets forth compensation paid by the Company to
its officers and directors for services rendered to the Company in all
capacities during the period ended September 30, 1997. No officer or director
received any compensation during the fiscal years ended December 31, 1995 or
1996.
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<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
----------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
--------------------------------------- ------------------------- ------------
OTHER ANNUAL RESTRICTED SECURITIES ALL OTHER
NAME AND PRINCIPAL COMPENSATION STOCK UNDERLYING LTIP PAYOUTS COMPENSA-
POSITION YEAR(1) SALARY ($) BONUS ($) ($) AWARD(S)($) OPTIONS (#) ($) TION ($)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John Smolik(2) 1997 $42,500(3) $ 0 $ 0 0 0 0 $ 0
President (CEO), 1996 - - - - - - -
and Chairman 1995 - - - - - - -
Eric A. Wachter, 1997 $42,500(3) $ 0 $ 0 0 0 0 $ 0
Ph.D(2), Director, 1996 - - - - - - -
Secretary/Treasurer 1995 - - - - - - -
Walter G. Fisher, 1997 $42,500(3) $ 0 $ 0 0 0 0 $ 0
Ph.D.(2), Director 1996 - - - - - - -
1995 - - - - - - -
Craig Dees, Ph.D.(2), 1997 $42,500(3) $ 0 $ 0 0 0 0 $ 0
Director 1996 - - - - - - -
1995 - - - - - - -
</TABLE>
____________
(1) The data presented for 1997 is through November 30. Data for 1996 and
1995 is presented for the period January 1 to December 31.
(2) Mr. Smolik and Drs. Wachter, Fisher and Dees all joined the Company as
of May 16, 1997 and are subject to employment agreements pursuant to
which the Company will compensate each individual at an annual rate of
$85,000. See "Employment Agreements and Change in Control Arrangements,"
below.
(3) Salary pro rated for period from May 16, 1997 to November 30, 1997,
based on gross annual salary of $85,000. See "Employment Agreements and
Change in Control Arrangements," below.
EMPLOYMENT AGREEMENTS AND CHANGE IN CONTROL ARRANGEMENTS
The Company entered into Employment Agreements with Drs. Wachter,
Fisher and Dees, as research scientists, and with Mr. Smolik, as Chief
Executive Officer, as of May 16, 1997. Each Employment Agreement has an
initial five-year term and provides that while the individual is employed by
the Company and for two years after termination he will not engage in
competitive activities against the Company. The Employment Agreements also
require the employee to promptly and fully disclose to the Board of Directors
all inventions, discoveries, improvements, know-how, works or other
intellectual property conceived, discovered or made by the employee during
his employment and twelve months thereafter, if such inventions are related
to or useful in the business or demonstrably anticipated business of the
Company, or result from duties assigned to the named individual by the
Company or from the use of any of the Company's assets and facilities. The
Company is highly dependent on the scientific and management expertise of Drs.
Wachter, Fisher and Dees and Mr. Smolik; see "Risk Factors -- Reliance on
Third Parties and Collaborative Relationships and Employees" and
"--Uncertainties Regarding Patent Matters," above. Drs. Wachter, Fisher and
Dees, and Mr. Smolik will each receive an annual gross salary of $85,000 and
typical health, life and disability insurance benefits that are available to
any salaried employee
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<PAGE>
of the Company. The Company has two additional employees, Dr. Tim Scott (a
research scientist) and Mr. Jay Harkins (a laboratory technician).
The Company does not have any compensatory plans or arrangements
resulting from the resignation, retirement or any other termination of an
executive officer's employment with the Company or from a change in control.
BOARD OF DIRECTORS
The directors of the Company receive no specified compensation for
serving as directors, and have no standard arrangements providing for such
compensation.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company entered into a Consent and Assignment of Lease which
assigned the lease between Genase, L.L.C. and its landlord for rental of
executive offices and laboratory space. Mr. Smolik, Chairman, Chief
Executive Officer, President and Chief Financial Officer of the Company, and
Dr. Dees, a director and employee of the Company, are members of Genase,
L.L.C. See "Description of Property," above. The Consent and Assignment was
approved by the Executive Committee of the Company's Board of Directors, a
majority of whose members are not associated with Genase, L.L.C.
ITEM 8. DESCRIPTION OF SECURITIES.
The securities subject to this Form 10-SB are shares of the
Company's common stock, par value $.001 per share, of which the Company is
authorized to issue 150,000,000 shares. The Company also has 5,000,000 shares
of preferred stock, par value $.01 per share, authorized for issuance from
time to time by resolution of the Board of Directors. None of the preferred
stock has been issued to date.
Under Nevada corporate law, holders of common stock are entitled
one vote per share on matters to be voted upon by the stockholders. Holders of
common stock do not have preemptive rights and are not entitled to cumulate
their votes for the election of directors. All shares of common stock issued
and outstanding are fully paid and nonassessable. The common stock is not
subject to any conversion or redemption provisions. Common stockholders are
entitled to receive such dividends as are declared by the Board of Directors
out of funds legally available therefor and are entitled to participate
equally in the assets of the Company available for distribution in the event
of liquidation, dissolution or winding up.
The transfer agent for the Company is U. S. Stock Transfer
Corporation, located in Glendale, California.
Article IV of the Company's Bylaws provides that certain material
transactions require the unanimous approval of all of the authorized number
of directors. Reference is made to the Bylaws for the complete text of
Article IV; however, such transactions include:
- Amending the Articles of Incorporation or Bylaws;
- Adopting or changing the Company's annual operating and
capital budget;
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<PAGE>
- Merging, consolidating, reorganizing, recapitalizing,
restructuring, acquiring or selling any assets of the Company
(other than non-intellectual property assets in the ordinary
course of business), dissolving, liquidating or engaging in
any similar transaction;
- Issuing or selling any of the Company's securities, granting any
options to acquire Company securities or instruments convertible
into such securities, or making filings with federal or state
securities regulators;
- Declaring or paying any dividend or distribution;
- Incurring any debt (other than in the ordinary course of
business);
- Creating committees of the Board of Directors; or
- Engaging in any other material transaction outside the ordinary
course of business.
Where unanimous Board approval is required for a matter, action
must be taken by all authorized directors (not a majority of a quorum). The
Bylaws also create a standing Executive Committee, which can act by unanimous
approval of its members. The Articles of Incorporation provide that vacancies
on the Board will be filled by the stockholders (rather than directors
remaining in office).
These provisions in the Articles of Incorporation and Bylaws are
designed to work in conjunction with the Voting Agreement among the Tennessee
Stockholders and the Chicago Stockholders to assure that the Chicago
Stockholders will have a continuing voice in corporate governance concerning
material transactions, while day-to-day operations of the Company will be
subject to normal voting requirements. See "Security Ownership of Certain
Beneficial Owners and Management," above. These provisions in the Articles of
Incorporation and Bylaws, together with the Voting Agreement, may delay,
defer or prevent a change in control of the Company.
PART II.
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS.
The Company maintains no active trading market for its common
stock, however, the common stock has been traded in the over-the-counter
market from time to time.
The high and low trading prices for the Company's common stock
(including M T Financial during 1995 and 1996; see "Overview of Company,"
above) during each quarter of the last two fiscal years are set forth below.
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<TABLE>
<CAPTION>
PERIOD ENDED PERIOD ENDED PERIOD ENDED
DECEMBER 31, 1995 DECEMBER 31, 1996 DECEMBER 3, 1997
(AMOUNTS IN $)
HIGH LOW HIGH LOW HIGH LOW
<S> <C> <C> <C> <C> <C> <C>
1st Quarter 1.00 1.00 .50 .50 .625 .625
2nd Quarter --- --- .625 .625 --- ---
3rd Quarter --- --- .625 .625 5.00 2.00
4th Quarter .50 .50 .625 .625 12.00 4.375
</TABLE>
The foregoing information was obtained from the National
Association of Securities Dealers as reported in the over-the-counter
"bulletin board." The quotations reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not represent actual transactions.
The foregoing information reflects trade prices, and not bid or ask prices,
because the small number of trades through market makers for the Company's
stock historically has not yielded meaningful bid and ask prices (however, in
the fourth quarter of 1997 through December 3, 1997, volume was 315,228
shares). See "Risk Factors -- Control by Existing Stockholders," above,
regarding the possible effects of the concentrated ownership of the Company's
stock on the market and price of the stock.
There are no shares of common stock subject to outstanding options
or warrants to purchase, or securities convertible into, common stock that
have been created, agreed to or authorized by the Company (certain
stockholders, however, have granted five-year warrants covering an aggregate
of 960,000 of their shares; see "Security Ownership of Certain Beneficial
Owners and Management," above). The Company has no agreements to register
under the Securities Act of 1933 any shares held by its stockholders. The
Company does not presently have any proposal to effect a public offering of
its common stock (but see "Risk Factors -- Substantial Additional Financing
Required," above, regarding the possibility of a future public or private
offering). Approximately 34,332,763 shares of common stock are beneficially
owned by persons who are currently, or during the last 12 months were,
affiliates of the Company as defined in Rule 144 under the Securities Act. A
portion of those shares would be eligible for resale by affiliates, subject
to the volume limitations and other provisions of Rule 144 and applicable law.
As of November 30, 1997, the Company's common stock was held by
approximately 488 shareholders, including brokers holding stock in "street
name."
Holders of the Company's common stock are entitled to receive such
dividends as may be declared by its Board of Directors. The Company has not
declared or paid dividends on its common stock, and the Company does not
anticipate paying any dividends in the foreseeable future.
-24-
<PAGE>
ITEM 2. LEGAL PROCEEDINGS.
The Company is not currently a party to any material litigation or
proceeding and is not aware of any material litigation or proceeding
threatened against it.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
None.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
During the last three years, the Company made the following sales
of its common stock without registration under the Securities Act of 1933
(the "Securities Act"). In each case where the purchase price was paid in
cash, the Company used the proceeds of the sales for working capital
purposes. All share amounts in this section have been adjusted for a
two-for-one reverse stock split that occurred in March of 1995.
1. On October 7, 1994, the Company sold 21,595,704 shares of
common stock to Theodore Tannebaum. The total offering price was $1,000,002
($.0231528 per share), and the entire proceeds of the sale were paid to the
Company in cash. The Company did not use any underwriters or brokers and
there were no commissions or underwriting discounts. This transaction was
exempt from registration under the Securities Act pursuant to Section 4(2) of
that Act, on the basis of the following factors: the Company made the offer
and sale to only one person without any public advertising or solicitation;
the investor had access to material information about the Company and the
opportunity to inquire of the Company's officers with respect to any further
information he sought; the investor was an "accredited investor" within the
meaning of Rule 501 of Regulation D under the Securities Act and acquired the
shares for investment and not with a view to the resale or distribution
thereof; and the certificates representing the shares bear a legend
restricting their transfer except in compliance with applicable securities
laws.
2. On December 9, 1994, the Company sold 3,239,350 shares of
common stock to Robert Weinstein, M.D. and 3,239,350 shares of common stock
to Stuart Levine. At that time, Mr. Levine was a director and officer of the
Company. The total offering price for the two sales was $300,000 ($.0231528
per share), and the entire proceeds of the sale were paid to the Company in
cash. The Company did not use any underwriters or brokers and there were no
commissions or underwriting discounts. These transactions were exempt from
registration under the Securities Act pursuant to Section 4(2) of that Act,
on the basis of the following factors: the Company made the offer and sale to
only two persons without any public advertising or solicitation; each
investor had access to material information about the Company and the
opportunity to inquire of the Company's officers with respect to any further
information he sought; each investor was an "accredited investor" within the
meaning of Rule 501 of Regulation D under the Securities Act and acquired the
shares for investment and not with a view to the resale or distribution
thereof; and the certificates
-25-
<PAGE>
representing the shares bear a legend restricting their transfer except in
compliance with applicable securities laws.
3. On March 31, 1995, the Company issued shares of common stock
to its existing stockholders as a result of the merger of the Company's
predecessor, Bemax Corporation, into its wholly-owned subsidiary M T
Financial Group, Inc. The purpose of this merger was to change the issuer's
domicile from California to Nevada. As a result of the merger, each Bemax
stockholder was entitled to receive one share of M T Financial common stock
for every two shares of Bemax common stock. A total of 29,211,019 M T
Financial shares were issued. The Company did not use an underwriter or
broker in this transaction and did not receive any proceeds. This transaction
was exempt from registration under the Securities Act pursuant to Rule
145(a)(2), which provides that there is no offer or sale of securities in a
statutory merger the sole purpose of which is to change the issuer's domicile
within the United States.
4. On May 16, 1997, the Company issued shares of common stock
in a restructuring and merger in connection with the acquisition of Photogen,
Inc.:
(a) As part of its restructuring, the Company sold
2,975,359 shares to Dr. Weinstein, 2,975,359 shares to Mr. Levine and 362,115
shares to Thomas Rosenberg, for a total purchase price of $1,803,450 ($.28568
per share). The entire proceeds of the sales were paid to the Company in
cash. The purpose of the restructuring was, among other things, to provide
the Company with sufficient funds so that (together with its existing
capital) it had $3 million of cash items at the time it acquired Photogen,
Inc. The Company did not use any underwriters or brokers and there were no
commissions or underwriting discounts. These transactions were exempt from
registration under the Securities Act pursuant to Section 4(2) of that Act,
on the basis of the following factors: the Company made the offer and sale to
only three persons without any public advertising or solicitation; each
investor had access to material information about the Company and the
opportunity to inquire of the Company's officers with respect to any further
information he sought; each investor was an "accredited investor" within the
meaning of Rule 501 of Regulation D under the Securities Act and acquired the
shares for investment and not with a view to the resale or distribution
thereof; and the certificates representing the shares bear a legend
restricting their transfer except in compliance with applicable securities
laws.
(b) As consideration for the acquisition of Photogen, Inc.,
the Company issued 4,800,000 shares to each of Eric A. Wachter, Ph.D., Craig
Dees, Ph.D., Walter G. Fisher, Ph.D., Timothy Scott, Ph.D. and John Smolik
(for a total of 24,000,000 shares). Drs. Wachter, Dees, Fisher and Scott and
Mr. Smolik were the shareholders and directors of Photogen, Inc. The Company
issued its common stock to these individuals in connection with the merger of
Photogen, Inc. with a subsidiary of the Company. The sale of these securities
to each of the five Photogen principals was exempt from registration under
the Securities Act pursuant to Section 4(2) of that Act, on the basis of the
following factors: the Company made the offer and sale to only five persons
without any public advertising or solicitation; each investor had access to
material information about the Company and the opportunity to inquire of the
Company's officers with respect to any further
-26-
<PAGE>
information he sought; each investor was an officer or director of Photogen,
Inc. and four of them would, upon issuance of the Company's shares, become
directors of the Company; each investor acquired the shares for investment
and not with a view to the resale or distribution thereof; and the
certificates representing the shares bear a legend restricting their transfer
except in compliance with applicable securities laws. The Company did not use
any underwriters and there were no underwriting discounts; however, Photogen,
Inc. had engaged Aurora Capital Corp. as its broker for the transaction
between the Company and Photogen, Inc. After the closing, three principals of
Aurora Capital Corp. received an aggregate of $180,000 from the Company for
their services and the five Photogen, Inc. shareholders granted the Aurora
Capital Corp. principals warrants to acquire an aggregate of 960,000 of their
shares of Company common stock. The shares subject to the warrants are being
held in escrow and are subject to restrictions on transfer. None of the
warrants have been exercised at this time; and any stock certificates issued
upon exercise of the warrants will bear legends restricting their transfer
except in compliance with applicable securities laws.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Various provisions in Nevada corporate law, the Company's Articles
of Incorporation and Bylaws, and a directors and officers insurance policy
provide indemnification for the Company's directors and officers.
Section 78.751 of the Nevada General Corporation Law permits
corporations to indemnify directors and officers. The statute generally
provides that to obtain indemnification the director or officer must have
acted in good faith and in a manner reasonably believed to be in or not
opposed to the best interests of the corporation; and, additionally, in
criminal proceedings, that the officer or director had no reasonable cause to
believe his conduct was unlawful. In any proceeding by or in the right of the
corporation, no indemnification may be provided if the director or officer is
adjudged liable to the corporation (unless ordered by the court).
Indemnification against expenses actually and reasonably incurred by a
director or officer is required to the extent that such director or officer
is successful on the merits in the defense of the proceeding.
Article Eighth of the Company's Articles of Incorporation and
Article VI of its Bylaws provide generally for mandatory indemnification, to
the fullest extent permitted by Nevada law, of a director and officer who was
or is a party or is threatened to be made a party to or is involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (a "proceeding"), by reason of the fact that he is or was a
director or officer of the Company or was serving at the request of the
Company as a director, officer, employee or agent of certain other related
entities. The Bylaws provide that the indemnification will cover all expenses
(including attorneys' fees), judgments, fines and settlement amounts
reasonably incurred by the director or officer. The Bylaws further provide
that a director or officer has the right to be paid expenses incurred in
defending a proceeding, except the amount of any settlement, in advance of
its final disposition upon receipt by the Company of any undertaking from the
director or officer to repay the advances if it is ultimately determined that
he is not entitled to indemnification.
-27-
<PAGE>
The directors and officers of the Company are also covered by an
insurance policy indemnifying them (subject to certain limits and exclusions)
against certain liabilities, including certain liabilities arising under the
Securities Act of 1933, which might be incurred by them in such capacities
and against which they cannot be indemnified by the Company. Furthermore,
Article Seventh of the Company's Articles of Incorporation eliminates the
personal liability of directors to the Company or its stockholders to the
fullest extent permitted by law.
PART F/S
The financial statements and opinion of independent certified
public accountants are set forth beginning on page F-i of this Form 10-SB.
PART III.
ITEM 1. INDEX TO AND DESCRIPTION OF EXHIBITS.
The following exhibits are filed as part of this Form 10-SB:
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
3.1 Restated Articles of Incorporation of Photogen Technologies, Inc.
3.2 Bylaws of Photogen Technologies, Inc.
3.3 Charter of Photogen, Inc.
3.4 Bylaws of Photogen, Inc.
9.1 Voting Agreement dated May 16, 1997 entered into by Eric A.
Wachter, Ph.D., Craig Dees, Ph.D., Walter G. Fisher, Ph.D.,
Tim Scott, Ph.D., John Smolik, Theodore Tannebaum, Robert J.
Weinstein, M.D., Stuart P. Levine, and Thomas B. Rosenberg, and
joined into by the Company.
10.1 Consent and Assignment to Lease entered into by the Company,
Genase, L.L.C. and P.C. Powell and Wilma Powell dated November 13,
1997.
10.2 Lease Agreement entered into by the Company, P.C. Powell and Wilma
Powell dated June 1, 1997.
10.3 Research Contract entered into by the Company and the University
of Tennessee, College of Veterinary Medicine dated as of October 1,
1997 (incorporated by reference to Exhibit 10.1 to the Company's
Quarterly Report on Form 10-QSB for the quarter ended September
30, 1997).
10.4 Confirmatory License in favor of the U.S. Department of Energy
relating to the Company's Method for Improved Selectivity in
Photo-Activation and Detection of Molecular Diagnostic Agents
(Serial No. 08/741,370) dated February 4, 1997.
-28-
<PAGE>
10.5 Confirmatory License in favor of the U.S. Department of Energy
relating to the Company's Method for Improved Selectivity in
Photo-Activation of Molecular Agents (Serial No. 08/739,801) dated
February 4, 1997.
10.6 Form of Employment Agreements entered into by the Company and each
of John Smolik, Eric A. Wachter, Ph.D., Walter G. Fisher, Ph.D., and
Craig Dees, Ph.D. dated May 16, 1997 (see "Directors, Executive
Officers, Promoters and Control Persons" and "Executive
Compensation," above, for information about the duties and
compensation of each employee subject to these agreements).
10.7 Form of Non-competition/Non-disclosure Agreements entered into by
the Company and each of John Smolik, Eric A. Wachter, Ph.D.,
Walter G. Fisher, Ph.D., Craig Dees, Ph.D. and Timothy C.
Scott dated May 16, 1997.
10.8 Form of Warrant Agreements entered into by the Company and certain
other parties dated May 16, 1997, including the form of Warrant
attached as Exhibit A thereto (see "Security Ownership of Certain
Beneficial Owners and Management," above, for information about the
grantors and grantees of the Warrants and shares subject to
Warrants).
10.9 Escrow Agreement entered into by the Company, American National Bank
and Trust Company of Chicago, Photogen Technologies, Inc., Eric A.
Wachter, Ph.D., Walter G. Fisher, Ph.D., John Smolik, Craig Dees,
Ph.D., Timothy C. Scott, Ph.D., Stuart Fuchs, Jeff Elliot Margolis,
and Stephen L. Ross, dated May 16, 1997.
21 Subsidiaries of the registrant
23 Consent of BDO Seidman, LLP
27 Financial Data Schedule
ITEM 2. DESCRIPTION OF EXHIBITS.
See Part III, Item 1, above.
-29-
<PAGE>
PHOTOGEN TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED FINANCIAL STATEMENTS
F-i
<PAGE>
PHOTOGEN TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
CONTENTS
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT F-2
FINANCIAL STATEMENTS
Consolidated Balance Sheets F-3
Consolidated Statements of Operations F-4
Consolidated Statements of Cash Flows F-5 - F-6
Consolidated Statements of Shareholders' Equity F-7
Notes to Consolidated Financial Statements F-8 - F-10
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
Photogen Technologies, Inc.
Knoxville, Tennessee
We have audited the accompanying balance sheet of Photogen Technologies, Inc.
(including Photogen, Inc., formerly Photogen, L.L.C.), a development stage
company, as of December 31, 1996, and the related statements of operations,
shareholders' equity and cash flows for the period from November 3, 1996
(inception) to December 31, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit 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 audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Photogen Technologies, Inc. at
December 31, 1996, and the results of its operations and its cash flows for the
period from November 3, 1996 (inception) to December 31, 1996, in conformity
with generally accepted accounting principles.
/s/ BDO Seidman, LLP
Chicago, Illinois
July 9, 1997
F-2
<PAGE>
PHOTOGEN TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
- -------------------------------------------------------------------------------
DECEMBER 31, SEPTEMBER 30,
1996 1997
- -------------------------------------------------------------------------------
(UNAUDITED)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ - $ 74,545
Interest receivable - 47,697
Prepaid expenses - 11,329
Marketable securities (Note 1) - 977,456
- --------------------------------------------------------------------------------
TOTAL CURRENT ASSETS - 1,111,027
UNITED STATES TREASURY NOTES,
total face value $1,283,000 - 1,246,055
EQUIPMENT AND LEASEHOLD IMPROVEMENTS - 69,440
PATENT COSTS 5,489 19,889
- --------------------------------------------------------------------------------
$ 5,489 $ 2,446,411
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ - $ 29,944
- --------------------------------------------------------------------------------
COMMITMENTS (Note 3)
SHAREHOLDERS' EQUITY (Note 2)
Preferred stock; par value
$.01 per share; 5,000,000 shares
authorized; none issued - -
Common stock; par value $.001
per share; 150,000,000 shares
authorized; 36,000,000 shares
issued and outstanding - 36,000
Additional paid-in capital - 2,607,526
Members' capital 5,489 -
Deficit accumulated during
the development stage after
recapitalization - (227,059)
- --------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 5,489 2,416,467
- --------------------------------------------------------------------------------
$ 5,489 $ 2,446,411
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-3
<PAGE>
PHOTOGEN TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
- -------------------------------------------------------------------------------
PERIOD FROM Cumulative
NOVEMBER 3, Nine Months Amounts
1996 TO Ended from
DECEMBER 31, September 30, November 3,
1996 1997 1996
- -------------------------------------------------------------------------------
(Unaudited) (Unaudited)
REVENUES
Investment income $ - $ 84,395 $ 84,395
- -------------------------------------------------------------------------------
EXPENSES
General and administrative 1,779 309,675 311,454
- -------------------------------------------------------------------------------
NET LOSS $ (1,779) $ (225,280) $ (227,059)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NET LOSS PER COMMON SHARE $ - $ (.01)
- -----------------------------------------------------------------
- -----------------------------------------------------------------
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING - 32,878,269
- -----------------------------------------------------------------
- -----------------------------------------------------------------
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-4
<PAGE>
PHOTOGEN TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
PERIOD FROM Cumulative
NOVEMBER 3, Nine Months Amounts
1996 TO Ended From
DECEMBER 31, September 30, November 3,
1996 1997 1996
- --------------------------------------------------------------------------------
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (1,779) $ (225,280) $ (227,059)
Depreciation 62 2,605 2,667
Amortization of discount on
United States Treasury Notes - (1,080) (1,080)
Realized gain on sale of United States
Treasury Notes - (17,519) (17,519)
Loss on sale of marketable
securities - 1,048 1,048
Changes in operating assets and
liabilities
Prepaid expenses - (11,329) (11,329)
Interest receivable - (47,697) (47,697)
Accounts payable - 29,944 29,944
- --------------------------------------------------------------------------------
Net cash used by operating activities (1,717) (269,308) (271,025)
- --------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Sale of marketable securities - 1,204,464 1,204,464
Purchase of marketable securities - (2,222,247) (2,222,247)
Purchase of United States
Treasury Notes - (1,406,212) (1,406,212)
Sale of United States Treasury Notes - 1,300,780 1,300,780
Purchase of equipment - (72,046) (72,046)
Patent costs (5,551) (14,400) (19,951)
- --------------------------------------------------------------------------------
Net cash used by investing activities (5,551) (1,209,661) (1,215,212)
- --------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of
common stock - 6,313 6,313
Proceeds from capital
contributions by stockholders 7,268 1,918,312 1,925,580
Cost of recapitalization - (371,111) (371,111)
- --------------------------------------------------------------------------------
Net cash provided by
financing activities 7,268 1,553,514 1,560,782
- -------------------------------------------------------------------------------
F-5
<PAGE>
PHOTOGEN TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
PERIOD FROM Cumulative
NOVEMBER 3, Nine Months Amounts
1996 TO Ended From
DECEMBER 31, September 30, November 3,
1996 1997 1996
- --------------------------------------------------------------------------------
(Unaudited) (Unaudited)
NET INCREASE IN CASH
AND CASH EQUIVALENTS $ - $ 74,545 $ 74,545
CASH AND CASH EQUIVALENTS,
at beginning of period - - -
- --------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS,
at end of period $ - $ 74,545 $ 74,545
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-6
<PAGE>
PHOTOGEN TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Deficit
Accumulated
Common Stock Additional During The
------------------ Members' Paid-in Development
Shares Amount Capital Capital Stage Total
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Contribution of capital - $ - $ 7,268 $ - $ - $ 7,268
Net loss for the period ended December 31, 1996 - - (1,779) - - (1,779)
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCE, at December 31, 1996 - - 5,489 - - 5,489
Net loss and capital contributions for the period
January 1, 1997 to May 15, 1997 (unaudited) - - 3,511 - (3,511) -
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCE, at May 15, 1997 (unaudited) - - 9,000 - (3,511) 5,489
Issuance of stock for cash 6,312,833 6,313 - 1,808,072 - 1,814,385
Effect of recapitalization and merger 29,687,167 29,687 (9,000) 1,170,565 (1,779) 1,189,473
Cost associated with recapitalization and merger - - - (371,111) - (371,111)
Net loss for the period May 16, 1997 to September
30, 1997 - - - - (221,769) (221,769)
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCE, at September 30, 1997 (unaudited) 36,000,000 $ 36,000 $ - $ 2,607,526 $ (227,059) $ 2,416,467
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-7
<PAGE>
PHOTOGEN TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. ORGANIZATION AND
SIGNIFICANT
ACCOUNTING POLICIES
NATURE OF Photogen Technologies, Inc. (the "Company"),
OPERATIONS through its subsidiary Photogen, Inc., successor
to Photogen, L.L.C. is a development stage
company that is attempting to develop proprietary
laser-based technologies to enhance the safety
and efficacy of photodynamic therapy ("PDT") and
photodynamic imaging for the diagnosis and
treatment of cancer and infectious diseases.
Photogen, L.L.C. was organized as a limited
liability company ("LLC") and was treated as a
partnership for federal income tax purposes.
The 1996 financial statements do not reflect
assets the members may have outside their
interests in the LLC, nor any obligations,
including income taxes, of the individual members.
INTERIM FINANCIAL The financial information as of September 30, 1997
STATEMENTS and with respect to the nine months ended
September 30, 1997 is unaudited. In the opinion
of management, such information contains all
adjustments, consisting only of normal recurring
accruals, necessary for a fair presentation of the
results for such periods. The information is not
necessarily indicative of the results of
operations to be expected for the full fiscal year.
PRINCIPLES OF Intercompany balances and transactions have been
CONSOLIDATION eliminated in consolidation.
ESTIMATES The financial statements include estimated amounts
and disclosures based on management's assumptions
about future events. Actual results may differ
from those estimates.
CASH EQUIVALENTS Highly liquid investments with a maturity of three
months or less when purchased are classified as
cash equivalents. The carrying amount
approximates fair value because of the short
maturity of those investments.
F-8
<PAGE>
PHOTOGEN TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
MARKETABLE Marketable Securities consisting of marketable
SECURITIES debt securities are classified as available-
for-sale securities. Fair value approximates cost
at September 30, 1997.
INVESTMENT IN UNITED The Company considers its investment in United
STATES TREASURY NOTES States Treasury Notes to be available-for-sale
securities. Unrealized holding gains and losses
are excluded from earnings and are reported as a
separate component of shareholders' equity until
realized.
EQUIPMENT AND Equipment and leasehold improvements are stated at
LEASEHOLD cost. Depreciation and amortization are being
IMPROVEMENTS provided, on accelerated and straight-line
methods, over the estimated useful lives of the
assets. Leasehold improvements are being
amortized on a straight-line basis over the lives
of the respective leases or the service lives of
the improvements, whichever is shorter.
PATENT COSTS Patent costs are amortized over the lesser of the
estimated useful life or the statutory life of the
patent perfection costs on the straight-line
method. The Company reviews the carrying values
of its patents and other long-lived assets for
possible impairment whenever an event or change in
circumstances indicate that the carrying amount of
the assets may not be recoverable. Any long-lived
assets held for disposal are reported at the
lower of their carrying amounts or fair value less
cost to sell.
INCOME TAXES The Company recognizes deferred tax assets and
liabilities for the expected future tax
consequences of temporary differences between the
tax basis and financial reporting basis of certain
assets and liabilities based upon currently
enacted tax rates expected to be in effect when
such amounts are realized or settled.
The Company has not recorded an income tax
benefit for losses incurred. The Company is in the
development stage and realization of the losses is
not likely. An income tax valuation allowance has
been provided for the losses realized to date.
NET LOSS PER Net loss per common share is computed based on the
COMMON SHARE weighted average number of common shares and
common share equivalents outstanding.
NEW ACCOUNTING In March 1997, the FASB issued SFAS 128, "Earnings
STANDARDS Per Share". The new standard simplifies the
standard for computing earnings per share and
requires presentation of two new amounts, basic
and diluted earnings per share. The Company will
be required to retroactively adopt this standard
when it reports its operating results for the
fiscal quarter and year ending December 31, 1997.
When the Company adopts SFAS 128, it expects no
significant changes to earnings per share.
F-9
<PAGE>
PHOTOGEN TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
2. RECAPITALIZATION On May 16, 1997, M T Financial Group, Inc. (an
AND MERGER inactive public company) through its wholly owned
subsidiary effected a reverse merger with
Photogen, Inc., successor to Photogen, L.L.C.
("Photogen"). Legally, Photogen is a wholly owned
subsidiary of Photogen Technologies, Inc.
(formerly known as M T Financial Group, Inc.).
For financial reporting purposes, Photogen was
deemed to be the acquiring entity. The
transaction has been reflected in the accompanying
financial statements as (1) a recapitalization of
Photogen (consisting of a 48,000 for one stock
split and change in par value) and (2) an issuance
of shares by Photogen in exchange for all of the
outstanding shares of M T Financial Group, Inc.
As part of the recapitalization, the Company sold
6,312,833 shares of common stock for a total
purchase price of approximately $1,814,000.
Further, as consideration for the acquisition of
Photogen, Inc., 24,000,000 shares of common stock
were issued.
Legal and brokerage fees of approximately
$371,000 were charged to additional paid-in
capital as costs of the recapitalization and
merger. Included in the paid-in capital is the net
cash contributed of approximately $109,000 by
MT Financial Group, Inc.
3. COMMITMENTS The Company is leasing offices and a laboratory.
The initial term of the lease is through July 1998
with two options for renewal for additional
terms of three years each. Total rental expense
charged to operations for the nine months ended
September 30, 1997 aggregated approximately
$18,000. There was no rental expense for the
period ended December 31, 1996.
The Company has entered into employment agreements
with certain officers and employees for an initial
term of five years. Under the terms of these
agreements, the officers and employees are each
entitled to an annual salary of $85,000 plus
fringe benefits.
F-10
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of
1934, the registrant caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized.
Photogen Technologies, Inc.
/s/ John Smolik
-------------------------------------------
Date: December 22, 1997 John Smolik, President
-30-
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- --------- -------------
<S> <C>
3.1 Restated Articles of Incorporation of Photogen Technologies, Inc.
3.2 Bylaws of Photogen Technologies, Inc.
3.3 Charter of Photogen, Inc.
3.4 Bylaws of Photogen, Inc.
9.1 Voting Agreement dated May 16, 1997 entered into by Eric A. Wachter, Ph.D.,
Craig Dees, Ph.D., Walter G. Fisher, Ph.D., Tim Scott, Ph.D., John Smolik,
Theodore Tannebaum, Robert J. Weinstein, M.D., Stuart P. Levine, and Thomas
B. Rosenberg, and joined into by the Company.
10.1 Consent and Assignment to Lease entered into by the Company, Genase, L.L.C.
and P.C. Powell and Wilma Powell dated November 13, 1997.
10.2 Lease Agreement entered into by the Company, P.C. Powell and Wilma Powell
dated June 1, 1997.
10.3 Research Contract entered into by the Company and the University of
Tennessee, College of Veterinary Medicine dated as of October 1, 1997
(incorporated by reference to Exhibit 10.1 to the Company's Form 10-QSB for
the quarter ended September 30, 1997).
10.4 Confirmatory License in favor of the U.S. Department of Energy relating to
the Company's Method for Improved Selectivity in Photo-Activation and
Detection of Molecular Diagnostic Agents (Serial No. 08/741,370) dated
February 4, 1997.
10.5 Confirmatory License in favor of the U.S. Department of Energy relating to
the Company's Method for Improved Selectivity in Photo-Activation of
Molecular Agents (Serial No. 08/739,801) dated February 4, 1997.
10.6 Form of Employment Agreements entered into by the Company and each of John
Smolik, Eric A. Wachter, Ph.D., Walter G. Fisher, Ph.D., and Craig Dees,
Ph.D. dated May 16, 1997.
10.7 Form of Non-competition/Non-disclosure Agreements entered into by the
Company and each of John Smolik, Eric A. Wachter, Ph.D., Walter G. Fisher,
Ph.D., Craig Dees, Ph.D. and Timothy C. Scott dated May 16, 1997.
10.8 Form of Warrant Agreements entered into by the Company and certain other
parties dated May 16, 1997, including the form of Warrant attached as
Exhibit A thereto.
<PAGE>
10.9 Escrow Agreement entered into by the Company, American National Bank and
Trust Company of Chicago, Photogen Technologies, Inc., Eric A. Wachter,
Ph.D., Walter G. Fisher, Ph.D., John Smolik, Craig Dees, Ph.D., Timothy C.
Scott, Ph.D., Stuart Fuchs, Jeff Elliot Margolis, and Stephen L. Ross,
dated May 16, 1997.
21 Subsidiaries of the registrant
23 Consent of BDO Seidman, LLP
27 Financial Data Schedule
</TABLE>
<PAGE>
EXHIBIT 3.1
RESTATED ARTICLES OF INCORPORATION
OF
PHOTOGEN TECHNOLOGIES, INC.
We, the undersigned, for the purpose of amending and restating the
Articles of Incorporation of M T Financial Group, Inc. filed December 28, 1994
with the Secretary of State of Nevada to establish a corporation under the
provisions and subject to the requirements of Title 7, Chapter 78 of the Nevada
Revised Statutes, and the acts amendatory thereof, and hereinafter sometimes
referred to as the General Corporation Law of the State of Nevada, do hereby
adopt and make the following Restated Articles of Incorporation:
FIRST: The name of the corporation (hereinafter called the
"Corporation") is: Photogen Technologies, Inc.
SECOND: The resident agent of the Corporation within the State of
Nevada is The Corporation Trust Company of Nevada, whose address is One East
First Street, Reno, Nevada 89501.
THIRD: The nature of the business of the Corporation and the objects
or the purposes to be transacted, promoted, or carried on by it are to engage in
any lawful act or activity for which corporations may be organized under the
General Corporation Law of the State of Nevada.
FOURTH: (a) The total number of shares of all classes of stock which
the Corporation shall have the authority to issue is one hundred fifty-five
million (155,000,000), of which (i) one hundred fifty million (150,000,000)
shares shall be Common Stock, par value $.001 per share ("Common Stock"), and
(ii) five million (5,000,000) shares shall be Preferred Stock, par value $.01
per share ("Preferred Stock"), which Preferred Stock may be issued from time to
time by the Board of Directors. The Board of Directors is authorized to
prescribe the classes, series and the number of each class or series of
Preferred Stock and the voting powers, designations, preferences, limitations,
restrictions and relative rights of each class or series of Preferred Stock.
The voting powers, designations, preferences, limitations, restrictions,
relative rights and distinguishing designation of each class or series of
Preferred Stock shall be described in one or more resolutions of the Board of
Directors authorizing the issuance of such class or series of Preferred Stock.
(b) No holder of any of the shares of any class or series of
capital stock of the Corporation shall have a preemptive right to acquire
unissued shares, treasury
<PAGE>
shares or securities convertible into or carrying a right to subscribe for or
acquire any such shares.
(c) Any paid-up shares of stock of the Corporation and any
shares of stock of the Corporation issued as fully paid-up shall not be
assessable or assessed in any manner or for any cause.
FIFTH: (a) The governing board of the Corporation shall be styled as
a "Board of Directors," and any member of said Board shall be styled as a
"director."
(b) The authorized number of members constituting the Board of
Directors of the Corporation is five (5); and the names and addresses of said
members are as follows:
Name Address
---- -------
Robert J. Weinstein, M.D. 875 North Michigan Avenue
Suite 2930
Chicago, IL 60611
John T. Smolik 1055 Commerce Park Drive
Oak Ridge, Tennessee 37830
Eric A. Wachter, Ph.D. 1055 Commerce Park Drive
Oak Ridge, Tennessee 37830
Craig Dees, Ph.D. 1055 Commerce Park Drive
Oak Ridge, Tennessee 37830
Walter G. Fisher, Ph.D. 1055 Commerce Park Drive
Oak Ridge, Tennessee 37830
(c) All vacancies on the Board of Directors, including those
caused by an increase in the number of directors, shall only be filled by vote
or consent of the stockholders.
SIXTH: The Corporation shall have perpetual existence.
SEVENTH: The personal liability of the directors to the Corporation
or its stockholders is hereby eliminated to the fullest extent permitted by the
General Corporation Law of the State of Nevada, as the same may be amended and
supplemented. No amendment to or repeal of this Article Seventh shall apply to
or have any effect on the liability or alleged liability of any director of the
Corporation for or with respect to any acts or omissions of such
-2-
<PAGE>
director occurring prior to the effective date of such amendment or repeal.
EIGHTH: The Corporation shall, to the fullest extent permitted by the
General Corporation Law of the State of Nevada, as the same may be amended and
supplemented, indemnify each person who is or was a director of the Corporation
and each person who serves or served at the request of the Corporation as a
director of another enterprise. The indemnification provided for herein shall
not be deemed exclusive of any other rights to which such person may be entitled
under any Bylaw, agreement, vote of stockholders or disinterested directors or
otherwise. No amendment to or repeal of this Article Eighth shall apply to or
have any effect on the rights of any person referred to in this Article Eighth
for or with respect to acts or omissions of such person occurring prior to such
amendment or repeal. The indemnification provided in this Article Eighth shall
continue as to a person who has ceased to be a director and shall inure to the
benefit of the heirs, executors and administrators of such person.
NINTH: The Corporation reserves the right to amend, alter, change, or
repeal any provision contained in these Articles of Incorporation in the manner
now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
We, the undersigned President and Secretary, respectively, of the
Corporation, hereby certify that the amendment of the original Articles of the
Corporation was adopted by the holders of at least 28,074,404 shares of stock
eligible to vote thereon which represents approximately at least 96% of the
shares of the Corporation eligible to vote thereon.
IN WITNESS WHEREOF, we do hereby execute these Restated Articles of
Incorporation on May 15, 1997.
/s/ Stuart P. Levine, President
------------------------------------
Stuart P. Levine, President
/s/ Kathleen A. Beauchamp, Secretary
------------------------------------
Kathleen A. Beauchamp, Secretary
STATE OF ILLINOIS )
) SS.
-3-
<PAGE>
COUNTY OF COOK )
On this 15th day of May, 1997, personally appeared before me, a Notary
Public in and for the State and County aforesaid, Stuart P. Levine and Kathleen
A. Beauchamp, known to me to be the persons described in and who executed the
foregoing Restated Articles of Incorporation, and who acknowledged to me that he
and she, respectively, executed the same freely and voluntarily and for the uses
and purposes therein mentioned.
WITNESS my hand and official seal, the day and year first above
written.
/s/ Martha L. Bongiorno
------------------------------------
Notary Public
["Official Seal" affixed]
(Notarial Seal)
CERTIFICATE OF ACCEPTANCE
OF APPOINTMENT BY REGISTERED AGENT
The Corporation Trust Company of Nevada hereby accepts the appointment
as Registered Agent of the above named corporation.
The Corporation Trust Company of Nevada
Dated: May 15, 1997 By: /s/ Jeffrey R. Graves
-----------------------------------
Assistant Secretary
-4-
<PAGE>
EXHIBIT 3.2
BYLAWS
OF
PHOTOGEN TECHNOLOGIES, INC.
(AMENDED AND RESTATED AS OF MAY 16, 1997)
ARTICLE I
OFFICES
Section 1. PRINCIPAL EXECUTIVE OFFICE. The principal executive office
of the corporation may be located within or without the State of Nevada. The
Board of Directors (herein called the "Board") is hereby granted full power and
authority to change the principal executive office or the location of any other
corporate office from one location to another.
Section 2. OTHER OFFICES. Branch or subordinate offices may at any
time be established by the Board at any place or places.
ARTICLE II
STOCKHOLDERS
Section 1. PLACE OF MEETINGS. Meetings of stockholders shall be held
either at the principal executive office of the corporation or at any other
place within or without the State of Nevada which may be designated either by
the Board or by the written consent of all persons entitled to vote thereat,
given either before or after the meeting and filed with the Secretary.
Section 2. ANNUAL MEETINGS. The annual meetings of stockholders shall
be held on the last Tuesday of each April, at 10:00 o'clock a.m., local time, or
such other date or such other time as may be fixed by the Board. At such
meetings, directors shall be elected and any other proper business may be
transacted.
Section 3. SPECIAL MEETINGS. Special meetings of the stockholders may
be called at any time by the Board, the Chairman of the Board, the President, or
by the holders of shares entitled to cast not less than 10 percent of the votes
at such meeting. Upon request in writing to the Chairman of the Board, the
President, any Vice President or the Secretary by any person (other than the
Board) entitled to call a special meeting of stockholders, the officer forthwith
shall cause notice to be given in writing to the stockholders entitled to vote
that a meeting will be held at a time requested by the person or persons calling
the meeting, not less than 10 nor more than 60 days after the receipt of the
request.
Section 4. NOTICE OF ANNUAL OR SPECIAL MEETINGS. Written notice of
each annual or special meeting of stockholders shall be given not less than ten
nor more than sixty days before the date of the meeting to each stockholder
entitled to vote thereat. Such notice shall state the place, date, and hour of
the meeting and (a) in the case of a special meeting, the general nature of the
business to be transacted, and no other business may be transacted, or (b) in
the case of the annual meeting, those matters which the Board, at the time of
the mailing of the notice, intends to present for action by the stockholders,
but, subject to the provisions of applicable law, any proper matter may be
presented at the meeting for such
<PAGE>
action. The notice of any meeting at which directors are to be elected shall
include the names of nominees intended at the time of the notice to be presented
by management for election.
Notice of a stockholders' meeting shall be given either by mail or by
other means of written communication, addressed to the stockholder at the
address of such stockholder appearing on the books of the corporation or given
by the stockholder to the corporation for the purpose of notice, or, if no such
address appears or is given, at the place where the principal executive office
of the corporation is located or by publication at least once in a newspaper of
general circulation in the county in which the principal executive office is
located. Notice by mail shall be deemed to have been given at the time a
written notice is deposited in the United States mails, postage prepaid. Any
other written notice shall be deemed to have been given at the time it is
personally delivered to the recipient or is delivered to a common carrier for
transmission, or actually transmitted by the person giving the notice by
electronic means, to the recipient.
Section 5. QUORUM. A majority of the shares entitled to vote,
represented in person or by proxy, shall constitute a quorum at any meeting of
stockholders. If a quorum is present, the affirmative vote of the majority of
the shares represented at the meeting and voting at the meeting (which shares
voting affirmatively also constitute at least a majority of the required quorum)
shall be the act of the stockholders, unless the vote of a greater number or
voting by classes is required by law, by the Articles of Incorporation or the
Bylaws and except as provided in the following sentence. The stockholders
present at a duly called or held meeting at which a quorum is present may
continue to do business until adjournment, notwithstanding the withdrawal of
enough stockholders to leave less than a quorum, if any action taken (other than
adjournment) is approved by at least a majority of the shares required to
constitute a quorum.
Section 6. ADJOURNED MEETINGS AND NOTICE THEREOF. Any stockholders'
meeting, whether or not a quorum is present, may be adjourned from time to time
by the vote of a majority of the shares, represented either in person or by
proxy, but in the absence of a quorum (except as provided in Section 5 of this
Article) no other business may be transacted at such meeting.
It shall not be necessary to give any notice of the time and place of
the adjourned meeting or of the business to be transacted thereat, other than by
announcement at the meeting at which such adjournment is taken; provided,
however, when any stockholders' meeting is adjourned for more than 45 days, or
if after adjournment a new record date is fixed for the adjourned meeting,
notice of the adjourned meeting shall be given as in the case of an original
meeting.
Section 7. VOTING. The stockholders entitled to notice of any meeting
or to vote at any such meeting shall be only persons in whose name shares stand
on the stock records of the corporation on the record date determined in
accordance with Section 8 of this Article.
Voting shall in all cases be subject to the provisions of Title 7 of
the Nevada Revised Statutes and to the following provisions:
(a) Shares held by an administrator, executor, guardian, conservator
or custodian may be voted by such holder either in person or by proxy, without a
transfer of such shares into the holder's name; and shares standing in the name
of a trustee may be voted by the trustee, either in person or by proxy, but no
trustee shall be entitled to vote shares held by such trustee without a transfer
of such shares into the trustee's name.
-2-
<PAGE>
(b) Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into the receiver's name if authority
to do so is contained in an order of the court by which such receiver was
appointed.
(c) Subject to the provisions of Title 7 of the Nevada Revised
Statutes, and except where otherwise agreed in writing between the parties, a
stockholder whose shares are pledged shall be entitled to vote such shares until
the shares have been transferred into the name of the pledgee, and thereafter
the pledgee shall be entitled to vote the shares so transferred.
(d) Shares standing in the name of a minor may be voted and the
corporation may treat all rights incident thereto as exercisable by the minor,
in person or by proxy, whether or not the corporation has notice, actual or
constructive, of the minority, unless a guardian of the minor's property has
been appointed and written notice of such appointment given to the Secretary of
the corporation.
(e) Shares standing in the name of another corporation, domestic or
foreign, may be voted by such officer, agent or proxyholder as the bylaws of
such other corporation may prescribe or, in the absence of such provision, as
the Board of Directors of such other corporation may determine or, in the
absence of such determination, by the chairman of the board, president or any
vice president of such other corporation. Shares which are purported to be
voted or any proxy purported to be executed in the name of a corporation
(whether or not any title of the person signing is indicated) shall be presumed
to be voted or the proxy executed in accordance with the provisions of this
clause, unless the contrary is shown.
(f) If shares stand of record in the names of two or more persons,
whether fiduciaries, members of a partnership, joint tenants, tenants in common,
husband and wife as community property, tenants by the entirety, voting
trustees, persons entitled to vote under a stockholder voting agreement or
otherwise, or if two or more persons (including proxyholders) have the same
fiduciary relationship respecting the same shares, unless the Secretary of the
corporation is given written notice to the contrary and is furnished with a copy
of the instrument or order appointing them or creating the relationship wherein
it is so provided, their acts with respect to voting shall have the following
effect:
(i) If only one votes, such act binds all;
(ii) If more than one vote, the act of the majority so voting
binds all; and
(iii) If more than one vote, but the vote is evenly split on any
particular matter, each faction may vote the securities in question
proportionately.
If the instrument so filed or the registration of the shares shows that any such
tenancy is held in unequal interests, a majority or even split for the purpose
of this section shall be a majority or even split in interest.
(g) No stockholder shall be entitled to cumulate votes at any
election of directors. Elections need not be by ballot; provided, however, that
all elections for directors must be by ballot upon demand made by the Chairman
of the Board or by a majority of the outstanding shares entitled to vote
therefor at the meeting and before the voting begins.
-3-
<PAGE>
Section 8. RECORD DATE. The Board may fix, in advance, a record date
for the determination of the stockholders entitled to notice of any meeting or
to vote, or entitled to receive payment of any dividend or other distribution,
or any allotment of rights, or to exercise rights in respect of any other lawful
action. The record date so fixed shall be not more than 60 days prior to the
date of the meeting nor more than 60 days prior to any other action. When a
record date is so fixed, only stockholders of record on that date are entitled
to notice of and to vote at the meeting or to receive the dividend,
distribution, or allotment of rights, or to exercise of the rights, as the case
may be, notwithstanding any transfer of shares on the books of the corporation
after the record date. 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 unless the Board fixed a new record date for the adjourned
meeting. The Board shall fix a new record date if the meeting is adjourned for
more than 45 days.
If no record date is fixed by the Board, the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the business day next
preceding the day on which notice is given or, if notice is waived, at the
close of business on the business day next preceding the day on which the
meeting is held. The record date for determining stockholders for any
purpose other than as set forth in this Section 8 or Section 10 of this
Article shall be at the close of business on the day on which the Board
adopts the resolution relating thereto, or the sixtieth day prior to the date
of such other action, whichever is later.
Section 9. CONSENT OF ABSENTEES. The transactions of any meeting of
stockholders, however called and noticed, and wherever held, are as valid as
though had at a meeting duly held after regular call and notice, if a quorum is
present either in person or by proxy, and if, either before or after the
meeting, each of the persons entitled to vote, not present in person or by
proxy, signs a written waiver of notice, or a consent to the holding of the
meeting or an approval of the minutes thereof. All such waivers, consents, or
approvals shall be filed with the corporate records or made a part of the
minutes of the meeting. Attendance of a person shall constitute a waiver of
notice of and presence at such meeting, except when the person objects, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened and except that attendance at a meeting is
not a waiver of any right to object to the consideration of matters required by
Title 7 of the Nevada Revised Statutes to be included in the notice but not so
included, if such objection is expressly made at the meeting. Neither the
business to be transacted at nor the purpose of any regular or special meeting
of stockholders need be specified in any written waiver of notice, consent to
the holding of the meeting or approval of the minutes thereof, except as
provided in Title 7 of the Nevada Revised Statutes.
Section 10. ACTION WITHOUT MEETING. Any action which under any
provision of Title 7 of the Nevada Revised Statutes may be taken at any annual
or special meeting of stockholders, may be taken without a meeting and without
prior notice if a consent in writing, setting forth the action so taken, shall
be signed by the holders of outstanding shares having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Unless a record date for voting purposes be fixed as provided in Section 8 of
this Article, the record date for determining stockholders entitled to give
consent to pursuant to this Section 10, when no prior action by the Board has
been taken, shall be the day on which the first written consent is given.
Section 11. PROXIES. Every person entitled to vote shares has the right
to do so either in person or by one or more persons authorized by a written
proxy executed by such stockholder and filed with the
-4-
<PAGE>
Secretary. Any proxy duly executed is not revoked and continues in full force
and effect until revoked by the person executing it prior to the vote pursuant
thereto by a writing delivered to the Secretary of the corporation stating that
the proxy is revoked or by a subsequent proxy executed by the person executing
the prior proxy and presented to the meeting, or by attendance at the meeting
and voting in person by the person executing the proxy.
Section 12. INSPECTORS OF ELECTION. In advance of any meeting of
stockholders, the Board may appoint inspectors of election to act at such
meeting and any adjournment thereof. If inspectors of election be not so
appointed, or if any persons so appointed fail to appear or refuse to act, the
chairman of any such meeting may, and on the request of any stockholder or
stockholder's proxy shall, make such appointment at the meeting. The number of
inspectors shall be either one or three. If appointed at a meeting on the
request of one or more stockholders or proxies, the majority of shares present
shall determine whether one or three inspectors are to be appointed.
The duties of such inspectors shall be as prescribed by Title 7 of the
Nevada Revised Statutes and shall include: determining the number of shares
outstanding and the voting power of each; determining the shares represented at
the meeting; determining the existence of a quorum; determining the
authenticity, validity, and effect of proxies; receiving votes, ballots, or
consents; hearing and determining all challenges and questions in any way
arising in connection with the right to vote; counting and tabulating all votes
or consents, determining when the polls shall close; determining the result; and
doing such acts as may be proper to conduct the election or vote with fairness
to all stockholders. If there are three inspectors of election, the decision,
act, or certificate of a majority is effective in all respects as the decision,
act, or certificate of all.
Section 13. CONDUCT OF MEETING. The Chairman of the Board shall preside
as Chairman at all meetings of the stockholders. The Chairman shall conduct
each such meeting in a businesslike and fair manner, but shall not be obligated
to follow any technical, formal or parliamentary rules or principles of
procedure. The Chairman's rulings on procedural matters shall be conclusive and
binding on all stockholders, unless at the time of a ruling a request for a vote
is made to the stockholders entitled to vote and represented in person or by
proxy at the meeting, in which case the decision of a majority of such shares
shall be conclusive and binding on all stockholders. Without limiting the
generality of the foregoing, the Chairman shall have all of the powers usually
vested in the chairman of a meeting of stockholders.
Section 14. PARTICIPATION IN MEETING BY CONFERENCE TELEPHONE.
Stockholders may participate in a meeting of the stockholders by means of
conference telephone or similar method of communication by which all persons
participating in the meeting can hear one another.
ARTICLE III
DIRECTORS
Section 1. POWERS. Subject to limitations of the Articles of
Incorporation, these Bylaws, and Title 7 of the Nevada Revised Statutes relating
to action required to be approved by the stockholders or by the outstanding
shares, the business and affairs of the corporation shall be managed and all
corporate powers shall be exercised by or under the direction of the Board. The
Board may delegate the management
-5-
<PAGE>
of the day-to-day operation of the business of the corporation to its officers,
provided that the business and affairs of the corporation shall be managed and
all corporate powers shall be exercised under the ultimate direction of the
Board. Without prejudice to such general powers, but subject to the same
limitations, it is hereby expressly declared that the Board shall have the
following powers in addition to the other powers enumerated in these Bylaws:
(a) To select and remove all the officers, agents, and employees
of the corporation, prescribe the powers and duties for them as may not be
inconsistent with law, the Articles of Incorporation or these Bylaws, fix
their compensation, and require from them security for faithful service.
(b) To conduct, manage, and control the affairs and business of
the corporation and to make such rules and regulations therefor not
inconsistent with law, the Articles of Incorporation or these Bylaws.
(c) To adopt, make, and use a corporate seal, and to prescribe
the forms of certification of stock, and to alter the form of such seal and
of such certificates from time to time.
(d) To authorize the issuance of shares of stock of the
corporation from time to time, upon such terms and for such consideration as
may be lawful.
(e) To borrow money and incur indebtedness for the purposes of
the corporation, and to cause to be executed and delivered therefor, in the
corporate name, promissory notes, bonds, debentures, deeds of trust,
mortgages, pledges, hypothecations, or other evidence of debt and securities
therefor.
Section 2. VACANCIES. (a) Any director may resign effective upon
giving written notice to the Chairman of the Board, the President, or the
Secretary, unless the notice specifies a later time for the effectiveness of
such resignation. If the resignation is effective at a future time, a successor
may be elected to take office when the resignation becomes effective.
(b) Vacancies in the Board shall be filled by the
stockholders, and each director so elected shall hold office until the next
annual meeting and until such director's successor has been elected and
qualified.
(c) A vacancy or vacancies in the Board shall be deemed to
exist in case of the death, resignation, or removal of any director, or if
the authorized number of directors is increased.
(d) The Board may declare vacant the office of a director who
has been declared of unsound mind by an order of court or convicted of a
felony.
(e) No reduction of the authorized number of directors shall
have the effect of removing any director prior to the expiration of the
director's term of office.
Section 3. PLACE OF MEETING. Regular or special meetings of the Board
shall be held at any place within or without the State of Nevada which has been
designated from time to time by the Board. In the absence of such designation,
regular meetings shall be held at the principal executive office of the
corporation.
-6-
<PAGE>
Section 4. REGULAR MEETINGS. Immediately following each annual meeting
of stockholders the Board shall hold a regular meeting for the purpose of
organization, election of officers, and the transaction of other business.
Section 5. SPECIAL MEETINGS. (a) Special meetings of the Board for any
purpose or purposes may be called at any time by the Chairman of the Board, the
President, any Vice President, the Secretary, or by any two directors.
(b) Special meetings of the Board shall be held upon two days'
written notice or 24 hours' notice given personally or by telephone, telegraph,
telex, or other similar means of communication. Any such written notice shall
be addressed or delivered to each director at such director's address as it is
shown upon the records of the corporation or as may have been given to the
corporation by the director for purposes of notice or, if such address is not
shown on such records or is not readily ascertainable, at the place in which the
meetings of the directors are regularly held.
(c) Notice by mail shall be deemed to have been given at the time a
written notice is deposited in the United States mails, postage prepaid. Any
other written notice shall be deemed to have been given at the time it is
personally delivered to the recipient or is delivered to a common carrier for
transmission, or actually transmitted by the person giving the notice by
electronic means, to the recipient. Oral notice shall be deemed to have been
given at the time it is communicated, in person or by telephone, to the
recipient.
Section 6. QUORUM. A majority of the authorized number of directors
constitutes a quorum of the Board for the transaction of business, except (a)
where the Articles of Incorporation or Bylaws require action by all directors,
in which case a quorum shall consist of all of the authorized number of
directors, and (b) to adjourn as hereinafter provided. Every act or decision
done or made by a majority of the directors present at a meeting duly held at
which a quorum is present shall be regarded as the act of the Board, except (x)
where the Articles of Incorporation or Bylaws require action by all directors,
in which case such act or decision shall be done or made by unanimous approval
or consent of the authorized number of directors and (y) where a greater number
is required by law, the Articles of Incorporation or elsewhere in these Bylaws.
Section 7. PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE. Members
of the Board may participate in a meeting through use of conference telephone or
similar communications equipment, so long as all members participating in such
meeting can hear one another.
Section 8. WAIVER OF NOTICE. Notice of a meeting need not be given to
any director who signs a waiver of notice or a consent to holding the meeting or
an approval of the minutes thereof, whether before or after the meeting, or who
attends the meeting without protesting, prior thereto or at its commencement,
the lack of notice to such director. All such waivers, consents and approvals
shall be filed with the corporate records or made a part of the minutes of the
meeting.
Section 9. ADJOURNMENT. A majority of the directors present, whether
or not a quorum is present, may adjourn any directors' meeting to another time
and place. Notice of the time and place of holding an adjourned meeting need
not be given to absent directors if the time and place be fixed at the meeting
adjourned, except as provided in the next sentence. If the meeting is adjourned
for more than 24
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hours, notice of any adjournment to another time or place shall be given prior
to the time of the adjourned meeting to the directors who were not present at
the time of the adjournment.
Section 10. FEES AND COMPENSATION. Directors and members of committees
may receive such compensation, if any, for their services, and such
reimbursement for expenses, as may be fixed or determined by the Board.
Section 11. ACTION WITHOUT MEETING. Any action required or permitted to
be taken by the Board may be taken without a meeting if all members of the Board
shall individually or collectively consent in writing to such action. Such
consent or consents shall have the same effect as a unanimous vote of the Board
and shall be filed with the minutes of the proceedings of the Board.
Section 12. RIGHTS OF INSPECTION. Every director shall have the
absolute right at any reasonable time to inspect and copy all books, records,
and documents of every kind and to inspect the physical properties of the
corporation and also of its subsidiary corporations, domestic or foreign. Such
inspection by a director may be made in person or by agent or attorney and
includes the right to copy and obtain extracts of documents.
Section 13. COMMITTEES.
(a) By unanimous vote or consent of all of the authorized number of
directors, the Board may designate one or more committees, each consisting of
one or more directors, and delegate to such committees any of the authority of
the Board except with respect to:
(i) The approval of any action for which Title 7 of the Nevada
Revised Statutes also requires stockholders' approval or approval of
the outstanding shares;
(ii) The filling of vacancies on the Board or in any committee;
(iii) The fixing of compensation of the directors for serving on
the Board or on any committee;
(iv) The amendment or repeal of the Bylaws or the adoption of
new bylaws;
(v) The amendment or repeal of any resolution of the Board
which by its express terms is not so amendable or repealable;
(vi) A distribution to the stockholders of the corporation
except at a rate or in a periodic amount or within a price range
determined by the Board; or
(vii) The appointment of other committees of the Board of the
members thereof.
Any such committee must be designated, and the members or alternate
members thereof appointed, by resolution adopted by all of the authorized number
of directors, and any such committee may be designated by such name as the Board
shall specify. The Board, acting through all of the authorized number of
directors, shall have the power to prescribe the manner in which proceeding of
any such committee shall be conducted. Unless the Board, acting through all of
the authorized number of directors,
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shall otherwise provide, the regular and special meetings and other actions of
any such committee shall be governed by the provisions of this Article
applicable to meetings and actions of the Board. Minutes shall be kept of each
meeting of each committee.
(b) There shall be an Executive Committee consisting of three (3)
directors who may exercise the authority of the Board to the extent permitted by
law and these Bylaws, and all actions of such Executive Committee shall be made
only by unanimous approval or consent of the members of such Committee.
ARTICLE IV
ACTIONS REQUIRING UNANIMOUS
APPROVAL OR CONSENT OF
BOARD OF DIRECTORS
The following actions of the corporation shall require the unanimous
approval or consent of all of the authorized number of directors:
(a) Amending, altering, modifying or repealing the corporation's Articles
of Incorporation or Bylaws.
(b) Increasing the annual compensation, bonus or benefits of the
corporation's officers, directors or key employees under written employment
contracts or amending such employment contracts.
(c) Changing the corporation's purpose or line of business activity.
(d) Adopting or changing the corporation's annual operating and capital
budget.
(e) Granting any license or disposing of any right or interest in any of
the corporation's intellectual property or amending or making any material
filings with the U.S. Patent and Trademark Office regarding any intellectual
property now or hereafter owned by the corporation.
(f) Merging, consolidating, reorganizing, recapitalizing, restructuring,
acquiring or selling (including a lease, mortgage or other disposition) any
assets of the corporation (other than non-intellectual property assets in the
ordinary course of business), dissolving, liquidating or engaging in any similar
transaction.
(g) Issuing or selling any of the corporation's securities, granting any
options, rights or warrants to acquire any of the corporation's securities or
instruments convertible into the corporation's securities, or making any filings
with federal or state securities regulators.
(h) Declaring or paying any dividend, distribution (by way of redemption
or otherwise), stock split, reverse stock split, repurchase of any of the
corporation's securities or similar transaction.
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(i) Changing the corporation's banking, public accounting, or principal
outside legal counsel relationships, or the terms or insurer of its directors'
or officers' insurance, as currently in effect for the corporation and its
subsidiaries.
(j) Incurring any debt or effecting any borrowing, other than accruals,
accounts payable to vendors and leasing office equipment, in the normal course
of business.
(k) Entering into any transaction or commitment obligating the corporation
for more than $50,000 or to perform for a period longer than 12 months,
excluding confidentiality agreements.
(l) Otherwise engaging in any material transaction outside of the ordinary
course of business or day-to-day operations of the corporation.
ARTICLE V
OFFICERS
Section 1. OFFICERS. The officers of the corporation shall be a
President, a Secretary, and a Treasurer. The corporation may also have, at the
discretion of the Board, a Chairman of the Board, one or more Vice-Presidents,
one or more Assistant Secretaries, one or more Assistant Treasurers, and such
other officers as may be elected or appointed in accordance with the provisions
of Section 3 of this Article.
Section 2. ELECTION. The officers of the corporation, appointed in
accordance with the provisions of Section 3 or Section 5 of this Article, shall
be chosen annually by, and shall serve at the pleasure of, the Board, and shall
hold their respective offices until their resignation, removal, or other
disqualification from service, or until their respective successors shall be
elected.
Section 3. SUBORDINATE OFFICERS. The Board may elect, and may appoint,
such other officers as the business of the corporation may require, each of whom
shall hold office for such period, have such authority, and perform such duties
as are provided in these Bylaws or as the Board may from time to time determine.
Section 4. REMOVAL AND RESIGNATION. Any officer may be removed, either
with or without cause, by the Board at any time or, except in the case of an
officer chosen by the Board, by any officer upon whom such power of removal may
be conferred by the Board. Any such removal shall be without prejudice to the
rights, if any, of the officer under any contract of employment of the officer.
Any officer may resign at any time by giving written notice to the
corporation, but without prejudice to the rights, if any, of the corporation
under any contract to which the officer is a party. Any such resignation shall
take effect at the date of the receipt of such notice or at any later time
specified therein and, unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it effective.
Section 5. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification, or any other cause shall be filled in
the manner prescribed in these Bylaws for regular election or appointment to
such office.
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Section 6. CHAIRMAN OF THE BOARD. The Chairman of the Board, if there
shall be such an officer, shall, if present, preside at all meetings of the
Board and stockholders and exercise and perform such other powers and duties as
may be from time to time assigned by the Board.
Section 7. PRESIDENT. Subject to such powers, if any, as may be given
by the Board to the Chairman of the Board, if there be such an officer, the
President is the chief executive officer of the corporation and has, subject to
the control of the Board, general supervision, direction, and control of the
business and affairs of the corporation. In the absence of the Chairman of the
Board, the President shall preside at all meetings of the stockholders and at
all meetings of the Board. The President has the general powers and duties of
management usually vested in the office of president of a corporation and such
other powers and duties as may be prescribed by the Board.
Section 8. VICE PRESIDENTS. In the absence or disability of the
President, the Vice Presidents in order of their rank as fixed by the Board or,
if not ranked, the Vice President designated by the Board, shall perform all the
duties of the President, and when so acting shall have all the powers of, and be
subject to all the restrictions upon, the President. The Vice Presidents shall
have such other powers and perform such other duties as from time to time may be
prescribed for them respectively by the Board.
Section 9. SECRETARY. The Secretary shall keep or cause to be kept, at
the principal executive office and such other place as the Board may order, a
book of minutes of all meetings of stockholders, the Board, and its committees,
with the time and place of holding, whether regular or special and, if special,
how authorized, the notice thereof given, the names of those present at Board
and committee meetings, the number of shares present or represented at
stockholders' meetings, and the proceedings thereof. The Secretary shall keep,
or cause to be kept, a copy of the Bylaws of the corporation at the principal
executive office or business in accordance with Title 7 of the Nevada Revised
Statutes.
The Secretary shall keep, or cause to be kept, at the principal
executive office or at the office of the corporation's transfer agent or
registrar, if one be appointed, a share register, or a duplicate share register,
showing the names of the stockholders and their addresses, the number and
classes of shares held by each, the number and date of cancellation of every
certificate surrendered for cancellation.
The Secretary shall give, or cause to be given, notice of all the
meetings of the stockholders and of the Board and of any committees thereof
required by these Bylaws or by law to be given, shall keep the seal of the
corporation in safe custody, and shall have such other powers and perform such
other duties as may be prescribed by the Board.
Section 10. TREASURER. Unless the Board has elected or appointed
another person to be the corporation's chief financial officer, the Treasurer
shall be the chief financial officer of the corporation and shall keep and
maintain, or cause to be kept and maintained, adequate and correct accounts of
the properties and business transactions of the corporation, and shall send or
cause to be sent to the stockholders of the corporation such financial
statements and reports as are by law or these Bylaws required to be sent to
them. The books of account shall at all times be open to inspection by any
director.
The Treasurer shall deposit all moneys and other valuables in the name
and to the credit of the corporation with such depositaries as may be designated
by the Board. The Treasurer shall disburse the funds of the corporation as may
be ordered by the Board, shall render to the President and directors, whenever
they request it, an account of all transactions as Treasurer and of the
financial condition of the
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corporation, and shall have such other powers and perform such other duties as
may be prescribed by the Board.
ARTICLE VI
INDEMNIFICATION
Section 1. INDEMNIFICATION IN ACTIONS BY THIRD PARTIES. The
corporation shall 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, except an
action by or in the right of the corporation, by reason of the fact that he or
she is or was a director or officer, of the corporation, or is or was serving at
the request of the corporation as a director, officer, partner, 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 him or her in
connection with the action, suit or proceeding if he or she acted in good faith
and in a manner which he or she 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 his or her conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of NOLO CONTENDERE or its equivalent,
does not, of itself, create a presumption that the person did not act in good
faith and in a manner which he or she reasonably believed to be in or not
opposed to the best interests of the corporation, and that, with respect to any
criminal action or proceeding, he or she had reasonable cause to believe that
his or her conduct was unlawful.
Section 2. INDEMNIFICATION IN ACTIONS BY OR IN THE RIGHT OF THE
CORPORATION. The corporation shall indemnity any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment in
its favor by reason of the fact that he or she is or was a director or officer
of the corporation, or is or was serving at the request of the corporation as a
director, officer, partner, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses,
including amounts paid in settlement and attorneys' fees actually and reasonably
incurred by him or her in connection with the defense or settlement of the
action or suit if he or she acted in good faith and in manner which he or she
reasonably believed to be in or not opposed to the best interests of the
corporation. Indemnification may not be made for any claim, issue or matter as
to which such a person has been adjudged by a court of competent jurisdiction,
after exhaustion of all appeals therefrom, to be liable to the corporation or
for amounts paid in settlement to the corporation, unless and only to the extent
that the court in which the action or suit was brought or other court of
competent jurisdiction determines upon application that, in view of all the
circumstances of the case, the person is fairly and reasonably entitled to
indemnity for such expenses as the court deems proper.
Section 3. INDEMNIFICATION AGAINST EXPENSES. To the extent that a
director, officer, employee or agent of the corporation has been successful on
the merits or otherwise in defense of any action, suit or proceeding referred to
in Sections 1 or 2 of this Article, or in defense of any claim, issue or matter
therein, he or she must be indemnified by the corporation against expenses,
including attorneys' fees, actually and reasonably incurred by him or her in
connection with the defense.
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Section 4. REQUIRED DETERMINATIONS. Any indemnification under Sections
1 and 2 of this Article, unless ordered by a court or advanced pursuant to
Section 5 of this Article, must be made by the corporation only as authorized in
the specific case upon a determination that indemnification of the director or
officer is proper in the circumstances. The determination must be made:
(a) By the stockholders;
(b) By the Board of Directors by majority vote of a quorum consisting
of directors who were not parties to the act, suit or proceeding;
(c) If a majority vote of a quorum consisting of directors who were
not parties to the act, suit or proceeding so orders, by independent legal
counsel in a written opinion; or
(d) If a quorum consisting of directors who were not parties to the
act, suit or proceeding cannot be obtained, by independent legal counsel in a
written opinion.
Section 5. ADVANCE OF EXPENSES. Expenses of officers and directors
incurred in defending a civil or criminal action, suit or proceeding must be
paid by the corporation as they are incurred and in advance of the final
disposition of the action, suit or proceeding, upon receipt of an undertaking by
or on behalf of the director or officer to repay the amount if it is ultimately
determined by a court of competent jurisdiction that he or she is not entitled
to be indemnified by the corporation. The provisions of this Section 5 do not
affect any rights to advancement of expenses to which corporate personnel other
than directors or officers may be entitled under any contract or otherwise by
law.
Section 6. NONEXCLUSIVITY; CONTINUATION. The indemnification and
advancement of expenses authorized in or ordered by a court pursuant to this
Article VI:
(a) Does not exclude any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under the Articles of
Incorporation or any agreement, vote of stockholders or disinterested directors
or otherwise, for either an action in his or her official capacity or an action
in another capacity while holding his or her office, except that
indemnification, unless ordered by a court pursuant to Section 2 of this Article
or for the advancement of expenses made pursuant to Section 5 of the Article,
may not be made to or on behalf of any director or officer if a final
adjudication establishes that his or her acts or omissions involved intentional
misconduct, fraud or a knowing violation of the law and was material to the
cause of action.
(b) Continues for a person who has ceased to be a director or officer
and inures to the benefit of the heirs, executors and administrators of such a
person.
Section 7. INSURANCE.
(a) The corporation may purchase and maintain insurance or make other
financial arrangements 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, partner, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise for
any liability asserted against him or her and liability and expenses incurred by
him or her in his or her capacity as a director,
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officer, employee or agent, or arising out of his or her status as such, whether
or not the corporation has the authority to indemnify him against such liability
and expenses.
(b) The other financial arrangements made by the corporation pursuant
to subsection (a) of this Section 7 may include the following:
(i) The creation of a trust fund.
(ii) The establishment of a program of self-insurance.
(iii) The securing of its obligation of indemnification by
granting a security interest or other lien on any assets of the
corporation.
(iv) The establishment of a letter of credit, guaranty or
surety.
No financial arrangement made pursuant to this subsection (b) of this
Section 7 may provide protection for any person adjudged by a court of competent
jurisdiction, after exhaustion of all appeals therefrom, to be liable for
intentional misconduct, fraud or a knowing violation of law, except with respect
to the advancement of expenses or indemnification ordered by a court.
(c) Any insurance or other financial arrangement made on behalf of a
person pursuant to this Section 7 may be provided by the corporation or any
other person approved by the Board of Directors, even if all or part of the
other person's stock or other securities is owned by the corporation.
ARTICLE VII
MISCELLANEOUS
Section 1. INSPECTION OF BYLAWS. The corporation shall keep in its
principal executive office the original or a copy of these Bylaws as amended to
date, which shall be open to inspection by stockholders at all reasonable times
during customary office hours. If the principal executive office of the
corporation is outside the State of Nevada and the corporation has no principal
business office in such state, it shall upon the written request of any
stockholder furnish to such stockholder a copy of these Bylaws as amended to
date.
Section 2. ENDORSEMENT OF DOCUMENTS; CONTRACTS. Subject to the
provisions of applicable law, any note, mortgage, evidence of indebtedness,
contract, share certificate, conveyance, or other instrument in writing and any
assignment or endorsements thereof executed or entered into between the
corporation and any other person, when signed by the Chairman of the Board, the
President or any Vice President, and the Secretary, any Assistant Secretary, the
Treasurer or any Assistant Treasurer of the corporation shall be valid and
binding on the corporation in the absence of actual knowledge on the part of the
other person that the signing officers had no authority to execute the same.
Any such instruments may be signed by any other person or persons and in such
manner as from time to time shall be determined by the Board and, unless so
authorized by the Board, no officer, agent, or employee shall have any power or
authority to bind the corporation by any contract or engagement or to pledge its
credit or to render it liable for any purpose or amount.
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Section 3. CERTIFICATES OF STOCK. Every holder of shares of the
corporation shall be entitled to have a certificate signed in the name of the
corporation by the Chairman of the Board, the President or a Vice President and
by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary, certifying the number of shares and the class or series of shares
owned by the stockholder. Any or all of the signatures on the certificate may
be facsimile. If any officer, transfer agent, or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent, or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if such
person were an officer, transfer agent, or registrar at the date of issue.
Except as provided in this Section, no new certificate for shares
shall be issued in lieu of an old one unless the latter is surrendered and
cancelled at the same time. The Board may, however, if any certificate for
shares is alleged to have been lost, stolen, or destroyed, authorize the
issuance of a new certificate in lieu thereof, and the corporation may require
that the corporation be given a bond or other adequate security sufficient to
indemnify it against any claim that may be made against it (including expense or
liability) on account of the alleged loss, theft, or destruction of such
certificate or the issuance of such new certificate.
Section 4. REPRESENTATION OF SHARES OF OTHER CORPORATIONS. The
President or any other officer or officers authorized by the Board or the
President are each authorized to vote, represent, and exercise on behalf of the
corporation all rights incident to any and all shares of any other corporation
or corporations standing in the name of the corporation. The authority herein
granted may be exercised either by any such officer in person or by any other
person authorized so to do by proxy or power of attorney duly executed by said
officer.
Section 5. STOCK PURCHASE PLANS. The corporation may adopt and carry
out a stock purchase plan or agreement or stock option plan or agreement
providing for the issue and sale for such consideration as may be fixed of its
unissued shares, or of issued shares acquired or to be acquired, to one or more
of the employees or directors of the corporation or of a subsidiary or to a
trustee on their behalf and for the payment for such shares in installments or
at one time, and may provide for aiding any such persons in paying for such
shares by compensation for services rendered, promissory notes, or otherwise.
Any such stock purchase plan or agreement or stock option plan or
agreement may include, among other features, the fixing of eligibility for
participation therein, the class and price of shares to be issued or sold under
the plan or agreement, the number of shares which may be subscribed for, the
method of payment therefor, reservation of title until full payment therefor,
the effect of the termination of employment, an option or obligation on the part
of the corporation to repurchase the shares upon termination of employment,
restrictions upon transfer of the shares, the time limits of and termination of
the plan, and any other matters, not in violation of applicable law, as may be
included in the plan as approved or authorized by the Board or any committee of
the Board.
Section 6. CONSTRUCTION AND DEFINITIONS. Unless the context otherwise
requires, the general provisions, rules of construction, and definitions
contained in the general provisions of Title 7 of the Nevada Revised Statutes
shall govern the construction of these Bylaws.
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EXHIBIT 3.3
C H A R T E R
O F
PHOTOGEN, INC.
The undersigned person under the Tennessee Business Corporation Act adopts
the following charter for the above listed corporation:
1. The name of the corporation is "Photogen, Inc."
2. The number of shares of stock the corporation is authorized to issue is
five hundred (500) shares of common stock, $.01 par value per share.
3. (a) The complete address of the corporation's initial registered office in
Tennessee is:
John T. Smolik
1055 Commerce Park Drive
Oak Ridge, Tennessee 37830
County of Anderson
(b) The name of the initial registered agent, to be located at the address
listed in paragraph 3(a), is:
John T. Smolik
4. The name and complete address of the incorporator is:
Matthew I. Hafter
Grippo & Elden
Suite 3600
227 West Monroe Street
Chicago, Illinois 60606
5. The complete address of the corporation's principal office is:
1055 Commerce Park Drive
Oak Ridge, Tennessee
37830
<PAGE>
6. The corporation is for profit.
7. Other provisions:
(a) The number of directors of the corporation shall be fixed by, or in
the manner provided in, the Bylaws.
(b) The corporation shall have perpetual existence.
(c) The personal liability of the directors to the corporation or its
shareholders for monetary damages for breach of fiduciary duty as a director is
hereby eliminated; provided, however, that this provision 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 shareholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
the law, or (iii) for distributions made in violation of the Tennessee Business
Corporation Act or this Charter. No amendment to or repeal hereof shall apply
to or have any effect on the liability or alleged liability of any director of
the corporation for or with respect to any acts or omissions of such director
occurring prior to the effective date of such amendment or repeal.
(d) The corporation shall, to the fullest extent permitted by the
Tennessee Business Corporation Act, as the same may be amended and supplemented,
indemnify each person who is or was a director of the corporation and each
person who serves or served at the request of the corporation as a director of
another enterprise. The indemnification provided for herein shall not be deemed
exclusive of any other rights to which such person may be entitled under any
Bylaw, agreement, vote of stockholders or disinterested directors or otherwise.
No amendment to or repeal hereof shall apply to or have any effect on the rights
of any person referred to herein for or with respect to acts or omissions of
such person occurring prior to the effective date of such amendment or repeal.
The indemnification provided herein shall continue as to a person who has ceased
to be a director and shall inure to the benefit of the heirs, executors and
administrators of such person.
April 11, 1997 /s/ Matthew I. Hafter
- -------------------- -------------------------------
Date Incorporator's Signature
Matthew I. Hafter
-------------------------------
Incorporator's Name (typed or printed)
<PAGE>
EXHIBIT 3.4
BYLAWS
OF
PHOTOGEN, INC.
ARTICLE I
OFFICES
Section 1. PRINCIPAL EXECUTIVE OFFICE. The principal executive office
of the corporation may be located within or without the State of Tennessee. The
Board of Directors (herein called the "Board") is hereby granted full power and
authority to change the principal executive office or the location of any other
corporate office from one location to another.
Section 2. OTHER OFFICES. Branch or subordinate offices may at any
time be established by the Board at any place or places.
ARTICLE II
STOCKHOLDERS
Section 1. PLACE OF MEETINGS. Meetings of stockholders shall be held
either at the principal executive office of the corporation or at any other
place within or without the State of Tennessee which may be designated either by
the Board or by the written consent of all persons entitled to vote thereat,
given either before or after the meeting and filed with the Secretary.
Section 2. ANNUAL MEETINGS. The annual meetings of stockholders shall
be held on the last Tuesday of each April, at 10:00 o'clock a.m., local time, or
such other date or such other time as may be fixed by the Board. At such
meetings, directors shall be elected and any other proper business may be
transacted.
Section 3. SPECIAL MEETINGS. Special meetings of the stockholders may
be called at any time by the Board, the Chairman of the Board, the President, or
by the holders of shares entitled to cast not less than 10 percent of the votes
at such meeting. Upon request in writing to the Chairman of the Board, the
President, any Vice President or the Secretary by any person (other than the
Board) entitled to call a special meeting of stockholders, the officer forthwith
shall cause notice to be given in writing to the stockholders entitled to vote
that a meeting will be held at a time requested by the person or persons calling
the meeting, not less than 10 nor more than 60 days after the receipt of the
request.
Section 4. NOTICE OF ANNUAL OR SPECIAL MEETINGS. Written notice of
each annual or special meeting of stockholders shall be given not less than ten
nor more than sixty days before the date of the meeting to each stockholder
entitled to vote thereat. Such notice shall state the place, date, and hour of
the meeting and (a) in the case of a special meeting, the general nature of the
business to be transacted, and no other business may be transacted, or (b) in
the case of the annual meeting, those matters which the Board, at the time of
the mailing of the notice, intends to present for action by the stockholders,
but, subject to the provisions of applicable law, any proper matter may be
presented at the meeting for such action. The notice of any meeting at which
directors are to be elected shall include the names of nominees intended at the
time of the notice to be presented by management for election.
<PAGE>
Notice of a stockholders' meeting shall be given either by mail or by
other means of written communication, addressed to the stockholder at the
address of such stockholder appearing on the books of the corporation or given
by the stockholder to the corporation for the purpose of notice, or, if no such
address appears or is given, at the place where the principal executive office
of the corporation is located or by publication at least once in a newspaper of
general circulation in the county in which the principal executive office is
located. Notice by mail shall be deemed to have been given at the time a
written notice is deposited in the United States mails, postage prepaid. Any
other written notice shall be deemed to have been given at the time it is
personally delivered to the recipient or is delivered to a common carrier for
transmission, or actually transmitted by the person giving the notice by
electronic means, to the recipient.
Section 5. QUORUM. A majority of the shares entitled to vote,
represented in person or by proxy, shall constitute a quorum at any meeting of
stockholders. If a quorum is present, the affirmative vote of the majority of
the shares represented at the meeting and voting at the meeting (which shares
voting affirmatively also constitute at least a majority of the required quorum)
shall be the act of the stockholders, unless the vote of a greater number or
voting by classes is required by law, by the Charter or the Bylaws and except as
provided in the following sentence. The stockholders present at a duly called
or held meeting at which a quorum is present may continue to do business until
adjournment, notwithstanding the withdrawal of enough stockholders to leave less
than a quorum, if any action taken (other than adjournment) is approved by at
least a majority of the shares required to constitute a quorum.
Section 6. ADJOURNED MEETINGS AND NOTICE THEREOF. Any stockholders'
meeting, whether or not a quorum is present, may be adjourned from time to time
by the vote of a majority of the shares, represented either in person or by
proxy, but in the absence of a quorum (except as provided in Section 5 of this
Article) no other business may be transacted at such meeting.
It shall not be necessary to give any notice of the time and place of
the adjourned meeting or of the business to be transacted thereat, other than by
announcement at the meeting at which such adjournment is taken; provided,
however, when any stockholders' meeting is adjourned for more than 45 days, or
if after adjournment a new record date is fixed for the adjourned meeting,
notice of the adjourned meeting shall be given as in the case of an original
meeting.
Section 7. VOTING. The stockholders entitled to notice of any meeting
or to vote at any such meeting shall be only persons in whose name shares stand
on the stock records of the corporation on the record date determined in
accordance with Section 8 of this Article.
Voting shall in all cases be subject to the provisions of Title 48,
Chapters 11-27 of the Tennessee Business Corporation Act and to the following
provisions:
(a) Shares held by an administrator, executor, guardian, conservator
or custodian may be voted by such holder either in person or by proxy, without a
transfer of such shares into the holder's name; and shares standing in the name
of a trustee may be voted by the trustee, either in person or by proxy, but no
trustee shall be entitled to vote shares held by such trustee without a transfer
of such shares into the trustee's name.
(b) Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into the receiver's name if authority
to do so is contained in an order of the court by which such receiver was
appointed.
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(c) Subject to the provisions of Title 48, Chapters 11-27 of the
Tennessee Business Corporation Act, and except where otherwise agreed in writing
between the parties, a stockholder whose shares are pledged shall be entitled to
vote such shares until the shares have been transferred into the name of the
pledgee, and thereafter the pledgee shall be entitled to vote the shares so
transferred.
(d) Shares standing in the name of a minor may be voted and the
corporation may treat all rights incident thereto as exercisable by the minor,
in person or by proxy, whether or not the corporation has notice, actual or
constructive, of the minority, unless a guardian of the minor's property has
been appointed and written notice of such appointment given to the Secretary of
the corporation.
(e) Shares standing in the name of another corporation, domestic or
foreign, may be voted by such officer, agent or proxyholder as the bylaws of
such other corporation may prescribe or, in the absence of such provision, as
the Board of Directors of such other corporation may determine or, in the
absence of such determination, by the chairman of the board, president or any
vice president of such other corporation. Shares which are purported to be
voted or any proxy purported to be executed in the name of a corporation
(whether or not any title of the person signing is indicated) shall be presumed
to be voted or the proxy executed in accordance with the provisions of this
clause, unless the contrary is shown.
(f) If shares stand of record in the names of two or more persons,
whether fiduciaries, members of a partnership, joint tenants, tenants in common,
husband and wife as community property, tenants by the entirety, voting
trustees, persons entitled to vote under a stockholder voting agreement or
otherwise, or if two or more persons (including proxyholders) have the same
fiduciary relationship respecting the same shares, unless the Secretary of the
corporation is given written notice to the contrary and is furnished with a copy
of the instrument or order appointing them or creating the relationship wherein
it is so provided, their acts with respect to voting shall have the following
effect:
(i) If only one votes, such act binds all;
(ii) If more than one vote, the act of the majority so voting
binds all; and
(iii) If more than one vote, but the vote is evenly split on
any particular matter, each faction may vote the securities in
question proportionately.
If the instrument so filed or the registration of the shares shows that any such
tenancy is held in unequal interests, a majority or even split for the purpose
of this section shall be a majority or even split in interest.
(g) No stockholder shall be entitled to cumulate votes at any
election of directors. Elections need not be by ballot; provided, however, that
all elections for directors must be by ballot upon demand made by the Chairman
of the Board or by a majority of the outstanding shares entitled to vote
therefor at the meeting and before the voting begins.
Section 8. RECORD DATE. The Board may fix, in advance, a record date
for the determination of the stockholders entitled to notice of any meeting or
to vote, or entitled to receive payment of any dividend or other distribution,
or any allotment of rights, or to exercise rights in respect of any other lawful
action. The record date so fixed shall be not more than 60 days prior to the
date of the meeting nor more than 60 days prior to any other action. When a
record date is so fixed, only stockholders of record on that date are entitled
to notice of and to vote at the meeting or to receive the dividend,
distribution, or allotment of rights, or to exercise of the rights, as the case
may be, notwithstanding any transfer of shares on the books of the corporation
after the record date. A determination of stockholders of record entitled to
notice of or
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to vote at a meeting of stockholders shall apply to any adjournment of the
meeting unless the Board fixed a new record date for the adjourned meeting. The
Board shall fix a new record date if the meeting is adjourned for more than 45
days.
If no record date is fixed by the Board, the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the business day next
preceding the day on which notice is given or, if notice is waived, at the
close of business on the business day next preceding the day on which the
meeting is held. The record date for determining stockholders for any
purpose other than as set forth in this Section 8 or Section 10 of this
Article shall be at the close of business on the day on which the Board the
adopts the resolution relating thereto, or the sixtieth day prior to the date
of such other action, whichever is later.
Section 9. CONSENT OF ABSENTEES. The transactions of any meeting of
stockholders, however called and noticed, and wherever held, are as valid as
though had at a meeting duly held after regular call and notice, if a quorum is
present either in person or by proxy, and if, either before or after the
meeting, each of the persons entitled to vote, not present in person or by
proxy, signs a written waiver of notice, or a consent to the holding of the
meeting or an approval of the minutes thereof. All such waivers, consents, or
approvals shall be filed with the corporate records or made a part of the
minutes of the meeting. Attendance of a person shall constitute a waiver of
notice of and presence at such meeting, except when the person objects, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened and except that attendance at a meeting is
not a waiver of any right to object to the consideration of matters required by
Title 48, Chapters 11-27 of the Tennessee Business Corporation Act to be
included in the notice but not so included, if such objection is expressly made
at the meeting. Neither the business to be transacted at nor the purpose of any
regular or special meeting of stockholders need be specified in any written
waiver of notice, consent to the holding of the meeting or approval of the
minutes thereof, except as provided in Title 48, Chapters 11-27 of the Tennessee
Business Corporation Act.
Section 10. ACTION WITHOUT MEETING. Any action which under any
provision of Title 48, Chapters 11-27 of the Tennessee Business Corporation Act
may be taken at any annual or special meeting of stockholders, may be taken
without a meeting and without prior notice if a consent in writing, setting
forth the action so taken, shall be signed by the holders of outstanding shares
having not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all shares entitled to vote
thereon were present and voted. Unless a record date for voting purposes be
fixed as provided in Section 8 of this Article, the record date for determining
stockholders entitled to give consent to pursuant to this Section 10, when no
prior action by the Board has been taken, shall be the day on which the first
written consent is given.
Section 11. PROXIES. Every person entitled to vote shares has the right
to do so either in person or by one or more persons authorized by a written
proxy executed by such stockholder and filed with the Secretary. Any proxy duly
executed is not revoked and continues in full force and effect until revoked by
the person executing it prior to the vote pursuant thereto by a writing
delivered to the Secretary of the corporation stating that the proxy is revoked
or by a subsequent proxy executed by the person executing the prior proxy and
presented to the meeting, or by attendance at the meeting and voting in person
by the person executing the proxy.
Section 12. INSPECTORS OF ELECTION. In advance of any meeting of
stockholders, the Board may appoint inspectors of election to act at such
meeting and any adjournment thereof. If inspectors of election be not so
appointed, or if any persons so appointed fail to appear or refuse to act, the
chairman of any such
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meeting may, and on the request of any stockholder or stockholder's proxy shall,
make such appointment at the meeting. The number of inspectors shall be either
one or three. If appointed at a meeting on the request of one or more
stockholders or proxies, the majority of shares present shall determine whether
one or three inspectors are to be appointed.
The duties of such inspectors shall be as prescribed by Title 48,
Chapters 11-27 of the Tennessee Business Corporation Act and shall include:
determining the number of shares outstanding and the voting power of each;
determining the shares represented at the meeting; determining the existence of
a quorum; determining the authenticity, validity, and effect of proxies;
receiving votes, ballots, or consents; hearing and determining all challenges
and questions in any way arising in connection with the right to vote; counting
and tabulating all votes or consents, determining when the polls shall close;
determining the result; and doing such acts as may be proper to conduct the
election or vote with fairness to all stockholders. If there are three
inspectors of election, the decision, act, or certificate of a majority is
effective in all respects as the decision, act, or certificate of all.
Section 13. CONDUCT OF MEETING. The Chairman of the Board shall preside
as Chairman at all meetings of the stockholders. The Chairman shall conduct
each such meeting in a businesslike and fair manner, but shall not be obligated
to follow any technical, formal or parliamentary rules or principles of
procedure. The Chairman's rulings on procedural matters shall be conclusive and
binding on all stockholders, unless at the time of a ruling a request for a vote
is made to the stockholders entitled to vote and represented in person or by
proxy at the meeting, in which case the decision of a majority of such shares
shall be conclusive and binding on all stockholders. Without limiting the
generality of the foregoing, the Chairman shall have all of the powers usually
vested in the chairman of a meeting of stockholders.
Section 14. PARTICIPATION IN MEETING BY CONFERENCE TELEPHONE.
Stockholders may participate in a meeting of the stockholders by means of
conference telephone or similar method of communication by which all persons
participating in the meeting can hear one another.
ARTICLE III
DIRECTORS
Section 1. POWERS. Subject to limitations of the Charter, these
Bylaws, and Title 48, Chapters 11-27 of the Tennessee Business Corporation Act
relating to action required to be approved by the stockholders or by the
outstanding shares, the business and affairs of the corporation shall be managed
and all corporate powers shall be exercised by or under the direction of the
Board. The Board may delegate the management of the day-to-day operation of the
business of the corporation to its officers, provided that the business and
affairs of the corporation shall be managed and all corporate powers shall be
exercised under the ultimate direction of the Board. Without prejudice to such
general powers, but subject to the same limitations, it is hereby expressly
declared that the Board shall have the following powers in addition to the other
powers enumerated in these Bylaws:
(a) To select and remove all the officers, agents, and employees of
the corporation, prescribe the powers and duties for them as may not be
inconsistent with law, the Charter or these Bylaws, fix their compensation, and
require from them security for faithful service.
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(b) To conduct, manage, and control the affairs and business of the
corporation and to make such rules and regulations therefor not inconsistent
with law, the Charter or these Bylaws.
(c) To adopt, make, and use a corporate seal, and to prescribe the
forms of certification of stock, and to alter the form of such seal and of such
certificates from time to time.
(d) To authorize the issuance of shares of stock of the corporation
from time to time, upon such terms and for such consideration as may be lawful.
(e) To borrow money and incur indebtedness for the purposes of the
corporation, and to cause to be executed and delivered therefor, in the
corporate name, promissory notes, bonds, debentures, deeds of trust, mortgages,
pledges, hypothecations, or other evidence of debt and securities therefor.
Section 2. VACANCIES. (a) Any director may resign effective upon
giving written notice to the Chairman of the Board, the President, or the
Secretary, unless the notice specifies a later time for the effectiveness of
such resignation. If the resignation is effective at a future time, a successor
may be elected to take office when the resignation becomes effective.
(b) Vacancies in the Board shall be filled by the stockholders, and
each director so elected shall hold office until the next annual meeting and
until such director's successor has been elected and qualified.
(c) A vacancy or vacancies in the Board shall be deemed to exist in
case of the death, resignation, or removal of any director, or if the authorized
number of directors is increased.
(d) The Board may declare vacant the office of a director who has
been declared of unsound mind by an order of court or convicted of a felony.
(e) No reduction of the authorized number of directors shall have the
effect of removing any director prior to the expiration of the director's term
of office.
Section 3. PLACE OF MEETING. Regular or special meetings of the Board
shall be held at any place within or without the State of Nevada which has been
designated from time to time by the Board. In the absence of such designation,
regular meetings shall be held at the principal executive office of the
corporation.
Section 4. REGULAR MEETINGS. Immediately following each annual meeting
of stockholders the Board shall hold a regular meeting for the purpose of
organization, election of officers, and the transaction of other business.
Section 5. SPECIAL MEETINGS. (a) Special meetings of the Board for any
purpose or purposes may be called at any time by the Chairman of the Board, the
President, any Vice President, the Secretary, or by any two directors.
(b) Special meetings of the Board shall be held upon two days'
written notice or 24 hours' notice given personally or by telephone, telegraph,
telex, or other similar means of communication. Any such written notice shall
be addressed or delivered to each director at such director's address as it is
shown upon the records of the corporation or as may have been given to the
corporation by the director for
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purposes of notice or, if such address is not shown on such records or is not
readily ascertainable, at the place in which the meetings of the directors are
regularly held.
(c) Notice by mail shall be deemed to have been given at the time a
written notice is deposited in the United States mails, postage prepaid. Any
other written notice shall be deemed to have been given at the time it is
personally delivered to the recipient or is delivered to a common carrier for
transmission, or actually transmitted by the person giving the notice by
electronic means, to the recipient. Oral notice shall be deemed to have been
given at the time it is communicated, in person or by telephone, to the
recipient.
Section 6. QUORUM. A majority of the authorized number of directors
constitutes a quorum of the Board for the transaction of business, except (a)
where the Charter or Bylaws require action by all directors, in which case a
quorum shall consist of all of the authorized number of directors, and (b) to
adjourn as hereinafter provided. Every act or decision done or made by a
majority of the directors present at a meeting duly held at which a quorum is
present shall be regarded as the act of the Board, except (x) where the Charter
or Bylaws require action by all directors, in which case such act or decision
shall be done or made by unanimous approval or consent of the authorized number
of directors and (y) where a greater number is required by law, the Charter or
elsewhere in these Bylaws.
Section 7. PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE. Members
of the Board may participate in a meeting through use of conference telephone or
similar communications equipment, so long as all members participating in such
meeting can hear one another.
Section 8. WAIVER OF NOTICE. Notice of a meeting need not be given to
any director who signs a waiver of notice or a consent to holding the meeting or
an approval of the minutes thereof, whether before or after the meeting, or who
attends the meeting without protesting, prior thereto or at its commencement,
the lack of notice to such director. All such waivers, consents and approvals
shall be filed with the corporate records or made a part of the minutes of the
meeting.
Section 9. ADJOURNMENT. A majority of the directors present, whether
or not a quorum is present, may adjourn any directors' meeting to another time
and place. Notice of the time and place of holding an adjourned meeting need
not be given to absent directors if the time and place be fixed at the meeting
adjourned, except as provided in the next sentence. If the meeting is adjourned
for more than 24 hours, notice of any adjournment to another time or place shall
be given prior to the time of the adjourned meeting to the directors who were
not present at the time of the adjournment.
Section 10. FEES AND COMPENSATION. Directors and members of committees
may receive such compensation, if any, for their services, and such
reimbursement for expenses, as may be fixed or determined by the Board.
Section 11. ACTION WITHOUT MEETING. Any action required or permitted to
be taken by the Board may be taken without a meeting if all members of the Board
shall individually or collectively consent in writing to such action. Such
consent or consents shall have the same effect as a unanimous vote of the Board
and shall be filed with the minutes of the proceedings of the Board.
Section 12. RIGHTS OF INSPECTION. Every director shall have the
absolute right at any reasonable time to inspect and copy all books, records,
and documents of every kind and to inspect the physical properties of the
corporation and also of its subsidiary corporations, domestic or foreign. Such
inspection
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by a director may be made in person or by agent or attorney and includes the
right to copy and obtain extracts of documents.
Section 13. COMMITTEES.
(a) By unanimous vote or consent of all of the authorized number of
directors, the Board may designate one or more committees, each consisting of
one or more directors, and delegate to such committees any of the authority of
the Board except with respect to:
(i) The approval of any action for which Title 48, Chapters
11-27 of the Tennessee Business Corporation Act also requires
stockholders' approval or approval of the outstanding shares;
(ii) The filling of vacancies on the Board or in any committee;
(iii) The fixing of compensation of the directors for serving
on the Board or on any committee;
(iv) The amendment or repeal of the Bylaws or the adoption of new
bylaws;
(v) The amendment or repeal of any resolution of the Board which
by its express terms is not so amendable or repealable;
(vi) A distribution to the stockholders of the corporation except
at a rate or in a periodic amount or within a price range determined
by the Board; or
(vii) The appointment of other committees of the Board of the
members thereof.
Any such committee must be designated, and the members or alternate
members thereof appointed, by resolution adopted by all of the authorized number
of directors, and any such committee may be designated by such name as the Board
shall specify. The Board, acting through all of the authorized number of
directors, shall have the power to prescribe the manner in which proceeding of
any such committee shall be conducted. Unless the Board, acting through all of
the authorized number of directors, shall otherwise provide, the regular and
special meetings and other actions of any such committee shall be governed by
the provisions of this Article applicable to meetings and actions of the Board.
Minutes shall be kept of each meeting of each committee.
(b) There shall be an Executive Committee consisting of three (3)
directors who may exercise the authority of the Board to the extent permitted by
law and these Bylaws, and all actions of such Executive Committee shall be made
only by unanimous approval or consent of the members of such Committee.
ARTICLE IV
ACTIONS REQUIRING UNANIMOUS
APPROVAL OR CONSENT OF
BOARD OF DIRECTORS
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The following actions of the corporation shall require the unanimous
approval or consent of all of the authorized number of directors:
(a) Amending, altering, modifying or repealing the corporation's Charter
or Bylaws.
(b) Increasing the annual compensation, bonus or benefits of the
corporation's officers, directors or key employees under written employment
contracts or amending such employment contracts.
(c) Changing the corporation's purpose or line of business activity.
(d) Adopting or changing the corporation's annual operating and capital
budget.
(e) Granting any license or disposing of any right or interest in any of
the corporation's intellectual property or amending or making any material
filings with the U.S. Patent and Trademark Office regarding any intellectual
property now or hereafter owned by the corporation.
(f) Merging, consolidating, reorganizing, recapitalizing, restructuring,
acquiring or selling (including a lease, mortgage or other disposition) any
assets of the corporation (other than non-intellectual property assets in the
ordinary course of business), dissolving, liquidating or engaging in any similar
transaction.
(g) Issuing or selling any of the corporation's securities, granting any
options, rights or warrants to acquire any of the corporation's securities or
instruments convertible into the corporation's securities, or making any filings
with federal or state securities regulators.
(h) Declaring or paying any dividend, distribution (by way of redemption
or otherwise), stock split, reverse stock split, repurchase of any of the
corporation's securities or similar transaction.
(i) Changing the corporation's banking, public accounting, or principal
outside legal counsel relationships, or the terms or insurer of its directors'
or officers' insurance, as currently in effect for the corporation and its
subsidiaries.
(j) Incurring any debt or effecting any borrowing, other than accruals,
accounts payable to vendors and leasing office equipment, in the normal course
of business.
(k) Entering into any transaction or commitment obligating the corporation
for more than $50,000 or to perform for a period longer than 12 months,
excluding confidentiality agreements.
(l) Otherwise engaging in any material transaction outside of the ordinary
course of business or day-to-day operations of the corporation.
ARTICLE V
OFFICERS
Section 1. OFFICERS. The officers of the corporation shall be a
President, a Secretary, and a Treasurer. The corporation may also have, at the
discretion of the Board, a Chairman of the Board, one
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or more Vice-Presidents, one or more Assistant Secretaries, one or more
Assistant Treasurers, and such other officers as may be elected or appointed in
accordance with the provisions of Section 3 of this Article.
Section 2. ELECTION. The officers of the corporation, appointed in
accordance with the provisions of Section 3 or Section 5 of this Article, shall
be chosen annually by, and shall serve at the pleasure of, the Board, and shall
hold their respective offices until their resignation, removal, or other
disqualification from service, or until their respective successors shall be
elected.
Section 3. SUBORDINATE OFFICERS. The Board may elect, and may appoint,
such other officers as the business of the corporation may require, each of whom
shall hold office for such period, have such authority, and perform such duties
as are provided in these Bylaws or as the Board may from time to time determine.
Section 4. REMOVAL AND RESIGNATION. Any officer may be removed, either
with or without cause, by the Board at any time or, except in the case of an
officer chosen by the Board, by any officer upon whom such power of removal may
be conferred by the Board. Any such removal shall be without prejudice to the
rights, if any, of the officer under any contract of employment of the officer.
Any officer may resign at any time by giving written notice to the
corporation, but without prejudice to the rights, if any, of the corporation
under any contract to which the officer is a party. Any such resignation shall
take effect at the date of the receipt of such notice or at any later time
specified therein and, unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it effective.
Section 5. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification, or any other cause shall be filled in
the manner prescribed in these Bylaws for regular election or appointment to
such office.
Section 6. CHAIRMAN OF THE BOARD. The Chairman of the Board, if there
shall be such an officer, shall, if present, preside at all meetings of the
Board and stockholders and exercise and perform such other powers and duties as
may be from time to time assigned by the Board.
Section 7. PRESIDENT. Subject to such powers, if any, as may be given
by the Board to the Chairman of the Board, if there be such an officer, the
President is the chief executive officer of the corporation and has, subject to
the control of the Board, general supervision, direction, and control of the
business and affairs of the corporation. In the absence of the Chairman of the
Board, the President shall preside at all meetings of the stockholders and at
all meetings of the Board. The President has the general powers and duties of
management usually vested in the office of president of a corporation and such
other powers and duties as may be prescribed by the Board.
Section 8. VICE PRESIDENTS. In the absence or disability of the
President, the Vice Presidents in order of their rank as fixed by the Board or,
if not ranked, the Vice President designated by the Board, shall perform all the
duties of the President, and when so acting shall have all the powers of, and be
subject to all the restrictions upon, the President. The Vice Presidents shall
have such other powers and perform such other duties as from time to time may be
prescribed for them respectively by the Board.
Section 9. SECRETARY. The Secretary shall keep or cause to be kept, at
the principal executive office and such other place as the Board may order, a
book of minutes of all meetings of stockholders, the Board, and its committees,
with the time and place of holding, whether regular or special and, if special,
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how authorized, the notice thereof given, the names of those present at Board
and committee meetings, the number of shares present or represented at
stockholders' meetings, and the proceedings thereof. The Secretary shall keep,
or cause to be kept, a copy of the Bylaws of the corporation at the principal
executive office or business in accordance with Title 48, Chapters 11-27 of the
Tennessee Business Corporation Act.
The Secretary shall keep, or cause to be kept, at the principal
executive office or at the office of the corporation's transfer agent or
registrar, if one be appointed, a share register, or a duplicate share register,
showing the names of the stockholders and their addresses, the number and
classes of shares held by each, the number and date of cancellation of every
certificate surrendered for cancellation.
The Secretary shall give, or cause to be given, notice of all the
meetings of the stockholders and of the Board and of any committees thereof
required by these Bylaws or by law to be given, shall keep the seal of the
corporation in safe custody, and shall have such other powers and perform such
other duties as may be prescribed by the Board.
Section 10. TREASURER. Unless the Board has elected or appointed
another person to be the corporation's chief financial officer, the Treasurer
shall be the chief financial officer of the corporation and shall keep and
maintain, or cause to be kept and maintained, adequate and correct accounts of
the properties and business transactions of the corporation, and shall send or
cause to be sent to the stockholders of the corporation such financial
statements and reports as are by law or these Bylaws required to be sent to
them. The books of account shall at all times be open to inspection by any
director.
The Treasurer shall deposit all moneys and other valuables in the name
and to the credit of the corporation with such depositaries as may be designated
by the Board. The Treasurer shall disburse the funds of the corporation as may
be ordered by the Board, shall render to the President and directors, whenever
they request it, an account of all transactions as Treasurer and of the
financial condition of the corporation, and shall have such other powers and
perform such other duties as may be prescribed by the Board.
ARTICLE VI
INDEMNIFICATION
Section 1. INDEMNIFICATION IN ACTIONS BY THIRD PARTIES. The
corporation shall 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, except an
action by or in the right of the corporation, by reason of the fact that he or
she is or was a director or officer, of the corporation, or is or was serving at
the request of the corporation as a director, officer, partner, 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 him or her in
connection with the action, suit or proceeding if he or she acted in good faith
and in a manner which he or she 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 his or her conduct was
unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of NOLO CONTENDERE or its
equivalent, does not, of itself, create a presumption that the person did not
act in good faith and in a manner which he or she reasonably believed to be in
or not opposed to the best interests of the corporation, and that, with respect
to any criminal action or proceeding, he or she had reasonable cause to believe
that his or her conduct was unlawful.
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Section 2. INDEMNIFICATION IN ACTIONS BY OR IN THE RIGHT OF THE
CORPORATION. The corporation shall indemnity any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment in
its favor by reason of the fact that he or she is or was a director or officer
of the corporation, or is or was serving at the request of the corporation as a
director, officer, partner, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses,
including amounts paid in settlement and attorneys' fees actually and reasonably
incurred by him or her in connection with the defense or settlement of the
action or suit if he or she acted in good faith and in manner which he or she
reasonably believed to be in or not opposed to the best interests of the
corporation. Indemnification may not be made for any claim, issue or matter as
to which such a person has been adjudged by a court of competent jurisdiction,
after exhaustion of all appeals therefrom, to be liable to the corporation or
for amounts paid in settlement to the corporation, unless and only to the extent
that the court in which the action or suit was brought or other court of
competent jurisdiction determines upon application that, in view of all the
circumstances of the case, the person is fairly and reasonably entitled to
indemnity for such expenses as the court deems proper.
Section 3. INDEMNIFICATION AGAINST EXPENSES. To the extent that a
director, officer, employee or agent of the corporation has been successful on
the merits or otherwise in defense of any action, suit or proceeding referred to
in Sections 1 or 2 of this Article, or in defense of any claim, issue or matter
therein, he or she must be indemnified by the corporation against expenses,
including attorneys' fees, actually and reasonably incurred by him or her in
connection with the defense.
Section 4. REQUIRED DETERMINATIONS. Any indemnification under
Sections 1 and 2 of this Article, unless ordered by a court or advanced
pursuant to Section 5 of this Article, must be made by the corporation only
as authorized in the specific case upon a determination that indemnification
of the director or officer is proper in the circumstances. The determination
must be made:
(a) By the stockholders;
(b) By the Board of Directors by majority vote of a quorum consisting
of directors who were not parties to the act, suit or proceeding;
(c) If a majority vote of a quorum consisting of directors who were
not parties to the act, suit or proceeding so orders, by independent legal
counsel in a written opinion; or
(d) If a quorum consisting of directors who were not parties to the
act, suit or proceeding cannot be obtained, by independent legal counsel in a
written opinion.
Section 5. ADVANCE OF EXPENSES. Expenses of officers and directors
incurred in defending a civil or criminal action, suit or proceeding must be
paid by the corporation as they are incurred and in advance of the final
disposition of the action, suit or proceeding, upon receipt of an undertaking by
or on behalf of the director or officer to repay the amount if it is ultimately
determined by a court of competent jurisdiction that he or she is not entitled
to be indemnified by the corporation. The provisions of this Section 5 do not
affect any rights to advancement of expenses to which corporate personnel other
than directors or officers may be entitled under any contract or otherwise by
law.
Section 6. NONEXCLUSIVITY; CONTINUATION. The indemnification and
advancement of expenses authorized in or ordered by a court pursuant to this
Article VI:
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(a) Does not exclude any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under the Charter
or any agreement, vote of stockholders or disinterested directors or
otherwise, for either an action in his or her official capacity or an action
in another capacity while holding his or her office, except that
indemnification, unless ordered by a court pursuant to Section 2 of this
Article or for the advancement of expenses made pursuant to Section 5 of the
Article, may not be made to or on behalf of any director or officer if a final
adjudication establishes that his or her acts or omissions involved
intentional misconduct, fraud or a knowing violation of the law and was
material to the cause of action.
(b) Continues for a person who has ceased to be a director or officer
and inures to the benefit of the heirs, executors and administrators of such a
person.
Section 7. INSURANCE.
(a) The corporation may purchase and maintain insurance or make other
financial arrangements 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, partner, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise for
any liability asserted against him or her and liability and expenses incurred by
him or her in his or her capacity as a director, officer, employee or agent, or
arising out of his or her status as such, whether or not the corporation has the
authority to indemnify him against such liability and expenses.
(b) The other financial arrangements made by the corporation pursuant
to subsection (a) of this Section 7 may include the following:
(i) The creation of a trust fund.
(ii) The establishment of a program of self-insurance.
(iii) The securing of its obligation of indemnification by
granting a security interest or other lien on any assets of the
corporation.
(iv) The establishment of a letter of credit, guaranty or surety.
No financial arrangement made pursuant to this subsection (b) of this
Section 7 may provide protection for any person adjudged by a court of competent
jurisdiction, after exhaustion of all appeals therefrom, to be liable for
intentional misconduct, fraud or a knowing violation of law, except with respect
to the advancement of expenses or indemnification ordered by a court.
(c) Any insurance or other financial arrangement made on behalf of a
person pursuant to this Section 7 may be provided by the corporation or any
other person approved by the Board of Directors, even if all or part of the
other person's stock or other securities is owned by the corporation.
ARTICLE VII
MISCELLANEOUS
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Section 1. INSPECTION OF BYLAWS. The corporation shall keep in its
principal executive office the original or a copy of these Bylaws as amended to
date, which shall be open to inspection by stockholders at all reasonable times
during customary office hours. If the principal executive office of the
corporation is outside the State of Nevada and the corporation has no principal
business office in such state, it shall upon the written request of any
stockholder furnish to such stockholder a copy of these Bylaws as amended to
date.
Section 2. ENDORSEMENT OF DOCUMENTS; CONTRACTS. Subject to the
provisions of applicable law, any note, mortgage, evidence of indebtedness,
contract, share certificate, conveyance, or other instrument in writing and any
assignment or endorsements thereof executed or entered into between the
corporation and any other person, when signed by the Chairman of the Board, the
President or any Vice President, and the Secretary, any Assistant Secretary, the
Treasurer or any Assistant Treasurer of the corporation shall be valid and
binding on the corporation in the absence of actual knowledge on the part of the
other person that the signing officers had no authority to execute the same.
Any such instruments may be signed by any other person or persons and in such
manner as from time to time shall be determined by the Board and, unless so
authorized by the Board, no officer, agent, or employee shall have any power or
authority to bind the corporation by any contract or engagement or to pledge its
credit or to render it liable for any purpose or amount.
Section 3. CERTIFICATES OF STOCK. Every holder of shares of the
corporation shall be entitled to have a certificate signed in the name of the
corporation by the Chairman of the Board, the President or a Vice President and
by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary, certifying the number of shares and the class or series of shares
owned by the stockholder. Any or all of the signatures on the certificate may
be facsimile. If any officer, transfer agent, or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent, or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if such
person were an officer, transfer agent, or registrar at the date of issue.
Except as provided in this Section, no new certificate for shares
shall be issued in lieu of an old one unless the latter is surrendered and
cancelled at the same time. The Board may, however, if any certificate for
shares is alleged to have been lost, stolen, or destroyed, authorize the
issuance of a new certificate in lieu thereof, and the corporation may require
that the corporation be given a bond or other adequate security sufficient to
indemnify it against any claim that may be made against it (including expense or
liability) on account of the alleged loss, theft, or destruction of such
certificate or the issuance of such new certificate.
Section 4. REPRESENTATION OF SHARES OF OTHER CORPORATIONS. The
President or any other officer or officers authorized by the Board or the
President are each authorized to vote, represent, and exercise on behalf of the
corporation all rights incident to any and all shares of any other corporation
or corporations standing in the name of the corporation. The authority herein
granted may be exercised either by any such officer in person or by any other
person authorized so to do by proxy or power of attorney duly executed by said
officer.
Section 5. STOCK PURCHASE PLANS. The corporation may adopt and carry
out a stock purchase plan or agreement or stock option plan or agreement
providing for the issue and sale for such consideration as may be fixed of its
unissued shares, or of issued shares acquired or to be acquired, to one or more
of the employees or directors of the corporation or of a subsidiary or to a
trustee on their behalf and for the payment for such shares in installments or
at one time, and may provide for aiding any such persons in paying for such
shares by compensation for services rendered, promissory notes, or otherwise.
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Any such stock purchase plan or agreement or stock option plan or
agreement may include, among other features, the fixing of eligibility for
participation therein, the class and price of shares to be issued or sold under
the plan or agreement, the number of shares which may be subscribed for, the
method of payment therefor, reservation of title until full payment therefor,
the effect of the termination of employment, an option or obligation on the part
of the corporation to repurchase the shares upon termination of employment,
restrictions upon transfer of the shares, the time limits of and termination of
the plan, and any other matters, not in violation of applicable law, as may be
included in the plan as approved or authorized by the Board or any committee of
the Board.
Section 6. CONSTRUCTION AND DEFINITIONS. Unless the context otherwise
requires, the general provisions, rules of construction, and definitions
contained in the general provisions of Title 48, Chapters 11-27 of the Tennessee
Business Corporation Act shall govern the construction of these Bylaws.
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EXHIBIT 9.1
VOTING AGREEMENT
This Voting Agreement ("Agreement") is entered into as of the 16th
day of May, 1997 by and among Eric A. Wachter, Ph.D. ("Wachter"), Craig Dees,
Ph.D. ("Dees"), Walter G. Fisher, Ph.D. ("Fisher"), Tim Scott, Ph.D.
("Scott"), John Smolik ("Smolik"), Theodore Tannebaum ("Tannebaum"), Robert J.
Weinstein, M.D. ("Weinstein"), Stuart P. Levine ("Levine"), and Thomas B.
Rosenberg ("Rosenberg") (individually a "Stockholder" and collectively the
"Stockholders"), and joined into by Photogen Technologies, Inc. for purposes
of Sections 1(c) and 1(d) herein. Wachter, Dees, Fisher, Scott and Smolik
are sometimes collectively referred to herein as the "Tennessee
Stockholders;" Tannebaum, Weinstein, Levine and Rosenberg are sometimes
collectively referred to herein as the "Chicago Stockholders;" and the
Chicago Stockholders or Tennessee Stockholders are each sometimes referred to
herein as a "Stockholder."
RECITALS
The Stockholders collectively own as of the date of this Agreement
approximately 96% of the issued and outstanding shares of common stock, $.001
par value per share (the "Common Stock"), of Photogen Technologies, Inc., a
Nevada corporation formerly known as M T Financial Group, Inc. (the
"Company"). The Company owns all of the issued and outstanding shares of
Photogen, Inc., a Tennessee corporation ("Subsidiary").
The shares of Common Stock together with all other capital stock or
securities of the Company, whether authorized or outstanding as of the date
hereof or at any time hereafter, are collectively referred to as the "Shares."
AGREEMENT
Now, therefore, in consideration of the mutual promises herein and
other consideration, the receipt and adequacy of which is acknowledged, the
parties hereby agree as follows:
1. VOTING AGREEMENT.
(a) The agreement in Section 1(b) shall be deemed to constitute a
voting agreement among the Stockholders pursuant to Section 78.365(3) of the
Nevada General Corporation Law. The agreement in Section 1(c) shall be
deemed to constitute an agreement among the parties hereto pursuant to
Section 48-17-302 of the Tennessee Business Corporation Act. As used in this
Agreement, the determination of a "Beneficial Owner" or "Beneficial
Ownership" shall be governed by Regulation 13d-3 under the Securities
Exchange Act of 1934, as amended. All percentages of stock ownership in this
Agreement shall be calculated on a fully-diluted basis.
(b) At each annual meeting of the stockholders of the Company, or
at each special meeting of the stockholders of the Company, and at any other
time at which stockholders of the Company will have the right to or will vote
for or render consent in writing, then and in each event, each Stockholder
hereby agrees to vote or cause to be voted all Shares of which he is the
Beneficial Owner in favor of the following actions to the extent any such
actions are subject to such vote or consent:
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<PAGE>
(i) To amend, alter, modify or repeal the Articles of
Incorporation or the By-Laws of the Company only in accordance with the
unanimous recommendation of all of the Directors of the Company (whether or
not any Board Action is required by law);
(ii) To fix and maintain the number of directors of the
Company at five (5);
(iii) To cause and maintain the election to the Board of
Directors of the Company of the following: (A) four (4) persons nominated
by the holders of 80% of the aggregate Shares Beneficially Owned by the
Tennessee Stockholders; and (B) one (1) person nominated by the holders of
80% of the aggregate Shares Beneficially Owned by the Chicago Stockholders;
(iv) To remove from the Board of Directors of the Company any
director nominated by the Tennessee or Chicago Stockholders, as applicable
pursuant to paragraph 1(b)(iii) at the request of the Stockholders
nominating such director; and
(v) To fix and maintain the Executive Committee of the Board
of Directors of the Company to consist of three (3) directors, two (2) of
whom shall be selected by the directors nominated by the Tennessee
Stockholders and one (1) of whom shall be selected by the director
nominated by the Chicago Stockholders.
(c) Company is agreeing for the benefit of the other parties hereto
to act in its capacity as stockholder of Subsidiary to the actions set forth
in this paragraph (c). At each annual meeting of the stockholder of the
Subsidiary, or at each special meeting of the stockholder of the Subsidiary,
and at any other time at which stockholder of the Subsidiary will have the
right to or will vote for or render consent in writing, then and in each
event, the Company (as the sole stockholder of the Subsidiary) hereby agrees
to vote or cause to be voted all voting securities of the Subsidiary of which
it is the Beneficial Owner in favor of the following actions to the extent
any such actions are subject to such vote or consent:
(i) To amend, alter, modify or repeal the Articles of
Incorporation or the By-Laws of the Subsidiary only in accordance with the
unanimous recommendation of all of the Directors of the Subsidiary,
(whether or not any Board Action is required by law);
(ii) To fix and maintain the number of directors of the
Subsidiary at five (5);
(iii) To cause and maintain the election to the Board of
Directors of the Subsidiary of the following: (A) four (4) persons
nominated by the directors of the Company who were selected by the
Tennessee Stockholders; and (B) one (1) person nominated by the director of
the Company who was selected by the Chicago Stockholders;
(iv) To remove from the Board of Directors of the Subsidiary
any director nominated by the Tennessee or Chicago Stockholders, as
applicable, pursuant to paragraph 1(c)(iii) at the request of the Company
directors or director, as applicable, nominating such Subsidiary director;
and
(v) To fix and maintain the Executive Committee of the Board
of Directors of the Subsidiary to consist of three (3) directors, two (2)
of whom shall be selected by the
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directors nominated by the Tennessee Stockholders and one (1) of whom shall
be selected by the director nominated by the director of the Company who
was selected by the Chicago Stockholders.
(d) The Company or Subsidiary, as applicable, shall provide the
Stockholders entitled to nominate directors hereunder prior notice of any
intended mailing of notice to Stockholders for a meeting at which any of the
actions subject to paragraphs 1(b) or 1(c) are to be acted upon. Thereafter,
Stockholders (or Company directors with respect to nominations of Subsidiary
directors) entitled to nominate directors hereunder shall notify the Company
or the Subsidiary (as applicable) in writing, prior to such mailing, of the
person nominated by him or it to be a director; provided, that if such
Stockholder (or Company directors) fails to give notice to the Company or
Subsidiary (as applicable), it shall be deemed that the nominee of such party
for such meeting is the person then serving as director pursuant to such
Stockholders' (or Company directors') previous nomination.
2. NECESSARY ACTS; ADDITIONAL PARTIES. Each of the parties hereto
agrees that he or it will do (or cause to be done) any act or thing and will
execute (or cause to be executed) any and all instruments necessary and/or
proper to make effective the provisions of this Agreement. Each Stockholder
represents and warrants to, and agrees with, each other party hereto that (a)
any transferee holding Shares over which such Stockholder remains the
Beneficial Owner shall execute and deliver a counterpart of this Agreement
and shall be bound by the provisions hereof as if such transferee was an
original party hereto; and (b) such Stockholder shall provide each other
party hereto true and complete information concerning the Beneficial
Ownership of Shares in the hands of transferees.
3. LEGEND ON STOCK CERTIFICATE. Each certificate representing
Shares covered by this Agreement is subject to and shall bear the restrictive
legend set forth below:
The voting of shares of stock evidenced by this certificate is subject to a
Voting Agreement dated as of the 16th day of May, 1997. Copies of the
Agreement may be obtained from the Secretary of the Company at no cost by
written request of the holder of record of this certificate.
4. GENERAL PROVISIONS.
(a) This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their legal representatives, heirs and legatees.
(b) The section headings in this Agreement are inserted for
convenience of reference only, and shall not affect the construction or
interpretation of this Agreement.
(c) The failure at any time to enforce any of the provisions of
this Agreement shall not be construed as a waiver of such provisions and
shall not affect the right of any party thereafter to enforce each and every
provision of this Agreement in accordance with its terms.
(d) This Agreement shall be governed by and construed in accordance
with the laws of the State of Illinois without giving effect to conflict of
laws principles thereof, except to the extent the Nevada General Corporation
Law and the Tennessee Business Corporation Law govern portions hereof.
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(e) This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original and shall be enforceable
against the party executing the same, and all of which together shall
constitute a single Agreement. In making proof of this Agreement, it shall
not be necessary to produce or account for more than one such counterpart.
(f) Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be held to be invalid by a court
of competent jurisdiction, the remaining provisions shall remain in full
force and effect and the provision held invalid shall be modified to the
extent necessary to be valid and shall be enforced as modified.
(g) Any notice to be served under this Agreement shall be in
writing and shall be deemed to be delivered or given upon receipt if
delivered personally, by overnight courier or by telecopier, or two days
after mailing by registered mail, return receipt requested, addressed as
follows:
IF TO THE COMPANY:
Photogen Technologies, Inc.
To its then current address
Attention: John Smolik
IF TO ANY STOCKHOLDER:
To such Stockholder's address on file in the
stock records of the Company
or to such other place as a party may specify in writing, delivered in
accordance with the provisions of this subsection.
(h) This Agreement constitutes the full and entire understanding
and agreement of the parties with regard to the subject hereof, and
supersedes any prior agreement or understanding, written or oral, with
respect to such subject matter. No party shall be liable or bound by any
representations, warranties or agreements, or any other information or
materials previously delivered, whether written or oral, regarding such
subject matter.
5. AMENDMENT; TERMINATION. This Agreement may be modified or
amended in any respect upon the written approval of the holders of 90% of the
Shares, and as so modified or amended, this shall continue to bind all
Stockholders regardless of whether they consented to such modification or
amendment. This Agreement shall terminate upon the earliest to occur of the
following: (i) the written approval of the termination executed by holders
of 90% or more of the Shares; (ii) the Stockholders collectively cease to own
an aggregate of 20% of the issued and outstanding voting securities of the
Company; (iii) the merger of the Company with another company in which the
Company is not the survivor or the sale of all or substantially all of the
Company's assets; or (vii) the 15th anniversary of the date of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first written above.
/s/ E. A. Wachter
_________________________________________
Eric A. Wachter, Ph.D.
/s/ Craig Dees
_________________________________________
Craig Dees, Ph.D.
/s/ Walter A. Fisher
_________________________________________
Walter G. Fisher, Ph.D.
/s/ Tim C. Scott
_________________________________________
Tim Scott, Ph.D.
/s/ John Smolik
_________________________________________
John Smolik
/s/ Theodore Tannebaum
_________________________________________
Theodore Tannebaum
/s/ Robert Weinstein
_________________________________________
Robert J. Weinstein, M.D.
/s/ Stuart Levine
_________________________________________
Stuart P. Levine
/s/ Thomas B. Rosenberg
_________________________________________
Thomas B. Rosenberg
Joined into by for purposes of Sections 1(c) and 1(d) herein.
Photogen Technologies, Inc.
By:/s/ John Smolik
______________________________________
Its: President
_____________________________________
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EXHIBIT 10.1
CONSENT AND ASSIGNMENT OF LEASE
This Consent and Assignment of Lease is made and entered into this 13th day
of November, 1997, by and between Genase, L.L.C. ("Assignor"), Photogen, Inc.
("Assignee"), and P. C. Powell, Jr. and Wilma Powell (collectively, "Landlord").
WHEREAS, Landlord and Assignor, as Tenant, entered into that certain lease
agreement (the "Lease") dated July 1, 1996, attached hereto as Exhibit A and
made a part hereof, demising approximately 3,000 rental square feet or area in
the improvements commonly known as 7327 Oak Ridge Highway, Knoxville, Knox
County, Tennessee and leasing certain equipment; and
WHEREAS, Assignor and Assignee entered into that certain Lease and
Facilities Sharing Agreement dated as of September __, 1997 (the "Sublease")
regarding the property and equipment which was the subject of the Lease; and
WHEREAS, Assignor desires to assign, and Assignees desire to acquire, all
of Assignor's right, title and interest as Tenant under the Lease and to cancel
the Sublease.
NOW, THEREFORE, for and in consideration of the sum of Ten and No/100
Dollars ($10.00) and other good and valuable consideration, the receipt and
sufficiency of which are hereby mutually acknowledged, the parties hereto hereby
covenant and agree as follows:
1. Assignor hereby sells, assigns and transfers to Assignee, and Assignee
hereby acquires from Assignor, all of Assignor's right, title and interest as
Tenant in and to the Lease.
2. Assignee hereby agrees to assume and perform all of the covenants,
duties and obligations of Assignor under the Lease which accrue or become
performable from and after the date hereof to the same extent as if Assignee had
originally been named as "Tenant" under the Lease.
3. Assignor, Assignee and Landlord agree that from and after the date
hereof the Sublease shall be terminated and of no further force and effect.
4. Landlord consents to the assignment by Assignor, and the assumption by
Assignee, of the Tenant's obligations under the Lease and the other transactions
hereunder; notwithstanding any other provision of the Lease or Sublease to the
contrary.
5. Assignor shall indemnify, defend (using counsel reasonably acceptable
to Assignee) and hold Assignee (and Assignee's officers, directors,
subsidiaries, affiliates, shareholders, employees
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and agents) harmless from and against all Adverse Consequences (defined below)
Assignee (or any of its officers, directors, shareholders, subsidiaries,
affiliates, employees or agents) incurs that arise out of or relate to (a) any
breach or alleged breach of any of Assignor's covenants, agreements,
representations and warranties in the Lease, and (b) any negligent, intentional
or other act or omission relating to Assignor's use and occupancy of the
premises and the equipment which was the subject of the Lease. "Adverse
Consequences" means any and all actual, consequential and other damages of any
nature, obligations, liabilities, losses, expenses (including reasonable
attorneys' fees and expenses), claims, demands, clean-up costs, settlement
payments, allegations, investigations and fines.
6. This Consent and Assignment of Lease may not be changed, modified,
discharged or terminated orally or in any other manner other than by an
agreement in writing signed by the parties hereto or their respective successors
and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this Consent and
Assignment of Lease to be executed in one or more counterparts effective as of
the day and year first above written.
ASSIGNOR: ASSIGNEE:
Genase, L.L.C. Photogen, Inc.
By: /s/ Timothy C. Scott By: /s/ John Smolik
------------------------------ ------------------------------
Name: Timothy C. Scott Name: John Smolik
Title: Vice President Title: President
LANDLORD:
/s/ PC Powell Jr.
- ---------------------------------
P.C. Powell, Jr.
/s/ Wilma Powell
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Wilma Powell
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EXHIBIT "A"
LEASE AGREEMENT
This Lease Agreement entered into at Knoxville, Tennessee, effective as of July
1, 1996, by and between P.C. Powell, Jr. and Wilma Powell, husband and wife
(hereinafter "Landlord"), and Genase, L.L.C. a Tennessee corporation
(hereinafter "Tenant").
IN CONSIDERATION of the mutual covenants and agreements hereinafter contained,
the parties hereto agree as follows:
1. PREMISES. In consideration of the rent, covenants and conditions that
Tenant herein agrees to pay, keep and perform, Landlord hereby leases to
Tenant land, building and improvements located at 7327 Oak Ridge Highway,
Knoxville, Knox County, Tennessee, all as described and outlined in Exhibit
"A" and referred as Unit A attached hereto and incorporated herein by
reference, all hereinafter referred to collectively as the "Premises."
2. TERM. The Lease Agreement shall be for a term of three (3) years,
commencing as of the date entered above and ending three years later on
June 30, 1999.
3. RENT. Tenant agrees to pay Landlord the sum of $1375.00 per month, during
the first year of the three year term, for 3000 sq. ft. as and for rental
of the Premises and for the option to purchase, as provided herein, said
payments beginning as of the date entered above. Tenant further agrees to
pay Landlord the sum of $1500.00 per month during the second and third
years of the lease term for 3000 sq. ft. as and for rental of the Premises.
4. OPTION TO RENEW. Tenant shall have two (2) options to extend the term of
the lease agreement for additional terms of three years each at a rental to
be negotiated, and upon the same terms and conditions as set forth herein.
Notice shall be given Landlord, within 30 days of expiration of Lease term,
of Tenant's intent to exercise this option.
5. AUTOCLAVE. Tenant desires to lease the "Autoclave" and related equipment
during the term of the lease and any extensions thereof according to the
terms described below:
A. The additional equipment to be leased includes the autoclave, steam
generator, and any required auxiliary equipment (such as the gas water
preheater) located on the Premises.
B. Landlord agrees to relocate the subject equipment to a location
convenient for use by Genase. The relocation and reinstallation shall
be accomplished in a manner that facilitates easy removal of the
equipment, in case Genase should purchase their own, or in case the
equipment requires repair. The units shall be installed with
sufficient room around them to facilitate easy access for routine
maintenance.
<PAGE>
C. Landlord agrees to have the units inspected and obtain all necessary
operating permits prior to Genase initiating use and the beginning of
the lease term.
D. Operational status will be demonstrated by having a signed inspection
and operating permit from the appropriate State Authorities, and by
successfully completing a test run using standard autoclave test
strips.
E. Tenant agrees to provide, at Tenants cost, all necessary on-going
maintenance during the term of the lease and any extensions thereof,
including periodic inspections as required by state authorities.
F. Tenant will indemnify Landlord against any claim as a result of injury
to any Tenant personnel as a result of operating the autoclave.
Landlord will provide insurance sufficient to cover the building
against damage caused as a result of operation of the autoclave.
Tenant will indemnify Landlord against loss of or damage to Tenants
equipment as a result of operating the autoclave.
G. Tenant shall have the option at its discretion to purchase its own
autoclave and install it on the Premises at Tenants expense.
H. Tenant agrees to pay Landlord $100.00 per month during the term of the
Lease and any extensions thereof for use of the autoclave and related
equipment. Should Tenant provide its own autoclave the lease payment
shall be reduced by $100.00 per month.
6. OPTION TO PURCHASE. Landlord hereby grants to Tenant the second right of
refusal and option to purchase the Premises described above at any time
during the term hereof or during any renewal period. The purchase price is
to be determined by appraisal by an appraiser mutually acceptable to both
parties (Landlord and Tenant). In the case of a binding third party offer,
the Tenant shall have a second right of refusal to purchase the premises
under the same terms as agreed to by the third party.
7. TAXES. Landlord shall be responsible for payment of all taxes, assessments
or other governmental charges applicable to the Premises.
8. UTILITIES. Tenant shall pay for use of all gas, electricity, sewer, water
and other utilities consumed or wasted upon the Premises. Tenant shall
provide its own janitor and cleaning service. Landlord shall make every
reasonable effort to connect the Premises waste lines to the municipal
sewer, and shall pay all costs associated with this connection. Tenant
will pay all ongoing usage fees.
9. MAINTENANCE AND REPAIRS. Landlord, at its expense, shall be responsible
for all maintenance and repairs to the building, including, but not limited
to the roof, floor, foundation, walls, general heating and air conditioning
systems, septic tank and lateral
2
<PAGE>
lines, and electrical and plumbing systems. Tenant shall be responsible,
at its own expense, for routine minor maintenance and upkeep, such as,
repairing faucet leaks, and replacing light bulbs. Tenant agrees to be
responsible for the routine maintenance of the back-up generator, which
shall include the battery, oil changes and periodic starting. In the event
the Landlord shall fail to proceed with and complete any repairs and
restorations which it may be required to make hereunder within a reasonable
time, Tenant, upon notice to Landlord, may contact designated repair
service personnel charging their services directly to the Landlord. Any
repairs made by the Tenant shall be such as are reasonably necessary to
protect the Premises and improvements for the account of and at the expense
of the Landlord.
10. IMPROVEMENTS AND ALTERATIONS. Tenant may, at its own expense, obtain,
maintain, and install in the Premises such trade fixtures as the Tenant
needs in order to operate its business, and may place such temporary
partitions, lighting fixtures, personal property, machines, motors and the
like in the premises, and may make such improvement and alterations to the
Premises, as it may desire, provided only, that such improvements and
alterations do not materially reduce the value of the Premises. All
improvements, alterations heretofore or hereafter made or installed or paid
for by Tenant, shall remain the property of the Tenant.
In case of damage or destruction thereto by fire or other causes, Tenant
shall have the right to recover such items from any insurance with which it
has insured the same, notwithstanding that any of such items might be
considered a part of real property. Tenant may remove all or any of such
items at any time during the term of this Agreement or any extension
thereof. Tenant may abandon the same, in whole or in part, to Landlord at
the end of the term or any extension thereof, or such other expiration of
the term, by vacating the Premises without removing the same. In the event
of removal of such items, Tenant shall repair any damage caused by such
removal.
Tenant shall be responsible for replacement and/or repairs to Premises for
any damage to Premises caused by abuse, neglect, or accident not recovered
by insurance that result directly from Tenant use of the Premises except as
provided for in Paragraph 5. It is understood by the Parties hereto that
the Landlord may enter the Premises during normal business hours to inspect
the building and to make routine repairs.
11. INSURANCE.
A. Landlord at its own expense and throughout the term of this lease
Agreement and any extensions thereof, shall maintain insurance with
respect to the Premises of the following types and in the following
amounts:
I. Fire insurance with full standard form extended coverage, in an
amount not less than eighty percent (80%) of the full replacement
value of the building.
3
<PAGE>
II. Public liability insurance protecting against claims for personal
injury, death and property damage occurring upon, in or about the
Premises with limits of liability of not less than One Million
Dollars ($1,000,000) per occurrence Tenant will likewise
maintain public liability insurance protecting against claims for
personal injury, death and property damage occurring upon, in or
about the Premises with limits of liability of not less than One
Million Dollars ($1,000,000) per occurrence.
B. Tenant, at its own expense and throughout the term of this Lease
Agreement and any extension thereof, shall maintain insurance on the
contents of the building.
C. All insurance required under the provisions of this Paragraph shall be
carried in favor of the Landlord or Tenant as their respective
interests may appear. All policies shall provide that same cannot be
canceled without giving at least ten (10) days prior written notice to
the other Party.
12. DAMAGE TO PREMISES. If the Premises are destroyed or damaged to such an
extent as to be rendered substantially unfit for occupancy, when considered
as a whole, and the destruction or damage is not reasonably repairable
within ninety (90) days after it occurs, the lease shall terminate as of
the date the destruction or damage occurred and rent shall be abated
accordingly. If the Premises are destroyed or damaged as aforesaid, but
the destruction or damage is reasonably repairable within ninety (90) days
after it occurs, or if the Premises are damaged but to such an extent as to
be rendered substantially unfit for occupancy when considered as a whole,
Landlord shall proceed diligently to repair the Premises and the rent shall
be abated or reduced, as may be equitable, while repairs are being made.
13. CONDEMNATION. If any part of the Premises is taken, appropriated or
condemned for public use, the lease shall terminate as to the part taken on
the date of the taking or sale. In such event, Tenant may elect to
terminate the lease as to the remainder of the Premises, by mailing to the
Landlord written notice of Tenants's receipt of written notice of the
taking and Tenants statement of its desire to terminate, if the part taken
or sold renders the remainder unsuitable and insufficient to serve the
business needs of the Tenant.
14. MECHANICS LIENS. No mechanic's lien for labor or materials shall attach to
or affect Tenant's interest in the Premises. Landlord shall pay or
discharge by bond or deposit any and all mechanic's liens or other liens
which are filed on any interest in the Premises for labor or materials
furnished to Landlord.
15. DEFAULT BY TENANT. If Tenant defaults in performance of any of the
provisions, covenants or conditions of the lease and such default continues
for thirty (30) after Tenant is notified in writing by Landlord to cure it
or, if such default is of such a nature that it
4
<PAGE>
cannot be cured within such thirty (30) day period and continues for longer
than the period reasonably required to cure it, or if Tenant abandons or
vacates the Premises at any time during the term of the Lease, or if Tenant
makes an assignment for the benefit of creditors, or if the interest of the
Tenant in the Premises is attached, levied upon or seized by a legal
process, or if Tenant is found to bankrupt or insolvent by a court of
competent jurisdiction, or if a receiver is appointed for Tenant by any
such court, or if the Lease is assigned or terminated by operation of law,
then immediately or any time thereafter, with reasonable notice given to
Tenant, Landlord may re-enter and take possession of the Premises by an
action in forcible entry and detainer or otherwise. Landlord may thereupon
elect, either (a) to declare the Lease terminated, in which event Landlord
may thereafter possess and enjoy the Premises as though the Lease had never
been made without prejudice to any and all rights of action which the
Landlord may have against Tenant at the time of such termination for rent,
damages or breach of covenant previously accruing or occurring, or (b) to
re-let the Premises on be-half of the Tenant.
16. ASSIGNMENTS AND SUBLEASES. Tenant shall not assign this lease or sublet
any part of the Premises without the written consent of the Landlord, which
shall not be unreasonably withheld.
17. QUIET ENJOYMENT. Landlord warrants that Landlord has the right to Lease
the Premises to Tenant. So long as Tenant pays the rent herein provided
and observes and performs the covenants and conditions of the Lease, Tenant
shall be entitled to peaceably and quietly possess, occupy and enjoy the
Premises during the term of the Lease without disturbance or eviction by
the Landlord or by any other person lawfully claiming under the Landlord.
18. SUCCESSORS AND INTEREST. The Lease Agreement shall be binding upon, inure
to the benefit of, and be enforceable by and against the heirs, executors,
administrators, successors and assigns of the Landlord and Tenant. No
assignment of the Lease or Sublease hereunder, whether by act of Tenant or
by operation of law, in violation of any provision of this lease shall vest
in any assignee or sublessee any right, title or interest whatsoever.
19. NOTICES. Any notice, statement or payment required or permitted by the
provisions of this Lease, is to be considered given, furnished or made when
mailed to he parties at the following addresses:
LANDLORD Mr. P.C. Powell
8303 Beaver Ridge Rd.
Knoxville, TN 37931
TENANT Genase, L.L.C.
Mr. John Smolik
119 Tanasi Court
5
<PAGE>
Loudon, TN 37774
20. EXPENSES. Any expense incurred as a result of performance of this Lease
except for those expenses set forth in Paragraphs 9 and 10 above will be
the responsibility of the person or entity, either Landlord or Tenant,
incurring the obligation.
21. HAZARDOUS SUBSTANCES. As used herein, "Hazardous Substance" means any
substance that is considered toxic and is the subject of any Local, State
or Federal regulation, and other substances that are considered flammable.
Tenant intends to use the Premises as a biological research and development
facility. Tenant may, from time to time, use small amounts of materials
that may be considered "Hazardous". "Small" amounts means volumes of less
than a few liters per month as a worst case.
Tenant will take all reasonable precautions for the storage and use of any
"Hazardous" materials as prescribed by law and good laboratory practice.
Tenant will indemnify Landlord against personal injury to any Tenant
employee and damage to the Premises caused as a result of the use of
"Hazardous" materials.
Landlord, prior to occupancy, will connect all waste and floor drain lines
to the existing septic system.
Landlord will connect these waste lines to the municipal sewer system as
soon as is possible.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease Agreement the
day and year first above written.
LANDLORD: TENANT:
GENASE, L.L.C.
/s/ P.C. POWELL
- ---------------------------------
P.C. Powell
/s/ WILMA POWELL /s/ JOHN SMOLIK
- --------------------------------- ---------------------------------
Wilma Powell President
6
<PAGE>
EXHIBIT "A"
UNIT I
unto the said Second Parties the following described premises, to wit: Situated
in District No. Six (6) of Knox County, Tennessee, and without the corporate
limits of the City of Knoxville, Tennessee, and being more fully described as
follows:
PARCEL NO. 1: BEGINNING at an iron pin in the Southeast corner of Tract
conveyed by Carl W. Burgin, Jr., and wife, to Bolt 23 August 1958, said
beginning point being distant 80.8 feet South 41 deg. 40 min. East from an iron
pin in the Southeast line of the Oak Ridge Highway, which iron pin is 230 feet,
more or less, Southwesterly from the point of intersection of the center line of
Pennell Lane projected Southeasterly to the Southeast line of Oak Ridge Highway;
thence from said beginning point, South 15 deg. 10 min. East 192 feet to an iron
pin in the line of other Pennell property; thence South 80 deg. 38 min. West
251.7 feet to an iron pin; thence North 28 deg. 22 min. West 98 feet to an iron
pin in the South line of property now or formerly belonging to Jack Sutton;
thence with the line of said property and along a fence line, North 60 deg. 30
min. East 80 feet to an iron pin; thence continuing with Sutton line, North 28
deg. 22 min. West 20 feet to an iron pin, corner to tract conveyed by Burgin to
Bolt; thence with the line of said tract, North 64 deg. 30 min. East 202 feet to
the place of BEGINNING.
PARCEL NO. 2: BEGINNING on an iron pin in the South right of way line of Oak
Ridge Highway, corner to property now or formerly belonging to Jack Sutton;
thence South 26 deg 45 min. East 80 feet with the Sutton line to an iron pin in
line of property now or formerly belonging to R.H. Pennell; thence North 64 deg.
30 min East 202 feet with R.H. Pennell's line to an iron pin on the West side of
spring branch; thence North 42 deg. West 80 feet with R.H. Pennell's line to an
iron pin in the East Side of spring branch and in the Highway right of way;
thence South 64 deg. 30 min. West 183.5 feet with the Oak Ridge Highway to the
point of BEGINNING.
BEING the same property conveyed to R.B. Ingram and P.C. Powell, Jr. by Deed
from Richard A. Shepherd and wife, Alice K. Shepherd, dated November 24, 1964,
and of record in Deed Book 1272, page 12, in the Register's Office for Knox
County, Tennessee.
PARCEL NO. 3: BEGINNING on an iron pin in the South right-of-way line of Oak
Ridge Highway, said pin located about 1300 feet South _____ 30' West from the
intersection of the West line of the Wright Road extended to intersect the South
line of said Oak Ridge Highway, said pin being now corner to R.H. Pennell;
thence with Pennell South 28DEG. 30' East 100 feet to an iron pin corner to
Pennell; thence with Pennell North 63DEG. 30' East 108.9 feet to an iron pin
corner to Pennell; thence with Pennell North 28DEG. 30' West 100 feet to an
iron pin in the South right-of-way line of said Oak Ridge Highway corner to
Pennell; thence with said right-of-way line South 63DEG. 30' West 108.9 feet to
the beginning, containing 0.25 acre, more or less.
<PAGE>
The above described property is improved by two block buildings.
BEING the same property conveyed to Parnell C. Powell and wife, Wilma Powell, by
warranty deed of 1 July, 1978, recorded in Warranty Deed Book ______, page ____,
in the Register's Office for Knox County Tennessee.
FOR FURTHER REFERENCE see Warranty Deed Book 903, page 311, in the Register's
Office for Knox County, Tennessee.
<PAGE>
EXHIBIT 10.2
LEASE AGREEMENT
This Lease Agreement entered into at Knoxville, Tennessee, effective as of
June 1, 1997, by and between P.C. Powell, Jr. and Wilma Powell, husband and
wife (hereinafter "Landlord"), and Photogen, Inc. a Tennessee Corporation
(hereinafter "Tenant").
IN CONSIDERATION of the mutual covenants and agreements hereinafter
contained, the parties hereto agree as follows:
1. PREMISES. In consideration of the rent, covenants and conditions that
Tenant herein agrees to pay, keep and perform, Landlord hereby leases to
Tenant land, building and improvements located at 7327 Oak Ridge Highway,
Knoxville, Knox County, Tennessee, all as described and outlined in
Exhibit "A" and referred as Unit B attached hereto and incorporated
herein by reference, all hereinafter referred to collectively as the
"Premises."
2. TERM. The Lease Agreement shall be for a term of three (3) years,
commencing as of the date entered above and ending three years later on
May 31, 2000.
3. RENT. Tenant agrees to pay Landlord the sum of $550.00 per month, during
the first year of the three year term, for 1000 sq. ft. as and for rental
of the Premises and for the option to purchase, as provided herein, said
payments beginning as of the date entered above. Tenant further agrees
to pay Landlord the sum of $600.00 per month during the second and third
years of the lease term for 1000 sq. ft. as and for rental of the
Premises.
4. OPTION TO RENEW. Tenant shall have two (2) options to extend the term of
the lease agreement for additional terms of three years each at a rental
to be negotiated, and upon the same terms and conditions as set forth
herein. Notice shall be given Landlord, within 30 days of expiration of
Lease term, of Tenants intent to exercise this option.
5. OPTION TO PURCHASE. Landlord hereby grants to Tenant the second right of
refusal and option to purchase the Premises described above at any time
during the term hereof or during any renewal period. The purchase price
is to be determined by appraisal by an appraiser mutually acceptable to
both parties (Landlord and Tenant). In the case of a binding third party
offer, the Tenant shall have a second right of refusal to purchase the
premises under the same terms as agreed to by the third party.
6. TAXES. Landlord shall be responsible for payment of all taxes, assessments
or other governmental charges applicable to the Premises.
7. UTILITIES. Tenant shall pay for use of all gas, electricity, sewer,
water and other utilities consumed or wasted upon the Premises. Tenant
shall provide its own janitor and cleaning service. Landlord shall make
every reasonable effort to connect the Premises
<PAGE>
waste lines to the municipal sewer, and shall pay all costs associated
with this connection. Tenant will pay all ongoing usage fees.
8. MAINTENANCE AND REPAIRS. Landlord, at its expense, shall be responsible
for all maintenance and repairs to the building, including, but not
limited to the roof, floor, foundation, walls, general heating and air
conditioning systems, septic tank and lateral lines, and electrical and
plumbing systems. Tenant shall be responsible, at its own expense, for
routine minor maintenance and upkeep such as, repairing faucet leaks, and
replacing light bulbs. Tenant agrees to be responsible for the routine
maintenance of the back-up generator, which shall include the battery,
oil changes and periodic starting. In the event the Landlord shall fail
to proceed with and complete any repairs and restorations which it may be
required to make hereunder within a reasonable time, Tenant, upon notice
to Landlord, may contact designated repair service personnel charging
their services directly to the Landlord. Any repairs made by the Tenant
shall be such as are reasonably necessary to protect the Premises and
improvements for the account of and at the expense of the Landlord.
9. IMPROVEMENTS AND ALTERATIONS. Tenant may, at its own expense, obtain,
maintain, and install in the Premises such trade fixtures as the Tenant
needs in order to operate its business, and may place such temporary
partitions, lighting fixtures, personal property, machines, motors and
the like in the premises, and may make such improvement and alterations
to the Premises, as it may desire, provided only, that such improvements
and alterations do not materially reduce the value of the Premises. All
improvements, alterations heretofore or hereafter made or installed or
paid for by Tenant, shall remain the property of the Tenant.
In case of damage or destruction thereto by fire or other causes, Tenant
shall have the right to recover such items from any insurance with which
it has insured the same, notwithstanding that any of such items might be
considered a part of real property. Tenant may remove all or any of such
items at any time during the term of this Agreement or any extension
thereof. Tenant may abandon the same, in whole or in part, to Landlord
at the end of the term or any extension thereof, or such other expiration
of the term, by vacating the Premises without removing the same. In the
event of removal of such items, Tenant shall repair any damage caused by
such removal.
Tenant shall be responsible for replacement and/or repairs to Premises
for any damage to Premises caused by abuse, neglect, or accident not
recovered by insurance that result directly from Tenant use of the
Premises except as provided for in Paragraph 5. It is understood by the
Parties hereto that the Landlord may enter the Premises during normal
business hours to inspect the building and to make routine repairs.
<PAGE>
10. INSURANCE.
A. Landlord at its own expense and throughout the term of this Lease
Agreement and any extensions thereof, shall maintain insurance with
respect to the Premises of the following types and in the following
amounts:
I. Fire insurance with full standard form extended coverage, in an
amount not less than eighty percent (80%) of the full replacement
value of the building.
II. Public liability insurance protecting against claims for personal
injury, death and property damage occurring upon, in or about the
Premises with limits of liability of not less than One Million
Dollars ($1,000,000.00) per occurrence. Tenant will likewise
maintain public liability insurance protecting against claims for
personal injury, death and property damage occurring upon, in or
about the Premises with limits of liability not less than One
Million Dollars ($1,000,000.00).
B. Tenant, at its own expense and throughout the term of this Lease
Agreement and any extension thereof, shall maintain insurance on the
contents of the building.
C. All insurance required under the provisions of this Paragraph shall be
carried in favor of the Landlord or Tenant as their respective
interests appear. All policies shall provide that same cannot be
canceled without giving at least ten (10) days prior written notice to
the other Party.
11. DAMAGE TO PREMISES. If the Premises are destroyed or damaged to such an
extent as to be rendered substantially unfit for occupancy, when considered
as a whole, and the destruction or damage is not reasonably repairable
within ninety (90) days after it occurs, the Lease shall terminate as of
the date the destruction or damage occurred and rent shall be abated
accordingly. If the Premises are destroyed or damaged as aforesaid, but
the destruction or damage is reasonably repairable within ninety (90) days
after it occurs, or if the Premises are damaged but not to such an extent
as to be rendered substantially unfit for occupancy when considered as a
whole, Landlord shall proceed diligently to repair the Premises and the
rent shall be abated or reduced, as may be equitable, while repairs or
being made.
12. CONDEMNATION. If any part of the Premises is taken, appropriated or
condemned for public use, the Lease shall terminate as to the part taken on
the date of the taking or sale. In such event, Tenant may elect to
terminate the Lease as to the remainder of the Premises, by mailing to the
Landlord written notice of Tenant's receipt of written notice of the taking
and Tenants statement of its desire to terminate, if the part taken or sold
renders the remainder unsuitable and insufficient to serve the business
needs of the Tenant.
<PAGE>
13. MECHANICS LIENS. No mechanic's lien for labor or materials shall attach to
or affect Tenant's interest in the Premises. Landlord shall pay or
discharge by bond or deposit any and all mechanic's liens or other liens
which are filed on any interest in the Premises for labor or materials
furnished to Landlord.
14. DEFAULT BY TENANT. If Tenant defaults in performance of any of the
provisions, covenants or conditions of the Lease and such default continues
for thirty (30) days after Tenant is notified in writing by Landlord to
cure it or, if such default is of such a nature that it cannot be cured
within such thirty (30) day period and continues for longer than the period
reasonably required to cure it, or if Tenant abandons or vacates the
Premises at any time during the term of the Lease, or if Tenant makes an
assignment for the benefit of creditors, or if the interest of the Tenant
in the Premises is attached, levied upon or seized by a legal process, or
if Tenant is found to be bankrupt or insolvent by a court of competent
jurisdiction, or if a receiver is appointed for Tenant by any such court,
or if the Lease is assigned or terminated by operation of law, then
immediately or any time thereafter, with reasonable notice given to Tenant,
Landlord may reenter and take possession of the Premises by an action in
forcible entry and detainer or otherwise. Landlord may thereupon elect,
either (a) to declare the Lease terminated, in which event Landlord may
thereafter possess and enjoy the Premises as though the Lease had never
been made without prejudice to any and all rights of action which the
Landlord may have against Tenant at the time of such termination for rent,
damages or breach of covenant previously accruing or occurring, or (b) to
re-let the Premises on behalf of the Tenant.
15. ASSIGNMENTS AND SUBLEASES. Tenant shall not assign this Lease or sublet
any part of the Premises without the written consent of the Landlord, which
shall not be unreasonably withheld.
16. QUIET ENJOYMENT. Landlord warrants that Landlord has the right to Lease
the Premises to Tenant. So long as Tenant pays the rent herein provided
and observes and performs the covenants and conditions of the Lease, Tenant
shall be entitled to peaceably and quietly possess, occupy and enjoy the
Premises during the term of the Lease without disturbance or eviction by
the Landlord or by any other person lawfully claiming under the Landlord.
17. SUCCESSORS AND INTEREST. The Lease Agreement shall be binding upon, inure
to the benefit of, and be enforceable by and against the heirs, executors,
administrators, successors and assigns of the Landlord and Tenant. No
assignment of the Lease or sublease hereunder, whether by act of Tenant or
by operation of law, in violation of any provision of this lease shall vest
in any assignee or sublessee any right, title or interest whatsoever.
18. NOTICES. Any notice, statement or payment required or permitted by the
provisions of this Lease, is to be considered given, furnished or made when
mailed to the parties at the following addresses:
<PAGE>
LANDLORD: Mr. P.C. Powell
8303 Beaver Ridge Road
Knoxville, TN 37931
TENANT: Photogen, Inc.
Mr. John Smolik
119 Tanasi Court
Louden, TN 37774
19. EXPENSES. Any expense incurred as a result of performance of this Lease
except for those expenses set forth in Paragraphs 9 and 10 above will be
the responsibility of the person or entity, either Landlord or Tenant,
incurring the obligation.
20. HAZARDOUS SUBSTANCES. As used herein, "Hazardous Substance" means any
substance that is considered toxic and is the subject of any Local, State
or Federal regulation, and other substances that are considered flammable.
Tenant intends to use the Premises as a biological research and development
facility. Tenant may, from time to time, use small amounts of materials
that may be considered "Hazardous." "Small" amounts means volumes of less
than a few liters per month as a worst case.
Tenant will take all reasonable precautions for the storage and use of any
"Hazardous" materials as prescribed by law and good laboratory practice.
Tenant will indemnify Landlord against personal injury to any Tenant
employee and damage to the Premises caused as a result of the use of
"Hazardous" materials.
Landlord, prior to occupancy, will connect all waste and floor drain lines
to the existing septic system.
Landlord will connect these waste lines to the municipal sewer system as
soon as is possible.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease Agreement the
day and year first above written.
LANDLORD: TENANT:
Photogen, Inc.
______________________________
P.C. Powell
___________________________________
President
_______________________________
Wilma Powell
<PAGE>
EXHIBIT 10.4
CONFIRMATORY LICENSE
(LARGE BUSINESS EMPLOYEE/INVENTOR-IDENTIFIED WAIVER)
Title: METHOD FOR IMPROVED SELECTIVITY IN PHOTO-ACTIVATION AND DETECTION
OF MOLECULAR DIAGNOSTIC AGENTS
INVENTOR(S): ERIC A. WACHTER; WALTER G. FISHER; and H. CRAIG DEES
SERIAL NO.: 08/741,370 FILING DATE (U.S.): 30 October 1996
CONTRACTOR: Lockheed Martin Energy Systems, Inc.
DOE CASE NO.: S-82,272
DOE CONTRACT NO.: DE-AC05-840R21400
DOE IDENTIFIED WAIVER NO.: W(I)-95-018; ORO-597
FOREIGN APPLICATIONS FILED IN OR INTENDED TO BE FILED AT
LICENSOR'S EXPENSE IN (COUNTRIES): None
A waiver of Government rights in the above-identified invention having been
granted by the U.S. Department of Energy (DOE) to the Inventor(s) (hereinafter
referred to as the "Licensor"), said Licensor having the authorization of the
Contractor to request and receive the waiver, the effective date of said waiver
is August 2, 1996.
Accordingly, this document is confirmatory of the paid-up license required to be
granted to the Government under 41 CFR 9-9.109-6 in the above-identified
invention, patent application, and any resulting patent, as well as any
continuation, divisional, reissue, supplemental or continuation-in-part thereof
and of all other rights reserved to the Government under 41 CFR 9-9.109-6, said
license and other rights including the following:
(1) GOVERNMENT LICENSE AND INSPECTION RIGHTS
With respect to the Subject Invention in which title has been waived to the
Licensor, the Federal Government shall have a nonexclusive, nontransferable,
irrevocable, paid-up license to practice or have practiced for or on behalf of
the United States the Subject Invention throughout the world.
The Government is hereby granted the irrevocable power to inspect and make
copies of the above-identified patent application.
(2) CONVEYANCE TERMS AND CONDITIONS - DOMESTIC
(a) Subject to the minimum rights reserved to the Licensor in paragraph
(8) herein, the Licensor agrees to convey to the Government, upon request, the
entire domestic right, title, and interest in the above-identified invention
when the Licensor:
(i) decides not to continue prosecution of the patent application
filed on the above-identified invention;
<PAGE>
(ii) at any time, no longer desires to retain title in the
above-identified invention; or
(iii) fails to have a United States patent application filed on the
invention in accordance with terms and conditions of
paragraph (4) herein.
(b) Conveyance requested pursuant to the above subparagraphs (2)(a)(i-iii)
shall be made by delivering to the DOE Patent Counsel duly executed instruments
and such other papers as are deemed necessary to vest in the Government the
entire right, title, and interest in the invention to enable the Government to
apply for and prosecute patent applications covering the invention in the United
States or otherwise establish its ownership of the invention.
(3) CONVEYANCE TERMS AND CONDITIONS -- FOREIGN
(a) Subject to the minimum rights reserved to the Licensor in
paragraph (8) hereof, the Licensor agrees to convey to the Government, upon
request, the entire right, title, and interest in the above-identified invention
in any foreign country if the Licensor:
(i) does not elect pursuant to paragraph (5) herein to retain such
rights in the foreign country; or
(ii) fails to have a patent application filed in the foreign country
on said invention in accordance with paragraph (5) herein, or
decides not to continue prosecution or not to pay any
maintenance fees covering such invention. To avoid forfeiture
of the patent application or patent, the Licensor shall, not
less than sixty (60) days before the expiration period for any
action required by the foreign Patent Office, notify the DOE
Patent Counsel of such failure or decision, and deliver to the
DOE Patent Counsel the executed instruments necessary for the
conveyance specified in this paragraph.
(b) Conveyances requested pursuant to the above subparagraphs (3)(a)(i)
and (3)(a)(ii) shall be made by delivering to the DOE Patent Counsel duly
executed instruments and such other papers as are deemed necessary to vest in
the Government the entire right, title, and interest in the invention to enable
the Government to apply for and prosecute patent applications covering the
invention in the foreign country or otherwise establish its ownership of the
invention.
2
<PAGE>
(4) FILING OF PATENT APPLICATIONS -- DOMESTIC
(a) The Licensor shall have a domestic patent application for the
above-identified Subject Invention filed within six (6) months after the
effective date of this waiver. The Licensor shall promptly notify the Patent
Counsel of any decision not to file such an application.
(b) For the above-identified invention for which a patent application has
been filed by the Licensor, the Licensor shall:
(i) within two (2) months after the filing or within two (2) months
after submission of an invention disclosure pursuant to the
requirements of the above contract if the patent application
previously has been filed, deliver to the DOE Patent Counsel a
copy of the application as filed including the filing date and
serial number;
(ii) include the following statement in the second paragraph of the
specification of the application and any patents issued on the
identified invention, "The Government has rights in this
invention pursuant to Contract No. DE-ACO5-840R21400 awarded by
the U.S. Department of Energy;
(iii) provide the DOE Patent Counsel with a copy of any patent issued
on the application within two (2) months after such patent
issues; and
(iv) not less than thirty (30) days before the expiration of the
response period for any action required by the Patent and
Trademark Office, notify the DOE Patent Counsel of any decision
not to continue prosecution of the application and deliver to
the DOE Patent Counsel executed instruments granting the
Government a power of attorney.
(c) If the Licensor at any time prior to the filing of the application
elects not to retain the rights waived for the above-identified invention, the
Licensor shall inform the DOE Patent Counsel promptly in writing of the date and
identity of any sale or placing on sale, public use, or public disclosure of the
invention which may constitute a statutory bar under 35 U.S.C. 102, which was
authorized by or known to the Licensor or any contemplated action of this
nature.
(5) FILING OF PATENT APPLICATIONS -- FOREIGN
(a) With respect to the rights waived for the above-identified invention
in a foreign country, the Licensor shall have a patent application filed on the
invention in that country in accordance with applicable statutes and regulations
and within one of the following periods:
3
<PAGE>
(i) Eight (8) months from the date of a corresponding United States
application filed by the Licensor, or if such an application is
not filed, six (6) months from the date the invention is
submitted as a disclosure pursuant to the requirements of the
above contract.
(ii) Six (6) months from the date a license is granted by the
Commissioner of Patents and Trademarks to file foreign
applications where such filing has been prohibited by security
reasons; or
(iii) Such longer period as may be approved by the DOE Patent
Counsel.
(b) The Licensor shall notify the DOE Patent Counsel promptly of each
foreign application filed and upon written request shall furnish an English
version of the application without additional compensation.
(6) OTHER TERMS AND CONDITIONS OF WAIVED RIGHTS
(a) REPORTING ON UTILIZATION OF SUBJECT INVENTIONS
The Licensor agrees to submit, on request, periodic reports no more
frequently than annually on the utilization of the Subject Invention or on
efforts at obtaining such utilization that are being made by the Licensor or its
licensees or assignees. Such reports shall include information regarding the
status of development, data of first commercial sale or use, gross royalties
received by the Licensor, and such other data and information as DOE may
reasonably specify. The Licensor also agrees to provide additional reports as
may be requested by DOE in connection with a march-in proceeding undertaken by
DOE in accordance with paragraph (b) of this clause. To the extent data or
information supplied under this section is considered by the Licensor, its
licensee or assignee to be privileged and confidential and is so marked, DOE
agrees that, to the extent permitted by 35 USC 202(c)(5), it will not disclose
such information to persons outside the Government.
(b) MARCH-IN RIGHTS
The Licensor agrees that with respect to the Subject Invention in
which it has acquired title, DOE has the right in accordance with the procedures
in 37 CFR 401.6 and any supplemental regulations of DOE, to require the
Licensor, an assignee or exclusive licensee of the Subject Invention to grant a
nonexclusive, partially exclusive, or exclusive license in any field of use to a
responsible applicant or applicants, upon terms that are reasonable under the
circumstances, and if the Licensor, assignee, or exclusive licensee refuses such
a request, DOE has the right to grant such a license itself if DOE determines
that:
(i) such action is necessary because the Licensor, assignee, or
their exclusive licensee has not taken, or is not expected to
take within a reasonable time,
4
<PAGE>
effective steps to achieve practical application of the Subject
Invention in such field of use;
(ii) such action is necessary to alleviate health or safety needs
which are not reasonably satisfied by the Licensor, assignee,
or their exclusive licensee;
(iii) such action is necessary to meet requirements for public use
specified by federal regulations and such requirements are not
reasonably satisfied by the Licensor, assignee, or exclusive
licensee.
(iv) such action is necessary because the agreement required by
paragraph (c) of this clause has not been obtained or waived or
because a licensee of the exclusive right to use or sell the
Subject Invention in the United States is in breach of such
agreement.
(c) PREFERENCE FOR UNITED STATES INDUSTRY
Notwithstanding any other provision of this clause, the Licensor
agrees that neither it nor any assignee will grant to any person the exclusive
right to use or sell the Subject Invention in the United States unless such
person agrees that any products embodying the Subject Invention or produced
through the use of the Subject Invention will be manufactured substantially in
the United States. However, in individual cases, the requirement for such an
agreement may be waived by DOE upon a showing by the Licensor or its assignee
that reasonable but unsuccessful efforts have been made to grant licenses on
similar terms to potential licensees that would be likely to manufacture
substantially in the United States or that under the circumstances domestic
manufacture is not commercially feasible.
(7) TERMINATIONS
(a) The waiver granted to the Licensor in connection with the above
contract, or any retention of rights by the Licensor herein may, subject to the
minimum rights reserved in paragraph (8) hereof, be terminated at the discretion
of the Secretary or his/her designee in whole or in part, if the request for
waiver or retention of rights by the Licensor is found to contain false material
statements or nondisclosure of material facts, and such were specifically relied
upon in reaching the waiver determination or the agreement to the retention of
rights by the Licensor.
(b) Any waiver of the rights as applied to the above-identified Subject
Invention, may be terminated at the discretion of the Secretary or his/her
designee, in whole or in part, if the Licensor fails to comply with the
provisions set forth in paragraphs (4) or (6) herein and such failure is
determined by the Secretary or his/her designee to be material and detrimental
to the interests of the United States and the general public.
5
<PAGE>
(c) Prior to terminating any waiver of rights under paragraph (7)(a) or
(7)(b) of this clause, the Licensor will be given written notice of the
intention to terminate the waiver of rights, the extent of such proposed
termination and the reasons therefor, and a period of thirty (30) days, or such
longer period as the Secretary or his/her designee shall determine for good
cause shown in writing, to show cause why the waiver of rights should not be so
terminated.
(d) All terminations of waivers of rights under paragraph (7)(a) shall be
subject to the rights granted in paragraph (8) of this clause, and termination
shall normally be partial in nature, requiring the Licensor to grant
nonexclusive or partially exclusive licenses to responsible applicants upon
terms reasonable under the circumstances.
(8) MINIMUM LICENSOR LICENSE
There is reserved to the Licensor an irrevocable, nonexclusive, paid-up
license in each patent application filed in any country on the above-identified
Subject Invention and any resulting patent in which the Government acquires
title. The license shall extend to the Licensor's domestic subsidiaries and
affiliates, if any, within the corporate structure of which the Licensor is a
part and shall include the right to grant sublicenses of the same scope to the
extent the Licensor was legally obligated to do so at the time the contract was
awarded. The license shall be transferable only with the approval of DOE except
when transferred to the successor of that part of the Licensor's business to
which the invention pertains.
(9) It is understood and agreed that this license does not preclude the
Government from asserting rights under the provisions of said contract or of any
other agreement between the Government and the Contractor or inventor, or any
other rights of the Government with respect to the above-identified Subject
Invention.
(10) The Licensor agrees that any products embodying any waived invention or
produced through the use of any waived invention during the term of a United
States patent covering the waived invention will be manufactured substantially
in the United States unless the Licensor can show to the satisfaction of the DOE
that it is not commercially feasible to do so.
Signed this 4th day of February, 1997
/s/ Eric A. Wachter (Inventor)
-------------------------------
6
<PAGE>
Signed this 4th day of February, 1997
/s/ Walter G. Fisher (Inventor)
-------------------------------
Signed this 4th day of February, 1997
/s/ H. Craig Dees (Inventor)
-------------------------------
[SEAL]
7
<PAGE>
State of Tennessee
County of Roane
On this 4th day of February, 1997, Walter G. Fisher, Eric A. Wachter and
H. Craig Dees personally appeared before me whose identity I proved on the basis
of their employee badge to be the signers of the attached document, and they
acknowledged that they signed it.
This Notary Certificate is prepared on a separate page and is attached to the
confirmatory license document entitled "Method for Improved Selectivity in
Photo-Activation and Detection of Molecular Diagnostic Agents," containing seven
pages.
/s/ Shelley L. Stafford
-------------------------------
Notary Public
8
<PAGE>
EXHIBIT 10.5
CONFIRMATORY LICENSE
(LARGE BUSINESS EMPLOYEE/INVENTOR-IDENTIFIED WAIVER)
TITLE: METHOD FOR IMPROVED SELECTIVITY IN PHOTO-ACTIVATION OF MOLECULAR
AGENTS
INVENTOR(S): WALTER G. FISHER; ERIC A. WACHTER; and H. CRAIG DEES
SERIAL NO.: 08/739,801 FILING DATE (U.S.): 30 October 1996
CONTRACTOR: Lockheed Martin Energy Systems, Inc.
DOE CASE NO.: S-82,272
DOE CONTRACT NO.: DE-AC05-840R21400
DOE IDENTIFIED WAIVER NO.: W(I)-95-018; ORO-597
FOREIGN APPLICATIONS FILED IN OR INTENDED TO BE FILED AT
LICENSOR'S EXPENSE IN (COUNTRIES): None
A waiver of Government rights in the above-identified invention having been
granted by the U.S. Department of Energy (DOE) to the Inventor(s) (hereinafter
referred to as the "Licensor"), said Licensor having the authorization of the
Contractor to request and receive the waiver, the effective date of said waiver
is August 2, 1996.
Accordingly, this document is confirmatory of the paid-up license required to be
granted to the Government under 41 CFR 9-9.109-6 in the above-identified
invention, patent application, and any resulting patent, as well as any
continuation, divisional, reissue, supplemental or continuation-in-part thereof
and of all other rights reserved to the Government under 41 CFR 9-9.109-6, said
license and other rights including the following:
(1) GOVERNMENT LICENSE AND INSPECTION RIGHTS
With respect to the Subject Invention in which title has been waived to
the Licensor, the Federal Government shall have a nonexclusive,
nontransferable, irrevocable, paid-up license to practice or have practiced
for or on behalf of the United States the Subject Invention throughout the
world.
The Government is hereby granted the irrevocable power to inspect and
make copies of the above-identified patent application.
(2) CONVEYANCE TERMS AND CONDITIONS - DOMESTIC
(a) Subject to the minimum rights reserved to the Licensor in paragraph
(8) herein, the Licensor agrees to convey to the Government, upon request, the
entire domestic right, title, and interest in the above-identified invention
when the Licensor:
(i) decides not to continue prosecution of the patent application
filed on the above-identified invention;
<PAGE>
(ii) at any time, no longer desires to retain title in the
above-identified invention; or
(iii) fails to have a United States patent application filed on the
invention in accordance with terms and conditions of
paragraph (4) herein.
(b) Conveyance requested pursuant to the above subparagraphs (2)(a)(i-iii)
shall be made by delivering to the DOE Patent Counsel duly executed instruments
and such other papers as are deemed necessary to vest in the Government the
entire right, title, and interest in the invention to enable the Government to
apply for and prosecute patent applications covering the invention in the United
States or otherwise establish its ownership of the invention.
(3) CONVEYANCE TERMS AND CONDITIONS -- FOREIGN
(a) Subject to the minimum rights reserved to the Licensor in
paragraph (8) hereof, the Licensor agrees to convey to the Government, upon
request, the entire right, title, and interest in the above-identified invention
in any foreign country if the Licensor:
(i) does not elect pursuant to paragraph (5) herein to retain such
rights in the foreign country; or
(ii) fails to have a patent application filed in the foreign
country on said invention in accordance with paragraph (5)
herein, or decides not to continue prosecution or not to pay
any maintenance fees covering such invention. To avoid
forfeiture of the patent application or patent, the Licensor
shall, not less than sixty (60) days before the expiration
period for any action required by the foreign Patent Office,
notify the DOE Patent Counsel of such failure or decision, and
deliver to the DOE Patent Counsel the executed instruments
necessary for the conveyance specified in this paragraph.
(b) Conveyances requested pursuant to the above subparagraphs (3)(a)(i)
and (3)(a)(ii) shall be made by delivering to the DOE Patent Counsel duly
executed instruments and such other papers as are deemed necessary to vest in
the Government the entire right, title, and interest in the invention to enable
the Government to apply for and prosecute patent applications covering the
invention in the foreign country or otherwise establish its ownership of the
invention.
2
<PAGE>
(4) FILING OF PATENT APPLICATIONS -- DOMESTIC
(a) The Licensor shall have a domestic patent application for the
above-identified Subject Invention filed within six (6) months after the
effective date of this waiver. The Licensor shall promptly notify the Patent
Counsel of any decision not to file such an application.
(b) For the above-identified invention for which a patent application has
been filed by the Licensor, the Licensor shall:
(i) within two (2) months after the filing or within two (2)
months after submission of an invention disclosure pursuant
to the requirements of the above contract if the patent
application previously has been filed, deliver to the DOE
Patent Counsel a copy of the application as filed including
the filing date and serial number;
(ii) include the following statement in the second paragraph of the
specification of the application and any patents issued on the
identified invention, "The Government has rights in this
invention pursuant to Contract No. DE-ACO5-840R21400 awarded
by the U.S. Department of Energy;
(iii) provide the DOE Patent Counsel with a copy of any patent
issued on the application within two (2) months after such
patent issues; and
(iv) not less than thirty (30) days before the expiration of the
response period for any action required by the Patent and
Trademark Office, notify the DOE Patent Counsel of any
decision not to continue prosecution of the application and
deliver to the DOE Patent Counsel executed instruments
granting the Government a power of attorney.
(c) If the Licensor at any time prior to the filing of the application
elects not to retain the rights waived for the above-identified invention, the
Licensor shall inform the DOE Patent Counsel promptly in writing of the date and
identity of any sale or placing on sale, public use, or public disclosure of the
invention which may constitute a statutory bar under 35 U.S.C. 102, which was
authorized by or known to the Licensor or any contemplated action of this
nature.
(5) FILING OF PATENT APPLICATIONS -- FOREIGN
(a) With respect to the rights waived for the above-identified invention
in a foreign country, the Licensor shall have a patent application filed on the
invention in that country in accordance with applicable statutes and regulations
and within one of the following periods:
3
<PAGE>
(i) Eight (8) months from the date of a corresponding United
States application filed by the Licensor, or if such an
application is not filed, six (6) months from the date the
invention is submitted as a disclosure pursuant to the
requirements of the above contract.
(ii) Six (6) months from the date a license is granted by the
Commissioner of Patents and Trademarks to file foreign
applications where such filing has been prohibited by security
reasons; or
(iii) Such longer period as may be approved by the DOE Patent
Counsel.
(b) The Licensor shall notify the DOE Patent Counsel promptly of each
foreign application filed and upon written request shall furnish an English
version of the application without additional compensation.
(6) OTHER TERMS AND CONDITIONS OF WAIVED RIGHTS
(a) REPORTING ON UTILIZATION OF SUBJECT INVENTIONS
The Licensor agrees to submit, on request, periodic reports no more
frequently than annually on the utilization of the Subject Invention or on
efforts at obtaining such utilization that are being made by the Licensor or its
licensees or assignees. Such reports shall include information regarding the
status of development, data of first commercial sale or use, gross royalties
received by the Licensor, and such other data and information as DOE may
reasonably specify. The Licensor also agrees to provide additional reports as
may be requested by DOE in connection with a march-in proceeding undertaken by
DOE in accordance with paragraph (b) of this clause. To the extent data or
information supplied under this section is considered by the Licensor, its
licensee or assignee to be privileged and confidential and is so marked, DOE
agrees that, to the extent permitted by 35 USC 202(c)(5), it will not disclose
such information to persons outside the Government.
(b) MARCH-IN RIGHTS
The Licensor agrees that with respect to the Subject Invention in
which it has acquired title, DOE has the right in accordance with the procedures
in 37 CFR 401.6 and any supplemental regulations of DOE, to require the
Licensor, an assignee or exclusive licensee of the Subject Invention to grant a
nonexclusive, partially exclusive, or exclusive license in any field of use to a
responsible applicant or applicants, upon terms that are reasonable under the
circumstances, and if the Licensor, assignee, or exclusive licensee refuses such
a request, DOE has the right to grant such a license itself if DOE determines
that:
(i) such action is necessary because the Licensor, assignee, or
their exclusive licensee has not taken, or is not expected to
take within a reasonable time,
4
<PAGE>
effective steps to achieve practical application of the
Subject Invention in such field of use;
(ii) such action is necessary to alleviate health or safety needs
which are not reasonably satisfied by the Licensor, assignee,
or their exclusive licensee;
(iii) such action is necessary to meet requirements for public use
specified by federal regulations and such requirements are not
reasonably satisfied by the Licensor, assignee, or exclusive
licensee.
(iv) such action is necessary because the agreement required by
paragraph (c) of this clause has not been obtained or waived
or because a licensee of the exclusive right to use or sell
the Subject Invention in the United States is in breach of
such agreement.
(c) PREFERENCE FOR UNITED STATES INDUSTRY
Notwithstanding any other provision of this clause, the Licensor
agrees that neither it nor any assignee will grant to any person the exclusive
right to use or sell the Subject Invention in the United States unless such
person agrees that any products embodying the Subject Invention or produced
through the use of the Subject Invention will be manufactured substantially in
the United States. However, in individual cases, the requirement for such an
agreement may be waived by DOE upon a showing by the Licensor or its assignee
that reasonable but unsuccessful efforts have been made to grant licenses on
similar terms to potential licensees that would be likely to manufacture
substantially in the United States or that under the circumstances domestic
manufacture is not commercially feasible.
(7) TERMINATIONS
(a) The waiver granted to the Licensor in connection with the above
contract, or any retention of rights by the Licensor herein may, subject to the
minimum rights reserved in paragraph (8) hereof, be terminated at the discretion
of the Secretary or his/her designee in whole or in part, if the request for
waiver or retention of rights by the Licensor is found to contain false material
statements or nondisclosure of material facts, and such were specifically relied
upon in reaching the waiver determination or the agreement to the retention of
rights by the Licensor.
(b) Any waiver of the rights as applied to the above-identified Subject
Invention, may be terminated at the discretion of the Secretary or his/her
designee, in whole or in part, if the Licensor fails to comply with the
provisions set forth in paragraphs (4) or (6) herein and such failure is
determined by the Secretary or his/her designee to be material and detrimental
to the interests of the United States and the general public.
5
<PAGE>
(c) Prior to terminating any waiver of rights under paragraph (7)(a) or
(7)(b) of this clause, the Licensor will be given written notice of the
intention to terminate the waiver of rights, the extent of such proposed
termination and the reasons therefor, and a period of thirty (30) days, or such
longer period as the Secretary or his/her designee shall determine for good
cause shown in writing, to show cause why the waiver of rights should not be so
terminated.
(d) All terminations of waivers of rights under paragraph (7)(a) shall be
subject to the rights granted in paragraph (8) of this clause, and termination
shall normally be partial in nature, requiring the Licensor to grant
nonexclusive or partially exclusive licenses to responsible applicants upon
terms reasonable under the circumstances.
(8) MINIMUM LICENSOR LICENSE
There is reserved to the Licensor an irrevocable, nonexclusive, paid-up
license in each patent application filed in any country on the
above-identified Subject Invention and any resulting patent in which the
Government acquires title. The license shall extend to the Licensor's
domestic subsidiaries and affiliates, if any, within the corporate structure
of which the Licensor is a part and shall include the right to grant
sublicenses of the same scope to the extent the Licensor was legally
obligated to do so at the time the contract was awarded. The license shall
be transferable only with the approval of DOE except when transferred to the
successor of that part of the Licensor's business to which the invention
pertains.
(9) It is understood and agreed that this license does not preclude the
Government from asserting rights under the provisions of said contract or of any
other agreement between the Government and the Contractor or inventor, or any
other rights of the Government with respect to the above-identified Subject
Invention.
(10) The Licensor agrees that any products embodying any waived invention or
produced through the use of any waived invention during the term of a United
States patent covering the waived invention will be manufactured
substantially in the United States unless the Licensor can show to the
satisfaction of the DOE that it is not commercially feasible to do so.
Signed this 4th day of February, 1997
/s/ Eric A. Wachter (Inventor)
--------------------------------
6
<PAGE>
Signed this 4th day of February, 1997
/s/ Walter G. Fisher (Inventor)
--------------------------------
Signed this 4th day of February, 1997
/s/ H. Craig Dees (Inventor)
--------------------------------
[SEAL]
7
<PAGE>
State of Tennessee
County of Roane
On this 4th day of February, 1997, Walter G. Fisher, Eric A. Wachter and
H. Craig Dees personally appeared before me whose identity I proved on the basis
of their employee badge to be the signers of the attached document, and they
acknowledged that they signed it.
This Notary Certificate is prepared on a separate page and is attached to the
confirmatory license document entitled "Method for Improved Selectivity in
Photo-Activation of Molecular Agents," containing seven pages.
/s/ Shelley L. Stafford
--------------------------------
Notary Public
8
<PAGE>
EXHIBIT 10.6
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into as of 16th day
of May, 1997, by and between Photogen, Inc. ("Employer"), and [____________]
("Employee"), and has reference to the following facts: Employee will be a
substantial shareholder of the parent company of Employer; and the Employer is
willing to employ the Employee for the term hereof provided the Employee enters
into this Agreement.
1. Employment. Subject to the provisions of this Agreement, the
Employer agrees to employ Employee, and Employee agrees to serve, in the
capacity as a [_______________]. Employee agrees to use his full time best
efforts to competently and faithfully promote Employer's interests and perform
the duties assigned to Employee by Employer from time to time in accordance with
applicable law and Employer's Board of Directors. Without limiting the
generality of the foregoing, Employee agrees to perform the duties set forth on
Schedule A. Employee will be based in the Oak Ridge, Tennessee area but may
from time to time be required to travel to discharge his duties.
2. Compensation; Benefits. Employer shall pay Employee an annual
gross salary as set forth in Schedule A, payable in accordance with normal
Employer payroll procedures and subject to deductions and withholdings required
by law or by agreement with Employee. Employer will reimburse Employee for
reasonable and necessary business expenses in accordance with Employer's
policies. Employee will also be eligible to participate in and receive benefits
provided under Employer's insurance and benefit plans as set forth on
Schedule A, in accordance with their respective provisions. Employer reserves
the right to amend all insurance and benefit plans at any time as necessary to
accomplish Employer's business objectives.
3. Confidential Information. (a) As a result of Employee's
employment with Employer, Employee will have access to Confidential Information
(defined below) that has great value to Employer. "Confidential Information"
means any and all information that has or could have value or utility to
Company, whether or not reduced to written or other tangible form and all copies
thereof, relating to Company's private or proprietary matters, confidential
matters or trade secrets. Confidential Information includes, but is not limited
to, information of a technical nature, such as research and development,
methods, know-how, formulas, compositions, protocols, processes and techniques,
discoveries, machines, inventions, ideas, computer programs (including software
and data used in all such programs), drawings, specifications, and business
information concerning any products, customer and supplier lists, production,
developments, costs, purchasing, pricing, profits, markets, sales, accounts,
customers, financing, expansions, and other information relating to Company's or
any of its affiliates' business practices, strategies or policies. Without
limiting the generality of the foregoing, Employee agrees that Confidential
Information includes information relating to each of the foregoing items with
respect to the Patents (defined below), except to the extent such information
has been disclosed publicly by Employer through no fault of Employee. "Patents"
means all patents, patent applications, and patent disclosures, together with
all reissuances, continuations, continuations-in-part, revisions, extensions,
and reexaminations thereof, and all improvements and inventions related thereto,
related to or arising out of Employer's method for
<PAGE>
improved selectivity in photo-activation of molecular agents and Employer's
method for improved selectivity in photo-activation and detection of molecular
diagnostic agents, including U.S. Patent Applications filed with respect thereto
by Employer on October 30, 1996 with the U.S. Patent and Trademark Office.
(b) During Employee's employment hereunder and at all times
thereafter, Employee agrees to hold in trust, keep confidential and not
disclose, directly or indirectly, to any third parties or make any use of
Employer's Confidential Information for any purpose except for the benefit of
Employer in the performance of Employee's duties under this Agreement.
Confidential Information which, without Employee's fault, becomes generally
known to the public or in the industry, or in which Employer ceases to have a
legally protectable interest, shall cease to be subject to these restrictions.
Upon Employee's termination (regardless of the reason for termination), Employee
shall immediately return to Employer all tangible Confidential Information and
any other material, including handwritten notes, made or derived from
Confidential Information, which is in Employee's possession or which Employee
delivered to others.
4. Non-competition; Non-interference. While employed by Employer
and for two (2) years after termination (regardless of the reason for
termination), Employee agrees not to, directly or indirectly, (a) own, manage,
control, participate in, consult with, be employed by, render services for, or
in any manner or in any capacity (except as owner of 2% or less of stock of a
publicly registered and traded entity) engage in any Competitive Business
(defined below), (b) solicit, induce or attempt to influence any other person or
entity to engage in any Competitive Business or to curtail or cease any business
or business relationship with Employer, its affiliates, employees or independent
contractors, (c) solicit any other employee or independent contractor to
terminate his or her employment or engagement with Employer and engage in a
Competitive Business, or (d) disparage Employer, its affiliates, employees,
independent contractors or their services or products. "Competitive Business"
means engaging anywhere in the world in the development, sale, lease, marketing,
financing or distribution of products or services similar to or competitive with
Employer's products or services.
5. Developments. Employee agrees to promptly and fully disclose to
the Board of Directors of Employer all inventions, discoveries, improvements,
know-how, works or other intellectual property conceived, reduced to practice,
discovered or made by Employee, alone or with others, during Employee's
employment and twelve (12) months after termination (regardless of the reason
for termination), if such inventions are related to or useful in the business or
demonstrably anticipated business of Employer, or result from duties assigned to
Employee by Employer or from the use of any Employer assets and facilities,
whether or not subject to registration with any governmental office
(collectively, "Developments"). Employee hereby assigns and transfers to
Employer all of Employee's right, title and interest in and to all Developments.
Employee agrees to sign and deliver to Employer (either during or after
employment) other documents Employer considers necessary or desirable to
evidence Employer's ownership of Developments. All copyrightable works that are
Developments, whether or not works made for hire (as defined in 17 U.S.C.
Section 101), shall be owned by Employer and Employer may file and own the same
as the author throughout the world.
2
<PAGE>
6. Term; Termination. The term of this Agreement shall commence the
date this Agreement is entered into and end on the fifth anniversary thereof,
unless terminated earlier as provided below. This Agreement may be renewed at
the end of the initial term for renewal terms of one year. Employer may
terminate this Agreement and Employee's employment hereunder at any time prior
to the expiration of the term of this Agreement or any renewal term upon the
occurrence of either of the following events: Employee's conviction of a felony
which has a material adverse effect on Employer, or any material breach of
Employee's obligations under this Agreement. Termination shall be effective
immediately upon written notice to Employee. Employee's obligations under
Paragraphs 3, 4, 5, and 7 shall survive the termination of Employee's
employment, regardless of the manner or reason of such termination.
7. Severability; Choice of Law; Injunction. If any provision of
this Agreement is deemed by a court of competent jurisdiction to be
unenforceable or invalid, the enforceability and validity of all other
provisions hereof shall not be affected thereby and such court shall modify the
unenforceable or invalid provision to the extent necessary to render it
enforceable and valid and such provision shall be enforced as modified.
Employee agrees that the time period and scope of the covenants in Section 3 and
4 hereof are reasonable and appropriate under the circumstances of Employer's
business and Employee's unique skills. This Agreement shall be governed and
interpreted in accordance with the laws of the State of Illinois without regard
to its provisions on conflicts of law. Employee acknowledges that a breach of
Paragraphs 3 or 4 would cause Employer irreparable harm. Accordingly, in the
event of a breach or threatened breach by Employee of any of the provisions of
Paragraphs 3 and 4, Employee agrees that Employer shall be entitled to
injunctive relief restraining Employee and any individual or entity from
participating in such breach or threatened breach and Employee waives any
provision of law requiring Employer to post a bond for any such injunctive
relief. Nothing herein shall be construed as prohibiting Employer from pursuing
any other remedies available at law or in equity for such breach or threatened
breach.
8. Miscellaneous. This Agreement may not be amended or modified
except by a written instrument signed by both parties after the date of this
Agreement. This Agreement may be assigned by Employer and shall inure to the
benefit of Employer, its successors and assigns, but may not be assigned or
delegated by Employee. This Agreement supersedes all prior agreements,
negotiations and representations, written or oral, between the parties with
respect to the subject matter contained herein. Any waiver of any breach of, or
failure to enforce, any of the provisions of this Agreement shall not operate as
a waiver of any other breach or waiver of performance of such provisions or any
other provisions.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
PHOTOGEN, INC.
By: /s/ John Smolik
-----------------------------
Its: President
----------------------------
EMPLOYEE:
--------------------------------
[_____________]
4
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SCHEDULE A
DUTIES AND COMPENSATION
DUTIES: [_________________]
COMPENSATION:
Gross Salary: Starting salary of $85,000 per year. Salary to be reviewed
annually.
Bonus/Options: Bonus will be available and paid at the discretion of the
Board. Employee stock options will also be available and
distributed as determined by the Board.
Benefits: Medical/Dental/Term Life Insurance
Long term disability insurance
Paid vacation
Benefit programs will be developed and implemented as
approved by the Board.
5
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EXHIBIT 10.7
AGREEMENT
This Agreement ("Agreement") is entered into as of the 16th day of
May, 1997, by and between Photogen Technologies, Inc. (f/k/a M T Financial
Group, Inc.) ("Photogen"), and the undersigned, [_____________] and has
reference to the following facts:
RECITALS
A. The undersigned has entered into a plan and agreement of
recapitalization and merger (the "Transaction") pursuant to which, when
consummated, he will receive 4,800,000 shares of common stock of Photogen.
B. The term Photogen herein includes Photogen Technologies, Inc. and
its subsidiary Photogen, Inc. and all entities which hereafter may become a
subsidiary or affiliate of Photogen during the term of this agreement.
In consideration of the consummation of the Transaction and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the undersigned agrees as follows:
1. CONFIDENTIAL INFORMATION. (a) The undersigned will have access
to Confidential Information (defined below) that has great value to Photogen.
"Confidential Information" means any and all information that has or could have
value or utility to Company, whether or not reduced to written or other tangible
form and all copies thereof, relating to Photogen's private or proprietary
matters, confidential matters or trade secrets. Confidential Information
includes, but is not limited to, information of a technical nature, such as
research and development, methods, know-how, formulas, compositions, protocols,
processes and techniques, discoveries, machines, inventions, ideas, computer
programs (including software and data used in all such programs), drawings,
specifications, and business information concerning any products, customer and
supplier lists, production, developments, costs, purchasing, pricing, profits,
markets, sales, accounts, customers, financing, expansions, and other
information relating to Photogen's or any of its affiliates' business practices,
strategies or policies. Without limiting the generality of the foregoing, the
undersigned agrees that Confidential Information includes information about each
of the foregoing items with respect to the Patents (defined below). "Patents"
means all patents, patent applications, and patent disclosures, together with
all reissuances, continuations, continuations-in-part, revisions, extensions,
and reexaminations thereof, and all improvements and inventions related thereto,
related to or arising out of Photogen's method for improved selectivity in
photo-activation of molecular agents and Photogen's method for improved
selectivity in photo-activation and detection of molecular diagnostic agents,
including U.S. Patent Applications filed with respect thereto by Photogen on
October 30, 1996 with the U.S. Patent and Trademark Office, copies of which are
attached hereto.
(b) The undersigned agrees to hold in trust, keep confidential and
not disclose, directly or indirectly, to any third parties or make any use of
Photogen's Confidential Information for any purpose except for the benefit of
Photogen. Confidential Information which, without fault on the
<PAGE>
part of the undersigned, becomes generally known to the public or in the
industry, or in which Photogen ceases to have a legally protectable interest,
shall cease to be subject to these restrictions. Upon the undersigned's
termination of employment (regardless of the reason for termination) or if the
undersigned ceases to be a shareholder of PTI, the undersigned shall immediately
return to Photogen all Confidential Information and any other material,
including handwritten notes, made or derived from Confidential Information,
which is in the undersigned's possession or which the undersigned delivered to
others.
2. NON-COMPETITION; NON-INTERFERENCE. During the give (5) year
period following the execution of this Agreement, the undersigned agrees not to,
directly or indirectly, (a) own, manage, control, participate in, consult with,
be employed by, render services for, or in any manner or in any capacity (except
as owner of 2% or less of stock of a publicly registered and traded entity)
engage in any Competitive Business (defined below), (b) solicit, induce or
attempt to influence any other person or entity to engage in any Competitive
Business or to curtail or cease any business or business relationship with
Photogen, its affiliates, employees or independent contractors, (c) solicit any
other employee or independent contractor to terminate his or her employment or
engagement with Photogen and engage in a Competitive Business, or (d) disparage
Photogen, its affiliates, employees, independent contractors or their services
or products. "Competitive Business" means engaging in the development, sale,
lease, marketing, financing or distribution of products or services similar to
or competitive with Photogen's products or services anywhere in the world.
3. NO AGREEMENT. Nothing contained herein in any event shall be
construed to (i) constitute a contract of employment between Photogen and the
undersigned or (ii) give any person the right to be retained in the employ of
Photogen.
4. SEVERABILITY; CHOICE OF LAW; INJUNCTION. If any provision of
this Agreement is deemed by a court of competent jurisdiction to be
unenforceable or invalid, the enforceability and validity of all other
provisions hereof shall not be affected thereby and such court shall modify the
unenforceable or invalid provision to the extent necessary to render it
enforceable and valid and such provision shall be enforced as modified. The
undersigned agrees that the time period and scope of the covenants in Sections 1
and 2 are reasonable and appropriate under the circumstances of Photogen's
business and the undersigned's unique skills. This Agreement shall be governed
and interpreted in accordance with the laws of the State of Illinois without
regard to its provisions on conflicts of law. The undersigned acknowledges that
a breach of Paragraphs 1 or 2 would cause Photogen irreparable harm.
Accordingly, in the event of a breach or threatened breach by the undersigned of
any of the provisions of Paragraphs 1 and 2, the undersigned agrees that
Photogen shall be entitled to injunctive relief restraining the undersigned and
any individual or entity from participating in such breach or threatened breach
and the undersigned waives any provision of law requiring Photogen to post a
bond for any such injunctive relief. Nothing herein shall be construed as
prohibiting Photogen from pursuing any other remedies available at law or in
equity for such breach or threatened breach.
5. MISCELLANEOUS. This Agreement may not be amended or modified
except by a written instrument signed by both parties after the date of this
Agreement. This Agreement may be assigned by Photogen and shall inure to the
benefit of Photogen, its successors and assigns, but may not be assigned or
delegated by the undersigned. This Agreement supersedes all prior agreements,
2
<PAGE>
negotiations and representations, written or oral, between the parties with
respect to the subject matter contained herein. Any waiver of any breach of, or
failure to enforce, any of the provisions of this Agreement shall not operate as
a waiver of any other breach or waiver of performance of such provisions or any
other provisions the Recitals of facts are incorporated herein and made a part
of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
PHOTOGEN TECHNOLOGIES, INC.
By:
--------------------------------
Its: PRESIDENT
--------------------------------
--------------------------------
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<PAGE>
EXHIBIT 10.8
WARRANT AGREEMENT
THIS WARRANT AGREEMENT ("Agreement") is entered into by and among
[_______________] (sometimes herein, the "Grantee"), Photogen Technologies, Inc.
(f/k/a MT Financial Group, Inc.) ("the Company") and [_______________]
("Grantor").
R E C I T A L S
A. Grantor and four other persons ("Members") are the equal owners of all
of the Membership Interests of Photogen L.L.C. ("Photogen");
B. Photogen retained the services of Stuart Fuchs and Jeff Eliot Margolis
and Stephen L. Ross, his associates, as placement agents to find venture capital
to develop Photogen's technology; and
C. Stuart Fuchs and his associates found and brought the Company,
Photogen and its Members together. The Company and Photogen, together with
Photogen's Members and others, entering into a Plan and Agreement of
Recapitalization and Merger (the "Transaction") which, if consummated, will
result in a placement fee due to Stuart Fuchs and his associates.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. The parties agree that the Recitals shall be incorporated herein
as part of this Agreement.
2. If the Transaction is consummated, the Warrant issued hereunder
by the Grantor for [_______________] shares of Common Stock of the Company (the
"Common Stock") in the form set out in Exhibit A hereto (the "Warrant"),
together with a like Warrant Agreement and Warrant for additional shares of
Common Stock to be issued by each of the other four Members to Stuart Fuchs and
his associates, aggregating in all 960,000 shares (the "Other Warrants"), plus a
payment of $180,000 by the Company to Stuart Fuchs and his associates, will
constitute full and complete satisfaction of all placement fees due Stuart Fuchs
and his associates for their services in connection with bringing the parties
together and the consummation of the Transaction.
3. If the Transaction is not consummated and the Plan and Agreement
of Recapitalization and Merger is terminated, this Agreement and the Warrant
shall be cancelled, without liability to any party hereto for such cancellation.
4. The Shares of the Company which are the subject of the Warrant
are outstanding shares owned by the Members. These Shares will be deposited in
escrow and will be subject to the terms of an Escrow Agreement attached to the
Warrant. The Escrow Agreement provides that the Escrow Agent will only act upon
the joint written direction of the Company, the
<PAGE>
Grantee and the Grantor, each of which parties agrees to provide such joint
written direction consistent with the terms of this Agreement and the attached
Warrant.
5. THE WARRANT IS ISSUED OF EVEN DATE TO THE GRANTEE WITH THE OTHER
WARRANTS. IF THIS WARRANT IS TO BE EXERCISED, THE OTHER WARRANTS ISSUED TO THE
GRANTEE MUST BE EXERCISED SIMULTANEOUSLY FOR THE SAME NUMBER OF SHARES OF COMMON
STOCK. ANY ATTEMPT TO EXERCISE THE WARRANT CONTRARY TO THE FOREGOING
REQUIREMENTS SHALL BE VOID.
6. SUBMISSION TO JURISDICTION. Each of the parties submits to the
jurisdiction of any state or federal court sitting in Chicago, Illinois, in any
action or proceeding arising out of or relating to this Agreement and the
attached Warrant and agrees that all claims in respect of the action or
proceeding may be heard and determined in any such court. Each of the parties
waives any defense of inconvenient forum to the maintenance of any action or
proceeding so brought and waives any bond, surety, or other security that might
be required of any other party with respect thereto. Each party appoints CT
Corporation System, 208 S. LaSalle Street, Chicago, Illinois 60604 (the "PROCESS
AGENT") as its agent to receive on its behalf service of copies of the summons
and complaint and any other process that might be served in the action or
proceeding. Any party may make service on any other party by sending or
delivering a copy of the process (a) to the party to be served at the address
and in the manner provided for the giving of notices in the Plan and Agreement
of Recapitalization and Merger or (b) to the party to be served in care of the
Process Agent at the address and in the manner provided for the giving of
notices in the Plan and Agreement of Recapitalization and Merger. Nothing in
this Section 6, however, shall affect the right of any party to serve legal
process in any other manner permitted by law or at equity.
7. In any action to enforce the terms of this Agreement or the
attached Warrant, the prevailing party (or parties) shall be entitled to all
attorneys' fees and costs, in addition to damages allowable at law or equity
against the losing party (or parties) in such amount as the Court may determine.
8. [_______________] agrees to pay a fee of $50 to the Company for
each exercise of a Warrant issued by the Grantor.
Accepted and agreed to as the 16 day of May, 1997:
Photogen Technologies, Inc.
By:
--------------------------------
Its President
- ------------------------------------ -----------------------------------
[_______________] , Grantee [_______________], Grantor
-2-
<PAGE>
No.[_______________] EXHIBIT A
WARRANT
Grantor: [_______________]
Grantee: [_______________]
Shares: All or part of [_______________] Shares of Common Stock, par
value $.001 per share, of Photogen Technologies, Inc, (f/k/a MT
Financial Group, Inc.) (the "Company"), Restricted, Legended and
Owned by Grantor
Exercise Price: $0.29 per Share
Issue Date: The 16 day of May, 1997
Term: Five years from date of the issuance of this Warrant
TERMS AND CONDITIONS
1. GENERAL. This Warrant is issued by the Grantor and accepted by
the Grantee pursuant and subject to each of the Terms and Conditions set forth
hereinafter. The number of Shares of Common Stock to be received upon the
exercise of this Warrant and the price to be paid for a Share of Common Stock
may be adjusted from time to time as hereinafter set forth. The Common Stock
deliverable upon such exercise and as adjusted from time to time is hereinafter
referred to as "Share(s)" and the exercise price for a Share in effect at any
time and as adjusted from time to time is hereinafter sometimes referred to as
the "Exercise Price." The term "Warrant" used above and throughout this
Certificate shall mean this Warrant or successor Warrants issued in exchange for
it for any reason pursuant to the terms and conditions contained herein.
"Holder" means the Grantee or one or more holders of the Warrant by assignment
and transfer in accordance with the terms of this Warrant. Escrow Agent means
the American National Bank and Trust Company of Chicago. The "Other Warrants"
has the meaning set forth in the Warrant Agreement to which this form of Warrant
is attached.
2. THE WARRANT IS ISSUED OF EVEN DATE TO THE GRANTEE WITH THE OTHER
WARRANTS. IF THIS WARRANT IS TO BE EXERCISED, THE OTHER WARRANTS ISSUED TO THE
GRANTEE MUST BE EXERCISED SIMULTANEOUSLY FOR THE SAME NUMBER OF SHARES OF COMMON
STOCK. ANY ATTEMPT TO EXERCISE THE WARRANT CONTRARY TO THE FOREGOING
REQUIREMENTS SHALL BE VOID.
<PAGE>
3. EXERCISE OF WARRANT. This Warrant may be exercised in whole or
in part at any time or from time to time on or after the 16 day of May, 1997,
but not later than 5:00 p.m., Chicago Time, on the 15 day of May, 2002, by
delivery by the Holder to the Escrow Agent of the Purchase Form attached hereto
duly executed (with a copy to the Grantor and the Company) and accompanied by
certified or bank check payable to Grantor's order, of the Exercise Price for
the number of Shares specified in such Form, together with all federal and state
transfer taxes applicable upon such exercise, if any. Upon the joint written
direction of the Company, the Holder and the Grantor, the Escrow Agent shall
promptly deliver the check in the amount of the Exercise Price to the Grantor
and deliver the Shares to the Company's Transfer Agent for transfer to the
Holder at the Holder's direction, together with federal or state transfer taxes,
if any, all pursuant to the terms of Escrow Agreement attached as Exhibit A
hereto.
If this Warrant should be exercised in part only, the Grantor shall,
upon surrender of this Warrant for cancellation, execute and deliver a new
Warrant, to the Holder, containing terms and conditions identical to this
Warrant except as provided for herein, evidencing the right of the Holder to
purchase the balance of the Shares purchasable hereunder.
Upon receipt of this Warrant, the executed Purchase Form and the
Exercise Price by the Transfer Agent, the Holder shall be deemed to be the
holder of record of the Shares issuable upon such exercise, notwithstanding that
the stock transfer books of the Company shall then be closed or that
certificates representing such Shares shall not then be actually delivered to
the Holder. The Grantor and the Company shall keep detailed records of the
disposition of the Warrant, bearing a serial number, and shall make such records
available to Holder upon request.
4. NOTICES TO WARRANT HOLDER. The following are "Notice Events:"
(a) if the Company shall pay any dividend or make any distribution upon the
Common Stock, or (b) if the Company shall offer to the holders of Common Stock
for subscription or purchase by them any shares of stock of any class or any
other rights to acquire any such shares of stock or (c) if the Company effects
any capital reorganization of the Company, reclassification of the capital stock
of the Company, consolidation or merger of the Company with or into another
corporation, sale, lease or transfer of all or substantially all of the property
and assets of the Company to another corporation or engages in voluntary or
involuntary dissolution, liquidation or winding up. In the event of a Notice
Event at any time when a portion of this Warrant shall be outstanding and
unexercised, the Company shall cause to be delivered to the Holder, prior to
either the effective date or record date of the Notice Event (whichever is
earlier), a notice containing a brief description of the proposed action and
stating the date of which a record is to be taken for the purpose of such Notice
Event and the date, if any, which is to be fixed as of which the holders of
Common Stock of record shall be entitled to exchange their shares of Common
Stock of record for securities or other property deliverable upon the occurrence
of such Notice Event or upon which such dividend or distribution is to be paid,
and the Holder shall have the opportunity to exercise this Warrant prior to such
record date in order to participate as a Common Stockholder in any such Notice
Event. The Holder, however, shall have no rights of adjustment in the number of
Shares covered by this Warrant or the Exercise Price for such Shares regarding
any such Event if the Holder fails to exercise this Warrant prior to the record
date of such Notice Event.
2
<PAGE>
5. STOCK SPLITS OR REVERSE STOCK SPLITS. If all or any portion of
this Warrant shall be exercised subsequent to any stock split or reverse stock
split of the Company occurring after the date hereof, as a result of which
shares of any class shall be issued in respect of outstanding Shares of the
Company or Shares shall be changed into the same or a different number of shares
of the same or another class or classes of capital stock of the Company, the
Holder shall receive, for the aggregate Exercise Price paid upon such exercise,
the aggregate number and class of shares which such Holder would have received
if this Warrant had been exercised immediately prior to the record date for such
stock split or reverse stock split. The Grantor shall forthwith deposit with
the Escrow Agent the aggregate number and class of shares issued by the Company
following any stock split or reverse stock split in exchange for the Shares on
deposit with the Escrow Agent immediately prior to the stock split or reverse
stock split. Any such event shall result in an appropriate adjustment to the
Exercise Price.
6. TRANSFER TO COMPLY WITH THE SECURITIES ACT OF 1933.
(a) This Warrant and the Shares or any other security issued or
issuable upon exercise of this Warrant may not be assigned, sold, transferred or
otherwise disposed of except to a person who, in the written opinion of counsel
reasonably satisfactory to the Company and the Grantor, is a person to whom this
Warrant or such Shares may legally be transferred pursuant to applicable state
and federal securities laws; and then only upon receipt by the Company and the
Grantor of an agreement from such person to comply with the provisions of this
paragraph 6 with respect to any resale or other disposition of such securities.
(b) The Company shall cause the following legend to be set forth
on each certificate representing Shares or any other security issued or issuable
upon exercise of this Warrant not theretofore lawfully distributed to the public
pursuant to applicable state and federal securities laws unless counsel for the
Company is of the opinion as to any such certificate that such legend is
unnecessary.
The securities represented by this certificate may
not be offered for sale, sold or otherwise
transferred except pursuant to an effective
registration statement under applicable state and
federal securities laws, or pursuant to an
exemption from registration under such laws. The
Company will require a written opinion of counsel
satisfactory to it that the proposed transfer is
in compliance with applicable securities laws.
7. INCIDENTAL REGISTRATION. If at any time the Company shall
propose the filing of a registration statement on an appropriate form under the
Securities Act of 1933, as amended, for the registration of the Common Stock,
other than a registration statement on Form S-4 or S-8 or any equivalent form of
registration statement then in effect, then the Company shall give the Holder
notice of such proposed registration and shall consider including in such
Registration
3
<PAGE>
Statement all or a portion of the Shares then owned or to be owned
by such Holder if such Holder desires to be considered a "Selling Shareholder"
in such Registration Statement. After receiving such notice from the Company, a
Holder desiring to be a Selling Shareholder shall give the Company notice,
within 15 business days after receiving such notice from the Company, to be so
included. In the event of the inclusion of Shares pursuant to this paragraph,
the Company shall bear the Costs and Expenses (defined below) of such
registration; provided, however, that the Selling Shareholder(s) shall pay the
fees and disbursements of their own counsel and, pro rata based upon the number
of Share included therein, the Securities Act registration fees and
underwriters' discounts and commissions attributable to such Shares; and,
provided further, however, that amounts to which any person or entity shall
become entitled pursuant to this sentence shall not include amounts which may
become payable pursuant to subparagraph 6(d) hereof. Nothing in this paragraph
shall require the registration of Shares in a Registration Statement relating
solely to (i) securities to be issued by the Company in connection with the
acquisition of the stock or the assets of another corporation, or the merger or
consolidation of any other corporation by or with the Company or any of its
subsidiaries, or an exchange offer with any corporation, (ii) securities to be
offered to the then existing security holders of the Company, or
(iii) securities to be offered to employees of the Company. The Company's
obligation to include Shares in such a Registration Statement shall be subject
to the following further conditions:
(a) If underwritten, the distribution for the account of the
Selling Shareholders shall be underwritten by the same underwriters who are
underwriting the distribution of the securities for the account of the Company
and the Selling Shareholder(s) shall enter into an agreement with such
underwriters containing customary provisions.
(b) Whether or not the Holder's Shares are included in the
Registration Statement, if the underwriting agreement entered into with the
aforesaid underwriters contains restrictions upon the sale of securities of the
Company, other than the securities which are to be included in the proposed
distribution, for a period not exceeding 120 days from the effective date of the
Registration Statement, then such restrictions shall be binding upon the Holder
and the Selling Shareholder(s) with respect to any Shares not covered by the
Registration Statement and, if requested by the underwriter, the Holder and
Selling Shareholder(s) shall enter into a written agreement to that effect.
(c) If the underwriters, or the Company shall state in writing
that they are unwilling to include any or all of the Holder or the Selling
Shareholder(s)' Shares in the proposed offering because such inclusion would
materially interfere with the orderly sale and distribution of the securities
being offered by the Company or for other good reasons, then the number of the
Holder's and the Selling Shareholder(s)' shares sought to be included shall be
appropriately reduced, or there shall be no inclusion of the Shares of the
Holder or the Selling Shareholder(s) in the Registration Statement, in
accordance with such statement by the underwriters or the Company.
4
<PAGE>
(d) As a condition to being accepted as a Selling Shareholder,
the Holder shall provide the Company and/or the underwriters, as applicable with
customary information for inclusion in the Registration Statement and typical
indemnification as called for by the underwriters and/or the Company, as
applicable. The Company and/or the underwriters, as applicable, shall provide
the Selling Shareholders with customary indemnification as well.
8. COSTS AND EXPENSES. As used in this Warrant, "Costs and
Expenses" of registration shall include all of the costs and expenses relating
to the Registration Statement involved, including but not limited to,
registration fees, filing and qualification fees of the Company's securities
being registered, blue-sky expenses, printing and mailing expenses, and fees and
expenses of Company's counsel. The term, however, shall not include fees and
expenses of counsel designated by the Selling Shareholder(s) and registration
fees relating to the Selling Shareholder(s)' Shares being registered.
9. ADDRESSES. All notices, certificates, waiver and other
communications required or permitted to be given hereunder to any of the parties
by any other party shall be in writing and shall be delivered personally or sent
by next day delivery service or registered or certified mail, postage prepaid,
as follows:
(a) If to the Company, addressed to:
Photogen Technologies, Inc.
1055 Commerce Park Drive
Oak Ridge, Tennessee 37830
(b) If to a Holder, addressed to the address of each such Holder
as shall, from time to time, appear on the records of the
Company or those of the Company's transfer agent as may be
the case.
(c) If to the Grantor, addressed to:
[_______________]
Photogen Technologies, Inc.
1055 Commerce Park Drive
Oak Ridge, Tennessee 37830
(d) If to the Escrow Agent, addressed to:
American National Bank and
Trust Company of Chicago
33 North LaSalle Street
Chicago, IL 60690
5
<PAGE>
Any notice delivered personally or sent by next day delivery service shall be
deemed to have been given on the date so delivered, and any notice delivered by
registered or certified mail shall be deemed to have been given on the date it
is received. Any party may change the address to which notices hereunder are to
be sent by giving written notice of such change of address in the manner
provided for giving notice.
10. WAIVER. No waiver by a party hereto of any right hereunder shall
be effective unless it is in writing which specifically refers to the provision
hereof under which such right arises, and no such waiver shall operate or be
construed as a waiver of any subsequent matter, whether of a similar or
dissimilar nature.
11. AMENDMENTS. This Warrant may be amended only by a written
instrument executed by all parties hereto.
12. APPLICABLE LAW. This Warrant and the legal relations among the
parties hereto shall be governed by and construed in accordance with the
substantive laws of the State of Illinois applicable to contracts made and to be
performed therein without giving effect to the principles of conflict of laws
thereof.
13. SHARES DEPOSITED IN ESCROW. The Grantor shall deposit the Shares
subject to this Warrant in Escrow with the Escrow Agent so that at all times
subsequent hereto there shall be on deposit with the Escrow Agent sufficient
Shares for issuance and delivery upon exercise of this Warrant, in accordance
with the terms of this Warrant and the Escrow Agreement.
6
<PAGE>
EXHIBIT 10.9
ESCROW AGREEMENT
This Escrow Agreement ("Agreement") is entered into as of the 16th day
of May, 1997, by and among the following parties: American National Bank and
Trust Company of Chicago, as escrow agent (the "Escrow Agent"), Photogen
Technologies, Inc. (f/k/a MT Financial Group, Inc.) ("the Company"), Eric A.
Wachter, Ph.D., Craig Dees, Ph.D., Walter G. Fischer, Ph.D., Timothy C. Scott,
Ph.D., and John Smolik (sometimes individually "Grantor" and collectively
"Grantors"), and Stuart Fuchs, Jeff Eliot Margolis and Stephen L. Ross
(sometimes "Grantee" and collectively "Grantees").
RECITALS
A. Grantors are the equal owners of all the Membership Interests of
Photogen L.L.C. ("Photogen");
B. Photogen retained the services of Fuchs, and Jeff Eliot Margolis and
Stephen L. Ross, his associates, as placement agents to find venture capital to
develop Photogen's technology; and
C. Fuchs and his associates found and brought the Company, Photogen and
its Members together. The Company and Photogen, together with Photogen's
Members and others have entered into a transaction which if consummated will
result in a placement fee due to Fuchs and his associates consisting of cash and
Warrants to purchase an aggregate of 960,000 shares of common stock of the
Company owned by the Grantors (192,000 shares owned by each Grantor);
D. In order for the Grantors to meet their obligation to provide Warrants
for 960,000 shares of common stock of the Company, the parties have agreed to
establish this Escrow Agreement pursuant to which the American National Bank and
Trust Company of Chicago shall act as the Escrow Agent.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties agree as follows:
1. Each Grantor hereby delivers a single stock certificate in the
amount of 192,000 shares of Common Stock of the Company together with stock
powers executed in blank and guaranteed to the Escrow Agent to be held by the
Escrow Agent pursuant to the terms and conditions of this Escrow Agreement (the
"Escrow Deposits"). The identification of each stock certificate by number
which each Grantor is depositing with the Escrow Agent is set forth on
Exhibit A, attached hereto.
2. The Warrant Agreements and the form of Warrants issued by each
Grantor to the Grantees is attached hereto as Exhibit B.
<PAGE>
3. This Escrow is established for a period of five years and will
terminate on the 15 day of May, 2002, unless sooner terminated as provided for
herein.
4. The Escrow Agent will only act with respect to a Grantor's
Deposits in accordance with one or more written letters of direction jointly
executed by the Company, the Grantor who made the Deposit and that Grantor's
intended Grantee(s) (or the Grantee(s) lawful transferee(s) (a "Holder") of the
Warrant) or in accordance with a final order of a court of competent
jurisdiction.
5. The Escrow Agent shall be entitled to compensation for standard
services rendered at the rate of $2,000 per annum. In addition, an exercise fee
of $500 in the aggregate will be charged each time a Grantee intends to exercise
a Warrant (which will always require the Grantee to exercise Warrants from all
five Grantors in equal amounts, I.E., a $100 charge for exercise of each of the
five warrants) and additional compensation for services beyond the standard,
including without limitation, participation in litigation. All fees, costs or
expenses pursuant to this Agreement and any transactions carried out hereunder
shall be billed by the Escrow Agent to the Company and shall not be deducted
from the Escrow Deposits, and the Company shall pay the same within 30 days from
receipt of the invoice. The Company shall also be responsible for any taxes and
tax reporting relating to the Escrow Deposits, if any. The Escrow Agent shall
not have a lien on the Escrow Deposit to secure payment of any fees, costs or
expenses, and the Escrow Agent hereby waives any right of offset or recoupment
it may have against the Escrow Deposits or any of the assets in the Escrow.
6. In the event of any dispute between the parties hereto, or
between them and any other person, which results in claims or demands against
the Escrow Deposits or the Escrow Agent, or in the event the Escrow Agent, in
the exercise of good faith, is reasonably in doubt as to what action it should
take hereunder, the Escrow Agent at its option may refuse to comply with any
claims or demands on it or refuse to take any other action hereunder, so long as
such dispute or such doubt exists; and in any such event, the Escrow Agent shall
not be or become liable in any way or to any person for its failure or refusal
to act. The Escrow Agent shall be entitled to continue so to refrain from
acting until (i) the rights of the parties to the dispute have been fully and
finally adjudicated by a court of competent jurisdiction, or (ii) all
differences shall have been adjusted and all doubt resolved by agreement between
the parties to the dispute and the Escrow Agent shall have been notified thereof
in writing signed by or on behalf of all such persons. The foregoing rights of
the Escrow Agent are in addition to all other rights it may have by law or
otherwise.
7. The Escrow Agent may consult with independent legal counsel in
the event of any dispute or question as to the construction of any of the
provisions hereof or its duties hereunder and it shall incur no liability and
shall be fully protected in acting reasonably and in good faith in accordance
with the written opinion and instructions of such counsel (except to the extent
a court of competent jurisdiction determines that such action nonetheless
constituted gross negligence or willful misconduct by the Escrow Agent). The
Escrow Agent shall notify the Company when it intends to consult with such
independent legal counsel. The Escrow Agent shall have the right to file legal
proceedings, including an interpleader, to determine the proper
-2-
<PAGE>
disposition of the Escrow Deposits hereunder, and all costs thereof shall
constitute an expense of administration of this Agreement.
8. In the event the Escrow Agent becomes involved in any disputes
(including without limitation any litigation) in connection with this Agreement,
the Company, Grantors and Grantees agree to indemnify and hold the Escrow Agent
harmless from all loss, cost, damages, expenses, liabilities, judgments and
attorneys' fees suffered or incurred by the Escrow Agent as a result thereof;
provided, however, that the foregoing indemnity obligation shall not apply to
any litigation in which relief is obtained for, and the Escrow Agent shall
remain liable for, its gross negligence or willful misconduct or any breach by
the Escrow Agent of its duties hereunder.
9. The following general provisions apply:
a. The Escrow Agent shall not be responsible for the
sufficiency of the form, execution, validity or genuineness of notices,
documents or securities now or hereafter deposited hereunder, or of any
endorsement thereon, or for any description therein nor shall the Escrow Agent
be responsible or liable in any respect on account of the identity, authority or
rights of the persons executing or delivering or purporting to execute or
deliver any such document, security or endorsement.
b. The duties and responsibilities of the Escrow Agent shall be
limited to those expressly set forth in this Escrow Agreement; provided however,
that with Escrow Agent's written consent, the duties and responsibilities in
this Agreement may be amended at any time or times by an instrument in writing
signed by all other parties hereto.
c. Except for the provisions of this Agreement, the Escrow
Agent is not required to be familiar with the provisions of the Warrant, Warrant
Agreement or any other instrument or agreement and shall not be charged with any
responsibility or liability in connection with the observance or non-observance
by anyone of the provisions of the Warrant, Warrant Agreement or such other
instrument or agreement.
d. The Escrow Agent shall have the right to resign by giving
30 days' prior written notice to the other parties hereto. Within such 30
day period, the Company, the Grantors, the Grantees and all Holders shall
appoint a successor escrow agent and advise the Escrow Agent of such
successor in writing. Thereupon, the Escrow Agent shall deliver all Deposits
in this Escrow to such successor escrow agent and after such delivery all
further responsibility of the Escrow Agent under this Agreement shall
terminate. If a successor escrow agent has not been appointed and has not
accepted such appointment by the end of the 30-day period, the Escrow Agent
may apply to a court of competent jurisdiction for the appointment of a
successor escrow agent, and the costs, expenses and reasonable attorneys'
fees which are incurred in connection with such a proceeding shall be paid by
the parties to this Agreement.
-3-
<PAGE>
e. In any event, this Escrow Agreement shall terminate on the
15 day of May, 2002, and all Escrow Deposits at that time shall be returned to
each depositing Grantor as his interest shall appear.
10. MISCELLANEOUS.
a. All notices or communications pursuant to this Agreement
shall be in writing and addressed as follows:
IF TO THE ESCROW AGENT:
American National Bank and
Trust Company of Chicago
33 North LaSalle Street
Chicago, IL 60690
IF TO THE COMPANY:
John Smolik
Photogen Technologies, Inc.
1055 Commerce Park Drive
Oak Ridge, Tennessee 37830
IF TO THE GRANTOR:
[__________________]
Photogen Technologies, Inc.
1055 Commerce Park Drive
Oak Ridge, Tennessee 37830
IF TO THE GRANTEES:
To the address on the Company records,
as set forth on Exhibit C hereto.
Notices or communications by mail shall be deemed given and effective three days
after depositing the same in the United States mail, postage prepaid, certified
mail return receipt requested. Alternatively, any party may give any
communication using any other means (including personal delivery, expedited
courier, messenger service, telecopy, telex, or ordinary mail), but no such
communication shall be deemed to have been duly given unless and until it
actually is received by the individual for whom it is intended. Any party may
change the address to which communications hereunder are to be delivered by
giving the other parties notice in the manner herein set forth.
-4-
<PAGE>
b. This Agreement (i) may be executed in one or more
counterparts and, if so executed, the various counterparts shall be and
constitute one instrument for all purposes and shall be binding on the party
that executed it; (ii) constitutes the full and entire agreement between the
parties with regard to the subject hereof, and supersedes any prior
representations, promises, or warranties (oral or otherwise) made by any party
or its agents, attorneys, employees or representatives; and no party shall be
liable or bound to any other party for any prior representation, promise or
warranty (oral or otherwise) except for those expressly set forth in this
Agreement; (iii) shall be governed by and construed in accordance with the laws
of the State of Illinois without regard to conflict of laws provisions thereof;
(iv) shall only be amended by a writing signed by all parties hereto; and (v)
has been executed by the parties' respective duly authorized representatives,
has been duly authorized by all requisite corporate action as applicable, and
constitutes the valid and binding obligation of the parties hereto.
[The remainder of this page is intentionally blank.]
-5-
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Escrow Agreement
to be executed as of the date first written above.
AMERICAN NATIONAL BANK PHOTOGEN TECHNOLOGIES, INC.
AND TRUST COMPANY OF CHICAGO,
As Escrow Agent
/S/ TIMOTHY P. MARTIN /S/ JOHN SMOLIK
- ------------------------------ ------------------------------
By: By:
- ------------------------------ ------------------------------
Its: Assistant Vice President Its: President
GRANTORS
/S/ ERIC A. WACHTER /S/ CRAIG DEES
- ------------------------------ ------------------------------
Eric A. Wachter, Ph.D. Craig Dees, Ph.D.
/S/ WALTER G. FISHER /S/ TIMOTHY C. SCOTT
- ------------------------------ ------------------------------
Walter G. Fischer, Ph.D. Timothy C. Scott, Ph.D.
/S/ JOHN SMOLIK
- ------------------------------
John Smolik
GRANTEES
/S/ STUART FUCHS
------------------------------
Stuart Fuchs
/S/ JEFF ELIOT MARGOLIS
------------------------------
Jeff Eliot Margolis
/S/ STEPHEN L. ROSS
------------------------------
Stephen L. Ross
-6-
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
NAME STATE OF INCORPORATION OTHER NAMES UNDER WHICH
OR ORGANIZATION SUBSIDIARY DOES BUSINESS
Photogen, Inc. Tennessee None
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Photogen Technologies, Inc.
Knoxville, Tennessee
We hereby consent to the use in this Form 10-SB of our report dated July 9,
1997, relating to the consolidated financial statements of Photogen
Technologies, Inc., which is contained in that Form 10-SB.
/s/ BDO SEIDMAN, LLP
Chicago, Illinois
December 22, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM
10-SB FOR THE PERIOD ENDED DECEMBER 31, 1996 AND THE NINE MONTHS ENDED
SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 3-MOS
<FISCAL-YEAR-END> SEP-30-1997 DEC-31-1996
<PERIOD-START> JAN-01-1997 NOV-03-1996
<PERIOD-END> SEP-30-1997 DEC-31-1996
<CASH> 74,545 0
<SECURITIES> 977,456 0
<RECEIVABLES> 59,026 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 1,111,027 0
<PP&E> 89,329 5,489
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 2,446,411 5,489
<CURRENT-LIABILITIES> 29,944 0
<BONDS> 0 0
0 0
0 0
<COMMON> 36,000 0
<OTHER-SE> 2,380,467 5,489
<TOTAL-LIABILITY-AND-EQUITY> 2,446,411 5,489
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 225,280 1,779
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (225,280) (1,779)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (225,280) (1,779)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (225,280) (1,779)
<EPS-PRIMARY> (.01) 0
<EPS-DILUTED> 0 0
</TABLE>
